Agenda and minutes

An apology for absence was received on behalf of Councillor Sacha Gosine.

The Board were also advised that following her decision in February 2022 to leave the Labour & Co-operative Group and sit as an Independent Member of the Council, Cllr. Romana Gosine had forfeited her seat on the Board, which would be filled following the Annual Council meeting in May.

The Chairman welcomed Mr Paul Cuttle from the Council’s External Auditors, Grant Thornton UK, and noted the presence of the Chief Officer and Director of Corporate Services, the Head of Finance and the Internal Audit Manager to respond to Members’ questions and concerns. He also welcomed the attendance of other members of the Council’s audit team to observe the Board proceedings.

To receive declarations of interest from Members including the terms(s) of any Grant of Dispensation by the Audit Board or Chief Officer & Director of Corporate Services.

There were no declarations of interest made.

To receive a presentation from the Head of Finance.

The Board received a PowerPoint presentation from the Head of Finance regarding the Annual Governance Statement (AGS), a statutory document that all Councils in England were required to publish alongside their annual Statement of Accounts. Members were also furnished with a hard copy of the material for their future reference.

The Head of Finance defined ‘Governance’ as a framework which comprised the systems and processes, culture and values by which the Council directed and controlled the activities which it was accountable for, to engage with and lead the [Dartford] community. That governance framework enabled the Council to monitor the achievement of its Corporate Objectives and to consider whether those objectives had led to the delivery of appropriate and cost-effective Council services for residents.

The Annual Governance Statement (ASG) was published together with the Council’s Annual Statement of Accounts which followed a local code of governance based on the principles set out in the CIPFA/SOLACE guidance on ‘Delivering Good Governance in Local Government (2016)’.The presentation detailed the ‘7 Principles’ required under the CIPFA/SOLACE guidance, together with the 7 stages to be followed to achieve approval of the Annual Governance Statement which were: the Principles, Risk Identification, Key Control Measures, Assurance,  Meetings & Consultations, Action Planning, Annual Governance Statement and Approval of the AGS.

The role of the Audit Board in this process was to oversee the production of the Council’s Annual Governance Statement and to keep under review, the Council’s corporate governance arrangements to ensure that they accorded with and/or complied with legislation and best practice.

The Chairman thanked the Head of Finance for his presentation.

                    RESOLVED:

1.     That the Minutes of the Board meeting held on 26 January 2022 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 no references from other Committees for the Board to consider.

There were no references from other Committees presented.

The covering report from the Head of Finance asked Members to note the Audit Plan 2021/22 submitted by the External Auditor Grant Thornton UK (Appendix A to the report) for its proposed audit of the Council’s Statement of Accounts for the year ending 31 March 2022.

Mr Paul Cuttle (Director Grant Thornton) advised Members that the external auditor’s independent 2021/22 Audit Plan provided the Board with a regulatory update and scoped the audit work proposed together with planned timescales. The key risks identified in the 2021/22 Plan remained unchanged from the previous year, as did the requirements in terms of Accounting Estimates and Related Disclosures and the papers were submitted as read.

He advised of two changes to CIPFA accounting practices from the previous 2020/21 financial cycle:

·         IFRS 16: Leases were expected to have an implementation date of 1 April 2022 to include 2021/22 disclosures. However, CIPFA had announced that Councils could defer implementation until the 2023/24 financial cycle should they so wish, and the external auditor expected most Councils to take this option, meaning that no work was required from an audit perspective at this stage; and

·         An issue regarding infrastructure assets had emerged in 2020/21 and CIPFA was consulting on potential changes to their Code for 2021/22 accounts. As the Council’s 2020/21 Accounts had been completed and signed-off on schedule, Dartford was not impacted by the issue and the new CIPFA measures (when confirmed), would apply to the following 2021/22 financial cycle.

In response to a specific question from the Cabinet Portfolio Holder for Finance [attending as a Board Member], Mr Cuttle confirmed that the external auditor had continued to enjoy a good and productive level of engagement with the Head of Finance and his Team throughout the period under review. He added, in support of his comments that the Council’s 2020/21 Accounts formed part of only 9% of local authority financial records submitted on time and to schedule, at the conclusion of the 2021/22 financial cycle.

                        RESOLVED:

1.    That Members note the report and 2021/22 Audit Plan attached as Appendix A to the report.

The covering report from the Head of Finance, attached as Appendix A to the report, the External Auditor, Grant Thornton’s document setting out information on the accounting estimates and related disclosures informing the Audit Risk Assessment for the Council in 2021-22.

The Head of Finance advised Members that Appendix A was presented to the Board at the specific request of the External Auditor, to ensure that the Board and responsible Finance Officers were aware in advance of the External Auditor’s estimates and related disclosure requests prior to the audit process of the Council’s 2021/22 Accounts commencing.

                    RESOLVED:

1.     That Members note Appendix A to the report which set out the information on the accounting estimates and related disclosures informing the Audit Risk Assessment for the Council in 2021-22;

2.     That Members confirm that the responses referred to in Appendix A to the report are consistent with the Board’s understanding of the related disclosures informing the 2021-22 Audit Risk Assessment for the Council in the period under review.

The covering report from the newly appointed Internal Audit Manager (IAM), attached at Appendix A the April 2022 update report informing the Board of internal audit activity and outcomes since the last report to the Board in January 2022 [Min. No. 37 refers], in addition to providing Members with an oversight of the internal audit function.

Members were asked to note the report and Appendix A and to approve the deferral of the Asset Management audit to the 2022/23 Internal Audit Plan as set out in detail in Appendix A.

