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Agenda and minutes

Items
Note No. Item

1.

Apologies for Absence.

Minutes:

Apologies for absence were received from Councillors A Bardoe, Mrs J A Ozog (Substitute Cllr. J M Ozog), A R Lloyd and subsequently from Cllr. J S Hawkes.

 

An apology for lateness was made by Cllr. D Swinerd on joining the proceedings. He also confirmed that he had no declarations of interest to make.

 

The Chairman welcomed Darren Wells from the Council’s External Auditors Grant Thornton UK and noted the presence of the Strategic Director (Internal Services), the Financial Services Manager and the Counter Fraud & Compliance Manager.

2.

Declarations of Interest.

To receive declarations of interest from Members including the terms(s) of any Grant(s) of Dispensation.

Minutes:

There were no declarations of interest made.

MD

3.

Confirmation of the Minutes of the meeting held on 25 April 2018 pdf icon PDF 109 KB

Minutes:

RESOLVED:

 

1.    That the minutes of the Audit Board meeting held on 25 April 2018 be confirmed as accurate.

4.

Urgent Items

The Chairman will announce his decision as to whether there are any urgent items and their position on the agenda.

Minutes:

The Chairman confirmed that there were no urgent items for the Board to consider.

5.

References from Other Committees (IF ANY)

There are no references from other Committees to consider at present.

Minutes:

There were no references from other Committees for the Board to consider.

6.

Report from the External Auditor pdf icon PDF 50 KB

To receive a report from the Council’s External Auditors Grant Thornton UK.

Additional documents:

Minutes:

The covering report from the Financial Services Manager (FSM) advised the Board that the External Auditor had completed the audit of the Council’s 2017/18 Accounts and enclosed for Members’ attention the following documents:

 

·         The External Auditor’s Audit Findings Report [attached as Appendix A];

·         The Council’s Letter of Representation to the External Auditor dated 30 July 2018 [attached as Appendix B];

·         The External Auditor’s letter setting out the Planned Audit Fee for 2018/19 [attached as Appendix C].

 

The FSM informed the Board that the External Auditor proposed to issue unqualified opinions on both the Accounts and the Value for Money (VfM) Conclusion [Appendix A to the report]. Some limited changes to the draft Accounts submitted within the 31 May deadline had been subsequently agreed with the External Auditor, but those changes did not change the draft outturn position for revenue and capital budgets presented to Cabinet in June 2018.

 

He advised Members of an error in the Letter of Representation [Appendix B to the report] as submitted in the Agenda papers. The reference to an ‘Appendix A - Schedule of Unadjusted Misstatements’ at the conclusion of the Letter referred to a prior year and should be ignored. A fully accurate replacement document had been subsequently submitted to the Chairman of the Board for his joint signature with the Strategic Director (Internal Services).

 

Darren Wells (Engagement Lead, Grant Thornton UK) advised Members that the Council’s draft Statement of Accounts for 2017/18 presented to the External Auditor for review within the 31 May 2018 deadline, had been of a high quality, and particularly commendable given the shortened timescale for presentation.

 

He confirmed that only limited changes had been required to the draft Accounts and that Grant Thornton as External Auditors proposed to issue unqualified Opinions on both the Financial Statements of Accounts for 2017/18 and the Value for Money Conclusion, as set out in his Audit Findings Report for the Year ending 31 March 2018 [attached as Appendix A to the covering report].

 

In conclusion, he confirmed that the Council’s scale of fees for 2018/19 had been set by the Public Sector Audit Appointments Ltd (PSSA) at £35,732 [Appendix C to the covering report]. This represented a 23% reduction on the applicable fees for 2017/18 and continued the trend of a downward sliding scale of fees, which reflected the strong performance of the Council’s Finance team in terms of their presentation of complete and materially accurate financial statements and supporting working papers for the 2017/18 Accounts.

