37.1           The Vice-Chairman in the chair welcomed Peter Barber, Engagement Lead from Grant Thornton, to the meeting.

37.2           The evacuation procedure, as noted on the Agenda, was taken as read.

38.1           Apologies for absence had been received from Councillors Dr A L Carter and A L Mackinnon (Chairman).  There were no substitutions for the meeting. 

39.1           The Committee’s attention was drawn to the Tewkesbury Borough Council Code of Conduct which was adopted by the Council on 26 June 2012 and took effect from 1 July 2012.

39.2           There were no declarations made on this occasion.

To approve the Minutes of the meeting held on 11 December 2013.

40.1           The Minutes of the meeting held on 11 December 2013, copies of which had been circulated, were approved as a correct record and signed by the Vice-Chairman in the chair. 

To consider Grant Thornton's report on progress against planned outputs.

41.1           Attention was drawn to Grant Thornton’s progress report, circulated at Pages No. 6-18, which set out the progress which had been made in relation to the audit plan together with any emerging national issues and developments that might be relevant to the Borough Council.  Members were asked to consider the report.

41.2           With regard to the progress against the audit plan, Members were advised that Grant Thornton was required to issue a detailed accounts audit plan for 2013/14 giving an opinion on the Council’s financial statements and the value for money conclusion.  The audit plan would be informed by interim work which included updating the review of the Council’s control environment and understanding of the Council’s financial systems.  Whilst the report set out that this work would be completed in early March, unfortunately this had been delayed.  Grant Thornton had completed its initial visit and would now be coming back to complete the work at the end of the month in order to bring the draft audit plan to the Audit Committee meeting in June.  This interim work comprised approximately 20% of Grant Thornton’s work during the year with the majority of information being obtained post year end when the Council produced its final accounts.  Grant Thornton would embark on a series of tests to update its work on the Council’s arrangements for value for money which would be informed by the year end outturns and medium term financial planning arrangements.  In terms of the certification of claims and returns, the next report on the Agenda provided the outcomes of the work for 2012/13 which had involved two claims; this represented a significant reduction compared to previous years.  In terms of work for 2013/14, a National Non-Domestic Rates claim was not expected which was surprising given the changes to the National Non-Domestic Rates system and the localisation of Business Rates.  The assumption was that the only area of work for 2013/14 would be the Housing and Council Tax Benefits claim and the work on the Council Tax benefit element would be reduced following changes to the Council Tax system. 

41.3           A Member queried what impact the additional interim work and the reduced work in respect of the National Non-Domestic Rates claim would have upon the audit fee.  The Engagement Lead explained that the work between now and the end of March would be encompassed within the overall fee; there would be no additional charge for Grant Thornton being slightly behind.  If work was no longer required e.g. National Non-Domestic Rates claim, then the Council would not be billed for it.  The Member went on to question how assurance would be provided that the National Non-Domestic Rates systems were operating as they should be.  The Policy and Performance Group Manager advised that internal control assurance would be required and a number of additional days had been included within the Internal Audit Plan 2014/15 for National Non-Domestic Rates to ensure that the key controls were in place.  The Engagement Lead from  ...  view the full minutes text for item 41.

To consider Grant Thornton’s Certification Report 2012/13.

42.1           Attention was drawn to Grant Thornton’s Certification Report 2012/13 which set out the findings of the two claims which had been certified during the year.  Members were asked to consider the information provided.

42.2           The Engagement Lead from Grant Thornton advised that the two claims which had been certified in 2012/13 were the National Non-Domestic Rates return and the Housing and Council Tax Benefit subsidy claim.  The overall messages from the certification were positive and both had been submitted to audit by the required deadline.  The Housing and Council Tax Benefit subsidy claim had required amendments but these related to the misclassification of cases between rent rebates and rent allowances and had no net impact on subsidy claimed.  The working papers supporting both claims had been good although they did recognise a number of small reconciliation differences in respect of the Housing and Council Tax Benefit subsidy claim.  The Council Officers responsible for the claim had been disappointed that the claim had been qualified; however, Members were advised that it was a complex claim and any errors had to be reported back to the paying department.  The majority of audits in this area resulted in a qualification.  Page No. 29 of the report showed that there was a small variation between the indicative fee and the actual fee.  Although the Housing and Council Tax Benefit claim was slightly more than anticipated, this was offset by the reduction in the amount of work which was required on the National Non-Domestic Rates return.  This was due to the fact that a full audit had been carried out in the previous year which meant that Grant Thornton was satisfied that the arrangements were effective.  This resulted in a net difference of approximately £750.

42.3           In response to a query regarding the amendment to the Housing and Council Tax Benefit subsidy claim, Members were advised that £489 was the net effect of the adjustment to the claim and it was noted that this had been in the Council’s favour.  It was to be borne in mind that this was a £22.9M claim as the benefits team processed a high number of transactions on a daily basis and unfortunately there was occasional human error.  The Council should take assurance that there were no significant issues over the way benefits were processed at Tewkesbury Borough Council.  The Engagement Lead from Grant Thornton reiterated that, there would be no Council Tax subsidy element in this work for 2013/14 and the audit fee would be reduced by 12% to reflect this change.

42.4           It was

RESOLVED          That the Grant Thornton Certification Report 2012/13 be NOTED.

To approve the accounting policies to be used during the 2013/14 closedown. 

