Agenda and minutes

There were no apologies for absence.

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

There were no Declarations of Interest.

The Minutes of the previous meeting of the Audit and Risk Committee held on 6 March 2019 are attached, and Members are asked to confirm them as a correct record.

RESOLVED:

                        That the Minutes of the meeting of the Committee held on 6 March              2019 be confirmed as a correct record.

Members are asked to note the membership of the Committee for 2019/20 as:

Councillor Pantling (Chair)

Councillor O’Donnell (Vice-Chair)

Councillor Bajaj

Councillor Dr Moore

Councillor Rahman

2 Labour Group vacancies (to be notified)

1 non-Group vacancy (to be notified)

Members were asked to note the membership of the Committee for 2019/20 as follows:

Councillor Pantling (Chair)

Councillor O’Donnell (Vice-Chair)

Councillor Bajaj

Councillor Joshi

Councillor Kaur Saini

Councillor Dr Moore

Councillor Rahman

1 non-Group vacancy (to be notified)

RESOLVED:

                        That the membership of the Committee for 2018/19 be noted.

Members are asked to note the meeting dates of the Committee for the 2019/20 municipal year as:

25 June 2019

24 July 2019

18 September 2019

20 November 2019

25 March 2020

All meetings to commence at 5.30pm, with any Members training or briefings to take place at 5.00pm.

Members were asked to note the meeting dates of the Committee for 2019/20 as follows:

25 June 2019

24 July 2019

18 September 2019

20 November 2019

25 March 2020

All to commence at 5.30pm.

It was confirmed that informal training sessions for Committee members would be convened prior to each Committee meeting.

RESOLVED:

                        That the meeting dates of the Committee for 2019/20 be noted.

Members are asked to note the Terms of Reference for the Committee as attached.

Members were asked to note the Terms of Reference for the Committee, copies of which were circulated with the agenda.

It was reported that the Terms of Reference were currently under review and any revisions would be submitted to the Committee in due course.

RESOLVED:

                        That the Terms of Reference of the Committee as circulated be                    noted.

The external auditor’s annual audit fees letter is attached for noting.

Grant Patterson (Grant Thornton) referred to the external auditor’s annual audit fees letter, a copy of which was submitted with the agenda.

The letter outlined the scale and scope of the audit and confirmed the billing schedule.

It was reported that Grant Thornton as the appointed external auditor would provide the annual opinion and a value for money conclusion, as provided in previous years.

RESOLVED:

                        That the external auditor’s annual fees letter for 2019/20 be                           noted.

The external auditor submits a paper, which provides a report on progress in delivering their responsibilities.

Grant Patterson (Grant Thornton) referred to the Annual Progress Report and Sector Update, copies of which were submitted with the agenda.

The report provided information on the progress in delivering the external auditor’s responsibilities and included a summary of emerging national issues and developments, together with a number of challenge questions in respect of those emerging issues.

Th progress to date concerning the two primary areas of the financial statements audit and the value for money conclusion were noted.

In respect of internal controls it was confirmed that a draft report had been submitted to the Council and that no significant concerns were notified.  Some minor improvement areas had been suggested.  It was noted that the Council had provided responses to all issues raised and it was expected that the draft financial statements for 31 March 2019 would reflect consideration of the points discussed and would be delivered on time.

In response to a question, it was clarified that Grant Thornton were in their first year as external auditors in a five year contract.  The previous external auditors were KPMG.  It was confirmed that issues previously identified by KPMG would be sustained.  The assets in the balance sheets of the Council to meet future liabilities had been highlighted in this regard.

The Committee was made aware of a sector wide issue concerning the effective management of pension contributions and liability.  An ongoing legal case was outlined and it was noted that a late pensions liability adjustment may be necessary, dependent on the outcome of the case expected in July 2019.  The enhanced partnership approach undertaken with the external auditors and County Council colleagues was recognised.

In conclusion, the information and questions provided in the sector review were discussed.  It was noted that the Council was tackling a continuing drive to achieve greater efficiency in the delivery of public services, whilst facing the challenges to address rising demand, ongoing budget pressures and social inequality.

RESOLVED:

                        That the Annual Progress Report and Sector Update be noted.

The Director of Finance submits a report, which seeks approval of the Policy for Engagement of External Auditors for Non-Audit Work.

The Chief Accountant submitted a report, which sought approval of the Policy for Engagement of External Auditors for Non-Audit Work.

It was reported that at its meeting on 28 June 2017, the Committee approved the Policy for Engagement of External Auditors for Non-Audit Work.  The Committee’s current Terms of Reference and the policy itself required the policy to be reviewed and approved annually.

The policy for was attached as an appendix to the report and it was reported that its purpose was to protect:

·         the Council’s interests by ensuring that any such work was properly arranged and approved; and

·         the External Auditor’s independence and objectivity.

The policy would not replace the Council’s existing procurement processes but enhanced the security of the process where the external auditors were concerned. The Policy outlined the approval processes and corporate reporting mechanisms that would be put in place for any non-audit work that the external auditor was asked to perform.

In undertaking the annual review, it was reported that a change had been suggested to clarify when approval was be required for additional statutory audit related work.

Grant Patterson (Grant Thornton) provided assurance that the external auditors were impartial in the process and were not considered as an advocate of the Council in undertaking their non-audit work.  It was also confirmed that as external auditors Grant Thornton had to satisfy a number of national checks before being able to bid for the non-audit function.

