Agenda and minutes

To receive any apologies for absence.

Apologies for absence were received from Councillors N Daubney, B Anota, I Gourlay and G Wareham.

To approve the minutes from the Audit and Risk Committee held on 27 October 2015.

The minutes of the Audit and Risk Committee meeting held on 27 October 2015 were agreed as a correct record and signed by the Chairman.

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 meeti9ng from the public seating area.

There were no declarations of interest.

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 Chairman of their intention to do so and on what items they wish to be heard before the meeting commences.  Any Member attending the meeting under Standing Order 34 will only be permitted to speak on those items which have been previously notified to the Chairman.

There were no Members present under Standing Order 34.

There was no Chairman’s correspondence.

To receive comments and recommendations from other Council bodies, and any responses subsequent to recommendations, which the Committee had previously made.  (N.B some of the relevant Council bodies may meet after dispatch of the agenda).

At the Cabinet meeting held on 3 November 2015 the following response was made to the recommendations from the Audit and Risk Committee meeting held on 27 October 2015, on the following item:

Cabinet Report:  Mid Year Treasury Report

RESOLVED:  The Panel support the recommendation to Cabinet as follows:

Cabinet is asked to note the report and the treasury activity.

CABINET RESPONSE:  The comments of the Committee were taken into consideration when Cabinet considered the item.

The Committee noted the responses made by Cabinet at its meeting held on 3 November 2015 to the recommendations made by the Audit and Risk Committee at its meeting held on 27 October 2015 in respect of the following item:

·         Mid Year Treasury Report.

The Committee will receive a briefing/training session on how an audit is undertaken.

All Members have been invited to attend for this item.

Members received a Powerpoint presentation from the Auditor on how an audit was undertaken within the Borough Council.  A copy of which would be circulated to Councillors.

Councillor Devereux asked what proportion of the Council’s activities did Internal Audit cover and which audits were undertaken by an external organisation?  In response, the Auditor explained that specialist audits relating to Health and Safety were undertaken by an External Auditor, however, the Internal Audit Team would receive a copy of the report.  Each year the Audit Manager prepared an Audit Plan which would provide a good coverage of the activities which the Council operated.  The Committee was advised that the Council had changed the approach to undertaking core audits and had moved towards a key control system which was reviewed on a quarterly basis to allow the Audit Team to be more efficient and free up some resource.

Councillor Chenery asked if when interviewing staff as part of an audit, could the Chairman and Vice-Chairman of the Audit and Risk Committee be involved.  In response, the Audit explained that it would be unlikely to invite Members to be part of the process.  The Assistant Director advised that the Internal Audit Team met with officers to provide information on the process and gain an understanding of how the service operated.  The Committee was reminded that the Audit Manager presented a summary of reports to Members and all reports were available to view on Insite and any Member cold ask questions.

The Chairman, Councillor Humphrey commented that when Ofsted Inspection took place the Audit Committee looked at the leadership and this could potentially be a role for the Borough Council’s Audit and Risk Committee to look at leadership when in house audits were conducted.

The Auditor advised that the Internal Audit Team took the political dimension into account when carrying out audits.

In response to questions, the Auditor explained that the audit reports were not published on the Council’s website.

Following questions from Councillor Devereux regarding follow up audits and a Central Register to record actions, the Auditor explained that the following up audits and actions were not recorded in a single register, however, each year’s audit plan was held in a central file.

In response to further questions from Councillor Devereux on the standards of internal and external audits, the Auditor explained that he did not have this information to hand but would forward details to the Committee.  The Assistant Director added that actions/recommendations relating to health and safety audits were followed up by the Council’s Safety and Welfare Adviser and presented to the Council’s Management Team.  Information could be provided to the Committee on the Council’s procedure relating to follow up actions/recommendations.

Councillor Collop commented that the Council had a small Internal Audit team and asked how service areas were prioritised if an audit had not been conducted for a longer period of time.  In response, the Auditor explained that the Audit Manager had broadened the coverage of audits to be undertaken  ...  view the full minutes text for item AR71

Ernst & Young, the Council’s External Auditors will present the Annual Audit Letter for year ended 31 March 2015.

Mr R Murray, Ernst and Young presented the Annual Audit Letter for the year ended 31 March 2015.

Mr R Murray explained that the purpose of the Annual Audit Letter was to communicate the key issues arising from the External Auditor’s work to the Members and external stakeholders, including members of the public.

It was explained that matters reported in the Annual Audit Letter were those Ernst and Young considered most significant for the Borough Council of King’s Lynn and West Norfolk.

Members’ attention was drawn to the following sections of the Annual Audit Letter:

·         Executive Summary – on 29 September 2015, unqualified audit opinion on Council's financial statements/unqualified value for money issued.

·         Key Findings.

·         Control Themes and Observations.

·         Looking Ahead.

·         Fees – the overall additional fee for 2014/15 was £4,800, the majority of this additional fee related to the additional work required regarding the preparation of group accounts for the first time.

Councillor Collop referred to section 2.2 value for money conclusion – the financial plan currently placed reliance on £3.3 million of funding from New Homes Bonus in 2016/17 and 2017/18 and asked the importance of including this income to fund the base budget.  In response, Mr Murray explained that a number of Councils were concerned about the future of the New Homes Bonus and the External Auditors had raised this point as any reduction in Government funding in future years, together with an increased use of reserves represented a risk to the achievement of the Council’s future budgets.

The Assistant Director commented that the Comprehensive Spending Review announcement was expected on 25 November 2015 and that currently the New Homes Bonus income had been included in the Council’s budget.  With regard to use of reserves, the Council had a planned approach in place to utilise the General Fund Reserve and the Cost Reduction Programme (which had been implemented in 2009 and had achieved significant savings).

The Chairman, Councillor Humphrey reminded the Committee that the Council had put a three year programme in place to address the budget gap and that the Council has also undertaken a cost reduction exercise to achieve savings.

In response to questions from the Chairman, Councillor Humphrey on Highways Network Asset (formerly Transport Assets), the Assistant Director explained that the this was a change from the existing requirement to account for those assets under Depreciated Historic Cost which would be effective from 1 April 2016.  This would present a bigger challenge for Norfolk County Council.  However, the Borough Council did have a number of highway assets, for example, bridges at various locations, etc and would need to be re-evaluated.

Councillor Collop referred to the earlier deadlines for production and audit of the financial statements 2017/18 and asked if this would present a resource issue for the Council.  In response, the Assistant Director explained that a key change in the regulations was that from the 2017/18 financial year the timetable for the preparation and approval of accounts would be brought forward as set out  ...  view the full minutes text for item AR72

The Committee noted the Work Programme.