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To approve as a correct record the Minute of the meeting held on 27 July 2015, attached as an appendix.
That the minutes of the meeting held on 27 July, 2015, be approved as a correct record.
To consider the report attached at Appendix B.
Contact Officer: Evelyn Kaluza (01296) 585549
The Committee had received a report on the current position with the draft Statement of Accounts for 2014-15 to the July meeting, prior to the accounts being submitted to the external auditors.
The Audit Commission’s Code of Audit Practice required the external auditors to report to ‘those charges with governance’ on the work carried out to discharge the external auditors statutory and audit responsibilities, together with any governance issues identified.
The Committee received a report summarising the auditors findings from the 2014-15 audit which was substantially complete. It included the messages arising from the audit of the financial statements and the results of the work undertaken to assess the Council’s arrangements to secure value for money in the use of resources. The report highlighted the following key findings:-
(i) Financial Statements – it was expected to issue an unqualified opinion, subject to the satisfactory clearance of any outstanding work. The audit results demonstrated that the Council had adequately prepared the financial statements.
(ii) Value for Money – it was expected to conclude that the Council had made appropriate arrangements to secure economy, efficiency and effectiveness in the use of resources.
(iii) Whole of Government accounts – it was expected to issue an unqualified confirmation to the National Audit Office regarding the Whole of Government accounts submission, and that there were no significant matters to report.
(iv) Audit Certificate – it was expected to issue the audit certificate at the same time as the Audit Opinion, which demonstrated that the full requirements of the Audit Commission’s Code of Audit had been discharged for the relevant audit year.
During their work, the external auditors had identified two significant audit risks and a number of other audit risks. These had been reported to Members in the Audit Plan. An explanation of the approach taken by the external auditors to look at these and how they had gained audit assurance on them was also included in the report. The identified issues were:-
Significant Audit Risks (including fraud risks)
· Risk of Management Override – management was in a unique position to perpetrate fraud because of their ability to directly or indirectly manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. As such, the external auditors considered this fraud risk as a part of every audit engagement.
· Revenue and expenditure recognition – ISA 240 required auditors’ consideration of the risks of material misstatement due to fraud to be based on a presumption that there were risks of fraud in revenue and expenditure recognition. This was due to the potential pressures or incentives on management to commit fraudulent financial reporting to achieve an expected financial outcome through inappropriate revenue and expenditure recognition.
Given the level and nature of revenue and expenditure; and the financial challenges facing the Council, we are unable to rebut this presumption of fraud and therefore assess this as a significant risk.
Other Audit Risks
· New Monitoring Officer – the Monitoring Officer had been replaced ... view the full minutes text for item 2.
To consider the report attached as Appendix C.
Contact Officer: Evelyn Kaluza (01296) 585549
The Committee received a progress report on assurance work activity undertaken against the 2015/16 Assurance Plan since July 2015 and the following matters were highlighted:-
(i) Assurance Reviews completed since the last progress report – three reviews had been completed on Enterprise Car Pool (savings), Section 106 (Developer Contributions) and Conference Centre Income. All have been given a reasonable assurance.
(ii) Assurance Reviews Follow-up
Transparency Code – Compliance: the target for all datasets had been extended from the end of July to 31 August. There were still 2 non-compliant areas that were ‘The Organisation’ (salaries, pay scales, senior posts and union facility time) and ‘Land and Property’. The second area was more complex to resolve and work had started to update the Uniform system. It was anticipated that the HR information would be uploaded before the end of September
New Finance Software – the new finance system (Tech One) had gone live on 1 June 2015. A number of areas of control had not been implemented and these were listed in the appendix to the report. It had been agreed that the outstanding areas would be implemented by 30 September 2015, with detailed testing then carried out during October / November.
(iii) Assurance Plan Work in Progress
The contract for software to assist the Council to track policy compliance (2014/15 Plan) had been agreed and the project implementation started. It was expected to go live in October 2015.
It was anticipated that the reviews of 2015/16 Data Protection (Off Site and Mobile Devices), 2015/16 Supplier Resilience and 2015/16 Housing Allocations would all commence in September 2015.
(iv) Service Risk Assurance 2014/15 – The Assurance Plan had been reviewed and updated for the remaining six months to reflect changes. Some reviews were no longer a priority for this year and in other cases they have been merged with other reviews or removed all together. Details of the changes and on completed and outstanding work was provided at Appendix 2.
(v) Update on Impact of Single Fraud Investigation Service – the two Fraud Investigation staff who reported to the Revenues and Benefits Service Manager transferred to the DWP’s Single Fraud Investigation Service on 2 February 2015. Prior to the transfer, the Revenues and Benefits Service had established a Compliance Team and the work of the team has expanded to deal with the ongoing referral of Housing Benefit fraud cases to the DWP and as the point of contact for any exchange of information between the Council and the DWP. These arrangements were documented in an SLA.
Any other allegations of council tax fraud were referred to the Compliance Team mailbox. The team were responsible for drawing information from various sources and making decisions to amend council tax accounts. Penalties were added to accounts, where appropriate. In addition the compliance team had a process for reviewing all discounts, exemptions and disregards on Council Tax which included a risk based priority system.
