Agenda and minutes

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

Contact: Committee Services  01362 656870

No. Item


Minutes (Agenda item 1)

To confirm the minutes of the following meetings:


13 December 2013 pdf icon PDF 265 KB

To confirm the Minutes of the meeting held on 13 December 2013.


The Minutes of the meeting held on 13 December 2013 were confirmed as a correct record and signed by the Chairman; subject to it being noted that the costs under Minute No. 62/13 had not been recovered in year one.


20 December 2013 pdf icon PDF 120 KB

To confirm the Minutes of the additional meeting held on 20 December 2013.


The Minutes of the additional meeting held on 20 December 2013 were confirmed as a correct record and signed by the Chairman.


Apologies (Agenda item 2)

To receive apologies for absence.


An apology for absence was received from William Nunn.



Urgent Business (Agenda item 3)

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.


Please see agenda item 11(a) – Minute No.12/14 below.


Declaration of Interests (Agenda item 4)

Members are reminded that under the Code of Conduct they are not to participate and must leave the room, for the whole of an agenda item to which they have a Disclosable Pecuniary Interest. 


In the interests of transparency, Members may also wish to declare any other interests they have in relation to an agenda item, that support the Nolan principles detailed within the Code of Conduct.





Non-members wishing to address the meeting (Agenda item 5)

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


Ellen Jolly and Mark Kiddle-Morris.



Quarterly Update - Governance Report and Strategic Risk Register (Agenda item 6) pdf icon PDF 30 KB

Report of the Governance and Performance Accountant.

Additional documents:


Chris Brooks, the Governance & Performance Accountant introduced James Edwards, the Performance Risk Officer who would be able to assist with any questions that Members might have following Chris’s departure from Breckland Council.  Members were informed that Chris would be leaving at the end of February.


The Governance & Performance Accountant apologised for not reporting the Strategic Risk Register sooner.  Members’ attention was drawn to the first 5 risks that had been included on the previous register.  Mr Ludlow thought that there seemed to be a lack of mitigating actions particularly in relation to 3 risks that related to the previous year.  He also noticed that a number of the risks had not made it onto this year’s register.  The Governance & performance Accountant stated that the relevant risks had been deemed to be operational risks and were managed by the appropriate department.


The Assistant Director of Finance explained that the Business Rates and Benefits schemes had been in operation since the beginning of the year and both were now being complied with.   Mr Ludlow felt that there were still potential changes to come in relation to personal benefits.  The Assistant Director of Finance agreed there would be more changes to come.


A revised Quarterly Risk Report for Quarters 2 & 3 had been tabled at the meeting and it was agreed that as Members had not had sufficient time to read the report any questions would be emailed to the Governance & Performance & Governance Accountant.  The Performance Risk Officer said that he would be happy to respond too.



2013/14 Audit Plan (Agenda item 7) pdf icon PDF 180 KB

Report by External Audit, Ernst & Young.


Rob Murray, Director for Ernst & Young presented the Audit Plan year ending 31 March 2014.


The report summarised Ernst & Young’s assessment of the key risks that drove the development of an effective audit for the Council and outlined a planned audit strategy in response to those risks.


Page 42 of the agenda provided Members with the context for the audit that took account of several key inputs.  In parts 2 and 3 of the report more detail had been provided on the areas which presented significant risk to the financial statements audit and outlined plans how these risks should be addressed. 


It was noted that there was no change to the Audit fee for 2013/14; however, the fee for certification of grant claims would be reported at a future meeting.


Mr Ludlow asked if there had been any significant changes in disclosures.  Members were informed that this had been a quiet year for accounting changes and it was anticipated that there would be no major changes to the regime for this year.  Members were made aware however, that the accounting for NNDR work would look a little different in future as provisions for NNDR appeals were now being accounted for at a local level.


The Chief Executive asked the meaning of 40+ testing against the fees on appendix A of the report.  Alison Riglar the Assistant Manager for Ernst & Young explained that this was in relation to housing benefit claims as an approach agreed by the Audit Commission to select and test an additional random sample of 40 cases, the initial testing had been carried out on 20 cases.


