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Contact: Craig Saunders; Email: firstname.lastname@example.org; (01296) 585043
Temporary Changes to Membership
Any changes will be reported at the meeting.
Councillor A Cole substituted for Councillor Mrs Renshell
To approve as correct records the Minutes of the meeting held on 18 March 2015 and 27 May 2015 attached as Appendices A and B respectively..
That the minutes of the meetings held on 18 March and 27 May 2015 be approved as correct records.
Declaration of Interest
Members to declare any interests.
There were none
To consider the report attached as Appendix C coloured green.
Contact Officer: Evelyn Kaluza (01296) 585549
The Committee received a report on the progress made by the external auditors, Ernst and Young, on their audit plan for 2014/15.
It was reported that the external auditors had completed all of their walk throughs and controls testing, including their review of the work of Internal Audit. To date this work had not identified any issues considered necessary to bring to the attention of the Committee.
As part of the external auditor’s planning procedures, they would consider the significant risks of giving a wrong conclusion in relation to their value for money assessment. As much work as was considered appropriate would be carried out to enable a safe conclusion to be reached on arrangements to secure value for money. This might identify other risks which might require the external auditors to focus additional attention during the course of the audit.
Due to the continuing financial pressures on local government, this had been reassessed as a significant risk. This did not reflect any particular concerns at this stage about the Council’s processes, but rather reflected the environment within which the Council was working.
The Council continued to face financial challenges, with a savings requirement of£0.6m in 2016/17. The Medium Term Financial Plan (MTFP) had a cumulative budget gap of £2.5 m in 2017/18 and a savings gap of at least £1.8m per year beyond 2017/18. The MTFP set out the Council’s strategic approach for closing the budget gap and key deliverables that were critical to the financial stability of the Council.
The external auditors would focus on reviewing the achievement of the planned savings in 2014/15 and reviewing the Council’s on-going identification of savings or alternative income streams to reduce the budget gap in 2016/17. They would also review the Council’s MTFP and the assumptions up to 2017/18.
It was reported that the Committee would be provided with formal reports throughout the audit process and the report submitted summarised the proposed timeline. In addition to this formal reporting, the external auditors would seek to give practical business insights and updates on regulatory matters via sector briefings.
Members sought clarification around several issues, including:-
· The arrangements for ensuring that sufficient funding was available to meet any obligations that might arise as a result of the Government’s recent announcements concerning a National Minimum Wage.
· Whether the proposed value for money assessment was particular to this Authority or of a generic nature. It was confirmed that the latter was the case.
· The work undertaken in relation to the Corporate Risk Register and mitigation actions.
· The period over which the value for money risk assessment would take place. It was confirmed that it was not possible at this stage to give an exact end date. Members were reminded that the MTFP anticipated the loss of Government Grant and Retained Business Rates by 2019/20.
· It was confirmed that major capital projects were subject to their own individual risk registers.
That the external auditors’ report be noted and it be confirmed was aligned with ... view the full minutes text for item 4.
To consider the report attached as Appendix D coloured blue.
Contact Officer: Evelyn Kaluza (01296) 585549
The Committee received a progress report on assurance work activity undertaken against the 2015/16 Assurance Plan since March 2015 and the following matters were highlighted:-
(i) Assurance / Project Delivery reviews completed since the last progress report:
· Data Transparency Code – Limited Assurance.
· 2014/15 Oyster Travel Cards – Substantial Assurance.
· 2014/15 Payroll – Substantial Assurance.
· 2014/15 Car Parking Income – Substantial Assurance.
· 2014/15 Treasury Management – Substantial Assurance.
· 2015/16 Depot Fuel Management – Substantial Assurance.
For the Data Transparency Code, a limited assurance meant that the review had identified some concerns on service delivery arrangements or the controls in place to manage identified risks. As such, the risk of the activity not achieving its objectives was medium to high.
In addition one Project Delivery Review on the Right Here Right Now project had been undertaken and had been given an Amber/Green rating (i.e. successful delivery appeared probable, although constant attention would be needed to ensure risks did not materialise into major issues threatening delivery).
