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To sign as a correct record the minutes of the meeting held on 27 November 2017.
The minutes of the meeting held on 27 November 2017 were signed as a correct record.
Declaration of Interests
Councillors/Staff to give notice of any disclosable pecuniary interest, other registrable interest or any other interest and the nature of that interest relating to any item on the agenda in accordance with the adopted Code of Conduct.
To answer questions from members of the public – submitted in writing or by electronic mail no later than 5.00 pm, 2 working days before the meeting.
To inform the Committee of the work performed
by the Assurance, Risk and Audit Team in the third quarter of the
financial year 2017/18.
The Assurance, Risk and Audit Manager submitted a report which sought to inform the Audit Committee of the work performed by the Assurance, Risk and Audit Team in the third quarter of the financial year 2017/18.
Chargeable time for the Assurance, Risk and Audit service for the quarter was 74.79%. This was below the planned target of 79.37%. The Assurance, Risk and Audit Manager explained that this reduction in time was due to a number of days spent on training staff members of the Assurance, Risk and Audit service.
Members noted the assurance activities for the quarter. The following reports had been submitted:
· Economic Growth 17/18
· Development Services 17/18.
It was acknowledged that since the reviews had been completed both sections had been reshaped within the authority, however the experience gained from carrying out the work had been beneficial and the agreed actions would improve the services as they move forward.
Members noted the following reviews which were in progress at 31 December 2017:
· Ethics and Culture 17/18
· Business Continuity 17/18
· Financial Services 17/18
· AONB Follow up review 17/18
· Governance 17/18
100% of recommendations made by the Assurance, Risk and Audit service were accepted by management during the quarter.
The Assurance, Risk and Audit Manager updated members on the recommendations resulting from both audit reviews.
Councillor Bainbridge requested further detailed updates on some outstanding items. The Assurance, Risk and Audit Manager agreed to obtain more information and distribute to members of the Audit Committee in due course via email.
That the report be noted.
To provide assurance over the effectiveness of
the Internal Audit Service at Allerdale Borough Council.
The Assurance Risk and Audit Manager submitted a report which sought to provide assurance over the effectiveness of the Internal Audit Service at Allerdale Borough Council.
The Public Sector Internal Auditing Standards (PSIAS) stated that an external assessment must be carried out at least every 5 years. The Allerdale Audit Committee agreed on 28 November 2016 for an external assessment to be conducted by the Lancashire and District Audit Group (LDAG).
As presented in the report, Members considered the results from the PSIAS Peer Review carried out by the LDAG, and a self-assessment completed by the Assurance Risk and Audit Manager.
In summary, the peer review concluded that the Councils Internal Audit Service ‘conformed’ to all focus areas of the review, including Purpose and Positioning, Structure and Resources and Audit Execution.
That the report be noted.
The Head of Governance submitted a report for members to review the Local Code of Corporate Governance.
Each Local Authority operates through a governance framework. It is an interrelated system that brings together an underlying set of legislative requirements, governance principles and management processes.
The seven core principles from the CIPFA/SOLACE Delivering Good Governance Framework have been adapted for the local Government context and incorporated into the Councils Local Code of Corporate Governance, which sets out the means by which the council intends to manage its governance arrangements.
That Council be requested to approve the Local Code of Corporate Governance.
The Financial Services Manager submitted a report which sought the Audit Committee to approve:
· The Treasury Management Strategy Statement and Investment Strategy, setting out the Council’s proposed treasury management activities for the year and policies for the prudent management of its investments
· A statement of the Council’s policy on making Minimum Revenue Provision, indicating how it was proposed to discharge the duty to make prudent Minimum Revenue Provision in the forthcoming financial year
· A set of prescribed prudential and treasury indicators for the forthcoming and following years – including the Council’s Authorised Borrowing Limit – demonstrating that its capitals expenditure plans were affordable and that external borrowing was within prudent and sustainable levels
The Treasury Management Strategy Statement set out the Council’s proposed treasury management activities for the year – based on budget proposals, interest rate forecasts and economic outlook and included the following issues:
· The current treasury position
· Treasury indicators required by CIPFAs Prudential Code for Capital Finance in Local Authorities and Treasury Management in the Public Services: Code of Practice and accompanying sector guidance
· Economic background and prospects for interest rates
· Borrowing strategy
· Policy on borrowing in advance of need
· Debt rescheduling
· Policy on the use of derivatives
· The process adopted for reviewing and addressing the training needs of officers and members in relation to treasury management
· Use of treasury management consultants including services provided and procedures employed for monitoring the quality of those services
The Annual Investment Strategy for 2018/19 set out the Council’s policies for the prudent financial management of its investments and for giving priority first to the security of those investments and secondly, to their liquidity and included:
· Procedures for determining the counterparties with whom investments may be placed, including the Council’s approach on the use of credit ratings and other sources of information to assess credit and counterparty risk
· The types of investment instruments that may be used
· Limits placed on the amount that may be invested with any single institution or group of institutions
· Limits on the maximum period for which funds may be prudently committed
· Reporting arrangements
The Minimum Revenue Provision Policy Statement set out how the Council would discharge the duty under the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 (as amended) to make prudent Minimum Revenue Provision in the financial year and included the following:
· A description of what Minimum Revenue Provision intended to achieve
· Commentary on the Council’s underlying duty to make prudent provision and ensure that debt was repaid over a period commensurate with that over which the capital expenditure provided benefits, or – for borrowing supported by central government funding (Revenue Support Grant) – over the period implicit in the determination of that funding
· Consideration of the ‘options’ for calculating Minimum Revenue Provision outlined in the statutory guidance on Minimum Revenue Provision and the restrictions on their use
· The policy proposed for the forthcoming year
Members were informed that revisions had been made to the statutory framework for treasury management, detailed in the report, ... view the full minutes text for item 343.
R McGahon, Grant Thornton UK LLP presented the Audit Committee with the external auditors’ Audit Plan for the Council for the year ending 31 March 2018.
The plan set out an overview of the planned scope and timing of the statutory audit, to help the Council understand the consequences of the auditors’ work, discuss issues of risk and the concept of materiality and to identify any areas where the Council may have requested that additional procedures be undertaken.
Significant risks had been identified, including the revenue cycle and fraudulent transactions, management override of controls, valuation of pension fund net liability and valuation of property, plant and equipment and investment property. The auditors set out their procedures to each risk.
The report also set out the auditors’ plans to assess whether the Council had put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources, known as the Value for Money (VfM) conclusion.
That the external auditors’ Audit Plan for the Council for the year ending 31 March 2018 be noted.
R McGahon, Grant Thornton UK LLP presented the external auditor’s annual letter on certification work for the Council for the year ended 31 March 2017. The auditors were required to certify the Housing Benefit subsidy claim submitted by the Council.
The external auditors had certified the Housing Benefit subsidy claim for the financial year 2016/17 relating to subsidy claimed of £24.205 million.
There were a small number of issues arising from the certification work which the auditors wished to highlight for the Council’s attention. Through their initial testing phase of rent allowance cases one error was detected which meant further testing was required. During the additional testing one further error was identified. The financial impact on the councils claim was only £411.53 and relatively insignificant to the total subsidy receivable.
That the annual letter on certification work for the Council for the year ended 31 March 2017 be noted.
Action 1 – That the Assurance, Risk and Audit Manager obtains further detailed updates on the outstanding recommendations from the Economic Growth 17/18 and Development Services 17/18 reviews and distribute to members of the Audit Committee in due course via email.