Agenda and draft minutes

Apologies for absence were received from Councillors R Gosine, J A Ozog and A R Lloyd.

The Chairman welcomed Board Members to the virtual meeting, and confirmed that the proceedings were being streamed live to the public on YouTube, via the link published on the Council’s website.

He gave a special welcome to Paul Cuttle, Engagement Lead, Grant Thornton UK (External Auditors) who was attending his first Dartford Council Audit Board meeting, and his colleague Keith Mungadzi, GT Audit Manager for the Council’s account. The remote presence and participation of the Council’s Strategic Director (Internal Services), the Head of Financial Services, the Audit and Democratic Services Managers, and the Board Clerk were also noted and welcomed.

To receive declarations of interest from Members including the terms(s) of any Grants of Dispensation by the Strategic Director (Internal Services).

There were no declarations of interest.

                    RESOLVED:

1.     That the Minutes of the Board meeting held on 20 January 2021 be confirmed as an accurate record of those proceedings.

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

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

There were no references from other Committees for Members to consider.

The covering report from the Head of Financial Services enclosed at Appendix A, the Audit Plan 2020/21 from the Council’s External Auditor Grant Thornton UK, for the audit of the Council’s Statement of Accounts for the financial year ending 31 March 2021. The covering report reminded Audit Board Members that the Accounts and Audit (Amendment) Regulations 2021, had extended the publication date for local authority accounts to 30 September for the 2020/21 and 2021/22 accounting years.

Following publication of the agenda, the External Auditor had submitted an updated Audit Plan 2020/21 document [Appendix A to report], which contained details of additional work on Value for Money [VfM], increased audit requirements of revised ISAs, proposed increase to revised 2019/20 audit fee and total audit fees (excluding VAT). The updated document was circulated to Members under separate cover prior to the meeting.

Paul Cuttle (Engagement Lead) Grant Thornton, briefly summarised the salient points in his updated report for Board Members including; the increase in fees, auditing standards, fraud management procedures, valuation of land and buildings, the impact of the COVID-19 pandemic as a medium-term risk, and Value for Money (VfM) Conclusion.

In particular, he advised Members that the new National Audit Office (NAO) Code of Audit Practice (the Code), which had come into effect for the 2020/21 audit year, had introduced a revised approach to the audit of Value for Money (VfM), and new set criteria covering financial sustainability, governance and improvements in economy, efficiency and effectiveness. The new Code required External Auditors to report more extensively across all key financial criteria and areas of client operation, rather than the current ‘reporting by exception’ binary [qualified/unqualified] approach. The new expanded remit would require enhanced partnership working arrangements with the Council across all audit and accounting areas, as recommended by the recent Redman report, and entail an increased audit fee for 2020/21 as detailed on p.15 of the updated report, pending confirmation by the PSAA and reporting to the next Board.

The Chairman thanked Paul Cuttle for summarising his updated report for Board Members and sought confirmation that Grant Thornton’s increase in fees was not specific to Dartford, but a reflection of the increased work required to meet the new NAO Code standards, following the Redmond Review of External Auditors the previous year.

Paul Cuttle confirmed that this was indeed the case. Grant Thornton’s Fees had been increased for all Kent local authorities in line with the demands of the new Code. The proposed fee for Dartford for the external audit of the Council’s 2020/21 Accounts had increased by £15,500 to a total proposed Audit Fee of £58,732 subject to PSAA approval [report p.15]. He understood that Government Grant monies would be available to meet the increased fees, under the terms and findings of the Redmond Review.

The Head of Financial Services confirmed his understanding that the review would make more money available to local authorities, and that the Council would be seeking a PSAA response to Grant Thornton’s increased fees proposal for  ...  view the full minutes text for item 76.

The report from the Audit Manager enclosed as Appendix A an External Quality Assessment report on the Dartford & Sevenoaks Internal Audited Partnership, conducted by the Institute of Internal Auditors (IIA) in January 2021. The purpose of the EQA was to review the Partnership’s compliance with Public Sector Internal Audit Standards (PSIAS), and was required to be conducted every 5 (five) years.

The Audit Manager summarised her covering report for the Board which reminded Members that the Internal Audit Team had undertaken their own self-assessment exercise in 2020 [Min. No. 48 refers], and that the IIA EQA findings largely aligned with those of the IA Team, with a couple of additional areas for improvement including upskilling the IA Team to undertake IT audits, which were currently outsourced. The external assessor had confirmed the Partnership’s current focus and direction of travel to improve the quality of its internal audit work [in Dartford and Sevenoaks Councils], together with the IA Team’s achievements to date, and actions in progress to accomplish its aims.

The IIA EQA had also recognised opportunities to increase the efficiency of current internal audit work through improved adherence to budget and time scales, whilst also continuing the quality of internal audit work. The Audit Manager had agreed all the actions and recommendations from the IIA as set out in the EQA report, and she advised the Board that a further external EQA exercise would be considered in some 18 (eighteen) months’ time.

The Chairman thanked the Audit Manager for her report, noted the largely satisfactory outcome of the external EQA conducted by the IIA, including some good quick win recommendations.

                    RESOLVED:

1.     That Board Members note the contents of the report and the attached Appendix A (Institute of Internal Auditors, External Quality Assessment).

The report from the Audit Manager enclosed the Internal Audit Charter (attached as Appendix A to the report) and the Internal Audit Plan 2021-22 (report Appendix B). Members were asked to approve the Internal Audit Charter and the 2021-22 Internal Audit Plan, and note the revised set of Key Performance Indicators (KPIs), and new assurance levels and definitions for 2021-22 financial year and beyond, as set out in the Plan.

