Agenda and minutes

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

Contact: Committee Services  01362 656870

No. Item


Minutes pdf icon PDF 116 KB

To confirm the minutes of the meeting held on 13 November 2009.


The minutes of the meeting held on 13 November 2009 were confirmed as a correct record and signed by the Chairman.




To receive apologies for absence.


None received.



Urgent Business

To note whether the Chairman proposes to accept any item as urgent business, pursuant to Section 100(B)(4)(b) of the Local Government Act 1972.





Declaration of Interest

Members are asked at this stage to declare any interests that they may have in any of the following items on the agenda.  The Members’ Code of Conduct requires that declarations include the nature of the interest and whether it is a personal or prejudicial interest.


No declarations were made.



Non-members wishing to address the meeting

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


None present.



Annual Audit Letter 2008-09 (Agenda Item 6) pdf icon PDF 276 KB

Report of the Senior Audit Manager, Audit Commission.


Mr. Rob Murray presented the Audit Commission’s Annual Audit Letter to Breckland Council for the year 2008-09.  His associates, Mr. Robert Davies and Mrs. Gill Bannister were also in attendance for this item.


The two primary findings from the 2008-09 audit work related to Financial Statements and Use of Resources and unqualified opinions had been issued in both cases, meaning that the Auditor agreed that (following some necessary adjustments) the financial statements presented fairly the financial position of the Council and that the Council had proper arrangements for securing value for money from its resources.


A major project for the Council over the coming year would be the preparations for implementation of new accounting procedures from 2010-11 under the new International Financial Reporting Standards regulations.  Mr. Murray stated he was comfortable with the arrangements being made for this by the Council but the position would be monitored.


Other assessment work carried out, although not in the scope of the Annual Letter, related to the new Comprehensive Area Assessment performance framework.


On the first assessment on managing and improving services contributing to wider community outcomes, performance was judged as adequate from a score of 2 out of 4. 


The second assessment combined the Use of Resources and Managing Performance assessments to give an overall Organisational Assessment.  This overall performance was judged as adequate from a score of 2 out of 4.


The outcomes of both these other assessments were published on the Audit Commission’s “Oneplace” website.


The Letter also explained that additional fees of £5,500 had been charged to cover additional audit work required to be carried out on the Council’s financial statements.


A member queried the overall performance assessment score, bearing in mind that the differences between scores 2 and 3 on various items were very marginal.


Mr. Murray explained that details were given in Appendix 1 to the Letter, where arrangements were described as good in a number of areas.  Overall assessment was a rounded score, based on the mix of ‘good’ and ‘in development’ findings.   Some scores had been moved from 2 to 3 following appeal by the Council, which reflected the marginality of some of the original scores.


Indications were that more Councils were achieving assessment ratings of 2 this year, reflecting the increased performance requirements for Use of Resources.


Level 4 achievements were rare and required exceptional performance across the range of KLOE (Key Lines of Enquiry), with excellent performance being recognised by peer Councils.


The raising of the performance bar was a mechanism to help Councils improve and was not intended to be a checklist exercise.  There would in general be a number of areas across the range of KLOE where demonstration of particular improvements could result in a Council’s overall score being raised to 3 (for example, in the area of risk management).


In response to a question on whether the position relating to the investments in Icelandic Banks and Barnham Broom had impacted on the results of the assessment, Mr. Murray  ...  view the full minutes text for item 6.


Internal Audit Terms of Refeence, Code of Ethics, Strategic and Annual Audit Plans and Summary of Internal Audit Coverage for 2010-11 (Agenda Item 7) pdf icon PDF 95 KB

Report of the Head of Internal Audit.

Additional documents:


The Head of Internal Audit presented the report and explained the statutory requirements and standards under which the audit service operated and set out the proposed Terms of Reference and strategic and annual audit plans for the service for 2010-11.


The report confirmed that the Council has taken appropriate steps to achieve full compliance with the regulatory requirements by ensuring that the requisite documentation and processes have been put in place when delivering the internal audit service within the organisation.


One amendment was noted to the Annual Audit Plan (page 65 of the agenda) whereby the audit of ARP Housing Benefits would be carried out in January 2011 (Quarter 4) rather than in the previous quarter.


