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Minutes To confirm as a correct record the Minutes of the previous meeting. Supporting documents: Minutes: The minutes from the meeting held on 12 June 2024 were APPROVED. |
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Apologies for Absence and Substitutions To receive any apologies for absence and notification of substitutes in accordance with the Constitution. Additional documents: Minutes: An apology for absence was received from Councillor Nash, Councillor Harrison attended as his substitute.
Councillor Buttironi left the meeting at 8.12pm due to feeling unwell. |
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Declaration of Interest To receive any declarations of interest. Additional documents: Minutes: Councillor King declared a non-pecuniary interest in item 10, Risk Management Quarter 4 2023/24 as he was related to the report author. |
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Audit Progress and Sector Update To note the external auditor’s audit progress and sector update. Supporting documents: Minutes: The representative from Grant Thornton stated that they had been appointed as the Council’s external auditor from 2023/24 and looked forward to working with the Council over the next 5 years.
The report set out the deliverables under their external audit contract (including the timeline proposed for the 2023/24 audit) as well as setting out the developments in the wider sector.
Grant Thornton had recently begun work on 2023/24 audit planning and had agreed an indicative audit plan which was the next item on the agenda.
The key outputs would be an opinion on the financial statements, supported by a detailed findings report from the financial statements audit, and also their assessment of the Value for Money arrangements in place to ensure economy, efficiency and effectiveness.
The planned date to finalise the Audit Findings Report was December 2024, however this was subject to a number of assumptions, including implementation of the Government’s backstop arrangement for outstanding prior year audits. The backstop date was originally September 2024 but, due to the general election, was now expected to be December 2024, although there was a possibility that this could be January or February 2025. This is dependent on the National Audit Office’s code of practice being confirmed, along with the legislation to enact the backstop being laid before Parliament and approved.
Therefore, Grant Thornton would be unable to report their audit opinion for 2023/24 until the previous auditors had completed the prior years’ audits which were subject to the backstop being confirmed.
It was clarified that there was one item noted in the deliverables, regarding the audit of the housing benefit subsidy claim, that was subject to further review with officers.
In response to a Member question, it was confirmed that that there were some aspects of preparatory planning that were not yet quite complete. An example of this was to confirm the general controls that the Council had around its IT environment and IT systems.
It was noted that Grant Thornton had originally been aiming to start the 2023/24 audit in July but, primarily due to the prior year position, they had agreed with officers that it would be better to begin the audit in October. It was therefore noted that the Council would be outside the statutory deadline for completion of the 2023/24 audit. However, this was not unexpected under the circumstances.
In response to a Member question, Grant Thornton confirmed they had sufficient resources to complete the audit. By the end of May 2024 Grant Thornton had completed 65% of its 2022/23 financial statement audits, compared to a total across the other firms of 7%.
The Committee was advised that, because the audits from prior years had not yet been completed, it was expected that those previous audits would be reported with a disclaimed opinion.
In response to a Member question regarding whether delays caused by the Council could impact audit fees later on, Grant Thornton stated that they were appreciative that the Council had a backlog of audits ... view the full minutes text for item 11. |
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External Audit Plan 2023/24 To receive and note the external auditor's report. Supporting documents: Minutes: The representative from Grant Thornton explained how they prepared the Audit Plan and confirmed that it accorded with the standards required. In summary the Plan set out the national context and highlighted local factors in order to highlight potential areas for audit focus based on key risks.
The report also confirmed the materiality level that had been set; this determined their approach to audit sampling and the level also recognised the fact that there were several years of unaudited accounts.
It was noted that further information was required from officers before they could complete a group risk assessment and determine appropriately materiality for that aspect of the audit.
Grant Thornton also set out an early indication of their approach to the value for money opinion and what they would focus on in their first year, with reference to the National Audit Office’s code of practice. Given the pressures on local government finance in general they would also look at financial sustainability.
In response to a Member’s specific question regarding the audit fee, Grant Thornton explained that the ISA 315 element had to be charged for, however the PSAA, who set the scale fee for all authorities, had omitted at the time when the scale fee was set because there was not sufficient information to allow them to estimate the cost. The final fee would be confirmed at the end of the audit. The quoted fees were currently based on the assumption that the authority would prepare a robust statement of accounts supported by sufficient evidence. If these requirements were met, then this would be the fee charged. If further work was necessary this would be discussed with the Chief Finance Officer.
