Agenda and draft minutes

Audit and Assurance Committee
Tuesday, 20th March, 2018 10.30 am

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

Contact: Jackie Currie  Email: jackie.currie@cumbria.gov.uk

Items
No. Item

48.

APOLOGIES FOR ABSENCE

To receive any apologies for absence

Minutes:

An apology for absence was received from Mrs J Crellin.

 

49.

MEMBERSHIP

To note any changes to the membership of the Committee

 

 

Minutes:

Members noted that Grant Thornton’s Audit Manager would be leaving her post in the near future to take up a new role, still within the company, but located in Manchester.  Details of the transition arrangements were explained to members, and they noted the new Audit Manager would be taking over from 1 May 2018.

 

The Audit and Assurance Committee thanked Ms Pieri for all her hard work on behalf of the Audit Committee and wished her well for the future.

 

 

50.

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 in any items on the agenda today.

 

51.

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:

RESOLVED that,     the press and public be not excluded from the meeting during consideration of any items of business on the agenda.

 

52.

MINUTES pdf icon PDF 136 KB

To confirm as a correct record the minutes of the meeting of the Committee held on 5 January 2018 (copy enclosed).

 

Minutes:

RESOLVED that,     the minutes of the previous meeting held on Friday 5 January 2018 be agreed as a true and accurate record, and signed by the Chair.

 

53.

2017/18 QUARTER 3 RISK REPORT pdf icon PDF 125 KB

To consider a report from the Corporate Director – Resources and Transformation (copy enclosed)

 

Additional documents:

Minutes:

The Audit and Assurance Committee considered a report from the Corporate Director – Resources and Transformation, which provided members with an update on progress with the 2017-18 corporate risks for the third quarter to 31 December 2017.

 

A high level summary of the position with all corporate risks was presented at Appendix 1 which included all risk scores, direction of travel and a summary risk profile of all corporate risks.

 

Members were also provided with a detailed register of all individual corporate risks in Appendix 2.  For each corporate risk, this provided information about the causal factors for the risk; activity undertaken during the previous quarter to manage the risk; and a forward look at the mitigating actions planned to further manage or tolerate the risk.

 

The Assistant Director updated members on the following:-

 

Notable Risk Management Activity in Quarter 3 & planned for Quarter 4

 

A range of improvement activities had been undertaken during Quarter 3 aimed at further strengthening the Council’s approach to risk management.

 

Amey Lessons Learned Report & Action Plan

 

The Lessons Learned actions relating specifically to risk management arrangements were progressing well in line with the action plan agreed with Members. These include:

 

·       A clear definition of a ‘significant contract’ has been developed;

·       The Councils most ‘significant contracts’ have been identified;

·       All ‘significant contracts’ have been risk assessed against the Corporate risk assessment criteria;

·       All ‘significant contracts’ will now be reported and monitored at CMT & DMT’s on a regular basis

 

The Assistant Director reported that a two-day Contract Management training course had been delivered in February 2018 with a risk management section included.  A further more detailed dedicated risk management training course would be delivered to officers involved in the commissioning, procurement and contract management processes in March 2018 and would address any recommendations from the Zurich Municipal review.     

 

A Risk Management workshop took place at Extended Leadership Team on 7 February 2018 to review the Council’s current risk management approach and to identify opportunities to strengthen arrangements at both a Strategic and Operational level.  Also a Risk Management Training workshop for Elected Members would take place by 31 March 2018.

 

Review of Performance & Risk Management Framework, including  Internal Audit Action Plan

 

The work to review the Performance and Risk Management Framework (PRMF) was well underway to meet the timescale of Spring 2018, ensuring that the new framework aligned with the 2018-2022 Council Plan agreed by Full Council on 15 February 2018.

 

Many of the risk management actions from the Internal Audit Action Plan would align with the development and implementation of the PRMF to ensure a consistent approach was applied across the Council regarding Performance & Risk Management arrangements.

 

Children’s Services Ofsted Inspection Outcome

 

Ofsted inspectors reported that “all local authority services for children in Cumbria had significantly improved and overall effectiveness now required improvement to be good”.

 

Inspectors judged the performance of the adoption service and the quality of the directorate’s leadership to be “good”. The report found that overall services “require improvement”.

 

This was a  ...  view the full minutes text for item 53.

54.

LOCAL CODE OF GOVERNANCE pdf icon PDF 85 KB

To consider a report from the Monitoring Officer (copy enclosed)

 

Additional documents:

Minutes:

The Monitoring Officer presented a report which updated members on the Council’s updated Local Code of Governance which had been prepared to reflect the requirements of the latest guidance on good governance in Local Authorities.