(ii) Assurance Reviews Follow-up:
New Finance Software – the new finance system (Tech One) had gone live on 1 June 2015. The main internal control changes implemented that could be demonstrated as working were the procure to pay process and to a limited extent the contract payment process. (These would be subject to detailed testing in October 2015)
There were still a number of outstanding control issues which the Finance Team had not yet been able to demonstrate were working in the system to the satisfaction of Business Assurance.
The list had been reviewed by the programme board on 14 July 2015 and dates had been set for improvement actions to be completed. Without these basic controls in place and operating would likely result in a significant amount of extra testing by both Business Assurance and External Audit to provide the assurances that determine the audit opinion over the statement of accounts for 2015/16.
(iii) Assurance Plan Work in Progress – the following work from the 2014/2015 plan had started:-
· 2014/15 Policy Compliance – The contract for software had been agreed and the project implementation started. It was expected to go live in September 2015.
· 2015/16 Section 106 Agreements – the field work was complete and the draft report was being written with a view to it being finalised by the end of July 2015.
· 2015/16 Taxi Licensing – the terms of Reference hade been issued and the fieldwork had started. The target date for completion of this review was mid-August.
· 2015/16 Conference Centre income – the terms of reference had been issued and the fieldwork had started. The target date for completion of this review was mid-August.
(iv) Service Risk Assurance 2014/15
A summary of the results of the service risk assurance process for 14/15 were attached as Appendix 3 to the Committee report. The results were used to identify areas of weakness to be reported in the Annual Governance Statement.
Business continuity and information security had been identified as showing a ... view the full minutes text for item 5.
To consider the report attached as Appendix E coloured pink.
Contact Officer: Evelyn Kaluza (01296) 585549
The Business Assurance Services Manager was required to provide a written annual report to those charged with governance timed to support the Annual Governance Statement (AGS), which should be presented to Members and considered separately from the AGS and the formal Accounts.
The Committee received a report detailing the Business Assurance Services Manager’s opinion on risk management, control and governance and their effectiveness in achieving the Council’s agreed objectives for 2014-15. Based on this work, Business Assurance Services (BAS) had reached the overall opinion that satisfactory assurance could be provided on the adequacy and effectiveness of the control environment. There were no specific governance, risk management and internal control issues of which the Manager had been made aware of during the year which caused any qualification of the above opinion.
In forming this opinion the Business Assurance Services Manager had confirmed that internal audit activity throughout 2014-15 had been independent from the rest of the organisation and had not been subject to interference in the level or scope of the audit work completed.
A total of 9 assurance reviews had been completed in 2014-2015 of which 4 had been given a “Substantial” assurance, 5 a “Reasonable” assurance and one a “Limited” assurance. In addition there had been one project review with an “amber/green” delivery confidence rating.
There were still a number of outstanding recommendations from 13/14 which related to the financial systems controls which could not be addressed by the existing finance system APTOS. However it was expected that the replacement finance system would address all of these weaknesses when it was implemented for 2015/16.
All agreed actions arising from audit reports were kept under review by Business Assurance Services and regular reports on overdue actions were provided to the Audit Committee.
Advisory work had also been completed from the Assurance Strategy and Plan on data transparency, the new finance system, project management maturity and on the Information Governance Group’s Risk Register.
Business Assurance officers had attended the three levels of governance of major projects (i.e. Project Board meetings, Major Projects Project Managers Group and the Major Projects Sponsors Group) to provide advice on risk and control. As a result, advisory areas of work which were not on the plan had been initiated on areas of risk including the banking contract and on confidential shredding.
The audit of the Financial System and Budgetary control from 2012-13 had been followed up. There were a number of outstanding recommendations regarding internal controls which would be remedied when the new Finance System was in place. As such, it had been agreed with the Director with the responsibility for Finance that it was not economical to incur additional costs for the APTOS system at that time.
Other sources of assurance through the three lines of defence model, as detailed in the strategy, had been used to validate the overall opinion. The annual service risk assurance process had been completed in March 2015. This process sought to identify from service managers which of their policy ... view the full minutes text for item 6.
To consider the report attached as Appendix F coloured grey.
Contact Officer: Evelyn Kaluza (01296) 585549
The Annual Governance Statement (AGS) for Aylesbury Vale District Council, that would be signed by the Leader of the Council and the Chief Executive when approved by the Audit Committee, formed part of the Council’s formal accounts for the financial year 2014-15. A draft of the Annual Governance Statement had been reported to the Audit Committee in March 2015, and Members had been given the opportunity to discuss and comment on it.
