Agenda and minutes

Apologies for absence were received on behalf of Councillors Butler-Ruhle, Jones and Maddison.

The Chairman welcomed Members, particularly new Members attending Board proceedings for the first time, and Councillor Lloyd, Cabinet Portfolio Holder for Finance, in his revised role as Observer to the Board.

He also noted and welcomed the attendance of the Chief Officer and Director of Corporate Services, the Head of Finance, the Internal Audit Manager and the Counter Fraud Manager, and advised Members that Mr Mo Chunghtai was attending in an observer capacity, pending his formal appointment as a non-voting Independent Member of the Board by the General Assembly of the Council on 25 July [Min. No. 8 refers].

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

There were no declarations of interest.

                        RESOLVED:

1.    That the Minutes of the Board meeting held on 27 April 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 presently no references from other Committees for thre Board to consider.

No references from other Committees were presented.

To receive a short verbal overview from the Chief Officer and Director of Corporate Services.

The Chairman advised that, for the particular benefit of new Board Members, the Chief Officer and Director of Corporate Services would outline the role and aims of the Audit Board, in place of the usual Member training module prior to Board proceedings.

The Chief Officer reminded Members that the Council was responsible for ensuring its business was conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for.

In support of those corporate aims, the Audit Board was responsible for overseeing that good governance arrangements were in place, and that the Council was operating a sound financial system of internal controls, and to challenge Council Officers on those controls and arrangements where appropriate.

The Board’s specific role and responsibilities included to:

·       Approve the Council’s Annual Statement of Accounts;

·       Receive reports from the Council’s External Auditors, Grant Thornton UK;

·       Oversee the production of the  Annual Governance Statement, and reviews the Annual Internal Audit opinion which feeds into the Statement;

·       Consider the effectiveness of the Council’s risk management arrangements and consider and approve the Council’s Strategic Risk Register;

·       Agrees the Council’s Anti-Fraud and Corruption Strategy, and consider reports on matters involving fraud and/or financial irregularities;

·       Receive reports on the Council’s Whistleblowing Policy and Corporate Complaints procedure.

Board Members were required to be satisfied with the Council’s governance arrangements, and to challenge them when they had concerns that existing controls might not be operating effectively.

Board meetings provided Members with the principal opportunity to challenge existing controls, through the consideration of regular audit reports presented by the Internal Audit Manager, on the various audit reviews undertaken of Council services, as agreed in the Annual Internal Audit Plan. Each audit will have received an assurance level depending on the outcome of the audit process of Substantial, Reasonable or Limited. Where an audit has attracted a Limited level of assurance, Members have the right to request a full copy of the audit report [rather than the summary to the Board], to better understand where any service weaknesses lie.

As part of the Board’s regular proceedings, Members will also receive update reports on progress against the recommendations for each audit undertaken. Where insufficient progress has been made, Members may challenge this, and request the responsible Service Manager to appear before the Board. The Chief Officer and the Leadership Team welcomed such challenges from the Board, which helped to ensure that the Council’s governance arrangements and internal controls were fit for purpose. Recent high profile cases involving Liverpool and Croydon councils, where the Government had had to intervene and send in inspectors, had been as a result of poor governance and internal controls in those authorities, and underlined the importance of the role of the Audit Board in ensuring good governance and internal controls were maintained by the Council. Members would continue to receive regular training modules from Officers prior to Board proceedings going forward, to assist them in their role.

The report from the Counter Fraud Manager (CFM) updated Members on the work undertaken by the Counter Fraud & Compliance Team during the previous financial year ending 31 March 2022, as set out in detail in Appendix A to the report.

The CFM advised Members that significant achievements in the period under review had included helping the Business Rates Team to generate additional bills to the value of £336,000 and to generate new bills amounting to £230,000 in the area of Council Tax discounts and exemptions, where resident’s individual circumstances had changed and previous benefits no longer applied.

