Agenda and draft minutes

Audit Committee - Tuesday, 26th November, 2019 7.00 pm

Venue: Committee Room 1, Council Offices, The Burys, Godalming

Contact: Amy McNulty  Democratic Services Officer

Media

Items
No. Item

AUD 28/19

Minutes

To confirm the Minutes of the Meeting held on 24 September 2019 (to be laid on the table half an hour before the meeting).

Minutes:

The Minutes of the meeting held on 24 September 2019 were confirmed and signed.

AUD 29/19

Apologies for Absence

To receive apologies for absence.

Minutes:

There were no apologies for absence.

AUD 30/19

Disclosure of Interests

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.

Minutes:

There were no disclosures of interest.

AUD 31/19

Questions by Members of the Public

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.

 

The deadline for receipt of questions is 5pm on Tuesday 19 November 2019.

Minutes:

There were none.

AUD 32/19

QUESTIONS FROM MEMBERS

The Chairman to respond to any questions received from Members in accordance with Procedure Rule 11.

 

The deadline for receipt of questions is 5pm on Tuesday 19 November 2019.

Minutes:

There were none.

PART I - RECOMMENDATIONS TO THE COUNCIL

Background Papers

 

Unless specified under an individual item, there are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to the reports in Part I of these minutes.

AUD 33/19

Financial Regulations Update pdf icon PDF 48 KB

The Audit Committee is asked to consider the update to the Financial Regulations and recommend them to the Council, in compliance with the Audit Committee Terms of Reference under Article 8 of the Constitution.  Specifically, the Audit Committee is required to maintain an overview of the Council’s Constitution in respect of financial regulations.

 

Recommendation

 

It is recommended that the Committee recommends the update to the Financial Regulations and any consequential changes to the scheme of delegation to the Council for adoption.

Additional documents:

Minutes:

Peter Vickers, the Head of Finance and Property, advised the Committee that the Audit Committee was required to maintain an overview of the Council’s Constitution in respect of financial regulations. Members noted that the regulations were last updated in September 2018 and in line with the commitment of continual review within the Annual Governance Statement the Financial Regulations had been reviewed and three changes were proposed, in relation to:

 

·         FR 4.30 Carry forwards of budget

·         FR 7.2  Approval of fees and charges

·         Glossary - Definition of key financial system

 

It was proposed that the Section 151 Officer, rather than the Executive, would approve all budget carry forwards, and these would then be reported to the Executive as part of the end of year out-turn reporting. The Committee noted that monitoring of the capital programme had improved following the work of the Value for Money O&S Committee, and capital budgets were rescheduled as necessary in-year. The budget carry-forwards requiring approval were revenue budgets of relatively low value. Members were satisfied with this amendment.

 

It was proposed that the Section 151 Officer be able to approve changes to fees and charges, including car park fees, to speed up the process and give more flexibility to change charges during the year to respond to market demand. Officers assured the Committee that changes to fees would be considered in consultation with the relevant Portfolio Holders, and it was recognised that there was a political element to certain fees and charges. The Committee felt that the case for flexibility was stronger for services where the council was in competition with other providers; also, that Licensing fees and charges should remain within the remit of the Licensing Committee. It was agreed that the approval of the S151 Officer to amend fees and charges should be in consultation with the relevant Portfolio Holders, and with the complete Schedule of Fees and Charges being reported to Council annually for information as part of the budget report.

 

The Committee was content with the addition to the Glossary of a definition of Financial Systems to the Financial Regulations. 

 

The Committee RESOLVED to RECOMMEND the update to the Financial Regulations to Council, as amended in relation to the S151 Officer’s approval of fees and charges; along with any consequential changes to the scheme of delegation.

PART II - MATTERS OF REPORT

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

AUD 34/19

Contract Procurement Rules Update pdf icon PDF 48 KB

The Contract Procurement Rules (CPRs) form part of the Council’s Constitutional framework. They should be maintained and updated as and when required to adopt legislative changes, reflect best practice in the industry and support the Council’s corporate objectives.

 

Recommendation

 

That the Audit Committee recommends to the Council that the proposed amendments to the Contract Procurement Rules be approved.

Additional documents:

Minutes:

Patrick Tuite, the Council’s Procurement Officer, advised the Committee that the Contract Procedure Rules (CPR) were maintained and updated as and when required to adopt legislative changes, reflect best practice in the industry and support the Council’s corporate objectives.

 

The current CPRs had last been updated and approved by full Council in October 2018. Whilst they were still for purpose, there were a small number of amendments required to reflect new/current legislation as well as the Council’s newly adopted Corporate Strategy.