43.1           The report of the Finance and Asset Management Group Manager, circulated at Pages No. 31-50, set out the main changes in accounting policies under the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14.  The Committee was asked to approve the accounting policies to be used during the 2013/14 closedown.

43.2           Members were advised that the Council was required to produce an annual Statement of Accounts prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14.  The accounting policies governed the accounting treatment used to close the final accounts which the Committee was asked to approve each September.  A full list of the changes to the accounting policies was attached at Appendix A to the report with the main changes outlined at Pages No. 32-33, Paragraph 2.0.  Members were advised that the changes to post-employment benefits had no net effect on the actual accounts but they would result in a presentational change as the transactions were split between employee-led and employer-led.  Termination benefits had previously been recognised when there was a ‘demonstrable commitment’ but this had now been changed so that there was more certainty.  With regard to property, plant and equipment (PPE), assets had previously been valued on a rolling programme over five years, however, this had been found to be insufficient and a valuer had been commissioned to ensure that the carrying value was not materially different from fair value at year end.  A new policy had been included clarifying the accounting treatment of Council Tax and Business Rates and how it differed from the statutory treatment involving the Collection Fund.

43.3           A Member queried whether the changes in respect of Council Tax and Business Rates had any impact on pooling and was informed that the final guidance was yet to be received from the Department of Communities and Local Government.  It was hoped that the implications would become clearer once Officers had attended a training course on pooling the following week.

43.4           It was

RESOLVED          That the accounting policies to be used during the 2013/14 closedown be APPROVED.

To consider the Internal Audit work undertaken and the assurance given on the adequacy of internal controls operating in the systems audited for the period December 2013 to February 2014.

44.1           The report of the Policy and Performance Group Manager, circulated at Pages No. 51-67, summarised the work undertaken by the Internal Audit team for the period December 2013 to February 2014.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

44.2           Members were advised that full details of the work undertaken during the period were attached at Appendix 1 to the report and it was estimated that 92-96% of audits would be completed by 31 March 2014.  The Policy and Performance Group Manager indicated that he intended to attach a document setting out the status of each audit as an appendix to the report in future.  There had been some sickness absence within the team which was being mitigated by a combination of overtime; a reciprocal working arrangement with a neighbouring authority which had been brought forward from March 2014; and the appointment of an agency contractor between mid-February and the end of March. 

44.3           Appendix 1 provided a summary of the activity audited, the control objectives for each activity and the audit opinion for each control objective.  Members were advised that the audit on data quality in relation to the Key Performance Indicators (KPIs) for Quarter 2 2013/14 which were reported via the performance management framework had been found to be satisfactory.  Human Resources had been audited to ensure that salary adjustments sent to the Payroll Officer were accurate, supported with appropriate documentation and processed in accordance with the Council’s policies and procedures and this had been found to be satisfactory.  The licensing audit had focused on licensing fees, the checking of licenses and supporting documentation and the issuing of the licences once the correct fee had been received.  Whilst some recommendations had been made, the overall level of assurance had been good or satisfactory.  There was nothing significant to report in respect of the key financial systems in relation to Business Rates.  The creditors audit had sought to ensure that there was adequate control over the placement of orders and receipt of goods.  It had been found that three invoices were not supported with official purchase orders; these were small in value and two related to the same service area.  The invoice details in relation to the payments made for the storage of personal belongings for homeless persons could not be verified e.g. it was unclear what items were being stored, how many items were being stored etc. thereby providing only limited assurance for that activity.  Recommendations had therefore been made to enhance the process for monitoring this expenditure.  With regard to the audit of tree inspections, Members were advised that the Grounds Maintenance Team had completed the inspections of high risk sites and it would now be important to implement the second phase of the project which was to establish and maintain a database of trees in order to monitor re-inspections.  With regard to the follow-up audits completed, Members were reminded  ...  view the full minutes text for item 44.

To approve the Internal Audit Plan 2014/15 as detailed at Appendix 1.

45.1           The report of the Policy and Performance Group Manager, circulated at Pages No. 68-72, set out, at Appendix 1, the Internal Audit Plan 2014/15. Members were asked to approve the Plan.   

45.2           Members were advised that the Internal Audit Plan 2014/15 was divided into five main areas: corporate governance; corporate improvement; fundamental financial systems; service areas; and consultancy and advice.  The Plan had been informed by recommendations from Group Managers and had been endorsed by the Corporate Leadership Team.  Members were informed that safeguarding was a new item which had been included under corporate governance and there was an audit tool kit for self-assessment which could be of assistance.  The Business Transformation Group Manager had asked for some work to be undertaken in relation to the Council’s Behaviours Framework which was a set of core values and behaviours which defined how staff were expected to approach their work and would be used as part of the Personal and Professional Development (PPD) meetings which were replacing the Joint Annual Review process.  Information governance; the new leisure centre; Disclosure and Barring Service Policy; and the National Fraud Initiative were the other areas included in the Plan under corporate governance.  The work on fundamental financial systems would help to inform Grant Thornton’s year end work on the accounts.  In terms of the service areas included in the Plan, audits would be carried out in relation to ICT; recycling; garden waste; Individual Electoral Registration (IER); homelessness; property leases; food control; and Section 106 Agreements.  Consultancy and advice had been allocated 30 days within the Plan which accounted for representation on corporate groups e.g. Health and Safety Group, Business Continuity Group etc.

45.3           Accordingly, it was

RESOLVED          That the Internal Audit Plan 2014/15 be APPROVED, as detailed at Appendix 1.