Agenda and minutes

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

27.2           The Chair welcomed David Johnson, Grant Thornton’s Audit Manager for Tewkesbury Borough Council, to the meeting.

28.1           Apologies for absence were received from Councillors K J Cromwell and Mrs H C McLain (Vice-Chair).  There were no substitutions for the meeting.

29.1           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.

29.2           There were no declarations made on this occasion.

To approve the Minutes of the meeting held on 21 September 2016.

30.1           The Minutes of the meeting held on 21 September 2016, copies of which had been circulated, were approved as a correct record and signed by the Chair. 

To consider the Audit Committee Work Programme. 

31.1           Attention was drawn to the Audit Committee Work Programme, circulated at Pages No. 12-18, which Members were asked to consider.

31.2           The Head of Corporate Services advised that follow-up audits were being undertaken for tree inspections and bulky waste.  A report on the tree inspection follow-up would be brought to the meeting on 22 March 2017 and the bulky waste report would go to the July meeting of the Audit Committee, the date of which would be confirmed at Council in January 2017.  The Head of Finance and Asset Management indicated that the External Auditors’ Audit Findings, which was currently due to be taken to the meeting in September 2017, would need to be brought forward to the July meeting as Grant Thornton had agreed to do a dry run of the early accounts closure which was required in 2018.  Related to that, the Grant Thornton Audit Manager queried whether the ‘Critical Judgements and Assumptions Made During the Preparation of the Statement of Accounts’ item would need to be brought forward from the July meeting and clarification was provided that this would be taken to the meeting on 22 March 2017.

31.3           It was subsequently

RESOLVED          That the following updates be made to the Audit Committee Work Programme:

-               Tree Inspection Follow-Up Audit to be added to 22 March 2017;

-               Bulky Waste Follow-Up Audit to be added to July 2017;

-               External Auditors’ Audit Findings to be brought forward from September 2017 to July 2017; and

-               Critical Judgements and Assumptions Made During the Preparation of the Statement of Accounts to be brought forward from July 2017 to 22 March 2017.

32.1           Attention was drawn to Grant Thornton’s progress report, circulated at Pages No. 19-34, 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.

32.2           Members were informed that this was the first progress report of the 2016/17 cycle.  Page No. 22 of the report set out the residual 2015/16 work and it was noted that the Annual Audit Letter would be presented to the Committee later in the meeting.  A report outlining the work undertaken and the findings from the certification of Housing Benefits would be brought to the Audit Committee in March 2017.  Members were advised that three errors had been identified during the audit which had required testing to be undertaken and had resulted in a potential reduction of £1,000 in the subsidy for the year; however, this was a reasonable outcome given that the total value was in the region of £18M.

32.3           The fee letter for 2016/17 had been issued in April 2016 and the fee had stayed the same as the current cycle.  The Accounts Audit Plan would be presented to the Committee in March 2017 and it was hoped that an interim accounts audit would be carried out in late February/early March – as close to year end as possible taking into account the commitments of the Finance team.  As mentioned under the previous Agenda item, the final accounts audit would be in July 2017, two months earlier than usual, as this would allow the Council to identify any issues ahead of the change in statutory deadline in 2018.  Work on the value for money conclusion would also begin earlier in terms of research and discussion with management.  The housing benefit grant claim would be brought forward to August facilitated by the early closure of the final accounts audit. 

32.4           Page No. 25 of the report informed Members of changes to the Code of Practice on Local Authority Accounting in the United Kingdom 2016/17 and it was noted that the main change related to IAS 1: Presentation of Financial Statements under the International Accounting Standards Board Disclosure Initiative which required the restatement of the previous years’ figures.  A selection of National Audit Office reports which may be of interest were included at Pages No. 26-28 and a number of publications currently being promoted by Grant Thornton were set out at Page No. 30 onwards.  Particular attention was drawn to the article on integrated reporting which focused on how assets and resources were used – whilst this was not currently a statutory requirement, it was something being considered going forward – and the update on Brexit and its potential impact on the public sector.

32.5           With regard to the changes to the Code of Practice, a Member questioned whether there would be any issues with comparisons over time.  The Audit Manager from Grant Thornton indicated that  ...  view the full minutes text for item 32.

To consider Grant Thornton’s Audit Letter 2015/16. 

33.1           Attention was drawn to Grant Thornton’s Annual Audit Letter 2015/16, circulated at Pages No. 35-47, which summarised the key findings from the work that had been carried out at Tewkesbury Borough Council for the year ended 31 March 2016.  Members were asked to consider the Annual Audit Letter 2015/16.