The report was otherwise noted.



Status of Audit Recommendations due for Implementation between 1 October and 31 December 2013 (Agenda item 8) pdf icon PDF 93 KB

Report by the Internal Audit Consortium Manager.

Additional documents:


The Internal Audit Consortium Manager presented an updated report following the concerns raised in relation to incomplete audit recommendations earlier in the year.


The Committee had been concerned at the growing percentage of outstanding recommendations and it had been suggested and agreed that a further update be provided after Quarter 3 audit verification work had been performed; otherwise, the next opportunity to review any progress would not have been until June 2014.


The number of outstanding recommendations, listed per audit, had been attached at Appendix 1 of the report.  At the end of 2012/13 Internal Audit had reported a figure of 49.3% (36 from a total of 73) of recommendations being implemented in accordance with target deadline dates previously set.  This figure fell to 42.7% (38 from a total of 89) at the mid-year point and then dropped again to 27.4% (20 from a total of 73) by the end of the third quarter of 2013/14.  Thus, the position had deteriorated over the current financial year.  However, in relation to high priority recommendations reported as outstanding, these had decreased from 11 at the close of Quarter 2 of 2013/14 to 7 at the end of Quarter 3.  The five high priority recommendations that had been completed by the close of Quarter 3 related to one recommendation applicable to Procurement (BRK/13/02), one recommendation relating to Environmental Health (BRK/13/05) and three recommendations attributable to the Network Infrastructure and Security Audit (BRK/13/11).


Councillor Kiddle-Morris referred to one of the outstanding high recommendations associated with his Portfolio, Asset Management (BRK/11/06) in relation to Street Lighting.  He explained that Breckland Council did not want to become a street lighting authority as the cost to the authority would be extortionate.  Negotiations were being had with the Town Councils to take over the responsibility for street lighting. The Town Councils had been provided with a list of where these street lights were situated, what they were made of and when they needed to be replaced and were being asked how much money they required to take them over.  The Chairman was content with the response as to why this particular recommendation was still outstanding.  Mr Ludlow asked if any would remain in the Council’s ownership.  The Chairman said that this was not the Audit Committee’s concern.  The Internal Audit Consortium Manager advised that given the situation, the wording for this outstanding recommendation needed to be revised to reflect the current situation.  Councillor Kiddle-Morris stated that he did not expect a resolution on this matter for some months.  It was agreed that the wording and the dates would be revised to enable proper monitoring.


It was noted that since the last Status Report had been prepared on audit recommendations, a new Performance Management system had been developed in-house and had become operational.  Hence all information obtained in relation to Quarter 3 position with regard to audit recommendations that required action and/or comment from management had been obtained using the new system.  The Chief Executive suggested that the high  ...  view the full minutes text for item 8.


Internal Audit’s Charter, Code of Ethics, Audit Strategy, Strategic and Annual Audit Plans, Summary of Internal Audit Coverage and Performance Indicators for 2014/15 (Agenda item 9) pdf icon PDF 105 KB

Report by the Internal Audit Consortium Manager.

Additional documents:


The report provided an overview of the key stages followed prior to the formulation of the Strategic Audit Plan for 2014/15 to 2016/17 and the Annual Audit Plan for 2014/15.


Members’ attention was drawn to the fact that this was the first time that an Audit Charter had been presented.  Previously, Terms of Reference had been submitted annually, but now, in accordance with Public Sector Internal Audit Standards, which came into effect on 1 April 2013, it had been necessary to develop an Audit Charter to reflect how the Internal Audit Service would operate in accordance with updated mandatory standards.  The Internal Audit Consortium Manager had compiled a Charter which covered the necessary requirements whilst acknowledging that some additional appendices had been needed to provide further clarity on important issues such as the Code of Ethics and the Performance Indicators adopted by the Internal Audit function.  Details of the Internal Audit Charter for 2014/15 could be found at Appendix 1 of the report on page 82 of the agenda.  It was noted that this would have to be revisited annually to confirm its ongoing validity and completeness, and be circulated in accordance with the specified requirements. 


