Quarter 3 Governance Report Risks (Agenda item 8)
- Meeting of Treasury Management Policy (Annual Report) & Internal Audit Plan (Annual Report), Governance and Audit Committee, Friday, 3rd February, 2012 10.00 am (Item 6.)
Report of the Assistant Director of Democratic Services.
The Governance & Performance Accountant presented the quarterly Risk report for Quarter 3 2011/12.
There had been a number of new risks identified during the quarter which could be seen from pages 49 to 53.
Members’ attention was drawn to Risk R-H 007 in relation to Housing which had increased from 4 to 6 as a result of major restructure changes within key partners. This had had a detrimental effect on the supply of affordable housing, reducing the ability of the authority to meet housing need.
The Asset Management risk score on page 55 of the agenda had decreased from a 6 to a 4 due to maintenance plans being agreed with Norfolk County Council over a five year period at the dual use leisure facilities.
Pages 57 to 62 of the agenda covered the risks that were rated as “outside the Council’s agreed tolerance level” for risk. These risks would be reviewed regularly via the performance management framework to ensure that they were managed effectively.
Mr Ludlow asked if risks for the Council’s own suppliers were measured. He had concerns about the number of businesses that were failing in the light of the current economic climate and asked if there were any assurances in place from these key suppliers.
The Governance & Performance Accountant advised that these businesses were monitored on a quarterly basis. The Assistant Director of Finance pointed out that all the Council’s suppliers had to go through a financial health check and contracts were periodically reviewed.
Lady Kay Fisher asked if the Council’s commercial property investments were holding fairly constant. There was some discussion about the difference in percentages terms in relation to square footage and income received. Mr Jermy thought it would be useful to find out the reduction in income with regard to any vacant properties.
Mr Kiddle-Morris explained that, overall, the income generated from commercial properties had decreased over the last six months although there were many still being leased. The Chairman felt that there should be a report on income as well; the Committee would then have a complete picture. Members were informed that there was not a target on values only on lets. The Assistant Director of Finance assured the Committee that there was a budget that was monitored for rental income which was seen as a pressure and was reported as one of the variances in the budget. In response to a further question, it was explained that Breckland Council had a mix of tenants from various business sectors and all had been credit checked. Mr Kiddle-Morris pointed out that Asset Management was mitigating the risk of properties becoming vacant by working proactively with property agents and focusing its resources accordingly.
Referring to page 59 of the agenda, Mr Stevens asked what the financial impact would be on the General Reserve Fund from the Breckland Leisure Centre. The Governance & Performance Accountant was unsure of the figure but assured Members that he would investigate and report back at the next meeting.
Mr Jermy mentioned the low contingency with regard to the Riverside project. Members were informed that contingencies were not monitored but cost pressures were. Mr Kybird pointed out that construction costs would be included as a contingency. It was noted that there was a very detailed risk register for this project being monitored by the Project Team.
Referring to the Medium Term Financial Strategy (MTF) on page 57 of the agenda, and bearing in mind the Minutes relating to revenue budget and efficiency requirements at Minute No. 66/10, Lady Kay Fisher believed that the pensions should be added to the MTF as a risk going forward. The Assistant Director of Finance stated that pensions had been recognised as a risk but was prone to fluctuation and therefore was difficult to manage. Further discussion was had on this matter and it was agreed that pensions should be added to the risk description under the Medium Term Financial Strategy.
The Chairman felt that Norfolk overall had not, as yet, felt the cold recession but it had slowed down. Suppliers and those that were contracted to the Council were all at risk and therefore some form of monitoring needed to be put in place.
RESOLVED that the Quarter 3 Governance Risk report be noted, subject to:
1) the financial impact on the General Reserve Fund from the Leisure Centres be reported back to the next meeting;
2) pensions be recognised as a risk under the Medium Term Financial Strategy;
3) additional detail be included on square footage and income received relating to commercial properties; and
4) a form of monitoring be put in place for those companies contracted to the Council.