 

 

                        RESOLVED:

 

1.    That Members note and welcome the External Auditor’s intention to issue an unqualified opinion on both the Financial Statements and the Value for Money Conclusion as set out in Appendix A to the report;

 

2.    That Members approve the terms of the Letter of Representation attached at Appendix B to the report as amended;

 

3.    That Members note the External Auditor’s proposed audit fee for 2018/19 as set in Appendix C to the report. 

7.

Financial Statements (Statement of Accounts) 2017/18 pdf icon PDF 49 KB

This report presents the Council’s Statement of Accounts for the period 1 April 2017 to 31 March 2018.

Additional documents:

Minutes:

The report from the Financial Services Manager (FSM) presented to the Audit Board the Council’s Statements of Accounts for the period 1 April 2017 to 31 March 2018 (attached as Appendix A to the report).

 

The report asked Members to adopt, approve the publication of, and authorise for issue the 2017/18 Statement of Accounts, as governed by the Local Government Finance Act 1982 and the Accounts and Audit Regulations 2015, which required that the Accounts be prepared by 31 May and audited and approved for publication by 31 July 2018.

 

The FSM reminded Members that the Council’s Statement of Accounts was prepared in accordance with ‘proper accounting practice’ i.e. with regard to all       the accounting rules issued by the Accounting Standards Board and the CIPFA Code of Practice on Local Authority Accounting, which differed from the statutory regulations that the Council was required to follow as a local authority. The Statement of Accounts demonstrated how the two regimes of ‘proper accounting practice’ and statutory regulations for local authorities were reconciled and confirmed that there had been no significant changes in those  requirements for the preparation of the 2017/18 accounts from the previous year. 

 

He advised the Board that the Council’s draft Accounts for 2017/18 had been signed-off by Officers, within the deadline on 30 May for presentation to the External Auditors. The sharing of working papers with Grant Thornton in advance, had enabled an early start to the audit process which had been largely completed by mid-June [previously September] and he wished to record his thanks to his Finance Team and the External Auditors for their achievements. If approved by Members that evening, the 2017/18 Accounts could be formally signed-off by the Chairman and Strategic Director (Internal Services) as Section 151 Officer, to meet the 31 July 2018 deadline.

 

The FSM then made the following comments to highlight specific aspects of the 2017/18 Accounts for Board Members:

·         The Comprehensive Income and Expenditure Statement (CIES) [agenda p.72] recorded an accounting surplus on the Provision of Services of £21.4m which reflected the figure in the EFA on page 77. In addition to this gain the Income and Expenditure Statement also show unrealized gains shown as part of other comprehensive income and expenditure such as changes on the revaluation of assets, changes to the value of financial assets and pension re-measurements. This took the Council to a total surplus of £39.9m. However, before plans to spend all the surplus could be put in place, it is important to note that the CIES was a statement under IFRS and not related to the taxation and regulatory regime;

 

·         The Movement in Reserves Statement (MIRS) [agenda p.73] recorded changes in usable and unusable reserves and began with the Accounting outcome of the CIES and then recorded the adjustments that had been made to obtain the statutory basis. The MIRS recorded that the general fund balance had been maintained at £3m,an increase to Earmarked General Reserves to £26.5m, HRA at £12.9m, Capital  ...  view the full minutes text for item 7.

8.

Counter Fraud & Compliance Team Annual Report 207/18 pdf icon PDF 76 KB

This report updates the Audit Board on the work carried out by the Counter Fraud & Compliance Team during the year ended 31 March 2018.

Minutes:

The covering report from the Counter Fraud & Compliance Manager (CF&CM) asked the Audit Board to note the 2017/18 Year End report for the work undertaken by his Team in the period under review [attached as Appendix A to the report].

