Agenda and minutes

When the continuous alarm sounds you must evacuate the building by the nearest available fire exit. Members and visitors should proceed to the visitors’ car park at the front of the building and await further instructions (staff should proceed to their usual assembly point. Please do not re-enter the building unless instructed to do so.

In the event of a fire any person with a disability should be assisted in leaving the building.

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

1.2             The Chair indicated that she had exercised her discretion under Procedure Rule No. 43 of the Constitution to vary the order of the Agenda and would take Item 9 – Annual Safeguarding Update, after Item 5 – Audit and Governance Committee Work Programme.

To receive apologies for absence and advise of any substitutions. 

2.1             Apologies for absence were received from Councillor K J Cromwell.  There were no substitutions for the meeting. 

Pursuant to the adoption by the Council on 26 June 2012 of the Tewkesbury Borough Council Code of Conduct, effective from 1 July 2012, as set out in Minute No. CL.34, Members are invited to declare any interest they may have in the business set out on the Agenda to which the approved Code applies.

3.1             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.

3.2             There were no declarations made on this occasion. 

To approve the Minutes of the Audit Committee meeting held on 12 December 2018.

4.1             The Minutes of the Audit Committee meeting held on 12 December 2018, copies of which had been circulated, were approved as a correct record and signed by the Chair.

To consider the Audit and Governance Committee Work Programme.  

5.1             Attention was drawn to the Audit and Governance Committee Work Programme, circulated at Pages No. 10-15, which Members were asked to consider.

5.2             The Head of Corporate Services indicated that the Work Programme had been in place for 12-18 months and was working well.  He made particular reference to the Internal Audit Peer Review Update which had been added to the Agenda for the meeting on 24 July 2019 and would advise Members on the progress made in implementing the recommendations arising from the independent review of Internal Audit.  It was subsequently

RESOLVED          That the Audit and Governance Committee Work Programme be NOTED. 

To consider the annual report giving assurance as to the level of the Council’s compliance with its safeguarding duty.

6.1             Attention was drawn to the report of the Head of Community Services, circulated at Pages No. 57-62, which gave an update on how the Council was fulfilling its safeguarding responsibilities.  Members were asked to consider the annual report.

6.2             Members were advised that this was a fairly succinct report with an action plan, attached at Appendix 1, which aimed to provide assurance that Tewkesbury Borough Council recognised and accepted its responsibilities to ensure, as far as possible, that young people and vulnerable adults were protected from harm.  It was noted that there had been legislative changes introduced by the Children and Social Work Act 2017 which had placed a duty on district authorities to play a more robust role in safeguarding and, locally, this had led to a review of the way that the Safeguarding Children Boards operated.  In light of the transition taking place at County level, a light touch review had been carried out in relation to Tewkesbury Borough Council’s own Safeguarding Policy which remained fit for purpose.  The Head of Community Services usually reported on the Section 11 self-assessment of safeguarding compiled by Children’s Services but this was not particularly relevant to district authorities which did not have the same level of involvement as the County Council, as such, this was being re-written and there was no requirement to submit a self-assessment this year.

6.3             A Member drew attention to Page No. 58, Paragraph 2.3 of the report which stated that, from 29 June 2018, local authorities must begin their transition from local Safeguarding Children Boards to Safeguarding Partner and Child Death Review Partnerships which must be completed by 29 September 2019 and she questioned whether this was just applicable to the county.  In response, she was advised that these were national changes, therefore it would affect the whole of Gloucestershire and the rest of the country.  A Member noted from the action plan that new online training was being made available to Councillors and he questioned whether this had been improved from that which was offered previously.   The Housing Services Manager confirmed that she had completed the training and had found it to be an improvement; training would be rolled out to all Members following the local elections in May.

6.4             It was

RESOLVED          That the annual report giving assurance as to the level of the Council’s compliance with its safeguarding duty be NOTED.

To consider the certification year-end letter March 2018.

7.1             Attention was drawn to Grant Thornton’s Certification Year End Letter March 2018, circulated at Pages No. 16-18, which set out the findings of the housing benefit subsidy claim which had been certified during the year.  Members were asked to consider the information provided.

