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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

153.

Membership

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

Minutes:

The Chairman reported that Councillor Graham had replaced Councillor Keates as a member of this Committee for the meeting.

 

 

154.

Communications and Apologies

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

 

(b)            Apologies for absence.

Minutes:

None.

 

 

155.

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 Member had an interest to declare in relation to the items of business on the agenda for the meeting.

 

 

156.

Minutes pdf icon PDF 94 KB

To confirm and sign the minutes of the meeting of the Committee held on 31st May 2017.

 

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 held on 31st May 2017 be confirmed as a correct record, subject to Minute 56, resolution (3) being corrected to show that the Newberries Car Park Development had a risk impact of 2 and not 3.

 

 

157.

Shared Anti-Fraud Service - activity and progress against Action Plan 2017/18 pdf icon PDF 549 KB

This report provides details of the performance of this service against the Anti-Fraud Action Plan 2016/17 and information on the Anti-Fraud Action Plan 2017/18.

 

Additional documents:

Minutes:

Report A/17/20 provided the Committee with details of anti-fraud performance against the Council’s 2016/17 Anti-Fraud Action Plan. This report also provided details of the Councils Anti-Fraud Action Plan for 2017/2018.  The meeting noted that it would receive a further report in January 2019 on the progress against the 2017/18 Plan.

 

Members noted that 110 new allegations of fraud had been made in 2016/17 of which 55 cases were closed as not needing further action. A total of 40 cases had been investigated, of which 32 indicated that fraud had occurred. Six prosecutions had been brought against individuals by the Council and nine persons received financial penalties in relation to council tax discount fund.

 

RESOLVED that

 

(1)       the activity of the Herts Shared Anti-Fraud Service 2016/17 be noted,

 

(2)       the Council’s Anti-fraud Action Plan 2017/18 be approved, and

 

(3)       the Anti-Fraud activity undertaken to protect the Council be noted.

 

 

158.

Ernst and Young External Audit results 2016/17 pdf icon PDF 4 MB

The National Audit Office’s Code of Audit Practice (the Code) requires the Council’s external auditors to report to those charged with governance – the Audit Committee – on the work they have carried out to discharge their statutory audit responsibilities together with any governance issues identified. This report summarises the findings from the Ernst and Young 2016/17 audit.

 

Minutes:

The Council’s external auditors, Ernst & Young, submitted a report which detailed the outcome of their 2016/17 audit of the Council’s Statement of Accounts. The representative of Ernst and Young reported that all work on the audit of the Council’s 2016/17 accounts was now complete. The audit had had three areas of focus and it was noted that no issues had arisen from ‘Revenue Recognition’ and ‘Management Override’. On the third issue ‘Valuation of other land and buildings’, the Committee noted that the external auditors had increased their sample of revaluations and had concluded that the valuation movements were supported by the valuations provided by the Council’s external specialist.

 

The Committee noted that the auditors had found no errors in the accounts and had no issues to bring to the Committee's attention.  The view of the auditor’s, that the Council had in place proper arrangements to secure value for money in the use of resources and to secure economy, efficiency and effectiveness in its use of resources, was welcomed by the Committee.

 

Both the Committee and representative of Ernst and Young paid tribute to the professional work and support of Hertsmere’s finance staff in the preparation of the 2016/17 Statement of Accounts. The meeting particularly noted the significant contribution made by Sajida Bijle and Daniel Omisore.

 

RESOLVED that the report of Ernst & Young detailing their approval of the 2016/17 accounts, be noted.

 

 

159.

Presentation and Approval of Statement of Accounts for 2016/17 pdf icon PDF 380 KB

This report submits the Council’s Statement of Accounts 2016/17 for approval by the Committee following completion of the external audit.

 

Additional documents:

Minutes:

The Financial Services Manager presented the Council’s Statement of Accounts for 2016/17 to the Committee for approval. The meeting was reminded that it had, on 31 May 2017, approved the submission of the accounts to Ernst & Young for external audit. That audit had now been completed and there were no material changes to the accounts to report.

