Audit and Risk Committee Minutes

Date:
Thursday, 2nd December, 2010
Time:
4.30pm
Place:
Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City
 
 

Attendance Details

Present:
Councillor M.E. Weeks (Chairman), Councillor John Booth (Vice-Chairman),Councillor Mrs A.G. Ashley, Councillor J.M. Cunningham, Councillor Bill Davidson, Councillor Marilyn Kirkland and Councillor Deepak Sangha.
In attendance:
Nick Caley - Grant Thornton
Andy Cavanagh - Head of Finance, Performance and Asset Management
Fiona Timms - Performance and Risk Manager
Margaret Mulkerrin - Audit Manager
Nigel Schofield - Committee and Member Services Officer
Item Description/Decision
PART I
26 APOLOGIES FOR ABSENCE
An apology for absence was received from Councillor Paul Clark and in accordance with the agreed procedures of North Hertfordshire District Council it was confirmed that Councillor Marilyn Kirkland would be his substitute. Norma Atlay, Strategic Director of Finance, Policy and Governance also tendered her apologies.
27 MINUTES
RESOLVED: That the Minutes of the Meeting of the Committee held on 15 September 2010 be approved as a true record of the proceedings and signed by the Chairman.
28 NOTIFICATION OF OTHER BUSINESS
There was no other item of business tabled.
29 CHAIRMAN'S ANNOUNCEMENTS
The Chairman welcomed everyone to this meeting of the Audit and Risk Committee.

The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question.
30 PUBLIC PARTICIPATION
There was no public participation.
31 AUDIT AND CONSULTANCY SERVICES: POSITION AGAINST THE 2010-11 ANNUAL AUDIT PLAN AS AT 31 OCTOBER 2010
The Audit Manager (AM) presented the report of the Head of Finance, Performance and Asset Management which detailed the progress of Audit and Consultancy Services (Internal Audit) against the 2010-11 Annual Audit Plan; summaries of internal audit work undertaken during the period 1 August 2010 to 31 October 2010; and internal audit performance indicator information relating to the period 1 April 2010 to 31 October 2010.

The Audit Manager referred the Committee to Appendix A to the report, which detailed the completed audits between 1 August 2010 and 31 August 2010 and described the assurance levels. The Audit Manager took the Committee through the assurance levels for audits completed in the reporting period. The Audit Manager confirmed that Appendix A also contained details of non-audit projects and time spent on other activities, including attendance at corporate groups and tender openings.

The Audit Manager next referred the Committee to Appendix B to the report, which detailed the current status of audit assignments for 2010/11 at 31 August 2010. The AM advised the Committee that a review of the Annual Audit Plan had indicated a set of amendments were proposed for the following Audits: Recruitment and Retention, Leasing , VAT, Environmental Stewardship, IT Strategy, Post Implementation Review (Covalent) and Software Leasing. The Committee noted and accepted the approved amendments which released 58 additional productive days. Subsequent to this a request was received from East Herts District Council for internal audit resource and NHDC could provide some 35 productive days which would generate a small income. The AM advised that all delayed audits would be considered as part of the 2011-2012 audit planning process. The AM referred the Committee to Appendix C which detailed the satisfactory performance of Internal Audit in the first seven months of 2010/11 against the internal audit performance indicators.

The Audit Manager concluded her report with reference to Appendix D - Action Plan for 2010-2011 and confirmed that all actions had been updated and that this Committee was on target to complete all actions within the agreed timescales.

The Committee reviewed each Audit as presented at Appendix A and in response to an enquiry on the Home Working Audit the AM confirmed and assured the Committee that the five high risk recommendations had been actioned and completed.

Questioned on shared working with other local authorities the Audit Manager agreed that it was good practice to undertake work for neighbouring authorities and although the current work was ad hoc it represented progress towards effective partnership working. The AM confirmed that neighbouring authorities had acknowledged assistance from NHDC Internal Audit.

RESOLVED:

(1)That the position of Internal Audit against the agreed annual Audit Plan for 2010-11, as at 31 October 2010, be noted;

(2)That the performance of Internal Audit for the first seven months of 2010/11 against its performance indicators as presented at Appendix C be noted;

(3)That the proposed changes to the remainder of the 2010 - 2011 Annual Audit Plan be agreed;

(4)That the progress against the Audit and Risk Committee Action Plan for 2010 - 2011 as presented at Appendix D be noted.

