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Agenda and draft minutes

Items
Note No. Item

14.

Apologies for Absence

Minutes:

Apologies for absence were received from Councillors Mrs R Gosine, Mrs J A Ozog, and the Head of Legal Services Mrs Kelly-Stone.

 

The Chairman noted the presence of the Strategic Director (Internal Services), the Financial Services Manager and the Internal Audit Manager, and welcomed the presence of the Strategic Director (External Services) to present agenda items 9 and 10 in the absence of the Head of Legal Services.

 

In the absence of any representatives from Grant Thornton UK (External Auditors), the Chairman proposed that agenda items 9 and 10 be taken immediately following the Member development briefing. 

15.

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.

MD

16.

Confirmation of the Minutes of the meeting held on 17 July 2019 pdf icon PDF 478 KB

Minutes:

                        RESOLVED:

 

1.    That the Minutes of the Board meeting held on 17 July 2019 be confirmed as accurate.

17.

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 of business for the Board to consider that evening.

18.

References from Other Committees (IF ANY)

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

 

Minutes:

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

19.

Member Development Briefing

At the Board meeting held on 17 July 2019 Members agreed a programme of ‘bit-sized’ training sessions to be held prior to future Board meetings, to commence in October 2019 [Min. No. 13 refers].

 

As such, Members will receive a short briefing on Internal Audit Standards as part of the agreed Member Development Programme.

 

Minutes:

Following agreement by the Board on 17 July 2019 [Min. No. 13 refers], Members received the first instalment of a programme of ‘bit-sized’ briefing sessions with the aim of equipping Board Members with up to date knowledge and terminology of auditing affairs.

 

The initial instalment of briefing from the Internal Audit Manager focussed on ‘Internal Audit Standards’ and the changes in the role of the Internal Audit (IA) function, from a servant of management focussing primarily on accounting and finance matters [Institute of Internal Auditors Statement of Responsibilities 1947], through an evolutionary series of reviews undertaken in 1981, 1999 and again in 2013 and 2017. Those reviews had combined to achieve significant changes to the original IA function [as stated in 1947] to the present day role of IA as an independent, objective assurance and consultancy activity, designed to add value and improve an organisations operations, independent of management.

 

In specific terms, the modern day IA function helped an organisation to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes and with this oversight role, to act as a ‘critical friend’.

 

The IA function remained under the line-management of the Strategic Director (Internal Services) as the Council’s Section 151 Officer (see below), but crucially, reported independently to the Audit Board and as required, the Managing Director.

 

Members were advised that as the role and function of IA had evolved, a standards regime had evolved in tandem. Key reference documents in that standards regime were:

 

·         1972: Local Government Act (Section 151)

·         1978: Standards for the Professional Practice of Internal Auditing

·         2002: Professional Practices Framework

·         2006: Code of Practice for Internal Audit in Local Government

·         2009: International Professional Practices Framework (IPPF)

·         2013: Public Sector Internal Audit Standards (PSIAS)

·         2015: Revisions to the IPPF

·         2015: Accounts and Audit Regulations (proper Internal Audit Practices)

·         2017: Revisions to the PSIAS

 

The establishment of PSIAS from 1 April 2013 (revised in March 2017) was particularly important, as it aligned global and international ‘public sector’ standards for the IA function, and confirmed the ‘risk-based’ approach to IA work going forward. A further step in that evolutionary process was the creation of the Internal Audit Standards Advisory Board (IASAB). ‘Standard Setters’ who contributed to the working of the IASAB were:

 

·         CIPFA (Chartered Institute of Public Finance & Accountancy)

·         Department of Health (DH)

·         Welsh Government

·         Department of Finance

·         HM Treasury

·         The Scottish Government

 

The IAM informed Members that standards were at the core of the IA function and governed all its activities to achieve the IA Mission – ‘to enhance and protect organisational value, by providing risk-based and objective assurance, advice and insight’ – bounded by mandatory guidance which covered Core principles, the Definition of Internal Audit and the Code of Ethics which underpinned all IA judgements. 