7.2             Members were advised that the housing benefit subsidy claim for the financial year 2017/18 had been certified as £18.7M and the letter gave a very high level summary of the qualification matters reported to the Department for Work and Pensions and adjustment to the claim form.  Four items had been outlined as matters resulting in qualification, as set out at Appendix A of the letter - these were quite technical but the Audit Manager from Grant Thornton advised that, essentially, Grant Thornton took a sample of the claims over the year and extrapolated these over the whole population, it was then up to the Department for Work and Pensions to decide if more work needed to be carried out.  Whilst a certain amount of error was expected, as a couple of the errors dated back over the past few years, it was recommended that the Council review this going forward.  Appendix B of the letter showed an additional charge of £4,311 for the extra work undertaken.

7.3             Having considered the information provided, it was

RESOLVED          That the Grant Thornton Certification Year End Letter March 2018 be NOTED.

To consider the external auditor’s Audit Plan 2018/19. 

8.1             Attention was drawn to Grant Thornton’s Audit Plan 2018/19, circulated at Pages No. 19-48, which set out the Audit Plan for the year ended 31 March 2019.  Members were asked to consider the information provided.

8.2             The Audit Manager from Grant Thornton advised that the significant risks were outlined at Pages No. 23-24 of the report and had been identified as management over-ride of control which was a presumed risk; valuation of Property, Plant and Equipment; and valuation of pension fund net liability.  There was a rebuttable presumed risk that revenue may be misstated due to improper recognition but Grant Thornton did not consider this to be a significant risk for Tewkesbury Borough Council.  Page No. 26 of the report outlined materiality and the misstatements that would be reported.  It was noted that materiality at the planning stage of the audit was £750,000 which was approximately 2% of the Council’s prior year gross expenditure – this had increased due to spend - and it was proposed that an individual difference could normally be considered to be clearly trivial if it was less than £37,000.  Page No. 27 of the report set out the background to the Value for Money approach and Members were advised that the 2017/18 Value for Money conclusion had highlighted that the Council must develop a robust savings plan in order to deliver its annual budgets with sufficient capacity to manage its emerging cost pressures over the duration of its Medium Term Financial Strategy (MTFS).  Grant Thornton would review the Council’s arrangements to establish how it was managing and monitoring those financial risks; review the robustness of its financial plans and the key assumptions supporting the development of the MTFS and savings plans; and understand the extent to which the Council was seeking to identify further income generation opportunities.  The annual audit fee was set out at Page No. 28 of the report and Members would be pleased to note that it had reduced significantly from the previous year – whilst this was good for the Council, it also meant there was a need for Grant Thornton to be more efficient and its requirements in terms of meeting the deadline for issuing its opinion were outlined at Page No. 29 of the report.  Members were advised that there had been a slight change in relation to the housing benefit certification which had a baseline fee of £7,795 and represented further savings to the Council.

8.3             Having considered the information provided, it was

RESOLVED          That Grant Thornton’s Audit Plan 2017/18 be NOTED.

To approve the accounting policies to be used during in the preparation of the 2018/19 financial statements.

9.1             The report of the Head of Finance and Asset Management, circulated at Pages No. 35-56, set out the main changes in accounting policies under the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19.  Members were asked to approve the accounting policies to be used in the preparation of the 2018/19 financial statements.

9.2             The Finance Manager explained that preparation of the 2018/19 annual statement of accounts would commence the following week.  In order to do this, the Council had to review all of its accounting policies to ensure it complied with the Code.  Substantial changes to the accounting standards had taken effect from 1 April 2018 in relation to Revenue Recognition and Financial Instruments due to the adoption of International Financial Reporting Standard (IFRS) 15 – Revenue from Contracts with Customers, and IFRS 9 – Financial Instruments.  IFRS 15 was relatively minor for Tewkesbury Borough Council and related to changes in the way income was recognised; however, IFRS 9 was likely to have significantly more impact as it brought in a new way to classify financial instruments which looked at how they were accounted for and included potential future losses.  Currently, these did not impact on the general fund but this change would mean the value of the fund could fluctuate and this would affect the bottom line.  Whilst the Council would still need to account for it, the government had issued a statutory override for pooled funds for five years to avoid the impact on the general fund.  IFRS 9 also impacted on the way the Council held instruments but the main change related to forward-looking expected losses i.e. it would be necessary to undertake an assessment of what the Council could potentially lose for every instrument it held.  The Finance Manager reiterated this was the biggest change for quite some time and would require a lot of work.  In addition, it was noted that the Council had adopted the Community Infrastructure Levy (CIL) in October 2018, with charging commencing on 1 January 2019, so a policy was required to set out the proposed accounting treatment.  This was difficult as developers could pay in instalments but the full CIL liability was due at commencement of development, therefore, the full amount should be shown in the accounts at that date.

