Agenda and minutes

The members had before them:

A.    The Agenda papers (previously circulated); and

B.    The Minutes of the meeting held on 4 December 2020 (previously circulated).

Apologies were received from Mr R W Banks and Dr C Hotham.

None.

Members of the public wishing to take part should notify the Democratic Governance and Scrutiny Manager (Interim Monitoring Officer) 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, 11 March 2021). 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 4 December 2020. (previously circulated)

RESOLVED that the Minutes of the meeting held on 4 December 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 made:

·         A high number of the recorded outstanding audit actions related to schools. Was this a growing trend and if so, what actions could be taken to address this issue? Jenni Morris, the Chief Internal Auditor responded that the number of audit actions associated with schools had previously been lower as less audits had been undertaken. However, individual school audits had now become a particular area of focus for audit work and it was intended to visit all schools in due course. Furthermore, there had been additional work with schools where covid-related issues had been identified. A number of schools had been impacted by covid-related staff absences and changes in policy. She did not consider that the number of audit actions in relation to schools was a cause for concern

·         In response to a query, Jenni Morris explained that audit action topic “Approval of Development” related to any approvals granted by the Council for major developments eg roadworks, housing developments. There had been significant changes of policy and management in this area. Internal Audit needed to determine the relevance of the audit recommendations to the associated actions given the significant service changes that had taken placed since the audit work had been commissioned and therefore whether the service area needed to be re-audited

·         In response to a query, Jenni Morris undertook to review school audit processes to include a reminder to schools to consult their governing body when an audit was underway.

RESOLVED that the internal audit progress to date be noted.

The Committee considered the Internal Audit Plan 2020/21 to 2022/23 - 2021/22 Focus.

In the ensuing debate, the following points were made:

·         Environmental, Social and Governance (ESG) audit work was very complicated and needed to be addressed through a structural rather than anecdotal approach. The ESG audit report due to be considered by the Pensions Committee was a useful point of reference. Jenni Morris commented that this report would be incorporated in the work programme. Clear lines of enquiry and an evidence-based work programme were key areas for the ESG audit work

·         It was important to continue to prioritise Internal Audit and not to lose the progress that had been made to date to improve processes as a result of the impact of covid. Jenni Morris responded that an open dialogue had been maintained between Internal Audit officers and the Council’s Senior Management Team (SLT) during the pandemic which had provided reassurance about the continued relevance and importance of Internal Audit to the Council. Internal Audit now reported to the Chief Officer Group (COG) and the SLT on a quarterly basis. At the start of each quarter, COG would be provided with a list of proposed audits and their terms of reference.

RESOLVED that the Internal Audit Plan focus for 2021/22 be approved.

The Committee considered the External Auditor - Annual Audit Letter 2019/20 and 202/21 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:

Annual Audit Letter

·         The Whole of Government Accounts had been completed on 1 February 2021

·         The format and wording of the Annual Audit Letter had been changed for the benefit of stakeholders. The Council was encouraged to publish it on its web site.

Audit Progress Report and Sector Update

·         In relation to certification work, the teachers’ pension fund return had been signed off on 9 February which brought the 2019/20 audit to a close

·         The 2020/21 Audit Plan for the Council and the Pension Fund had not yet been issued. 2019/20 Audit work was ongoing for a number of other councils and external audit resources had been directed towards the completion of those audits. In addition, there had been a complication in terms of ethical standards of the audit work with a member of external auditor’s audit team, who had worked on this Council’s accounts, joining the Council’s Internal Audit team next month. To allay concerns about independence, the external auditor had received an assurance from the Chief Financial Officer (CFO) that that particular officer would not be involved in work associated with the 2020/21 Accounts. In addition, the external auditor had put in place a series of safeguards in relation to access to files. He asked that the Committee endorse these associated governance arrangements

·         Under ethical standards and FRC guidance, an external audit manager was allowed to work on a particular audit for a maximum of 10 years. The PSAA who were responsible for appointing the external auditors had a lower threshold of 7 years with an opportunity to extend for a further 3 years if appropriate. Recruitment of experienced auditors had proved to be an issue for the external auditors. The current Engagement Manager was very experienced and PSAA approval had been sought to extend her engagement for a further year (In total, 8 years for the Council and 9 year for the Pension Fund (similar disclosures were made for the Penson Fund last year)). Safeguards had been put in place including an internal Grant Thornton peer review (Quality Support Team) of both the Council and Pension Fund audit files during the 2020/21 cycle and the CFO had indicated that he was comfortable and understood the reasoning on quality grounds for the re-engagement for a further year. He asked that the Committee endorse this reappointment and the associated governance arrangements

·         Materiality had not be determined yet but would be assessed on a similar basis to previous years for both the Council and the Pension Fund

·         The audit plan work would focus on the significant risks for the Council which were not dissimilar to the 2019/20 accounts including revenue recognition and management override, valuation of land and buildings, and valuation of net pension liability

·         Work would continue to focus of the  ...  view the full minutes text for item 589.