 

In addition to mandatory guidance the IPPF 2015 model recommended the formulation of Implementation and Supplemental guidance to underpin the IA function. The Audit Partnership had  ...  view the full minutes text for item 19.

20.

Annual Report 2018/2019 of the Monitoring Officer on the Review of Ethical Governance Arrangements and Ancillary Matters pdf icon PDF 117 KB

To review the Council’s ethical governance arrangements and ancillary matters as set out in Appendix A to the attached report from the Head of Legal Services.

Additional documents:

Minutes:

In presenting the report and Appendix A the Strategic Director (External Services) asked Members to acknowledge the significant role played by the Head of Legal Services in compiling both documents.

 

She advised the Board that 90% of the 2018/19 Annual Report (AR) remained unchanged from the 2017/18 AR, with the addition of updated statistics for the period under review. The number of complaints remained low, reflecting the robust complaints frame work the Council had in place.  The SD (ES) in her role as Monitoring Officer and the Head of Legal Services as Deputy Monitoring Officer employed an ‘open-door’ policy regarding complaints. This enabled them to dispense advice and undertake work informally and address issues quickly, to prevent them from escalating needlessly. The Committee on Standards in Public Life (CSPL) had proposed a review of the ethical standards regime [Appendix A para 6 page 98 refers] including a proposal for a national Member Code of Conduct. The implications of the CSPL review for the Council would be conveyed to Members in due course.

 

The Cabinet Portfolio Holder for Finance [attending as a Board Member] praised the report and Appendix for its clarity. In his role as Chairman of the Council’s Deed, Trust and Obligations Committee he had appreciated the guidance provided by the report’s author on the recruitment and training of Independent Members. He also praised the successful partnership working being undertaken with Sevenoaks Council through the joint Revenue & Benefits Service which was proving to be a real success for both authorities [report para 6.17]. He judged the training received that evening by Board Members to be particularly useful, and mooted that Members of the Council’s Treasury Management Panel (on which he held Observer status), might benefit from similar bespoke training on the complex financial issues the Panel was charged with approving [report paras 3.10 and 3.6.6. refer].

 

                        RESOLVED:

 

1.    That Members endorse the Monitoring Officer’s Annual Report 2018/19 on the Review of Ethical Governance Arrangements and ancillary matters, as set out in Appendix A to the covering report.

 

21.

Complaints Monitoring and Procedure Review - 2018/2019 pdf icon PDF 299 KB

To provide Members with information on the Council’s Corporate Complaints Procedure, including the number and nature of complaints received in respect of the services provided by the Council, during the period 1 April 2018 to 31 March 2019.

Additional documents:

Minutes:

In the absence of the Head of Legal Services the report and Appendix were presented by the SD (ES) as set out.

 

The Chairman sought confirmation of his continued role as the Council’s Designated Person for Housing Complaints, prior to a complaint being forwarded to the Housing Ombudsman, given the apparent uncertainty over the continuation of the latter role.

 

The SD (ES) advised that as far as she was aware, the role of Housing Ombudsman was to be retained and by extension therefore, the Council would also retain the position of Designated Person, presently fulfilled by the Chairman of the Audit Board.

 

It might be the case in the future that the roles of Ombudsman and Housing Ombudsman would be combined, but this was not known at this stage. In general terms, the Housing Ombudsman took up to six months longer [than the Ombudsman] to take action over complaints. It was not known whether this was a capacity issue within the Housing Ombudsman’s Office, or whether that could form a trigger for the integration of the Ombudsman roles in the future.

 

The Chairman advised that no housing complaints had been forwarded to the Housing Ombudsman by him acting as the Council’s Designated Person in the period under review, and he commended the work of the Council in dealing with housing complaints.

