Agenda and minutes

3.1             The evacuation procedure, as noted on the Agenda, was advised to those present. 

3.2             The Chairman welcomed Alex Walling, Engagement Lead from Grant Thornton, and David Johnson, Audit Manager for Tewkesbury Borough Council from Grant Thornton, to the meeting.

4.1             Apologies for absence were received from Councillors B C J Hesketh and Mrs H C McLain (Vice-Chairman).  Councillors T A Spencer and R J E Vines would be acting as substitutes for the meeting. 

5.1             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.

5.2             The following declaration was made:

5.3             No further declarations were made on this occasion.

To approve the Minutes of the meetings held on 18 March and 26 May 2015.

6.1             The Minutes of the meeting held on 18 March and 26 May 2015, copies of which had been circulated, were approved as correct records and signed by the Chairman. 

7.1             Attention was drawn to Grant Thornton’s progress report, circulated at Pages No. 11-23, which set out the progress that 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.

7.2             Members were informed that the Accounts Audit Plan 2014/15 was complete and would be presented to the Committee under the next Agenda Item.  The interim accounts audit had also been completed and the findings would be reflected in the Audit Plan.  The 2014/15 final accounts audit would commence in August in order to present to the Committee at its meeting in September.  In terms of the value for money work, Members were advised that Grant Thornton carried out an assessment to ensure that the Council had proper arrangements in place for securing financial resilience and challenging how it secured economy, efficiency and effectiveness.  Grant Thornton would present its value for money conclusion to the Committee in September.

7.3             With regard to emerging issues and developments, particular attention was drawn to Page No. 21 which related to provision for business rates appeals.  It was felt that this may be of interest to Members given Tewkesbury Borough Council’s experience with Virgin Media and the costs associated with that revaluation.  In addition, Members were reminded that legislation had recently been passed to bring forward the deadlines for the preparation and audit of Local Government financial statements and an update was provided at Page No. 22 of the report.  The current statutory deadline for the preparation of financial statements was 30 June with the deadline for audit completion on 30 September.  These deadlines would be brought forward to 31 May and 31 July respectively from 2018 and assurance was provided that good progress was being made towards meeting those targets.

7.4             A Member drew attention to the challenge question at the bottom of Page No. 19, “Have members been briefed on the key findings of the Independent Commissioner’s final report?”  The Finance and Asset Management Group Manager advised that a seminar on devolution, and the associated issues, had been arranged for all Members on Tuesday 30 June 2015 at 5.00pm.   It was

RESOLVED          That the Grant Thornton progress report be NOTED.

To consider Grant Thornton’s report on the Accounts Audit Plan 2014/15.  

8.1             Attention was drawn to the Grant Thornton Accounts Audit Plan 2014/15, circulated at Pages No. 24-38, which set out the Audit Plan for the year ended 31 March 2015.  Members were asked to consider the information provided.

8.2             The report outlined the challenges and opportunities which the Council was facing.  The common themes which had been identified were business rates; the provision of shared services through One Legal; and, outsourcing of waste collection to Ubico.  In planning the audit, Grant Thornton had also considered the impact of key developments in the sector and taken account of national audit requirements, as set out in the Code of Audit Practice and associated guidance.  The audit approach was shown in the form of a diagram at Page No. 29 of the report.  Page No. 30 gave an overview of the controls and processes which Grant Thornton proposed should be undertaken in order to address the significant risks identified.  With regard to the risk of management over-ride of controls, early testing had been carried out for journal entries to the end of February.  In terms of further work, testing of journal entries for period 12 was planned but that would be a quicker audit.  Two other risks had been identified in respect of operating expenses and employee remuneration and work had been carried out in those areas to gain assurance over the figures which would be included in the Statement of Accounts.  In relation to value for money, the outcomes from the previous year would be reviewed and any new risks would be identified.  The findings from the interim audit work were set out at Pages No. 33-34 of the report and Members were advised that no issues had been identified.  Any issues with individual transactions would be carried forward to the audit of the financial statements and reported in the audit findings report in September.  The report also set out the key dates in the audit cycle and the fees for the work which were based on the Audit Commission contract and decreased year on year.