The Head of Internal Audit highlighted three main revisions to the Terms of Reference:


  • Modifications to take account of changes to titles of posts following the Council’s recent management restructure
  • Revised and improved processes for the follow-up of audit recommendations
  • A new Section 10 to provide greater clarity around performance monitoring arrangements for the internal audit function


The current internal audit strategy had been prepared taking into account a number of changes and ongoing development work by the Council in relation to new payroll system, externalisation of the planning and development control service, revised treasury management arrangements, delivery of audits linked to the Anglia Revenues and Benefits Partnership (ARP), and the roll out of the new management structure.


The Strategy also examined the potential role of internal audit in relation to the shared services proposals with South Norfolk District Council, for which it might be possible to use some of the RIEP funding to support such input.  However, when formulating the new Strategic Audit Plan, a ‘business as usual’ approach had been adopted.


Following completion of the annual audit needs assessment, the updating of the Strategic Audit Plan and extraction of the new Annual Audit Plan, a total of 256 days were identified for 2010-11 to undertake 18 audit assignments and follow-up work.  It was noted that a saving of four days on original proposals for 2010-11, recorded in the previous Strategic Plan, had been achieved, primarily due to management’s increased involvement in the monitoring/delivery of agreed audit recommendations arising from previous review work.


The report also referred to a summary of internal audit coverage for 2010-11, which it was hoped would be a useful tool for officers, members, the Internal Audit Services contractor and External Audit.


A member suggested that the audit coverage for Development Control in 2010-11 could usefully include some focus on negotiations for affordable housing under Section 106 agreements.


The Committee thanked Mrs. King for her report and work on taking forward the Audit Plan and it was


RESOLVED that the following Internal Audit documents be approved:


(1)         Terms of Reference 2010-11

(2)         Code of Ethics 2010-11

(3)         Audit Strategy 2010-11

(4)         Strategic Audit Plan 2010-11 to 2014-15

(5)         Annual Audit Plan 2010-11

(6)         Summary of Internal Audit Coverage 2010-11



Treasury Management Policy and Strategy (Agenda Item 8) pdf icon PDF 93 KB

Report of the Director (Governance & Corporate Development).

Additional documents:


The Head of Finance presented the report, which outlined the Council’s prudential indicators for the period 2010-11 to 2012-13 and set out the expected treasury operations for the period.


The following key points were highlighted:


  • There were no changes in lending criteria and therefore the current counterparty and lending limits remained the same.

  • An amended Minimum Revenue Provision (MRP) was included in order to take account of revised accounting treatments arising from the new International Financial Reporting Standards (IFRS) regime.

  • Revised guidance from the CIPFA Prudential Code and CIPFA Treasury Management Code of Practice was incorporated.

  • CLG is also consulting on changes to investment guidance.  This will be brought Committee at an appropriate time.


The Head of Finance answered some questions of detail, from which the following points were noted:


-        Although the Council is currently debt free, there was no reason why the Council could not spend from its reserves and borrow on the markets to fund capital projects, provided they were aligned to the Council’s policies and have a business case to support a borrowing requirement. 

-        The MRP policy adopted an asset life model.

-        Underlying assumptions on inflation were consistent with the Council’s latest budget and interest rates were similarly in line with the budget.

-        Following the Committee’s discussions on the matter last September, new benchmarks have been introduced that focus on security, liquidity and yield.

-        Investments were made based on credit ratings and advice from the Council’s advisers, backed up by other market information.  Any changes were reported to the Committee.

-        A potential risk that the UK Government’s sovereign rating position could be downgraded was something that had been known about for some time.  In the event of any change in the sovereign position, the eligible investments counterparties list would be reviewed.  At the present time, however, no change was anticipated.

Member training on treasury management had been arranged for 26 March 2010, to be provided by Butlers.  An outline programme for the day was circulated and members were invited to let the Head of Finance know if they wished for any other particular areas to be included, as the programme was designed to fit around the needs of members.


Subject to the main changes explained above, the policies remained as previously agreed by the Committee, other than to incorporate updated job titles where appropriate.


The position as to the Icelandic Banks investments was as given in Appendix C to the report.


RECOMMEND TO COUNCIL that approval is given to:


(1)         the Prudential Indicators and Limits for 2010-11 to 2012-13 contained within Appendix A to the report;

(2)         the statement setting out the Council’s policy on the Minimum Revenue Provision (MRP) contained within Appendix A to the report;

(3)         the Treasury Management Strategy 2010-11 to 2012-13 and the Prudential Indicators contained within Appendix B to the report;

(4)         the Authorised Limit Prudential Indicator;

(5)         the Investment Strategy for 2010-11 contained in the Treasury Management Strategy (Appendix B) and the policy (annex  ...  view the full minutes text for item 8.


