Agenda and minutes
PDF 60 KBVenue: Committee Room C, County Hall, Kingston upon Thames, Surrey KT1 2DN
Contact: Cheryl Hardman
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APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
Minutes: There were none. |
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MINUTES OF THE PREVIOUS MEETING [18 March 2013]
To agree the minutes as a true record of the meeting. Minutes: The minutes were agreed as a true and correct record.
A Member requested that it be clarified that point 4 under Minute 22/13 related to the evidence kept for audits. |
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DECLARATIONS OF INTEREST
To receive any declarations of disclosable pecuniary interests from Members in respect of any item to be considered at the meeting.
Notes: · In line with the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012, declarations may relate to the interest of the member, or the member’s spouse or civil partner, or a person with whom the member is living as husband or wife, or a person with whom the member is living as if they were civil partners and the member is aware they have the interest. · Members need only disclose interests not currently listed on the Register of Disclosable Pecuniary Interests. · Members must notify the Monitoring Officer of any interests disclosed at the meeting so they may be added to the Register. · Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest. Minutes: There were none. |
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QUESTIONS AND PETITIONS
To receive any questions or petitions.
Notes: 1. The deadline for Member’s questions is 12.00pm four working days before the meeting (18 June 2013). 2. The deadline for public questions is seven days before the meeting (17 June 2013). 3. The deadline for petitions was 14 days before the meeting, and no petitions have been received.
Minutes: There were none.
Tim Evans joined the meeting. |
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RECOMMENDATIONS TRACKER
To review the Committee’s recommendations tracker. Minutes: Declarations of Interest: None.
Officers: Kevin Kilburn, Deputy Chief Finance Officer Sue Lewry-Jones, Chief Internal Auditor
Key Points Raised During the Discussion: 1. In relation to R3/11 (social care debt), the Committee would be able to address this issue when it reviews the draft Statement of Accounts at Item 7. 2. In relation to R1/12 (Annual Governance Statement), the Committee agreed that this action was now complete. 3. In relation to A33/12 (Highways Contract audit report), the Chief Internal Auditor updated the Committee that the Audit report on Highways which was finalised in May 2013 was not the report looking at the recommendations in question. The relevant follow-up audit report would be published shortly. 4. In relation to A43/12 (Strategic Director for Customers and Communities), the Chief Executive would be in attendance for Item 13 ‘Annual Governance Statement’. He would give his analysis at this stage in the meeting. 5. In relation to A55/12 (Finance Dashboard), the Deputy Chief Finance Officer confirmed that work on the Finance Dashboard was ongoing and would go live in July. The slight delay was due to technical issues.
Tim Hall joined the meeting.
6. In relation to A58/12 (Risk Management), the Chairman had received an updated Environment & Transport Directorate Risk Register on 21 June 2013 and would circulate it to the Committee. The Committee expressed concern about the time it had taken to be provided with an updated Risk Register. 7. In relation to A59/12 (Energy Purchasing Contract), the Leader of Surrey County Council had received a response from the Leader of the local authority in question. Surrey County Councillors would be invited to the next scheduled meeting which is in November 2013 but the supplier would be willing to meet Members of Surrey County Council in advance of that meeting. 8. In relation to A3/13 (PAMS), the Chairman requested a progress note to be circulated to the Committee. 9. In relation to A4/13 (purchase cards), the Chief Internal Auditor informed the Committee that the new online approval system had launched at the end of March and a follow-up audit was planned for Summer 2013. The Chairman requested that an updated figure on the acceptance of the new guidelines be circulated. 10. In relation to A6/13 (Babcock 4S), Members clarified that the issue was regarding financial benefits specifically.
Actions/Further Information to be Provided: The recommendation tracker to be updated to reflect the discussion, as noted above.
Resolved: That the recommendations tracker was noted and the committee agreed to remove pages 25-26 of the tracker as the actions were completed.
Next Steps: None. |
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EXTERNAL AUDIT: 2012/13 AUDIT PLAN SURREY PENSION FUND
The Council’s external auditors are presenting their Audit Plan for the year 2012/13 in respect of the Surrey Pension Fund.
