Agenda and minutes

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

Contact: Committee Services  01362 656870

Items
No. Item

1.

Minutes pdf icon PDF 80 KB

To confirm the minutes of the meetings held on:

Additional documents:

Minutes:

The minutes of the meetings held on 14 and 20 November 2008 were confirmed as correct records and signed by the Chairman.

 

2.

Apologies

To receive apologies for absence.

Minutes:

An apology for late arrival was received from Mr. R.G. Kybird.

 

3.

Non-members wishing to address the meeting

To note the names of any non-members wishing to address the meeting.

Minutes:

Lady Fisher, Executive Member for Governance, was in attendance.

 

4.

Computer Audit Needs Assessment (Agenda item 6) pdf icon PDF 76 KB

Report of the Head of Internal Audit on the Outcomes of the Computer Audit Needs Assessment work carried out in Quarter 2 and its subsequent impact on the Strategic and Annual Audit Plans.

Additional documents:

Minutes:

The Head of Internal Audit presented the report and explained the results of the Computer Audit Needs Assessment work carried out in August 2008 and its impact on the Strategic and Annual Audit Plans. 

 

The Committee was asked to note the findings of the Assessment and approve the amended Audit Plans.

 

Three computer audit reviews were identified as being necessary from the Needs Assessment work as follows:

 

  • Environmental Health Application – this review had been completed and was at draft report stage

  • Virus Protection / Spyware – the field work on this review had commenced

  • General IT Controls – this review was to commence in February 2009

 

Other on-going work to monitor progress on agreed actions arising from previous audits was also needed.

 

The report set out the number of audit days required to deliver the review projects and audit follow-up work for the year 2008-09 and it was noted that the previous figure of 52 days had reduced to 45 computer audit days.

 

A member asked if the revised Audit Plan programme for 2008-09 was now back on target, bearing in mind the slippage that had been reported at the last meeting.  The Head of Internal Audit confirmed that the revised timetable of work and progress made to date should enable the Audit Plan target to be met by the end of the year.

 

It was noticed that one item classified as very high risk, e.g. the Academy application was not to be audited until 2010-11, whereas the stated frequency for the review of very high risk items was two yearly.  The Head of Internal Audit was asked whether she was happy with this position and she agreed that the proposed scheduling of this particular audit did not match the frequency of review recommended.   The matter would therefore be revisited with the Deloitte and Touche auditors with a view to undertaking this piece of work earlier than 2010-11.  The Academy system had last been reviewed by the previous contractor in 2007-08, when the assurance level had been adequate with no high recommendations for action.

 

It was further confirmed that Internal Audit re-examined the Strategic Audit Plan each year, prior to extracting the Annual Audit Plan and to inform the process, an annual audit risk assessment was carried out.  Furthermore, it was explained that if audits performed during the current financial year had identified high level risks, these would be noted as part of the next annual audit needs assessment and revised risk ratings could be applied, resulting in a change of frequency for future reviews. 

 

Following discussions around the outcomes of audit review work, the Head of Internal Audit added that where fundamental weaknesses were found in systems of internal control, action on high priority recommendations must be taken within three months.

 

In answer to another question, it was clarified that the purpose of individual audits was primarily to give assurance that internal controls operating over systems were robust, rather than to identify savings relating to service delivery.  However,  ...  view the full minutes text for item 4.

5.

Capital Programme (Agenda Item 7) pdf icon PDF 12 KB

As requested at the meeting of the Committee on 20 November 2008 (Minute 53/08), to review the Capital Programme.

Minutes:

At the last meeting the Committee had asked to look in more detail at the capital programme and a member explained that the reason for this was not to challenge the content of the programme as such but rather to be assured of the appropriateness of the processes that underpinned the preparation of the programme when looking at economies and efficiencies etc.

 

The Head of Finance explained that there was a detailed process behind the development of the capital programme which included both member and officer involvement.  Projects included in the capital programme were subject to approval of detailed specifications and had to comply with the Council’s contract standing orders, so that any schemes would be subject to further reports before funds were released.

 

The Assistant Director added that there were opportunities to improve the way the capital programme was managed and under the Council’s Capital Strategy, the authority was required to set up a Capital Programme Working Group to make the process more visible and to provide evidence of achievement.

 

A Capital Programme Working Group had accordingly been established and the first meeting would be held this month, when officers would be reviewing the timelines for the start and finish of projects through the use of Project Initiation Documents (PID) to ensure continuous validity of schemes and for monitoring progress.

 

A strong concern was raised that there should be an equality of distribution of schemes across the district. This did not appear to be evident to members from the present programme.

 

The Executive Member explained that the capital programme was supported by the results of a lot of needs analyses.  A lot of funding for Thetford Growth Point projects would be met from other grants, such as LABGI and Healthy Town funding, which were not reflected in the capital programme.

 

It was also explained that there was an allocation of £1.7million match funding in the revenue budget which was a key measure used to support and fund schemes around the district.

 

A member raised the question of support needed for the refurbishment of the Memorial Hall in Dereham and it was explained that £30,000 had been granted towards the development of a scheme for the Hall.

 

It was also noted that the updated 2009-10 draft capital programme being presented to the Cabinet included delaying the proposed scheme of works at Barnham Broom by another year to enable the business case for the project to be further evaluated against present economic circumstances.  Members welcomed this information.

 

The position was noted.

 

6.

Draft Treasury Management Policy & Strategy 2009/10 (Agenda Item 8) pdf icon PDF 138 KB

Report of the Executive Member (Governance).

