Agenda and draft minutes

Audit and Governance Committee
Thursday, 25th July, 2019 7.00 pm

Venue: Civic Offices - St Nicholas Way, Sutton, SM1 1EA. View directions

Contact: Fiona Bywaters, Committee Services Team Leader  Tel.: 020 8770 4990, Email:  committeeservices@sutton.gov.uk

Media

Items
No. Item

1.

Welcome and Introductions

Minutes:

The Chair, Councillor Sam Weatherlake, welcomed those present.

 

2.

Apologies for Absence

Minutes:

Apologies for absence were received from Councillors Mirhashem and Patel, with Councillors Batt and Penneck attending as substitutes.

3.

Declarations of Interest

Minutes:

There were no declarations of interest. Councillor Mattey mentioned that he had family who work for PWC.

 

4.

Minutes of the Previous Meeting pdf icon PDF 89 KB

To approve as a correct record the minutes of the meetings held on 16 May 2019.

Minutes:

RESOLVED: that the minutes of the meeting held on 16 May 2019 be agreed as an accurate record.

 

Richard Simpson, Strategic Director - Resources, gave a brief update on the London Counter Fraud Hub. It was confirmed that the question of membership would come back to committee for decision.

 

5.

Operation of the Code of Conduct

A function of the Council’s Audit and Governance Committee is to receive updates on the operation of the member Code of Conduct at Sutton. The purpose of this verbal update is to inform the committee of complaints which have been received and dealt with since the last meeting of the Audit & Governance Committee on 16 May 2019.

Minutes:

Jessica Crowe, Assistant Director - Customers, Commissioning and Governance, gave a brief verbal update, explaining that no formal complaints had been made since the presentation of the last report to committee.

 

Committee members discussed the recent anti-bullying pledge which was agreed under a Council motion.

 

6.

Member Development Update pdf icon PDF 219 KB

The purpose of this report is to update the committee on the Council's member development programme, setting out how the Council is ensuring that all members are fully aware of their obligation to follow the Nolan Principles and to help them meet the standards of behaviour and conduct that the public have a right to expect from their elected members.

Minutes:

 

Fiona Bywaters, Committee Services Team Leader, briefly presented the report.

 

Members agreed with the suggestion that a fortnightly update of the Member Information Bulletin would be suitable over the summer period.

Members suggested that they be surveyed in advance of a session to ascertain their particular interests in order that a session may be tailored in particular.

 

Members suggested that perhaps a refresh of the bulletin be considered and that perhaps some advice from the communications team be sought in this regard - e.g. including a ‘headline story’. Some suggested that the bulletin should return to a Friday dispatch and include a link to press releases as well as include more news-type stories on the borough.

 

RESOLVED: that the member development update be noted.

 

7.

Annual Review of Corporate Governance and Annual Governance Statement pdf icon PDF 173 KB

This report presents the councils Annual Governance Statement for 2018/19. This statement is required to comply with Regulation 6 (3) of the Accounts and Audit regulations 2015 and the CIPFA/SOLACE standards.

Additional documents:

Minutes:

Andrew Hamilton, Audit Manager, SWLAP, presented the report.

Members requested that further information on the Audit and Governance member development programme be circulated.

 

Reference was made to Freedom of Information legislation and exceptions based on commercial confidentiality in the context of council interests in companies. Further consideration was given to the council-owned companies and how they would be reported on as part of the AGS in future years. It was requested that any reporting include the division of responsibilities and commissioning vs ownership relationships.

 

Members discussed governance in the context of Brexit, and in particular any mitigation of a no-deal exit. The Assistant Director - Customers, Commissioning and Governance, explained that measures were being put in place and referred to the risk register as well as regional and national plans. Councillors sought reassurance that issues would be escalated as appropriate if urgent decisions were required.

 

Discussion also turned to The Sutton Plan and the extent of the voluntary sector involvement within the borough.

 

RESOLVED: that the 2018/19 AGS (as contained in Appendix A) be endorsed prior to it being certified by the Chief Executive and Leader for inclusion within the Council’s Statement of Accounts.

 

8.

Statement of Accounts 2018/19 and Audit Finding reports (Council and Pension fund) pdf icon PDF 148 KB

This report sets out the responsibilities of this Committee in relation to signing off the Statement of Accounts and Value for Money conclusion and any other matters raised by the External Auditors on the 2018/19 Statement of Accounts.

Additional documents:

Minutes:

Representatives of Grant Thornton presented the report followed by comments from Richard Simpson, Strategic Director - Resources.

 

Members discussed the significant findings - key judgments and estimates, as referred to in the reports, and in particular how debt was constituted and recovered. Councillor Nick Mattey requested that further information be circulated among committee members in this regard (to include aged debt and debts across directorates at the request of Councillor Colin Stears).

Members also discussed a recent ‘equal pay’ legal case (‘Sergeant and McCloud’) and further explanation was given on the implications by the representatives of Grant Thornton.

