Agenda and minutes

Audit Committee
Thursday, 18th June, 2015 7.00 pm

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

Contact: Susanne Wicks, Committee Support Team Leader  Tel: 020 8770 6540 | Email:

No. Item


Member Development - Alternative Commissioning Models (financial and service risks)


The Executive Head of Finance, Phil Butlin, and Tom Alexander, the Head of Strategic Business, delivered a short presentation regarding the financial and service risks of alternative commissioning models.  The presentation covered the range of alternative models, why local authorities use them, the financial and service risks they present, and how best to manage those risks.  Finally, they outlined the key issues with alternative models.


Councillor David Hicks thanked the officers for their presentation.




Apologies for absence and notification of substitutes


Apologies for absence were received from Councillors Adrian Davey and Ali Mirhashem.


Declaration of Interests


No declarations of interest were made.


Minutes of the last meeting pdf icon PDF 92 KB

To approve as a correct record the Minutes of the meeting held on 26 March 2015.


Councillor Alan Salter noted that references to the ‘Overview and Scrutiny Panel’ should be replaced by ‘Scrutiny Committee’ on pages 4 and 5 of the minutes.


RESOLVED:  That the minutes are agreed as an accurate record of the meeting.



Update from Grant Thornton pdf icon PDF 291 KB


Christian Heeger (Director) and Nicholas White (Senior Manager) from Grant Thornton presented their update report and invited comments and questions.


At the request of Councillor Alan Salter, Christian Heeger explained the variance between the Council’s scale fee and the audit fee for 2014/15.  The Executive Head of Finance, Phil Butlin, also explained that the fee is based on assumptions and could increase should more work be required. 


Nick White pointed the Committee’s attention to the two “challenge questions” within the report.  With regard to the business rates question, Phil Butlin explained that a view must be taken on the likelihood of success for business rate appeals, and the potential financial impact of successful appeals.   With regard to the reliability of software solutions, Christian Heeger advised that some local authorities are also experiencing issues, but this should improve over time.


The Strategic Director, Gerald Almeroth, explained the appeals process in further depth, and advised that the financial impact of appeals is reported to the Strategy and Resources Committee on a quarterly and annual basis.


With regard to the key findings of the Independent Commission’s final report into local government finance, Gerald Almeroth confirmed the report had been referred to in reports to the Strategy and Resources Committee and officers were mindful of the findings. 


Treasury Management Update - Annual Report 2014/15 pdf icon PDF 192 KB


Phil Butlin introduced this report and pointed the Committee members’ attention to the recommendations.   He highlighted that a further instalment of the recovery of the £5.5m funds invested with Heritable Bank may be received.  He invited comments and questions.


Councillor Richard Broadbent asked why the Council is unlikely to refinance the two £2m PWLB loans which mature this year. Phil Butlin explained that a view will be taken on whether to borrow at a better rate of interest, or if the cost is worth bearing, but it is unlikely given the current level of balances. 


Councillor David Hicks sought assurance that the interest rates detailed in the ‘Debt Maturity Schedule at 31.03.15’ were in line with the economic forecast and Gerald Almeroth confirmed this was the case. 


RESOLVED:  That the Audit Committee


1.         Notes the treasury management activity undertaken during 2014/15.

2.         Approves this report as the Treasury Management Annual Report 2014/15 and recommends that it is adopted by Full Council.





Annual Review of Corporate Governance and Annual governance Statement 2014/15 pdf icon PDF 162 KB


This report was presented by the Head of Audit and Investigations, David Dobbs.  He outlined the method for compiling the Annual Governance Statement and invited comments and questions.


At the suggestion of Councillor Richard Broadbent, it was agreed that point 3.6 (d) should be amended to read:  “....An internal Audit Plan is prepared in consultation with senior managers and is approved by the Audit Committee.”


RESOLVED:  That the Audit Committee


1.         Notes the findings of the 2014/15 Review of Corporate Governance and the audit opinion of Substantial Assurance.

2.         Endorses the 2014/15 Annual Governance Statement prior to it being certified by the Chief Executive and Leader for inclusion within the Council’s Statement of Accounts.



Internal Audit - Annual Report 2014/15 pdf icon PDF 83 KB

Additional documents:


The report was presented by the Head of Audit and Investigations, David Dobbs.  He reminded the Committee that they discussed fraud and investigations in depth at their previous meeting. 


David Dobbs highlighted the drop in internal referrals in 2014/15 when compared with the previous year, and advised that the Fraud Awareness training had been refreshed and rolled out across the authority.  The Whistleblowing policy was refreshed and three referrals were made during the year, of which one was deemed valid. 


David Dobbs pointed the Committee to Appendix B to the report, which summarises Limited/Low Assurance opinions following audits in 2014/15 and provided an update where appropriate.


The Committee discussed in some depth the issue of remuneration of an Executive Headteacher at one of the borough’s schools, which had been subject to some local Press coverage.  David Dobbs confirmed that Audit work continues in the school but the recommendations made have been enacted by the Governing Body.  Councillor David Hicks asked if Governing Bodies are given guidance on Headteacher pay.  David Dobbs responded that some benchmarking information had been made available, but the Governing Body made decisions at an inquorate meeting and did not record the decision appropriately. With regard to sanctions, David Dobbs explained that the local authority can withdraw a Governing Body’s control of the school’s delegated budget and write a note of concern to the Department for Education. 


In response to questions from Councillor Richard Broadbent, David Dobbs advised that where an audit has resulted in an opinion of Low or Limited Assurance, a follow up audit can take place within a couple of months, or issues can be resolved via email if appropriate.  He also confirmed that Audit Reports can be supplied to councillors upon request by email to the Head of Audit and Investigation, subject to data security requirements.


Councillor David Hicks noted that this was the last Audit Committee that David Dobbs would attend, as he would be moving to a new job in late August.  On behalf of the Committee, Councillor David Hicks thanked David Dobbs for his contribution to and support of the work of the Committee.


RESOLVED:  That the Audit Committee


1.         Endorses the Head of Internal Audit’s Opinion on the Council’s internal control environment and the Annual Review of Effectiveness of Internal Audit

2.         Notes that Internal Audit has confirmed that it has complied with the Public Sector Audit Standards during 2014/15 and as required, has made an annual confirmation of independence.


Annual report of the Audit Committee 2014/15 pdf icon PDF 85 KB

Additional documents:


The Head of Audit and Investigations, David Dobbs presented this report. He advised that the Annual Report had been circulated to the Committee for comment, and the comments had been incorporated into the report.


In response to questions, David Dobbs undertook to amend the evidence for  item 2.3 in the Assessment of the Audit Committee using CIPFA criteria (Appendix C) to read “[Summaries of Quality Questionnaires from managers] are summarised and included in Internal Audit’s Annual Report which is presented biennially at the June/July meeting”


RESOLVED:  That the Audit Committee


1.         Finalises the content of the Annual Report;

2.         Agrees that the Annual Report can be made available/distributed to stakeholders.


Audit Committee work plan pdf icon PDF 41 KB

The Committee’s Work Plan is attached.


The Executive Head of Finance, Phil Butlin, undertook to circulate responses to the external auditor enquiries, one from officers and one from the Chair of the Audit Committee. 


RESOLVED:  That the work plan is noted.


Any urgent business brought forward at the direction of the Chair


No urgent items were raised.


Date of the next meeting

The next meeting will take place on 24 September 2015.


The next meeting of the Committee will take place on 24 September 2015.