Agenda and minutes

Apologies for absence were received from Councillor A Ryves and F Haywood.

To approve the minutes from the Audit Committee held on 20 February 2023.

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The minutes of the meeting held on 20 February 2023 were agreed as a correct record and signed by the Chair, subject to the following amendments:

A70: page 802, penultimate paragraph be amended to read:

Councillor Gidney added that it was a complex document and that in his view he would like to concentrate on …..

A71: page 804, paragraph 6 be amended to read:

In response to questions from Councillor Moriarty on experience from other councils, the Internal Audit Manager explained that she was aware that other Councils had moved ….

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.

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 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 Members present under Standing Order 34.

There was no Chair’s correspondence.

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The Senior Internal Auditor presented the report which provided the proposed Strategic Internal Audit Plan for 2023/24 to 2026/27, the Annual Internal Audit Plan for 2023/24 and the Internal Audit Charter.  The Committee was informed that the plan would provide the basis for the Annual Audit Opinion on the overall adequacy and effectiveness of the Council’s framework of governance, risk management.

The Committee was advised that the Charter and Internal Audit Strategy outlined how the internal audit function was set up and formal documents.  The Senior Internal Auditor explained that this was particularly wordy and invited Members to focus on the areas set out below:

-           Strategic Internal Audit Plan

-           Annual Audit Plan 2023/24

The Senior Internal Auditor informed the Committee that section 1.4 of the report outlined the areas that had been considered for the development of the plan. The Internal Audit Team  produced the strategic audit plan based upon all those details which was being presented to the Committee today.

The Committee was informed that to produce the plans, the Internal Audit Team had set out all the auditable areas and reviewed those against previous audits and reviews and then discussed these holding one-to-one sessions with all of the responsible officers across the organisation for these areas. The risks had been identified against each area. The Internal Audit Team had good conversations with each of the Assistant Directors/responsible officers and had linked back the plan to the Corporate Risk Register.

It was noted that the Internal Audit Team had set 323 audit days over a total of 22 audit reviews for 2023/24. The Senior Internal Auditor advised that 50 days of this time related to audit management work undertaken by Eastern Internal Audit Services in accordance with the Council’s agreement in place with them. This covered areas such as quality assurance, follow up, advice and guidance, Audit Committee papers and attendance.

Audit days had been calculated considering other work commitments such as Anti-Fraud and Anti-Corruption related work, training and development and other non-chargeable time (including Project related work – such as assisting with the Energy Rebate Schemes, and recently assisting with the due diligence and fraud risk controls around UKSPF and REPF schemes, other areas will be looked at during the year such as testing of Disabled Facilities Grants for the purposes of the Better Care Fund annual declaration.

Internal Audit Charter

This essentially had not had any changes made to it since last year, as there had been no changes to how the internal audit function was set up.

Strategic Audit Plan (this should be Appendix 3 not 2)

Outlined the associated risks and justification for each audit area and plotted the audit days allocated for each area and the year they were currently assigned to them.

Annual Internal Audit Plan 23/24 (Appendix 4)

Provided concise details of each planned audit for 2023/24 including the quarter and number of days assigned for each audit.  ...  view the full minutes text for item A85

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The Assistant Director, Resources presented the report which provided an update on the External Audit of the Borough Council’s Statement of Accounts and related activity.

Members were advised that the audit of the 2019/2020 accounts had still yet to be undertaken.  It was noted that as at 31 January 2023 the National Audit Office had advised that there were 45 audits from 2019/2020 outstanding.  The Assistant Director explained that the External Auditors were scheduled to attend the King’s Court offices week commencing 24 April 2023.

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

·         Section 2:  The Accounts and Audit (Amendment) Regulations 2021.

·         Section 3:  Statement of Accounts 2019/20 and Subsequent Years Update.

·         Section 4:  Improvement Actions and Review:

·         Section 5: Financial Implications.

The Committee was advised that the Council was undertaking preparation work for the External Auditors to complete the outstanding audits.  The Assistant Director explained that there were no outstanding queries for the Borough Council to answer.

The Assistant Director, Resources outlined the concerns raised by the Council and explained that the Council’s three statutory officers (Chief Executive, Monitoring Officer and Section 151 Officer) had written to Ernst Young highlighting the authority’s concerns and requesting a timetable and allocation of resources for all the outstanding audits.

The Committee was informed that officers were still waiting for an update from Ernst Young on the fees for work undertaken to date on the 2019/2020 audit.  So far, only the scale fee had been paid.

In response to a question from Councillor Morley on additional funding being available to external auditors, the Assistant Director – Resources explained that a grant had been given to all local authorities to improve the audit regime, the Council had received £20,000 for 2021/2022 but the Council are already contributing to fees in excess of the £39,000 scale fee where currently fees are estimated around £100,000 but the Council had not been notified as yet of any changes by Ernst Young that will make a difference.  Reference was made to the letter the Council had received from DLUHC but was not sure if the auditors had received one.