The IAM advised Members that she had adopted the format of previous update reports to the Board, but that continued staff vacancies within the Internal Audit Team, had required her to revise priorities and timings for some audits, as set out in Annexes A and B to Appendix A. However, she was pleased to report that the % of ‘Reasonable’ assurances [Annex A Plan A refers], had increased since the writing of the report with the finalisation of 2 additional audits, and that the Team’s Lead Auditor had effectively stepped-up into the vacant Audit Manager role in the period under review, and commended her performance to the Board.

The Chairman thanked the IAM for her first update report to the Board and on her appointment in her new role and attendance at her first Dartford Audit Board meeting. He also reminded Members that should they have any concerns over a particular audit summarised in the Update report, a full report on an individual audit could be requested for consideration by Members at the next meeting of the Board.

In response to a specific question from the Cabinet Portfolio Holder for Finance, the IAM advised that she had requested a postponement of the Asset Management audit to the 2022/23 Plan, to allow the asset management system to be implemented and become imbedded. An audit in the present cycle would not have been able to provide the required assurances. In answer to a follow-up question concerning continued staff vacancies in her Team and its consequent impact on performance, the IAM advised that with 1 (one) exception, the field work for all audits in the current 2021/22 Internal Audit Plan had either been completed or commenced, and that all audits in the cycle were expected to be completed in full and on schedule, for inclusion in the annual report for presentation to the Board in July 2022.

                    RESOLVED:

1.     That Members note the Internal Audit Update report and Appendix A;

2.     That Members approve the proposed deferral of the Asset Management audit to the 2022/23 cycle for the reasons set out in Appendix A to the report.

The covering report from the Internal Audit Manager attached at Appendix A for the Board’s approval, the Internal Audit Plan for the 2022/23 financial year.

The report reminded the Board that in accordance with professional standards (Public Sector Internal Audit Standards), the Audit service was required to establish a risk-based plan setting out the priorities and activities to be undertaken in the ensuing financial year. The Audit Plan was aligned to the key risks of the Council and its corporate priorities and plans, and considered the wider risks facing the public sector. The Audit Board, through its Terms of Reference, was required to consider and approve the Audit Plan each year.

The IAM advised Members that the Audit Plan had been changed and the format adapted from that used in previous years. The previous A and B lists of proposed audits no longer existed, with proposed audits now split into High Priority and Medium Priority [Appendix A, Annex 1 agenda pages 90/91 refer].

The Audit Service was committed to delivering all of the High Priority audits and at least 50% of the Medium priority audits. Medium priority audits would be completed throughout the 2022/23 cycle and chosen in order based on the risk profile of the Council at the time.

In response to a specific question from the Cabinet Portfolio Holder for Finance, the IAM confirmed that where appropriate, external specialist assistance would be sought for specific audits such as ‘Network Security’, as suggested by the Cabinet Member.

The Chief Officer and Director for Corporate Services advised the Board in this specific context, that a ‘Phishing Response’ audit was proposed as a priority, following an internal Council survey of all Officers on anti-phishing awareness, which had prompted a programme of anti-phishing training and compliance with procedures [Priority audit 4 agenda p.90 refers].

                    RESOLVED:

1.     That Members approve the Internal Audit Plan 2022/23 as set out in Appendix A to the report.

To consider and approve the revised Strategic Risk Register [Appendix A to the report].

The report from the Chief Officer and Director of Corporate Services attached at Appendix C an updated Strategic Risk Register (SRR) for approval by the Board, as previously discussed with Members in the context of the Council’s Risk Management Strategy in January 2022 [Min. No. 36 refers]. Appendix A to the report comprised an Impact Matrix and Appendix B a scale of Likelihood Definitions.

The Chief Officer advised the Board that the new SRR comprised a complete review of the previous January 2021 risk register, which had been an overly complex document that had contained some risks which were completely outside the Council’s control. The new streamlined register approved by the Leadership Team focussed on those risks which the Council could control, and which might impact on the Council’s ability to function effectively to deliver key services to residents.

She advised that each risk in the revised SRR had first been assessed as an inherent risk before any controls had been applied, then subjected to the 5x5 matrix of Impact v Likelihood [table in covering report agenda p.96 refers]. All identified risks would continue to be assessed on a rolling basis, with the risk target amended as appropriate. Given the new and revised nature of the SRR, directional arrows of travel had not been implemented at this stage, but would feature in future editions.

The Chairman suggested that the SIC (selective invoice checks) exercise be added as a further control measure where applicable.

In response to a specific question from the Cabinet Portfolio Holder for Finance (in attendance as a Board Member), the Chief Officer and Director of Corporate Services advised Members that the Leadership Team [comprising herself and her two fellow Directors], decided the nature and scale of residual risk the Council faced in each are of its areas of operation. However, it was open to the Audit Board to challenge those assessments.

The Head of Finance confirmed in response to a follow-up question from the Cabinet Portfolio Holder, that he was in discussions with the relevant Director over the Council’s policies to address the risks posed by Climate Change, and how those risks might best be reflected in a future edition of the SRR.

Paul Cuttle (Director Grant Thornton, External Auditors), suggested that dates be assigned to targeted Controls in the SRR supported by SMART objectives.

The Chief Officer and Director of Corporate Services confirmed that the review date against each risk had been set to reflect when the targeted controls were expected to be put in place.

                    RESOLVED:

1.     That Members approve the updated Strategic Risk Register attached at Appendix C to the report.

Following the January 2022 meeting of the Board the Chairman had selected a further 5 (five) creditor payments for checking by Internal Audit. The report summarised the findings of that exercise.

Members noted that no adverse issues had been noted by the Internal Audit team in their examination of the five selected creditor payments selected by the Chairman following the January Board, as set out in detail in para 5 of the report [agenda pages 124/125 refer].

                    RESOLVED:

1.     That Members note the contents of the report;

2.     That Members select five further creditor payments for checking by Internal Audit.