 

Local Authorities operated through a corporate governance framework; a system that brought together an underlying set of legislative requirements, governance principles and management processes.

 

Each Local Authority was responsible for maintaining its own local governance framework which ensured that resources were directed in accordance with agreed policy and according to priorities, that there was sound and inclusive decision making and that there was clear accountability for the use of those resources in order to achieve desired outcomes for service users and communities.

 

The Framework defined the principles that should underpin the governance of each Local Authority and provided a structure to help authorities with their approach to governance. The Framework stated that authorities should test their governance structures and partnership arrangements against the principles contained in the Framework by:-

 

·      reviewing existing governance arrangements

·      developing and maintaining an up-to-date local code of governance, including arrangements for ensuring ongoing effectiveness

·      reporting publicly on compliance with their own code on an annual basis and on how they have monitored the effectiveness of their governance arrangements in the year and on planned changes.

 

The Local Code of Governance was therefore a key document in the Council’s corporate governance framework, setting out the Council’s arrangements that met the expected standards of governance.  It would form the basis of the annual review of governance for 2018/19 by providing standards against which the Council would assess its performance in adhering to stated governance arrangements and thereby meeting the standards set out in Delivering Good Governance.

 

The Monitoring Officer suggested that the Local Code of Governance should be aligned to the Council Plan with a timeframe of 2018-2022.  Members discussed whether this was an appropriate timeframe and upon conclusion of these discussions it was AGREED.  

 

RESOLVED that,     the Audit and Assurance Committee considered and approved the draft Local Code of Corporate Governance for the period 2018-2022.

 

55.

WHISTLEBLOWING & SPEAK UP POLICIES pdf icon PDF 101 KB

To consider a report from the Monitoring Officer (copy enclosed)

 

Minutes:

RESOLVED that,     the Whistleblowing/Speak Up Polices be deferred to the next meeting of the Audit and Assurance Committee.

 

56.

ANNUAL GOVERNANCE STATEMENT: 2017/18 ACTION PLAN PROGRESS UPDATE pdf icon PDF 109 KB

To consider a report from the Corporate Director – Resources and Transformation (copy enclosed)

 

Additional documents:

Minutes:

The Audit and Assurance Committee considered a report from the Corporate Director – Resources and Transformation which reminded them that on 25 September 2017, members of the Audit and Assurance Committee approved the Annual Governance Statement for 2017/18.  The Statement highlighted governance issues that were considered to be significant, with actions to tackle those issues set out in an associated Action Plan for 2017/18.  The Corporate Director – Resources and Transformation said that the intention was that in future these would be reported by exception.  This was noted.

 

The Council recognised that some issues were of more corporate significance than others and, in the main, issues would properly be addressed by the relevant Assistant Directors through their Service Plans.  However, significant corporate governance issues required appropriate action plans and were therefore reported within the Corporate Governance Action Plan at a corporate level (i.e. through the Corporate Management Team and Elected Members).

 

The Council’s definition of a significant governance issue was as follows:-

 

·      It has significantly prejudiced or prevented achievement of a principal objective;

·      It has resulted in the need to seek additional funding to allow it to be resolved;

·      It has required a significant diversion of resources;

·      It has had a material impact on the accounts;

·      It has been identified by the Audit and Assurance Committee as significant;

·      It has resulted in significant public interest or has seriously damaged reputation;

·      It has resulted in formal actions being taken by the Section 151 Officer or Monitoring Officer;

·      It has received significant adverse commentary in external or internal inspection reports that has not been able to be addressed in a timely manner.

The review of corporate governance 2016/17 identified two significant governance issues, which relate to Children’s Services and the Amey Litigation.  The Action Plan for 2017/18 sets out the work to be undertaken to manage these issues. 

 

Children’s Services Leadership and Governance

 

Following the Ofsted re-inspection in November 2017, the inspectors reported that: “all local authority services for children in Cumbria had significantly improved and overall effectiveness now requires improvement to be good”.

 

Inspectors judged the performance of the adoption service and the quality of the directorate’s leadership to be “good”. The report found that overall services “require improvement”.

 

The Director of Children’s Services (DCS) had worked with senior leaders, including politicians, to drive significant change and improvement across the county and senior leaders had improved their understanding and scrutiny of Children’s Services since the last inspection. 

