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Agenda and minutes

Venue: Committee Rooms A and B, Civic Offices, Elstree Way, Borehamwood

Contact: Democratic Services  020 8207 7558

Items
No. Item

(Councillor Sachdev in the Chair)

423.

Membership

To receive details of any changes in membership of the Committee notified since the agenda was printed.

Minutes:

There were no changes to the membership of this Committee.

 

424.

Communications and Apologies

(a)            Communications (if any) relating to business on the agenda.

 

(b)            Apologies for absence.

Minutes:

Vice-Chairman Councillor Sachdev welcomed Members and Officers to the meeting which he said he would open and chair until the Chairman’s arrival.

 

There were no apologies for absence.

 

425.

Declarations of Interest

Members are required to declare any disclosable pecuniary interests they or their spouse/partner have in any matter which is to be considered at this meeting.  Members must also declare any other pecuniary or non-pecuniary interests they have in any matter to be considered at this meeting. The responsibility for declaring an interest rests solely with the member concerned.

 

Members must clearly state to the meeting the existence and nature of any disclosable pecuniary interest, other pecuniary interest or non-pecuniary interest and the agenda item(s) to which it/they apply.

 

Disclosable Pecuniary Interests are prescribed by the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 as follows;

 

Employment, office, trade, profession or vocation

 

Any employment, office, trade, profession or vocation carried on for profit or gain.

 

Sponsorship

 

Any payment or provision of any other financial benefit (other than from the relevant authority) made or provided within the relevant period in respect of any expenses incurred by a member in carrying out duties as a member, or towards your election expenses. This includes any payment or financial benefit from a trade union within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992.

 

Contracts

 

Any contract which is made between the relevant person (and a body in which the relevant person has a beneficial interest) and the relevant authority— (a) under which goods or services are to be provided or works are to be executed; and (b) which has not been fully discharged.

 

Land

 

Any beneficial interest in land which is within the area of the relevant authority.

 

Licences

 

Any licence (alone or jointly with others) to occupy land in the area of the relevant authority for a month or longer.

 

Corporate tenancies

 

Any tenancy where (to the member’s knowledge) - (a) the landlord is the relevant authority; and (b) the tenant is a body in which the relevant person has a beneficial interest.

 

Securities

 

Any beneficial interest in securities of a body where - (a) that body (to the member’s knowledge) has a place of business or land in the area of the relevant authority; and (b) either (i) the total nominal value of the securities exceeds £25,000 or one hundredth of the total issued share capital of that body; or (ii) if the share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class.

 

In cases of disclosable pecuniary interest, Members must withdraw from the meeting room while the matter is being considered.

 

Minutes:

No Members had an interest to declare in relation to the items of business on the agenda for the meeting.

426.

Minutes pdf icon PDF 86 KB

To confirm and sign the minutes of the meeting of the Committee held on 7 September 2016.

 

In accordance with the Constitution, no discussion shall take place upon the minutes, except upon their accuracy.

 

Minutes:

RESOLVED that the minutes of the meeting of the Committee held on 7 September 2016 be approved and signed as a true correct record.

 

427.

Shared Anti-Fraud Service pdf icon PDF 239 KB

This report provides information on progress made delivering the Council Anti-Fraud Action Plan 2016/17.

 

Additional documents:

Minutes:

The Shared Anti-Fraud Service (SAFS) representative reported on progress made against the Council’s published Anti-Fraud Action Plan and noted that all milestones had been met or were on course for delivery and that there were no significant outstanding issues.

 

Members were referred to the table in report paragraph 2.7 which gave a breakdown of reported fraud cases and their outcomes and were informed that Hertsmere Borough Council was one of the Service’s best authorities on staff fraud reporting.  The representative added that a meeting had been held with the Director of Resources at the beginning of this year which had revealed an already substantial amount of work coming in and liaison with the Revenues and Benefits service in particular being undertaken.

 

The Vice-Chairman commented on the need to look at the cost to the Council of bringing people in for investigation.  The representative acknowledged that there was indeed a cost involved and that all efforts were being made to raise awareness and concentrate on prevention and deterrents.  He referred members to paragraph 2.14, regarding the SAFS project lead on a county‑wide data matching exercise, and was pleased to report that an agreement was now in place with a Memorandum of Understanding to be issued shortly. 