 

Successes

 

In presenting the report to the Board, the CF&CM referred Members to paragraph 3 of Appendix A (agenda p. 180) which set out in table format the successes achieved by his Team in the year to 31 March 2018 in terms of tangible monetary savings of some £128.5K to the public purse, and the further projected losses to the taxpayer had his Team not taken action when they did. The second table on p. 180 recorded the Team’s impact on Housing claims resulting in a saving to the public purse of over £114K following the removal of fraudulent Housing Benefit claims. The Team had also co-ordinated the Council Tax & Benefit penalty scheme on behalf of the Council, which penalised claimants who failed to declare relevant changes in relation to Council Tax Single Person discount and welfare benefits claims. His Team had issued 57 such penalties in the period under review. The Team’s collaboration with the Council’s Housing Team had also resulted in the successful repossession of a 2-bedroomed Council property from misuse.

 

In addition to monetary savings, the CF&CM advised that the work of his Team helped to protect the Council’s reputation in the eyes of the public, generate confidence in the workings of the Council through the identification and pursuit of fraud, and provided excellent value for money (VfM). All/any suspicions of tenancy fraud should be reported to the Team via the advertised anti-fraud hotline.

 

Future Developments

 

The CF&C Team were working closely with colleagues in the Business Rates Collection Section to eradicate false and erroneous claims for Small Business Rates Relief (SBRR). The Council had recently purchased a data-matching facility which was already proving a great success in identifying companies who were falsely claiming SBRR.

 

The Department for Works and Pensions (DWP) had made a proposal to re-commence joint working with local authorities on cases involving potentially fraudulent claims for welfare benefits and Council Tax discounts.  The Council was keen to re-start joint working with the DWP as it enabled all areas of potential fraud to be reviewed under one joint investigation. It was hoped that work with the DWP would re-commence later in 2018.

 

The Chairman noted that the Team’s tenancy fraud hotline (agenda p. 181) was a Sevenoaks number [given the Team’s location at Sevenoaks Council offices]. He wondered whether Dartford residents should be asked to telephone the Civic Centre Call Centre to give them an increased sense of ‘ownership’ in reporting tenancy fraud.

 

The CF&CM advised that callers to the tenancy fraud hotline tended only to call once. It was therefore essential that an experienced member of his Team took these calls to ensure that all relevant information was captured.

 

Following a Member’s suggestion, the Strategic Director (Internal Services)  ...  view the full minutes text for item 8.

9.

Appointment of Interim Internal Audit Manager

Minutes:

At the request of the Chairman, the Strategic Director (Internal Services) advised Board Members of the joint appointment with Sevenoaks Council of an Internal Audit Manager on an interim basis for 6 (six) months from 1 August 2018.

 

The successful candidate was an experienced officer who had been recruited from the Mid-Kent Audit Partnership. He would also be taking on the role of Chief Audit Executive (CAE) which the Strategic Director had been fulfilling since the departure of the previous Audit, Risk & Anti-Fraud Manager (ARAFM) Bami Cole, in addition to her Section 151 Officer role [Min. No. 10 of 2017 refers]. 

 

As previously advised to Members, it had not been deemed appropriate to burden the then Acting Internal Audit Manager, Lisa Nyon, with the CAE role. However, safeguards had been put in place to ensure that Lisa, as Acting Audit Manager, had had independent access to both the Managing Director and the Board Chairman for the performance of her duties, through-out the period of that appointment [Min. No. 14 of 2017 refers].

 

The Chairman thanked the Strategic Director for updating the Board and looked forward to working with the Interim Internal Audit Manager, including in his role as CAE.

 

10.

Annual Review of the Effectiveness of the Internal Audit Service 2017/18 pdf icon PDF 50 KB

This report provides Members with a summary of the findings from the review of the effectiveness of the system of Internal Audit for 2017/18.

Additional documents:

Minutes:

This report provided the Audit Board with a summary of the findings from the review of the effectiveness of the Council’s system of Internal Audit for 2017/18 set against the Public Sector Internal Audit Standards (PSIAS).

