Agenda and minutes

The members had before them:

A.    The Agenda papers (previously circulated); and

B.    The Minutes of the meeting held on 24 September 2021 (previously circulated).

Apologies were received from Cllrs Aled Evans and Dan Morehead.

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 2 December 2021). Further details are available on the Council’s website. Enquiries can be made through the telephone number/e-mail address listed in this agenda and on the website.

None.

To confirm the Minutes of the meeting held on 24 September 2021. (previously circulated)

RESOLVED that the Minutes of the meeting held on 24 September 2021 be confirmed as a correct record and signed by the Chairman.

The Committee considered an update on the progress of the Statutory Accounts 2020/21.

Mark Sanders, Deputy Chief Finance Officer introduced the report and commented that nationally only 9% of councils had had their accounts signed-off by the external auditor by the end of September 2021. To date, 77% of councils had not yet had their accounts signed-off. In relationto  this Council’s Accounts, the changes made since the report to Committee in September had been highlighted in yellow and mainly related to disclosures that had no material impact on the Accounts. There had also been one update to the Group Accounts.

He explained that unfortunately, Grant Thornton had notified the Council that it would not be possible to sign-off the Statement of Accounts at this meeting due to a new last-minute technical issue that had arisen. The issue related to the way in which Place Partnership Limited (PPL) had been recorded in the draft Accounts of a partner organisation which was inconsistent with the recording in this Council’s and other partner’s Accounts.

Peter Barber, Key Audit Partner and Helen Lillington, Senior Audit Manager from Grant Thornton, the Council's external auditor presented the External Audit Findings Report and commented that:

·         The changes made to the Accounts since the Committee meeting in September had been of a technical nature and did not impact on the stability and financial resilience of the Accounts

·         Grant Thornton was the external auditor for each of the local authority shareholders of PPL, and, under its commercial arm, was also the external auditor of PPL. It came to Grant Thornton’s attention that there was an inconsistent treatment of PPL across the 3 partner shareholders’ accounts. Although the sums involved (£5/6m spend) was considered immaterial, there were significant assets and liabilities in the Pension Fund. It was important to see a consistent approach to the audit of PPL to ensure that there was no double-counting or any matters omitted. It was therefore not possible to sign-off the Accounts until this matter was resolved. A meeting of all the auditors involved with PPL would be held next Tuesday

·         The changes to the Accounts mainly related to Capital Financing Regulations and Financial Instruments

·         The key issue in relation to Capital Financing Regulations concerned the way in which the Council had treated its PFI arrangements with West Mercia Waste in its Accounts. The Accounts had been amended to show the capital financing requirements and the Council’s underlying need to borrow separately within the disclosure notes to the Accounts. As this was a disclosure, there was no impact to the Council’s Reserves, Balance Sheet or financial resilience

·         The external auditor was required to report all non-trivial misstatements and disclosure changes. Most of the disclosures related to the Financial Instruments and a large number of changes had been required. Some of the changes had been made now but some would need to be made in later years.

In the ensuing debate, the following points were made:

·         Concern was expressed about the external auditor’s access rights  ...  view the full minutes text for item 622.

The Committee considered a report on the appointment of External Auditors.

In the ensuing debate, the following points were made:

·         In response to a query, Mark Sanders confirmed that the Worcestershire Treasurers Group had met and it was clear from this meeting that there was no appetite amongst partner councils for a joint procurement exercise to appoint an external auditor

·         If the Council did decide to appoint its own external auditor, would it enable the Accounts to be signed off quicker? Rachael Hart advised that there were only a limited number of accountancy firms that provided this service and due to the technical nature of public sector accounts, those firms were experiencing difficulties in recruiting suitably qualified auditors. It was difficult to say whether a locally appointed external auditor would be able to provide a faster service but given the national picture, it was unlikely

·         It would be beneficial in terms of consistency of approach if the County Council and all the local district councils had the same external auditor appointed

·         Members of the Committee unanimously agreed that the opt in to the national auditor appointment scheme was the preferred approach for the appointment of external auditors.