In respect of the advance question relating to Grant Thornton’s prior issues regarding the audit of a local authority pension scheme that led to FRC sanctions, it was confirmed that there was a system of continuous improvement, and quality scores were now very high. An assurance was given that this would not occur at this authority.
In response to a Member question, it was confirmed that audit fees had been set at a level that is considered to be sufficient to complete the audit. It was noted that they are significantly higher than previously.
In respect of materiality limits relating to officer salaries, it was confirmed that this related to one disclosure note in the statement of accounts and had been set at a national level for all local authorities and to ensure it was overly onerous with regard to testing.
In response to a Member question, it was stated that if Grant Thornton sought to achieve complete assurance in year one and again in year two this would effectively double the workload and there would not be the resource to do this. National recovery of external audit processes and reporting was expected to take from three to five years and would be subject to further consideration by Government. No amount of additional funding would be sufficient resolve current ... view the full minutes text for item 12. |
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Draft Annual Governance Statement 2023/24 The Audit Committee is asked to consider and to provide feedback on the draft Annual Governance Statement for 2023/24 as set out in Annex 1. Supporting documents:
Minutes: The Deputy Chief Finance Officer explained that the report presented the draft Annual Governance Statement (AGS) for 2023/24.
The Council was required to publish this annual statement on its corporate governance arrangements.
This draft had been prepared in consultation with the officers across the Council who have lead responsibility for the policies, processes and controls that contributed to its corporate governance arrangements. The format and contents were defined in the Government’s Code of Practice and guidance from CIPFA.
The Audit Committee was invited to review the draft AGS and provide any feedback to be taken into consideration before the draft was finalised. The final draft would include the internal audit opinion for 2023/24.
The Leader and Managing Director would sign the final version. It would then be presented to Audit Committee for approval with the audited Statement of Accounts.
A number of advance questions had been raised on this item and a Member asked that these be considered and that an update on whether they had been adopted be brought back to this Committee when the final AGS was reported for approval. This was agreed.
It was further suggested that the internal audit section should highlight how management actions were tracked through to completion.
The next step would be to bring the final draft back to the Committee with the audited statement of accounts for 2023/24.
RESOLVED that the Committee notes the draft Annual Governance Statement for 2023/24 and that comments be passed to the Chief Finance Officer. |
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Internal Audit - Quarter 4 2023/24 Progress Report (i) The Audit Committee notes the Quarter 4 2023/24 internal audit progress report at Annex 1; and (ii) Makes any comments and/or observations on the report to the Chief Finance Officer and Chief Internal Auditor. Supporting documents:
Minutes: Natalie Jerams, Chief Internal Auditor of Southern Internal Audit Partnership (SIAP) explained that this report provided an update on the delivery of the 2023/24 internal audit plan at the end of quarter 4.
It was noted that 83% of the plan had been delivered to date and the 17% of audits that remained (3 audits) were close to completion and would be incorporated in the next annual report and opinion.
Page 79 of the report provided details of the management actions and their status. There had been a positive direction of travel with the completion of overdue management actions since the previous report in March 2024. All management actions were followed through to completion.
There had been one audit with a limited assurance and this related to the playgrounds and wheeled sports facilities audit. Eight management actions relating to this audit had been completed, with five remaining outstanding. Page 81 of the report demonstrated how officers intended to respond to these management actions.
Pages 82 and 83 of the report gave a line-by-line breakdown of the individual audits and their status.
It was requested that the detail of medium priority items be included in future audit reports.
Councillor Chester, a visiting member, stated that there were some playgrounds in the borough that should be maintained by the Council but because they had not been adopted, they seemed to be falling through the gaps. These were often on housing estates and residents’ groups tended to maintain them; however, it could not be assured that they were kept to the right standards. It was questioned how the Council could ensure that playgrounds were delivered and adopted in good time, and none were missed.
It was stated that this could be followed up after the meeting and individual playgrounds could be looked at, however this was not part of this audit’s remit. The audit could not be extended as it had already concluded. If the Council adopted playgrounds, it would mean they were liable for them.
In response to a member question relating to risk management, it was explained that the Council reported on its risk registers retrospectively however the audit report also includes a management action to report ‘in quarter’ updates on any new, updated or closed risks.