The purpose of this report is to inform the Committee of the external auditors’ plan, including the risk assessment and approach being adopted for the audit of the financial statements for 2012/13. Additional documents: Minutes: Declarations of Interest: None.
Officers: Lynn Clayton, Audit Manager (Grant Thornton) Phil Triggs, Strategic Finance Manager (Pension Fund & Treasury)
Key Points Raised During the Discussion: 1. The Audit Manager (Grant Thornton) introduced the report and suggested that the Audit Plan for the Surrey Fire-fighters’ Pension Fund be circulated to Committee Members for information. She confirmed that the fees for the Audit of the Fire-fighters’ Pension Fund was included within the fees for the County Council audit and not within the fees for the audit of the Surrey Pension Fund. 2. In response to a query, the Audit Manager (Grant Thornton) explained that the Audit Plan had been delayed because the new standard template had not been signed off by Grant Thornton in time for the previous Committee meeting. 3. Members queried the definition of “management over-ride of controls”. The Audit Manager (Grant Thornton) explained that the external auditors had to consider the possibility of fraud and whether managers were circumventing the usual controls to engage in fraudulent transactions. 4. Members queried the definition of “unusual entries” in journals. The Audit Manager (Grant Thornton) explained that these were journal entries that were out of kilter with normal Council journal entry policies and procedures. For example, if journal entries being processed at midnight is unusual, these would be checked. Grant Thornton’s view is that unusual journal entries are a common way of hiding fraud. However, unusual journal entries which are identified through an audit are usually found to not be due to fraudulent activity. Journal testing is carried out by undertaking a full download of every journal and using the system to identify any entries which are out of the norm. 5. The Chairman asked about administration costs cross-charged from the Council; it was confirmed these were covered by a formal Service Level Agreement (SLA).
Actions/Further Information to be Provided: The Audit Manager (Grant Thornton) would circulate the Audit Plan for the Surrey Fire-fighters’ Pension Fund separately (Recommendations tracker ref: A15/13).
Resolved: That the External Audit: 2012/13 Audit Plan Surrey Pension Fund be noted.
Next Steps: None.
The Audit & Governance Committee adjourned its meeting at 10.30am to join the Armed Forces Week Flag-Raising Ceremony.
The Committee reconvened at 11.15am. |
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RISK MANAGEMENT ANNUAL REPORT
This annual risk management report has been produced to enable the committee to meet its responsibilities for monitoring the development and operation of the council’s risk management arrangements. It also presents the latest Leadership risk register.
Additional documents: Minutes: Declarations of Interest: None.
Officers: Cath Edwards, Risk and Governance Manager Kevin Kilburn, Deputy Chief Finance Officer Sue Lewry-Jones, Chief Internal Auditor
Key Points Raised During the Discussion: 1. The Risk and Governance Manager introduced the item. 2. The Chairman queried why the risk management policy statement which the Committee had approved the previous year had not been implemented and what the consequence of this was. The Risk and Governance Manager explained that the Risk and Resilience Steering Group was co-ordinated by Emergency Management and was mainly focussed on the Olympics. It was difficult to push through corporate risk issues. In the absence of the policy statement being implemented, officers tried to push the message of a more holistic approach from the bottom to the top of the organisation. 3. Members suggested that some risks on the Leadership Risk Register may be getting worse but that this was hidden by categorising the risks as ‘high’ without any further sub-divisions of ‘high’. The Risk and Governance Manager assured the Committee that Corporate Board has robust discussions on the Register and understood the risk levels. In response to a query about whether Corporate Board has ever changed any risks on the Leadership Risk Register, officers confirmed that it has done so. The Risk and Governance Manager informed the Committee that the Directorate Risk Registers have more detail and therefore will be changed more regularly than the Leadership Risk Register. 4. Members asked whether they could attend officer meetings on risk. It was suggested that this would help the Committee to know how seriously risk management was taken. The Cabinet Member for Business Services informed the Committee that officers did take risk management seriously and arguably were too risk averse. It was agreed that a seminar be arranged to allow the Committee to look in more detail at Directorate Risk Registers, and it was confirmed these were accessible on the intranet. 5. The Chief Internal Auditor informed the Committee that the initial findings of the annual audit of risk management highlight: the absence of an updated Environment & Infrastructure Directorate Risk Register for a long period of time; the non-implementation of the risk management policy statement; the unavailability of up-to-date service risk registers. 6. Members requested more detail on controls to be included within the Leadership Risk Register. Officers pointed out that it would be difficult to put much more detail into a strategic document but agreed to consider this request.
