Agenda and minutes

Apologies were received from Councillor Grant.

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

There were no declarations of interest.

The Chair announced there were several reports at the meeting that had only had minor amendments from the previous approved versions, and these had been highlighted as a summary of key points for the assistance of Members.

The Minutes of the previous meeting of the Audit and Risk Committee held on 25^th June 2014 are attached, and Members will be asked to confirm them as a correct record.

Matters Arising

Minute Item 4 – Procedural Guidance and Recent Changes in Arrangements for Cash Handling at the Council

A ‘top 15’ list of cash income generators for a sample week in May 2014 was circulated to Members for information following the previous meeting.

Minute Item 6 – Risk Management and Insurance Services Update Report

Officers and members commented on the Data Centre move on the 4-6 July 2014. It was reported there was no significant loss of service, and was a relatively smooth transfer.

RESOLVED:

that the minutes of the meeting of Audit and Risk Committee held on 25^th June 2014 be confirmed as a correct record.

The Director of Finance presents the Draft Statement of Accounts for the year ended 31^st March 2014. The Audit and Risk Committee is recommended to note the draft accounts for the year ended 31^st March 2014 as submitted for audit.

The Chair agreed to hear the agenda out of order, and the following agenda item was heard next.

The Director of Finance submitted the Draft Statement of Accounts for the financial year ended 31^st March 2014, prior to formal approval of the final Statement of Accounts at the Audit and Risk Committee on 29^th September 2014, in accordance with the Accounts and Audit (England) Regulations 2011. The report was presented by the Director of Finance and the Principal Accountant. The draft accounts were appended to the report and were submitted for information only.

The Audit and Risk Committee was recommended to note the draft accounts for the year ended 31^st March 2014 as submitted for audit.

Members were informed the accounts were made up of four core financial statements, which were:

1.    Movement in reserves statement

2.    Comprehensive income and expenditure statement

3.    Balance sheet

4.    Cash flow statement

The report for the draft Statement of Accounts confirmed they had been formally submitted to KPMG LLP for audit.

Members were asked to pass on questions to officers ahead of the Audit and Risk Committee meeting in September prior to the accounts being signed off.

Members agreed to set up a working party to discuss the draft accounts, comprising the following Councillors:

Councillor Alfonso

Councillor Desai

Councillor Dr. Moore

Councillor Naylor

It was agreed that, if requested, Finance Officers would provide Members with one-to-one discussions regarding the terminology used in the report before the Audit & Risk Committee meeting on 29^th September 2014.

The Chair thanked officers for the report.

RESOLVED:

1.    that the Draft Accounts for the year ended 31^st March 2014, as submitted for audit, be noted.

2.    the working party to feed back to Members of the Audit and Risk Committee via the Chair before the meeting on 29^th September 2014.

3.    Finance Officers contact Committee Members to arrange one-to-one discussions regarding the terminology used in the report.

The External Auditor submits a report to the Audit and Risk Committee with an overview of progress in delivering their responsibilities as external auditors. The report also highlights the main technical issues which are currently having an impact in local government.

The Committee is asked to receive the report.

The External Auditor submitted a report with an overview of progress in delivering their responsibilities as external auditors. The report also highlighted the main technical issues which were currently having an impact in local government.

The report was presented by John Cornett, Director, KPMG LLP.

Members were informed that the planning process for the 2014-15 audit was complete, and the following were brought to Members attention:

·         The interim audit work on the draft financial statements was substantially complete. The only matter brought to the Committee’s attention was that there was no formal evidence of the monthly bank reconciliations, and the issue was raised with officers in March 2014, and the external auditors were confident action had been taken to address the issue.

·         Funding transfer from the National Health Service to local authorities, and public health responsibilities. Members requested an update on the transfer of money, and on working in partnership with the health services and voluntary sector to make best use of the money.

·         The auditing of the Council’s accounts would commence on 11^th August 2014, with an opinion audit deadline of 30^th September 2014.

·         Work on the value for money conclusion was complete, with no significant issues to report.

·         National research by KPMG LLP and Shelter on the housing shortage was highlighted, and a link to the full report can be found in the document.

The Chair thanked the External Auditors for the report.

RESOLVED:

1.    that the Audit and Risk Committee received the report and note its contents.

2.    That the Director of Public Health be asked to bring an update to a future meeting of the Audit and Risk Committee on the transfer to the Council of the public health responsibilities and associated funding from the National Health Service.

The Director of Finance submits a report that presents the findings of the annual review of the effectiveness of the Council’s system of internal audit for 2013-14.

The Committee is recommended to accept the findings of the review, and conclude that the Council has an effective system of internal audit upon which it (the Council) can place reliance.

The Director of Finance submitted a report that presented the findings of the annual review of the effectiveness of the Council’s system of internal audit for 2013-14. The report was presented by the Head of Internal Audit and Risk Management. The Audit and Risk Committee was recommended to accept the findings of the review and conclude that the Council had an effective system of internal audit upon which it (the Council) could place reliance.

It was reported Council’s Finance Division included the Internal Audit Team, which carried out reviews of financial and management systems and sought to provide assurance to management on the effectiveness of their management controls. Recommendations were made to improve systems and procedures as and when appropriate, with the aim of reducing the Council’s exposure to unacceptable levels of risk. Internal Audit was an integral part of the Council’s overall system of internal control, which was the means by which the Council ensured that resources were used effectively and for their intended purposes.

It was further reported that a further fundamental component of the Council’s system of internal audit was the Audit and Risk Committee, as the Committee had an essential role to play in providing independent assurance on the effectiveness of the Council’s system of internal control as a contribution to the Council’s governance arrangements as reported in the Annual Governance Statement.