It was acknowledged that there was an error on page 72 of the report as there had been one audit that had concluded with a limited assurance.
RESOLVED that:
(i) The Audit Committee note the Q4 2023/24 internal audit progress report available at Annex 1; and (ii) The Audit Committee make any comments and/or observations on the report to the Council’s Chief Finance Officer. |
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Internal Audit - 2023/24 Annual Report and Opinion That the Audit Committee: (i) Notes the Annual Internal Audit Report & Opinion for 2023/24 at Annex 1: and (ii) Make any observations on the Audit Report & Opinion to the Chief Finance Officer and Chief Internal Auditor. Supporting documents:
Minutes: Natalie Jerams, Chief Internal Auditor of Southern Internal Audit Partnership (SIAP) stated that the overall annual report and opinion concluding on the frameworks of governance, risk management and control for 2023/24 was a reasonable opinion, with only one limited assurance report within the year which related to playgrounds and wheeled sports facilities, and this was detailed in the annual report.
17% of audits were yet to conclude in 2023/24 and these would feature in next year’s annual report and opinion, with the conclusions of these audits coming forward in the next quarter.
The annual report also provided an update on customer survey results, and these came out high at 98%.
Customer satisfaction is an assessment of responses to questionnaires issued to a wide range of stakeholders including members, senior officers and key contacts involved in the audit process (survey date April 2024).
SIAP also used the opportunities within the annual report to refer to the quality improvement programme of their process and their self-assessment against the standards and they remained compliant.
Natalie Jerams and her team were thanked for their work, internal audit was an important tool for the Council.
RESOLVED that:
(i) The Audit Committee notes the Internal Audit Report and Opinion for 2023/24 at Annex 1; and
(ii) The Audit Committee make observations on the Audit Report and Opinion to the Chief Finance Officer and Chief Internal Auditor. |
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Internal Audit 2024/25 – Quarter 2 Internal Audit Plan That the Audit Committee: (i) Considers the proposed Internal Audit Plan for Quarter 2 2024/25, as set out at Annex 1, and makes any observations on it; and (ii) Authorise the Council’s Chief Finance Officer and Chief Internal Auditor to finalise the plan in consultation with the Chair of the Audit Committee. Supporting documents:
Minutes: Natalie Jerams, Chief Internal Auditor of Southern Internal Audit Partnership (SIAP) explained that there were 2 annexes and briefing note which shared the rationale behind moving towards the quarterly planning approach rather than annual planning as it had been previously.
Quarterly planning allowed SIAP to remain focussed, so they were able to respond to emerging risk. Members were reassured that all auditable areas were considered as part of the quarterly planning approach.
The approach to public sector audit standards would change in the coming months and global standards were also changing.
Annex 2 of the report showed the proposed audits in quarter 2 and these had been discussed with the senior management team; these focussed on areas of risk. Some of the advance questions highlighted some other areas for consideration. Procurement and contract management would be considered later in the year and the timing of an IT disaster recovery review would also be considered.
The Committee felt the quarterly planning approach was useful and there was comfort now that the horizon scanning information had been made available. It was questioned whether there were any examples of where the quarterly approach had been useful. It was agreed that a written response would be sent. The Chief Finance Officer stated that from an officer perspective, rather than looking each February at the year ahead, in depth discussions were taking place with SIAP as current risks emerged. The Chief Internal Auditor came to Management Team meetings. This process felt more dynamic, and the horizon scanning was really useful; this was a good fit for the Council.
In terms of the four audits that had concluded, these would feature in the quarter 1 progress report that was coming to the Audit Committee in September.
Page 125 of the report gave the rationale for the audits that had been selected.
The following responses to member questions were given regarding the audits that had been selected for quarter 2:
· Procurement and Contract Management Frameworks – due to all of the work that had been undertaken over the last 6 – 9 months, the Council wanted to check that it had the right building blocks for this service. There could be another one or two audits on this service after this audit. · Economic Prosperity – UK Shared Prosperity Fund (UKSPF) – The Council had benefitted with £1million for projects. This audit was to ensure that the funds had been spent and projects delivered in the way that was intended and to check that projects were on track in terms of completion. · Sold Services – The Council provided a substantial number of services to other authorities for revenues and benefits and fraud activities for example. This audit would ensure that the correct governance was in place for this number of agreements with other authorities. Assurance that the Council had firm foundations to how they managed and monitored the contracts. This was an example of a new audit that was coming onto the audit plan. A member asked if ... view the full minutes text for item 16. |
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Risk Management Quarter 4 2023/24 That the Audit Committee notes the quarter 4 2023/24 update on risk management provided in the report and associated Annex 1 and the quarter 1 2024/25 update at Annex 2 and make any observations to the Executive.