8.3             A Member sought clarification as to why employee remuneration had been identified as a risk.  The Audit Manager from Grant Thornton explained that no judgements were being made, however, part of the process was to identify areas in the Statement of Accounts which were considered to be at higher risk of error or material misstatement.  They tended to be larger value, larger volume areas.  The report set out the particular areas within the risk which Grant Thornton would look at and how they would be addressed in order to gain assurance that they would be fairly stated within the Statement of Accounts.

8.4             It was

RESOLVED          That the Grant Thornton Accounts Audit Plan 2014/15 be NOTED.

To consider the fee letter from Grant Thornton in relation to the audit work to be undertaken during 2015/16.

9.1             Attention was drawn to Grant Thornton’s fee letter, circulated at Pages No. 39-42, which set out the proposed fee, together with the scope and timing of the work for 2015/16.  Members were asked to consider the fee letter.

9.2             The Engagement Lead from Grant Thornton explained that the actual audit fee was set by the Audit Commission and was reduced by 25% year on year following a recent procurement exercise.  In terms of work carried out, the fee included: audit planning and interim audit; final audit of the financial statements; value for money conclusion; and the whole government accounts return.  There was only one grant certification, which related to housing benefit, and the indicative grant certification fee had been set at £9,110.  The scale fee for 2015/16 was £44,921 and the outline timetable for the work was set out at Pages No. 40-41 of the report.  The key Members of the audit team for 2015/16 would remain unchanged.

9.3             A Member indicated that the Grant Thornton Accounts Audit Plan 2014/15, which had been considered under the previous Agenda Item, had stated that the total fee was £72,595, however, the billing schedule included in the Fees Letter set out that the total fee would be £54,031 and he questioned why there was a reduction in the saving being made.  The Engagement Lead from Grant Thornton advised that the bulk of the reduction was due to the 25% year on year decrease introduced by the Audit Commission; however, the certification fee for the two years was also slightly different.

9.4             It was

RESOLVED          That the Grant Thornton Fees Letter 2015/16 be NOTED.

To approve the critical accounting judgements that will be used in completing the 2014/15 annual accounts and to note the key sources of estimation uncertainty.

10.1           The report of the Finance and Asset Management Group Manager, circulated at Pages No. 43-48, set out the critical accounting judgements and key sources of estimation uncertainty that would be used in preparing the 2014/15 accounts.  Members were asked to approve the judgements and to note the key sources of estimation uncertainty.

10.2           The Finance Manager explained that the Audit Committee had approved the accounting policies to be used during the 2014/15 closedown at the meeting in March 2015.  In applying the Council’s accounting policies, certain judgements had to be made about complex transactions, or those involving uncertainty about future events, and it was considered that it would be beneficial for Members to know what assumptions were made during the preparation of the accounts which the Committee would be asked to approve in September.  The judgements were set out at Appendix A of the report and would be included as a note in the Statement of Accounts.  Members were advised that there was a high degree of uncertainty about future levels of funding for local government and an assumption had been made that it would remain an ongoing concern in the future.  It had been deemed that the Council had control of the Swimming Bath Trust on the basis that it had the right to appoint the majority of representatives to the board and, as the management agent, it had control over the financial and operating policies of the pool.  However, as the site had been revalued to nil as part of the work around the delivery of a new leisure centre, a decision had been taken not to prepare group accounts on the basis of immateriality.  The Finance Manager went on to explain that the Council’s former insurers, Municipal Mutual Insurance Limited, had ceased to trade in 1992 and the Council had become a party to the scheme of administration for outstanding liabilities at that time.  The directors had triggered the scheme of arrangement which meant that the Council was subject to a maximum liability of £159,699.  An initial rate of £23,954 had been suggested to achieve a solvent run off and that had been paid over in January 2014; however, an additional 10% had been included in the long term provisions in case more money was required.  The level of business rate appeals under the business rate retention scheme had been calculated using historic appeals information.  The ones which were outstanding where statistical information was available relating to the outcome of past appeals had been calculated using the average success rate and rateable value loss.  The appeals relating to Virgin Media had been treated separately as they were unique cases.  The hearing relating to the 2005 assessment had resulted in a reduction in rateable value of 40% and that had been used as the basis for establishing a provision for the outstanding 2010 Virgin Media appeals.  Members were advised that IAS 19 disclosures included information on the assets which made up the Local Government Pension Scheme for  ...  view the full minutes text for item 10.

