Agenda and minutes

Venue: Norfolk Room, Conference Suite, Elizabeth House, Dereham

Contact: Committee Services  01362 656870

No. Item


Minutes (Agenda item 1) pdf icon PDF 102 KB

To confirm the minutes of the meeting held on 23 November 2012.


The Minutes of the meeting held on 23 November 2012 were confirmed as a correct record and signed by the Chairman subject to the following typographical error being amended at Minute No. 66/12 to read: “adopted” and not “a doped”.



Apologies (Agenda item 2)

To receive apologies for absence.


Apologies for absence were received from R Kybird, R Childerhouse and T Jermy.



Standards Arrangements under the Localism Act (Agenda item 6) pdf icon PDF 57 KB

Report of the Assistant Director of Democratic Services.


The Standards Officer presented the report which sought approval for relevant changes to be made to the Standards Arrangements and to extend the appointment of the current Independent Person.


The Standards Arrangements had previously been approved by Full Council on 5 July 2012, however, since implementation, lessons had been learnt and potential refinements had been identified.


Members were being asked to endorse and recommend these changes to the next Full Council meeting on 28 February 2013.  The recommendation also requested that the appointment of the current Independent Person be extended until the Annual Council meeting in May 2015.


In response to a question about the volume of complaints, Members were informed that thirteen had been received thus far under the new regime since July 2012; three of these had been withdrawn and no further action was being taken on the remainder.  A report would be brought to the Audit Committee in June and annually thereafter to highlight the variety of complaints received.


Mr Ludlow asked if the Independent Person had involvement in every complaint.  The Standards Officer explained the complaints procedure to Members.


Mr Stevens asked if there was a right of appeal process.  Members were informed that there was no such appeal process in place under the new regime but there was nothing to stop the person putting in a further complaint.


RECOMMEND to Council that the following alterations be made to the Standards Arrangements as previously approved by Council on 5th July, 2012:


(1)         the Monitoring Officer be granted the authority to seek further resolution or other action where appropriate to resolve the complaint without a hearing, when an investigation has been conducted and a breach had been found;


(2)         the Monitoring Officer be granted the authority not to pursue a complaint at any stage if it was deemed to no longer merit consideration under the arrangements;


(3)         on receipt of a complaint against all or the majority of a town or parish council members, the Monitoring Officer be granted authority to notify the members named within the complaint and seek their comments as per current arrangements, but be authorised to refer the complaint back to the town / parish council to be dealt with under its own complaints procedure; and


(4)         that the appointment of the current Independent Person, Mrs Fiona Anthony, be extended until the Annual Meeting of Council in May 2015.



Audit Protocol (Agenda item 7)

Verbal update.


The Internal Audit Consortium Manager and the External Audit Manager from Ernst & Young had been pursuing the development of a new Audit Joint Working Protocol in recent weeks, and to date, a briefing paper on placing reliance on the work of Internal Audit had been formulated.  This document highlighted the new External Auditors’ sampling requirements, which the Internal Audit Consortium Manager confirmed had immediately been adopted in relation to 2012/13 audits performed by Internal Audit.


Once External Audit had completed their initial financial testing work in March 2013, it was then envisaged that key controls would be formally indentified and incorporated into a Working Protocol which would be adopted by both sets of auditors.  This Protocol would be presented for Member endorsement at the Audit Committee meeting in June 2013.


The External Auditor further advised that Ernst & Young would be introducing new working practices in due course, different to those used by the Audit Commission previously.



Annual Audit Fee Letter (Agenda item 8) pdf icon PDF 80 KB

Report by the External Auditors.


Emma Patchett, the Audit Manager presented the Audit Commission’s Annual Audit Fee Letter to Breckland Council for 2012/13. 


The fee reflected the risk-based approach to audit planning as set out in the Code of Audit Practice and the work mandated by the Commission for 2012/13.  The Audit fee covered:


  • Audit of the financial statements;
  • Value for money conclusion; and
  • Whole of Government accounts.


When asked about the value of the new auditing arrangements the Assistant Director of Finance pointed out that the charges had decreased considerably compared to the previous year but he would reserve judgement until the final bill had been received.


Mr Ludlow questioned the planned fee for 2011/12.  Members were informed that the figure for 2011/12 had not been finalised as yet as the certifications of grant claims had just been completed.


The Annual Audit Fee Letter was noted.



2012/13 Audit Plan (Agenda item 9) pdf icon PDF 260 KB

For information.


NB. This paper has been marked to follow and will be emailed to Members as a separate document to the agenda.


The External Audit Manager presented the Audit Plan for 2012/13.


The plan outlined two key strategic risks one of which would probably be seen in the vast majority of Audit authorities – pressures from the economic downturn.


The detail of how these risks would be approached was highlighted.


One element of the audit process that was different for this year was the use of analytics.  This new methodology should highlight any anomalies that would not have previously been found.


Page 8 of the Audit Plan listed the deliverables that External Audit had agreed to provide the Audit Committee throughout the year in 2013.


Mr Ludlow asked for the meaning of MTFS quoted under significant risks on page 4 of the Plan.  Members were informed that MTFS stood for Medium Term Financial Strategy.