 

The Committee considered proposed amendments in relation to:

 

1.    Modern Slavery

 

The Modern Slavery Act 2015 was put in place to tackle modern slavery and Government was putting more obligations on local authorities. Whilst the council was not an in-scope organisation for the purpose of the act, it was felt important to reflect the spirit of the  Act, and the CPRs should ensure that proportionate due diligence was undertaken to certify that council-appointed contractors did not participate in modern slavery, either directly or within their supply chains.

 

The Committee asked how officers could make a judgement on contractors and sub-contractors claims, and the cost to the council of trying to comply with the Act. Officers explained that the obligations on contractors were similar to those in relation to their health and safety, or equality and diversity, policies. Companies hoping to contract with the council would have to demonstrate how they complied with their requirements under the Modern Slavery Act, along with other types of compliance.

 

2.    Tax implications

 

A new section on tax implications was intended to raise awareness of specific circumstances where officers needed to be alert to tax implications of procuring services: the Construction Industry Scheme (CIS); IR35, relating to off-payroll working; and reverse charge of VAT.

 

3.    Accessibility standards

 

To comply with new regulations for accessibility of public sector bodies’ websites, any procurement resulting in a public-facing website must comply with the Equality Act 2010 and the new Regulations.

 

4.    Carbon neutral

 

In relation to the section on being carbon neutral this would mean that for every procurement within the scope of the CPRs, the environmental impact must be considered as well as steps taken to minimise or offset the carbon impact where applicable. The Committee was pleased to see this addition being introduced and felt that it was an important way to drive improvements in the supply chain and demonstrate leadership. The Committee had some reservations about ‘off-setting’ and felt that this needed to be clarified, and the emphasis put on carbon reduction in the first place.

 

The Committee agreed that the newly established Climate Change Advisory Group should be asked to consider the procurement requirements in relation to the carbon neutral target, in particular defining ‘off setting’.

 

5.    Obtaining quotes

 

It was proposed to amend the current requirement of seeking quotes to a requirement that officers should have to obtain three quotes, with the intention that this would strengthen the procurement process. The Committee questioned whether this was always practicable, and suggested that  ...  view the full minutes text for item AUD 34/19

AUD 35/19

Tax Strategy Update pdf icon PDF 61 KB

The Council is required to have in place a Tax Strategy to fulfil its responsibilities under the Legislation in Criminal Finances Act 2017, and to undertake to respond appropriately to the Corporate Criminal Offence guidance from HMRC issued September 2017.

 

Recommendation

 

That the Audit Committee considers the attached Tax Strategy and passes any comments and observations to the Executive.

Additional documents:

Minutes:

The Committee was advised that the Council was required to have in place a Tax Strategy to fulfil its responsibilities under the Legislation in Criminal Finances Act 2017, and to undertake to respond appropriately to the Corporate Criminal Offence guidance from HMRC issued in September 2017.

 

The Council’s Tax Strategy had been adopted in September 2018. The Committee noted that the legislation was aimed more at the wider corporate world, and the Council did not have any complex tax structures. It was therefore proposed that the Strategy be reviewed every two years, or sooner if there was a material change that impacted on it.

 

The Committee RESOLVED to RECOMMEND the Tax Strategy 2020/22 to the Executive for approval.

AUD 36/19

Annual Governance Statement - Consideration of Potential Governance Issues pdf icon PDF 22 KB

To enable the Committee to raise any potential emerging governance issues that may need to be addressed in the Annual Governance Statement 2019/20.

 

A document setting out the classification for significant issues is attached for reference.

 

Recommendation

 

The Committee is invited to raise any potential emerging governance issues for consideration.

Minutes:

Graeme Clark, the Strategic Director, advised the Committee that this was their opportunity to raise any potential governance issues that may need to be addressed in the Annual Governance Statement for 2019/20. A document setting out the classification for significant issues was provided to help the Committee determine whether something was or was not a governance issue.

 

The Committee had nothing to raise at this time.

AUD 37/19

Debt Recovery Update

As requested at the last meeting, to receive a verbal update from the Head of Finance on the Council’s Debt Recovery Policy.

Minutes:

Peter Vickers gave a verbal update to the Committee on debt recovery. In February 2019 the council had implemented a new Income Debt Management Policy which provided an over-arching framework for managing all the council’s income streams. It was a significant update of the previous policy, driven by the need to reflect the capability of current systems and the principle of charging for services at the point of service whenever possible.

 

The Committee noted that there were 3 key areas of work:

1.    Updates to IT systems including Agresso, and Adelante the cash-handling system. Adelante had new functionality to allow recurring payments which allowed the process to be more efficient.

2.    The Finance Team was liaising with all services to discuss the handling of debt and establish procedures appropriate to the service and their customers.

3.    The Exchequer team was being reconfigured to make sure they had the right capacity to handle debt management, with increased resources in the debt recovery team to avoid reaching the point of having to use bailiffs and going to court. Recovery of Housing Benefit over-payments was a key focus. Officers were in contact with Reigate and Banstead Borough Council to benefit from their practices.