9.3             A Member found IFRS 9 very complicated and, with regard to the general fund, she questioned whether losses would be visible to the public.  The Finance Manager confirmed that the income and expenditure accounts would show profit and losses.  With regard to CIL, a Member questioned what happened if this money was not received, for instance, if the developer went out of business.  In response, the Finance Manager clarified that it was classed as a demand, which had more weight in law than a debt, and the Council would be seen as a preferred creditor should a developer go bankrupt.  The Head of Development Services confirmed that the CIL money was required regardless of  ...  view the full minutes text for item 9.

To consider the progress made in relation to implementing specific internal audit recommendations that have been questioned at the previous Audit Committee meeting.

10.1          The report of the Head of Corporate Services, circulated at Pages No. 63-67, updated Members on the progress made in implementing specific internal audit recommendations that had been questioned at previous Audit Committee meetings.  Members were asked to consider the report.

10.2          The Head of Corporate Services explained that, at the Audit Committee on 12 December 2018, Members had been concerned that a number of recommendations had not been implemented despite a revised implementation date being agreed and it had been resolved to ‘call-in’ those recommendations where the implementation date had slipped at least twice.  This had applied to five recommendations: homelessness – procurement of storing goods; Winchcombe Tourist Information Centre – lease agreement; recycling – data protocol; business continuity – update of business continuity plan; and Disabled Facilities Grant monitoring.  As highlighted at Appendix 1 to the report, of the five recommendations, only the Winchcombe Tourist Information Centre – lease agreement; and recycling – data protocol remained unimplemented.  Members were informed that both of the outstanding recommendations would be followed-up by Internal Audit.

10.3          A Member expressed concern that the issue with Winchcombe Tourist Information Centre was an ongoing problem and questioned whether it would be resolved by the end of December 2019 as suggested.  The Head of Development Services advised that the issue was that a physical copy of the lease could not be located, therefore, a meeting had been set with the Winchcombe Trust for early April to discuss drafting a new position; it was anticipated that December 2019 was a realistic timescale for completion of the agreement.

10.4           It was

RESOLVED          That the progress made in relation to implementing specific internal audit recommendations that had been questioned at the previous Audit Committee meeting be NOTED.

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

11.1          The report of the Head of Corporate Services, circulated at Pages No. 68-96, was the third monitoring report of the financial year and summarised the work undertaken by the Internal Audit team for the period December 2018 to February 2019.  Members were asked to consider the audit work completed and the assurance given on the adequacy of the internal controls operating in the systems audited.

11.2           The Head of Corporate Services advised that the full details of the work undertaken in the period were attached at Appendix 1 to the report.  It was noted that a ‘limited’ opinion had been issued on the audits in relation to Ubico client monitoring (budgetary control framework); Community Infrastructure Levy (governance); and the General Data Protection Regulation (privacy notices).  A list of audit recommendations that were due to be followed-up could be found at Appendix 2 to the report; of those 15 recommendations, 12 had been implemented, one partially implemented and two were yet to be implemented.  Two of the three recommendations which were partially implemented or unimplemented had now been followed-up twice and Officers were in attendance to answer any questions in accordance with the Committee’s requirements.

11.3          With regard to the Ubico client monitoring audit, Members were advised that a previous audit undertaken in 2016/17 had made a series of recommendations to improve contract monitoring arrangements, therefore, this audit had been carried out as part of the 2018/19 audit plan and the Head of Corporate Services was pleased to report there had been significant improvement.  A new set of Key Performance Indicators (KPIs) had been developed and agreed across all of the Ubico partners around the key activities undertaken in waste and recycling services.  The KPIs were reported to the various governance boards and to the Council’s Overview and Scrutiny Committee on a six monthly basis with the first report presented in January 2019.  This did not include KPIs in relation to grounds maintenance which had been developed by a Member Working Group and approved by the Executive Committee earlier in the month.  It was noted that there were still some elements of the service which did not have KPIs, for instance, trade waste which was currently being reviewed with a report being taken to the Overview and Scrutiny Committee at the end of the year.  Members were informed that a limited opinion had been issued in respect of financial reporting e.g. budget monitoring.  Regularity and detail had improved, i.e. a monthly budgeting report was produced and reviewed by the Finance Team which was more detailed than it had been originally and, although there had previously been limited analysis, the report now covered various activities and verbal assurance had been given that there would be further improvements following the appointment of the new Ubico Financial Controller.  Notwithstanding this, a detailed review of the latest budget figures had highlighted a number of concerns in relation to the substantial overspend and limited information to explain the position – at the end of quarter  ...  view the full minutes text for item 11.