Actions/Further Information to be Provided: A seminar to be arranged for the Committee on risk management. (Recommendations tracker ref: A16/13). A link to Directorate Risk Registers to be circulated to the Committee (Recommendations tracker ref: A17/13).
Resolved: 1. That the Committee is satisfied with the risk management arrangements; 2. That the Risk Management Policy Statement and Strategy be APPROVED for inclusion in the Constitution (Recommendations tracker ref: R1/13). 3. That the Leadership Risk Register be NOTED.
Next Steps: None.
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INTERNAL AUDIT ANNUAL REPORT 2012/13
This report summarises the work of Internal Audit for the period 1 April 2012 to 31 March 2013, identifying the main themes arising from the audit reviews and the implications for the County Council. Additional documents: Minutes: Declarations of Interest: None.
Officers: Kevin Kilburn, Deputy Chief Finance Officer Sue Lewry-Jones, Chief Internal Auditor
Key Points Raised During the Discussion: 1. The Chief Internal Auditor introduced the report and highlighted the four key audit findings which the Governance Panel had agreed to take forward into the Governance Statement: Capital Monitoring; Project Management; Commercial Services; and Direct Payments. 2. The Cabinet Member for Business Services informed the Committee that performance on spending in line with the capital programme had improved compared with the previous year. She explained that the year-end investment and economic regeneration property acquisitions had been forecasted for at least six months and that the Cabinet had been aware that this would happen. 3. Members asked for reassurance that cancelled audits had reasonable explanations and were not delaying tactics by services. The Chief Internal Auditor highlighted the comprehensive analysis of completion of the 2012/13 Internal Audit programme of work, shown at Annex E to her report. The Chief Finance Officer had questioned Audit Managers about any audits which had not taken place and was satisfied that cancellations were for the right reasons. Specifically on the Procurement Standing Orders audit, a number of other audits had included checks on compliance with procurement standing orders so that a separate audit was viewed as not necessary. Internal Audit was robust at undertaking audits that needed to happen. 4. Members expressed concern that Commercial Services had been operating with minimal visibility and highlighted the likelihood that more trading services would be provided in future. They asked for reassurance that trading activities would be managed differently going forward. 5. Members expressed concern about data protection breaches and queried how information governance could be further strengthened. The Chief Internal Auditor pointed out that practically speaking, email and dealing with sensitive information was a way of life for council officers. However, there had been a lot of work undertaken to make data more secure over the past few years, with consequent improvements in practice. This work included cleaning up group email accounts, and warning users when draft messages to group email accounts involved recipients external to the County Council. 6. In response to a query, the Chief Internal Auditor explained that a ‘n/a’ audit opinion is probably the result of an audit providing a position statement. 7. Members queried the audit opinion categories used at Surrey County Council. The Chief Internal Auditor informed the Committee that the Effectiveness Review of Internal Audit had also suggested that the categories be looked at again. 8. Members queried a suggestion that there had been an “unexpected spike in predicted demand for school places” (page 257, paragraph 29). They raised concerns that forecasting was not as robust as it could be and highlighted the need for an additional meeting of the Planning & Regulatory Committee in August to deal with a high number of late planning applications for school expansions in the 2013/14 academic year. It was pointed out that demand for school places was consistently growing and ... view the full minutes text for item 36/13 |
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2012/13 ANNUAL GOVERNANCE STATEMENT
This report presents the Annual Governance Statement, which provides an assessment of the council’s governance arrangements for the financial year ending 31 March 2013.
Additional documents: Minutes: Declarations of Interest: None.
Officers: David McNulty, Chief Executive
Members: David Hodge, Leader of the Council
Key Points Raised During the Discussion: 1. The Leader of the Council introduced the item.
