Agenda and draft minutes

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To approve the minutes from the Audit Committee meeting held on 11^th March 2024.

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RESOLVED: The Minutes from the meeting held on 11^th March 2024 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.

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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.

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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

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The Committee received a report from Ernst & Young, External Auditor.

The report outlined the external auditors risk assessment, audit approach and scope of the audit for 2023/24. The report specified reporting criteria as part of the audit plan as, financial sustainability, governance and improving economy, efficiency, and effectiveness.

The Chair thanked officers for their report and invited questions and comments from the Committee as summarised below:

Councillor Devulapalli asked for clarification and referred to page 24 of the report.

The External Auditor clarified the Council’s capital transactions were required to go through the fixed assets register and the last reconciliation was for year 2019/20. He added that due to the complexities of these transactions, it provided a further risk going from year 2019/20 to year 2023/2024 reconciliation of the statement of accounts.

The Assistant Director clarified further that there was a back log and work was still being carried out on historical financial statements. From the 2019/20 audit, she explained that the finance team are working on the corrections and amendments as they needed to be carried through to 2023/2024 statement of accounts.

Councillor Coates referred to page 7 of the report and sought clarification on definition of assurance within the report and it’s context.

In response to Councillor Coates, the External Auditor defined assurance as the capacity and experience of the finance team to deal with the statement of accounts. He stated assurance came from internal audit reports on financial systems and providing accurate information. Lastly, he clarified assurance was a true and fair reflection of the accounts being provided and the audit committee having assurance in the finance team and their processes.

Following on Councillor Coates asked the External Auditor if the constitution had been looked at regarding what the Audit Committee did.

The External Auditor responded that the constitution had been looked at and what was in place was what was expected. He noted CIPFA produces a good practice document which would be useful support for the committee if needed.

The Chair asked for elaboration on value of money in terms of audit. In which the External Auditor clarified the criteria that was defined by national audit office which was governance, improving economic efficiency and financial sustainability. These criteria would identify procedures and arrangement in place rather than the outcome.

In response to further questions from the Chair, the External Auditor confirmed that it was expected to have back stop dates where the audit stops once enough work had been done to give an opinion. This would come from DLUHC and regulations would allow the audit to be reset and a disclaimer opinion given.

The Chair thank the officer for clarification.

Councillor Dark commented the strength of an external audit was the element of independence. However, this also is a potential weakness due to a lack of knowledge of the Council. He raised concerns that as the audit would be carried out with the Section 151  ...  view the full minutes text for item A167

Verbal Report from Jamie Hay, Senior Internal Auditor

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The Committee received an update from the Senior Internal Auditor as follows;

·         Over the past year provide assurance to senior management and elected members

·         17 Successful Audit completed. These audits covered a range of areas, including financial controls, compliance with regulations, and operational efficiency.

·         2 Outstanding Audits- Local Council Tax Support/ Housing Benefit and Council Tax/Non-Domestic Rates

·         Overall assurance opinion provided- 2 substantial assurance, 9 reasonable assurance and 3 limited assurances and 3 Position Statements.

·         One significant achievement has been assurance regarding the mitigation of risks to the council and local authority trading companies objectives.

·         Identified 102 actionable recommendations to mitigate these risks - 10 high, 31 medium and 61 low and a further 13 Suggested Actions within Position Statements

·         All 7 audits carried forward from 2022/23 annual plan were concluded by 24/07/23.

·         7,312 investigations were completed exceeding the KPI target of 5,000 (an achievement of 146%) for fraud and corruption.

·         Due to an increase in the number of matches received in year 3,836 cases were carried forward into the 2024/25 financial year.

·         Identified Fraud & Error Totalled = £323,145.77

·         Traced Debtors/Absconders Totalled = £145,413.94.

·         Overall = £468,559.71

·         Looking ahead we are committed to concluding the remaining audits of the 2023/24 plan prior to the full progress report presented in June. Work has also commenced on all Quarter 1 audits of the 2024/25 Annual Internal Audit Plan which is being presented shortly.

·         The Senior Internal Auditor thanked responsible officers, senior leadership and the Audit Committee for their ongoing support and guidance.

The Chair invited questions and comments from the Committee, as summarised below;

The Senior Internal Auditor responded to questions from Councillor Bearshaw and advised recommendations from previous years which were outstanding were being looked at and a progress report for this would be ready in June 2024. He stated if the Audit Committee would like further reasons as to why recommendations were outstanding then individual officers as can be asked to attend Audit Committee to explain why.

The Head of Internal Audit added further that the recommendations were discussed with Senior Management and highlighted to them to enable to support Internal Audit with ensuring the recommendations were implemented.