 

With regard to Key Performance Indicator 4 (paragraph 3.5 refers), another Member asked whether “achieved” meant that fraud had been identified or the case had been closed.  The SAFS representative confirmed that a case was closed if not proved.

 

The Committee noted that all data required to meet the Transparency Code had been included and published (section 4 refers). 

 

RESOLVED that:

 

1.     progress with the Shared Anti-Fraud Service in delivering the Council’s Anti-Fraud Action Plan for 2016/17 be noted; and

 

2.     the anti-fraud activity undertaken to protect the Council be noted.

Councillor Goldstein joined the meeting at 7.43pm at the conclusion of the above item and assumed chairmanship of the meeting.

 

428.

The Annual Audit Letter Year ended 31 March 2016 pdf icon PDF 2 MB

The Annual Audit Letter advises the Committee of the key issues that arose from the work of the Council’s External Auditors and that the Council has in place proper arrangements to secure value for money in the use of resources.

 

Minutes:

The Council’s external auditors, Ernst & Young, presented a report outlining the Annual Audit letter for the year ending 31 March 2016 which had been issued in October 2016 and which advised on key issues arising from the work carried out and aimed to ensure the Council had in place proper arrangements to secure value for money in the use of its resources.

 

Specifically, the Committee was referred to the unqualified and financial conclusions detailed on agenda page 46; to the key issues on agenda page 54; to the inclusion for the first time of the Elstree Studios accounts (page 55); and to two recommendations on agenda page 57 concerning, respectively, the need to ensure consistency between the Finance and Estates Management registers of assets and a procedural point concerning formal documentation of any transfers between earmarked reserves.  The recommendations were noted for future action.

 

Members also noted, on agenda page 64, two future changes as follows:

 

·       the earlier planned deadline for the future production and audit of the financial statements from 2017/18.  This entailed signing and completion of the accounts to be brought forward from the September meeting to the July meeting each year, starting in 2017 in preparation for the new practice; and

·       the appointment of auditors which related to agenda item 10, External Audit Recommendations.

 

With regard to Appendix A to the report, Audit Fees, Members were advised that the variation between the planned fee for 2015/16 and the final fee was due to the impact of preparing group accounts and associated additional work such as the consolidation of the Elstree Studios accounts.  The Chairman suggested that, bearing in mind that the Studios employed a different set of auditors, a quote should be obtained from Elstree Studios as the Council’s external auditors were effectively auditing the work of another auditor.  This point was acknowledged by the Director of Resources and another Member underlined the need to ensure consistency between the two sets of auditors. 

 

RESOLVED that the content of the Annual Audit Letter for the Year ended 31 March 2016 be noted.

 

It was agreed that, to facilitate business on the agenda, the following two items, items 7 and 8, should be considered in reverse order.

 

429.

Certification of claims and returns annual report 2015-16 pdf icon PDF 37 KB

This report summarises the overall assessment by Ernst and Young of the Council’s management arrangements for the certification process.

 

Minutes:

The Council’s external auditors were required to certify certain claims and returns submitted by Hertsmere Borough Council.  Auditor certification was an important part of the process to confirm entitlement to funding.  Ernst & Young submitted a report on the outcome from their certification work for 2015/16.

 

A representative from Ernst & Young presented the report reminding Members of the predecessor auditors’ recommendations following their audit for 2014/15 (agenda page 91 refers) and drawing their attention to the current recommendations arising from the audit for 2015/16 (agenda page 92).  She said that the most recent audit had resulted in a qualification letter and, put into context, Ernst & Young had 4 local authorities with qualification letters of some length.  Hertsmere’s letter consisted of a single page and comprised a good audit for this Council.  One recommendation involved work on system errors identified in 2014 being subject to secondary review with the aim of avoiding these errors in future.

 

In response to a Member’s question, she confirmed that the number of claims examined depended on the size of the authority and the Ernst & Young Director present at the meeting explained how the figures were extrapolated.  The Head of Finance and Business Services pointed out that any errors could involve either underpayments or overpayments.  Responding to further questions, in terms of the length of time taken to audit a case, she said that this depended on the nature of the claim and that RT (real time) reporting would most likely increase the number of overpayments detected.