Members were advised that the assurance gathering process for preparing the Statement was based on the management and internal control framework of the Council and, in particular, on the independent report of the Council’s Business Assurance Services Manager presented to this meeting. The assurance framework included reference to the sources of assurance obtained from management. This included the new service risk assurance process which had been reported in more detail in the Business Assurance Service Progress Report.
Improvements to the internal control environment were documented in Section 5 of the AGS and these would be monitored via the Business Assurance Service Progress Reports.
Having critically reviewed the Annual Governance Statement 2014-15, commenting in particular on the Council’s e-learning arrangements for staff, and regular reporting on the Authority’s customer comments and complaints procedure; having considered the robustness of the Council’s governance arrangements, and having monitored the actions arising from the review arrangements, it was
(1) That the content of the Annual Governance Statement 2014-15, be noted.
(2) That the Annual Governance Statement 2014-15 be approved for inclusion in the Council’s Statement of Accounts for 2014-15.
To consider the report attached as Appendix G coloured white
Contact Officer: Tony Skeggs (01296) 585273
The Committee received a report on the current position in terms of accounts preparation, and which also identified significant changes to accounting policies applied in the preparation of the accounts. The budget outturn position was also reported in a management style for the information of Members.
Members were informed that whilst the Quarterly Finance Digest (QFD) did not form part of the statutory accounts, it did provide a more understandable guide to the financial events that had taken place in the last year relating to the provision of Council services. The outturn position for the year shown in the Digest was a contribution to balances of £135,703, as against a budgeted contribution to balances of £101,100. The actual contribution would have been greater but during 2014/15 the Council had agreed to a special use of balances of £10,000 to fund the continuing costs associated with HS2.
The early generation of savings in advance of 2014/15 and higher income associated with revised service provision had contributed to this underspend, although this had to be offset against a shortfall in income from investment interest.
Some of the main factors that had been reported during the year and which had contributed to the outturn position were savings/extra income from Housing Benefit Administration, Office Accommodation, Development Control higher fee income, Waterside theatre (business rates and other cost savings), and domestic refuse (savings on salaries and vehicle running costs). Factors that had negatively impacted included Environment and Health administration, partnership costs associated with iESE, business transformation (project and salary costs), redundancy costs associated with the restructure of Planning Business Support and lower income offset by reduced running expenses for the IT Division.
The latest Quarterly Finance Digest had also detailed the top 5 underspends and overspends by service areas for 2014/15, and showed that the General Fund Statement of Balances position at the year end was £3.765m after taking into account the outturn position.
During 2014/2015, transfers to and from reserves had been as follows:-
· That £2.7m had been transferred out of reserves and £6.3m transferred into reserves, making a net increase of £3.6m.
· The largest use of reserves had been £0.657m from the income investment reserve that had been transferred to the General Fund in order to meet the shortfall on investment interest. Investment interest continued to be lower than expected due to interest rates remaining unchanged throughout the year. The 2015/16 budgets had been revised to more accurately reflect the anticipated interest for the year so that there was less call on the reserve in the future.
· A contribution of £0.5m had been transferred from the Property Sinking Fund (revenue to capital) to help fund the Swan Pool improvements.
· Other movements out had been £405,000 from the Planning reserve to fund appeal costs, and £401,000 from the Repair and Renewals Fund to meet the costs of planned operational building repairs.
· There had been one sizeable contribution to reserves, which was £3.45m of New Homes Bonus into the New Homes Bonus reserve. This ... view the full minutes text for item 8.
To consider the report attached as Appendix H coloured green.
Contact officer: Evelyn Kaluza (01296) 585549
The Committee considered the future Work Programme for 2015-16 which took account of comments and requests made at previous Committee meetings and particular views expressed at this meeting, and the requirements of the internal and external audit processes.
That the future Work Programme as discussed at the meeting be approved.
Dates of Future Meetings
Future meetings are planned as follows
· 6.30 pm on 28 September 2015
· 6.30 pm 0n 9 November 2015
It was noted that
the next meeting of the Audit Committee would be