REASON FOR DECISION: To ensure that the Audit and Risk Committee fulfils its obligations as an essential component of corporate governance and gains independent assurance that the Internal Audit function is fulfilling its statutory obligations.
32 REVIEW OF THE ANTI-FRAUD AND CORRUPTION STRATEGY AND ANTI-MONEY LAUNDERING POLICY
The Audit Manager presented the report of the Head of Finance, Performance and Asset Management which provided for review, comment and agreement to the revised policies for The Anti - Fraud and Corruption Strategy (Appendix 1) and The Anti - Money Laundering Policy (Appendix 2).

The Audit Manager advised the Committee that there were no fundamental changes to the policies and the reason for presentation to the Committee was to seek comment on the updating. There had only been a few minor amendments in either policy and the AM confirmed that should the Committee agree the two policies they would be implemented and staff advised as soon as possible.

The Committee reviewed the two revised policies and agreed that the documents should be implemented and staff advised as soon as possible of the new documents.

RESOLVED:

(1)That the revised policy documents for the Anti - Fraud and Corruption Strategy as presented at Appendix 1 be agreed;

(2)That the revised policy documents for the Anti-Money Laundering Policy as presented at Appendix 2 be agreed.

REASON FOR DECISION:
To ensure that North Hertfordshire District Council maintained a robust anti - fraud and corruption framework and was able to respond in a consistent manner to all allegations of fraud and corruption and concerns about suspected or known money laundering activity.
33 RISK MANAGEMENT UPDATE
The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management which provided the Committee with an update on the management of Strategic and Corporate risks owned by the Corporate Management Team and Cabinet.

The PRM advised the Committee that some risks had been reviewed and changes made where appropriate to the scope of the risk, and updates made to progress against the mitigating actions. The Top Risks were as summarised at Appendix A. The PRM confirmed that the overall description of the Risk: ‘Sustainable Community Strategy Implementation’ had been clarified and was attached at Appendix B. Subsequent assessment of the financial situation and a review of the arrangements of some of NHDC’s partners had led to the increase in the probability score from 1 to 2 as the risk of the delivery of the Sustainable Community Strategy would probably occur on more than one occasion in the next 12 months.

Unfortunately the risk of delivery of part or all of the Corporate Plan had increased the probability score from 1 to 2. There had been delays to the delivery of several projects in the 2010 - 2011 Corporate Plan (as reported to the Finance and Performance Scrutiny Sub - Committee on 29 November 2010 - Minute 34 refers) due to the need for financial efficiencies and a downturn in anticipated Capital receipts.

The PRM referred the Committee to Appendix C - Risks and Opportunities Management Strategy and identified the two main changes to the Strategy: 1. The Strategy would cover a three year period until 2013 (unless there were any significant changes that would require an earlier update) and 2. Where there have been any changes to titles of Committees/Job Titles.

To conclude the report the PRM advised the Committee that any key financial risks identified by Heads of Service which were cross referenced to the risk register and might impact on the General Fund had been considered and built into the General Fund balance for 2010-2011.

The Committee discussed and approved the proposals for the change to the probability of the Top Risk Sustainable Community Strategy and change to the probability of the Corporate Plan Risk and agreed that these changes should be forwarded to Cabinet for endorsement. With regard to Appendix B - The Sustainable Community Strategy Implementation the PRM agreed to remind the appropriate Officer to upload the minutes from the Local Strategic Partnership Executive Meetings to the NHDC website following each meeting.

The Committee reviewed the Risk and Opportunities Strategy, noted the main changes, agreed to a three yearly review and acknowledged that the Strategy required the Audit and Risk Committee to consider regular reports on the Council’s Top Risks. The PRM also agreed to provide visible track changes to the text of the Strategy when it was next reviewed even if the changes were minor.

RESOLVED: That the amendments to the Top Risks, as set out in the report, be noted and the amended Risk and Opportunities Management Strategy be noted and forwarded to Cabinet for endorsement.

RECOMMENDED TO CABINET:

(1)That Cabinet be requested to approve the change and increased probability from 1 to 2 to the Top Risk of Sustainability Community Strategy Implementation;

(2)That Cabinet be requested to approve the increase in probability from 1 to 2 for the Corporate Plan risk;

(3)That Cabinet be requested to endorse the amended Risk and Opportunities Management Strategy for 2010 - 2013 as presented at Appendix C to the report.

