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To sign as a correct record the minutes of the meeting held on 28 November 2016.
The minutes of the meeting held on 28 November 2016 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.
The Assurance, Risk and Audit Manager submitted a report which sought to inform the Audit Committee of the work performed by Assurance, Risk and Audit in the third quarter of the financial year 2016/17.
Chargeable time for the Assurance, Risk and Audit service for quarter three was 77.19%. This was below the planned target of 79.9%. 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:
· Housing Benefits
· Council Tax
· Flood Grants
· Contract Monitoring
· Performance Management
Councillor B Miskelly asked for details on the debt written off with regard to National Non Domestic Rates Audit Review 2016/17, as mentioned in Appendix A of the report. The Assurance, Risk and Audit Manager agreed to send details on this.
Members noted the following reviews which were in progress at 31 December 2016:
· Car Parking Income – Draft Report
· Statutory Finance Reviews – Continuous Audit Testing
· ICT Review – Testing in progress
· Receipts and Banking – Testing in progress
· Value for Money – Testing in progress
· Risk Management – Planning
100% of recommendations made by the Assurance, Risk and Audit service were accepted by management during the quarter.
The Assurance, Risk and Audit Manager informed Members that she would look at web conferences available to see if any were relevant to the Audit Committee and circulate links to them accordingly.
Members noted the Corporate Risk and Issues Log. The Assurance, Risk and Audit Manager provided an update on business continuity. The Council’s Senior Management Team had carried out an exercise and it now needed looked into as to what had effectively been mitigated.
That the report be noted.
The Assurance, Risk and Audit Manager submitted a report which sought the Audit Committee to accept the Assurance, Risk and Audit Strategy for 2017/18.
The strategy set out how the Assurance, Risk and Audit service would carry out its duties in line with the statutory responsibilities of the Account and Audit Regulations 2015, the standards and expectations of the Public Sector Internal Auditing Standards (PSIASs), the Council’s Constitution, external stakeholders, the Audit Committee and the Delivering Good Governance Framework 2016.
Members noted the strategy.
That the Assurance, Risk and Audit Strategy 2017/18 be noted.
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 2017/18 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 agreed that the recommendations be approved.
That Council be requested to approve:
J Farrar, Grant Thornton UK LLP presented the external auditor’s annual letter on certification work for the Council for the year ended 31 March 2016. 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 2015/16 relating to expenditure of £25.9 million.
There were no issues arising from the certification work which the auditors wished to highlight for the Council’s attention.
That the annual letter on certification work for the Council for the year ended 31 March 2016 be noted.
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 2017.
The plan set out an overview of the planned scope and timing of the audit, as required by International Standard on Auditing (UK & Ireland) 260, 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.
The plan highlighted the Council’s key challenges, including the Autumn Statement 2016 and financial health and the Allerdale Investment Partnership, setting out the auditors’ response to them.
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.
Other risks had also been identified, including operating expenses, employee remuneration and changes to the presentation of the Council’s financial statements.
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.
Members noted the plan.
That the external auditors’ Audit Plan for the Council for the year ending 31 March 2017 be noted.