Agenda and minutes

Audit Committee
Thursday, 25th July, 2019 3.00 pm

Venue: Town Hall, Scarborough

Items
No. Item

1.

Declarations of Interest pdf icon PDF 43 KB

Members are reminded of the need to consider whether they have a disclosable pecuniary, prejudicial or other (personal) interest to declare in any items on this agenda. Details of any interest must be declared at the start of the meeting or as soon as possible. The attached form must be completed. Any advice required should ideally be sought before the day of the meeting.

Minutes:

No declarations of interest were received.

 

2.

Minutes pdf icon PDF 97 KB

To approve and sign as a correct record the Minutes of the meeting held on 25 April 2019.

Minutes:

RESOLVED that the minutes of the meeting held on 25 April 2019 be approved as a correct record and signed by the Chairman.

 

3.

Public Question Time

Public questions of which due notice has been given and which are relevant to the business of the Audit Committee.

Minutes:

There were no public questions.

 

4.

External Audit Completion Report pdf icon PDF 779 KB

To consider the report of the External Auditors (attached).

 

Minutes:

The External Auditor, Mark Kirkham presented the External Audit Completion Report. Members were advised that with the exception of the ongoing formal objection to the Council’s accounts on the basis of income and expenditure in relation to activities in Whitby Harbour, there were no adverse matters to bring to the committee.  In the same way as for the previous three years, this meant that the External Auditors could not yet sign off the Council’s accounts.  Members asked if this matter was nearing a resolution.  The Monitoring Officer advised that the Council had provided Mazars with all the information they had requested; the outstanding matter was completing the process to define clearly the boundary of the Whitby Harbour land and Council land. 

RESOLVED that the report be received.

 

5.

Commercial Property Investment Strategy - update

To consider the report of the Director (RB) (to follow)

 

Minutes:

The Commercial Director, Mr Bradley advised that since the previous update in April, a number of potential commercial property acquisitions in the traditional retail and industrial sectors had been considered and rejected at an early stage.  Several potential acquisitions in the leisure sector were being explored at a high level.  Refresher training on commercial property investment had been delivered by Anthony Collins Solicitors and National Capital Markets to the new Chief Executive, new Portfolio Holder and other members of the Property Investment Governance Board earlier in the month.

RESOLVED that the update be noted.

 

6.

Building Security

To consider a verbal report by the Asset & Risk Manager, Martin Pedley.

 

Minutes:

The committee considered a verbal update by the Asset & Risk Manager, Martin Pedley in respect of building security arrangements at the Town Hall.  Members were reminded that the main part of the smart pass access system around the Town Hall went live in April.  The remaining element was around access through the front doors to the Town Hall, and the implementation of a fully self-serve solution in the foyer.  Following concerns raised by both officers and the Audit Committee, it was decided not to implement the fully self-serve option.  Instead Civic Reception would remain staffed and the self-serve system would be affixed to the reception desk and visitors would be encouraged to self-serve, whilst still having the assurance of a member of staff available.  This would enable visitors, Members and staff to become familiar with the self-serve solution and address any issues that might arise in a controlled manner.  The self-serve element was scheduled for September.  Therefore to enable the front doors to be reopened, smart pass controlled door furniture needed to be installed to the rooms off the civic reception and the top balcony.  This was happening at the weekend, and then early the following week the software element would need implementing.  Once officers were comfortable that all was functioning correctly then a date could be determined to reopen the doors.

RESOLVED that the report be received.

 

7.

Treasury Management Outturn for 2018-19 pdf icon PDF 162 KB

To consider the report of the Director (NE) (Reference 19/154 attached)

 

Minutes:

The committee considered the report of the Director (NE) (reference 19/154) in respect of the Council’s Treasury Management Out-turn for 2018/19.  Members were reminded that the Treasury Strategy for the 2018/2019 financial year was approved by Full Council in March 2018.  This strategy was based on the following expectations:

·       A continuation of a low interest rate environment  - expectation that Bank Rate would rise to 0.75 % and then maybe one more increase by 2020.

·       Emphasis for investments would be placed on security rather than pure return. 

·       The Council would continue to generate short term savings by maintaining an under-borrowed position.