2.
Members queried how to make the system of school
place planning more robust. The Chief
Executive informed the Committee that there was a degree of
uncertainty about school place planning. Over the past four years, forecasting on a borough
level has become more accurate but there is a lack of clarity over
demand for particular schools. It is
also apparent that not all schools are able to expand. It is unlikely that data can be made any more
robust but tolerances can be built in.
At present, if any child does not have a place on day one of the
school term, they will have been found a place by day two or day
three. Teams across the Council are
working better together than they had previously. 3. Members queried how confident the leadership was to deliver savings with additional efficiencies being announced. The Leader of the Council reminded the Committee that the Council had been aware that the earlier years of efficiencies would be the easiest. The Public Value Programme had done well to find savings and to track those savings. The Chief Executive stated that the next three years would be challenging. 4. Members queried whether the Chief Executive and Leader of the Council were happy in their jobs. The Chief Executive had told new staff that the Members and officers of ... view the full minutes text for item 37/13 |
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FULL YEAR SUMMARY OF INTERNAL AUDIT IRREGULARITY INVESTIGATIONS: APRIL 2012 - MARCH 2013
The purpose of this report is to inform members of the Audit and Governance Committee about irregularity investigations undertaken by Internal Audit between 1 April 2012 and 31 March 2013. This report complements and builds upon the half-year irregularity report, which was presented to Audit and Governance Committee on 6 December 2012. Minutes: Declarations of Interest: None.
Officers: David John, Audit Performance Manager Kevin Kilburn, Deputy Chief Finance Officer Sue Lewry-Jones, Chief Internal Auditor Sheila Little, Chief Finance Officer
Key Points Raised During the Discussion: 1. The Audit Performance Manager introduced the item and updated the Committee on the situation with the activities of a school Business Manager, as detailed in the report. The police were confident that charges would be brought this week and that the case would be handled quickly to enable the internal investigation to continue. 2. Further to concerns about governance by a schools’ Governing Body, a Member asked for advice on what the Children and Education Select Committee could usefully look at with regard to school governance.
3.
The Chairman informed the Committee that the
resources to audit every school each year were not
available. Instead, schools were
audited according to themes. He
requested a note on the process of auditing schools to be
circulated to the Committee. The Chief
Finance Officer informed the Committee that she had to sign the
School Financial Value Standard annually to say that schools have
effective controls. Internal Audit had
completed a piece of work which showed that it was possible for the
Chief Finance Officer to have confidence to sign the Standard for
the Department for Education. The
irregularities identified were not significant enough for her not
to sign the Statement. 4. The Audit Performance Manager clarified that Surrey County Council audits Surrey County Council maintained schools but not Academies. The Deputy Chief Finance Officer explained that Academy Schools have to appoint external auditors. 5. In response to a query, officers stated that thefts from safes vary from approximately £30 to £3,000. Fraudulent activity within a school could be a six-figure sum. It was rare to find fraud in excess of 6 figures.
Actions/Further Information to be Provided: A note on the process of auditing schools to be circulated to the Committee (Recommendations tracker ref: A19/13).
Resolved: The Committee noted the report.
Next Steps: None.
The Committee adjourned at 1.20pm for lunch. |
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COMPLETED INTERNAL AUDIT REPORTS
The purpose of this report is to inform Members of the Internal Audit reports that have been completed since the last meeting of this Committee in March 2013. Additional documents: Minutes: The Committee reconvened at 2pm with Bill Barker in the Chair. All Members were present apart from Nick Harrison.
Declarations of Interest: None.
Officers: Sue Lewry-Jones, Chief Internal Auditor
Key Points Raised During the Discussion: 1. The Chief Internal Auditor introduced the item and highlighted that Transport for Education and Commercial Services had both received a ‘Major Improvement Needed’ audit opinion.
Nick Harrison joined the meeting and took the Chair.
