Agenda and draft minutes

Audit Committee
Thursday, 29th March, 2018 5.00 pm

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

Contact: Sharon Major, Committee Services Officer  Tel: 020 8770 4990, Email:  committeeservices@sutton.gov.uk

Items
No. Item

44.

Welcome and Introduction

Minutes:

Councillor Hicks welcomed all those present.

45.

Apologies for absence

Minutes:

Apologies were received from Councillor Mirhashem who arranged for Councillor Sangster to be his substitute and also from Councillor Kevin Burke who arranged for Councillor Bartolucci to be his substitute.

46.

Declaration of interests

Minutes:

No declarations of interest were made.

47.

Minutes of the last meeting pdf icon PDF 91 KB

To approve as a correct record the Minutes of the meeting held on 11 January 2018.

Minutes:

RESOLVED: that the minutes of the meeting held on 11 January 2018 be agreed as a correct record.

 

48.

Treasury Management Quarterly report pdf icon PDF 149 KB

This report is the treasury management review for the quarter ended 31 December 2017. It summarises the Council’s Treasury Management operations during the first nine months of 2017/18. It is presented for the purpose of monitoring and review and meets best practice as suggested by the Treasury Management Code of Practice.

 

Additional documents:

Minutes:

This report was presented by Lyndsey Gamble Head of Investment Risk and Commercial finance. Key points highlighted from the treasury management review for the quarter ended 31 December 2017 were:

  • No new long term borrowing
  • Currently £10M investment balance held over closing period
  • On Feb 2, new guidance was received which confirmed that the Authority need to clearly state the reasons for any borrowing in advance of need.

 

Members asked for information on details of what is considered as “Borrowing in advance of need.”  Head of Investment Risk and Commercial finance responded accordingly. It was  clarified that if the Council are borrowing for a commercial property this would need to be highlighted to confirm how the Council  are managing risk around that transaction. This specifically applies to purchasing property outside of the Borough. Committee were advised that this will be detailed within an investment and capital strategy which will show how these risks will be managed. This has been referenced in the 18/19 document. It was confirmed that the Government will bring out templates to guide Local authorities for the years 2019/20.

 

Iain Murray from Grant Thornton advised that In terms of reviewing the implementation of the guidance the external auditors will look at that as part of their role.  

Members asked for more clarification on the risk of these investment, particularly outside the borough.  Iain Murray spoke of the risk of a legal challenge, and any investment inside or outside the borough need confirmation that the council is comfortable with commercial risk of that purchase.

 

Councillor Clifton mentioned the reference on page 15 of the agenda papers regarding Heritable Bank and was pleased to note that all the investment had been repaid.

 

The committees’ attention was drawn to the progress on the Municipal bond agency and that the agency has been assigned AA3 strength credit rating.

 

The Council has opted up to professional status. In respect of the Treasury Management advisor a joint contract for Sutton and Kingston is due to be appointed shortly, it was confirmed there is no gap in service

  

RESOLVED that :

 

  1. The treasury management activity undertaken during the first nine months of the year was noted
  2. It be agreed to adopt this report as the quarter three Treasury Management    Review.

 

49.

External Audit: Grant Certification Report 2017/18 pdf icon PDF 202 KB

Minutes:

The report was presented by Iain Murray of Grant Thornton. It was confirmed that there were no issues identified.  Members wished to record their thanks to officers for this result. The report was noted.

50.

External Audit Plan pdf icon PDF 446 KB

Minutes:

The report was presented by Paul Jacklin of Grant Thornton He highlighted that part of their role as external auditor to issue an opinion on statements and also on value for money.

 

Area of focus are on outgoings  and nothing has been identified as unusual. One change this year is that the council are planning to produce group accounts for this year. The Sutton Housing Partnership account details are now of a material nature so they need to be picked up into the revised method of reporting. The key focus of review will be regarding the pension fund liability.  The costs of this are already identified it was confirmed this will only affect the pension fund.

 

In terms of value for money conclusion the key area of focus will be regarding understand medium term strategy and savings plans, set against uncertainty of local government funding and austerity.

 

Regarding the earlier than usual close of accounts production and publication. The final accounts need to be published by end of July. Both the Council and the Auditors are working hard to meet this new deadline. Members sought more clarification regarding types of risks and Iain Murray responded accordingly.  The plan was noted.

 

51.

Pension External Audit Plan pdf icon PDF 427 KB

Minutes:

The report was presented by Paul Jacklin of Grant Thornton. The key areas that were highlighted were regarding key challenges for the fund and changes to the accounting code.

The significant risks are highlighted within the report and how these will be mitigated.

The fees for the year were unchanged and were highlighted to the committee.

 

Members asked what percentage of the pension fund relates to individuals who are direct employees. The Strategic Director confirmed that roughly 40% are direct members.  It was confirmed that maintained Schools are regarded as direct contributors to the fund. The report was noted.

 

52.

