Agenda and draft minutes

Audit Committee - Monday, 28th March, 2022 7.00 pm

Contact: Kimberly Soane  Democratic Services Officer

Items
No. Item

AUD 106/21

Minutes

To confirm the Minutes of the Meeting held on 29 November 2021 and published on the Councils Website.

Minutes:

The Minutes of the meeting held on 29 November 2021 were agreed as a correct record.

AUD 107/21

Apologies for Absence

To receive apologies for absence.

Minutes:

Apologies were received from Cllrs Jan Floyd-Douglass and John Gray.

AUD 108/21

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 submitted for this meeting.

AUD 109/21

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.

Minutes:

There were none.

AUD 110/21

QUESTIONS FROM MEMBERS

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

 

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 111/21

Anti Money Laundering Policy pdf icon PDF 208 KB

The Council will do all it can to prevent the Council and its staff being exposed to money laundering through criminal activity, to identify the potential areas where it may occur, and to comply with all legal and regulatory requirements, especially with regard to the reporting of actual or suspected cases.

 

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 came into force on the 26 June 2017. There has subsequently been two amendments, neither of which impact on this policy, The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 and Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020. Although Local Authorities are not obliged to comply with the requirements of this legislation the Chartered Institute of Public Finance and Accounting (CIPFA) advises that an organisation should consider a policy framework which supports the implementation of the counter fraud strategy and includes an anti-money laundering policy to prevent the use of their services for money laundering.

 

Recommendation

 

The Audit Committee are asked to note the Draft Policy and make comments for the Executive to consider prior to final approval.

Additional documents:

Minutes:

Patrick Tuite, Procurement Officer, outlined the review of the Anti-Money Laundering Policy and the changes made.  It was highlighted that there had been minimal changes made, the most significant being the change from SOCA (Serious Organised Crime Agency) to the National Crime Agency (NCA).

 

The Chairman requested clarification as why there was a difference between the values of £10,000 in para 7.11 and 15,000 in para 7.12?  It was explained that the figures were those set out in legislation but that Waverley are more strict and apply due diligence for anything above £5,000.

 

Recommendation

 

The Audit Committee noted the Draft Policy and ask Council to consider their comments prior to final approval.

 

AUD 112/21

Finance Regulations pdf icon PDF 121 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 to the Council for adoption.

Additional documents:

Minutes:

Peter Vickers, Head of Finance and Property Services, outlined the adjustments made following a review of the financial regulations.  The main adjustments made were outlined in 4.3 of the report.

 

a) Explicit that the Deputy S151 has authority to act as the S151 (2.2)

b) Stricter control regrading funding agreements and changes to funding agreements being agreed by S151 officer. (2.17)

c) Requirement for business case for capital bids (3.11)

d) Stricter controls on contractual disputes being reported to S151 (4.1)

e) Reference to IR35 rules in Contract Procurement Rules (4.12)

f) Control on how staff bank detail changes will only be accepted through the payroll system (5.8)

g) Clarification of External audit checking registers (16.1)

 

The officers were asked to clarify adjustment a) and advised that the deputy  Section 151 officer could act as the S151 officer if the S151 officer was unavailable only. This was outlined in the glossary on page 64.

 

It was asked if 4 working days for legal to go through reports prior to the deadline was practical?  Officers advised this was what legal had requested.

 

Officers were asked if there still was a form to be completed for Capital Bids as they were not included in paperwork to Council.  The Committee were advised that the forms were still completed but were not included as annexes as they were so large they would make the agenda pack so large. They were available if members wished to view them.

 

The Committee commented:

 

·         that it was difficult to understand the collation between the key controls and the comments and felt this could be formatted more clearly.

·         that 3.2 – Budget Processes planned and communicated should have the processes added.

·         whether bullet points 2 & 3 in 3.43 were consistent? Officer advised this followed the Councils Regulations but they would look at the wording.

·         whether in bullet point 4 of 5.1 that it was always the case that the staffing budget was not exceeded? It was highlighted this was the case and it would be necessary to obtain a supplementary budget.

·         that item 6 outlined the key controls and explanations but appear to be repeated in 6.12.

 

The Committee felt the regulations needed to be formatted to make it easier to read and flow better.

 

Recommendation

 

The Committee recommends the update to the Financial Regulations to the Council for adoption subject to the comments made.

 

AUD 113/21

CPR Update pdf icon PDF 214 KB

These CPRs set out the minimum requirements the council must follow when procuring and/or entering into Contracts for the supply of goods, works and services including consultants.

 

The CPRs are put in place to ensure that the council gets value for money for residents, complies with all legal requirements, minimises the risk of challenge / undue criticism, supports social value and sustainability and provides transparency as to how it spends public money.

 

Recommendation

 

The Audit Committee are asked to APPROVE the draft CPR’s and make recommendation to Council to approve.

Additional documents:

Minutes:

Patrick Tuite, Procurement Officer, outlined the review of the Contract Procurement Rules and the changes made. 

