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Agenda and minutes

Agenda and minutes

Venue: Meeting Room G.01, Ground Floor, City Hall, 115 Charles Street, Leicester, LE1 1FZ

Contact: Angie Smith, Democratic Support Officer 

Items
No. Item

14.

APOLOGIES FOR ABSENCE

Minutes:

The Chair welcomed those present and led introductions.

 

There were no apologies for absence from Members.

15.

DECLARATIONS OF INTEREST

Members are asked to declare any interests they may have in the business to be discussed.

Minutes:

Members were asked to declare any interest they might have in the business to be discussed.

 

There were no declarations of interest made.

16.

MINUTES OF THE PREVIOUS MEETING pdf icon PDF 216 KB

The Minutes of the previous meeting of the Audit and Risk Committee held on 20 July are attached, and Members will be asked to confirm them as a correct record.

Minutes:

RESOLVED:

That the minutes of the meeting held on 20 July 2022 be confirmed as a correct record.

17.

FINANCIAL UPDATE REPORT pdf icon PDF 242 KB

The Deputy Director of Finance submits a report to the Audit and Risk Committee which provides an update on the progress of the statement of accounts and external audit for 2020/21 and 2021/22, and the decision of the Monitoring Officer to appoint Bipon Bhakri as an Independent Member of the Committee.

 

The Committee is recommended to note the contents of the report and the update provided on the progress of the external audit, and to support Bipon Bhakri in his role as the Independent Member.

Additional documents:

Minutes:

The Deputy Director of Finance submitted a report to the Audit and Risk Committee which provided an update on the progress of the statement of accounts and external audit for 2020/21 and 2021/22, and the decision of the Monitoring Officer to appoint Bipon Bhakri as an Independent Member of the Committee.

 

The Committee was recommended to note the contents of the report including the progress of the external audit, and to support Mr Bipon Bhakri in his role as the Independent Member.

 

The Chair welcomed Mr Bhakri (Independent Member) to the meeting. Members agreed with the recommendation to support Mr Bhakri in his new role.

 

RESOLVED:

The Audit and Risk Committee welcomed Mr Bhakri to the meeting and resolved to support him in his role as the Independent Member.

 

The Head of Finance presented the report and Members noted the following points made:

 

·         National issues around the valuation of infrastructure assets had delayed the closing of the 2020/21 accounts. However, the delay had no impact on the resources the Council had available and was an accounting adjustment.

·         In addition, the Government had delayed issuing the ‘Whole of Government Accounts’ return further impacting on the 2020/21 accounts.

·         Statements for 2021/22 would be impacted by the same issues, and it was not known when the accounts would be completed.

 

The External Auditor then presented the Leicester City Council audit progress report and sector update

·         As a point of clarification, the external auditor confirmed there was now a signed opinion for the 2021 accounts. The annual auditors report had also been issued. It was also noted that the authority would fall under the Whole of Government accounts as it fell under the threshold required by Government.

·         Apart from the valuation of infrastructure assets the External Auditors would be in a position to certify the audit closed.

·         Members were reminded that initial planning for the 2021/22 audit was taken to the Audit and Risk Committee meeting in March 2022, with the audit plan being taken to the Committee in July 2022.

·         External auditors confirmed the statutory publication of accounts for the Council had moved to the end of November. Overall external auditors were on track to hit that deadline apart from the matter of infrastructure assets.

·         However, in terms of value for money there was one issue in that the Code of Audit Practice had not changed, and the Auditor’s Annual Report should have been issued in September, but it was recognised that all auditor firms had to concentrate on completing statutory statement of accounts.

·         With the report there was a value for money extension letter written from the external auditor with the deadline for the report being by 28 February 2023.

·         With regards to the overall controlled environment, for journal entry controls there was a continuing issue around authorisation. The Council were aware of the risk, and there was additional testing to mitigate risk.

·         In relation to infrastructure assets, they were accounted on the balance sheet as historic cost, but there was an  ...  view the full minutes text for item 17.