Additional documents:

Minutes:

The Head of Finance presented the report and welcomed the opportunity to have the Committee’s comments in the light of the present economic situation regarding investments as part of the consultation process, prior to consideration of the report by Cabinet on 24 February 2009 for recommendation to the Council.  There was scope to change some figures in the document and to recognise the potential extra risks in the current investment scenario.

 

The report explained that the financial uncertainty that occurred in the second half of 2008 had reinforced the need for authorities to ensure that they had adopted a security-biased approach to their investment strategies.  Such an approach was in line with the fundamentals of local authority investing – security first, liquidity second and yield (although important) third. 

 

In support of the Council’s security-biased approach, changes were proposed to the Council’s strategy relating to the way investments were dealt with and as a result of the current difficulties in the money markets, in particular, the Icelandic banking situation.

 

Firstly, it was proposed to amend the Strategy Statement, as advocated by the Council’s advisers (Butlers), to adopt the Lowest Common Denominator approach.  This would ensure that counterparties would have to be well rated by all three rating agencies (Fitch, Moody’s and S&P), rather than just by one or two.

 

Secondly, a more restrictive operational approach was being proposed until such time as the banking system returned to more ‘normal’ working.  Until further notice, all new investments would need to be authorised by the S151 Officer or Deputy Chief Executive.  In the short term while the markets were still unsettled, the Council would look to use higher rated institutions where necessary for new investments based on the advice of the Council’s advisers at the time of the investment.

 

On the first amendment, a member stated that the vast majority of institutions were not rated by all rating institutions.  Therefore, while recognising the concerns and the need for caution, he asked if the rating proposal would be a blanket requirement.

 

Regarding the second amendment, it was asked if ‘higher rated’ meant moving up, for example from an AA rating to a rating of AAA, and whether the Council’s Strategy reflected the fact that a lot of the Icelandic banks, though not down-graded, were put on ‘on watch’.

 

In response to the first question on the requirement for counterparties to be rated by all three rating agencies, the Head of Finance felt that two out of three might be satisfactory.  He also confirmed that ‘higher rated’ did mean requiring a higher credit rating as a more cautious approach.  These points could be clarified in the report.

 

A point was made by a member that the ratings in question in fact related to debt ratings only and that it was important to note that while a business could be a poor one, its debts could be classified ‘secure’.  There was a concern, therefore, that an investment could be entered into where the  ...  view the full minutes text for item 6.

7.

Appointment of Independent Persons (Agenda Item 9) pdf icon PDF 91 KB

Report of the Chief Accountant (previous minute 42/08 refers).

Minutes:

As requested at the last meeting, the Committee considered a report on options available for the appointment of independent persons.  The reason for considering this matter was to enable the consideration of the appointment of independent members, not only to address recent difficulties in ensuring a quorum for meetings but also to give the Council an external view.

 

It was noted that the constitution and terms of reference of the Committee provided for the inclusion of up to two independent members of the committee and the attendance allowances for such members had also been agreed.

 

As well as the initial idea to co-opt independent experts, other options considered included:

 

  • Extending the membership to allow additional Members of the Council to join the Committee
  • Include an Executive Member on the Committee
  • Allow substitutes
  • Consider the attendance records of the current membership
  • Consider alternative times and dates for meetings

 

It was felt the recent change of the usual day of meetings to Friday had addressed the issue of ensuring a quorum.

 

The Committee concluded that there would be an advantage in extending the membership as follows:

 

  • One new member drawn from the Council’s membership
  • One independent person (non-voting)
  • Two substitute members drawn from the Council’s membership

 

It was felt this would ensure continuity of membership, provide for member development by enabling other members of the Council to gain expertise and enable the Council to benefit from an external view.

 

RECOMMEND TO THE COUNCIL that the constitution of the Audit Committee is increased by one to six members, plus the addition of two substitute members, and nominations to the additional places be sought accordingly.

 

RESOLVED that

 

(1)                     an independent person be co-opted onto the Committee as a non-voting member and the necessary arrangements for this be put in hand; and

(2)                     the necessary person specification for the post be drawn up and agreed in consultation with the Chairman.

 

8.

International Financial Reporting Standards (Agenda Item 10) pdf icon PDF 79 KB

To receive a presentation from the Chief Accountant.

Minutes:

The Head of Finance gave a detailed presentation to the Committee on the subject of International Financial Reporting Standards.

 

A copy of the presentation slides is appended to these minutes for members’ information.

 

RESOLVED that a standing item to provide for regular updates on the matter is included on future agenda.

 

9.

Risk Management (Agenda Item 11)

To receive a demonstration of the risk register on the Council’s performance/risk management system.

Minutes:

The Governance and Performance Accountant gave a demonstration of the risk register on the Council’s performance/risk management system, to show how the risk register operated on the management system, how risks were recorded onto the system and how members could access the system.  The demonstration also showed how risks and their mitigation plans were reviewed and monitored.

 

The Governance and Performance Accountant answered a number of questions on the operation of the process. 

 

In answer to other questions, it was noted that the question of Partnerships risk was being addressed and there would be an audit report to the Committee in due course.  It was confirmed that Partnerships risk would be reflected in the next quarter performance reports.  It was also confirmed that the ARP Joint Committee had agreed for risk management reports to be made to every meeting in future.

 

The question of construction project risk management was presently being discussed with legal and asset management officers.

 

Member Training on LSP risk management was being organised in conjunction with Norfolk County Council.  Suggested dates for the training session were noted and members were asked to confirm their availability to the Governance and Performance Accountant.

 

10.

Next Meeting (Agenda Item 12)

To note the arrangements for the next meeting to be held on Friday, 13 March 2009 at 10.00 a.m. in the Anglia Room, Conference Suite, Elizabeth House, Dereham.

Minutes:

The arrangements for the next meeting on 13 March 2009 were noted.