Supporting documents:
Minutes: The Head of Corporate Policy and Projects explained that as covered at the Audit Committee training last month, risk management was part of the usual business of the Council and at an operational and management level took place on a day-to-day basis. The role of the Audit Committee when it came to Risk Management was to provide independent assurance over the adequacy of the risk management framework. This report provided members with an update on risk management in Quarter 4, that was the period from January to March 2024. Strategic risks were presented at Annex 1. In Quarter 4, no new strategic risks were identified. Two strategic risks were recommended for closure at the end of Quarter 4. These were SR6 – Local Government Reorganisation, Devolution and Levelling Up, and SR8 Fraud. The reasons for closure of these risks were summarised at paragraph 14 of the covering report. As well as reporting the strategic risk register to this Committee, updates were also provided on any red rated operational risks. In Quarter 4 of 2023/24 there were no red rated operational risks. However, the Council was taking the opportunity in this report to update members on two operational risks rated red in Quarter 1 of 2024/25. The detail of these two red rated operational risks was set out in the Part 2 exempt annex, that is Annex 2. Following this Audit Committee meeting, this report would be considered by the Executive on 18 July 2024. Due to the timing of when the Executive meeting agenda was published, any observations made by the Audit Committee on the report’s contents would be reported verbally at the meeting of the Executive. There were a number of advance questions for this item to which answers had been circulated. A member raised concerns regarding the cost pressures affecting the viability of Council developments and felt that this was a question for further debate at a later time. It was questioned whether SR8 – Fraud, should be closed as a risk as there was always an inherent risk around fraud. It was stated that fraud was managed on a daily basis with a suite of controls and mitigations in place. The Council had a fraud service that also sold services to other authorities. It was noted however that a dedicated agenda item on fraud was due to come to the Committee in December. In light of this, the Committee felt that this risk should remain on the risk register until this discussion had taken place. Officers reassured members that if SR8 was closed, fraud would still remain as a risk on the assurance framework, and be monitored, and could be re-escalated to the risk register if required. As an organisation, the Council would not lose sight of fraud. In response to a member question, asking how fraud had gone from such a high risk to a lower risk, it was stated that there had been a concerted effort by the fraud team to downgrade this risk. ... view the full minutes text for item 17. |
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Audit Work Programme and Schedule 2024/25 and Action Tracker To discuss and agree any changes to the schedule for Audit Committee’s Work Programme 2024/25 and note the Action Tracker. Supporting documents:
Minutes: RESOLVED that the Audit Committee’s work programme for 2024/25 and the action tracker be noted. |
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Any Other Urgent Business To consider any item(s) which, in the opinion of the Chair, should be considered as a matter of urgency – Local Government Act 1972, Section 100b (4)(b).
Note: Urgent business must be submitted in writing but may be supplemented by an oral report. Additional documents: Minutes: There was none. |
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Exempt Business RECOMMENDED that members of the Press and public be excluded from the meeting for part of items 7 and 10 of business under Section 100A(4) of the Local Government Act 1972 on the grounds that:
3. Information relating to the financial or business affairs of any particular person (including the authority holding that information).
7. Information relating to any action taken or to be taken in connection with the prevention, investigation or prosecution of crime. Additional documents: Minutes: RESOLVED that members of the press and public be excluded from the meeting for part of agenda items 7 (Internal audit - Quarter 4 2023/24 progress report) and 10 (Risk Management - Quarter 4 2023/24) under Section 100A(4) of the Local Government Act 1972 on the grounds that: It involves the likely disclosure of exempt information as defined in paragraphs 3 and 7 of Part 1 of Schedule 12A of the Act.
3. Information relating to the financial or business affairs of any particular person (including the authority holding that information).
7. Information relating to any action taken or to be taken in connection with the prevention, investigation or prosecution of crime. |