To approve the Internal Audit Six Month Plan 2019/20 (April-September).

12.1          The report of the Head of Corporate Services, circulated at Pages No. 97-102, set out the proposed Internal Audit Plan for April to September 2019.  Members were asked to approve the six month plan as set out at Appendix 1 to the report.

12.2          The Head of Corporate Services advised that the Internal Audit Plan provided a total of 200 productive days and was delivered by two full-time equivalent members of staff.  Particular reference was made to the 15 days allocated for the General Data Protection Regulation and 10 days allocated to the serious and organised crime framework which would include working with licensing.  It was noted that 30 days had been allocated for corporate improvement and 20 days for the corporate risk register - this informed a lot of internal audit work therefore it was important to give assurance that the information it contained was correct and that the mitigating controls were in place and working.  In terms of specific service areas, days had been allocated to Ubico, ICT, Disabled Facilities Grants and the Housing Benefit subsidy.  A number of days had also been set aside for ongoing work to implement the team’s Quality Assurance and Improvement Programme which included the peer review of individual audit assignments and supporting documentation.  There would also be training for new Members, following the local elections in May, and the team would look at income streams around internal audit as well as providing consultancy and advice and sitting on corporate groups.  Follow-up reviews were an important aspect of internal audit work and 15 days had been allocated for this purpose in the six month period.

12.3          It was

RESOLVED          That the Internal Audit Six Month Plan be APPROVED as set out at Appendix 1 to the report.

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

 13.1          The report of the Borough Solicitor, circulated at Pages No. 103-110, 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 made against those issues.

13.2           Members were advised that the table set out at Appendix 1 to the report comprised the Significant Governance Issues and the proposed actions and timescales for completion, with a further column indicating the progress as at 1 March 2019.  The Borough Solicitor confirmed that she was confident all actions would be completed in accordance with the timescales set out.  It was

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

To consider the risks contained within the corporate risk register and assurance that the risks are being effectively managed. 

14.1           The report of the Head of Corporate Services, circulated at Pages No. 111-126, asked Members to consider the risks contained within the Corporate Risk Register and assurance that the risks were being effectively managed.

14.2          Members were advised the Council had a risk management strategy in place which formalised the risk management arrangements and set out the risk management approach around the identification, analysis, prioritisation and management of risk.  A key element of the strategy was the maintenance of a Corporate Risk Register that captured the Council’s key corporate risks.  The Risk Management Strategy had been brought to the Audit Committee in December 2018 and was subsequently approved by the Executive Committee in January 2019.  The scoring in the Corporate Risk Register was based on three stages: gross risk score – the inherent risk without any mitigating controls in place; current risk score – the assessed risk after the application of controls; and target risk scores – proposed risk score by applying future controls if the current risk score was deemed to be too high).  The Corporate Risk Register included a column for mitigating controls to demonstrate that the measures in place were working effectively and any additional mitigation required was set out in the ‘identified risk management action points’ column; this would be used to inform the Internal Audit Plan moving forward.  The Corporate Risk Register was presented to the Corporate Management Team on a monthly basis and was further reviewed by the Corporate Governance Group on a quarterly basis. 

14.3           It was noted that a new risk had been put forward by the Counter Fraud Unit in relation to the Council’s fraud and corruption framework which was considered to be well-managed but would be kept under review.  Another new risk had been added following a meeting of the Corporate Management Team around the uncertainly over Brexit and the potential adverse impact on Council services and communities - as this was so uncertain, it was unclear how this risk could be managed but a plethora of information was available from national and regional agencies and key action points had been identified in terms of ongoing participation in the multi-agency network, supporting small businesses through the Growth Hub, the Gloucestershire local Resilience Forum undertaking an audit of countywide fuel storage capacity and an assessment of data storage.

14.4          It was

RESOLVED          That the risks contained within the Corporate Risk Register be NOTED.