Agenda and minutes

Audit Committee
Thursday, 29th June, 2017 7.00 pm

Venue: Civic Offices, St Nicholas way, Sutton, SM1 1EA

Contact: Sharon Major, Committee Services Officer  Tel: 020 8770 4990, Email:

No. Item


Apologies for absence


Apologies for absence were received from Councillors Adrian Davey, Kevin Burke and Ali Mirhashem. Councillor Daniel Sangster was a substitute. Councillor Hicks welcomed all those present.



Declaration of interests


No declarations of interest were made.


Minutes of the last meeting pdf icon PDF 223 KB

To approve as a correct record the Minutes of the meeting held on 16 March 2017.


RESOLVED: that the minutes of the meeting held on 16 March be agreed as a correct record, subject to an amendment to minute 44 where the motion to amend the resolution  should read “Endorse the findings of the report, including the recommendations as contained in appendix A and the terms of reference in appendix D.”



Member Development pdf icon PDF 64 KB

A copy of the development survey for members to review and complete to regarding their training requirements is attached. The survey is to be discussed in the meeting.


The member development survey for members was presented by Phil Butlin, Assistant Director, Resources Directorate (Finance).  Members were asked to complete and return the circulated form by the end of July.  


Members were requested to comment on the training priority areas. Councillor Hicks requested clarity on the questions regarding ethical standards, and expectations of officers and members. It was suggested that this area be covered as a priority as well as the principles of public life.



Annual Review of Corporate Governance and Annual Governance Statement 2016/17 pdf icon PDF 134 KB

This report presents and explains the Annual Review of Corporate Governance, undertaken using the CIPFA/SOLACE standards and the Council’s 2016/17 Annual Governance Statement.


Additional documents:


The report was presented by Margaret Culleton, Head of Internal Audit who advised Members on the annual review of corporate governance which had been undertaken using the 7 CIPFA principles, as detailed in the appendix. Phil Butlin, Assistant Director, Resources Directorate (Finance), confirmed that a report on the Council’s Risk Management process would be presented to the September meeting of the committee and would include actions taken in response to the Mazars report on risk management in Sutton and Kingston, currently being finalised..  

Members asked for clarification regarding paragraph  3.1.  The Head of Internal Audit responded that this information provides examples of the governance work used to inform the report. In response, Councillor Hicks asked for a summary of the internal and external organisations that carry out the functions mentioned within the report to provide clarity on where these boards/ bodies sit within the Council. The Head of Internal Audit confirmed that this will be provided to the members of the Committee before the next meeting.



  1. The findings of the 2016/17 review of Corporate Governance and the audit opinion of Substantial Assurance be considered.
  2. The Annual Governance Statement (Appendix A) be considered and endorsed prior to it being certified by the Chief Executive and Leader for inclusion within the Council’s Statement of Accounts.



Internal Audit - Annual Report 2016/17 pdf icon PDF 109 KB

This report summarises the work undertaken by Internal Audit during 2016/17, including details of audit assurance opinions and counter-fraud/investigation work. It includes the Head of Internal Audit’s Annual Opinion on the Control Environment and the Annual Review of Effectiveness of Internal Audit.

Additional documents:


The report was briefly presented by Margaret Culleton, Head of Internal Audit. She highlighted the work undertaken by Internal Audit during 2016/17 which included 50 audit assurance opinions (of which 60% were rated as substantial or high).  All key financial audits were considered as substantial.  It was confirmed that where there is a limited assurance report, these are followed up and re-audited to help areas to improve the controls in place.


Councillor Broadbent requested more information on why limited audit assurance outcomes have doubled. The Head of Internal Audit responded that as the type of work undertaken year on year changes comparisons with previous years’ data need to be approached with caution. She confirmed that trends have been reviewed she did not believe they are a cause for concern.  Members asked for the provision of comparable data from previous years to be included in the next report.


