Agenda and minutes

Audit & Governance Committee
Thursday, 27 July 2017 10.00 am

Venue: Members Conference Room, County Hall, Kingston upon Thames, Surrey KT1 2DN

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

Items
No. Item

40/17

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

41/17

MINUTES OF THE PREVIOUS MEETING [13 June 2017] pdf icon PDF 200 KB

42/17

DECLARATIONS OF INTEREST

    All Members present are required to declare, at this point in the meeting or as soon as possible thereafter

    (i)            Any disclosable pecuniary interests and / or

    (ii)           Other interests arising under the Code of Conduct in respect of any item(s) of business being considered at this meeting

    NOTES:

    ·         Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest

    ·         As well as an interest of the Member, this includes any interest, of which the Member is aware, that relates to the Member’s spouse or civil partner (or any person with whom the Member is living as a spouse or civil partner)

    ·         Members with a significant personal interest may participate in the discussion and vote on that matter unless that interest could be reasonably regarded as prejudicial.

    Minutes:

    There were none.

43/17

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 (21 July 2017).

    2.  The deadline for public questions is seven days before the meeting (20 July 2017).

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

     

     

    Minutes:

    There were none.

44/17

RECOMMENDATIONS TRACKER pdf icon PDF 75 KB

    To review the Committee’s recommendations tracker.

    Additional documents:

    Minutes:

    Declarations of interest:

    None

     

    Witnesses:

    None

     

    Key points raised during the discussion:

    The Committee reviewed each item of the tracker and noted its contents with the exception of tracker item A1/17 being reworded as below.

     

    Action/Further information to note:

    To re-word tracker item A1/17- Surrey Choices - to read: That the Committee will see how the new Overview and Budget Scrutiny Committee will be dealing with this matter going forward.

     

    RESOLVED:

    The report was noted.

     

45/17

ANNUAL REPORT OF SURREY COUNTY COUNCIL pdf icon PDF 145 KB

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

    Additional documents:

    Minutes:

    Declarations of interest:

    None

     

    Witnesses:

    David Hodge, Leader of the Council

    David McNulty, Chief Executive

    Verity Royle, Senior Principal Accountant

     

    Key points raised during the discussion:

     

    1.    The Senior Principal Accountant introduced the Council’s Annual Report explaining that the same format of the report had been maintained and there was less jargon making it more accessible. It was also reported that whilst the Council was not required to produce an annual report, it continued to do so, as it was good practice for transparency.

    2.    The late Environmental Sustainability Review section from page 44 of the Annual Report was tabled and is attached to these minutes as Appendix A.

    3.    There was some discussion around the format of the printed copies and where they were distributed.  Several ideas were mooted regarding what information should be contained in the ‘mini’ version and who should receive the full version and the mini version.  The Chief Executive explained that this document should be primarily viewed as a reference document, and not primarily as a communication tool, which would also be available online. The online version would be in sections which would make it easier to read and printing costs would be kept to a minimum. 

    4.    A member compared the length of this document with that of a multi billion pound corporation that had a much more succinct document.  The Leader reminded the committee that the council dealt with people who held the council to account. 

    5.    The Committee questioned the Chief Executive and Leader about the contents of the report and made suggestions for inclusion. Some would not be relevant or information would be available in next year’s report as this was a backward looking document.

    6.    The Chief Executive highlighted that the council receive three times more compliments than complaints across the board and not in just one area and that members should be pleased with this good news. 

    7.    In response to a member statement about devolution the Chief Executive explained that there was no longer Government interest in devolution, apart from those already started, and that plans were on hold.  However, progress had been made with talks on health devolution.

    8.    Several amendments and suggestions for inclusion were made and agreed as given below.

     

    Actions/ further information to be provided:

     

    Suggested amendments and inclusions for the Annual Report:

    ·         It was thought that the cogs used on page 10 of the report didn’t provide the impact needed for the message. (Tracker A8/17)

    ·         Page 13 - £ missing from schools expenditure.  Three paragraphs of text beneath this table to be re-worded in order to make better sense.

    ·         To include a table on page 54 of the report to show property investment details. (Tracker A8/17)

     

    ·         That the summary of accounts as used on page 210 of the agenda pack could be included in the mini version of the annual report.  It was suggested that the outturn position may be simpler to read.