The 2012/13 Audit Plan was otherwise noted.



Quarter 3 Governance Report Risks (Agenda item 10) pdf icon PDF 247 KB

Report by the Governance & Performance Accountant.


The Governance & Performance Accountant presented the quarterly Risk Report for Quarter 3 2012/13.  The report listed the number of risks that had decreased, new risks and closed risks.


A replacement page for page 27 of the report was circulated and the following points raised by Mr Ludlow were highlighted:


  • Page 21 – under BC-F-OR 14 – the score for this risk description should be 3 not 2.  A report on the technical changes to increase the tax base and council tax income had been approved at Full Council in January 2013.


  • Page 24 – under BC-SR 11 – this risk had not been closed only an element of it had.


  • Page 31 – BC/SH-EH-O7 04 should read: BC/SH-EH-OR 04


Mrs Jolly asked how the new risks identified were tracked.  She also asked how all the risks featured made their way from this paperwork to senior managers.  The Governance & Performance Accountant explained that he met with Managers on a regular basis to identify risks and discuss mitigation plans.  Dependent on the nature of the risk, risks were also reported on the new Performance system and were monitored through these Audit Committee meetings. 


Mr Nairn asked how a new risk was identified.  Members were informed that these would be flagged up by Managers as it was a subjective system.  The Assistant Director of Finance explained that there was a quarterly process to review risks and identify new ones. Managers would be mindful of any new risks in their areas, for example, through legislation changes, and would accordingly report to Chris Brooks, the Governance & Performance Accountant.


The Quarterly Risk Report for Quarter 3 was otherwise noted.



Treasury Management Policy and Strategy 2013-14 (Agenda item 11) pdf icon PDF 150 KB

Report of the Assistant Director of Finance.


Mr Ludlow had tendered questions and observations on various matters in relation to this report and these had been taken into account.  Mr Ludlow was thanked for highlighting the amendments/changes; however, such changes would be subject to the Audit Committee’s agreement.


Copies of the amendments were circulated.


The Assistant Director of Finance presented the Treasury Management Policy and Strategy 2013-14 and he highlighted the following main changes and key issues:


a)           CIPFA had issued an amendment to the Prudential Code 2011 to replace the net debt indicator with a gross debt indicator.  However, this did not affect the Council as it currently had no debt.


b)           The Budget report to Cabinet 12th February sets out the key challenges surrounding availability of capital and revenue over the forthcoming budget period.  Key challenges for Treasury activities surround the monitoring of Performance Indicators, particularly the availability of capital and monitoring the need to borrow and ensuring that cash was available when needed whilst maximising returns.  Audit Committee on 23rd November 2012 approved a wider lending list which was not based purely on credit ratings.  This change had been reflected in the 13/14 Strategy and Policy attached to this report.


c)            During 2012/13, the advice was not to place money for more than 3 months (other than with the two part nationalised banks on our lending list).  On the 11th January 2013, Sector advised that it was no longer necessary to place such stringent limits on duration; however, the Council’s time limits were still guided by their colour coding methodology.  Their newsflash also stated that between September 2012 and January 2013, around 40% of counterparties monitored by Sector had their credit ratings reduced to the extent that it would have lowered their standard Sector suggested duration, in other words, the outlook remains mixed.


d)           The 13/14 Strategy and Policy still required counterparties to have an AAA rating by Fitch.  Sector advised that there was a distinct possibility that the UK may lose this rating.  Sovereign issues would therefore be kept under review and should this occur, advice from Sector would be sought and Audit Committee would be kept updated.  In addition, whilst the Treasury Strategy and Policy allowed for investing in non UK banks, at this time no non UK investments were being made.


e)           MRP policy had not changed


f)              The Council’s Treasury advisory contract with Sector was renewed in 2012/13 for one year and expired at the end of November 2013.  A new contract for advisory services would be tendered for.


g)           Due to the timing of writing this report, all information on the capital programme had been based on the budget being presented to Council on 28th February 2013 which could be subject to change.


Referring to the first point (section (a) above) Members were informed that the budget report would be subject to approval by Full Council on 28 February 2013.


In relation to (d) above, the Assistant Director of Finance stated that Breckland Council needed to  ...  view the full minutes text for item 8.


Internal Audit Terms of Reference, Code of Ethics, Audit Strategy, Strategic and Annual Audit Plans and Summary of Internal Audit Coverage for 2013/14 (Agenda item 12) pdf icon PDF 87 KB

Report by the Head of Internal Audit.

Additional documents:


The Internal Audit Consortium Manager stated that the report served to demonstrate the links between key audit documentation detailing the way in which the service would operate in the new year, through to the population of Strategic and Annual Audit Plans for 2013/14 onwards.  However, Members were asked to note that from 1 April 2013, new Public Sector Internal Audit Standards would be coming into force that would supersede CIPFA’s Code of Practice and call for some revisions to the terms of reference and other papers currently being presented.  As soon as detailed guidance was published by CIPFA in April 2013, the Internal Audit Consortium Manager would review and realign working practices so that they fully comply with the new requirements specified in these standards.  It was already appreciated that an Audit Charter would need to be complied in the new financial year.


