Agenda and minutes

There were no apologies for absence.

To approve the minutes from the Audit and Risk Committee held on 7 August 2023.

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The minutes of the Audit Committee held on 7 August 2023 were agreed as a correct record and signed by the Chair.

Please indicate if there are any interests which should be declared.  A declaration of an interest should indicate the nature of the interest (if not already declared on the Register of Interests) and the agenda item to which it relates.  If a disclosable pecuniary interest is declared, the Member should withdraw from the room whilst the matter is discussed.

These declarations apply to all Members present, whether the Member is part of the meeting, attending to speak as a local Member on any item or simply observing the meeting from the public seating area.

Under Agenda Item 7:  Update on Audit of Accounts Progress, Councillor Ryves declared an interest in that he had been trained as an auditor.

To consider any business which, by reason of special circumstances, the Chairman proposed to accept as urgent under Section 100(b)(4)(b) of the Local Government Act 1972.

There was no urgent business.

Members wishing to speak pursuant to Standing Order 34 should inform the Chair of their intention to do so and on what items they wish to be heard before a decision on that item is taken.

There were no Councillors present under Standing Order 34.

There was no Chair’s correspondence.

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The Assistant Director, Resources presented the report which updated the Committee on the External Audit of the Borough Council’s Statement of Account and provided an update on proposals under consideration by the Government for Levelling-up, Housing and Communities (DLUHC) to clear the audit backlog of work.

The Committee was advised that the Council found itself in a position where the audit of its accounts had not been completed since 2019/2020.  It was noted that a report by the National Audit Office published in January 2023, report that at 30 November 2022 there were 45 audits outstanding from 2019/2020.

The Committee’s attention was drawn to the following sections of the report:

•           2 – The Accounts and Audit (Amendment) Regulations 2021.

•           3 – Update from DLUHC – July 2023.

•           4 – Statement of Accounts 2019/2020 and Subsequent Years Update.

•           5 – Financial Implications

The Assistant Director, Resources highlighted that the ongoing nature of the audit process continued to significantly impact resources in the finance team as well as other teams across the Council.

The Chair thanked the Assistant Director, Resources for the update report and invited questions and comments from the Committee, a summary of which is set out below.

In response to questions from Councillor Dark on the recruitment of auditors and the current situation nationally, the Assistant Director, Resources provided an overview of the first tender process operated by the PSAA to appoint auditors for the previous year’s of which 99% of local councils opted into to achieve cost efficiencies. The Assistant Director, Resources explained that following that initial tender process, the audit requirements grew due to the changing nature of councils structures such as wholly owned companies, commercial operations which resulted in increased audit work and associated costs.  The Committee was advised that the backlog was affecting other audit firms as well as EY and due to recruitment issues in the sector and conflicting priorities, they had limited capacity to deliver the audits  in the timescales allowed .  The Assistant Director, Resources outlined the measures in place to work more swiftly as soon as possible to work through the backlog to sign off the audits.

Councillor Coates commented that Ernst Young were a large organisation that he was surprised to learn had limited resources and asked how much pressure could the Borough Council and other local authorities exert to express concerns on the significant backlog on auditing the outstanding Statements of Account.

Councillor Devulapalli added that if the accounts would take so long to audit and then a revised timetable had indicated a quick turn around on three sets of accounts and asked if there would be less rigorous auditing/reporting.

The Chair, Councillor Ryves referred to 3.3 “It should be noted that it has been highlighted that in order to achieve these deadlines, it may result in qualifications and disclaimers of opinion in the short term for a number of local bodies.”  The  ...  view the full minutes text for item A115

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In presenting the report, the Financial Services Manager explained the purpose of the report and reminded the Committee that the Council had formally adopted the Chartered Institute of Public Finance Accountancy’s Code of Practice on Treasury Manager (2017) and remained fully compliant with its requirements.

The Financial Services Manager explained that the Annual Treasury Outturn Report looked backwards at 2022/2023 and covered:

•           The 2022/2023 Treasury Outturn.

•           Compliance with Treasury Limits.

•           Outturn Summary.

The Financial Services Manager drew the Committee’s attention to the following sections of the report:

•           2.1:  Executive Summary

•           4.2:  Capital Expenditure

•           5.6:  Council’s Capital Spend – Revenue.