 

Officers were asked if there was a way for Surrey CC and Waverley BC to use each other’s processes and recommendations if a similar procurement process is needed to save on resources.  The committee were advised that was something that was utilised already and there were a number of processes and exemptions employed.

 

The Committee queried why the report stated the thresholds should be revised every two years and yet the document states annually.   The Procurement Officer advised that this was because officers review the document annually but only report bi-annually.

 

Officers were asked if checks were made on the lawfulness of suppliers and the suppliers ownership?  It was highlighted these checks were proportional to the value of the procurement.

 

It was noted that 13 was missing from the table of contents.

 

Recommendation

 

The Audit Committee recommends to the Council that the proposed amendments to the Contract Procurement Rules be approved and incorporated into the councils constitution subject to the comments made by the committee.

 

PART II - MATTERS OF REPORT

AUD 114/21

Review of the Strategic Risk Register pdf icon PDF 139 KB

The Strategic Risk Register is a key governance document underpinning the delivery of the Corporate Strategy 2020 - 2025. The register focuses on the risks that are inherent in delivering the strategic objectives selected and designed to deliver the strategic priorities.

 

The Audit Committee is charged within its Terms of Reference to ensure that the council has an effective risk management framework in operation. The risk register is therefore a part of the governance documentation used within the risk management framework. It is therefore important that members of the committee have an oversight of the Strategic Risk register to gain assurance of its effective operation.

 

Recommendation

 

The Audit Committee review the detail provided in annexe 2 and 3 and provide feedback to officers.

Additional documents:

Minutes:

Peter Vickers asked the Committee for comment following an informal  session held prior to the meeting.

 

The Committee commented on the following areas:

 

·         Officers to look at the division in aspects run by the HRA. Housing Operations and Housing Delivery although interdependent are separate divisions.

·         LPP2 was not mentioned in the document and developments that do not feature in it. Officers agreed to take away and examine.

·         No mention of how we manage refugees, taking into account the current Ukrainian issues.

·         Should risks involved in cost of living be included. Fuel increases, energy increases and inflation etc

·         There was concern that some risks indicated as green could be more than a significant concern which could be ignored if marked green.

·         Working from Home – where have these risks been considered?

·         Have we assessed the risks of not completing appropriate assessments in accordance with legislation. Especially in light of the upcoming appeals and judicial reviews?

 

The Committee were advised that the document primarily sets up the corporate Risks rather than operational but the comments would be taken on board.

 

Officers responded to some of the comments highlighting:

 

·         this was a living document and all risks would be monitored on a regular basis.

·         Working from home has been fairly assessed. Annexe 2 Risk 31 covers this. Various scrutiny meetings have discussed working from home.

·         Officers also outlined the processes agreed for dealing with the refugee crisis.

 

The Committee NOTED the document and asked officers to consider the comments made.

AUD 115/21

Review of the progress in achieving the Audit Plan pdf icon PDF 74 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 is attached.

 

Recommendation

 

It is recommended that the Committee notes the contents of the Internal Audit Progress report as attached.

Additional documents:

Minutes:

The Committee were advised that the 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. Gail Beaton gave an update on the current position of the Internal Audit Plan for 2021-22.

 

The Committee were advised that all reviews have now been started and some completed with 65% complete and 35% progressing well.  It was noted that three reviews were proposed to be deferred to 2022/23.

 

The Committee NOTED the Internal Audit Progress report.

AUD 116/21

Update on the Financial Management Code pdf icon PDF 235 KB

TheFinancial ManagementCode (FMCode) isdesigned tosupport goodpractice infinancial  managementand toassist local authoritiesin demonstrating theirfinancial sustainability. The FMCode setsout thestandards offinancial managementfor local authorities. Each local authority must demonstratethattherequirementsofthecode arebeing satisfied.

 

Demonstratingthis compliancewith the  FM Codeis acollective responsibilityof electedmembers, thechief financeofficer (CFO)and theirprofessional colleaguesin theleadership team. This report updates the committee on progress and sets out proposed actions to strengthen compliance.

 

Recommendation

 

That the Audit Committee note the progress on the Financial Management Code and endorse the Action Plan set out in this report.

Additional documents:

Minutes:

Graeme Clark, Strategic Director, reminded the Committee that CIPFA had introduced the code 18-months ago and the scope had been discussed with the committee last year. Section 4.4 of the report was highlighted outlining the scope of the document and it was emphasised that the code would be used to check against without the need for excessive resources.

 

The Committee were advised that officers hoped to run an informal session for members on sections C&D in April/May of this year.   An annual report would be brought to Committee at their June/July meeting.

 

The Committee made the following observations:

 

·         The RAG rating was useful but required definition.

·         Members felt some areas marked Amber were unfairly marked down and asked why officers were reluctant to rate Green?  It was felt by officers some areas we could be stronger on.

·         Cllr Hyman suggested that under Section 2- D Accountability that Councillors and Residents should be able to drill down and asked for a duty of candour. It was felt this was covered by Councillors being able to raise under ‘emerging governance’ on the Audit Committees Agenda each meeting.