 

The SD (ES) advised that a referral to the Housing Ombudsman from the Council may be in the pipeline. She advised that the Council had ‘mis-directed’ a complaint to the Ombudsman (rather than the Housing Ombudsman) in error, given the overlap in the two roles which even the incumbents did not always agree on. The outcome of that referral would be advised to Members in due course.

 

 The Cabinet Portfolio Holder for Finance noted the detailed nature of the report and appendices and the feedback it provided for the Board. He suggested that for the 2019/20 exercise, the report might also include details of individual complaints that had led to a change in Council policy, to add to the analysis of complaints received as set out in Appendix A.

 

                        RESOLVED:

 

1.    That the Board note the contents of the report and the information and analysis set out in Appendices A and B;

 

2.    That the 2019/2020 annual report include details of any individual complaints that had led to a change in Council policy.   

 

22.

Internal Audit Self-Assessment pdf icon PDF 115 KB

The purpose of this report is to provide Members with the outcomes of the internal self-assessment undertaken in August 2019 against the Public Sector Internal Audit Standards (PSIAS). The report also includes an update and progress made to date to address the findings from the 2018 self-assessments (internal and external).

Additional documents:

Minutes:

The report from the Internal Audit Manager (IAM) provided Members with the outcomes on the internal audit self-assessment exercise undertaken in August 2019 [attached as Appendix A to the report], as set against the Public Sector Internal Audit Standards (PSIAS). The report also included an update on the progress made to date to address the findings from the 2018 self-assessment, and the 2015 and 2017 external quality assessments.

 

The IAM highlighted the following principal points for Members:

 

·         The 2019 IA Self-Assessment exercise had been more comprehensive and detailed than in previous years and had generated significant work to be taken forward with Management and the Audit Partnership, including an evaluation of the progress of the IA Service in the preceding 5 year period, the updates undertaken in 2017 and 2018 and IA Strategy going forward;

·         The role of the Audit Manager (Chief Audit Executive) required to be finalised by March 2020 in consultation with Sevenoaks Council;

·         A review of the Audit Partnership Strategy would be presented to the Board in April 2020;

·         The recruitment of new posts of Trainee Auditor, and 2 Lead Auditors had now been completed.

 

The Cabinet Portfolio Holder for Finance congratulated the IAM on an excellent report and the progress in the Council’s IA function which had taken place following his appointment. He asked what further areas now needed to be addressed.

 

The IAM informed Members that the Council’s IA function had progressed well in the previous twelve month period, particularly in terms of restructuring and recruitment, with the long-term view for the service in mind. However, more work was required to enhance the added value of the IA function for the Council, in particular a greater concentration on Risk Management, governance, and the development of in-house Counter-Fraud and IT skills.

 

In response to a specific question from the Chairman, the IAM confirmed that the IA recruitment process had been team-based, to ensure that the skills short-fall of the previous structure was addressed, including the need for officers with good people skills to be able to fulfil the IA role of ‘critical friend’ to management.

 

He believed that goal had been achieved with the new appointments, resulting in a new well-rounded IA team with all the requisite skills required to perform the enhanced IA function going forward.

 

                                    RESOLVED:

 

1.    That Members note the outcomes of IA self-assessment exercise undertaken in August 2019 and the actions identified as set out in Appendix A to the report.

 

23.

Report from the External Auditor pdf icon PDF 113 KB

To present to the Board the updated Audit Findings Report and 2018/19 Annual Audit Letter from the Council’s External Auditors Grant Thornton UK.

Additional documents:

Minutes:

The covering report from the Financial Services Manager (FSM) presented for the Board’s approval two documents from the Council’s External Auditors Grant Thornton UK:

 

·         An updated Audit Findings report for the Year ended 31 March 2019 (attached as Appendix A to the report);

·         The 2018/19 Annual Audit Letter (attached as Appendix B to the report).

 

In the absence of representatives from Grant Thornton UK, Members were asked to note the documents as read.