·       Longer term borrowing and rescheduling of debt would be taken if the rates proved favourable.

Members were advised that the actual out-turn saw Bank Rate rise to 0.75% in August 2018.  There were no further movements due to the continued uncertainty around Brexit.    If these uncertainties remained or a disorderly exit occurred then the next rate movement could be a reduction.  The investment activity during the year conformed to the approved strategy with emphasis placed on security, then liquidity and finally return.  Most of the investments to generate interest, rather than cashflow derived, were mainly in the 3 to 6 month period with strong rated institutions.  None of the institutions had difficulty in repaying the investments and interest.  In respect of borrowing for the general capital programme the Council maintained an under-borrowed position with no new external borrowing being undertaken.  Although there was assumed borrowing in the strategy, due to slippage on the capital schemes and drawing grants in advance of spend, there was no new borrowing.  However the Council did take on new external borrowing to support the Commercial Property Investment Strategy.  Finally, officers continually looked for opportunities to restructure existing borrowing, but no opportunities arose. 

RESOLVED that the committee:

(i)              receive this report and note the out-turn position of the Council’s Treasury Management function for the 2018/2019 financial year; and

 

(ii)             approve that this report is presented to the 3 September 2019 Cabinet meeting.

 

Reasons

(i)              To comply with the CIPFA Code of Practice of Treasury Management in Local Authorities (the Code) by informing the relevant internal bodies of the Council’s treasury management activities before 30 September following the end of the financial year that the report relates;

 

(ii)      To keep Members informed of Treasury Management activities and performance.

 

8.

2018/19 Statement of Accounts pdf icon PDF 142 KB

To consider the report of the Director (NE) (Reference 19/161 attached)

 

Additional documents:

Minutes:

The committee considered the report of the Director (NE) (reference 19/161).  Members were advised that the Council’s accounts for 2018/19 had been published before the deadline of 31 May; however, for the reasons given by the External Auditor, it would not be possible as in the previous three years to publish audited accounts by the deadline of 31 July.  As stated in the External Audit Completion Report at item 4, Mazars were still undertaking work in respect of the Council’s property, plant and equipment and the Council’s pension liabilities (in common with other authorities across the public sector because of the impact of a recent court case that had ruled that transitional protection arrangements that were put in place when pension schemes were reformed were age discriminatory).  In respect of the latter the Council would engage actuarial advice when the audited accounts were nearer to publication.  There were no changes as yet to report to the accounts originally published in May; any such changes would be reported to the committee.  Officers took into account a member of the committee’s complaint that this report had been published very late, and earlier publication of a very large document would have been appreciated.  In reply to a further question, the Accountancy Manager advised that officers were content with the current valuation of the Council’s assets, which were subject to a rolling five year programme of valuations, or in some cases annually.

RESOLVED that the committee:

 i.       note the information contained within the Council’s 2018/19 Statement of Accounts; and

 

ii.        note that the Council is still concluding discussions in relation to an objection received from a local elector regarding the 2015/16, 2016/17 and 2017/18 Statement of Accounts and that an objection has been received from the same elector in relation to the 2018/19 accounts.  For this reason, the audit will not be formally concluded and an audit certificate will not be issued by this meeting; and

 

iii.       delegate authority to Director (Nick Edwards) to update the published accounts with any adjustments required as a result of the objection (if any); and

 

iii.       approve the Accounts for publication on the Council’s website by the statutory deadline of 31 July 2019, noting that these will still be ‘subject to audit.

 

Reasons

The Accounts and Audit Regulations 2015 require that Members approve the audited Statement of Accounts by 31 July 2019.

 

9.

Appointment of Audit Committee Champions

To consider a verbal report by the Director, Nick Edwards.

 

Minutes:

RESOLVED that the committee appoint the following champions:

Risk Management – Councillors Sam Cross and Helen Mallory

Internal Audit and Fraud – Councillors David Chance and Carl Maw

Governance – Councillors Alex Bailey and Michelle Donohue-Moncrieff

 

10.

Audit Monitoring Report (Quarter 1) and Audit Charter pdf icon PDF 143 KB

To consider the report of the Director (NE) (Reference 19/159 attached).

