Agenda and draft minutes

Audit Committee
Tuesday, 18th September, 2018 2.00 pm

Venue: Meeting room, City Hall

Contact: Ian Hird  0117 92 22384

Items
No. Item

5.

Apologies and safety information

SAFETY INFORMATION – PLEASE NOTE:

1. There are no planned fire alarm tests or drills. If the alarm sounds, please exit

the room via the main entrance lobby at the front of the building.

2. Please then exit the building via the front ramp and assemble at the fire

assembly point, which is on the paved area between the side entrance of the

cathedral and the roundabout at the Deanery Road end of the building.

3. Please follow the instructions of the fire wardens and security staff on hand.

Please do not return to the building until instructed to do so by fire wardens.

Minutes:

Apologies were received from Cllrs Brain and Pearce (it was noted that Cllr Sergeant was substituting for Cllr Pearce and Cllr Goggin was substituting for Cllr Brain).

 

The Chair welcomed everyone to the meeting.  He also reminded those present of the safety information as detailed on the agenda.

 

6.

Declarations of interest

To note any declarations of interest from councillors. They are asked to indicate

the relevant agenda item, the nature of the interest and in particular whether it

is a disclosable pecuniary interest.

 

Any declaration of interest made at the meeting which is not on the register of

interests should be notified to the Monitoring Officer for inclusion.

Minutes:

None.

7.

Exclusion of Press and Public

The committee is asked to agree that under s.100A(4) of the Local Government Act 1972, the public be excluded from the meeting for the next item of business (i.e. item 4 on the agenda) on the grounds that it involves the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of schedule 12A of the Act.

 

NOTE – ONLY AGENDA ITEM 4 IS EXEMPT

Minutes:

RESOLVED:

That under section 100A(4) of the Local Government Act 1972, the public be excluded from the meeting in respect of the committee’s consideration of the next item of business (item 4 on the agenda) on the grounds that it involves the likely disclosure of exempt information as defined in paragraph 3 of part 1 of schedule 12A to the Act.

 

8.

IT corporate risks

Minutes:

The committee considered an exempt report from the Director - Digital Transformation providing an update on IT corporate risks and work underway to further improve IT infrastructure and security.

 

In discussion the following main points were raised/noted/clarified:

 

a.      In response to questions relating to Corporate Risk CRR 2 (IT infrastructure) and CRR 7 (Cyber-attack threats and implications), the Director - Digital Transformation outlined details of robust actions being taken forward to mitigate these risks as part of the Future State Assessment (FSA), following the approval of the FSA capital bid by the Cabinet on 3 July 2018.

 

b.      It was suggested that it would be useful to carefully track and assess the degree to which these corporate risks reduce as the FSA progresses through implementation.

RESOLVED –

That the update report and the above information be noted.

 

Note:

At this point in the meeting, the meeting was opened for public attendance/observance.

 

At the invitation of the Chair, attendees then introduced themselves.

Jon Roberts and Jackson Murray (from Grant Thornton, the Council’s new external auditor) were welcomed to the meeting).

 

On behalf of the committee, the Chair thanked Ian Hird (Democratic Services, who would shortly be leaving the authority) for his work for the Council and in relation to this committee.

 

9.

Minutes of previous meetings pdf icon PDF 212 KB

a.      Minutes – 26 July 2018

b.      Minutes – 31 July 2018

Additional documents:

Minutes:

a. Minutes - Audit Committee – 26 July 2018

 

RESOLVED:

That the minutes of the meeting of the Audit Committee held on 26 July 2018 be confirmed as a correct record.

 

b. Minutes - Extraordinary Audit Committee – 31 July 2018

 

Cllr Negus suggested that the minutes of this meeting should be amended to include the following two additional points:

i.                 The committee had noted at the 26 July meeting that BDO personnel had been changed during the year.  When questioned, BDO had denied that this had impacted on their ability to meet the deadline for signing off the accounts.

ii.               The committee had noted that a compromise agreement had been referred to by the external auditors in relation to the former Chief Executive at the 26 July and 31 July meetings.

The suggestion was discussed and the second point was not unanimously agreed. The meeting agreed that BDO would be contacted to check inclusion of an additional point to be included in the minutes about the discussion that had taken place in relation to the former CX’s employment contract. This was done and the minutes have been updated as follows:

 

“Cllr Stevens had sought clarification about the external auditor view of the ‘compromise agreement’ reached by the Council with the former Chief Executive.  The external auditor clarified that there is no compromise agreement and that information was awaited in relation to BCC’s interpretation of the former Chief Executive’s employment contract, specifically in relation to the issue of ‘payment in lieu of notice’.”

 

Subject to the above additions, it was

 

RESOLVED:

That the minutes of the extraordinary meeting of the Audit Committee held on 31 July 2018 be confirmed as a correct record.