The Performance Indicators for the Internal Audit Service could be found at Appendix 8 of the report; these had not changed from previous years.


The basis of standards of conduct for 2014/15 in relation to the Code of Ethics remained unchanged; however, it had been necessary to make one small amendment to Section 6 of the Code of Ethics to mark the changeover from the Deloitte auditors to Mazars auditors, the latter now being engaged to deliver the Annual Audit Plan. 


A rigorous, three tier consultation process had been carried out in relation to the Internal Audit Strategy.  Management had significantly contributed to shaping future audit coverage and had provided assistance with developing the timetable for the delivery of audit projects.  In the course of liaison with management, it had been confirmed that in order to deliver requirements within the Public Sector Internal Audit Standards, it was no longer viable to support a previously agreed move from annual to two yearly audit examination of the system of risk management and corporate governance arrangements, and instead, annual reviews would be reinstated.


The Annual Audit Plan for 2014/15 encompassed 225 days allocated across 20 individual assignments.  Of these 20 assignments , it was noted that three reviews relating to Revenues and Benefits services were being delivered by another Internal Audit provider – the West Suffolk Internal Audit Partnership.


Members were asked to approve the document.


Referring to page 79 of the agenda in relation to West Suffolk Internal Audit Partnership, Mr Ludlow asked if there had been any issues with audit coverage undertaken by this provider this year.  The Internal Audit Consortium Manager advised that she had not had to commission any additional audit testing in year, as the scope of the Partnership’s work in relation to Revenues and benefits audits had been comprehensive.


The Assistant  ...  view the full minutes text for item 9.


Formulation of a Working Protocol between Internal and External Audit for 2013/14 and 2014/15 (Agenda item 10) pdf icon PDF 73 KB

Report by the Internal Audit Consortium Manager.

Additional documents:


An Audit Joint Protocol had been developed between Internal Audit and the Council’s External Auditors.  The Protocol had been formulated to avoid any potential duplication of work and determine the assurance that could be placed on the respective work of the two parties.


There had been two stages of development involved in extracting the Protocol and the new Protocol attached at Appendix 1 explained the overarching aims of the document, recognising the respective responsibilities of each auditing body, itemised audit key areas of primary concern, reviewed liaison arrangements including who would be the key audit contacts at the Council and commented on provisions for accessing audit files and reports.  There were also four separate appendices showing the working arrangements that would be followed, the nature of audit sample sizes to be extracted and hence used for testing purposes a summary of financial key controls indentified for in-year evaluation and how Ernst & Young would rely on the work of Internal Audit..


RESOLVED that the Audit Protocol be approved and endorsement be given to the level of interaction that would be adopted by Internal and External Audit throughout the remaining quarter of 2013/14 and the financial year 2014/15.



Treasury Management Policy and Strategy 2014/15 (Agenda item 11) pdf icon PDF 74 KB

Report by the Assistant Director of Finance.

Additional documents:


The Assistant Director of Finance presented the report which outlined the Council’s Prudential Indicators for 2014-15 to 2016-17 and set out the expected treasury operations for this period.  It was noted that approval for the Treasury Management Policy, Strategy and Prudential Indicators for 2014-15 and 2016-17 would be requested from Full Council and not the Audit Committee.


The Council was required to receive and approve, as a minimum, three main reports each year incorporating a variety of policies, estimates and actuals.  The first and most important was the report being considered, the prudential and treasury indicators and treasury strategy.


The Treasury Management Strategy for 2014-15 covered two main areas - Capital issues and Treasury Management issues.


The Assistant Director of Finance highlighted the following main changes and key issues:


·        No change to the MRP policy.

·        No change to counterparty limits.

·        The Council’s treasury advisory contract expired in November 2013 and had been re-tendered with a new contract awarded to Capita Asset Services which ends March 31st 2017.

·        Due to the timing of writing this report, all information on the capital programme had been based on the budget being presented to Cabinet on 19 February 2014.