33.2           The Audit Manager from Grant Thornton explained that the findings arising from the audit of the Council’s financial statements had been reported to the Audit Committee meeting on 21 September 2016 and an unqualified opinion had subsequently been issued.  Grant Thornton had established a positive and constructive relationship with the Finance team and senior management which it was hoped would continue going forward. The risks which had been reviewed as part of the process were set out at Pages No. 40-41 and Page No. 42 confirmed the unqualified opinion on the accounts which had been submitted in advance of the national deadline of 30 September.  It was noted that two issues, regarding receipts in advance and suspense journals, had been identified as a result of interim work in February/March 2016 and both matters had already been addressed by the Finance team.  In terms of the value for money conclusion, Grant Thornton had been satisfied in all respects that the Council had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March 2016.  One key value for money risk had been identified and was referenced at Page No. 44.  Members were informed that this was likely to continue to be a risk in 2016/17 given the pressure on local government finances and other local pressures.  Page No. 45 of the report outlined the areas which Grant Thornton had worked on with the Council during the year and what was intended for 2016/17 – it was noted that the main focus would be the early closure of the accounts.  The audit fees for the work carried out were set out at Appendix A to the report along with the dates when Grant Thornton’s reports had been issued. 

33.3           In response to a query regarding the 2% increase in Council Tax, referenced within the information regarding the value for money risk which had been identified, the Audit Manager from Grant Thornton explained that this was a suggested increase included within the Medium Term Financial Strategy proposals to help cover the shortfall in the budget.  This was not set in stone but was one of the options which could be considered to alleviate financial pressure.  The Member raised concern that the tense of the report was confusing as it implied Council Tax was yet to be raised for 2016/17 and confirmation was provided that the wording reflected the arrangements in place as at 2015/16.

33.4           A Member requested further clarification regarding the external auditors’ involvement in the housing benefit certification and he was informed that Grant Thornton’s role was to ensure that the subsidy claim had been properly calculated.  There were  ...  view the full minutes text for item 33.

To recommend to Council the option to opt-in to the Public Sector Audit Appointments Ltd as the Sector Led Body for the appointment of the Council’s External Auditors from 2018/19.

34.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 48- 53, set out a proposal for the appointment of the Council’s external auditors from 2018/19.  Members were asked to recommend to Council the option to opt-in to the Public Sector Audit Appointments Ltd (PSAA) as the Sector Led Body for the appointment of the Council’s external auditors from 2018/19.

34.2           The Head of Finance and Asset Management explained that the appointment of the Council’s current auditor, Grant Thornton UK LLP, had been made under a contract led by the Audit Commission which had been closed under the Local Audit and Accountability Act 2014.  The transitional arrangements for local government bodies had been extended by one year to include the audit of the accounts for 2017/18 and, when those arrangements came to an end on 31 March 2018, the Council would be able to move to local appointment of the auditor.  There were three broad options open to the Council: to set-up an auditor panel to oversee the process for making a stand-alone appointment; to join with other local authorities to establish a joint auditor panel and make a joint appointment; or to opt-in to a Sector Led Body which would have the ability to negotiate contracts with firms nationally.  Public Sector Audit Appointments, the transitional body set up by the Local Government Association to manage the current contract, had been approved as the Sector Led Body for the independent appointment of auditors for principal authorities in England from 2018/19 and 270 Councils and local bodies had expressed their interest in a national scheme.  Officers believed that this would be the most cost effective and efficient route and the Audit Committee was asked to recommend to Council that Tewkesbury Borough Council opt-in to the Sector Led Body arrangement and give formal notification before the March 2017 deadline.

34.3           In response to a Member query, clarification was provided that a report would be taken to the Council meeting on 24 January 2017 and, if the recommended option was approved, regular updates would be brought to the Audit Committee throughout the year.  A Member questioned whether there would be implications in terms of staff workload and the Head of Finance and Asset Management confirmed that the recommended option would be the least resource intensive for staff and would secure the best value for money via economies of scale.  Having considered the information provided, it was

RESOLVED          That it be RECOMMENDED TO COUNCIL that it opt-in to the Public Sector Audit Appointments Ltd. as the Sector Led Body for the appointment of the Council’s external auditors from 2018/19.

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 September to November 2016.

35.1           The report of the Head of Corporate Services, circulated at Pages No. 54-81, was the second monitoring report of the financial year and summarised the work undertaken by the Internal Audit team during the period September to November 2016.  Members were asked to consider the audit work completed and the assurance given on the adequacy of internal controls operating in the systems audited.

35.2           Members were advised that full details of the work undertaken in the period was attached at Appendix 1 to the report and a list of audits within the 2016/17 Audit Plan and their progress to date could be found at Appendix 2 to the report.  The majority of audit opinions had been positive with the exception of the audit relating to the Ubico monitoring arrangements which had a combination of ‘limited’ and ‘unsatisfactory’ opinions.  It was noted that there had been some slippage in the delivery of the Audit Plan due to sickness absence and an agreement was in place with the Finance team to use one of its Officers to undertake audits in order to help get the plan back on track for the New Year.  Confirmation was provided that there had been no incidents of fraud, corruption, theft or whistleblowing during the period. The partnership arrangement with Tewkesbury Town Council was on a one year rolling programme and the Internal Audit team was happy to continue this arrangement unless the Town Council wished to terminate the agreement.