Outstanding Computer Audit Recommendations - Progress Update (Agenda Item 9) pdf icon PDF 72 KB

Report of the Director (Governance & Corporate Development).


The Head of ICT reported on progress of outstanding computer audit recommendations.


It was explained that delays in completing the work on recommendations were due to a number of factors, including:


-        Change of action owner (changes in personnel not then reflected within revised audit reports)

-        Misallocation of ownership of action (assumptions made at the time about the responsible service area)

-        Recent changes in circumstances changing the scope of original recommendations which has removed or required further changes to existing proposals (such as recent central Government security requirements that Breckland has been obliged to follow)


The Head of ICT also explained that while these delays were by and large unavoidable, it was recognised that actions needed to be clarified (and closed where possible) to reassure the Committee that necessary action to minimise any risk was being taken.


The current position on the outstanding items was then given as follows:


Actions completed and verified – 11

Actions on target – 9

Actions completed & awaiting audit verification 0 5

Dates revised & awaiting audit verification – 6


In answer to questions, the Committee was advised that monitoring of audit recommendations was now processed through the corporate performance management system (TEN), with quarterly reports made to the Performance Clinic.  In this way, senior management were able to ensure all recommendations were followed up and action taken as necessary.


The Head of Internal Audit added that this was backed up through the six-monthly internal audit reporting processes to Committee.


The Committee was pleased to note the positive progress now being achieved in respect of the outstanding items and also noted the improved monitoring procedures through the corporate performance management system.


RESOLVED that the report be noted.



International Financial Reporting Standards (Agenda Item 10)

Presentation by the Director (Governance & Corporate Development).


The Head of Finance gave a presentation to update members on progress to date on implementation of the new IFRS-based Code of Practice on Local Authority Accounting.


Two key issues for the Council were the changes to the accounting treatments for assets and the PFI contract.


Component accounting was due to be introduced from April 2010. Although there is the potential to have to report on up to 26 categories for some assets, it is anticipated that officers will be able to agree a pragmatic approach with the auditors.


There are two types of lease affecting assets – finance and operating.  Currently the Council determines that they are all operating leases; therefore, income streams are all revenue.  Under IFRS, it is likely that some will become finance leases, with income becoming a capital receipt.


The District Valuer was presently carrying out a review of leases and valuations, which would assist in determining the accounting treatment to be applied, i.e. identifying them as finance or operating leases.  This is in preparation for reporting in 2010-11, which will also require comparative figures for the previous year.


A member was concerned at the impact revaluations of leases would have on the Council’s budget and asked whether there was a transitional period.


The Head of Finance advised that information to date indicated that most leases were of the operational type and would not change.  However, there was scope to look at setting de minimis levels when setting accounting policies.  The Government has recognised this was a major issue for local authorities and is currently consulting on the principle that all leases determined as operating leases on 14 November 2009 could continue on that basis.


Mr. Murray advised that low values would not impact on financial assessments but could result in impairments in the value of assets.


With regard to the PFI accounting treatment, there was a strong possibility that the PFI account would come back onto the balance sheet, which would have a significant impact.  Specialist Consultants, Ernst & Young, had been appointed to advise the Council on this issue.


Work ongoing in preparation for the IFRS changes included:


-        Project plan based on CIPFA/SORP guidance

-        Discussion with audit to agree changes to accounting treatment

-        New PFI accounting treatment being included in the accounts for 2009-10

-        Restatement of the balance sheet in preparation for 2010-11

-        Training


In reply to a question on resources, the Head of Finance said that, with the assistance being provided by Ernst & Young and the District Valuer, existing staff resources should be sufficient to cope with the additional work involved in the changeover to IFRS.  However, if circumstances changed, additional resource would be sought if necessary.


The position was noted.



Risk Management Strategy and Methodology (Agenda Item 11) pdf icon PDF 203 KB

A copy of the revised Risk Management Strategy and Methodology is attached for the Committee’s consideration.

Additional documents:


Due to time constraints, this item was deferred to the next meeting.



Work Programme pdf icon PDF 9 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.


The item was noted.



Next Meeting

To note the arrangements for the next meeting to be held on Friday, 12 March 2010 at 10.00 a.m. in the Norfolk Room, Conference Suite, Elizabeth House, Dereham.


The arrangements for the next meeting on 12 March 2010 were noted.