Agenda and minutes

To confirm the appointment of Cllr John Gray as Chairman of the Committee for the 2018/19 Council Year.

RESOLVED that Cllr John Gray be appointed as Chairman of the Committee for the 2018/19 Council Year.

To confirm the appointment of Cllr Richard Seaborne as Vice Chairman of the Committee for the 2018/19 Council Year.

RESOLVED that Cllr Richard Seaborne be appointed as Vice Chairman of the Committee for the 2018/19 Council Year.

To confirm the Minutes of the Meeting held on 27 March 2018 (to be laid on the table half an hour before the meeting).

RESOLVED that the Minutes of the Meeting held on 27 March 2018 be confirmed as a correct record and signed.

To receive apologies for absence.

Apologies for absence were received from Cllr Pat Frost.

To receive from Members, declarations of interests in relation to any items included on the Agenda for this meeting, in accordance with the Waverley Code of Local Government Conduct.

There were no declarations of interest in connection with items on the agenda.

The Chairman to respond to any questions received from members of the public of which notice has been duly given in accordance with Procedure Rule 10.

There were no questions received from members of the public.

The Chairman to respond to any questions received from Members of which notice has been duly given in accordance with Procedure Rule 11.

There were no questions received from Members.

There were no matters falling within this category.

The background papers relating to the following items are as set out in the reports included in the original agenda papers.

To receive the External Audit Finding Report from Grant Thornton (to follow).

Recommendation

It is recommended that the Audit Committee endorses the External Audit Findings Report.

Iain Murray from Grant Thornton presented the External Audit Findings Report to the Committee. He advised that due to the new deadlines, at the time of drafting the report, some work was still ongoing however this had now been completed and Grant Thornton was proposing to issue an unqualified opinion on the financial statements.

A change had been suggested relating to the fair value of loans; this related to borrowing from the PWLB. Iain advised that this was a presentational change and did not impact on the reported figures; the amendment would be reflected in the final published version of the accounts. The Committee recognised the added pressures of the new timescales, but felt that any further updates should have been provided in advance of the meeting. Cllr Gray requested that should this occur in future years, an updated report be circulated the day before the meeting.

In relation to judgements and estimates, the audit had identified some old debt where it was not clear if it had a specific impairment against it, although the amounts identified were not material. The Committee was advised that some work was already under way to review and rationalise corporate debt.

In regard to the follow up of last year’s audit recommendations, it was highlighted that although all related party transactions declarations had now been received, they had not been returned in a timely manner, and therefore it could not be marked as completed. Graeme Clark acknowledged that this had taken longer than had been hoped due to a few outstanding declarations from councillors. The process for this was being worked on by officers as it would be especially important to complete these in a timely manner next year due to the upcoming elections.

Iain advised that in relation to audit adjustments, some minor disclosure improvements had been identified and these changes had now been incorporated into final set of financial statements. One unadjusted item was reported. This related to a capital invoice for which there was no accrual. Iain explained that the auditor was obliged to report this, but that it was not indicative of any underlying weaknesses in the Council’s processes and so should not give rise to undue concern.

Grant Thornton would also be issuing an unqualified Value for Money conclusion. This was in the context of an increasingly challenging financial environment and uncertainty around the fair funding review. Cllr Townsend noted that this section referred to property investment, but felt that this could be made more explicit. Iain responded that property investment was becoming the norm across local government and there were no concerns about Waverley’s current approach. Graeme added that he discussed property acquisition issues as part of an ongoing dialogue with the auditors, which would enable any concerns to be raised promptly if required.

Members noted that the management response section was incomplete and some sections of the report would require updating. The Committee was disappointed to have been presented with such an incomplete external audit report  ...  view the full minutes text for item AUD 8/18

The purpose of this report is for the Audit Committee to consider and approve the Statement of Accounts for the year ended 31 March 2018.

Recommendation

It is recommended that the Audit Committee

1.         approves the Statement of Accounts for the financial year ended 31 March 2018;

2.         approves the Letter of Representation for 2017/2018; and

3.         confirms that the accounts have been prepared on a going concern basis.

The Committee had been provided with a copy of the unaudited financial statements that had been published on 31 May. A Member seminar had also been held on 14 June to highlight any changes from the previous year. Officers thanked Members for their input at this earlier session.

The Committee heard that there had been no changes to the accounting assumptions, and that the main change was in regard to the narrative, which was now structured in the form of a performance review.