 

The FSM advised that the amendments to the updated Audit Findings report [Appendix A] were annotated in italics, and that the Annual Audit Letter 2018/19 [Appendix B] summarised the updated Audit Findings report. The two documents had enabled the Council’s Accounts for 2018/19 to be published with an ‘Unqualified’ assessment.

 

In response to a specific question from the Cabinet Portfolio Holder for Finance, the FSM confirmed that the earlier difference of opinion with the External Auditor over the Council’s Pension Fund net liability [Appendix A - agenda p.63 refers] had been resolved. It had been concluded that there was no material increase in risk for the Council from the Court of Appeals ruling from December 2018, and that any additional liability for the Council in terms of pension provision [arising from changes to the retirement age] would be assessed going forward, as part of the tri-annual pension’s valuation exercise.

 

The Chairman thanked the FSM for these further explanations in the absence of the External Auditors.

 

                        RESOLVED:

 

1.    That Members note the updated Audit Findings Report for the Year ended 31 March 2019 attached at Appendix A to the report;

 

2.    That Members note the Annual Audit Letter for 2018/19 attached at Appendix B to the report.

24.

Internal Audit Update Report (October 2019) pdf icon PDF 115 KB

The report provides Members of the Audit Board with an update on the Audit Partnership, including Internal Audit activity, service developments and progress towards delivery of the 2019/20 Audit Plan.

Additional documents:

Minutes:

The report from the Internal Audit Manager (IAM) provided Members with an update [attached as Appendix A to the report] on the Audit Partnership, including IA activity, service developments and progress made towards delivery of the 2019/20 Audit Plan.

 

Key points emphasised by the IAM in his presentation to Members included:

 

·         The October 2019 update report underlined what had been an exceptional year of transformation for the IA service, particularly in the last six month period, following the work to restructure the service and recruit into new posts;

·         The IA team had comprised of only 2 auditors for the period under review [against a complement of 5.8 auditors] as the re-structure process had unfolded. A revised Audit Plan would be presented to the Board in January 2020 once the IA team had recovered from the back-log and decided what audits would be moved to 2021[Appendix A agenda pages 164 and 165 refer];

·         Management response to audit actions continued to be positive and was detailed on agenda pages 172/173.

 

The IAM advised Members of a positive change in management responses to audit actions. Managers were now responsible for the implementation of audit actions which had in turn led to many more positive conversations with the IAM and his team. As part of those conversations, managers were advised that any failure to implement audit actions could result in individual managers appearing before the Audit Board.

 

He also confirmed that all 3 advertised auditor roles had now been filled, with a trainee role due to commence in early November 2019. Filling the vacant positions within the IA team would pay dividends in terms of planning the Audit Strategy for 2020 and beyond.

 

The Chairman thanked the IAM for another excellent audit update report.

 

                        RESOLVED:

 

1.    That Members note the contents of the Internal Audit Progress Report (October 2019) attached as Appendix A to the report.

 

25.

Selective Invoice Checks pdf icon PDF 138 KB

During the Board meeting held on 17 July 2019 Members selected 5 (five) creditor payments for checking. This report summarises the findings of that exercise and provides Members with the opportunity to select further payments for checking.

 

Minutes:

At the July 2019 meeting of the Board Members selected five creditor payments for checking by Internal Audit. The report advised the outcome of that exercise, which was that all five creditor payments selected for checking had been made appropriately and in compliance with Council procedures.

 

In the absence of a list of transactions for Members to choose a further five creditor payments from for checking, it was agreed that the Chairman would make the selections subsequently, from a list provided by the IAM. It was also agreed that future transactions would be selected using a list of all transactions over the quarter, rather than transactions beginning with a specified letter of the alphabet. This would result in testing being more current and allow greater value in examining only procurement transactions.

 

                        RESOLVED:

 

1.    That Members note the contents of the report;

 

2.    That the Chairman choose five quarterly transactions for checking by Internal Audit from a list to be provided by the IAM.