 

The Committee was pleased to hear about the work being done to manage income due to the Council, and that Internal Audit had reviewed the new systems.

AUD 38/19

PROGRESS ON THE INTERNAL AUDIT PLAN FOR 2019/20 pdf icon PDF 51 KB

The Committee’s Terms of Reference include provision for the Committee to approve, monitor and comment on the progress made in the achievement of the Internal Audit Plan. An update on the current position of the internal audit reviews in 2019-20 is presented.

 

Recommendation

 

It is recommended that the Committee notes the contents of the Internal Audit progress report for November 2019 as attached in Annexe 1.

Additional documents:

Minutes:

Gail Beaton, the Internal Audit Manager, provided an update on the current position of the internal audit reviews planned for 2019-20.

 

The Committee was disappointed to see there was still a vacancy on the internal audit team, and asked how this impacted on the programme of work for the year. Gail advised that in prior years it had only been herself and the contractors so they had been in this position before. There was a shortfall of only 12 days and she was confident that they were still able to meet the Council’s need and provide assurance to management. If she was not here for any reason, there was a business continuity plan in place where the external contractors could step in where necessary.

 

In relation to the audit on asbestos, a question was asked about the monitoring of recommendations arising from the report. Gail advised that there was monitoring by the Head of Service and she also followed up.

 

The Committee RESOLVED to note the contents of the Internal Audit progress report to the beginning of November 2019.

AUD 39/19

PROGRESS ON THE IMPLEMENTATION OF INTERNAL AUDIT RECOMMENDATIONS pdf icon PDF 109 KB

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.

Minutes:

The Committee received a report on Senior Management’s progress in implementing the recommendations raised by Internal Audit following a review in their service areas. There was one overdue recommendation in relation to the review of the Financial Regulations, and this would be resolved once the updated Financial Regulations were approved by Council.

 

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

AUD 40/19

FRAUD INVESTIGATION SUMMARY pdf icon PDF 57 KB

The report provides an update to the Committee on the work being completed in investigating fraud, primarily focusing on Housing Tenancy fraud.

 

Recommendation

 

It is recommended that the Audit Committee notes the success of the fraud investigation activity.

Additional documents:

Minutes:

The Committee received a report providing an update on the work being completed in investigating fraud, primarily focusing on Housing Tenancy Fraud. It was noted that the update also included the National Fraud Initiative (NFI) outputs which assisted in identifying any instances where applicants remained on the Councils records as requiring housing but had been adequately housed by other housing providers or died so could be removed from the waiting list. As requested by the Committee, the previous year outcomes had been included.

 

The Committee noted that an increased awareness by Housing staff had enabled cases to be dealt with more confidently and efficiently. This had lead to a reduction in cases being referred to the Fraud Investigation Officer, and supported the work to embed new ideas and processes to safeguard the Councils assets, and to improve the processes and controls in place to minimise the opportunity for fraudulent practices to be successful.

 

Members were advised that the notional value of financial savings detailed in the report up to 30 September 2019, was £504,736, of which £258,530 related to National Fraud Initiative, £55,992 to a Disabled Facilities Grant; and the balance of £190,214 was based on Cabinet Office figures related directly to housing fraud. However, these indicative values did not include the real value to Waverley Borough Council, as it cost on average £200,000 to build a new house. These outcomes highlighted the financial value of continuing to support the work being carried out, and also the ethical and social importance of securing the return of properties back into housing stock which helped Waverley to meet the needs of legitimate housing applicants.

 

The Committee RESOLVED to NOTE the success of the fraud investigation activity.

AUD 41/19

Audit Committee Recurrent Annual work Programme pdf icon PDF 52 KB

The Committee’s annual recurrent work programme is attached. The Work Programme details regular items, but other items can be submitted to each meeting on an ad hoc basis or at the request of the Committee.

 

Recommendation

 

The Audit Committee is invited to note its recurrent annual work programme.

Minutes:

The Committee noted the recurrent work programme.

AUD 42/19

Any Other Business

Minutes:

The Chairman, Cllr Peter Marriott, advised that he and Cllr Davidson had recently attended the 4th Quality Audit Forum and found it very useful with good presentations and speakers. Cllr Marriott suggested that it would be valuable to have the key note speakers present to the Audit Committee, and officers agreed to try and enable this. It was agreed that the Value for Money O&S Committees should be invited to any presentation or briefing arranged.

 

The main issue discussed was local authorities struggling to meet the July deadline for approval of the annual account, due to council and audit resource pressures. The Chairman commended the council’s team and Grant Thornton for enabling Waverley to meet the deadline.

 

They had also been advised of a new Local Audit Code currently out for consultation which would be implemented in 2020 subject to government approval. It was felt that this would increase the workload on external audit with increased emphasis on value for money.