•           5:7:  Capital Finance Requirement.

•           5.8:  The Authorised Limit.

•           6:4:  Investments.

The Committee was informed that the following additional supporting information was attached to the report:

•           Appendix 1 – Economic Outlook.

•           Appendix 2 – Investments as at 31 March 2023.

•           Appendix 3 – Borrowing as at 31 March 2023.

•           Appendix 4 – Prudential Indicators.

The Financial Services Manager advised that the Council’s Treasury Policy Statement 2023/2024 and annual Treasury Strategy Statement 2023/2024 were approved by Council on the 23 February 2023.

The Chair thanked the Financial Services Manager for the report and invited questions and comments from the Committee, a summary of which is set out below.

In response to questions from the Chair relating to the Capital Programme, the Financial Services Manager explained that there were elements of the Capital Programme which were not funded by revenue.  The Committee was reminded that the Capital Programme was approved by Council in February of each year.

Councillor Dark commented that 2022/2023 was a difficult year nationally and complimented the work undertaken by officers to deliver the services and to provide reassurance to Councillors.  Councillor Dark added that this was a lengthy report and drew the Committee’s attention to the following sections of the report:

•           5.8:  The Authorised Limit.

•           6:3:  As at 31 March 2023 the Council did not have temporary loans.

•           7.4:  During 2022/2023, the Council maintained an under-borrowed position.

•           8:1:  No borrowing was undertaken during the year.

•           8.2:  The Council had not borrowed more than, or in advance of its needs, purely in order to profit from the investment of the extra sums borrowed.

•           9.2:  The investment activity during the year conformed to the approved strategy, and the Council had no liquidity difficulties.

•           Page 42:  The Council had not borrowed any money to support the revenue budget.

Councillor Dark referred to investments and reminded the Committee that £3m had been allocated in the budget for capital projects to generate revenue and also to improve the Council’s revenue position.

In response to questions from Councillor Dark on the Council’s investments being sustainable and making a good return, the Assistant Director Resources explained that £3m had been set aside for earmarked reserves which were designed for investment.  The Committee was informed that  ...  view the full minutes text for item A116

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The Financial Services Manager explained that the Council had formally adopted the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management (revised 2021) and remained fully compliant with its requirements.  One of the primary requirements of the Code was receipt by Council of a quarterly Review Report.

The Committee was informed that the Quarterly Review Report had been prepared in compliance with CIPFA’s Code of Practice, and covered the following:

•           A review of the Treasury Management Strategy.

•           The Council’s capital expenditure (prudential indicators).

•           An economic update for the first three months of 2023/2024.

The following additional supporting information was attached to the report as set out below:

•           Appendix 1 – Economic Update.

•           Appendix 2 – Interest Rate forecasts.

•           Appendix 3 – Prudential and Treasury Indicators for 2023/2024.

•           Appendix 4 – Investment Portfolio.

•           Appendix 5 – Approved countries for investment.

The Chair thanked the Financial Services Manager for the report and invited questions and comments from the Committee, a summary of which is set out below.

In response to questions from the Chair, Councillor Ryves, the Financial Services Manager confirmed that future reports to the Committee would be presented on a quarterly basis.

The Chair, Councillor Ryves referred to Appendix 3 and commented on the authorised limit for external debt for the previous year being £86m compared to the current year £10m and added that this appeared to be odd.  In response, the Financial Services Manager explained that the method of calculating the authorised limit and opportunities for borrowing was dictated by CIPFA guidance and this indicator confirmed we were operating within that limit.

Councillor de Winton commented that the figures presented indicated the Council was in a good place but felt in his opinion the economy of West Norfolk had slowed down and elsewhere in the country staff had been made redundant and asked what “stress tests” had been applied.

The Chair invited Councillor Morley, Finance Portfolio Holder to answer the question from Councillor de Winton.

Councillor Morley commented that the Administration had not gone through the war games analysis but seek to improve and help the community to recover and added that perhaps this could be picked up in separately to ascertain what the Council’s parameters were to work within.