The Committee considered a report on Income Management.

In the ensuing debate, the following points were made:

·         Niki Hardman, Programme Manager explained that an overall Council debt position of £30m had been recorded in October 2020. This had since been reduced but there remained a significant amount of work to complete, particularly around aged debt. The aim of the debt team was to engage the whole of the council but in particular those involved in the raising of debt by increasing awareness and encouraging officers to take greater responsibility for debt management in their role. A revised Corporate Debt Policy would be formulated. It was acknowledged that not enough debt was being forwarded to legal services and processes were being reviewed to improve that. The total amount of debt for the top 20 debtors was now £6.7m reduced from £14.8m in October 2020. Mark Sanders added that debts which related to individuals in a social care setting were treated with a greater degree of care and due diligence

·         There were a number of large organisations included in the aged debt list. At what point would the Council commence sanctions against these companies, for example no longer commissioning work from them until the debt was paid? An action plan needed to be in place showing how organisational debt (excluding individual debt) would be recovered and what possible sanctions could be introduced (without compromising the Council’s legal position). This action plan should be reported to the Committee. Michael Hudson responded that an action plans had been formulated for each aged debt and legal services had been brought in to help take these strategies forward. He anticipated that by the next Committee meeting, significant progress would be made on aged debt. The action plans could be shared with the Committee albeit respecting the confidentiality of the information

·         A note of caution was raised about the introduction of sanctions against aged debtors. The council needed to be conscious of its own debt arrangement before considering the introduction of sanctions

·         The lack of referrals to legal services was concerning, given that a number of the aged debts had accrued over a long period of time. It seemed that the longer the debt accrued, the more difficult it became to resolve them

·         Catherine Hitchman, Principal Solicitor (Adult Social Care Education and Debt Recovery Team) explained that a legal team had been established and been working closely with the debt team to establish debt referral and management processes. Two main types of debt had been referred to legal services. Firstly social care debt which equated to £93k and mostly related to deceased individuals with the charge on their estate for payment of social care costs. £61k of this debt had now been recovered. Secondly, there was sundry debt which amounted to £13k. 63 cases had been referred to the legal team since the start of the year. To date no cases had been issued to court. Legal Services would continue to work with the debt team to  ...  view the full minutes text for item 590.

The Committee considered the Risk Management Update.

In the ensuing debate, the following points were made:

·         Jenni Morris indicated that it was intended to move away from multiple risk register approach in the future and consolidate them into a single risk register

·         The change of focus of risk management on emerging risks as well as any changes to established risks was welcomed. It was suggested that a periodic review of all the risk registers be undertaken to maintain a focus of the organisation on the bigger picture. The progress and improvements made to the risk register over recent years was acknowledged. Jenni Morris responded that consideration was being given to using similar language and themes across all aspects of audit, risk and performance management work so that the organisation provided a consistent  message. This approach would enable the council to identify key themes

·         The Chairman welcomed the recent progress made in the management of risk. The inclusion of the same red risks year after year without any hope of reducing the risk was pointless. He therefore welcomed the focus on addressing emerging risks before they became significant.

RESOLVED that the Risk Management update be noted.

The Committee considered the Statutory Accounts 2020/21 progress, accounting policies and estimates.

In the ensuing debate, the following points were made:

·         Mark Sanders indicated that as part of the member induction process following the elections, it was intended to provide a specific training session for committee members on management assessments and risks associated with the accounts

·         It was important that post elections, committee members received the necessary training/information to enable them to adequately challenge council processes.

RESOLVED that:

a)    The work in preparation for the 2020/21 Statutory Accounts be noted;

b)   The accounting policies for 2020/21 be approved; and

c)    Management arrangements to identify and evaluate accounting estimates be noted.

The Committee considered the Forward Plan.

The Chairman thanked members of the Committee, officers and representatives of the external auditor for their contribution to the work of the Committee over the life of the Council. The Chairman was thanked for his contribution and leadership.

RESOLVED that the work programme be noted.