RESOLVED that Council be advised that the opt in to the national auditor appointment scheme was the Committee’s preferred approach for the appointment of external auditors on the basis of the reasons set out in paragraph 19 of the report.

The Committee considered the Internal Audit Progress Report.

In the ensuing debate, the following points were made:

·         Did the increased number of grants received from Government during the Covid pandemic represent an increased risk to the Council in terms of its grant certification process? Jenni Morris, Chief Internal Auditor advised that the Council worked closely with operational staff to ensure that the records were of sufficient quality to allow the sign-off of grant certification. Throughout the process, she had to be cognisant of the impact on the Council’s finances should a grant certificate not be signed-off

·         In response to a query, Jenni Morris undertook to provide more details in relation to the processes and audit arrangements for the Blue Badge Scheme in a future report

·         In response to a query, Jenni Morris explained that the majority of fraud investigations were intelligence-led albeit there were also frauds detected as a direct result of audit work. The Council’s fraud team focused a lot of its work on fraud prevention. In particular, the team provided advice to colleagues working in high risk areas ensuring that they were aware of any risks and what issues to look out for

·         Did the Council have a list of priority areas of concern from a fraud perspective? Jenni Morris advised that work was focused on areas of high risk, however there were areas which were perceived as a lesser risk but needed to be monitored to prevent the level of risk increasing. The two high risk area were Adult Social Care and Procurement. Fraud in Adult Social Care was more frequent but involved lower sums of money. By contrast, procurement fraud was less common but tended to involve large sums of money

·         In response to a query, Jenni Morris confirmed that the Fraud team did examine employee behaviour patterns to detect key indicators of potential employee fraud

·         To what extent were the Framework arrangements examined for potential fraud? Jenni Morris commented that the Council’s risk profile, contracts and performance indicators were examined by the fraud team. The Council’s control regulations and how much it was being paid was also  analysed. In particular, checks were carried out to ensure that the Council’s procurement code was being adhered to. A key issue of concern was the life of a particular contract and the ongoing management of that contract, for example how the performance of the contractor was being reviewed and the controls that were in place for variations to that contract

·         The Chairman welcomed the progress made in addressing the number of audit actions to the point where there were no outstanding audit actions over 12 months.

RESOLVED that the Internal Audit Progress Report be noted.

The Committee considered the Finance Improvement Plan.

In the ensuing debate, the following points were made:

·         In response to a query, Mark Sanders indicated that at present budgets were automatically accrued and it was hoped that the move to a cashflow-based approach would act as a motivator to budget holders to better manage their budgets. The Council was looking at consolidating its procedures for raising orders so staff had all the necessary information available to them. In addition, the number of people involved in the raising of orders would be reduced to make the system more robust. It was important to get better financial systems in place at this stage, especially with the E5 system being improved, alongside better staff training and awareness

·         The changes in the responsibilities for budget holders represented a cultural shift for the Council and might be a risk going forward. Mark Sanders responded that the proposed changes would act as a platform to enable budget holders to make decisions based on the best available information

·         In response to a query, Mark Sanders commented that the approach the Council had to take to financial management was more complex than necessary for a commercial organisation, particularly in terms of securing payments. It was vital to ensure that the right people received the right information in a clear and robust fashion so that the budget holder was able to decide the most appropriate response

·         Mark Sanders undertook to provide an appendix in future reports that linked the improvement programme to income and debt management. A report on the Finance Improvement Programme would be brought to every meeting.

RESOLVED that the report be noted and further updates be brought to the Committee during 2022/23.

The Committee considered the Risk Management Report.

RESOLVED that the Risk Management report be noted.

The Committee considered the Training Programme.

In the ensuing debate, the following points were made:

·         It was proposed and agreed that an additional training session on procurement be introduced for July 2022 meeting

·         Training sessions should be scheduled to start at 9.30am with the Committee meetings scheduled to start at 10.30am.

RESOLVED that the Training Programme as set out in paragraph 5 of the report be approved subject to an additional training session on procurement being included in July 2022.

RESOLVED that the work programme be noted.