Internal Audit Annual Plan 2018/19 pdf icon PDF 158 KB

This report comprises the draft Annual Internal Audit Plan for 2018/19. This sets out Internal Audit’s priorities and work programme for the year ahead for approval by the Audit Committee.

 

Additional documents:

Minutes:

Margaret Culleton,  Head of Internal Audit presented the report, and highlighted the draft Annual Internal Audit Plan for 2018/19. She set out Internal Audit’s priorities and work programme for the year ahead for approval by the Audit Committee.  As part of pulling the plan together Internal audit review risks highlighted this year and ensure the audits range across number of areas.  Audit days have been reduced due to the shared nature of the work, this year there is a 5 day reduction in number of days planned.

 

In debate members asked if the budget for audit is frozen.  Officers confirmed this is the case and that pay can affect the cost of work provided, in particular the Mazars work for specific IT audits.  Members asked about a summary of where issues had been identified previously that these were highlighted to the committee, in particular priority 1 issues to be reported to the committee. The Head of Internal audit confirmed that this has been started to put in place and that it will be reported going forward.

 

RESOLVED that :

 

1.The Internal Audit Plan, Charter and Strategy for 2018/19 was commented upon and it be approved.



 

53.

SWLFP Anti Fraud and Investigations update pdf icon PDF 179 KB

This report comprises the draft Annual Internal Audit Plan for 2018/19. This sets out Internal Audit’s priorities and work programme for the year ahead for approval by the Audit Committee.

 

Additional documents:

Minutes:

Kevin Holland, Deputy Head, Fraud & Risk, Head of South West London Fraud Partnership, presented the report, which  summarised the results of the Council’s Counter-Fraud and investigations work undertaken since 1 April 2017 and gave an indicative resource allocation plan for 2018/19.  The Committee were advised there is no change in provision for reviewing fraud.  In respect of property fraud it was highlighted that  8 properties have been recovered so far. Members asked for future reports to show that the stages in recovering a property so they can understand the process and timelines.

 

Fraud referrals are growing in numbers and it was thought that this is not indicating an increase in level of fraud but an increase of awareness on what should be referred for review. Members asked if there is a defined procedure for tenants to report fraud and it was confirmed that this is shared in the resident newsletters and in awareness sessions.

 

Members also asked for more clarity on the identified Council tax fraud,due to the magnitude of the difference in previous years.  It was confirmed that this a relating to a one off case and this is outlined in paragraph 4.5 of the report.  Regarding paragraph 4.14 Members asked for the definition of reasonable provision for the investigation and prevention of fraud. In regard to this report this is a judgement that has been made following taking part in proactive fraud investigation work.

 

RESOLVED that :

 

1.The report was noted and commented upon .

 

54.

Review risk register pdf icon PDF 136 KB

The Committee are asked to review and comment upon the latest corporate risk register shown as Appendix A. In order to ensure effective corporate oversight of key organisational risks the Council’s recently updated risk management strategy requires the corporate risk register to be reviewed at Audit Committee on a regular basis.

 

 

Additional documents:

Minutes:

Sam Barker, Head of Corporate Commissioning, presented the report and asked the Committee to review and comment upon the latest corporate risk register.

 

It was highlighted that the Councils preparation for the new GDPR preparations are in progress to ensure requirements of the regulations are met.  The Council's Corporate management team have reviewed the risk register firstly on the voluntary sector relationships. This has improved significantly and risk has reduced.  Finally that the risk regarding item 11 this was thought to have increased and there will be an emergency planning exercise to test the preparedness of the Council and Service providers.

 

Members queried the report where it was indicated that the Council would not be fully compliant with GDPR and requested a further update.  It was confirmed that regarding high risk items the Council will be fully compliant. Members further sought clarity in respect of the Carillion risk.  In particular they sought assurance on if other suppliers will be affected by their trading position with Carillion.   They queried if the Council are at risk from impact of knock on risk from Carillions’ trading position affecting others who also supply to the Council.  It was confirmed that the Council does not have any contract with Carillion.  Officers talked through the procurement practice and procedures and checks on the financial standing of organisations that tender for contracts.  Members expressed an interest in understanding how ongoing contractor financial status is tracked, and if that would be done throughout the performance of the contract.

 

RESOLVED that :

 

  1. The Corporate Risk Register was reviewed, considered and commented on.

2. No new risks were highlighted to be added or escalated to the corporate risk register

3. The Council’s overall risk statement  was considered.

 

55.

Audit Committee work plan pdf icon PDF 49 KB

The Committee’s Work Plan is attached.

 

Minutes:

It was suggested that the Work plan be proposed to the new committee for inclusion in its new work plan and should be carried forward in the new committee.  It was noted that the July meeting items is quite long and Members considered moving the review of the risk register from July to September

 

56.

Any urgent items brought forward at the discretion of the Chair

The Chair must approve the reason for urgency.

Minutes:

There were no urgent items. Councillor Broadbent wanted to record the thanks of the Committee to the Chair for all his work over the last four years.


The meeting ended at 6.30 pm