Agenda and minutes

Councillors and officers introduced themselves. 

To record the attendance of substitute councillors, if any, who have been authorised to attend in accordance with the provisions of standing order 17(1), with notification having been given to the proper officer before the start of the meeting and to receive apologies for absence. 

Councillors Marilyn Badcock, Jane Crossley, Simon Howell and Judy Roberts had all given their apologies for absence.  Councillors Eric Batts, Bill Jones, Janet Shelley and Richard Webber attended as their substitutes respectively.  

To note that at the annual council meeting held on 18 May 2011, Councillor Mike Murray was elected as chairman of the Audit and Governance Committee for the 2011/12 municipal year.  However, the committee is asked to appoint a vice-chairman from its membership. 

The committee noted that Councillor Mike Murray had been appointed by the Council as the committee’s chairman for the 2011/12 municipal year.  

The committee was asked to elect its vice-chairman. 

RESOLVED: To elect Councillor Simon Howell as the committee’s vice-chairman for the 2011/12 municipal year. 

To adopt and sign as a correct record the minutes of the meeting of the committee held on 9 March 2011 (previously published). 

RESOLVED: To adopt the minutes of the committee meeting held on 9 March 2011 as a correct record and agree that the chairman signs them.  

To review the actions arising from the last two committee meetings and receive an update on progress. 

The chairman asked for updates on matters discussed at the last two committee meetings.  The committee noted that at its next meeting, internal audit was due to update on the White Horse Leisure and Tennis Centre audit.  The committee noted that with regard to a previous internal audit investigation, management team had made arrangements for staff to make work-related confidential telephone calls in private rooms rather than open-plan offices.  The committee also noted that the council’s consultant was investigating outsourcing the payroll service to a contractor. 

To note the committee’s terms of reference: 

(1)       To consider and determine on behalf of the Council all aspects of the accounts of the authority including the approval of the statement of accounts.

(2)       To receive the District Auditor’s Annual Governance Report (or equivalent) and review responses to it.

(3)       To consider corporate governance matters (including not limited to comments and complaints and risk management issues and review responses to them and agreeing a code of corporate governance).

(4)       To approve the Statement of Internal Control.

(5)       To receive external and internal audit reports and review responses to them.

(6)       To scrutinise the council’s treasury management activity. 

(7)       To consider and determine any other issue related to the above functions properly referred to the committee by the Council. 

The committee noted its terms of reference, as set by the Council. 

To receive any declarations of personal or personal and prejudicial interests in respect of items on the agenda for this meeting. 

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To receive notification of any matters, which the chairman determines, should be considered as urgent business and the special circumstances, which have made the matters urgent, and to receive any announcements from the chairman. 

The committee noted the fire evacuation arrangements.  

Any statements, petitions and questions from the public under standing order 32 will be made or presented at the meeting.

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To consider report 6/11 introduced and presented by the audit manager. 

The committee considered report 6/11 of the audit manager.  This summarised the outcome of recent internal audit activity.  Since the committee’s last meeting, internal audit had completed thirteen audits and three follow-up reviews.  The committee discussed the audits that had received a limited assurance. 

ICT

It was reported that Capita was now receiving human resources’ updates when staff left the council, so their access to the council’s financial management system could be terminated.  A new helpdesk call management system would be introduced bringing improvements over the old system.  In the internal audit follow-up audit, checks would be made on arrangements for disaster recovery tests in 2011. 

Mortgage administration 2010/11

The committee noted that the council used to offer mortgages to tenants that wished to buy their council house.  Although the council no longer offered this service, there were still six active mortgage accounts.  Payments came through the council’s cash receipting system; this was audited regularly.  For historical reasons, this system was operated by a stand-alone computer rather than a networked system.  The committee did not consider this to be ideal and asked internal audit to investigate whether this was common practice. 

Travelling and subsistence expenses 2010/11

The committee noted that a new online expenses system had been introduced to process staff expenses claims.  This system had been developed in-house.  The committee acknowledged that this area was being reviewed again in the current year, but asked internal audit to undertake a spot check of receipts in the interim. 