Councillor Rust referred to the Serco contract and a condition that a fine could be imposed if the service was not delivered and asked if this could be applied to Ernst Young.  In response, the Assistant Director, Resources explained that this was not just an issue with Ernst Young but was a national issue.  It was also explained that the Council had opted into the PSAA tender exercise to appoint auditors and that Ernst Young had been allocated as the Council’s auditors for the next term.  The contract is with PSAA and the auditors and not with the Council.

The Chair, Councillor Devereux explained that he had raised the issues with regard to the delayed audits with CIPFA at the East of England Audit Chairs Forum at County Hall in Norwich on 2  ...  view the full minutes text for item A86

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The Committee was reminded that the budget for 2022/2023 was presented to Cabinet on 9 February 2022 and approved by Council on 23 February 2022 in accordance with the process for approving the financial plan 2021/2026.

It was highlighted that the Council was currently estimating a contribution to the General Fund Reserves of £830,754, a favourable movement of £223,764 against a budgeted transfer of £526,990 increasing the estimated balance as at 31 March 2023 to £9,734,514.

The Capital Programme 2021/2026 was updated at Council on 23 February 2022. The current spend is £18,897,755 against a revised budget of £33,416,370. Major Projects comprises of 59% of the revised budget for the Capital Programme. The Council’s Member Major Projects Board held meetings throughout the year to monitor and receive updates for these projects. Officers of the Council were reviewing the impact on the timing and funding of programme reflecting specifically recovery from the pandemic and inflation.

The budgeted turnover savings for 2022/023 were (£550,000). Following the decision of the Council on 1 December 2022 to finalise its pay award to its employees, an estimate of its impact on employee costs had been included in the report.  As at the 27 January 2023 the Council had 63 vacant posts of which 28 were in active recruitment phases.  Of those note in active recruitment phases at the time, there were 35 in total, consisting of 3 covered by agency workers/contractors, 32 on hold pending further instruction from the service.  The table at 2.3 showed those costs and savings.  The calculation was based on an estimate for the impact of the cost of living pay award, assumed that the current level of vacant posts would remain similar for the remainder of the financial year and estimates the spend on other costs to the end of the year.

The Financial Services Manager presented the Budget Monitoring Report – January 2023 and highlighted the following sections of the report:

·         Summary.

·         Revenue Budget 2022/2023 – Budget Summary, Turnover Savings, Opportunities, Risks.

·         Capital – Budget and Spend 2022/23, Notes to Capital Budget Revisions and Movement table.

·         Reserves – Budget Revisions and Movements:  Ring Fence Reserves, Service Delivery.

·         Age Debt Analysis.

·         Council Tax and Business Rates.

·         Treasury Management 2022/23 – Prudential Indicators, Loans, Investments.

·         Conclusion.

·         Appendix A – Budget Monitoring Variances October 2022.

·         Appendix B – Capital Programme 2021/2026.

·         Appendix C – Limits and Purposes for Earmarked Reserves.

·         Appendix D – Age Debt Analysis – Period 7.

The Assistant Director, Resources responded to questions from Councillor Collingham in relation to turnover savings, recruitment and agency staff fees.

In response to questions from Councillor Morley on number of FTEs and impact on the level of service delivery, the Assistant Director provided an overview on the challenges facing recruitment to posts and the temporary use of interim or agency staff but highlighted that any impact to service delivery was reflected in performance reports.

Following questions from Councillor Rust on turnover  ...  view the full minutes text for item A87

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The Committee noted the Cabinet Forward Decision List.

The Chair, Councillor Devereux highlighted the importance of the Committee reading and understanding reports and commented that consideration may be given to the Committee separating into small groups to undertake a “deep dive” and report back findings to assist with the improvement programme to help clarify things for the future.

The Assistant Director, Resources highlighted that there was a recommendation of best practice for a report from the Audit Committee to Cabinet or Council on the work undertaken and that the objective was raising the importance of the work of the Audit Committee to a wider audience.  The Assistant Director, Resources advised that this was an item that would be picked up with the Audit Committee post May 2023 Election.

To note the Committee’s Work Programme 2023/2024.

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The following items were identified for consideration to be included in the 2023/2024 work programme:

·         Consideration of the appointment of Independent Person(s) to the Audit Committee and how to utilise that expertise.

·         Internal Audit Plan, Policies, Strategies and Resources to ensure balance was right from a Member perspective to see where the pressures are/ought to be that would inform the improvement opportunities and decision making process.

·         Role of the Audit Committee – to focus on whether there was a policy, implementation and findings of audits.  Linkage with Corporate Performance Panel, project boards, project management, performance management, etc. Who was responsible for the technical scrutiny of the budget as opposed to the scrutiny of processes.

·         Risk management role of the Audit Committee.

·         Constitution/Scrutiny – to consider if the Constitution was robust enough to specify the scope, scale and degree of responsibility to enable the Audit Committee to undertake the correct work to the required standards.

To note that the date of the next meeting of the Audit Committee will take place on 21 June 2023 at 4.30 pm in the Council Chamber, Town Hall, King’s Lynn.

The next meeting of the Audit Committee will take place on 21 June 2023 at 4.30 pm in the Council Chamber, Town Hall, King’s Lynn.

The Chair, Councillor Devereux expressed thanks to all Members of the Audit Committee for their input and officers for their professional advice and guidance during his time as Chair of the Committee.