·        Due to ongoing position of the Co-operative bank, contingency accounts have been set up to support banking business continuity in the event of any issues. Breckland Council had joined a joint procurement with other Norfolk authorities to retender for a new banker, with scope for a start date of our choice so that it did not conflict with other authorities in order to minimise the risk and enable a successful implementation for Breckland.


Referring to Breckland Council’s counter party list, Members were informed that the merits for using Handelsbanken had been considered and £5m had been placed with this Swedish bank.


A detailed update on the procurement of banking services was provided. Soft market testing had been carried out with banks to establish interest and the response had been good. 


The Assistant Director of Finance was pleased to announce that the sale of the Landesbanki claims had gone ahead.  The sale means that Breckland had recovered 97% of the amounts that had been originally deposited with LBI in 2006.  It was noted; however, that this money had already been factored into the balance sheet but now had been turned into ‘real cash’.  £1.7m/84% had been recovered from the Glitner bank; however, £80m Krona was still being held in an escrow account, although there was no rush to repatriate this money as it was currently earning 4% interest.  Distributions for Kaupthing, Singer and Friedlander were continuing and £3.4m out of £4m had already been received which had been greater than originally expected.  In response to a question from the Vice-Chairman, the Assistant Director of Finance explained that the Council had responsibility for the exchange rate risk 8in relation to the escrow account.  He pointed out that the Icelandic Krona was currently performing well against sterling.


In relation to the Council’s Treasury Management Advisors,  ...  view the full minutes text for item 11.


Intellectual Property (Agenda item 11a) pdf icon PDF 71 KB

Report by the Assistant Director of Commissioning.


The Assistant Director of Commissioning presented the report that recommended to the Audit Committee that a Working Party be established to review the Intellectual Property held by the Council.


Members were informed that this matter had not really been considered in the past and had come about by a request made by the Executive Member for Corporate Services and Quality Assurance. 


The role of the Working Party would be to establish whether Breckland Council held any intellectual property. As councils developed ideas and acted in more entrepreneurial ways and operated in a climate of increased collaborations as well as developing partnerships, it was worth considering what information was held within the Council that had an Intellectual Property value.  If it did hold any, it needed to be protected.


It had been recommended, if approved, that at the very first meeting of the Working Party that a suitably qualified legal expert would be invited to explore with Members those areas of Intellectual Property where it was thought that some element of protection would be of benefit to the Council.


Councillor Nairn named a few areas which he thought should be classed as Intellectual Property; one of which was explained would rest with the Council rather than the individual.


Mr Ludlow asked if the Council was using anyone else’s Intellectual Property.  The Vice Chairman stated that this should rest with the investor or organisation but there needed to be a clear written agreement as to where the rights belonged.  He agreed that the suggestion of a Working Party was needed.  In response to the Vice-Chairman’s comments, and in relation to external consultants, Mr Stevens stated that this would depend on what was written in the contracts.


The Chairman felt that this was an opportune time to start looking into this matter and agreed with the recommendations.  He asked how many Members there should be on the Working Party.  The Assistant Director of Commissioning stated that following the advice of the Senior Committee Officer, the Working Party would be established as an informal Group bringing forward any information to the Audit Committee where any decisions could then be made.


It was RESOLVED that Members of the Informal Working Party would be Cliff Jordan, Robert Kybird and Keith Stevens.



Bank update (Agenda item12)

Verbal update by the Assistant Director of Finance.


This matter had been covered in Minute No. 11/14 above.



Work Programme (Agenda item 14) pdf icon PDF 54 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.


It was agreed that Breckland Training Services should be added to the December meeting.


It was further agreed that feedback from the Intellectual Property Working Party should be included on the Work Programme in future.



Next Meeting (Agenda item 15)

To note the arrangements for the next meeting to be held on Friday, 13 June 2014 at 10.00am in the Norfolk Room.


The arrangements for the next meeting on Friday, 13 June 2014 at 10.00am in the Norfolk Room were noted.