 

10.

Action sheet pdf icon PDF 71 KB

Minutes:

The action sheet (tracking actions agreed at the 26 July meeting of the committee) was noted.

 

11.

Declarations of interest

Up to 30 minutes is allowed for this item. Public forum items must be about

matters that fall within the remit of the Audit Committee.

Any member of the public or councillor may participate in public forum. Public

forum items should be emailed to democratic.services@bristol.gov.uk

 

Please note that the following deadlines will apply in relation to this meeting:

Questions - Written questions must be submitted by 5.00 pm on Wednesday 12 September 2018 at latest.

Petitions and statements - Petitions / written statements must be submitted by

12.00 noon on Monday 17 September 2018 at latest.

Minutes:

None.

12.

Work programme pdf icon PDF 108 KB

Minutes:

The latest update of the work programme was noted.

 

It was noted that Grant Thornton would also be circulating (later at this meeting) a briefing document setting out the high level outline of their approach to delivering their responsibilities as the Council’s external auditor moving forwards, together with an outline reporting timeline.

 

13.

Governance tracking report - AGS tracker 2016-17 and 2017-18 pdf icon PDF 670 KB

Minutes:

The Director – Finance presented the report, highlighting the following:

 

a.      In relation to the implementation of actions required from the Bundred review:

·         75 actions (88%) were now ranked Green (completed and evidenced).

·         10 actions (12%) were now ranked Amber (in progress with evidence) – further narrative was included in the report on the progress of Amber ranked actions.

·         There were no actions ranked Red (not started/started but not evidenced).

 

b.      In relation to implementation of actions required from the 2016-17 Annual Governance Statement (AGS):

·         15 actions (68%) were now ranked Green (completed and evidenced).

·         7 actions (32%) were now ranked Amber (in progress with evidence).

·         There were no actions ranked Red (not started/started but not evidenced).

 

c.       Appendix C set out 12 draft areas of improvement identified from the 2017-18 AGS. These remained draft until such time as they were formally endorsed by BDO, the Council’s external auditor.  A proposed action plan had been prepared in anticipation that these areas of improvement would be confirmed.

In discussion the following main points were raised/noted/clarified:

 

a.      In relation to performance management of staff (action 12 of appendix C), the My Performance reporting system had been updated for 2018-19 and re-launched in June.  A specific corporate project was also underway to reassess the whole approach to performance management at all levels of the organisation.  The performance management data / arrangements would also be subject to member scrutiny.

 

b.      Although not directly related to this progress report, Cllr Negus referred to the ongoing situation where only the statutory minimum notice (i.e. 28 calendar days) was routinely being given via the Mayor’s forward plan of key decisions to be taken at Cabinet.  In his view, this this was a major concern in terms of the governance of the authority as it effectively removed any opportunity for pre-decision member scrutiny.  In discussion, it was noted that the Forward Plan is kept under review and published monthly.  Any changes about the timing of the notification of “key decisions” via the forward plan were essentially Mayoral decisions.   The Chair suggested that individual political groups may wish to consider making representations to the Mayor’s office on this issue.

 

c.       It was noted that each of the directorate-focused scrutiny commissions would be receiving regular progress updates on directorate risk registers and performance.

 

d.      It was noted that Cllr Stevens would discuss separately with officers a number of specific queries.

 

e.      It was noted that a number of current Amber ranked actions in relation to finance  were being addressed through the restructuring of the Council’s finance section and the finance improvement plan.

 

f.        It was noted that a column had been omitted from the detailed tracker making it difficult to reconcile the summary and the detailed schedule.  It was agreed that this would be rectified and the report re-circulated with the minutes.

Noting and taking account of the above, it was:

 

RESOLVED:

That the committee notes the progress made to date against the AGS action plan for 2016-17 and the  ...  view the full minutes text for item 13.

14.

Internal Audit activity report pdf icon PDF 372 KB

Additional documents:

Minutes:

The committee considered the latest Internal Audit activity report.

 

Overview:

 

The Interim Chief Internal Auditor presented the report, highlighting the following key points:

 

a.     In terms of the Audit Plan, 27% of planned reviews had commenced, with 12% at draft or final report stage.

 

b.     The Audit team’s pro-active fraud work continued to identify a good level of recoverable savings and a number of successes in relation to council tenancies.

 

c.      11 grants/certifications with a total value of £10m had been certified to date.

 

d.     For the 9 concluded follow-up audits in this period, 83% of recommendations were either fully or partially implemented.

 

e.     Internal Audit resources (see later section of this minute).