Councillor Hicks asked whether, in future years, the summary of audits could include information on the impact of the service being delivered. Phil Butlin, Assistant Director, Resources Directorate (Finance), agreed that context can be added to the report to explain the impact.  Members of the committee requested sight of the actual audit reports and the Head of Internal Audit agreed to provide this to the Chair and Vice Chair.


Councillor Broadbent asked for details of the actions that have been put in place as a result of the findings of audits to be shared with the committee, to which the Head of Internal Audit agreed. Members also requested  copies of the reports on section 106 funding and review of interim/agency staff which include the action plans and responses to issues raised. The Head of Internal Audit agreed to provide these.



  1. The Annual Report as per the second addendum documents circulated and

Appendix Ai and Aii be noted.

2.            The Head of Internal Audit’s Opinion on the Council’s internal control environment and the Annual Review of Effectiveness of Internal Audit be endorsed.

3.            It be noted that the Internal Audit has confirmed compliance with the Public Sector Internal Audit Standards during 2016/17.



Whistleblowing Policy Review pdf icon PDF 103 KB

In May 1995 the Nolan Committee issued a report on the Standards in Public Life: Local Public Spending Bodies.  This report made a number of recommendations, some sector specific and others more general in nature.  The Nolan Committee recommended that Local Authorities should institute Codes of Practice on Whistleblowing, which would enable concerns to be raised confidentially inside and if necessary outside the organisation.

Additional documents:


The code of practice on Whistleblowing was presented by Andrew Hamilton, Audit Manager who stated that ownership of this policy had passed to the Head of Internal Audit. Specific changes were listed at Paragraph 4.1 and expanded to adhere to the code. It was confirmed that the next steps were to highlight the revised code to officers, ensure that the policy is easy to find and awareness raising. Members welcomed the inclusion of temporary workers as detailed in Paragraph 4.1  It was confirmed that whistleblowers can be anonymous.


The Audit Manager confirmed future whistleblowing reports would be brought to committee’s attention. Members agreed it would be good to raise awareness of the policy and the Audit Manager confirmed work is ongoing with IT to identify how it can be made easier to find the policy on the intranet.



  1. The revised whistleblowing policy was commented on and approved.



Audit Committee Annual Report pdf icon PDF 105 KB

This report comprises the Annual Report of the Audit Committee for 2016/17. The purpose of this Annual Report is to demonstrate to stakeholders the work undertaken by the Audit Committee over the previous 12 months in promoting good governance and fulfilling its terms of reference.

Additional documents:


The Annual Report of the Audit Committee for 2016 /17 was presented by Andrew Hamilton, Audit Manager. Discussion focused on assessment of the committee against best practice, in particular the two areas where full compliance had not been evidenced.  Members queried how this can be improved to a fully met rating.


Discussion focused on areas rated as less than fully compliant:

  • Under the adding value point, Members discussed how the committee could have a more interactive relationship with internal audit outside of formal committee meetings.  It was also suggested that the committee could request an update from each Directorate looking at risks and controls across the council.  Part of this would include the Head of each service presenting to the committee on what their key objectives are and how they review and manage risks. Members asked for this to be arranged by the Head of Internal Audit.
  • Regarding items 15 and 19 In appendix C the Chair and Vice Chair asked for a separate meeting to be set up outside committee with the Head of Internal Audit to discuss how it can be improved.


Councillor Hicks moved an additional resolution regarding showing effectiveness of the audit committee.  It was moved that with reference to point 19 in appendix C that a meeting should be arranged with the Head of Internal Audit Margaret Culleton and Alix Wilson Head of SWLAP to discuss this in more detail and to agree an action plan. This was seconded by Councillor Broadbent and is to be arranged, by the Internal Audit team.