The Head of Internal Audit and Risk Management drew Members’ attention to key conclusions and sources of information upon which the conclusion was based. Also highlighted from the report was the contribution of the Audit and Risk Committee to the governance of the City Council.

The Committee received the report, and agreed the recommendations.

RESOLVED:

1.            that the findings of the review be accepted.

2.            the Committee concluded that the Council had an effective system of internal audit upon which the Council could place reliance.

The Director of Finance presents to Committee the detailed operational audit plan for the second quarter of the financial year 2014-15.

The Audit and Risk Committee is asked to note the Internal Audit operational plan for the second quarter of 2014-15.

The Director of Finance submitted a report which presented to Committee the detailed operational audit plan for the second quarter of the financial year 2014-15 (July to September 2014), and was presented by the Audit Manager. The Audit and Risk Committee was asked to note the Internal Audit operational plan and the themes underlying the work intended, as itemised at the back of the report.

Members were pleased to note there was a planned audit to look at the inventory and assets of Museums, and asked that the condition of the assets and their safekeeping were also looked at. Members were informed that for insurance purposes an inventory needed to be kept, but insurance of items on loan to the museums were usually the responsibility of the owner. The Committee were reassured there were now better security and management structures in place.

The Committee received the report, and agreed the recommendations.

RESOLVED:

1.    that the Audit and Risk Committee note the Internal Audit operational plan for the second quarter of 2014-15.

The Director of Finance submits a report to seek the Committee’s approval of amendments to the Internal Audit Charter

The Committee is recommended to approve the revised Internal Audit Charter and agree that it accurately reflects the terms of reference of the Internal Audit service.

The Director of Finance submitted a report which sought the Committee’s approval of amendments to the Internal Audit Charter, and was presented by the Audit Manager. The Audit and Risk Committee were recommended to approve the revised Internal Audit Charter and agreed that it accurately reflected the terms of reference of the Internal Audit service.

Members were informed there were modest changes to the Charter to reflect requirements of the Public Sector Internal Audit Standards, the new external audit joint working protocol and the current status of the counter-fraud teams, and the changes were highlighted in the report. A report on the review of the Corporate Counter Fraud Team would be brought to a future Committee meeting, and there would be further reporting on the fraud process at the next meeting of the Audit and Risk Committee.

The Committee received the report, and agreed the recommendations.

RESOLVED:

1.    that the Committee approve the revised Internal Audit Charter, and agree that it accurately reflected the terms of reference of the Internal Audit service.

AGENDA

MEMBERS OF THE PUBLIC TO NOTE

Under the law, the Committee is entitled to consider certain items in private where in the circumstances the public interest in maintaining the matter exempt from publication outweighs the public interest in disclosing the information.  Members of the public will be asked to leave the meeting when such items are discussed.

The Committee is recommended to consider the following report in private on the grounds that it will contain ‘exempt’ information as defined by the Local Government (Access to Information) Act 1985, as amended, and consequently makes the following resolution:-

“that the press and public be excluded during consideration of the following report in accordance with the provisions of Section 100A(4) of the Local Government Act 1972, as amended, because it involves the likely disclosure of 'exempt' information, as defined in the Paragraph detailed below of Part 1 of Schedule 12A of the Act, and taking all the circumstances into account, it is considered that the public interest in maintaining the information as exempt outweighs the public interest in disclosing the information.”

Paragraph 3

Information relating to the financial or business affairs of any particular person (including the authority holding that information)

OUTCOMES OF INTERNAL AUDIT WORK IN 2013-14 QUARTER 4 (JANUARY 2014 – MARCH 2014)                                                Appendix B1

RESOLVED:

“that the press and public be excluded during consideration of the following reports in accordance with the provisions of Section 100A(4) of the Local Government Act 1972, as amended, because they involve the likely disclosure of 'exempt' information, as defined in the Paragraphs detailed below of Part 1 of Schedule 12A of the Act, and taking all the circumstances into account, it is considered that the public interest in maintaining the information as exempt outweighs the public interest in disclosing the information.”

Paragraph 3

Information relating to the financial or business affairs of any particular person (INCLUDING THE authority holding that information)

B1)      OUTCOMES OF INTERNAL AUDIT WORK IN 2013-14 QUARTER 4 (JANUARY 2014 – MARCH 2014)

The Director of Finance to present a report.

The Director of Finance submitted a summary of Internal Audit work completed in the fourth quarter of the financial year 2013-14 (1^st January 2014 to 31^st March 2014), and which provided more detail on Internal Audit reports in which low assurance levels had been given and where there were material concerns. The Audit and Risk committee was recommended to receive the report and note the key issues identified. The report was presented by the Audit Manager.

The report concerned the strength of internal controls in the City Council's financial and management processes and included references to material weaknesses and areas thereby vulnerable to fraud, error or other irregularity, therefore it had been brought as a 'B' agenda item.

The Committee received the report.

RESOLVED:

1.    that the report be received;

2.    that the key issues identified be noted.

1.    The Chair informed the meeting the Council had decided as an authority to withdraw from ESPO, which was now a joint committee of six member authorities, not including Leicester City Council. The meeting was informed that officers could still procure through ESPO, but overall the Council’s procurement was strengthened.

2.    The Committee Members requested a report to the Audit and Risk Committee meeting in December on the collection, handling and security of cash and security of officers in the Markets service.

3.    Following a recent news article regarding the closure of the Police investigation into Housing fraud, the Committee Members requested a report from the Director of Housing on what were the weaknesses in procedures, what improvements to process and procedure had been made, and results of the improvements.

The meeting closed at 19.06pm.