The Audit Manager advised the Board that the report and Appendices provided the framework for internal audit activity in the forthcoming 2021-22 financial year for approval by the Audit Board. The Charter (report Appendix A) was the key governance document that set out the purpose, authority, and responsibility of Internal Audit, and provided access to all records, personnel and property deemed necessary to enable the Internal Audit team to undertake its work, and was agreed by the Board annually. The March 2021 Charter document presented to Members for approval contained no major changes to the Charter agreed by the Board together with the 2020-21 Audit Plan in July 2020 [Min. Nos. 46 and 47 refer]. However, further clarification had been added to the Council’s counter-fraud and whistle-blowing arrangements and policies.

The 2021-22 Internal Audit Plan (report Appendix B) had been discussed with all Service Managers prior to publication. Annex 1 to the IA Plan listed proposed audits in a preferential Audit Plan A and B format [agenda pages 65-69 refer], with Plan A being the core audits for completion in the 2021-22 financial cycle, and Plan B detailing possible in-year additions if resources and time permitted. New CIPFA approved assurances were set out in Annex 2 [agenda p.71], with Annex 3 listing the new KPIs for 2021/22 aligned to key areas, with the addition of a new ‘target’ measurement [agenda p.72 refers].

The Chairman thanked the Audit Manager for her report and updated March 2021 Internal Audit Charter and 2021/22 Internal Audit Plan documents.

In the absence of any questions Audit Board Members RESOLVED:

1.     To approve the March 2021 Internal Audit Charter (Appendix A to the report);

2.     To approve the Internal Audit Plan 2021-22 (Appendix B to the report);

3.     To approve the revised set of Key Performance Indicators (Appendix B Annex 3 to the report); and

4.     To note the new assurance levels and definitions for the 2021-22 financial year (Appendix B Annex 2 to the report).

The final report from the Audit Manager provided Board Members with an update on Internal Audit outcomes and activities since the last report to the Board in January 2021 [Min. No. 68 refers], in addition to facilitating Members’ oversight of the Internal Audit function.

The Audit Manager informed the Board that three audits had been completed in the period under review as detailed in paras 10-14 of the report [agenda p.77 refers]. The audits of the Council’s New Build Capital Programme and Budget Setting measures had both attained a ‘Substantial’ assurance level. The ‘Limited’ assurance level given to the audit of the Council’s Local Air Quality Management, had reflected the current absence of an Air Quality Action Plan. The audit of Facilities Management would focus on the arrangements to make the Civic Centre Covid-secure. Planned audits of ‘Covid-19 Recovery’ and ‘Corporate Project Governance’ had both been deferred due to the ongoing pandemic, but good progress had been made with the Cyber Security audit, with the findings due to be agreed with the new IT Manager in April 2021.

She highlighted the fact that the three audits and other attendant internal audit function work in the period under review, had been achieved despite the Team operating on a part-time basis until 15 March, when their participation in the ongoing priority work of the Council’s Community Hub to help combat COVID-19 in Dartford had concluded. The IA Team was now back to full strength and solely engaged on internal audit matters, but the Audit Manager wished to take the opportunity to thank her team for their work in contributing to the ongoing work of the Council’s Community Hub. As a consequence of that Hub work, the Internal Audit Plan had inevitably fallen behind schedule, however the Audit Manager advised the Board that the Council’s Internal Audit function was now better placed overall than in March 2020, and she expressed her confidence that all the audits listed in Plan A [report Annex A agenda p.80 refers], would be completed by July 2021.

The Chairman thanked the Audit Manager for her March 2021 update report, and asked that his thanks and those of the Board as a whole, be passed to the Internal Audit team for their contribution to the ongoing work of the Council’s Community Hub, to help combat the effects of COVID-19 in Dartford, in addition to their normal IA duties, and that those thanks be recorded in the Minutes.

In the absence of any questions Audit Board Members RESOLVED:

1.     To note the Internal Audit Progress Report (March 2021) and updates (attached as Appendix A to the report);

2.     To approve the deferral of the Covid-19 Recovery and Corporate Project Governance audits to the 2021/22 Internal Audit Plan, as being more appropriate to the timings of those pieces of work. 

The Chairman asked whether it was still proposed to submit a Selective Invoice Checks (SICs) report to the next Board meeting in July 2021, and whether the mooted guidance to Council Officers who held budgets and ordered goods and services [Min. No. 70 refers], should also be copied to Members.

The Audit Manager confirmed that a Selective Invoices Check report was still proposed for presentation to the July Board, following her team’s return to full strength and focus on IA matters, having completed their COVID-19 duties in support of the Council’s ongoing Community Hub work. She would ask the Chairman to select 5 invoices for IA inspection, from a list that she would email to him following the Easter break.

She advised that the proposed Internal Audit guidance notes to budget holding and purchasing Officers, as agreed with the Head of Finance and the Strategic Director (Internal Services) and recently approved by the Chairman, would now issue to relevant Officers following the Easter break. She also undertook to provide Audit Board Members with the guidance material, given their oversight role of Council purchasing procedures, including consideration of the quarterly Selective Invoices Check report as part of regular Board agenda papers.

The Chairman thanked his Grant Thornton guests and Officers for their reports and virtual attendance, and the Board Clerk for organising and recording the Board proceedings. He expressed the hope that the next scheduled meeting of the Board in July 2021 would be conducted in person and face to face.