The Chair, Councillor Ryves referred to page 54, internal borrowing figure and asked for an explanation.  In response, the Financial Services Manager explained that there were many phrases associated with internal borrowing and a CIPFA template was used which linked to the new Code and some localisation needs to be applied to this.  It was explained that in the financial year there were some elements of the capital programme that were not funded through capital receipts and grants and the figures represent the changes to the capital programme approved by Cabinet on 1 August 2023.  The Financial Services Manager added that the Quarter 2  ...  view the full minutes text for item A117

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The Financial Services Manager presented the Budget Monitoring Report – 30 June 2023 and drew attention to the following sections:

•           Summary.

•           Revenue Budget 2023/2024.

•           Capital.

•           Reserves.

•           Age Debt Analysis.

•           Council Tax and Business Rates.

•           Treasury Management 2023/2024.

•           Conclusion.

•           Appendix A – Budget Monitoring Variances June 2023.

•           Appendix B – Capital Programme 2022/2027.

•           Appendix C – Age Debt Analysis, 30 June 2023.

The Chair thanked the Financial Services Manager for the report and invited questions and comments from the Committee, a summary of which is set out below.

Councillor Dark provided clarification on the Internal Drainage Board (IDB) levy received by Government.  The Committee was advised that the Council was one of the local authorities to receive additional grant from DLUHC to help with the increase in IDB levies due to the unprecedented rising in energy costs.  £205,451 had been paid to the Borough Council as a one-off recognition of the difficult circumstances affecting local authorities.  Councillor Dark commented that the work undertaken by IDBs was commendable but added that did take 42% of the authority’s available Council Tax.  Councillor Dark provided an overview of the work led by South Holland District Council which got a number of Councils to start a cohesive voice to central Government.  The Borough Council proactively went in when generated a one-off payment which was either the second or third largest payment made to a local authority.  In conclusion, Councillor Dark stated that clearly this was not enough and that Councillor Morley had similar concerns.

Councillor Morley, Portfolio Holder for Finance commented that the previous Administration was to be commended on addressing the various issues associated with the IDB’s including taking forward lobbying the 15 or so districts effected by IDB levels and added the current Administration had undertaken to carry this work forward.  The Committee was informed that the MPs Liz Truss and James Wild were aware of this sensitive issue in West Norfolk and could also lobby Government.

Councillor Morley, Portfolio Holder for Finance responded to questions from Councillor Bearshaw on the costs both within the Borough and other areas of the country.

Councillor Bearshaw asked what the Borough Council did to liaise with the IDB Consortium to bring more money back in.  Councillor Morley, Portfolio Holder for Finance explained that officers were undertaking an exercise to check the figures for Water Management Alliance  as they were not consistent with the Borough Councils.

In response to questions from Councillor Coates on Balances and Reserves in relation to section 4.1, 3rd bullet point – to set aside funding for anticipated investment or projects and asked if they were anticipated why were they not included in the budget.  In response, the Assistant Director, Resources explained that this was called prudential management of finances and it may be something to be spent in  2 to 3 years’ time and that money would  be set  ...  view the full minutes text for item A118

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The Committee noted the Cabinet Forward Decisions List.

The Chair, Councillor Ryves asked a general question on the role of the Audit Committee and being able to undertake a review of the IDB’s numbers to check consistency on the figures report.  Councillor Morley, Portfolio Holder for Finance commented that the Council could look at the relationship with Internal Audit and the audits which it undertook for IDBs.  The Assistant Director, Resources explained that Internal Audit had previously carried out an audit of the Water Management Alliance but that arrangement had now ended.  The Assistant Director, Resources advised that she would follow up the comments made on the discrepancy on the figures reported and would report back to the Audit Committee.

To note the Committee’s Work Programme.

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Councillor Dark commented on the significant number of items scheduled for the next meeting in November and asked which items were time critical or asked if two meetings should be scheduled.  In response, the Chair explained that the Agenda for the next meeting would be discussed at sifting.

Councillor Bearshaw referred the meeting held on 7 August – Corporate Risk Register when a discussion took place on the bowtie analysis and added that he had held a discussion with G Greaves and asked if it would be helpful for Members to receive a briefing prior to the November meeting.  The Chair asked if the Democratic Services Officer could liaise with the relevant officer to arrange a briefing on Teams (late afternoon) for the Audit Committee.

To note that the date of the next meeting of the Audit Committee will take place on 27 November 2023.

The net meeting of the Audit Committee will take place on 27 November 2023 at 4.30 pm in the Council Chamber, Town Hall, Saturday Market Place, King’s Lynn.