 

The Corporate Parenting Board’s knowledge and influence was now a strength and members had in-depth knowledge about children in care and what matters to them.  Elected members carefully scrutinise and oversee services for vulnerable children. 

 

Cumbria was now rated ‘Good’ for its Leadership, management & governance and as such would be subject to a ‘lighter touch’ approach to ongoing support and supervision, involving regular progress updates with the DfE advisor by telephone.

 

The report contained 10 recommendations for action and the directorate was already working to address these.

 

The Directions Notice had now been lifted  ...  view the full minutes text for item 56.

57.

INTERNAL AUDIT PROGRESS REPORT TO 31 JANUARY 2018 pdf icon PDF 220 KB

To consider a report from the Group Audit Manager (copy enclosed)

 

Minutes:

The Audit and Assurance Committee considered a report from the Group Audit Manager which provided a summary of the work of Internal Audit for the six months up to 31 January 2018.

 

Key points to note were:-

 

·         Work was progressing on the completion of outstanding 2016/17 audit work and work from the 2017/18 audit plan was well underway.

·         The level of risk based audits receiving Reasonable or higher assurance was currently 65% (taking account of all current draft and final audit reports issued).  This was consistent with the position reported at 10 November 2017 and was an increase on the same period last year when the figure was 56%. 

 

Outcomes from Audit Reports to 31 January

 

Audits completed to final report stage at 31 January comprised 13 risk based audit reviews, 4 school audits, and 4 follow ups of previous audits.  The % of reports resulting in Reasonable or higher assurance was 71%.   

 

A further five audits had been completed to draft report stage.  When these reports were also taken into account, the level of Reasonable/Substantial assurance was 65% which remained an increase from the same period last year when the figure was 56%.

 

Of particular note were the increased assurance levels in relation to the 5 reported follow up audits; ICT Security, Focus Families, Traded Services and Agency Staff (all finalised) and Data Quality (report in draft).  All had received revised assurance opinions from Partial to Reasonable as a result of improved controls following the original audit reviews.

 

The Group Audit Manager drew members’ attention to the lack of any completed audit work in the Health, Care and Community Services directorate and explained that the reasons for this were understood and outside of internal audit’s control.  The limited number of audits expected to be concluded in time for the 2017/18 audit opinion may impact on the opinion, but would not be known until the audits were completed.

 

Members welcomed the report and were reassured that improvements to these were being made.

 

RESOLVED that,     members note the progress and the outcomes of internal audit work.

58.

DRAFT INTERNAL AUDIT PLAN 2018/19 pdf icon PDF 97 KB

To consider a report from the Group Audit Manager (copy enclosed)

 

Additional documents:

Minutes:

The Group Audit Manager presented the draft internal audit plan, which had been prepared in consultation with senior management and in conformance with the Public Sector Internal Audit Standards (PSIAS).

The approach to preparing the audit plan had been based around:-

 

·      Review of the Council’s corporate risk register

·      Consultation with senior management

·      Review of annual governance statement action plan

·      Review of service plans and related risk registers

·      Consideration of emerging issues and risks nationally, regionally and locally

·      Issues discussed at Audit & Assurance Committee meetings

 

The recommendations from the 2017 External Quality Assessment of Internal Audit had been incorporated where appropriate.  The plan was now more closely aligned to corporate and service level risk registers and included an appendix setting out where Internal Audit would provide assurance over risks in the corporate risk register. 

 

The plan also included a number of shorter, key control audits aimed at providing assurance over the controls in place to address core risks within a system or service.  The plan also included provision for closer working with Risk Management colleagues to inform a broader opinion on risk management arrangements.

 

It was anticipated that there would need to be a review of the plan during the first half of the year following the review of the corporate risk register to ensure that Internal Audit resources continued to be focused at the most significant risks.

 

Internal audit would continue to follow up all audits resulting in Partial or Limited assurance.

 

One of the members asked if it would be possible for the Pupil Referral Units to put themselves forward for an audit to be carried out.  The Group Audit Manager confirmed that PRU’s were included in the programme as part of School Audits.

 

One of the members raised the issue of Universal Credit and whether this posed any risk to the County Council.  The Senior Manager – Accountancy and Financial Planning AGREED to look into this.

 

RESOLVED  that,    the Audit & Assurance Committee approve the draft audit plan together with the proposed approach to follow up audits and the audit charter.

59.