 

Details of the review were set out in the self-assessment checklist for compliance with the PSIAS [attached as Appendix A to the report] completed by the Strategic Director (Internal Services) in her role as Chief Audit Executive (CAE).

 

The CAE’s opinion, on completion of the self-assessment checklist, was that the Council’s arrangements in place for the Internal Audit function during 2017/18 were substantially compliant with the PSIAS with one material exception. Her continued role of designated CAE in the absence of an Internal Audit Manager; concurrent with her role as the Council’s Section 151 Officer; had posed a potential conflict of interest and possible threat to the independence and objectivity of the Internal Audit Service. However, steps had been taken to mitigate that possible threat in the case of the previous Acting Audit Manager Lisa Nyon, and would no longer apply following the appointment of the Interim Internal Audit Manager from 1 August 2018, who would then assume the CAE role for the Council [Min. No. 9 refers].

 

The Chairman questioned the P (Partial) marking for ‘Proficiency and Due Professional Care’ on page 35 of the Checklist [agenda p. 195] for the Internal Audit Team and suggested that a Y (Yes) marking would be more appropriate, given that all teams required continuous training irrespective of their proficiency, to keep abreast of new regulations.

 

The CAE advised that the P marking was based on the outstanding need for a full training analysis of the current IA Team, as recommended in the PriceWaterhouseCooper follow-up Review  of the Internal Audit Service [Min. No. 52 refers]. Such an analysis would be a priority task for the Interim Internal Audit Manager following his appointment. 

 

                        RESOLVED:

 

1.    That Members note the findings of the self-assessment review of the effectiveness of the Internal Audit Service 2017/18 against the Public Sector Internal Audit Standards (PSIAS) as set out in Appendix A to the report;

 

2.    That Members note the outcome of the review of the self-assessment of Internal Audit effectiveness for 2017/18 as set out in the report by the Chief Audit Executive (CAE).

 

 

11.

Internal Audit Annual Report 2017/18 pdf icon PDF 55 KB

This report provides Members with a summary of the work of the Internal Audit Service during 2017/18.

Additional documents:

Minutes:

This report provided the Audit Board with a summary of the work of the Internal Audit Service during 2017-18 as set out in full in the Internal Audit Annual Report 2017-18 [attached as Appendix A to the report]. The report outlined the achievements of the IA Section during the year under review and, based on the work completed, informed the Board of the Chief Audit Executive’s (CAE) overall opinion on the adequacy and effectiveness of the internal control environment, which was timed to support the Annual Governance Statement.

 

The CAE referred Members to her Opinion set out in full in the Internal Audit Annual Report 2017-18 [Appendix A para. 2.3 agenda p. 229]. Based on the work of the Team over the preceding year to 31 March 2018 she was pleased to confirm her overall conclusion that the Council’s control environment contributed effectively to the proper, economic, efficient and effective use of resources in achieving the Council’s objectives in the period under review.

 

She advised Members that excellent progress had been made against the Annual Audit Plan for 2017/18 as shown at Appendix 2 to the report [agenda p.235] with 100% of reports completed or at draft stage. Appendix 3 [agenda pages 236/7] recorded the opinions given for each of the completed audits the majority of which were rated at full or substantial assurance. 47 audit recommendations had been agreed with management to help strengthen the control environment further, of which 29 had been implemented, 6 were in progress and 12 were not yet due for implementation. 27 client satisfaction surveys had been issued of which 23 had been returned completed with a 96% audit satisfaction rating. The Team had also provided ad-hoc advice to Services regarding internal control and risk factors.

 

During the year under review the Principal Auditor had acted-up as Audit Manager, and a vacant Auditor post had also been carried with the help of temporary agency cover. Relevant training courses had been undertaken by the Team during the year and networking with audit colleagues across Kent maintained. Following his appointment on 1 August 2018 the Interim Internal Audit Manager would prioritise the agreement of a training development programme for the Team, and fully implement the actions flowing from the PriceWaterhouseCooper follow-up report [Min. No. 9 also refers].