 

RESOLVED that the information contained in the certification report from Ernst & Young be noted.

 

430.

Audit Plan - External Auditors pdf icon PDF 133 KB

This Audit Plan sets out how Ernst & Young intend to carry out their responsibilities as external auditor. It provides the Committee with a basis to review the proposed audit approach and scope for the 2016/17 audit. It will also help ensure that this audit is aligned with the Committee’s service expectations.

 

Minutes:

The Audit Plan set out how the external auditors intended to carry out their responsibilities; provided the Committee with a basis to review the proposed audit approach and scope for the 2016/17 audit; and also help to ensure that the audit was aligned with the Committee’s service expectations.

 

The external auditor, in presenting the report, highlighted section 2 which set out the financial statement risks and the responsibilities in respect of fraud and error and also section 3 concerning value for money risks.  In respect of the latter, Members were pleased to note that no value for money risks had been identified.  Responding to a Member’s question, she clarified that value for money risks were based on advice from the National Audit Office and concerned whether the Council had appropriate risk measures in place which it followed.

 

RESOLVED that the External Auditors’ proposed Audit Plan for the Year ending 31 March 2017 be noted.

 

431.

Treasury Management Strategy 2017/18 and Prudential Indicators 2017/18 to 2019/20 pdf icon PDF 94 KB

This report provides the Committee with details of the proposed Treasury Management Strategy for 2017/18 and prudential indicators for 2017/18 to 2019/20.

 

Additional documents:

Minutes:

The report provided Members with details of the proposed Treasury Management Strategy for 2017/18; the prudential indicators for the years 2017/18 to 2019/20; and a review of the treasury management function for the first six months of 2016/17.

 

In presenting the report, the Head of Finance and Business Services explained that, whilst the Council had ultimate responsibility for approving the Treasury Management Strategy and Prudential Indicators, the Audit Committee was able to challenge aspects of the Strategy before making its recommendations to the full Council.

 

The Head of Finance and Business Services took Members through the report and appendices in detail, drawing their particular attention in the first instance to the tables in paragraphs 1.5 and 5.2.1 of Appendix 1 regarding the reporting cycle for the proposed Strategy and the capital expenditure forecasts for 2017/18 to 2019/20 respectively.

 

Responding to questions from the Vice-Chairman, the Head of Finance and Business Services confirmed that the Council had previously been advised by Sector but that Capita Asset Services was the Council’s current treasury advisor and that the Strategy was based on the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice.  In response to a related question, he said that the Council received reports on an almost daily basis from Capita in respect of the current interest rates.

 

Another Member asked whether the new Hertsmere Development Company would affect the capital finance programme and was advised that it could be potentially affected and that this was known as internal borrowing.  He then gave an explanation, for the Committee’s benefit, of how capital financing worked.  Members noted the correction of a typo in table 10, section 6.1 of Appendix 1, whereby the heading in column 3 should read “…to 30 November 2016”.

 

During further discussion, it was agreed that the Council should be investing in its own development schemes but that, subject to this, the alternative investment approach outlined in section 8 should not be supported.  The Head of Finance and Business Services advised that report Appendix 2 comprised the mid-year position as of September 2016 and referred the Committee in particular to the investment overview in table 4 which showed a current favourable variance of approximately £80k.

 

RESOLVED that:

 

1.     the content of the Treasury Management Strategy 2017/18 and Prudential Indicators 2017/18 to 2019/20, attached at Appendix 1 to the report, be noted and agreed and specifically:

 

·       the Annual Investment Strategy set out in section 7 be noted and approved; and

·       with the exception of investment in the Council’s own development schemes, the alternative approach set out in section 8, involving higher risk investments, be considered but not agreed for inclusion in the Council’s Annual Investment Strategy and the current risk averse approach be retained; and

 

2.     subject to (1) above, the Treasury Management Strategy 2017/18 and Prudential Indicators 2017/18 to 2019/20, attached at Appendix 1, be recommended to the Council for approval; and

 

3.     the Treasury Management and Prudential Indicators Mid-Year Review 2016/17, attached at Appendix 2  ...  view the full minutes text for item 431.

432.

External Audit Recommendations pdf icon PDF 126 KB

This report provides Members with an update on progress that officers have made with the implementation of agreed recommendations made by the Council’s external auditors.