In response to subsequent questions from the Chairman and individual Members, the CFM confirmed the following principal points for Members:

·         COVID-19 Business Support Grants (agenda p.11 refers): Co-ordination of this Government scheme had continued to be undertaken by the Team on behalf of the Council during the 2021-22 financial cycle under review, with some £7.34M in grants distributed to 1,444 recipients. This represented only some 25% of the additional workload experienced by the Team when the Scheme was first launched in 2020-21, but nevertheless, had been a significant extra workload compared to pre-COVID times, with Government requiring local authorities to undertake pre-payment and other administrative checks. The Scheme had now concluded, but the Team would continue to undertake post-COVID validation work with Government Agencies, on an ad-hoc basis going forward;

·         Council Tax (agenda p.12 penultimate bullet point refers): In collaboration with other Counter Fraud Teams across Kent, the CFM had identified an alternative product which allowed the authority to re-commence checking Council Tax Single Person Discount awards utilising credit reference data, to replace previous software that had been discontinued by the manufacturer. The new product required more input from the Team, but was a required tool to monitor the 15,000 cohort of single person discount beneficiaries of some £5-6M in authority revenue, who were averse to updating the Council to changes in their personal circumstances and continued qualification for the award. It was not known why the previous manufactured had discontinued production;

·         Future Developments (agenda p.13 refers): New software had been required to meet the Council’s obligation to make a minimum of 36,000 payments to recipients of the Government’s £150 Council Tax Rebate scheme. The Team had almost met its target to re-imburse all those residents who paid their Council Tax by Direct Debit (DD), as their bank details were on record and verifiable. The process to re-imburse residents who did not pay their Council Tax by DD and, as a consequence, the Council did not have verifiable bank details for, was more elongated. New bank details submitted by applicants had to be rigorously examined by the Team, to both prevent possible fraud and to protect the Council’s reputation as a diligent authority, and making all those payments was some way short of completion as a consequence. The final stage of the project would give the Council the authority to make discretionary payments to the most vulnerable residents, including in bands E, F,  ...  view the full minutes text for item 7.

The report from the Head of Finance updated Members on the proposed appointment of Mr Mo Chughtai, as a non-voting Independent Member to the Audit Board, prior to approval of the nomination by the General Assembly of the Council at its meeting on 25 July 2022 with the Board’s agreement.

Members were advised that the proposed appointment of Mr Mo Chughtai had been the result of a joint process with Sevenoaks Members, resulting in Mr Chunghtai being proposed to both the Audit Board and Sevenoaks’ Audit Committee, which would provide synergy between the two bodies and an opportunity to share best practice.

The Chairman informed the Board that he and Councillor Harman had represented the Council in the appointment process to recommend Mr Chughtai’s appointment to the GAC as non-voting Independent Member to the Board.

                        RESOLVED:

1.    That Members note the application process to appoint Independent Members to the Audit Board, as set out in the body of the report;

2.    That the appointment of Mr Mo Chughtai, as non-voting Independent Member of the Board be recommended to the General Assembly of the Council.  

 The covering report from the Internal Audit Manager (IAM) set out the background to and the requirements of the Internal Audit Annual Opinion on the effectiveness of the Council’s internal control, governance and risk management arrangements. The Opinion was a requirement of the Public Sector Internal Audit Standards (PSIAS), and included a summary of the work taken into consideration when forming the Opinion.  The Board, under its Terms of Reference was required to consider the Opinion each year, and was asked to note the Annual Audit Opinion 2021/22 attached at Appendix A to the report.

Members received a brief oral summary of the papers from the IAM who emphasised the independence of the internal audit function from the Council as set out in the Audit Charter and Standard 1100, and confirmed that the 2021/22 Opinion [Appendix A to the report], took account of all completed audits in the period under review plus 3 (three) audits carried over from the previous 2020/21 annual cycle.

She expressed her satisfaction with the Council’s internal controls, including risk management controls, and confirmed that all assurance ratings had been completed, or were in the process of being implemented. Due to staff vacancies, some scheduled audits had not been completed, but actions had been followed up on a monthly basis with relevant management, and the IAM had been satisfied with management’s response and the progress made in each case. In conclusion, she paid tribute to her Team who had performed well in the period under review, despite staff changes (including her own appointment) and vacancies throughout the cycle, and thanked senior officers for their understanding and co-operation in that regard.

In response to a variety of subsequent questions from individual Members, the IAM and Head of Finance confirmed the following principal points of process and outcome, in relation to the completed audits listed in Appendix A [table para 26 p.6, agenda p.28 refers]:

·         Four audits had been awarded ‘Limited’ assurance levels e.g. Business Continuity, IT Disaster Recovery, Safeguarding, Corporate Project Governance (Acacia Hall). All High priority actions had either been implemented or had reasonable implementation dates agreed with management;

·         Given the growth in the ‘Audit Universe’, individual audits were revisited, on average, every 5 (five) years, depending on the associated risk,  and factored into the Annual Audit Plan;

·         Agreed actions were revisited by IA on a risk basis according to the priority level. High priority actions involved testing to determine whether the implemented control in place was effective. Medium priority actions required management to provide evidence of implementation, and low priority actions were usually concluded on the basis of subsequent written assurances received by IA from management;

·         Where required/deemed necessary for an effective audit process, expert internal auditors were commissioned by the Council e.g. IT Disaster Recovery [Appendix A pages 18 refers].

