Agenda and draft minutes

Audit and Assurance Committee
Friday, 26th July, 2019 10.30 am

Venue: Conference Room A&B, Cumbria House, Carlisle CA1 1RD

Contact: Nicola Harrison  Email: nicola.harrison@cumbria.gov.uk

Items
No. Item

15.

APOLOGIES FOR ABSENCE

To receive any apologies for absence

Minutes:

Apologies for absence were received from Mr F Cassidy and Ms C McCarron Holmes.

16.

MEMBERSHIP

To note any changes to the membership of the Committee

 

 

Minutes:

Mr Morgan replaced Mr Cassidy and Mr M Wilson replaced Ms McCarron Holmes as members of the Committee for this meeting only.

17.

DISCLOSURES OF INTEREST

Members are invited to disclose any disclosable pecuniary interest they have in any item on the agenda which comprises

 

1          Details of any employment, office, trade, profession or vocation carried on for            profit or gain.

 

2          Details of any payment or provision of any other financial benefit (other than from the authority) made or provided within the relevant period in respect of any expenses incurred by you in carrying out duties as a member, or towards your election expenses.  (This includes any payment or financial benefit from a trade union within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992.

 

3          Details of any contract which is made between you (or a body in which you have a beneficial interest) and the authority

 

(a)       Under which goods or services are to be provided or works are to be executed; and

 

            (b)       Which has not been fully discharged.

 

4          Details of any beneficial interest in land which is within the area of the authority. 

 

5          Details of any licence (alone or jointly with others) to occupy land in the area of the authority for a month or longer. 

 

6          Details of any tenancy where (to your knowledge)

 

            (a)       The landlord is the authority; and

 

            (b)       The tenant is a body in which you have a beneficial                                                         interest.

 

7          Details of any beneficial interest in securities of a body where

 

(a)       That body (to your knowledge) has a place of business or land in the    area of the authority; and

 

 

(b)       Either –

 

(i)      The total nominal value of the securities exceeds £25,000 or one            hundredth of the total issued share capital of that body; or

 

(ii)     If that share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class.

In addition, you must also disclose other non-pecuniary interests set out in the Code of Conduct where these have not already been registered.

 

Note

 

A “disclosable pecuniary interest” is an interest of a councillor or their partner (which means spouse or civil partner, a person with whom they are living as husband or wife, or a person with whom they are living as if they are civil partners).

Minutes:

There were no disclosures of interest made at the meeting.

18.

EXCLUSION OF PRESS AND PUBLIC

To consider whether the press and public should be excluded from the meeting during consideration of any item on the agenda.

Minutes:

There were no items on the Agenda for which the press and public should be excluded.

19.

MINUTES pdf icon PDF 231 KB

To confirm as a correct record the minutes of the meeting of the Committee held on 26 June 2019

Minutes:

RESOLVED that, the minutes of the meeting held on 26 June 2019 be agreed as a correct record and signed by the Chair.

20.

Annual Governance Statement 2018/19 pdf icon PDF 196 KB

To consider a report from the Executive Director – Corporate, Customer and Community Services

Additional documents:

Minutes:

A report was considered from the Monitoring Officer regarding the Annual Governance Statement 2018/19. The report presented the final draft of the Annual Governance Statement 2018-19 and advised that following the annual review of the effectiveness of the Council’s corporate governance framework, no significant governance issues had been identified.

 

The Monitoring Officer advised members that evidence had been gathered from a wide range of sources, in order to assess the performance of the Council in various aspects of its work. It was highlighted that specific questions had been asked of managers on contract management and Health and Safety. The detail of the evidence collected was included in the draft Annual Governance Statement (AGS). The work undertaken enabled an assessment of whether there were any significant governance issues to be made.

 

Members were informed that a key item over previous years had been the Amey Lessons Learned Action Plan, however as sufficient progress had been made in embedding the actions and recommendations contained in the plan, contract management arrangements could now revert being regarded as part of day to day work. The Monitoring Officer invited the Committee to approve the draft AGS so that it could be published with the Statement of Accounts.

 

Following a query from a member, the Monitoring Officer confirmed that the AGS was a retrospective document, a snapshot in time rather than a live document which was continually updated.

 

It was moved by Mr Morgan and seconded by Mr Fisher that the Annual Governance Statement be approved and signed prior to publication. This was agreed by assent of the Committee.

 

RESOLVED that,

 

(1)      The final Annual Governance Statement of Cumbria County Council for 2018-19 be approved.

 

(2)      The final Annual Governance Statement 2018-2019 is signed by the Leader of the Council and the Chief Executive prior to publication.

21.

Accounts Overview 2018/19 pdf icon PDF 371 KB

Additional documents:

Minutes:

A report was considered from the Director of Finance (S151 Officer) regarding the Accounts Overview 2018/19. The report advised that the Unaudited Accounts for the Council and the separate Cumbria Local Government Pensions Scheme (Cumbria LGPS) had been published on 31 May 2019 in line with the Accounts and Audit Regulation 2015.