2. In response to queries, the Chief Internal Auditor highlighted the lack of incentives for education officers to keep transport costs down as they do not hold the budget. SEN officers are not present at the annual review by schools of SEN children, which covers their transport. There is also no incentive for schools to change arrangements. A Member who had sat on Education Select Committee discussed the challenges in encouraging children to attend their local school. Members also suggested that best practice is for transport officers to attend meetings with parents and to encourage parents to provide transport training to older children with SEN. It was agreed that the Chairman would write to the relevant portfolio holders about concerns. 3. With regard to the Follow-up Review of Rental Income, Members queried whether data is in the right format to enable PAMS to work effectively. The Chief Internal Auditor replied that there had been work to reconcile rent deposits. The Chairman requested an update following the end of the first financial quarter of 2013/14. 4. In response to a query, the Chief Internal Auditor clarified that for every Audit Report a Management Action Plan (MAP) is agreed. Internal Audit reviews progress on implementation. If an audit is classified ‘Major Improvement Needed’ or ‘Unsatisfactory’, a full follow up audit is undertaken. 5. Members queried how VAT is worked out for Commercial Services. The Chief Internal Auditor offered to provide a written response to this query. 6. The Chief Internal Auditor informed the Committee that a progress report would be provided on the Residential Block Care Contracts MAP in September 2013. Individual actions are not all tracked upon reaching their deadline due to the number of recommendations made by Internal Audit each year. A progress check is made every six months. The Chairman stated that in theory where a service misses a deadline they should inform Internal Audit. The Deputy Chief Financial Officer informed the Committee that the contract with Anchor would be up for review in 2018/19.
Actions/Further Information to be Provided: 1. The Chairman to write to the Cabinet Member for Transport, Highways and Environment and Cabinet Member for Schools and Learning about concerns over Transport for Education (Recommendations tracker ref: A20/13). 2. The Chief Internal Auditor to provide an update on the reconciliation of rent deposits following the end of the first financial quarter of 2013/14 (Recommendations tracker ref: A21/13). 3. The Chief Internal Auditor to provide a written briefing on how VAT is worked out for Commercial Services (Recommendations tracker ref: A22/13).
Resolved: |
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CODE OF CORPORATE GOVERNANCE
The purpose of this report is to provide the Committee with an update on the changes made to the Code of Corporate Governance.
Additional documents: Minutes: Declarations of Interest: None.
Officers: Cath Edwards, Risk and Governance Manager
Key Points Raised During the Discussion: 1. The Risk and Governance Manager introduced the item.
Actions/Further Information to be Provided: None.
Resolved: That the Committee APPROVED the updated Code of Corporate Governance and recommended it to County Council for inclusion in the Constitution (Recommendations tracker ref: R3/13).
Next Steps: None.
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STATEMENT OF ACCOUNTS 2012/2013
The Chief Finance Officer (and Deputy Director for Business Services) has approved the statement of accounts for 2012/13 as presenting a true and fair view of the county council’s financial position as at the 31 March 2013 and its income and expenditure for the year. The accounts are attached at Annex A to this report for Member debate and approval. The committee is asked that these be approved and published, subject to examination by the external auditors.
The draft accounts of the Surrey Pension Fund for the year ended 31 March 2013 are also included at Annex A, as required by the county council’s obligations as the administering authority of the fund under the Local Government Pension Scheme Regulations. The pension fund accounts summarise the fund’s transactions for the 2012/13 financial year and its position at year-end as at 31 March 2013.
The Annual Report for the authority is also attached at Annex B for consideration by the Committee.
Additional documents: Minutes: Declarations of Interest: None.