 

It was reported that the accounts for 2016/17 had been prepared in accordance with a forthcoming duty in the Accounts and Audit Regulations 2015 to secure external audit sign off by 31st July. This year Hertsmere had successfully used the 2016/17 audit process as a dry run before imposition of the new duty in 2017/18.

 

The Committee asked that the narrative to the accounts provide an explanation of why the accounts showed adjustments and the meaning of capitalisation. Members wanted explanations provided to help make the accounts more understandable to the public. It was suggested that the Statement of Accounts be checked to ensure all typing mistakes were corrected.

 

RESOLVED that

 

(1)       the audited Statement of Accounts for 2016/17 (Appendix 1 to Report A/17/22), be approved,

 

(2)       the  contents of the Letter of Representation 2016/17 (Appendix 2 to Report A/17/22), which must be agreed and signed by the Corporate Director (in her capacity as the Chief Finance Officer) and the Chairman of the Audit Committee and submitted to the auditor prior to the issue of their audit opinion, be noted,

 

(3)       the Corporate Director and the Chair of the Audit Committee be authorised to sign the final audited Statement of Accounts and confirm that they represent a true and fair view of the Council’s financial position as at 31 March 2017 and for the year then ended, and

 

(4)       the contents of the Letter of Assurance provided to Ernst & Young on the 11 May 2017. (Appendix 4 to Report A/17/22) be noted.

 

 

160.

Shared Internal Audit Service - internal audit progress update pdf icon PDF 516 KB

This report provides the Committee with (a) the progress made by the Shared Internal Audit Service in delivering the Council’s 2017/18 Internal Audit Plan as at 14 July 2017, (b) the findings for the period 13 May 2017 to 14 July 2017, (c) the proposed amendments required to the approved 2017/18 Audit Plan, (d) the implementation status of previously agreed audit recommendations, and (e) an update on performance management information as at 14 July 2017.

 

Minutes:

The Shared Internal Audit Service (SIAS) submitted a report to the Committee detailing progress made by SIAS on: delivery of the Council’s 2017/18 Internal Audit Plan as at 14 July 2017; findings for the period 13 May 2017 to 14 July 2017; proposed amendments to the 2017/18 Audit Plan; status of audit recommendations and an update on performance management information as at 14 July 2017.

 

The Committee was informed that, as of today, 21.5% of the 2017/18 Audit Plan days had now been delivered. 

 

RESOLVED that the information contained in the Shared Internal Audit Service progress report (A/17/23) be noted and the amendments to the Audit Plan be approved.

 

 

161.

Shared Internal Audit Service - Annual report pdf icon PDF 857 KB

The Shared Internal Audit Service Annual report provides detail on the activity of the Service in the 2016/17 financial year.

 

Minutes:

The Committee had before it the sixth annual report from the Shared Internal Audit Service (SIAS) and noted that the Service had, despite challenges, delivered 95% of days commissioned by clients in 2016/17.

 

In future the meeting noted that it was the intention of SIAS to submit reports on shared learning to this Committee, so that general learning points were shared.

 

RESOLVED that the information contained in the Shared Internal Audit Service Annual report 2016/17 be noted.

 

 

162.

Treasury Management Annual Outturn report and Treasury Indicators 2016/17 pdf icon PDF 89 KB

This report provides Members with an annual review of the performance of the treasury management function including prudential indicators during 2016/17.

 

Additional documents:

Minutes:

The Committee noted that the Council was required by regulations issued under the Local Government Act 2003 to produce an annual treasury management review of activities and the actual prudential and treasury indicators for the year ended 2016/17.

 

The purpose of that report was to meet one of the requirements of the CIPFA Code; that an annual review report of treasury management activities be made for past financial year. The regulations place responsibility on councillors for the review and scrutiny of treasury management policy and activities.  Report A/17/25 provided details of the outturn position for treasury activities and highlighted compliance with the Council’s policies previously approved by members. From 2016/17 financial year onwards the Audit Committee was the nominated body responsible for ensuring effective scrutiny of the treasury management strategy and policies.