35.3           Attention was drawn to the audit on the Health and Safety Self-Assessment 2016/17, set out at Page No. 57 of the report.  The Health and Safety Executive self-assessment checklist had been adopted by the Environmental Safety Officer and two of the statements within the checklist had been reassessed as ‘partially met’ so it would be necessary to establish additional procedures for reporting within the staff safety register and for lone working.  Reviews in relation to both lone working and health and safety reporting arrangements were included within the action plan which was monitored by the ‘Keep Safe, Stay Healthy’ Group.  It was noted that an annual health and safety report was brought to the Audit Committee for consideration.

35.4           Pages No. 58-61 set out the findings of the audit of Ubico client monitoring 2016/17.  The Head of Corporate Services clarified that this was an audit of the way the Council was set-up to monitor the Ubico contract and to demonstrate that it was being delivered in line with the requirements.  Whilst the overall conclusion was adverse, he emphasised that Ubico carried out in excess of three million bin collections per year on behalf of Tewkesbury Borough.  In terms of the financial information received, Internal Audit did not consider this to be detailed enough for robust scrutiny and challenge.  This view was shared by the Finance team which had flagged this to Ubico on numerous occasions.  There was a fragmented approach to the monitoring of the contract across the organisation, for example, waste and recycling was  ...  view the full minutes text for item 35.

To consider the progress made in the response to the recommendations stated in the 2015/16 annual report concerning the audit of the trade waste collection service.

36.1           The report of the Interim Head of Community Services, circulated at Pages No. 82-89, provided an update in relation to the recommendations arising from the trade waste audit.  Members were asked to consider the progress that had been made.

36.2           The Interim Head of Community Services advised that the findings of the trade waste audit had been presented to the Audit Committee at its meeting in June 2016.  The audit had identified a number of recommendations which were being used to help drive forward service improvements and Officers were working with Ubico and the Joint Waste team to deliver those changes.  Appendix 1 to the report set out the progress that had been made to date.

36.3           In response to a query regarding recommendation 1, ‘Financial: delivery of service is not commercially viable’, the Head of Finance and Asset Management advised that there was currently no assurance that the trade waste service was operating to its commercial optimum and it was necessary to undertake a review to check whether the service was operating effectively and bringing in the income expected.  It was noted that the review would be carried out by a consultant and a report would be presented in April 2017.  A Member asked who would be receiving that report and was informed that it would go to the Head of Community Services.  Clarification was provided that the review had not yet commenced and was currently going through the approval process with the partner authorities listed in the update. The project would be carried out by the Association for Public Service Excellence (APSE) and would be a continuation of the work which had already been done in respect of commercialisation.  The overall cost of the work would be approximately £10,000 shared between each of the partner organisations, however, there was no budget for the work and that was something which would need to be considered going forward. 

36.4           A Member noted that a request had been made to Ubico for detailed budgets for 2017/18 and he queried whether the Council was moving to a full commercially viable charging system.  The Head of Finance and Asset Management explained that this related to his earlier point about the lack of detail in the financial information provided by Ubico.  It was necessary to fully assess the cost of delivering the trade waste service to get an idea as to what price to set; there was a question mark around the definition of the service i.e. was it a commercial waste service or a wider recycling service.  There were other operators in the market so it needed to be a balanced fee rather than a straight accounting figure.  The Member felt that it would be interesting to see what this would mean financially.

36.5           A Member questioned why Tewkesbury Borough Council, Cheltenham Borough Council and West Oxfordshire District Council were the only three authorities paying for the review.  She also raised concern as to why more money was being put into the  ...  view the full minutes text for item 36.

To consider the progress of the Counter Fraud Unit and to recommend to Council the approval of option 3 of the business case to establish a permanent Counter Fraud Unit, subject to similar approval being made at all partner authorities; should all necessary approvals not be forthcoming, option 2 would be this Council’s default position.

37.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 90-129, asked Members to consider the activity undertaken by the Counter Fraud Unit to date and to recommend to Council the approval of option three of the business case, to establish a permanent Counter Fraud Unit, subject to similar approval being made at all partner authorities; should all necessary approvals not be forthcoming, option two would be the Council’s default position.