In response to a question the types of activities that were undertaken as ‘non-audit work’ were discussed and recent examples were provided where specific interest and expertise in a particular area was required.

RESOLVED:

                        To approve the Policy for Engagement of External Auditors for                      Non-Audit Work.

The Director of Finance submits a report, which provides an opportunity for the Committee to comment on the Council’s Draft Annual Governance Statement 2018–2019, before it is brought back to July’s committee for formal approval.

The Chief Accountant submitted a report, which provided an opportunity for the Committee to comment on the Council’s Draft Annual Governance Statement 2018–2019.  It was reported that the Statement would be brought back to the next meeting of the Committee for formal approval as part of the statement of accounts.

It was reported that the Council was required to publish, as part of its financial accounts reporting, an Annual Governance Statement. The statements intention was to provide assurance that the Council operated in accordance with the law and had due regard to proper standards of behaviour and safeguarded the ‘public purse’.

It was noted that the Annual Governance Statement was aligned to the work carried out by the external auditors, who would ensure it was consistent with their understanding and had no significant omissions.  It was reported that the work undertaken to date by the external auditor had not identified any concerns.

In response to a comment concerning the effect on the City and public finance of the UK’s EU exit (Brexit), reference was made to a detailed report submitted to a previous meeting.  It was confirmed that the Committee could be forwarded copies of that information separately.

RESOLVED:

                        That the Draft Annual Governance Statement 2018–2019 be                         noted.

The Director of Finance submits a report, which provides an opportunity for the Committee to comment on the Council’s Draft Statement of Accounts 2018-2019, before it is brought back to July’s committee for formal approval.

The Chief Accountant submitted a report, which provided an opportunity for the Committee to comment on the Council’s Draft Statement of Accounts 2018/19.  It was reported that the Statement would be brought back to the next meeting of the Committee for formal approval as part of the statement of accounts.

The previous debate concerning the potential pension liability adjustments were reiterated and noted (Minute Item 8 refers).  The Committee’s role in being assured that processes were in place to mitigate risk was discussed and recognised.

In terms of the estimated expenditure of separate departments of the Council, the difference in capital and revenue spend was explained and noted.

Members were advised that due to the length and complexity of the Statement of Accounts, officers could provide any further 1:1 assistance with questions on request.

RESOLVED:

                        That the Draft Statement of Accounts 2018/19 be noted.

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 reports in private on the grounds 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).

The following reports concern the strength of internal controls of the City Council’s financial and management processes and includes references to material weaknesses and areas thereby vulnerable to fraud or other irregularity.

It is considered that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

Item 13

Appendix H: INTERNAL AUDIT – 2018/19 PROGRESS AGAINST PLAN

Item 14

Appendix I: INTERNAL AUDIT – ANNUAL REPORT 2018/19

Item 15

Appendix J: INTERNAL AUDIT – AUDIT PLAN 2019/20

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 involved 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 circumstances into account, it was considered that the public interest in maintaining the information as exempt outweighed 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).

INTERNAL AUDIT – 2018/19 PROGRESS AGAINST PLAN

INTERNAL AUDIT – ANNUAL REPORT 2018/19

INTERNAL AUDIT – AUDIT PLAN 2019/20

The internal auditor submits a report, which provides a summary of progress against the Internal Audit Plan 2018-19, summary information on high importance recommendations and progress with implementing them, and information on resources used to progress the plan.

Bharat Mistry (Internal Audit) submitted a report, which provided:

·         a summary of progress against the Internal Audit Plan 2018-19

·         summary information on high importance recommendations and

            progress with implementing them

·         information on resources used to progress the plan

It was reported that under the Council’s Constitution, the Committee had duties to monitor performance against the Internal Audit Plan on an annual basis.  Summaries of Internal Audit reports were therefore regularly provided with details of any issues arising.  The close working relationship between County Council Officers undertaking the Internal Audit function and the Council’s own Finance Team was emphasised and noted.

In considering the detailed information in appendices and particularly the timeframes, it was confirmed that once appropriate action had been completed by relevant managers or officers, audits would be removed from the lists.

The process that would be undertaken if audit advice and recommendations were not sufficiently acted upon were discussed, including further individual reporting of concerns to the Committee.

RESOLVED:

                        That the report be noted.

The internal auditor submits a report, which provides an annual report on internal audit work conducted during 2018-19. The report also contains information on the internal audit function’s conformance to professional standards and its quality assurance framework, which provides an insight into its effectiveness.

Neil Jones (Internal Audit) submitted a report, which provided the Committee with an annual report on internal audit work conducted during 2018-19. The report also contained information on the internal audit function’s conformance to professional standards and its quality assurance framework, which provided an insight into its effectiveness.

RESOLVED:

                        That the report be noted.

The internal auditor submits a report, which provides an indication of internal audit work planned to be conducted during 2019-20.

Neil Jones (Internal Audit) submitted a report which provide the Committee with an indication of internal audit work planned to be conducted during 2019-20.

Members attention was drawn to the sections of the report concerning the Committee’s duties.  It was noted that the Committee was asked to review and challenge management’s responsiveness to the internal audit findings and recommendations, and with seeking assurance that appropriate action had been taken where necessary and agreed recommendations had been implemented within reasonable timescales.

In response to a question, arising from consideration of the summary information in appendices, the frequency and type of audits carried out at the City’s schools were summarised and noted.

RESOLVED:

                        That the Internal Audit – Audit Plan 2019/20 be approved.

The meeting closed at 6.50 pm.