RESOLVED: To request internal audit to:

(i)                 report in the ICT follow-up audit whether arrangements have been made for disaster recovery tests in 2011;

(ii)        investigate whether the use of stand-alone computer systems was common practice, rather than networked systems; and

(iii)       undertake a spot check of staff expenses receipts and report back to the next meeting.  

Committee members will recall that internal audit reports that have been awarded a full or satisfactory rating, are not included in the officer’s report to the committee.  However, these reports are emailed to councillors approximately two weeks prior to each committee meeting.  Committee members are encouraged to raise any questions on these reports in advance of the meeting with Steve Culliford in Democratic Services, steve.culliford@southandvale.gov.uk.  Any such questions will be raised at this point in the meeting. 

The committee noted that where internal audit had been awarded a full or satisfactory rating in their audit work, these reports were not included in the audit manager’s activity report.  However, internal audit would email these reports to committee members approximately two weeks prior to each committee meeting.  The committee was encouraged to raise any questions on these reports at least one week before each committee meeting.  Any such questions would be raised at this point in the meeting but would be circulated before each meeting, along with the answers. 

The audit manager tabled questions that had been received from the chairman and reported that no further questions had been raised by committee members prior to the meeting.  Of the internal audit reports that had been awarded a full or satisfactory rating, the committee noted that the creditor payments and sundry debtors’ services had shown significant improvements since the previous audit. 

To consider report 7/11 introduced and presented by the audit manager. 

The committee considered report 7/11 of the audit manager.  The report updated councillors on the management of internal audit, summarised progress against the 2011/12 audit plan, and outlined the priorities for the second quarter.  Tabled at the meeting was a Gant chart showing progress against the audit plan.  The chart also explained the reason for carrying out each audit.  At the next meeting, further information would be available showing a schedule of audit activity.  The committee asked that the audit plan included a review of the links between subscribers to the brown bin service and the contractor’s data. 

The committee noted that after a difficult year, the internal audit team was now at full strength and was making good progress. 

RESOLVED: To include within the planned brown bin 2011/12 audit, a review of the links between subscribers to the brown bin service and the contractor’s data. 

To consider report 8/11 introduced and presented by the audit manager. 

The committee considered report 8/11 of the audit manager.  This set out internal audit’s work for the year to 31 March 2011.  Despite being without its manager for several months, the internal audit team had completed the 2010/11 audit plan.  The audit manager believed that overall the council had a satisfactory control environment. 

RESOLVED: To note the report. 

To consider report 9/11 introduced and presented by the strategic director. 

The committee considered report 9/11 of the strategic director, which informed councillors of the estimated external audit fee for 2011/12 and the work that the Audit Commission would carry out during the year.  The report also sought approval for Maria Grindley of the Audit Commission to remain as the ‘engagement lead’ for a further two years.  The engagement lead was responsible for the overall delivery of the external audit, and liaison with the council’s chief executive and the Audit and Governance Committee’s chairman. 

Maria Grindley of the Audit Commission addressed the committee.  She reported that the Audit Commission set the audit fee after consultation with local government bodies.  The fee was an estimate; the final fee would depend on the amount of work required during the year. 

The strategic director reported that the council had appointed Maria Grindley as the council’s external auditor ‘engagement lead’ for a five-year term.  This would expire shortly.  The director recommended extension of her appointment for up to two years. 

The committee recalled that the government planned to disband the Audit Commission and transfer its work to the private sector.  Approving the extension would allow Ms Grindley to continue in her role up until the transfer.  The committee supported the recommendation. 

RESOLVED:

(a)               To note the estimated external audit fee for 2011/12 and the contents of the Audit Commission’s letter appended to report 9/11; and

(b)       To approve the extension of up to two years for Maria Grindley of the Audit Commission to be the council’s ‘engagement lead’, being satisfied that there is no risk to auditor independence. 