Members mentioned that the Council had displayed financial resilience for several years in succession, receiving a rating of Good Value for Money.

Enquiry was also made as to the role of external audit in the context of Brexit issues and processes in place would be reviewed, and highlighted if necessary.

 

Further discussions focussed on a misclassification in the accounts, the valuation of assets in the investment portfolio, future risks / financial pressures, an increase in demand for statutory obligations and management of the savings programme with regard to transparency.

 

RESOLVED: that

 

  1. The progress of the external Audit be noted.

  2. The format and inclusions to be presented in the final report be noted.

 

9.

Annual Insurance Review pdf icon PDF 120 KB

The report provides assurance that the insurance service is operating efficiently and effectively as part of the overall risk management framework of the Council, whilst generating income through commercial activity.

Additional documents:

Minutes:

Bradley Peyton, Head of Insurance and Pensions, presented the covering report.

 

Councillor Colin Stears motioned that the public and press be excluded, as seconded by Councillor David Hicks, and agreed by the Committee, on the grounds that discussion would involve the likely disclosure of exempt information as defined in Paragraph 3 Schedule 12A of the Local Government Act 1972. The Head of Insurance and Pensions then presented the exempt Appendix and answered questions.


RESOLVED: that the review was considered and the efficient and effective operation of the insurance service be noted.

 

10.

Internal Audit – Annual Report 2018/19 pdf icon PDF 159 KB

This report summarises the work undertaken by Internal Audit during 2018/19, 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:

Minutes:

Kevin Holland, Head of the South West London Fraud Partnership, and Andrew Hamilton, Audit Manager, SWLAP, presented the report.

 

Members requested further elaboration on the service specific audits, and in particular, those which received a Limited Assurance. The Vice Chair requested that recurring issues be highlighted for action and ultimately mitigated against or resolved due to concern over the pace of progress. The Vice Chair also requested that Members refer any concerns to the Chair and himself for update in future reports.

 

Consideration was also given by Members to school audits (and an issue of deficit budgets) as well as fraud sanctions. Members requested that data on fraud include ‘cases unfounded’ and the Audit Manager committee to look if this was possible within the case management software.

 

RESOLVED: that

  1. The Annual Report on Internal Audit 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 noted.

 

11.

Annual report of the Audit Committee 2018/19 pdf icon PDF 110 KB

This report presents a draft Annual Report of the Audit and Governance Committee for 2018/19 for consideration. The purpose of this Annual Report is to demonstrate to stakeholders the work undertaken by the Audit and Governance Committee over the previous 12 months in promoting good governance and fulfilling its terms of reference.

Additional documents:

Minutes:

The report was taken as read other than to note the title as Audit and Governance Committee.

 

RESOLVED: that

 

1.     The Annual Report was commented upon and content be finalised.

 

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

12.

Annual Review of Risk Management Strategy and review of Corporate Risk Register pdf icon PDF 131 KB

This report sets out the annual review of the Council’s risk management strategy and guidance. This report provides an overview of the current corporate risk register which has been updated for July 2019. 

Additional documents:

Minutes:

Jessica Crowe, Assistant Director - Customers, Commissioning and Governance, presented the report.

 

Members again made reference to the possibility of a no deal Brexit and the risks established by the Council to which officers provided further detail on the ‘Brexit working group’. Members requested that pertinent information on the specific risks be circulated among the committee and a briefing be provided by officers prior to the next meeting in October 2019, in early September. Reassurance was given that major suppliers and providers had been contacted with regard to their contingency plans.

 

Consideration was also given to the Council’s risk appetite as outlined in the report.

 

RESOLVED: that

 

  1. The updated Risk Management Strategy and Guidance (Appendix A) be agreed.

  2. The Council’s updated risk statement (Appendix B) and updated corporate risk register (Appendix C) were noted and commented upon.

 

13.

Treasury Management Annual Report pdf icon PDF 164 KB

The Local Government Act 2003 require the Council to produce an annual treasury management report reviewing treasury management activities and the actual Prudential and Treasury Indicators for 2018/19. 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).

 

The Council invested surplus funds when available and complied with the requirements of the Prudential Code. The Council has operated the agreed Treasury Management Strategy for 2018/19.

Additional documents:

Minutes:

Lyndsey Gamble, Head of Investment, Risk and Commercial Finance, presented the report.

 

RESOLVED: that

 

1.    The Treasury Management activity undertaken during 2018/19 be noted.

 

2.    The Council performed within the Prudential Indicator limits set for 2018/19 be noted.

3.    This report be approved as the Treasury Management Annual Report 2018/19 and recommended for adoption by Full Council.

 

14.

Work Programme pdf icon PDF 51 KB

Minutes:

The work programme was noted and the Strategic Director - Resources considered how requests made at committee could be included within the programme.