Agenda and minutes

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.

Apologies were received from Adebola Adebayo.

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

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.

Councillors Radford and Stevens declared that they were Bristol Energy customers. Councillor Pearce declared that he was a non-Executive Director of Bristol Energy.

As this is an extraordinary meeting of the committee, public forum business must

relate specifically to the business for which this extraordinary meeting has been

arranged.  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:

For written questions - 5.00 pm on Wednesday 10 October 2018.

For written statements - 12.00 noon on Monday 15 October 2018.

The Committee agreed to hear Public Forum before the item to which it related.

The Chief Internal Auditor introduced the report, highlighting that the Annual Governance Statement (AGS) was largely completed when the draft version was presented to the Committee in May 2018. The comments and observations made by members at the May Committee had been reviewed and amendments had been made to the AGS accordingly. The final version of the AGS had been signed by the Mayor, Head of Paid Service, Monitoring Officer and the Section 151 Officer.

It was also highlighting that the external auditors, BDO, had been consulted and they were satisfied that there were no outstanding matters of compliance in respect to the Final AGS.

Members were reminded that the first update in respect of management actions taken to address the “Significant Governance Issues” within the AGS had been reported to the Audit Committee at the September meeting.

The following points arose from debate:-

1. The Chair congratulated officers on improvements on the progress made on the implementation of recommendations from the Bundred report. There had been long-term issues to address and the improvements were being reflected in a more stable financial position;

2. The recent Judicial Review against the Council was not reflected in the Statement as it did not occur in the 2017/18 financial year;

3. The preliminary findings of BDO with respect to final payment to the ex-Chief Executive had not been fully reflected in the Statement as finalisation of the findings and recommendations were awaited;

4. The Chair expressed concern that that the Forward Plan was still not publishing future Cabinet decisions sufficiently far ahead although he acknowledged there had been improvements which allowed for better scrutiny;

5. The Chair allowed the Chair of OSMB, Councillor Gollop, who was in attendance as an observer to comment. He reported that he had held positive discussions with the Mayor regarding further improvements and requested that Audit Committee urge the Mayor to make the necessary improvements to ensure good governance and scrutiny;

6. Councillor Negus found the current situation unacceptable and a deficit in the democratic process. He urged all Committees to take the matter up with the Mayor.

7. Councillor Pearce suggested that a far longer term Forward Plan might be more useful. The Service Director – Finance reported that the Forward Plan was in line with the current Decision Pathway as agreed with the current administration and agreed to raise the Committee’s concerns with the Mayor’s Office;

8. Minor typographical errors were highlighted;

9. The Committee accepted the recommendation of the report and it was therefore:-

Resolved (Unanimously) – That the Final Annual Governance Statement and Action Plan be agreed as a fair reflection of the internal control and governance environment during 2017/18 and to date.

The Committee first heard Supplementary Questions from Alderman Price in relation to his Public Forum submission, the responses to which are set out below each question.

1. Assurance was sought that the new Education Management system would have the ability to track the performance of children in care.

Response: The Education Management system sits on the same shared database as social care and early help, so there is a single record for a young person which contains data we, as an LA, store on them including care status, end of key stage results, as well as a wealth of other information where services work with a child / young person.  On that basis we are able to track the performance of all children and subsets of children including those in care.

2. In relation to the pupil premium assurances that a separately identifiable cost centre was available and utilised for accounting and reporting on the grant funding associated to LAC pupil premium.

Response:  The LA can confirm that a separately identifiable cost centre is available and utilised for accounting and reporting on the grant funding associated with LAC Pupil Premium.

The Interim Head of Corporate Finance summarised the report highlighting a number of changes made since the Statement was considered in May as follows:

Ø  An in depth review by the Council’s insurance provider identified an under value of heritage assets by £98m which was incorporated in the draft statement. As this related to assets held by the Council prior to 1 April 2016 there were restatements of the balance sheet as at 31 March 2016 and 31 March 2017 requested, with the balance sheet for 31 March 2018 reflecting a £2m increase in revaluations in 2017/18;

Ø  Six months of the remuneration from salary of the ex-Chief Executive had been reclassified as compensation for loss of office. BDO reported that it was inappropriate to conclude that the final payment was contractual. This did not change the actual accounts and was no additional cost to the Council;

Ø   A detailed note setting out the position relating to Bristol Arena following Cabinet decision on 4 September 2018. This did not change the numbers in the accounts.

The Committee were asked to approve the Statement of Accounts for 2017/18, the signing off of the accounts being delegated to the Chair of Audit Committee.

The following points arose from debate:-

1. Councillor Negus wanted assurance that there were processes in place so that heritage assets were accurately valued so that such a situation did not reoccur and was assured that there was a process to revalue annually. The cost of the insurance was reflected in the valuation of assets;

2. It was confirmed that although the Cabinet decision on the Arena came after the end of this year’s accounts it was accounting and financial reporting practice to report such matters as a “post balance sheet event”. Temple Island was classified as assets under construction and an element of the expenditure had been  ...  view the full minutes text for item 22.

The Committee noted the response to a question submitted by Councillor O’Rourke. There were no Supplementary Questions but Councillor O’Rourke urged the Committee to take forward an internal review of arrangements relation to the final salary remuneration of the ex-Chief Executive.

The Committee then heard statements from Councillor O’Rourke and Councillor Hopkins.

The representative from BDO summarised the report and invited questions. The following points arose from debate:-

1. The Chair referred to the Table at Page 209 and the column on Pension Fund Liability. It was noted that actuaries used the figure of 26 years for life expectancy after retirement but this Council used the figure of 26.2 years which was not significantly longer so questioned why this was an issue. BDO acknowledged that this figure was not far greater than 26 years but because of the sensitivity of the valuation to these assumptions gave rise to a £6.3m overstatement which was significant although not material to the Council’s accounts and was therefore set out in Appendix 1 under Unadjusted Audit Differences. The different rates did not impact on what the Council contributed to the Avon Pension Fund;

2.  BDO had contacted the National Audit Office (NAO) to ask that when actuaries provide details of “normal” assumption ranges for the purposes of the central assurance review, that they also provide details of where local areas were applying a figure outside the normal range so that action could be taken earlier on and so reduce the risk of delays. The Committee noted that these findings related to the whole Avon Pension Fund not just the City Council.

3. Reference was made to Page 218 – Key Audit and Accounting Matters. It was noted that the valuation of subsidiaries of Bristol Waste and Bristol Energy had been calculated at £10.8m.This had resulted in a £12.8m impairment which had been corrected and put through in the accounting year. The preference shares were regarded as debt;

4. The representative from BDO acknowledged that the auditing of the accounts was still ongoing due to the complexity of issues arising. It was vital to fully investigate all issues in order to produce a quality report. All significant issues with the exception of the use of resources were in the report. It was not possible to give a date for the final report as BDO were still awaiting some pieces of information from the Council. Should any other matters arise before the report was finalised they too would need to be addressed. The Service Director – Finance advised the Committee that it was being asked to agree the accounts as true and fair subject to there being no further reportable issues;

5. The representative of BDO clarified that the issue regarding the ex -Chief Executive’s final salary payment was true and fair for accounting purposes, so the accounts appropriately disclose the position.  The outstanding issue was the use of resources arrangements and potential use of auditor powers but this did not impact on the opinion relating  ...  view the full minutes text for item 23.