18.

PROCUREMENT ANNUAL REPORT 2021/22 pdf icon PDF 297 KB

The City Barrister & Head of Standards submits a report, as required under the Council’s Contract Procedure Rules, to the Audit and Risk Committee to inform them of the activity of the procurement function of the Council (which comprises three specialist procurement teams: Procurement Services, ICT Procurement and ASC Procurement) over the previous financial year and evidence compliance with the requirements of the Contract Procedure Rules.

 

The Committee is recommended to note the contents of the report and make any comments to the City Barrister & Head of Standards.

Minutes:

The City Barrister & Head of Standards submitted a report, as required under the Council’s Contract Procedure Rules, to the Audit and Risk Committee to inform them of the activity of the procurement function of the Council (which comprises three specialist procurement teams: Procurement Services, ICT Procurement and ASC Procurement) over the previous financial year and evidence compliance with the requirements of the Contract Procedure Rules.

 

The Committee is recommended to note the contents of the report and make any comments to the City Barrister & Head of Standards.

 

The Deputy Director of Finance presented the report and made the following points:

 

·         The report updated on what was required under Contract Procedure Rules.

·         For information Members were asked to note the Public Contracts Regulations (PCR) thresholds updated in December 2021 were now inclusive of VAT, which had caused council internal procedures to be amended, and officers to be reminded of the new thresholds to take the VAT inclusive costs for checking.

·         Attention was drawn to the Procurement Bill going through Parliament, to consolidate national procurement regulations following Brexit into UK legislation. Contracting authorities would now have to consider specific national priority outcomes alongside local priorities, including creating new businesses, new jobs and new skills, tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience. It would also give the authority more scope to consider local priorities as well with the added flexibility it had to target procurement activity.

·         More information would be required to be published on contacts and contract management as a result. There was now a page on the government website to which local authorities and government had to upload certain contracts, providing a central portal for upcoming procurement so that anyone could check the web page for information rather than going round individual councils, departments and websites.

·         Members were asked to note the table at Point 3.7 in the report which listed the number of completed procurements.

·         The Council’s Open Data website had information on planned procurements for coming years and was kept up to date, with an ongoing exercise currently being undertaken to ensure that directors kept procurement information regularly updated.

·         It was noted that normal procurement procedures were suspended during the pandemic with the Council using Exemptions to allow for PPE to be bought outside of normal procurement procedures at the start of the pandemic to respond to the situation. Various contracts had also been extended as they could not realistically be re-tendered or renewed during the pandemic. Internal audit had looked to ensure people were complying with procurement procedures.

·         The council had been successful in getting three major capital schemes approved by government under levelling up. The Council were now required to procure the infrastructure works for the schemes.

·         The Committee had previously discussed social value over recent years through the Council’s processes, for example apprenticeships, benefit for the local community. There was more potential and discussion to be had, and the team had been asked to focus on how the council could  ...  view the full minutes text for item 18.

19.

ANNUAL INSURANCE REPORT 2022 pdf icon PDF 294 KB

The Deputy Director of Finance submits a report to the Audit and Risk Committee which presents an overview of the Council’s internal and external insurance arrangements and provides information on the claims received in recent years, and the results of the claims handling process.

 

The Committee is recommended to note the contents of the report, and the Council’s approach to ensuring it is managing the financial risk associated with the claims.

Minutes:

The Deputy Director of Finance submitted a report to the Audit and Risk Committee which presented an overview of the Council’s internal and external insurance arrangements and provided information on the claims received in recent years, and the results of the claims handling process.

 

The Committee was recommended to note the contents of the report, and the Council’s approach to ensuring it was managing the financial risk associated with the claims.

 

The Financial Strategy and Insurance Manager presented the report and drew Members’ attention to the following:

 

·         A significant decision was how the authority purchased insurance. For most types of claim the first £200k was handled as an excess by the authority, the cost of which was managed internally.