The Director of Finance (S151 Officer) explained the relationship between this item and the External Audit reports and outlined the responsibility of the Committee.

The Committee was reminded of the Accounts training session for members and reserve members of the Audit and Assurance Committee held on 22 July 2019 where a lot of detail in relation to the understanding of the accounts had been presented. Slides from the session had been circulated to members. A synopsis of the training session content was provided by the Director of Finance (S151 Officer).

The report before members provided a comprehensive explanation of the Statement of Accounts for Cumbria County Council, the Cumbria Local Government Pension Scheme (LGPS), Value for Money, the Letter of Representation, the Statement of Accounts for the Port of Workington Harbour Accounts 2018/19 and debt management. The Director of Finance (S151 Officer) asked the Committee to be content with the information contained within the report before determining the recommendations within the report.

The Director of Finance (s151 Officer) advised that the County Council was not in full agreement with the Auditor regarding accounting for balances of the Copeland Community Fund which the Council holds as an Accountable Body. Members were advised that the Council would not be amending the accounting treatment for 2018/19.  This matter would be subject to further discussion with the Auditors during 2019/20.  In relation to the Cumbria LGPS Fund significant findings – key judgement and estimates, Members were informed that an adjustment would not be made in respect of the valuation of Level 3 investments totalling £6.101m.

In referring to the Notes to the Accounting Statements, a member queried whether Cumbria County Holdings Ltd owned all of the companies identified in the document (p198 of Agenda pack) and who decided what the dividends would be. It was clarified for members that Cumbria County Holdings Ltd owned the companies in the list and the figures related to individual accounts before they were consolidated. The Group Finance Manager - Corporate Accounting undertook to provide further detail after the meeting. A short discussion took place on the membership of the Board.

 

The Director of Finance (S151 Officer) asked that given the detailed information provided during the meeting from Grant Thornton and County Council officers and taking into consideration the comprehensive reports before members, whether the Letters of Representation could be signed. Members agreed that they had no further queries on the Accounts, including those relating to the Port of Workington and that the letters could be signed.

The Director of Finance (S151 Officer) drew members’ attention to the Grant Thornton Action Plan which related to Journal upload. In order to assure the Committee that this was being  ...  view the full minutes text for item 21.

21a

Letter of Representation - Cumbria County Council pdf icon PDF 147 KB

To consider a report from the Director of Finance (S151 Officer)

Minutes:

The Committee received the letter of representation to the Associate Director of Grant Thornton. The letter was provided in connection with the audit of the group financial statements of Cumbria County Council and its subsidiary undertakings to the year ended 31 March 2019 for the purpose of expressing an opinion as to whether the group and parent Council financial statements gave a true and fair view in all material respects in accordance with International Financial Reporting Standards and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the UK 2018/19 and applicable law.

 

Discussion relating to this item is recorded at Minute 21.

21b

Letter of Representation - Cumbria Local Government Pension Scheme pdf icon PDF 559 KB

To consider a report from the Director of Finance (s151 Officer)

Minutes:

The Committee received the letter of representation to the Associate Director of Grant Thornton regarding the Cumbria Local Government Pension Scheme (LGPS). The letter was provided in connection with Grant Thornton’s audit of the financial statements of Cumbria LGPS (‘the Fund’) for the year ended 31 March 2019 for the purpose of expressing an opinion as to whether the Fund’s financial statements are presented fairly, in all material respects in accordance with International Financial Reporting Standards and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the UK 2018/19 and applicable law.

 

Discussion relating to this item is recorded at Minute 21.

21c

Audited Statement of Accounts 2018/19 pdf icon PDF 3 MB

To receive the County Council’s Audited Statement of Accounts 2018/19

Minutes:

Members received the audited Statement of the Accounts for the year 2018/19.

 

Discussion relating to this item is recorded at Minute 21.

 

21d

Port of Workington Statement of Accounts pdf icon PDF 312 KB

To receive the Port of Workington’s Statement of Accounts 2018/19

Minutes:

Members received the Port of Workington Statement of Accounts for the year ending 31 March 2019.

 

Discussion relating to this item is recorded at Minute 21.

 

22.

GRANT THORNTON ITEMS

22a

External Audit Findings - Cumbria County Council 2018/19 pdf icon PDF 632 KB

To consider a report from Grant Thornton

Minutes:

The Associate Director – Grant Thornton guided members through the Audit Findings Report for Cumbria County Council for the year ended 31 March 2019.

 

Mr Kelly offered an apology for the lateness of the papers which was due to a very challenging timeline as the accounts were prepared at the end of May and the findings report was produced by the end of June. This had been compounded by the implications of the McCloud judgement.

 

Mr Kelly was pleased to report a positive outcome for the audit findings for Cumbria County Council and guided members through the report in detail which included key findings and other matters arising from the audit. This included four adjustments to the financial statements. He advised that an objection raised in the 2016/17 accounts had now been concluded, which had allowed the 2016/17 and 2018/19 accounts to be closed and a certificate of closure to be provided.