     

    Resolved:

     

    To endorse the Annual Report (Annex A  ...  view the full minutes text for item 45/17

46/17

SURREY COUNTY COUNCIL ACCOUNTS 2016/17 AND EXTERNAL AUDIT'S AUDIT FINDINGS REPORT pdf icon PDF 122 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 2016/17 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:

    Nikki O’Connor, Finance Manager

    Jonathan Evans, Principal Accountant

    Ciaran McLaughlin, Grant Thornton

     

    Key points raised during the discussion:

     

    1. The Principal Accountant introduced the report and highlighted changes to CIPFA reporting requirements, the unqualified opinion on the financial statements and qualified opinion on an except for basis on VfM (Value for Money), as well as the action plan based on the audit findings.
    2. In response to Member queries it was reported that:

    a)    Capital underspends occurred due to both delays in projects and in some cases projects not occurring.  Carry forwards were only approved for projects that were delayed and not for those that were no longer required.  This was reviewed throughout the year and it was unusual not to have a carry forward as slippage in capital schemes was common.

    b)    There was some discussion about social care debt. It was agreed that this was a sensitive area and one which was constantly being reviewed.  The Finance Manager confirmed that the bad debt provision was calculated based on the age of the debt. 

    c)    The Finance Manager confirmed that the accounts of the council’s trading companies are on the agenda to be presented to the December meeting of this committee.

    d)    It was recognised that the primary statements could be very difficult for the layman to read and understand but that the Director’s narrative report would help the reader to understand what the figures mean in simple terms and highlight the key messages.

    1. Grant Thornton introduced the audit findings report and explained that the audit was substantially complete. The support from officers was good.  A couple of adjustments had been identified as set out in the submitted report and these were regarding an academy conversation and the recognition of a deferred capital receipt.  In response to a question, the Finance Manager explained that academies were written out of the council’s balance sheet when they convert and were treated as expenditure in the comprehensive income & expenditure account.
    2. In response to a member question as to why materiality included the Dedicated Schools Grant (DSG), over which the council had no control, Grant Thornton explained that there was a need for the council to measure, monitor and maintain records of DSG received. Grant Thornton included this when considering appropriate levels for materiality.
    3. Grant Thornton also confirmed that it was not their role to look at things like cyber security.

    6.    Grant Thornton confirmed that they expected to issue an unqualified opinion on the financial statements and that in relation to value to money, they were satisfied that in all significant respects the council had put in place proper arrangements to secure economy, efficiency and effectiveness in the use of its resources for the year ended 31 March, with the exception of the arrangements for management of children’s services due to the findings of Ofsted, published in their June 2015 report.  This ‘except for’ opinion is the same as issued in previous years and would remain the case  ...  view the full minutes text for item 46/17

47/17

SURREY PENSION FUND LOCAL GOVERNMENT PENSION SCHEME AND EXTERNAL AUDIT FINDINGS REPORT pdf icon PDF 64 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

    Ciaran McLaughlin, Grant Thornton

     

    Key points raised during the discussion:

     

    1.    The Strategic Manager Pensions and Treasury and Grant Thornton introduced their respective part of the report.

    2.    There was some discussion around the increase in numbers of deferred pensioners.  It was explained that there was a revised method of counting and the numbers given included the backlog in administration.

     

    Actions/ further information to be provided:

    None.

     

    Resolved:

    1.    That the 2016/17 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, to the report, was noted.

    3.    That there were no issues to be referred to Cabinet.

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

     

    Reason for decision:

    To fulfil the County Council’s obligations as the administering authority under the Local Government Pension Scheme (LGPS) Regulations.

48/17

TREASURY MANAGEMENT OUTTURN REPORT 2016-17 pdf icon PDF 261 KB

    This report summarises the council’s treasury management activity during 2016/17.  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 Strategic Manager Pensions and Treasury introduced the report.

    2.    An updated risk register was tabled and is attached as Appendix B to these minutes.

    3.    The Committee discussed the low interest rate environment that continued and how it was expected to continue for the next few years.

    4.    There was a discussion regarding item one on the risk register and the fact that it was not Brexit alone that was the risk and that the risk was one of volatility caused by geo-political events.

     

    Actions/ further information to be provided:

    That item one of the risk register be amended as below and that item eight of the risk register be amended to be consistent on the use of lower case and capital letters.

     

    Resolved:

     

    1.    That the Treasury Management Annual Report for 2016/17 was noted.

     

    2.    That the revised Treasury Management Risk Register shown in Annex 3, and with the following amendment/addition be adopted:

    ·         that Risk 1 should read ‘geo-political issues’ rather than UK leaving Europe and the risk rating made higher.

     

    Reason for decision:

    To ensure compliance with CIPFA’s Code of Practice for Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities.

     

49/17

WORKPLAN AND BULLETIN TIMETABLE 2017/18 pdf icon PDF 30 KB

50/17

DATE OF NEXT MEETING