Members’ attention was drawn to section 3.2 of the report (on page 75) that commented on the level of consultation that had been undertaken by Internal Audit with External Audit colleagues and other Internal Audit Service providers.  Internal Audit had been mindful of the financial pressures facing the authority both currently and in future years and had therefore been liaising with its counterparts at St Edmundsbury Borough Council and South Holland Council as well as the External Auditors, Ernst & Young to ensure that there was no duplication of work and wherever possible, reliance could be placed on each other’s work.  Internal Audit would continue to maintain a dialogue with these bodies with a view to minimising auditing costs to the authority wherever possible.


Referring to section 3.3 of the report, Members were reminded that an Audit Joint Working Protocol would be extracted in due course, and brought to the Audit Committee meeting in June 2013.


Focus was next given to Internal Audit’s Code of Ethics for 2013/14, mentioned in Section 3.4 of the report with full details attached at Appendix 2 (pages 90 – 93).  The Code of Ethics sets out the minimum standards for the performance and conduct of Breckland Council’s Internal Auditors and had been completely rewritten to satisfy the new Public Sector Internal Audit Standards.


The Internal Audit Consortium Manager also comments on the Internal Audit Strategy at Section 3.5 and Appendix 3 to the report, emphasising that the new Strategic and Annual Audit Plans had been formulated using the outcomes of a recently completed audit needs assessment exercise.  Such Plans were very much living documents that could be amended to respond to changing corporate priorities and new legalisation as well as new initiatives being adopted by the Council; hence, resources could be re-directed where needed most throughout the year.  The Internal Audit Strategy sets out how Internal Audit was now adopting a more standardised approach to the number of planned days required to undertake specific audits at Consortium sites.  Further to this, a number of audits had been repackaged to create greater uniformity of coverage and help promote increased sharing of best practice  ...  view the full minutes text for item 9.


Training (Standing item) (Agenda item 13)

To note if there are any training issues/ requests.


The Internal Audit Consortium Manager was thanked for delivering an informative training session held recently for new Members.


The Chairman said that training would remain on the agenda as a standing item so that any Member could raise any training issues he or she might have on an as and when basis.


The Chairman asked if the Assistant Director of Finance could offer further guidance to Members after the meeting in relation to the questions asked earlier by Mrs Jolly in relation to the Treasury Management Policy & Strategy.



Work Programme (Agenda item 14) pdf icon PDF 55 KB

A copy of the Committee’s work programme is attached.  The Committee is asked to consider whether any additions, deletions or amendments to the programme are required.


RESOLVED that the following item be added to the Work Programme:


  • Annual report on complaints under the Localism Act 2011
  • Audit Joint Working Protocol – Internal Audit


Mr Ludlow asked about the review of external contracts that he thought should have been added to the Work Programme.  He also asked why the Self Assessment Exercise and Action Plan was on the Work Programme twice. In response to the first question, the Committee was informed that such a review was a function covered by the Overview and Scrutiny Commission.  In response to the latter, the Head of Internal Audit explained that it would be removed from the 13 December meeting if Members were content with the document in September.



Next Meeting (Agenda item 15)

To note the arrangements for the next meeting on 7 June 2013 at 10.00am in the Norfolk Room.


The arrangements for the next meeting on 7 June 2013 at 10.00am in the Norfolk Room were noted.



Counter Fraud, Corruption and Bribery Policy and Whistle Blowing Policy (Agenda item 16) pdf icon PDF 62 KB

Report of the Assistant Director of Finance.

Additional documents:


The Assistant Director of Finance presented the report which asked Members to review and approve the updated Counter Fraud, Corruption and Bribery Policy and the Whistle Blowing Policy.


The reasons for the recommendation were to reflect changes in legislation and changes in working practices with the shared management. The authorities were attempting to align policies where possible and the same Policies had already been approved by South Holland District Council. 


The Whistle Blowing Policy offered a contact list that could be updated separately to the main Policy by the Monitoring Officer and the S151 Officer, rather than waiting for the main Policy to be reviewed.  The Audit Commission also remained on the contact list as it had a dedicated Whistle Blowing hotline.


In essence the Policies had not changed except for the Fraud Policy that had been updated to be consistent with the approach outlined in the national Fighting Fraud Locally: the Local Government Fraud Strategy.


In response to a question, Members were informed that the Policy was a public document and would be advertised as such and available to all stakeholders.  Any investigations uncovering criminal actions taken would be reported to the Police and may end up in the local press.


In response to a further question in relation to how these Policies could be enforced with the Council’s contractors, the Assistant Director of Finance explained that all contractors were obligated to sign up to the Policies as part of their contractual arrangements.


The Chairman did not anticipate any problems with the Policies.


Subject to an amendment on page 12 of 19 under the heading Responsibility for the Whistle Blowing Policy, to read: “Prior to any approval….” instead of “Subsequent to any approval….” it was


RECOMMENDED to Council that:


(1)         the Counter Fraud, Corruption & Bribery Policy be approved; and


(2)         the Whistle Blowing Policy be approved.