A more detailed update on the work of the compliance team ... view the full minutes text for item 3.
To consider the report attached as Appendix D.
Contact Officer: Tamsin Ireland (01296) 585004
The risk management arrangements of the Council were a key part of the overall internal control arrangements of the Council and form part of the Annual Governance Statement. When risk appetite is properly understood and clearly defined, it becomes a powerful tool, not only in taking well measured risks, but also for improving overall performance and decision making.
At the most basic level, risk appetite was how much risk the Council was prepared to take in order to attain the benefit / return for our investment (£ or effort) or in other words, the individual and total impact of risk it was prepared to accept in the pursuit of the strategic objectives.
The Committee received a report and were informed that an updated and revised Risk Management Strategy had been produced (Appendix 1) to reflect changes in the Council’s approach to risk and risk appetite since the last strategy had been approved in September 2013. To help update the Strategy it had been necessary to gain an insight into how we ‘Think about Risk’, particularly those risks associated with our emerging priorities. These had been discussed with Transition Board on 2 September, and informally with Cabinet on 21 September. Feedback from those meetings was reported verbally to Members.
The Audit Committee had a role to monitor the effectiveness of risk management and internal control across the Council and as part of discharging this role was asked to review the Strategic Risk Register.
The Strategic Risk Register provided evidence of a risk aware and risk managed organisation. While it reflected that many of the risks that were on the current radar for Transition Board were similar to those faced across other local authorities, the difference was in how they were assessed and managed. The Register had been considered by Transition Board to review the ratings, establish how effectively the risks were being managed and where further action was required.
The matrix at Appendix 1 (page 1) detailed a summary of 15 areas of risk and how they had been rated. The ratings had taken into account the importance of the risk in terms of the impact on the Council and also the confidence in managing that risk. The third dimension (size of bubble in matrix) is how likely the risk was to change in the next twelve months. This reflected that some of the risks were “slow burning” which meant there were potential longer term impacts but action to mitigate the risks might still be required.
The Risk Register was reviewed on a six monthly basis by Transition Board and reported to the Audit Committee.
Members sought further information and were informed:-
· on the various sources of assurance that the Council used to satisfy itself that it was meeting it’s safeguarding duties. The Council also had a new Prevent Duty from 1 July 2015, that would require additional training and putting together a Prevent Risk Assessment and Action Plan.
· that risk management was addressed as a part of every business case. ... view the full minutes text for item 4.
To consider the report attached as Appendix E.
Contact Officer: Tony Skeggs (01296) 585273
The Accounts and Audit Regulations state that Members should only approve the accounts when they have been made aware of the findings of the audit and hence were able to make a better informed decision.
Following on from the report on the draft accounts to the July meeting, Members received a report updating them on the audit process and the changes made to the accounts in accordance with the external auditor’s recommendations. The auditors’ comments and findings from their work on the 2014/15 accounts had already been reported to Members in the Annual Governance Report (AGR).
Subject to being satisfied with the revised accounts and that the auditor’s comments had been correctly responded to, the Committee was required to authorise the Chairman to sign them on the Audit Committee’s behalf, together with the Director with responsibility for Finance, in order to comply with the 30 September statutory deadline. However, it was requested that the Committee delegate to the Head of Finance, in consultation with the Chairman or Vice Chairman, the ability to make such changes to the accounts that are considered necessary in order to achieve the statutory deadline.
As already reported by the external auditors, a couple of amendments had been made to the accounts to revise misstatements and to better explain the nature of certain financial transactions. The changes to the accounts between the draft submitted for audit in July and the version now submitted to this meeting were:-
· Fixed Asset Register – it was identified that information produced by the Fixed Asset Register package to reflect the movements during the year was producing an incorrect treatment of the figures. This figures for the revaluation of the Community Centres and the Hampden House car park had been amended to some the correct position within the income and expenditure account and the revaluation reserve. Despite the changes, the overall year end position of the revaluation reserve was unchanged, with the contribution to balances being £135,703.
· External loan – a loan of £5.17m had been re-classified from long term borrowing to short term borrowing, as it was due for repayment in December 2015.
· Aylesbury Land Use and Transport Strategy (ALUTS) – under the financial instruments note 17.1, the ALUTS amount had been removed as it did not meet the definition of a financial instrument.
· Related Parties Transactions Note – all but 2 Members had now returned their disclosure returns. Completion of these disclosures was an audit requirement and as a result of the delays experienced this year this area had been highlighted by the auditors.
While the Council could choose whether or not to make amendments to its draft accounts for non-material errors or misstatements, the view this year had been that it would reflect all errors or misstatements in the accounts that were raised by external audit.
There was a requirement to report significant events that occur after the balance sheet date and before the sign off date, however, none had occurred since the July 2015 Audit Committee meeting. ... view the full minutes text for item 5.
To consider the report attached as Appendix F.
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 Audit Committee meetings 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:
· 6.30pm on 9 November, 2015.
· 6.30pm on 25 January, 2016.
· 6.30pm on 21 March, 2016.
The next meeting of the Audit Committee would be held at 6.30pm on 9 November, 2015, in the Olympic Room at The Gateway, Gatehouse Road, Aylesbury.