 

Additional documents:

Minutes:

The committee considered the report of the Director (NE) (reference 19/159) in respect of the latest Audit Monitoring Report and updated Audit Charter which defined Internal Audit’s purpose, authority and responsibility.  Members were advised that Appendix 1 summarised the seven finalised audit reports including issues identified and remedial actions undertaken.  A further six audits were underway which would be reported to the next Audit Committee meeting in October.  Members were pleased to note that in the seven audits only one priority action was identified – the lack of signed agreement from Ryedale District Council as party to the Countywide Parking Services agreement – which was addressed immediately.

RESOLVED that the committee note:

(i)            the results of audit and fraud work undertaken so far in 2019/20; and

(ii)          the updated Audit Charter.

 

Reasons

To enable the committee to fulfil its responsibility for considering the outcome of internal audit work and the responsibilities and reporting lines outlined in the Charter.

 

11.

Effectiveness of Internal Audit pdf icon PDF 161 KB

To consider the report of the Director (NE) (Reference 19/160 attached).

 

Additional documents:

Minutes:

The committee considered the report of the Director (NE) (reference 19/160) in respect of the recent review of the Council’s internal audit arrangements.  Members were advised that the survey of Directors and management demonstrated that overall the Council was pleased with the work of the internal audit team.  Seventeen out of 18 managers chose to respond.  The Chairman thanked the Audit and Fraud Manager, Alison Johnson for all her work for the Council and wished her well in her new position at Harrogate Borough Council.

RESOLVED that the committee note the results of the review of the Council’s internal audit arrangements.

 

Reasons

To ensure there is an appropriate review of the effectiveness of the Council’s internal audit arrangements.

 

 

12.

Progress update on Safeguarding Self-assessment 2018-19 pdf icon PDF 138 KB

To consider the report of the Director (Lisa Dixon) (reference 19/158 attached)

 

Additional documents:

Minutes:

The committee considered the report of the Director (LD) (reference 19/158) in respect of the annual safeguarding self-assessment audit for both adults and young people.  Members were advised that good progress had been made across the Council in relation to safeguarding: there were clear strategies in place which were regularly reviewed, and training was regularly delivered to staff, councillors and the wider community.  Further actions had been identified from the audit such as sampling of procedures and reporting mechanisms to ensure that they were embedded across the Council, but there were no significant failings or concerns.  Further actions and changes may arise from the review of the Safeguarding Policy in October 2019.  Members welcomed the report noting that under the DBS regime, checks were only made for specific roles, not for all councillors as under the previous CRB regime.

RESOLVED that the committee note the progress made and issues highlighted in the annual safeguarding self-assessment audit (18/19) for both adults and young people.

 

Reasons

To ensure scrutiny of the Council’s safeguarding responsibilities. It is a requirement under section 11 of the Children’s Act 2004 for district councils to make arrangements to ensure its functions safeguard and promote the welfare of children.

 

13.

Procurement - contract procedural rules exemptions

To consider the report of the Director (LD) (to follow).

 

Minutes:

The committee noted that this report had been deferred to the October meeting.

 

14.

Work Programme pdf icon PDF 57 KB

To consider the Audit Committee Work Programme (Reference 19/157 attached)

 

Minutes:

The committee considered its work programme 2019/20 (reference 19/157).  In reply to a question about the external audit of the Council’s compliance with the General Data Protection Regulation, the Monitoring Officer advised that that this had been requested by the Council and had proved very positive, the detail of which would be reported to the committee in October.  More generally in terms of data protection, the Monitoring Officer commented that a very serious data breach of a confidential document concerning the proposed town centre regeneration in Eastborough was currently under investigation by both Internal Audit and the North Yorkshire Police cyber-crime team.  Such a breach may constitute the offence of misconduct in public office which carried a maximum sentence of life imprisonment.  In respect of the Leader’s comments at the Cabinet meeting on 16 July about pre-decision scrutiny of the next phase of the development of the Futurist site, it was queried whether a report would be submitted to the Audit Committee.  The Chairman advised that he would speak to the Leader on this matter.  The Chairman also noted the continuing absence of an independent person on the committee who could bring much expertise and experience to the committee, and asked officers to look into this matter again.

RESOLVED that, subject to the above, the report be received.