In response to specific questions from a new Member regarding the findings for the audit of Safeguarding (Limited Assurance) – Issued December 2021[Appendix A - pages 15/16 refer], the Chief Officer and Director  ...  view the full minutes text for item 9.

The covering report from the Head of Finance reminded Board Members that the Council was responsible for ensuring that its business was conducted in accordance with the law and proper standards and that public money was safeguarded and properly accounted for. In discharging that overall responsibility the Council had to ensure that it had good governance arrangements in place and that it operated a sound system of internal controls which it reviewed annually. Appendix A to the report comprised the Annual Governance Statement for the period 1 April 2021 to 31 March 2022, the Governance Action Plan 2022-23 was attached at Appendix B to the report, with a Governance Action Plan 2021-22 (from the 2020-21 Review) document attached as Appendix C.

The Head of Finance advised Members that the report laid out the process for the compilation of the Annual Governance Statement set out in detail in Appendix A. The Governance Plan 2022-23 document [Appendix B to the report], was the product of the process undertaken, based on the seven key governance principles, in accordance with the Corporate Code of Governance and the CIPFA/Solace framework. Appendix C provided a review of the previous Plan together with updates for inclusion in the 2022-23 plan as appropriate.

                        RESOLVED:

1.    That Members note the review of the Council’s Corporate Governance arrangements as set out in the report;

2.    That Members approve for inclusion in the Annual Statement of Accounts, the Annual Governance Statement 2021/22 attached as Appendix A to the report and the Governance Action Plan 2022/23 attached as Appendix B to the report.

To receive an update from the Head of Finance.

The report from the Head of Finance asked Members to agree and endorse the action plan [attached as Appendix A to the report], on the remaining actions to be addressed from the self-assessment exercise of the Board’s processes conducted on 26 January 2022 [Min. No. 34 refers].

The self-assessment exercise had identified a number of areas which were assessed as not meeting or only partly meeting best practice, and it was agreed that an Action Plan addressing those issues would come to a future meeting of the Board for approval. Since the last meeting of the Board in April, some of issues had been progressed at Annual Council on 11 May 2022 including;

·       Increasing the Board’s membership for 7 to 9 Councillors’

·       The appointment of the Cabinet Portfolio Holder for Finance as Observer to the Board, with his relevant skills and experience in both the public and private sectors to ensure the Board as a whole operated effectively;

·       Updated Terms of Reference for the Board to reflect its current functions.

Remaining areas that were identified in the January self-assessment exercise as partly meeting or not meeting best practice, were set out in Appendix A for Members endorsement.

Two main remaining items where action was outstanding were:

·       To repeat the self-assessment exercise in January 2023; and

·       To produce an annual report for presentation to the General Assembly of the Council (GAC) on the work of the Board. That report would be brought to the next meeting of the Board in September, prior to presentation to the GAC in October 2022, with a recommendation that the GAC receive an annual report on the Board’s work each year from July 2023.

RESOLVED:

1.     That the self-assessment action plan update attached at Appendix A to the report be noted and endorsed.

The Chairman advised that the standard report from Internal Audit recording the results of checking 5 (five) creditor payments randomly selected by the Chairman at the previous meeting for verification, had not been possible due to staff shortages.

For the particular benefit of new Members, the Chairman explained that the selective or ‘Cardiff’ invoice checks exercise was conducted by the Board to ensure that any Council invoice could be randomly selected by the Board for inspection by Internal Audit to ensure it had been processed properly, with the aim of ensuring Officers with fiscal responsibility adhered to proper spending and accounting procedures.

It was hoped that the exercise could be resumed following the next meeting of the Board in September, staffing levels permitting.

In closing the proceedings, the Chairman asked the Clerk to ensure that Mo Chughtai’s details appeared in the next Board agenda papers, following the expected confirmation of his appointment by the GAC on 25 July as non-voting Independent Member on the Board.