Agenda and minutes

The members had before them:

A.    The Agenda papers (previously circulated); and

B.    The Minutes of the meeting held on 2 October 2020 (previously circulated).

Apologies were received from Mr R W Banks and Mr L C R Mallett.

None.

Members of the public wishing to take part should notify the Assistant Director for Legal and Governance 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 3 December 2020). 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 2 October 2020. (previously circulated)

RESOLVED that the Minutes of the meeting held on 2 October 2020 be confirmed as a correct record and signed by the Chairman.

The Committee considered the Internal Audit Progress Report.

In the ensuing debate, the following points were raised:

·         It was queried how the potentially fraudulent amendment of bank account details had been drawn to the attention of Internal Audit. Jenni Morris responded that Liberata had reported the issue to the Council. Internal Audit had conducted an initial investigation to ensure it was not a county council issue which it was not. Work was now underway with Liberata to resolve the issue. This dialogue emphasised the constructive working relationship between Internal Audit and Liberata

·         Jenni Morris indicated that two apprentices had been added to the Internal Audit team and an Audit and Compliance Manager had now been recruited

·         The Chief Internal Auditor was thanked for her and her team’s work through a challenging period. Jenni Morris acknowledged that it had been a challenging period but it had given the team an opportunity to look at different and more efficient ways of working 

·         The reduction in the number of outstanding audits and the improvement in the organisational cultural attitude to Internal Audit together with the positive response from senior management was welcomed.

RESOLVED: that

a)    progress to date be noted; and

b)   the focus of the quarter 4 audit plan be approved.

The Committee considered the External Audit Progress Report and Sector Update.

Peter Barber, Key Audit Partner from Grant Thornton, the Council’s external auditor introduced the report and made the following points:

·         The County Council and Pension Fund Accounts had been signed off on 27 October 2020, five weeks ahead of the revised national deadline. Only 55% of Grant Thornton’s local authority clients had met the deadline

·         An unqualified Value for Money conclusion on the Accounts was issued on 27 October 2020

·         The Pension Fund Annual Report and Consistency Statement had been issued on 23 November ahead of 1 December 2020 deadline

·         The Whole of Government Accounts deadline was 4 December 2020. Work on this was substantially complete but there was a national technical issue in relation to the data collection tool. If the deadline was not achieved then the external auditor was required to write to the National Audit Office (NAO) to explain

·         The teachers’ pension return deadline was 7 December 2020. Although work on this was substantially complete, external audit resources had been diverted to other higher priorities and it was likely that the deadline would be missed

·         An increased fee had been proposed at the planning stage to reflect the challenges associated with Property, Plant and Equipment, pension liabilities and the consolidation of Worcestershire Children First. However, as a result of the impact of Covid 19, a further additional fee was proposed of £13,750 and £6,000 for the Council and Pension Fund respectively. This was only a proportion of the total cost of the work undertaken by the external auditor. The Public Sector Audit Appointments (PSAA) would ultimately sanction any fee increase

·         The NAO had finalised their guidance on the Value for Money (VFM) audit which included proposed changes to the VFM criteria. In addition, from 2021 onwards, an Auditor’s Annual Report would be produced alongside the Statement of Accounts, instead of the External Audit Letter. The new procedures would be more detailed and subjective in nature which would be reflected in a possible increased fee.

In the ensuing debate, the following points were raised:

·         There was reference in the report to a variation in the fee for the Pension Fund audit on the basis of “raising the bar” by the regulator. Did this indicate that the Pension Fund accounts were not to the same standards as the Council accounts? Peter Barber advised that work had been completed to the same standard in both sets of accounts

·         Had the additional fee for the work associated with the PPE audit reached its zenith or would it be included in future external audit fees? Peter Barber commented that the cost of the work of the external expert, brought it to provide assurance to the external auditor on the Council’s PPE valuation, accounted for the majority of the fee. Consideration would be given to whether the same level of assurance was necessary going forward based on any further observations from the regulator and the fee would be adjusted accordingly

·         It was  ...  view the full minutes text for item 578.

The Committee considered the Income Management Report.

In the ensuing debate, the following points were raised:

·         Mark Sanders commented that since the report had been written, the total debt of £14.8m for the top 20 debtors had reduced to £11.9m. He also anticipated that this figure would reduce further to £5m as reimbursements for social care costs were expected to be received from the NHS as well as the receipt of a payment from a council. An agreement had been reached for additional legal resources to help collect more complicated debts that might lead to legal action

·         In response to query, Mark Sanders undertook to arrange for an officer from legal services to attend the Committee meeting in March 2021 to provide details of legal aspects of debt collection processes. The Income and Debt Manager would also attend the meeting

·         Why did the Council continue to report long-term debts and were these debts recoverable? Mark Sanders responded that there was a bad debt provision in the accounts that looked at collectability of debts. There would be a cost/benefit analysis of all debt, particularly long-term debt to determine whether it was possible to collect it or write it off

·         Did the external auditor challenge the Council’s approach to managing long-term debt? Peter Barber commented that the collectability of debts was reviewed in the Council’s accounts. The Council’s bad debt provision was examined to ensure that it was prudent and not over-optimistic/pessimistic. The external auditor would check that the debts were correct, that there was provision set aside for non-collection which was reasonably based, and whether there was a policy in place

·         The additional support in legal services to help collect outstanding debt was welcomed

·         It was important to stop debt escalating.  As soon as a debt was over a month old, there should be challenge from the top of the organisation. Mark Sanders indicated that the role of the Income and Debt Manager was to work with operational managers to ascertain the necessary debt information and work with the debtor where appropriate. There were very few debts that dated back before 2010/11 and these were small amounts. Jenni Morris added that she would be liaising with the Income and Debt Manager to analyse whether the right debts were being raised in the first place and whether those debts could be paid up-front or in instalments

·         How much of the total debt was being paid by instalments? Mark Sanders indicated that the total amount of debt being paid by instalments was £2.54m.

·         Mark Sanders undertook to provide an exempt non-anonymised version of Table 4 in the report to the Committee meeting in March 2021.

RESOLVED that the Income Management report be noted.

The Committee considered the Risk Management Update.

In the ensuing debate, the following points were raised:

·         The Council was facing unprecedented economic pressures and the more proactive approach to risk management would place the Council in a better position to manage risk

·         The monitoring of risks and the work with partners organisations was an important part of the revised approach to risk management. In particular, it would be helpful to know details of Herefordshire Council’s risks associated with its waste disposal and collection service because of the potential impact on the Energy from Waste plant at Hartlebury. Jenni Morris responded that the appointment of a Risk and Assurance Manager enabled the Council to be more proactive in addressing risk and liaising with operational managers who managed those risks, whether internally or externally

·         Jenni Morris explained that the resourcing of a dedicated officer post would make a big difference to improving the Council’s approach to risk management.

RESOLVED that the Risk Management update be noted.

The Committee considered the Statutory Accounts Update.

In the ensuing debate, the following point was raised:

·         Was the appointment of an asset valuer a separate arrangement to the Council’s relationship with Place Partnership? Mark Sanders advised the Council was seeking an external appointment and a tendering exercise would be undertaken to find an external valuer.

RESOLVED that the Statutory Accounts update report be noted.

The Committee considered the Forward Plan.

In the ensuing debate, it was noted that the External Audit Letter would be reported to the March 2021 Committee meeting.

RESOLVED that the work programme be noted.