EXTERNAL QUALITY ASSESSMENT OF INTERNAL AUDIT pdf icon PDF 305 KB

To consider a report from the Group Audit Manager (copy enclosed)

 

Minutes:

Members had before them a report from the Corporate Director – Resources and Transformation which explained that under the Public Sector Internal Audit Standards (PSIAS), all Internal Audit functions working in the public sector must receive an externally accredited assessment every five years.

 

The assessment was undertaken during October 2017 and the draft report issued in November.  As reported to Audit and Assurance Committee in January 2018, the overall assessment was that the Council’s Internal Audit service ‘generally conformed’ to the standards; this was the highest of three possible outcomes.

 

The action plan contained 7 recommendations; 4 directly relating to the systems and processes within Internal Audit and 3 relating to wider corporate arrangements in respect of Risk Registers, Assurance mapping and management monitoring and reporting on implementation of agreed actions.

 

RESOLVED that members note both the EQA report and agreed action plan, and that further updates on the agreed actions are to be brought to the committee in 6 months time.

 

60.

EXTERNAL AUDIT PLAN - CUMBRIA LOCAL GOVERNMENT PENSION SCHEME 2017/18 pdf icon PDF 462 KB

To consider a report from Grant Thornton (copy enclosed)

 

 

Minutes:

Members of the Audit and Assurance Committee considered a report from Grant Thornton which provided them with an overview of the planned scope and timing of the statutory audit of Cumbria Local Government Pension Scheme.

 

The Associate Director from Grant Thornton took members through the report and highlighted points to note.

 

RESOLVED that the report be received and noted.

 

 

 

 

 

61.

ACCOUNTS PREPARATION - 2017/18 pdf icon PDF 153 KB

To consider a report from the Assistant Director – Finance (Section 151 Officer) (copy enclosed)

 

Minutes:

The Audit and Assurance Committee considered a report from the Section 151 Officer, which summarised the overall approach and progress to date on the preparations for the Council’s and Cumbria Local Government Pension Scheme Statement of Accounts 2017/18 and the Council’s Value for Money conclusion.

The production of the accounts was a significant annual exercise for the Council involving many officers across the Council led by Finance. In preparation for the closure of accounts for 2017/18 a comprehensive timetable, covering both revenue and capital, had again been produced following on from good practice established in previous years, together with proforma documentation for all Finance staff to use.

 

In addition the Council had purchased new accounts reporting software that would provide an additional check in respect of Accounting Code compliance, support the earlier closedown requirements through automated procedures and improved links to working papers which will then ease the audit process.

 

Members noted that the draft Statement of Accounts would be published by 31 May and the Audited Statement of accounts reported to Audit and Assurance Committee on 27 July 2018.

 

RESOLVED that, members note

 

(1)    the High Level High level timetable for the closedown of the Council’s and the Cumbria Local Government Pension Scheme 2017/18 accounts. (paragraph 4.17)

(2)    Potential risks for the closure of the Council’s 2017/18 accounts (paragraph 4.22)

(3)    Value For Money (VFM) approach to determine the VFM conclusion as part of the final accounts process (paragraph 4.28 to 4.33)

(4)    Potential risks for the closure of the CLGPS 2017/18 accounts (paragraph 5.10)

 

 

 

 

 

 

 

 

 

 

62.

EXTERNAL AUDIT PROGRESS AND UPDATE REPORT 2017/18 pdf icon PDF 675 KB

To consider a report from Grant Thornton (copy enclosed)

 

Minutes:

The Audit Manager from Grant Thornton presented a report which provided the Audit and Assurance Committee with a report on progress in delivering Grant Thornton’s responsibilities as external auditors.

 

The officer took members through the report, and members noted progress.

 

RESOLVED that the report be received and noted.

 

63.

FORWARD PLAN - AUDIT AND ASSURANCE COMMITTEE pdf icon PDF 51 KB

To note the Forward Plan for the Audit and Assurance Committee and agree any additional items (copy enclosed).

Minutes:

The Forward Plan was noted with the following amendments:-

 

29 June 2018        add Presentation re: Significant Contracts

                                 Add deferred item – Whistleblowing/Speak up Policy

                                

 

64.

DATE & TIME OF NEXT MEETING

The next meeting will be held on 29 June 2018 at Cumbria House, Carlisle at 10.30am

 

Minutes:

The next meeting will be held on Friday 29 June 2018 at 10.30am at Cumbria House, Carlisle.

 

Members were sad to note that the Group Audit Manager would be leaving her post with the County Council at the end of April 2018.  They recognised that she was leaving the organisation in a positive position and wished her every success for the future.