Agenda and minutes

The Members had before them:

A.    The Agenda papers (previously circulated); and

B.    The Minutes of the meeting held on 18 March 2016 (previously circulated).

A copy of document A will be attached to the signed Minutes. 

Mrs A T Hingley for Mr S Clee.

An apology was received from Mr S Clee.

Members of the public wishing to take part should notify the Director of Resources in writing or by e-mail indicating the nature and content of their proposed participation no later than 9.00am on the working day before the meeting (in this case, 20 July). Further details are available on the Council’s website. Enquiries can be made through the telephone number/e-mail address below.

None.

To confirm the Minutes of the meeting held on 18 March 2016. (previously circulated – pink pages)

RESOLVED that the Minutes of the meeting held on 18 March 2016 be confirmed as a correct record and signed by the Chairman.

The Committee considered the Annual Statutory Financial Statements for the year ending 31 March 2016.

The Chief Financial Officer introduced the report and made the following comments:

·         He wished to thank Helen Lillington and her team from Grant Thornton for their work in helping to meet the deadline to publish the accounts by 31 July 2016

·         There were 2 key points relating to the Council's statement of accounts: the Council had broken even against its cash limited revenue budget; and there had been a decrease of £0.8 in the Council's useable reserves

·         In overall terms, revenue spending was in line with the Council's budget of £325 million. General balances at the end of the 2015/16 financial year would remain at £13 million, which was consistent with the Medium Term Financial Plan approved by Full Council in February 2016

·         Although there was an accounting deficit of £24.8m, there was no cash change in the balances

·         In relation to earmarked reserves, school balances had increased by £1.3m to £18.1m and key discussions would need to take place with schools about how these funds would be spent. Directorate reserves had decreased by £1.0m to £8.7m. Insurance reserves had decreased by £0.6m to £7.3m. PFI grant reserves had decreased by £3.9m to £14.7m

·         The Council remained a significant capital investor with the Energy from Waste (EfW) plant at Hartlebury being the largest capital project

·         The Council's external borrowing had increased by £77.4 million to £338.7 million largely due to the EfW plant however the arrangements with Mercia and the low cost of borrowing had proved beneficial to the Council

·         In terms of long term investments, Malvern Hills Science Park was a key economic development for the future

·         The Council had a low level of other debtors and in particular trade debtors had reduced which had been enhanced by the commissioning of financial services to Liberata

·         Investments had reduced by £2.5 million to £45.0 million over the year. These investments were low rate low risk in nature

·         Creditors had reduced by £6.8 million to £98 million. Trade creditors as a percentage of total creditors increased from 56% to 59% (£57.8 million) however he did not consider this to be a matter of concern

·         In relation to the Pension Fund statement of accounts, there were 3 key messages: 1) the Fund had performed well this year; 2) different investment approaches had been used, for example investment in wind farms; and 3) The funding levels had remained the same.

Helen Lillington introduced the Audit Findings Report of the Council and the Pensions Fund and made the following points:

·         The key message was that she anticipated providing an unqualified audit opinion in respect of the financial statements for the Council and no adjustments to the accounts were proposed. There were a number of minor changes including one unadjusted misstatement but none were material or significant

·         The standard of the paperwork had improved from last year which enabled the signing off the accounts sooner. There was still  ...  view the full minutes text for item 387.

The Committee considered the Annual Governance Statement.

The Chief Financial Officer introduced the report and commented that the Annual Governance Statement confirmed the overall assurance of the Council's systems and had been signed by the Chief Executive and the Leader of the Council.

RESOLVED that the Annual Governance Statement be approved.

The Committee considered the latest refresh of the Corporate Risk Register.

Tony Leak, the Management Information and Analytics Manager introduced the report and commented that one red risk had been identified relating to "demographic changes lead to changed demand for services". This risk was being addressed through demand management work streams however there remained a lot of work still to be done therefore it remained a red risk.

In the ensuing debate, the following principal points were raised:

·         Was it anticipated that the mitigating actions would be sufficient to reduce the red risk to amber in due course? Tony Leak responded that he anticipated that a clearer picture would emerge in 6 months. The issue was whether people were confident that the long term actions would be successful

·         The reference to addressing the demographic changes risk though the use of volunteers, did that mean that the recent demand on the Council's services was being met by volunteers or that volunteers would supplement service provision? Tony Leak responded that in some cases volunteers might supplement existing staff but they might also be undertaking low level intervention work that existing staff would not be paid to undertake

·         How did the Council's risk management performance compare with other authorities? Tony Leak commented that it was difficult to make comparisons with other Councils, but in broad terms the risks identified tended to be similar, however those Councils with financial difficulties tended to have this as a red risk.

RESOLVED that the latest refresh of the Corporate Risk Register including the red risk identified and mitigating actions be noted.

The Committee considered the Internal Audit Annual Report 2015/16.

In the ensuing debate, the following principal points were raised:

·         Garry Rollason commented that the arrangements for Warwickshire audit team to provide the Internal Audit for Worcestershire had received positive feedback and had not had a detrimental impact on service provision. The Chief Financial Officer concurred with this assessment. In response it was commented that it was not always positive for the internal audit function to be popular with managers. Garry Rollason acknowledged that a balance needed to be struck in respect of the popularity of the work undertaken by Internal Audit team

·         It was disappointing that discussions were still taking place over the definition of a consultant. Garry Rollason responded that a limited assurance opinion had been given on this audit and since the publication of this report further work had been undertaken on this matter. The Chief Financial Officer added that the definition of the term consultant had now been determined

·         Had the former Headteacher and a former Governor been removed as signatories for the Devolved Capital Fund at St James' CE Primary School? Garry Rollason indicated that at the time the report was written, that was the case and therefore only a limited assurance had been given. The implementation date had not yet been reached for the completion of the recommendations set out in the audit therefore it was not possible to confirm the position.

RESOLVED that the Internal Audit Annual Report 2015/16 be endorsed.

The Committee considered the Internal Audit Strategy and Workplan 2016/17 and the Internal Audit Charter.

In the ensuing debate, the following principal points were raised:

·         Garry Rollason explained that contingency arrangements had been included in the Internal Audit Strategy and Workplan so that if risks changed or new topics arose they could be accommodated thereby allowing flexibility to respond to the Council's needs

·         In response to a query, Garry Rollason indicated that the Workplan was subject to variation especially given the changes constantly affecting the Council recently.

RESOLVED that the Internal Audit Strategy and Workplan 2016/17 and the Internal Audit Charter be approved.

The Committee considered its work programme.

In the ensuing debate, Garry Rollason indicated that he would have very little additional information to report to the next meeting in the Internal Audit Progress Report. It was therefore agreed that as this was the only item on the agenda, the September meeting would be cancelled and if possible replaced with a training session on Treasury Management and Capital Expenditure.

RESOLVED that:

a)    the work programme be noted; and

b)   The Committee meeting on 9 September 2016 be cancelled and replaced with a training session for members on Treasury Management and Capital Expenditure.