 

The CAE confirmed, in response to a specific question from a Member, that the same audits were not conducted each year, but were staggered over a 3 to 5 year cycle. The Chairman added that some Council Departments and Services were subjected to audit more often than others.

 

In response to a query from a Member, the CAE undertook to provide the Board with the details of the audit client who had ‘Strongly Disagreed’ with the timing of their audit [Appendix 4 agenda p.238].

 

 

                                    RESOLVED:

 

1.    That Members note the contents of the Annual Internal Audit Report 2017/18 and support the work undertaken by the Internal Audit Service during the period under review;

 

2.    That Members support the conclusion  ...  view the full minutes text for item 11.

12.

Review of Internal Audit Recommendations - Progress Report pdf icon PDF 48 KB

This report updates Members on progress with the implementation of recommendations agreed with Management during 2017/18, and to report on the outstanding recommendations due to have been implemented by 30April 2018.

Additional documents:

Minutes:

This report updated Members on progress of the implementation of recommendations agreed with Management during the year 2017/18 and reported on the outstanding recommendations that had been due for implementation by 30 April 2018 as set out in Appendix A.

 

The Chairman expressed his concern that the Implementation Date of December 2014 to institute the recommendations of the audit of the Council’s IT Security policy had still not been met.

 

The Strategic Director (Internal Services) advised Members that the implementation date had been overly optimistic, and on reflection, should have been challenged by the ICT Manager at the time of audit. However, the draft Information Security Policy had now been revised, to make it compliant with the new strictures of the General Data Protection Regulations (GDPR) and the draft Policy had been submitted to the Managing Director for review and approval prior to presentation to the Board.

 

The Chairman asked that the SD (IS) liaise with the MD with a view to the draft Policy being agreed as soon as possible.

 

                        RESOLVED:

 

1.    That Members note the report and the reasons set out in Appendix A for delayed implementation of the actions agreed with Management by 30 April 2018 and endorse the revised dates for implementation provided by Management in each instance.

13.

Audit Reports Issued Since Last Meeting of the Board pdf icon PDF 55 KB

This report informs Audit Board Members of the outcomes of the audits completed since the previous report to the Board on 25 April 2018 and provides Members with the opportunity to request clarification or further information, if considered necessary.

Additional documents:

Minutes:

This report and Appendix A informed the Audit Board of the outcomes of the audits completed since the previous report to the Board on 25 April 2018 and provided Members with the opportunity to request clarification and further information as required or considered necessary.

 

Two audits had been completed since the last report to the Board as detailed in Appendix A. The review of External Legal Fees 2017/18 had been given a Substantial Assurance opinion and the audit of IT Security 2017/18 had been given a Full Assurance opinion.

 

                        RESOLVED:

 

1.    That Members note the summary details of audits completed provided in Appendix A to the report.

 

14.

Selective Invoice Checks pdf icon PDF 63 KB

During the April 2018 meeting of the Board, Members selected five creditor payments for checking. This report summarises the findings of that exercise and provides the opportunity for Members to select further payments for checking.

Minutes:

At the last meeting of the Board on 25 April 2018 Members selected 5 (five) creditor payments for checking by Internal Audit. The report advised Members of the outcomes of that exercise.

 

The report advised that the results of the Internal Audit review confirmed that all the spend decisions made were appropriate, that four of the five creditor payments were in compliance with Council procedures, and that steps were being taken in the case of the fifth creditor payment to draw-up a formal contract or waiver to support the expenditure in question - emergency works by SL Treecare Ltd. to remove fallen trees obstructing a footpath to Council properties in Joydens Wood.

 

                        RESOLVED:

 

1.    That Members note the contents of the report;

 

2.    That Members select a further 5 (five) creditor payments for checking by Internal Audit and that the outcome be reported to the next meeting of the Board.