Councillor Bearshaw commented that with the severity of some of the recommendations, had SMART actions been considered.

In response to Councillor Bearshaw, the Chair asked for a draft progress report of the actions in May before it was presented to the Committee in June.

The Senior Internal Auditor confirmed a progress report could be communicated to the Committee in May.

Councillor Devulapalli sought clarification on the assessment of risks in which the Senior Internal Auditor confirmed the risks were identified and decided by management and risks were graded by them as red, amber, and green.

Cllr Bearshaw commented that the butterfly matrix presents risk information a lot easier and suggested the Committee wait until this is brought back to them before undertaking training on risk as requested by the Chair.  ...  view the full minutes text for item A168

For Audit Committee to consider the following recommendations:

a)    Internal Audit Charter 2024/25

b)    The Internal Audit Strategy 2024/25

c)    The Strategic Plan 2024/25 to 2026/27

d)    The Annual Internal Audit Plan for 2024/25.

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The Committee received a report from Head of Internal Audit.

The report included the Internal Audit Charter which defined the authority’s purpose, roles, and responsibilities The Head of Internal Audit highlighted to the committee of the relevant changes which were title changes only. The Internal Audit Strategy detailed the resources and approach of the audit. It also included the three-year strategic internal audit plan and annual plan as well as an assurance map for the top 5 risks as at 2023/24 which had not been updated this year. Further work was required to produce more detailed maps on corporate risks. It signified there was a total of 307 Audit days, 23 audits and time for follow up included in the plan.

The Chair thanked the Head of Internal Audit, for their report and invited questions and comments from the Committee as summarised below:

Councillor Dark commended the Officer on the report and referred to Appendix 5 of the report which was the five strategic risks in an assurance map and sought for reassurance that the audit work in third line had been undertaken.

The Senior Internal Auditor advised the Cost Management Audit had been deferred to year 2024/25 plan. He added, that the audit on Economic Growth was carried out this year and had reasonable assurance opinion given. The third risk, an Anti-Social Behaviour and Community Safety audit was carried out in 2022/23 along with, Homelessness and Housing Options which was concluded for year 2023/24 and a reasonable opinion given. Council Tax and Non-Domestic Rates was still being finalised. Organisational Change was deferred due to a review and assessment outstanding by an external provider in liaison with the Personnel Department.

Councillor Dark suggested this was put in writing for Councillors to understand the position of all five strategic risks and the third line of assurance.

The Chair agreed with Councillor Dark for an update on the third line of assurance and timeline and sought clarification that these risks were either being audited currently or would be audited in the future.

The Senior Internal Auditor confirmed this could be put in writing.

Councillor De Winton asked if the internal audit would also audit the Council owned companies.

In response to Councillor De Winton’s question, the Head of Internal Audit advised that as subsidiaries of the Borough Council, they could not be audited unless agreement had been made with the companies to allow engagement with the auditors. If they were audited in the Council’s Audit plan, it would be from the point of view of the Borough Council managing and monitoring these companies.

The Senior Internal Auditor added that as part of June progress report, included would be executive summary of position statements of West Norfolk Housing Company and West Norfolk Property Company and would specify what was carried out as part of the audit and provide assurance.

Councillor Bearshaw commented that the companies of the Borough Council could be audited  ...  view the full minutes text for item A169

Items for the Committee to consider for the Work Programme 2024/2025 are;

·         Council Owned Companies

·         Control of Climate Change Activities

·         Appointment of Independent Person

·         Review of Terms of Reference

·         Results and Action Plan- Self Assessment

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Following a discussion by the Committee the following was agreed and added to the Work Programme 2024/25:

18^th November 2024- Ernst & Young External Audit update on progress of audit for 2023-2024

20^th January 2025- Internal Audit and Audit Standards update on new global internal audit standards and CIPFA document for public sector.

The following items were considered for the Work Programme 2024/2025

·         Council Owned Companies

·         Control of Climate Change Activities

·         Appointment of Independent Person

·         Review of Terms of Reference

·         Results and Action Plan- Self Assessment

The Assistant Director would discuss with the Monitoring Officer in relation to the process of recruitment and job specification for the Independent Person including number of positions.

Following the self-assessment of the Audit Committee, recommendations and ideas would be considered in the review of the Terms of Reference and added to the work programme once finalised.

Regarding the Council Owned Companies, it would be considered if further discussion was required following Shareholders Meeting.

Control of Climate Change Activities and risks of the strategy to be discussed with Chair of Corporate Performance Panel to be added to the agenda.

To note that the date of the next meeting of the Audit Committee will take place on 24^th June 2024

The next meeting of the Audit Committee would be held on 24^th June 2024 at 4:30pm in the Town Hall, King’s Lynn.