To note the draft statement of accounts, introduced and presented by the chief accountant.  These accounts will be approved for audit by the chief finance officer/section 151 officer.  TO FOLLOW ONCE AGREED BY THE CHIEF FINANCE OFFICER

The committee considered the draft statement of accounts for 2010/11.  The committee noted that this year, there was a change to the regulations regarding sign-off of the draft accounts.  The section 151 officer was required to sign off the draft accounts, not the committee.  However, the committee would be required to approve the final accounts in September. 

The section 151 officer reported that he had signed-off the draft statement of accounts at the end of June.  The draft was now before the committee to give councillors a chance to consider the accounts prior to formally approving the final version in the autumn. 

The chief accountant explained the key points.  The committee noted that the Cabinet was due to consider the revenue outturn report for 2010/11 in September but this might be available in draft form in August.  The committee asked to be sent a draft copy in August, if possible. 

In answer to a question, the chief accountant reported that the large reduction in the council’s pension liability was due to Oxfordshire County Council employing a new actuary to value the Oxfordshire local government pension fund and each council’s liability.  The new actuary took a more optimistic view than the previous actuary.  The head of finance assured the committee that the council should not see the same level of variances in the future. 

The committee also noted the latest position in the council’s long-term investment in the Icelandic bank, Landsbanki.  The council’s had been awarded priority investor status and this had survived a legal appeal.  The council should recover 95 per cent of the investment.  A second claim would be made for lost interest. 

With regard to the council’s long-term debtors in the balance sheet, the committee asked that the final version of the accounts contained a fuller explanation of what this item included.  The director agreed to investigate this and advise the committee outside of the meeting. 

The committee also asked about an item in the accounts that set aside an amount to defend a legal challenge by a third party.  The officers explained that it was good accounting practice to allocate funds in case the council lost the legal challenge.  The officers agreed to update the committee at a future meeting. 

RESOLVED: To timetable a review of the draft statement of accounts in August, taking into account the committee’s suggested clarification regarding long-term debtors, and ask that copies of the draft revenue outturn variance report to the Cabinet are circulated to the committee in August also. 

The Accounts and Audit Regulations (2003), as amended by the Accounts and Audit (Amendment) (England) Regulations 2006, require local authorities to carry out a review of the effectiveness of the system of internal control and risk management and publish an Annual Governance Statement each year with the annual Statement of Accounts. 

The purpose of the attached Annual Governance Statement is to ask the committee to consider its content, to seek clarification of any of the assurances within it, and note that this version of the statement will be amended to ensure that it is up to date when the accounts are signed in September.  

The statement will follow this agenda. 

The committee considered the draft Annual Governance Statement 2010/11.  The committee noted that this document would form part of the final statement of accounts and therefore the officers had sent a copy to the Audit Commission for comment. 

The committee commented on the draft statement.  In relation to the corporate priorities set out on page 4, councillors suggested:

• removing the word ‘ambitious’ from the description of the council’s housing targets 
• amending the corporate priority to read ‘work in partnership with stakeholders to sustain vibrant market towns’ 
• under the strategic objective about managing our business effectively, include a reference to making the best and most efficient use of taxpayers’ funds and council assets to link in to risk assessments in line with these strategic objectives

The officers agreed to review these suggestions. 

Councillors also suggested that the council should consider preparing an investment management strategy, particularly for property investments.  The committee noted that the council did not have a property investment strategy but had a policy setting limits on how much could be invested in cash and property.  The committee believed that a strategy should be developed and that this should form an additional recommendation in the Annual Governance Statement. 

RESOLVED:

(a)       To review the suggestions made by the committee and consider whether they can be included in the final version of the Annual Governance Statement; and

(b)       To include an additional recommendation in the final Annual Governance Statement that the council should develop an investment management strategy, particularly for property investments. 

To review the audit and governance work programme, identifying areas that might be included in future agendas, and confirm the date of the next meeting – Wednesday 28 September 2011.  Introduced and presented by the democratic services officer. 

The committee noted the work programme for 2011/12.  This set out a programme of items that were due to come before future committee meetings.  It would appear on each agenda and was open to the committee to update as necessary. 

RESOLVED: To note the Audit and Governance Committee work programme for 2011/12. 

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