 

Additional documents:

Minutes:

The report updated Members on progress made by Officers in implementing the agreed recommendations of the Council’s external auditors.

 

The Financial Services Manager referred the Committee specifically to the recommended reconciliations and actions set out in Appendix A to the report which he confirmed were all in hand (agenda page 141 refers).

 

RESOLVED that the report be noted.

 

433.

Shared Internal Audit Service (SIAS) - progress update pdf icon PDF 451 KB

This report provides the Committee with (a) the progress made by the Shared Internal Audit Service in delivering the Council’s 2016/17 Internal Audit Plan as at 14 January 2017, (b) the findings for the period 27 November 2016 to 14 January 2017, (c) the proposed amendments required to the approved 2016/17 Audit Plan, (d) the implementation status of previously agreed audit recommendations, and (e) an update on performance management information as at 14 January 2017.

 

Additional documents:

Minutes:

The report provided the Committee with an update of progress made by the Shared Internal Audit Service (SIAS) in delivering the Council’s 2016/17 Internal Audit Plan as at 14 January 2017; the findings for the period 27 November 2016 to 14 January 2017; the amendments proposed to the 2016/17 Audit Plan for Members’ approval and the implementation status of previously agreed audit recommendations; and an update on performance management information as at 14 January 2017.

 

The Committee was referred in particular to the tables in report sections 2.2 and 2.20 concerning final reports issued, the key findings and performance management.  A Member asked why some of the performance indicators had set targets of 95% rather than 100% and was informed that this took account of the few factors that were outside the Council’s and/or SIAS control.

 

RESOLVED that the Internal Audit progress report be noted and the amendments proposed to the Audit Plan 2016/17 (as at 14 January 2017) be approved.

 

(Action:  Audit Manager SIAS)

 

434.

Risk Management Progress Update pdf icon PDF 213 KB

This report reviews and updates the Strategic Risks facing this Authority.

 

Additional documents:

Minutes:

The Committtee received a report reviewing and updating the strategic risks facing the authority.

 

It was noted that the Newberries Car Park redevelopment in Radlett remained a high risk project and would continue as such until it reached the planning stage.  Members were advised that the Council had made considerable investment in this item in order to bring the matter to the planning stage.

RESOLVED the current strategic risks be noted and in particular the following deletions, amendments and additions as detailed in Appendices A and B:

·       the removal of Section 106 Agreements as a strategic risk;

·       the reduction in the assessment of External Financial Pressure and Data Protection and Information Management risks; and

·       the addition of two new risks: Cyber risks and the Collection of Housing Benefit Overpayments.

 

435.

New Accounting Standards and review of Accounting Policies pdf icon PDF 307 KB

 

This report provides an update to the Committee on the material changes in the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for 2016/17.

 

Minutes:

Members received a report updating them on material changes in the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for 2016/17 and recommending that the Council’s current accounting policies were retained except where they were affected by the changes in the Code of Practice 2016/17 and referred to throughout the report.

 

Members noted that report Appendices A and B presented the respective previous as well as the new CIES and MiRS formats for comparison purposes.  The Financial Services Manager also highlighted for Members’ particular attention report paragraph 4.1 which mentioned some minor adjustments made to the Council’s accounting policies for 2015/16 in respect of its Property, Plant and Equipment.

 

RESOLVED that the report be noted and that:

 

1.     the Comprehensive Income and Expenditure Statement (CIES) and new Expenditure and Funding Analysis (EFA) be presented on the same basis that the Council is organised and management accounting information reported, as set out in report paragraphs 3.1 to 3.4 inclusive;

 

2.     the Council’s other existing accounting policies be retained without change, as set out at paragraph 4.1; and

 

3.     the impact of implementing a revised CIES and MiRS (Movement in Reserves Statement) and a new EFA, as set out at paragraph 3.5, be noted.

 

(Action:  Financial Services Manager)

 

436.

Date of Next Meeting

The next meeting of the Committee is scheduled to take place on 31 May 2017 at 7.30pm in the Civic Offices, Elstree Way, Borehamwood.

 

Minutes:

It was noted that the next meeting of the Committee was scheduled to take place on Wednesday, 31 May 2017 at 7.30 p.m. in the Civic Offices, Elstree Way, Borehamwood.