·         External insurance was held for catastrophic cases, such as a major fire in a building, or serious injury.

·         An annual budget was held corporately which funded both the cost of external premiums and the amount paid out in deductibles.

·         Schools and the Housing Revenue Account which had a statutory ring fence on it, paid for their own shares. Other departments insurance was held corporately and not in departmental section budgets.

·         The budget setting process in February 2022 had reduced the corporate revenue budget by £0.5million, with a view to paying out less than budgeted due to good performance on claims.

·         On balance over the past seven years claims had been coming in under budget, but could be volatile between years, therefore an insurance fund was held as a corporate reserve on the balance sheet, but in practice managed as one fund. As of 2021 there was nearly £15million in that fund.

·         An external actuarial valuation to find out how much should be held to cover claims to date was being undertaken and a report should be received shortly.

·         The most significant external insurance was for property, liability and motor insurance, with a combined liability policy to cover staff and the public.

·         Externally there had been quite a lot of cost increases, particularly for property insurance, with adverse weather events still concerning insurers.

·         Other issues include an insurance provider withdrawing from the UK market post Brexit. In the future there would be a smaller market and less competition for providers that would make it difficult to get better rates.

·         Claims information focussed on areas with a lot of claims, namely highways maintenance, motor claims, and housing services. It was not a criticism of those areas for having the most claims but was the type of area, for example, trips and falls on highways. It was noted that highways was very good at repudiating claims usually around 80% defence of claims, largely due to having a good system of highways maintenance.

·         Amounts paid could be variable between years, simply depending on when bigger claims were submitted. Employer’s liability claims tended to be of higher value but were fewer in number.

 

In response to Members’ questions, the following information was provided:

 

·         The general approach to spreading risk across was with a £200k excess to  ...  view the full minutes text for item 19.

20.

ANNUAL REPORT ON THE NATIONAL FRAUD INITIATIVE pdf icon PDF 364 KB

The Deputy Director of Finance submits a report to the Audit and Risk Committee the purpose of which is to provide an update on the National Fraud Initiative (NFI) exercises currently underway.

 

The Committee is recommended to note the contents of the report and make any comments it deems appropriate.

Minutes:

The Deputy Director of Finance submitted a report to the Audit and Risk Committee the purpose of which was to provide an update on the National Fraud Initiative (NFI) exercises currently underway.

 

The Committee was recommended to note the contents of the report and make any comments it deemed appropriate.

 

Stuart Limb, Corporate Investigations Manager, presented the report, and Members noted the following information:

 

·         The Authority took part in the NFI hosted by the Cabinet Office.

·         Every two years in October the authority uploaded vast amounts of data along with other local authorities and public sector organisations throughout the country.

·         In return matches were sent back to the Authority by secure portal in January.

·         The current exercise was for 2020/21. The types of matches varied across different work areas and work streams. Each work area would be responsible for filtering through those matches, with high-risk cases being worked upon first, identifying any irregularities or errors.

·         The statistics are brought to Committee for a timely update.

·         4.3 in the report gave examples of some of the matches the Authority looked through.

·         The authority received 14,752 matches, with 8,336 matches checked, with just 2 errors identified, and 0 frauds that would be investigated, which was a success for the authority, with very low level of errors in the authority.

·         On the overpayments identified, there had been a query placed with the Cabinet Office as it was believed their reporting figures were slightly inaccurate.

·         Officers would start at the end of October to upload data to start the next exercise in January.

 

In response to Members questions, it was noted that:

 

·         Each local authority would have a different level of matches returned based on the size of the authority which varied greatly, and no more or less fraud had been identified in Leicester, though there was a high level of assurance given there were low levels of fraud based on the matches.

·         Members question the number of hours of officer time spent on checking matches and would the time have been better spent identifying underclaimed benefits and payments. Members were informed that the authority Revenues and Customer Support had ongoing work to improve benefit take up and improve welfare support. It was accepted there was a low level of savings for what was a significant piece of work, but the fact was the authority had no choice but to upload data every two years to the Cabinet Office, and most councils would say they spent a disproportionate amount of time on the NFI. The Cabinet Office had consulted recently on increasing the scope of NFI but had decided not to progress this currently.

