Agenda and minutes

Audit & Governance Committee
Monday, 25 July 2016 10.00 am, MOVED

Venue: Ashcombe Suite, County Hall, Kingston upon Thames, Surrey KT1 2DN. View directions

Contact: Angela Guest  Email: angela.guest@surreycc.gov.uk

Note: This meeting will now be held in the Members Conference Room, County Hall 

Items
No. Item

37/16

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

38/16

MINUTES OF THE PREVIOUS MEETING - 26 MAY 2016 pdf icon PDF 148 KB

39/16

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.

40/16

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 (19 July 2016).

    2.  The deadline for public questions is seven days before the meeting (18 July 2016).

    3.  The deadline for petitions was 14 days before the meeting, and no petitions have been received.

     

    Minutes:

    There were none.

41/16

Annual Report of Surrey County Council pdf icon PDF 93 KB

    To consider the Annual Report for the authority and endorse it for publication.

    Additional documents:

    Minutes:

    Declarations of interest:

    None.

     

    Witnesses:

    Julie Fisher, Deputy Chief Executive

    Verity Royle, Senior Principal Accountant

     

     

    Key points raised during the discussion:

    1.    The Deputy Chief Executive and Senior Principal Accountant introduced the Council’s Annual Report explaining that the emphasis had been to maintain the same format of the report with few changes. The only changes to the report related to reporting how the Council operated and its focus.  It was also reported that whilst the Council was not required to produce an annual report, it continued to do so as good practice.

    2.    Some Members felt that there was not enough emphasis put on the inadequacy of Surrey’s transport system, which was the cause of much upset with residents.  Also, that the Leader had made a statement to say that the county was not involved in local infrastructure and used examples to explain why this was not a good thing.  The Deputy Chief Executive explained that local plans were the local council’s responsibility but officers were working closely with them.  She also recognised that infrastructure was important which was why the Council were working with Government on a devolution deal which the Leader had addressed in the summary of the annual report. 

    3.    In response to a Member query regarding looking at other ways other than a straight devolution deal the Deputy Chief Executive explained that financial challenges would limit what the Council could do without devolution. 

    4.    There was some discussion about what Members perceived as a disconnect between local and County Council and whilst they recognised that improvements had been made that communication needed to be improved.

    5.    The Ofsted inspection was discussed and in response to questions the Deputy Chief Executive reported:

    ·         It was not known when Ofsted would re-inspect, which could happen at any time, but that a quarterly monitoring visit was planned for August.

    ·         The improvement plan was a three year plan and the Council were a third into that period. 

    ·         The improvement plan would be considered by the Improvement Board on a monthly basis at a detailed level.

     

    Action/Further information to note:

    The Committee agreed that the Deputy Chief Executive take away comments made on infrastructure for further discussions rather than making changes to the annual report.

     

    Resolved:

    1.    That the County Council’s annual report, set out in Annex A to the report, was noted and endorsed.

    Mr Will Forster attended the meeting from 10.09 am and arrived during the debate on this item.

42/16

Statement of Accounts 2015/16 pdf icon PDF 118 KB

    The purpose of this report is to receive the Council’s Statement of Accounts, as well as to inform the Committee of the result of the external audit of the council’s 2015/16 Statement of Accounts, to receive the external auditor’s Audit Findings Report and to approve the council’s letter of representation from the Chief Finance Officer and Deputy Director for Business Services.

    Additional documents:

    Minutes:

    Declarations of interest:

    None.

     

    Witnesses:

    Kevin Kilburn, Deputy Chief Finance Officer

    Jonathan Evans, Principal Accountant

    Thomas Ball, Grant Thornton

    Andy Mack, Grant Thornton

    Jeff Bannister, Grant Thornton

     

    Key points raised during the discussion:

    1.    The Principal Accountant introduced the report and tabled a paper of minor changes and amendments to the main report which is attached as annex 1 to these minutes.

    2.    It was recognised that the balance sheets would be very difficult for the public to read and understand but that the Director’s narrative report would help the public to understand what the figures mean in simple terms.

    3.    That Surrey Choices had been shown to have no significant risks was questioned.  The Principal Accountant explained that the report was for the county as a whole and was a high level analytical review.  He also said that Surrey Choices would have its own audit and audit opinion which would be reported back to this committee.  Auditors were very aware of the issues around Surrey Choices and would aim to provide assurance.

    4.    In response to a question whether Orbis would be audited separately it was reported that Orbis would be included in a Value for Money (VfM) audit.  The external auditor also responded that the council could request they look at specific areas/issues.  It was also pointed out by the Principal Accountant that the Council needed to consider the large risks and take account the size of the organisation/partnership with regard to risk. 

    5.    There was some discussion around Committee concerns that there may not be right amount of leadership in terms of time and effort given to roles and skills.  That many of the leading members had various roles and maybe were spread too thin.  The main concern from this was that it would be easy for something important to be missed.  The external auditor explained that further audit work was to be done and they expected next year’s plan to deal with these issues.

     

    Action/Further information to note:

    None.

     

    Resolved:

    1.    That the 2015/16 Statement of Accounts , as attached in Annex A to the report, was approved for publication on the Council’s website and in a limited number of hard copies.

    2.    That the contents of the 2015/16 Audit Findings Report in Annex B to the report was noted.

    3.    That the officer response to recommendations of the external auditor was agreed.

    4.    That the Director of Finance’s letter of representation, as in Annex C to the report was noted.

    5.    That there were no issues in the Audit Findings Report that should be referred to the Cabinet.

     

43/16

Surrey Pension Fund Local Government Pension Scheme Accounts 2015/16 and External Audit's Audit Findings Report pdf icon PDF 66 KB

    Grant Thornton as the Council’s external auditors has completed their audit and the Pension Fund financial statements are being presented to this Committee to be approved prior to publication.