REASON FOR DECISION: To ensure compliance with the NHDC Risk and Opportunities Management Strategy and to allow Cabinet to accept changes to Top Risks in their ownership.
34 ANNUAL GOVERNANCE STATEMENT - UPDATE ON THE ACTION PLAN
The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management inviting the Committee to review progress against the Action Plan arising from the 2009-2010 AGS and as presented at Appendix A

The PRM advised the Committee that two items had been completed since the last meeting held on 15 September 2010, viz. AGS 011.001 and TRA 010.008 and that four items had missed milestones and missed completion at the programmed date, viz. AGS 010.003, AGS011, AGS 015 and AGS 004.

The Committee reviewed each item in turn and the PRM agreed to include additional milestones to track how the completion of a revised Conflicts of Interest Policy (AGS 015) would be achieved. It was confirmed that HNDC had a current Conflicts of Interest Policy. However, to avoid officers inadvertently being in breach of it a rewrite using clear terminology was necessary. A Member suggested that it might be appropriate to investigate the potential for using such a policy adopted by another authority. It was confirmed that some examples had been provided for use by the officer undertaking the revision of this policy.

A final discussion concerned the Document Retention Policy (AGS 001.002) and the reasons for the missed completion date. The Committee requested that the Head of IT and Customer Services should provide an explanation for the delay. As part of the ‘clear out’ approach for the office accommodation project the Head of Finance, Performance and Asset Management advised that staff had been reminded of the need to delete emails and electronic documents no longer required.

RESOLVED:

(1)That the completion of the following actions: AGS 011.001 Improve security of NHDC IT systems and TRA 010.008 Revised Business Continuity Plans be noted;

(2)That the Performance and Risk Manager be requested to update the Action Plan to include additional milestones to allow progress against AGS 015 be tracked to ensure completion with no further delay;

(3)That the progress against the actions subject to (2) above, arising from the 2009/10 Annual Governance Statement, as detailed in the report, be noted;

(4)That the Head of IT and Customer Services be requested to advise the Chairman and Vice-Chairman of this Committee the reasons for the delay in the implementation of the Document Retention Policy (AGS 010.002) detailed as a changed completion date from 31 July 2010 and that the revised completion date of 31 December 2010.

REASON FOR DECISION: To oversee the production of the Annual Governance Statement (AGS) and the delivery of the AGS Action Plan.
35 ANNUAL AUDIT LETTER 2009-2010 TO NORTH HERETFORDSHIRE DISTRICT COUNCIL
Mr Nick Caley (of Grant Thornton, the Council’s external auditors) presented the Annual Audit Letter for 2009-2010.

Mr Caley had no updating to the report and provided a summary of the key messages and issues arising from the work carried out by Grant Thornton for NHDC during the 2009-2010 audit. The main topics covered were: Auditing the year end accounts for 2009-2010, the accuracy of grant claims and returns to government departments, an assessment of the Councils arrangements for securing economy, efficiency and effectiveness in the use of its resources.

Mr Caley was pleased to advise the Committee that an unqualified opinion was given on the 2009-2010 accounts which gave a true and fair view of the Council’s financial affairs at 31 March 2010. The Committee noted that Grant Thornton would continue to monitor the Council’s financial position as part of the 2010-2011 audit including a risk based assessment of the robustness of the Medium Term Financial Strategy. Mr Caley confirmed that the proposed Audit Plan for 2010-2011 would be presented to the Committee at the next meeting scheduled for 28 February 2011.

There was some concern about the delayed progress to compliance with the International Financial Reporting Standards and Mr Caley advised that NHDC was at amber status as were 60 per cent of other local authorities. The Head of Finance, Performance and Asset Management (HF) advised that there had been a major effort to achieve a balanced budget and that work on IFRS had slipped a little. In response to an enquiry the HF confirmed that compliance to IFRS must be completed by June 2011 as financial reporting after that date had to be to IFRS and no other procedure. With regard to the use of external resources to meet the IFRS timetable the HF advised that other Hertfordshire Authorities who had taken this approach had found it to represent poor value for money unless targeted to very specific tasks. The Committee accepted the reasons for the slower progress than planned and requested an update at the next meeting to be held on 28 February 2011.

The Chairman thanked Mr Caley for the report and that the Committee were pleased with the services provided by Grant Thornton.

RESOLVED:

(1)That the key messages to NHDC in the Audit Letter be noted;

(2)That the unqualified opinion of the Council’s Accounts for 2009-2010 be noted and welcomed;

(3)That the key areas for action by the Council as detailed in the Audit Letter be noted;

(4)That the Head of Finance, Performance and Asset Management be requested to present an updating report on progress towards compliance with the International Financial Reporting Standards at 30 June 2011.

Published on Tuesday, 14th December, 2010
5.43 p.m.