In relation to confirming that the accounts were prepared on a going concern basis, Members queried how far ahead this was looking. Officers clarified that this was just the next financial year.

Cllr Mulliner requested that in future, it would be useful to have the useable reserves section presented in a way that separated the General Fund and HRA reserves.

The Committee RESOLVED to:

1.    Approve the Statement of Accounts for the financial year ended 31 March 2018;

2.    Approve the Letter of Representation for 2017/2018; and

3.    Confirm that the accounts have been prepared on a going concern basis.

The purpose of the this report is for the Audit Committee to consider and approve the Annual Governance Statement for the year ended 31 March 2018.

Recommendation

It is recommended that the Audit Committee approves the attached Annual Governance Statement 2017/18.

Walter Stockdale presented the Annual Governance Statement (AGS) to the Committee. The AGS had been reviewed by the Chief Executive and Leader following input from the Audit Committee and described how the Council’s corporate governance arrangements had been working over the last year.

The document included one significant operational event, which was the Air Quality issue. It also highlighted the appointment of the new Chief Executive and the impact of GDPR.

The Committee considered the wording of section 10, relating to managing resources. Members felt that this was confusing and could potentially imply that all budget issues would be resolved by 2021, which was not the case.

The Committee RESOLVED that the Annual Governance Statement 2017/18 be approved, subject to the removal of “by 2020/2021” from the third line of paragraph 10.1.

Information Governance is a matter that the Audit Committee has shown a keen interest in in recent years. New legislation came into force in May 2018 which has prompted the development of a new Information Governance Strategy.

This report seeks the Audit Committee’s comments on the Council’s new draft Information Governance Strategy and asks the Committee to endorse the Council’s approach to Information Governance.

Recommendation

It is recommended that the Audit Committee provides observations and comments on the draft Information Governance Strategy and endorses the Council’s approach to Information Governance as set out in the Strategy.

Graeme Clark advised that the Information Governance Strategy was being presented to the Committee as it had previously been concerned about outstanding audit recommendations on this matter. The Committee had received regular updates on the progress made by officers to implement the recommendations and to ensure that the Council was fully prepared for the introduction of GDPR.

The Committee felt that the structure of the Strategy should be reviewed, and that more clarification should be provided about the overall purpose of the document, as well as how its principles would be embedded into the culture of the organisation. Members also highlighted that phrasing of the strategy was very forward-looking and felt that it should be more focused on what was being done in the present. Cllr Mulliner noted that various training sessions were being proposed and felt that there should be a mention of how this would be monitored and who would ensure that this was completed. Cllr Townsend also highlighted that it was also unclear as to whether the strategy applied to both staff councillors, or whether some parts only applied to staff. Members suggested that this be made clearer.

Additionally, Members felt that the Strategy should provide a clear description of the hierarchy of data, particularly the distinction between information and data. The Committee also requested that the document reference and version number be included on every page and a glossary be added to the end.

The Committee agreed that the Strategy was a good starting point but felt that further amendments were required, particularly in relation to structure, before it was ready to be published. Members would be happy to provide additional comments on further drafts if required, and asked to see a final version of Strategy when it was ready.

The Committee RESOLVED to pass the comments noted above to officers, and endorsed the Council’s approach to Information Governance as set out in the Strategy.

The Accounts and Audit Regulations 2015 (Part 2 s3) require local authorities to have a sound system of internal control and Internal Audit is part of this system of internal control  Part 2 (s5) of the Regulations state that an authority must undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes.  This report is a summary of the work carried out by Internal Audit during the financial year 2017-18 and also provides an assurance opinion to support the Annual Governance Statement on the organisation’s control environment.

Recommendation

It is recommended that the Audit Committee endorses the annual the annual report for 2017/2018.

Gail Beaton presented the Annual Internal Audit Report to the Committee. She explained that this report linked to the Internal Audit opinion set out in the Annual Governance Statement.

The report detailed the audit recommendations made throughout the year, and highlighted those still to be actioned. Summaries were also provided of audits where little or no assurance had been given.

The report also provided performance indicators in relation to the contractor for Internal Audit. Cllr Gray noted that performance appeared to have slipped this year and asked if there was any particular reason for this. Gail explained that one review could significantly affect the average, and some reviews, e.g. in relation to IT, didn’t always provide working papers as a matter of course and this could cause delays.