 

The Audit Committee NOTED the progress on the Financial Management Code and endorsed the Action Plan set out in this report.

 

AUD 117/21

Accounting Policies

Verbal update on accounting policies.

Minutes:

Peter Vickers, Head of Finance and Property Services updated the Committee on the current accounting policies advising that all Financial Statements should comply with CIPFA codes.  Every year before the accounts are compiled officers take into account the policies.  A review has been taken of these policies and no new standards have been identified that need taking into account.

 

 

AUD 118/21

Annual Governance Statement - Consideration of Potential Governance Issues.

To enable the Committee to raise any potential emerging governance issues that may need to be addressed.

 

Recommendation

 

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

 

Minutes:

The Committee were invited to raise any potential emerging governance issues they felt may need addressing.

 

Cllr Richard Seaborne asked about the Structured Governance on Operational Greenhouse Figures. He advised that in 2020/21 a report was drafted but this had no document control on it and had advised that it had used government guidance but there was no reference of what guidance supplied and no methodology.  He felt this was an important document which should also include the emissions for our Council Housing stock.  Officers were asked for this to be reviewed and reported again with a formal timetable for it to be reviewed.

 

Recommendation: The Environmental Portfolio Holder to be requested to take this to Executive for action.

 

Cllr Jerry Hyman raised the issue of the Legal Departments reliance on applicants and appellants evidence when dealing with appeals and judicial reviews.  He felt this meant we were not putting across our strongest case in these matters.  Officers advised that in our submissions to court we are using a very experience senior barrister and were confident of his advice.

AUD 119/21

Audit Charter pdf icon PDF 89 KB

 

 

This report provides the Audit Committee with an overview of Waverley’s Internal Audit Charter that has been developed in accordance with the requirements of the Public Sector Internal Auditing Standards.

These standards apply to all internal audit service providers, whether in-house, shared services or outsourced. The Public Sector Internal Audit Standards (PSIAS) (Attribute Standard 1000) requires organisations to have an Internal Audit Charter that formally defines the purpose, authority and responsibility of the internal audit activity, consistent with the Definition of Internal Auditing, the Code of Ethics and the Standards.

 

Recommendation

 

It is recommended that the Audit Committee notes the amendments and approves the Internal Audit Charter as attached in Annexe 1.

Additional documents:

Minutes:

The Committee were given a short overview of Waverley’s Internal Audit Charter which had been circulated with the agenda.

 

The Committee NOTED the Internal Audit Charter

 

 

AUD 120/21

Review of Progress in the implementation of Internal Audit Actions pdf icon PDF 443 KB

To inform the Audit Committee of Senior Management’s progress in implementing the actions 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 and, following discussion at the Audit Committee meeting identifies any action it wishes to be taken.

Minutes:

Gail Beaton outlined the review of the progress in the implementation of the internal audit recommendations.

 

It was highlighted that Annexe 1 showed those actions which had not been implemented yet and Annexe 2 highlighted those actions which the Head of Service had requested an extension with revised dates set out.

 

The Committee discussed the requests and raised concern that some of these actions had now had up to 5 extensions.

 

The Committee considers the information contained in Annexe 1 and asked for their comments to be taken into consideration.

 

The Committee considered the Head of Service(s) justifications for a request for a change in the agreed target dates listed in Annexe 2 and AGREED the appropriate revised implementation date(s) for Strategic Housing and Community Services, Regulatory and Environmental Services & Housing Operations.

 

The Committee asked for the Head of Planning and Economic Development to attend Committee and give assurance that these will be completed by the revised dates before agreement will be given. Members requested sight of the documentation outlining the testing carried out on the Horizon system before its implementation in Planning.

AUD 121/21

Proposed Internal Audit Plan 2022-2023 pdf icon PDF 74 KB

The Committee’s terms of reference include provision for the Committee to approve the proposed Internal Audit Plan. This report presents the proposed Draft Internal Audit Plan for 2022-23 and the Committee is invited to comment and approve the Audit Plan. The plan has been drawn up by the Internal Audit Manager through completing a risk assessment of the audit universe of the council’s activities including consultation with Senior Management Team.

 

The draft audit plan also contains those reviews that were deferred from 2021-22 audit plan identifiable by the inclusion of (C/F 2021-22).

 

Recommendation

 

It is recommended that the Audit Committee comments and approves the proposed Draft Internal Audit Plan for 2022-23 as attached in Annexe 1.

Additional documents:

Minutes:

 

The Committee were advised that their terms of reference include provision for the Committee to approve the proposed Internal Audit Plan. The report presented the proposed Draft Internal Audit Plan for 2022-23 and the Committee was invited to comment and approve the Audit Plan.

 

The Committee were advised that there were a few areas relating to Housing and a review of Risk Management as discussed earlier in the meeting.

 

Officers were asked if an audit of homeworking was being planned and were advised that HR were doing reviews and this will be discussed with them.

 

 

 

AUD 122/21

Audit Committee Recurrent Annual Work Programme pdf icon PDF 190 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 Audit Committee Recurrent Annual Work Programme was noted.