  1. The committee commented on the report and agreed to delegate authority to finalise the report to the Head of Audit in consultation with the Chair.
  2. It be agreed that the final Audit Report be made available/distributed to stakeholders.
  3. Areas where the self assessment has identified less than full compliance with best practice were considered and commented upon regarding potential approached to address this.
  4. Head of Internal Audit to arrange a meeting with the Chair and Vice chair to formulate an action plan to identify how to demonstrate the effectiveness of the audit committee.



Treasury Management Annual report 2016/17 pdf icon PDF 137 KB

The Council is required through regulations issued under the Local Government Act 2003 to produce an annual treasury management report reviewing treasury management activities and the actual prudential and treasury indicators for 2016/17. This report meets the requirements of both the CIPFA Code of Practice on Treasury Management (the code) and the CIPFA Prudential Code for Capital Finance in Local Authorities (the Prudential Code).


Additional documents:


The Treasury Management Annual Report was presented by Lyndsey Gamble, Head of Financial Strategy and Planning. In discussion she drew the committee’s attention to the table in paragraph 4 as a summary of treasury management activity in the year. It was confirmed that the reduction in balances seen was due to utilising internal funding rather than borrowing.  However since balances are now at a minimal level, some external borrowing had been undertaken to finance the purchase of investment properties.  


The Head of Financial Strategy and Planning confirmed that a MiFID update is expected in July. She further drew committee’s attention to the details in paragraph 4.15 regarding changes to Minimum Revenue Provision (MRP) policy and discussed the exceptions to the practice as set out in the policy.  The Committee was advised that the Council’s treasury advisors Capita Asset Services have been bought by Link group.  There were no concerns about this change, but the Council’s contract was due to be re-let in March 2018 and this would provide an opportunity to consider the performance of the advisors.



  1. The Treasury Management activity undertaken during 2016 /17 be noted.
  2. The amended Minimum Revenue Provision (MRP) policy attached at appendix C be approved and it be recommended that this is adopted by Full Council
  3. The Treasury Management Annual Report 2016/17 be approved and it be recommended that this is adopted by Full Council.



External Audit Progress Report pdf icon PDF 11 MB

External Audit Report from Grant Thornton


Paul Jacklin, Senior Manager - Grant Thornton, presented the report and provided the committee with an update on progress in delivering the external auditor responsibilities. He confirmed the outcome of the work on the Statement of Accounts would come to the next committee meeting.


It was confirmed that work is progressing to schedule with draft accounts ready at the end of May. The Grant Thornton representative highlighted the issue that the narrative report provided to members is not consistent.


The Assistant Director advised that the Council have opted into an auditor selection process run by Public Sector Audit Appointments Limited (PSAA) The Grant Thornton Senior Manager advised that Grant Thornton had won the largest tranche of work so it is likely they will be reappointed as our auditors through the process.  It is expected that  the council will be told who the nominated auditors are by the end of the year.

The update was noted by members of the committee.



Audit Committee Work Plan pdf icon PDF 76 KB

Audit Committee work plan is attached for review and comment.


The Audit committee noted the work plan and suggested the following amendments:

  • Remove MiFID update as a separate item (will be covered in Treasury Management reports),
  • Remove duplicate entry regarding review of Risk Management, and
  • Member Development on Annual accounts - Delete reference to Annual accounts.


The committee discussed that 2018 meeting dates would need to include a meeting in late July to agree the audited accounts by 31 July 2018 in line with the new statutory timetable.  



Exclusion of the press and public

The following motion should be moved, seconded and approved if the committee wishes to exclude the press and public to deal with reports revealing exempt information:


“That the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in paragraph 3 Schedule 12A of the Local Government Act 1972.”



There were no press or public in attendance



Any urgent items brought forward at the discretion of the Chair

The Chair must approve the reason for urgency.


Councillor Hicks informed the committee that the updated RIPA policy was now on the intranet and that revised training had been delivered to Officers. A record of decision would be published shortly.



Date of next meeting

The next meeting of the Audit Committee will take place on 21 September 2017 at 7.00pm


The date of the next meeting of the Audit committee was confirmed as 21 September 2017