To consider the Internal Audit work undertaken and the assurance given on the adequacy of internal controls operating in the systems audited during 2014/15.

11.1           The report of the Corporate Services Group Manager, circulated at Pages No. 49-88, was the final monitoring report of the financial year and summarised the remaining work undertaken by the Internal Audit team during 2014/15.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

11.2           Members were advised that full details of the work undertaken were attached at Appendix 1 to the report and a list of audits within the 2014/15 Audit Plan and their progress to date could be found at Appendix 2 to the report.  The Corporate Services Group Manager confirmed that all audit work had been completed, with the exception of the audit of Individual Electoral Registration (IER), which translated to a 92.31% completion of the original plan with 24 out of 26 audits completed; it was noted that one audit had been completed after 31 March 2015.  Days had been allocated within the 2015/16 Audit Plan, following the elections, to carry out the work around IER.  Members were advised that two additional internal audits had been undertaken during the year in respect of business flood grants and Repair and Renew grants and that those were in addition to the Tewkesbury Town Council audit. For the period being reported, all audit opinions had been given either a ‘good’ or ‘satisfactory’ level of control with the exception of health and safety (risk assessments), which had a ‘limited’ audit opinion, and ICT asset inventory, which had an ‘unsatisfactory’ audit opinion.  In terms of health and safety, there had previously been no formal reporting mechanism to Council apart from the ‘Keep Healthy, Stay Safe’ Group.  As health and safety was an important part of the governance framework, the Council’s Environmental Safety Officer had been seconded to the Internal Audit team to undertake health and safety audits which would be reported to the Committee.  The first of those audits had been completed in the reporting period and the opinion could be found at Appendix 1 to the report.  The Corporate Services Group Manager was pleased to advise that no incidents of fraud, corruption, theft or whistleblowing had been reported during the period.  As previously reported to the Audit Committee, the Internal Audit team had been commissioned by Tewkesbury Town Council to undertake its internal audit.  An interim audit report had previously been issued and the formal year end audit was due to be taken to the Town Council meeting the following week.

11.3           With regard to the audits which had been completed during the period, Members were advised that a good level of control had been identified within payroll in terms of the accuracy of information and salary adjustment notifications and there was a good reconciliation process and verification of employees.  It had been concluded that the Council had satisfactory risk management arrangements on the basis that there was an approved Risk Management Strategy in place, which was due for renewal during 2015/16; the Corporate  ...  view the full minutes text for item 11.

To consider the Internal Audit Annual Report 2014/15 and the assurance from the work undertaken during the year on the level of internal control within the systems audited during the year. 

12.1           Attention was drawn to the report of the Corporate Services Group Manager, circulated at Pages No. 89-94, which provided Members with a summary of the internal audit work undertaken for the financial year 1 April 2014 to 31 March 2015, together with an opinion on the overall adequacy and effectiveness of the organisation’s control environment.  Members were asked to consider the report and the assurance that, overall, there was a satisfactory level of assurance in relation to the effectiveness of the Council’s framework of governance, risk management and control. 