 

The attention of the Committee was drawn to a temporary breach of treasury strategy on 1st December 2016, when £6.3m was held in the Council’s current account overnight in contravention of the £5m limit. The breach had been reviewed by internal audit and extensive testing undertaken to ensure that this was the only occurrence. Internal audit had concluded that the revised arrangements now in place provided substantial assurance that such an event would not reoccur.

 

RESOLVED that the Treasury Management Annual Outturn report and Treasury indicators 2016/17 be approved and submitted to Council for information.

 

 

163.

Treasury Management Strategy 2017/18 - Review of Building Societies pdf icon PDF 377 KB

An overview of the benefits, risks and rewards for using building societies in the Treasury Management Strategy is set out in this report.

 

Minutes:

The Treasury Manager reported to the Committee with an overview of the benefits, risks and rewards of including the use of Building Societies in the Treasury Management Strategy. The Committee had asked in January 2017 that further consideration be given to the use of unrated/lower rated Building Societies.

 

The Council’s current Treasury Management Strategy closely followed the advice of the Council’s advisors Capita and used a modelling approach, a key part of which was the use of three credit rating agencies, which was then reflected in their maximum duration recommendation. 

 

Most of the Building Societies did not have a credit rating, which made the risk of default is harder to access. Other councils who used Building Society investments, assessed the risk based upon the size of asset held and generally held a small proportion of their overall portfolio with any single counterparty. Capita did not recommend this approach due to the ratings uncertainty, relatively small asset size and lack of product diversity compared to banks. However other treasury advisers did approve of the use of Building Societies and considered them to present an acceptable level of risk. Their limited use of higher risk investment products was a factor in their favour, but resulted in their portfolio of investments not being diverse and may be overly exposed to fluctuations in particular markets such as the housing market where building societies are heavily exposed. Advisors who advocate the use of Building Societies also argued that the additional regulatory framework and insolvency regime would result in council deposits being repaid in preference to retail depositors in the event of liquidation.   

 

The options before the Committee were, firstly, not to change the present strategy or, secondly, to add building societies. If building societies were to be added then the maximum investment would be £3m in societies with a minimum asset base of £3bn and for a maximum period of 6 months.

 

Members welcomed this report and the proposed changed to the Treasury Management Strategy. It was noted that other local authorities operated a much more diverse investment strategy and it was suggested that if Members had other ideas to secure improved investment returns they should be passed to officers for investigation.

 

RESOLVED that the use of unrated/lower rated Building Societies be approved and added to the Council’s Treasury Management Strategy for 2017-18, with such use being limited to a maximum investment of £3m in building societies with a minimum asset base of £3bn for a maximum period of 6 months.

 

 

164.

Risk Management Progress and Update report pdf icon PDF 153 KB

The report reviews and updates the Strategic Risks.

 

Additional documents:

Minutes:

The Committee received information on a review of Hertsmere’s strategic risks and noted a proposal to increase the likelihood and decrease the impact of “Cyber Risks”. It was also proposed to add a new risk of “Transfer of verge maintenance back to Hertfordshire County Council”.

 

The Committee clarified that they were of the view that the rating of the Newberries Car Park Development Scheme should be a Likelihood of 2 and an Impact of 3. Also Members asked that information be provided in future report to detail officer action and view on all red risks.

 

RESOLVED that

 

(1)       the current Strategic risks be noted, in particular

 

-       the increase in the likelihood and decrease in the impact of “Cyber Risks”.

 

-       the addition of a new risk “Transfer of verge maintenance back to Hertfordshire County Council”.

 

(2)       the Annual Risk Management report 2016/17, be noted.

 

(3)       future reports include full information on all of the ‘red’ risks (boxes 14, 15 and 16).

 

 

165.

Date of Next Meeting

The next meeting of the Committee is scheduled to take place on 26th September 2017 at 7.30pm in the Civic Offices, Elstree Way, Borehamwood.

 

Minutes:

It was noted that the next meeting of this Committee was scheduled to take place on 26th September 2017 at 7.30 p.m. in the Civic Offices, Elstree Way, Borehamwood.