·         The Council had recently bought the Better Off Leicester tool on the website, the key aim of which was to allow people in the city to type in their circumstances and information to inform them of what benefits they could claim, including discretionary payments the Council could make.

·         Work was now starting in earnest on how the council could help  ...  view the full minutes text for item 20.

21.

PROGRESS AGAINST INTERNAL AUDIT PLANS 2021-22 AND 2022-23 pdf icon PDF 456 KB

The Head of Internal Audit & Assurance Service submits a report to the Audit and Risk Committee which provides a summary of progress against the 2021-22 and 2022-23 Internal Audit Plans, including:

 

i.              Summary information on progress with implementing high importance recommendations

ii.            Summary of progress against the Internal Audit Plans

iii.           Commentary on the progress and resources used

iv.           An update on progressing improvements to internal audit arrangements following a meeting regarding the CIPFA research report, ‘Internal audit: untapped potential’

 

The Committee is recommended the note the routine update report.

Additional documents:

Minutes:

The Head of Internal Audit & Assurance Service submitted a report to the Audit and Risk Committee which provided a summary of progress against the 2021-22 and 2022-23 Internal Audit Plans, including:

 

i.              Summary information on progress with implementing high importance recommendations

ii.            Summary of progress against the Internal Audit Plans

iii.           Commentary on the progress and resources used

iv.           An update on progressing improvements to internal audit arrangements following a meeting regarding the CIPFA research report, ‘Internal audit: untapped potential’

 

The Committee was recommended the note the routine update report.

 

Neil Jones, Head of Internal Audit Service (HoIAS) presented the report and noted the following:

 

·         The report took the opportunity to re-emphasise what was important for the committee, with how internal audit implemented important recommendations towards the front of the report, with paragraph 6 outlining the basis behind the designation of high important recommendations. Appendix 1 to the report introduced references to high importance recommendations.

·         There were three new recommendations following audit of key ICT controls, with weaknesses around the IT disaster recovery processes. Recommendations had been accepted and a plan was being developed for those, and brief assurance had been given on progress being made on those by Internal Audit.

·         Updates on recommendations were provided in bold font, with the most recent update on 5 September 2022. It was noted there had been a couple of extensions to deadlines for recommendations which were being monitored, one of which related to contract arrangements during Covid which had already been discussed.

·         The report and the appendix identified the number of times high importance recommendations had been extended.

·         Appendix 2 noted progress against plans up to 31st July 2022, and it was reported that many of the audits had moved on, the outcomes of which would be brought to the next meeting of Committee.

·         Paragraph 13 in the report provided a summary of resources used in progressing work over the year, which had gone quite well with officers investing 303 days up to 31 July 2022.

·         Paragraph14 outlined a healthy staffing situation in terms of retention and recruitment. It was also noted there had been extensions to contracts, and the placement of a sponsored student from De Montfort University.

·         The final part of report provided a short update from CIPFA about the role of internal audit in local authorities. Improvements had already begun to be implemented, but it was recognised that larger projects would require further discussions.

 

Members were given the opportunity to comment and ask questions. The following was noted:

 

1.    In terms of social value, it was noted that internal audit had undertaken a piece of work on social value in procurement. Members asked if it would be possible to have sight of the report. Officers would confirm with the Monitoring Officer with regards to the sharing of a report that was not in the public domain with Audit and Risk Committee Members.

2.    Members asked if the 303 days of internal audit input were within plan.  ...  view the full minutes text for item 21.

22.

ANY OTHER URGENT BUSINESS

Minutes:

a)    The Chair informed the Committee that Angie Smith, the Democratic Support Officer, was leaving the authority. She thanked Angie for all her assistance and wished her all the very best in her future role.

 

There being no other items of urgent business, the meeting closed at 7:23pm.