    Additional documents:

    Minutes:

    Declarations of interest:

    None.

     

    Witnesses:

    Phil Triggs, Strategic Manager Pensions and Treasury

    Thomas Ball, Grant Thornton

    Andy Mack, Grant Thornton

     

    Key points raised during the discussion:

    1. The Strategic Manager Pensions and Treasury introduced the report and highlighted the audit findings against significant risks and the auditor’s action plan.  He reported that externally held cash balances would be reconciled on a quarterly basis and that action on late starter letters had been implemented.
    2. The external auditor thanked the staff for all their hard work and reported that it has been a much improved process from last year.
    3. The committee discussed the potential for teething problems with the new Border To Coast pool.  The external auditor reported that there would be no changes as to how the accounts were compiled or presented and that they would be working with other auditors in the pool as a matter of course.
    4. It was recognised by those involved in the pool that this was very new ground and officers were taking advice from a wide range of experts in order to avoid any teething issues.  The pool was to be set up by April 2018.

     

    Action/Further information to note:

    None.

     

    Resolved:

    1.    That the 2015/16 Pension Fund financial statements in Annex A to the report was approved.

    2.    That the content of the Audit Findings for Surrey Pension Fund Report in Annex B was noted.

    3.    That there were no issues that needed to be referred to Cabinet in relation to the external auditor’s conclusions and recommendations.

    4.    That the Director of Finance be authorised to sign the representation letter as set out in Annex C to the report.

44/16

External Audit Fee Letter - removed

45/16

Treasury Management Outturn Report 2015/16 pdf icon PDF 249 KB

    This report summarises the council’s treasury management activity during 2015/16.  The report will include the latest risk register for Treasury Management.

    Additional documents:

    Minutes:

    Declarations of interest:

    None.

     

    Witnesses:

    Phil Triggs, Strategic Manager Pensions and Treasury

     

    Key points raised during the discussion:

    1. The Committee discussed the low interest rate environment that had continued for the last seven years and that in comparison with other councils, Surrey was in the lower quartile in terms of its debt cost.
    2. The Chairman reported that he had invited Arlingclose, the new external Treasury Advisor to the next committee meeting when a training session would be provided following that meeting.
    3. There was a discussion regarding Brexit and what assessments were being undertaken to ensure investments were the right ones.
    4. In relation to Brexit, the Strategic Manager Pensions and Treasury explained that:

    ·         Brexit was the number one risk on the treasury risk schedule

    ·         There had been some unexpected surprises following Brexit in that the FTSE100 index had seen healthy increases.

    ·         Gilt prices had risen and yields had fallen which was favourable for local authorities.

    ·         The Bank of England’s Monetary Policy Committee had met in the previous month and had decided to take no action.

    ·         It was suspected that the current base rate may reduce at the August meeting and the level of quantitative easing may be increased.

    ·         It was reported that officers were carefully monitoring the investment/financial horizon and constantly looking for warning signs in order that there  would not be a repeat of the Icelandic issue in Surrey.

    ·         In July, full council approved a revised treasury management strategy that will result in cash balances being further reduced and short term borrowing increased in order to reduce risk.

     

    Action/Further information to note:

    The Chairman asked that Members send any questions regarding treasury to the Strategic Manager Pensions and Treasury before the next committee meeting and training session in September.

     

    Resolved:

    1.    That the content of the Treasury Management Annual Report for 2015/16 was noted.

    2.    That the revised Treasury Management Risk Register, shown in Annex 3 of the report be adopted.

46/16

RECOMMENDATIONS TRACKER pdf icon PDF 198 KB

    To review the Committee’s recommendations tracker.

    Minutes:

    Declarations of interest:

    None

     

    Witnesses:

    Kevin Kilburn, Deputy Chief Finance Officer

    Sue Lewry-Jones, Chief Internal Auditor

     

    Key points raised during the discussion:

    1.    A20/15 and A43/15 were taken together.  The Chairman would invite the Head of Resources & Caldicott Guardian back to the December meeting of this Committee to give an update on progress.

    2.    A45/15 – The Chairman reported that the Head of Human Resources & Organisation Development had done most of the work on this and would report back to the Committee at its meeting in September.

    3.    A1/16 – The Deputy Chief Finance Officer reported that the Shareholder Board would be considering a report tomorrow and that the Council Overview Board (COB) would then scrutinise anything to come out of that.  If extra funding was required then that would be a Cabinet decision.  Several Members expressed frustration at the delayed meetings and not knowing what was going on.

    4.    A2/16  - The Chairman reiterated that he would still prefer council finance officers sitting on the partnership boards.  Despite the Deputy Chief Finance Officer trying to reassure the Committee that the boards had high level officers on the boards the Chairman stated that he did not feel assured with the level/skill of officers on those boards.

    5.    A4/16 – The Chief Internal Auditor reported that an audit of highways works was to be undertaken and the report would come back to this Committee.  It was agreed therefore to take this off the tracker and put on the forward plan.

    6.    A18/15 – The Chairman requested that this item stay on the tracker and for Committee to be updated on the workstreams to be undertaken.

     

    Action/Further information to note:

    1.    That the Chief Internal Auditor reports to the Chair when the Commitee is likely to see the audit report into highways.

    2.    That Toni Carney, Head of Resources & Caldicott Guardian, be invited to the December meeting of this Committee.

    3.    That Ken Akers, Head of Human Resources & Organisation Development, be invited to report back to the September meeting of this Committee.

    4.    To remove A4/16 from the tracker and transfer to the Forward Plan.

     

    Resolved:

    That the committee noted the report.

     

47/16

DATE OF NEXT MEETING