The Committee thanked officers for their hard work in delivering such a comprehensive service and congratulated the service for achieving 100% completion of the Audit Plan by 31 March 2018.

The Committee RESOLVED to endorse the Annual Internal Audit Report for 2017/18.

The Committee’s Terms of Reference include provision for the Committee to comment on the progress made in the achievement of the Audit Plan. An update on the current position of the reviews in 2017-18 and 2018-19 is presented.

Recommendation

It is recommended that the Committee notes the completion of the 2017-18 Audit Plan and the progress on the 2018-19 Audit Plan as attached in Annexe 1 and 2.

The committee reviewed the latest position on the reviews contained within the Audit Plans for 2017/18 and 2018/19. Annexe 1 to the report confirmed that all 2017/18 reviews had been completed. Annexe 2 showed that some reviews for 2018/19 were well under way and would be signed off shortly.

The Committee RESOLVED to note the completion of the 2017/18 Audit Plan and the progress on the 2018/19 Audit Plan.

To inform the Audit Committee of Senior Management’s progress in implementing the recommendations raised by Internal Audit following a review in their service areas.  This report will enable the Committee to consider what action is required in respect of those that are overdue or appear likely to be implemented later than the target date.

Recommendation

It is recommended that the Committee considers the information contained in Annexe 1 and, following discussion at the Audit Committee meeting, identifies any action it wishes to be taken.

The Committee received a report setting out the latest positon regarding the implementation of internal audit recommendations. Gail Beaton informed the Committee that the recommendation regarding Outstanding Reconciliation Items had now been completed and the recommendation regarding Audit Trails would be completed by its due date of 30 July.

The Committee also heard that the recommendation relating to Final Payment Process was dependant on revisions to the Financial Regulations that would be presented to the Committee at its September meeting. Members felt that although amendments to the Financial Regulations would be required to ratify these changes, the working process itself should be updated straight away. Peter Vickers responded that there had already been internal discussion about how best to implement this change; a plan was in place, and the revisions to the Financial Regulations would just cement this. Noting that work was under way behind the scenes, the Committee felt that the progress status for this action should not be 0% as this painted an unduly alarming picture. The Committee requested that the progress be updated, the notes section be completed, and the target date be amended to reflect the change in timescales.

The Committee RESOLVED to note the progress in implementation of internal audit recommendations.

The report provides an update to the Committee on the progress made by Waverley Borough Council officers on the work being completed in investigating all types of fraud, primarily focusing on Housing Tenancy fraud.

Recommendation

It is recommended that the Audit Committee notes the success of the investigation activity and the results achieved.

Gail Beaton presented a summary of the of the work that had been undertaken by officers to investigate fraud, in particular Housing Tenancy Fraud. The report also provided a comparison with the previous year’s work. While there were slightly fewer cases in 2017/18, the financial value to of the work had increased. Gail added that the work that was being done would hopefully make people be more cautious of applying for properties they are not entitled to.

The Committee was particularly pleased to note the good results in relation to fraudulent property succession claims and felt that this acted as a good deterrent.

The Committee RESOLVED to note the success of the investigation activity and the results achieved.

Recommendation

The Audit Committee is invited to note the recurrent annual work programme, attached.

The Committee considered its recurrent annual work programme. Peter Vickers advised that work was still ongoing in relation to risk, and so the Risk Management report would now come to the Committee’s November meeting. Members asked if they could still receive a brief update in September.

The Committee RESOLVED to note its recurrent annual work programme.

To consider the following recommendation on the motion of the Chairman:

Recommendation

That pursuant to Procedure Rule 20 and in accordance with Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of the following item(s) on the grounds that it is likely, in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the public were present during the item(s), there would be disclosure to them of exempt information (as defined by Section 1001 of the Act) of the description specified in the appropriate paragraph(s) of the revised Part 1 of Schedule 12A to the Local Government Act 1972 (to be identified at the meeting).

At 8.38pm it was:

RESOLVED that pursuant to Procedure Rule 20 and in accordance with Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of the following item on the grounds that it is likely, in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the public were present during the item, there would be disclosure to them of exempt information (as defined by Section 1001 of the Act) of the description specified in the paragraph 3 of the revised Part 1 of Schedule 12A to the Local Government Act 1972, namely:

Information relating to the financial or business affairs of any particular person (including the authority holding that information).

To consider the (exempt) report on this matter, attached.

The Committee RESOLVED that the recommendation within the report be approved.