 

Members were advised that although there may be more adjustments listed in the Audit Findings report this year, none were material in quantity or nature. The adjustments related to updates to disclosure notes and the majority involved the provision of additional words with the aim of helping the reader of the Accounts. He concluded that the Committee could be assured that the accounts were of a high standard.

 

Mr Kelly reported on the financial statements in great detail. He proposed they were a true and fair position. He welcomed that the Annual Governance Statement had been produced to a high standard and there were robust arrangements in place. He commented on the adjustments relating to the McCloud case which had had an impact on the Cumbria LGPS Pension Scheme and Fire Pension Scheme. He provided an update on the completion of Grant Thornton’s work on journals and pensions.

 

A comprehensive explanation was provided on Value for Money (VFM) arrangements. He welcomed that the previous ‘except for’ in relation to contract management arrangements had been lifted. He anticipated giving an unqualified VFM statement. In terms of Statutory Duties, he was pleased to report that additional statutory powers or duties for 2018/19 had not been exercised. Mr Kelly highlighted the work undertaken on the objection relating to the 2016/17 audit and certification of the closure of the audits. An explanation was provided on the Grant Thornton fees.

 

The Director of Finance (S151 Officer) and her team were thanked for their input to what was considered to be an excellent audit from the point of view of the external auditor.

 

Ms Johnstone guided members through the key messages in great detail, commenting on the risks identified in the Audit Plan, the work Grant Thornton had undertaken and their conclusions about the risks.

 

A briefing on the matters discussed with management was provided and the two risks identified in relation to Value For Money were noted. Grant Thornton considered the Council to be effective and have arrangements in place to mitigate the risks which related to the Medium Term Financial Plan and  ...  view the full minutes text for item 22a

22b

External Audit Findings - Cumbria Local Government Pension Scheme 2018/19 pdf icon PDF 502 KB

To consider a report from Grant Thornton

Minutes:

The Associate Director – Grant Thornton guided members through the audit findings for Cumbria Local Government Pension Scheme. Mr Kelly advised that he intended to give an unqualified opinion and confirmed that, as set out in the audit findings report, the statements gave a true and fair view of the financial position of the Pension Scheme. He noted the high quality of the accounts and the supporting working papers.

 

Mr Kelly explained that the audit had identified a few small items which he guided members through: these related to the McCloud judgements and IT General controls relating to the journal upload tool. Mr Kelly talked members through the key judgements and estimates. He highlighted that the first transition of Pension Fund assets into Border to Coast Pensions Partnership had taken place during the financial year and that this had been factored in to the audit work undertaken. He informed members that the Audit was substantially complete.  He reported on the additional fees arising as a result of work carried out on the scheme’s Equity Protection instrument and in assessing the impact of the McCloud judgement on the Scheme’s Present Value of past service liabilities.

 

He set out the approach to materiality and highlighted the risks identified in the Audit Plan and how these had been addressed through the audit work undertaken. He highlighted that the report confirmed that the Fund’s use of the going concern basis of accounting was appropriate. Mr Kelly talked about other communication requirements such as disclosures and matters in relation to fraud. The Action Plan was noted and a short report was given on the follow up work undertaken on the previous year’s recommendations. He considered there to be a high standard of accounting.

 

Discussion took place on the Mc Cloud judgement and the Cumbria LGPS. A member acknowledged that the timing of the judgement was very challenging given that the preparation of the accounts was underway and work had started on the Triennial Revaluation. It was queried whether an audit took place on the payment of pensions as there had been recent performance issues with the company who administered pension payments. Mr Anderson reported on the audit work that took place on this matter. He advised that the testing had identified no areas of concern and therefore this had not been flagged as a risk. The Director of Finance (S151 Officer) advised on the work of Cumbria Pensions Committee and Local Pension Board, their monitoring role of the company who administer pension benefits and that they had received assurance that performance had improved. Members were advised that the Pensions Committee and Local Pension Board kept a watching brief on this matter.

 

A member asked a question on materiality. Mr Anderson confirmed that materiality was based on the asset value in the accounts.

23.

FORWARD PLAN - AUDIT AND ASSURANCE COMMITTEE pdf icon PDF 151 KB

To note the Forward Plan for the Audit and Assurance Committee and agree any additional items

Minutes:

The Committee’s Forward Plan was considered. It was agreed that Safeguarding – Adults would be the Deep Dive for the September meeting.

 

Discussion took place on the date of the July 2020 meeting. In order to allow time for the reports to be prepared within the stipulated timescale, the meeting date would change to 29 July 2020.

 

RESOLVED that,

 

(1)      The Deep Dive for the September meeting will be Safeguarding – Adults

(2)      The July meeting in 2020 be changed to 29 July 2020.

24.

DATE & TIME OF NEXT MEETING

The next meeting will be held on 17 September 2019 at 10.30am at Cumbria House, Carlisle.

 

Minutes:

The next meeting will be held on 17 September 2019 at 10.30am at Cumbria House, Carlisle.