 

Completed summaries:

The Interim Chief Internal Auditor then updated the committee in relation to the summaries of 8 completed audits (reference numbers quoted below relate to those used in the report):

 

A – CORPORATE

 

A1 – Executive officer decision making:

After completion of fieldwork, a limited assurance audit opinion was assigned.  6 recommendations for improvement had been agreed for implementation, including clarification of where responsibility lay for the publication of decisions.

 

A2 – Corporate and IT business continuity planning - follow-up:

The follow-up review had identified that of 8 recommendations from the original review, 4 key areas had not been implemented.  Timescales for the implementation of outstanding recommendations were now agreed, including critical systems checks.

 

A3 – Contract waivers to procurement regulations – follow up:

The follow-up review had identified that whilst most recommendations from the original review had been implemented, there were still some practice issues to be addressed and the number of contract waivers was still too high.  Timescales for the implementation of outstanding recommendations were now agreed and would be subject to a further follow-up review in the last quarter of 2018-19.

 

In discussion, an update was given on the work taking place to register all contracts, including mapping the timescales for contract renewal.  It was recognised that despite an improved position, there was a need to instigate a more fundamental “culture change” across the Council in relation to procurement, so that properly planned processes were routinely in place and then followed.

 

B – ADULTS, CHILDREN AND EDUCATION

 

B1 – Foster care payments – follow up:

The follow-up review had identified that none of the recommendations from the original review had been fully implemented.  Timescales for the implementation of the recommendations were now agreed and would be subject to a further follow-up review in the last quarter of 2018-19.

 

Whilst noting that the scope of / issues raised by this review were specifically around the payment process, Cllr Negus suggested that the authority needed to be very mindful of the need to recruit more foster parents, not only because this was in the best interests of vulnerable children but because this was also the best option for the Council in terms of cost effectiveness.  Cllr Negus questioned why the report did not refer to this.  The Interim Chief Internal Auditor commented that audit subject  ...  view the full minutes text for item 14.

15.

Peer review implementation update pdf icon PDF 463 KB

Additional documents:

Minutes:

The committee considered a report providing an update on the implementation of the recommendations from the Peer Review.

 

It was noted that 43% of the recommendations were completed to date, with 46% of actions advanced and in progress, and that it was anticipated that 95% implementation would be achieved by the end of November.

 

RESOLVED –

That the progress report on the implementation of the recommendations from the Peer Review be noted.

 

16.

Treasury Management annual report 2017-18 pdf icon PDF 451 KB

Additional documents:

Minutes:

The committee considered the Treasury Management annual report 2017-18.

 

The Head of Corporate Finance presented the report, highlighting the following:

 

a.      The 2017-22 treasury strategy identified a medium term borrowing requirement of £450m to support the existing and future capital programme.  The Council’s policy was to defer borrowing while it had significant levels of cash balances (which stood at £64m at March 2018).

 

b.      The Council’s long term debt at 31 March 2018 was £431m with an average annual interest rate of 4.68%

 

c.       Investments were £64m at 31 March 2018 with an average annual interest rate of 0.44%

RESOLVED:

That the Treasury Management annual report 2017-18 be noted.

 

17.

Updated draft Statement of Accounts 2017-18 pdf icon PDF 183 KB

Additional documents:

Minutes:

The committee was asked to note the update report of the Director - Finance on the draft, unaudited Statement of Accounts 2017-18 (which still remained work in progress but reflected the latest position).

 

In terms of the issues that BDO had identified in their update report as submitted to the Extraordinary Audit Committee on 31 July 2018, the latest position was as follows:

·         Clearance of outstanding issues on the audit queries tracker such as fees and charges had been addressed/completed.

·         The issue raised around pension liability assumptions was ongoing; BDO need to speak directly to the actuary.

·         Valuation of property – this was an ongoing item – BDO would be including a note to the accounts to take account of the impact of the Cabinet decision on the arena.

·         NNDR appeals – this issue had been addressed/completed.

·         Clarifications in respect of the exit package for the former Chief Executive  ongoing but it was understood that BDO would be concluding this aspect in the very near future.

·         Use of Resources – ongoing but linked to above.

The Director - Finance advised that given the current position, in her view, it was highly unlikely that BDO would sign off the accounts by 30 September 2018.  The committee would be kept informed of the position and an Extraordinary meeting of the committee would be arranged as necessary.

The committee expressed strongly their disappointment of not achieving the deadline and considered that it was wholly unacceptable to be at this late stage without an indication of a date by which the external audit of the accounts would be concluded.

 

RESOLVED –

That the update be noted.

 

Grant Thornton – outline briefing from the Council’s new external auditor:

At this point in the meeting, Jon Roberts, Engagement Lead, Grant Thornton circulated and outlined a briefing document setting out the high level outline of their approach to delivering their responsibilities as the Council’s external auditor moving forwards, together with an outline reporting timeline, in respect of which amendments to the committee’s work programme would be required.