37.2           Members were reminded that, in 2013/14, the government had announced that local responsibility for the investigation of benefit fraud was to be transferred to the Department of Work and Pensions and a Gloucestershire-wide Counter Fraud Unit had subsequently been established following a successful DCLG bid.  The Counter Fraud Unit had been undertaking feasibility work on behalf of a number of Gloucestershire authorities, West Oxfordshire District Council and Cheltenham Borough Homes.  The work had been undertaken as a pilot and a business case had now been drafted with a view to creating a permanent Counter Fraud Unit which would serve the partner organisations across the region.  The work undertaken for all authorities within Gloucestershire, and West Oxfordshire, was summarised at Appendix A to the report.  Particular attention was drawn to Page No. 95 which related specifically to Tewkesbury Borough Council where work had been carried out in respect of Council Tax, housing register applications, business rates and fly-tipping.  In addition, a number of policies which had recently been approved by the Executive Committee had been prepared by Officers from the Counter Fraud Unit.  The arrangements to date had been well-received and a decision was now required by all partners regarding full membership with effect from 1 April 2017.  The business case for the permanent establishment of the Counter Fraud Unit was attached at Appendix B to the report and outlined three potential options: carry on as is; partial formation of a countywide unit; or full formation of a countywide unit.  Given the performance to date and the potential for future counter fraud work to be undertaken, it was Officers’ view that the Council should support the option to form a unit comprising all authorities.  Whilst there would be an increased cost over the base budget, this would effectively be covered by the increased ongoing income resulting from the successful work already undertaken and the business case illustrated the potential additional income that could be generated from detecting and preventing fraud through the establishment of a permanent unit.

37.3           A Member felt that the income and loss avoidance figures, set out at Page No. 123 of the report, suggested that this was an easy decision and he queried what was meant by income generation.  The Head of Finance and Asset Management advised that this was based on the initial stages of the pilot, for instance, the single person discount review in Council Tax had led to discounts being removed retrospectively and the review of housing applications had led to the cancellation of 63 applications which  ...  view the full minutes text for item 37.

To consider the progress made in relation to the recommendations arising from the safeguarding audit.

38.1           Attention was drawn to the report of the Interim Head of Community Services, circulated at Pages No. 130-136, which set out the progress made in relation to the recommendations arising from the safeguarding audit.  Members were asked to consider the report.

38.2           Members were advised that the Safeguarding Children Self-Assessment toolkit had been completed in November 2013 and an audit in 2014/15 had given assurance that it was a fair reflection of the Council’s safeguarding arrangements.  Where areas of partial or non-compliance had been identified, an action plan had been created with an implementation date of April 2014.  The audit had identified that the implementation date had lapsed and all actions remained outstanding which had led to a ‘limited’ audit opinion.  A follow-up report had been presented to the Audit Committee in March 2015 and it had been agreed that a report would be produced on an annual basis to give assurance that the correct measures, controls and arrangements were in place and the Council was meeting its safeguarding obligations – this was the first annual report.  An internal self-assessment had been carried out to measure progress against the actions and this was summarised at Appendix 1 to the report.  Additional details were provided for notable areas at Paragraph  2.2, Page No. 134 of the report, and included the introduction of mandatory safeguarding training for all licensed taxi drivers and the approval of the revised Safeguarding Policy by the Executive Committee in November 2016.  In addition to the self-assessment, a further review would be carried out by Internal Audit in quarter four of 2016/17.  It was noted that the Section 11 Audit issued by Gloucestershire County Council had not yet been received for completion for 2016 and recommendations for additional actions may follow from that.

38.3           It was noted that all issues identified within the audit had been actioned, with the exception of the Section 11 Audit, and the Chair offered his congratulations to the team on behalf of the Committee.  It was

RESOLVED          That the progress made in relation to the recommendations arising from the safeguarding audit be NOTED.

To consider the monitoring report on the Significant Governance Issues identified in the Annual Governance Statement and to review progress against the actions. 

39.1           The report of the Borough Solicitor, circulated at Pages No. 137-141, set out the Significant Governance Issues and the action to be taken to address them as identified in the Council’s Annual Governance Statement.  Members were asked to consider the progress that had been made against those issues.

39.2           Members were advised that the table at Appendix 1 to the report comprised the Significant Governance Issues identified and the proposed action and timescale as well as a column to indicate the progress made as at 30 November 2016.  Actions 2-5 were all on track and expected to achieve the intended timescales.  Action 1 related to the review of the Council’s Constitution and Members were advised that work had not progressed as intended due to other unexpected work commitments within the small Democratic Services team.  Whilst the review was a long standing one, assurance was provided that the Constitution remained relevant and simply required modernisation so the delay did not put the Council in a legally compromised position.  A Member questioned whether Councillors would be involved in the review and the Borough Solicitor confirmed that Members would be consulted, potentially through a workshop to enable all to participate.

39.3           It was

RESOLVED          That progress against the Significant Governance Issues identified in the Council’s Annual Governance Statement be NOTED.