Officers: Kevin Kilburn, Deputy Chief Finance Officer Nikki O’Connor, Finance Manager (Assets, Investment and Accounting) Charles Phipp, Senior Finance Officer (Pensions and Treasury) Phil Triggs, Strategic Manager (Pension Fund and Treasury)
Key Points Raised During the Discussion: 1. The Finance Manager (Assets, Investment and Accounting) introduced the item. She informed the Committee that the external auditors had started work the week prior to the meeting and the final Statement of Accounts would come back to Committee in September with the external auditor’s report. 2. The Chairman highlighted that members of the Committee had been given a briefing session to ensure that they understand the structure of the accounts and the difference between local authority accounts and company accounts. 3. Members queried how many officers had inputted into the Statement of Accounts. The Finance Manager (Assets, Investment and Accounting) informed the Committee that there were two full-time equivalent staff who work on the Statement of Accounts. There are also contributions from many other areas of Finance, including an officer producing the accounts for the Surrey County Council Pension Fund. 4. Members queried the Earmarked Reserves listed in the Explanatory Foreword by the Chief Finance Officer. The Chairman suggested that the descriptions of the reserves provided in the Annual Report should be included within the Statement of Accounts. The Finance Manager (Assets, Investment and Accounting) felt that this would be appropriate under Note 8 rather than within the Explanatory Foreword. 5. The Deputy Chief Finance Officer informed the Committee that when a school becomes an Academy, any long term borrowing remains as the Council’s liability. In this way, Academies were treated differently to previous situations where services moved out of local authority control. For example, when the police moved out of local authority control, Councils did keep the debt but the Home Office provided a grant to pay it off. This could be due to local authorities retaining responsibility for education within their borders but not for policing. 6. The Chairman requested that under Capital Expenditure in the Explanatory Foreword (page 54 of the Committee papers), the significant capital investment agreed as part of the MTFP be explained by reference to the need for more school places rather than stimulation of the local economic recovery. 7. Members asked whether Surrey County Council was in a minority for not undertaking external borrowing at the present time. The Deputy Chief Finance Officer assured the Committee that the Council was not in a minority. He explained that the cost of carrying surplus cash balances was currently not good value for money, and therefore using such balances to fund fixed assets was a cost-effective approach. It was queried whether there was capacity for more short-term borrowing. The Deputy Chief Finance Officer pointed out that this would need to be repaid and this could be at a time when interest rates had risen. 8. Members asked where the Heritage Assets were held. Officers explained that artefacts were held at County ... view the full minutes text for item 41/13 |
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TREASURY MANAGEMENT OUTTURN REPORT 2012/13
This report summarises the council’s treasury management activity during 2012/13, as required to ensure compliance with CIPFA’s Code of Practice for Treasury Management. The report also covers the council’s Prudential Indicators for 2012/13, in accordance with the requirements of the CIPFA Prudential Code for Capital Finance in Local Authorities. Additional documents: Minutes: Declarations of Interest: None.
Officers: Kevin Kilburn, Deputy Chief Finance Officer Charles Phipp, Senior Finance Officer (Pensions and Treasury) Phil Triggs, Strategic Manager (Pension Fund and Treasury)
Key Points Raised During the Discussion: 1. The Strategic Manager (Pension Fund and Treasury) introduced the item and highlighted the impact of the US Government clarifying its position on quantitative easing. The US Federal Reserve was aiming to have reversed its Quantitative Easing (QE) policy by the middle of 2014. It was possible that the Bank of England would reassess its position with regard to its own QE policy. However, regardless of the policy on QE, it was unlikely that there would be any rise in bank interest rates until mid-2015. 2. Officers assured Members that while £6.6m of deposits was still due to be returned from the failed Icelandic banks, they were confident that payment would be received. 3. The Senior Finance Officer (Pensions and Treasury) confirmed that the UK credit rating was still AAA with two of the three rating agencies. 4. Members requested training on gilt markets. 5. There was a discussion on the inclusion of the Economic Review ‘opinion’ in the Treasury Management Outturn Report. Officers explained that the annex adds colour and context to the outturn report.
Tim Hall left the meeting.
6. There was a discussion about the Risk Register, included at annex 4. The Chairman was satisfied with the high risk score for Interest Rate Risk (Borrowing). There was a view that the financial failure of SCC’s main bankers should be rated a higher risk but there was acceptance of the officers’ explanation. 7. Members considered the policy of investing in ‘safe’ counterparties which provide lower interests rates but accepted there was an associated risk of investing in lower-rated counterparties. The Committee would review the Treasury Strategy later in the year.
Actions/Further Information to be Provided: To provide training to the Audit & Governance Committee on gilt markets (Recommendations tracker ref: A27/13).
Resolved: 1. That the Committee NOTED the content of the Treasury Management Annual Report for 2012/13. 2. That the Committee ADOPTED the Treasury Management Risk Register.
Next Steps: None.
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