12.2           Members were advised that the annual audit plan was compiled using a risk-based approach and was informed by governance issues and work relevant to the production of the Annual Governance Statement; work on fundamental financial systems; work of a service-based nature; corporate improvement work; follow-up work; and consultancy and advice.  This approach resulted in a comprehensive range of audits that were undertaken over the course of the year to support the overall opinion on the control environment.  In compliance with the Public Sector Internal Audit Standards (PSIAS), regular monitoring reports of internal audit activity were presented to the Audit Committee on a quarterly basis.  A list of the audit work undertaken in the year was set out at Page No. 91, Paragraph 2.2 of the report.  There was one audit outstanding from the 2014/15 Plan in relation to electoral registration, as had been reported earlier in the meeting, and this work would be accommodated within the 2015/16 Plan.  As well as internal work, the team also provided an internal audit to Tewkesbury Town Council.  This arrangement had commenced part way through 2014/15 and days had been formally allocated within the 2015/16 Plan to carry out that work on an ongoing basis.  In addition, the Internal Audit team also undertook a variety of corporate improvement work initiatives.  The Audit Plan contained an allocation of days for that type of work and the Corporate Management Team could request that the Internal Audit team assist with areas of work which needed to be moved forward, for example, the Revenues and Benefits improvement programme; work around the Local Government Transparency Code; setting up the Repair and Renew grants; the ‘Selling to the Council’ guide; and setting up the methodology for the health and safety audit.  The team was also represented on key corporate groups such as the Corporate Governance Group and the ‘Keep Safe, Stay Healthy’ Group.

12.3           Members were advised that 49 audit opinions had been given during the year, as set out at Page No. 92, Paragraph 3.2.  There were two limited opinions and one unsatisfactory opinion issued throughout the year relating to safeguarding, risk assessments and ICT asset inventory respectively.  The Corporate Services Group Manager explained that Officers worked in a complex environment with a number of schemes, policies and procedures which meant that there would always be areas where assurance was limited or unsatisfactory; the important part was recognising those areas and taking action to make improvements.  Management of  ...  view the full minutes text for item 12.

To consider the Risk Register and the risks contained within it.  

13.1           The report of the Corporate Services Group Manager, circulated at Pages No. 95-103, attached the corporate risk register which had been reintroduced in 2014.  Members were asked to consider the corporate risk register and the risks contained within it.

13.2           Members were advised that the corporate risk register was reported through the performance management framework which was reviewed by the Overview and Scrutiny Committee.  The reporting of the register had been discussed by the Corporate Governance Group where it was agreed that the Audit Committee was the most appropriate Committee to review the register given that its Terms of Reference included the responsibility to monitor the effective development and operation of risk management.

13.3           The register had first been reported to the Audit Committee at its meeting on 9 September 2015 and, therefore, this was the third update. The Council’s overall risk management arrangements were overseen by the Corporate Governance Group and the register, attached at Appendix 1, was a corporate document which had been endorsed by the Corporate Leadership Team.  Members were informed that a number of risks were unchanged from those reported at the March Committee.  With regard to the risk around economic development, the Corporate Services Group Manager advised that an Overview and Scrutiny Committee Working Group had been established to develop a new Economic Development and Tourism Strategy.  In terms of the delivery of operational services, the original risk had related to the transfer of services to Ubico which  had now taken place; as such, it would now be necessary to monitor the governance arrangements.  With regard to Individual Electoral Registration (IER), the risk was to be removed from the register as a result of the recent elections being successfully managed.  Although there had been issues during the process, they had been mitigated and the register was accurate.

13.4           It was

RESOLVED          That the information within the Corporate Risk Register be NOTED.

To approve the Annual Governance Statement 2014/15. 

 14.1          The report of the Corporate Governance Group, circulated at Pages No. 104-124, set out the Council’s Annual Governance Statement 2014/15, which Members were asked to approve.

14.2           In introducing the report, the Borough Solicitor explained that the Annual Governance Statement was included alongside the Council’s Statement of Accounts which was due to be approved by the Audit Committee in September 2015.  It provided assurance that the Council was following the code of corporate governance that it had approved and adopted, which was consistent with the principles of the CIPFA/SOLACE Framework ‘Delivering Good Governance in Local Government’.  The Annual Governance Statement for 2014/15 was attached at Appendix 1 to the report and included four significant governance issues which would address the need for improvements that had been identified.  These significant governance issues would be monitored throughout the year and the progress would be reported to the Audit Committee.  The significant governance issues identified were: embedding of budget understanding/development ownership with a focus on training; business continuity, which had been carried forward from the previous year and would test the arrangements in place; Constitution update, which would involve a full review, including the Scheme of Delegation; and the development and implementation of a corporate Workforce Development Strategy. 

14.3           It was

                 RESOLVED           That the Annual Governance Statement 2014/15 be                                            APPROVED.