Agenda and minutes

Audit & Governance Committee
Thursday, 26 July 2018 10.30 am

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

Contact: Joss Butler  Email: joss.butler@surreycc.gov.uk

Items
No. Item

36/18

MINUTES OF THE PREVIOUS MEETING - 24 MAY 2018 pdf icon PDF 82 KB

37/18

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:

    Edward Hawkins declared a non-pecuniary interest as he was the Surrey County Council (SCC) appointed Director of Halsey Garton Property Investment Ltd.

     

38/18

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

39/18

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 (state actual deadline date).

    2.  The deadline for public questions is seven days before the meeting (state actual deadline date).

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

     

    Minutes:

    There were none.

40/18

RECOMMENDATIONS TRACKER & BULLETIN pdf icon PDF 98 KB

    To review the Committee’s recommendations tracker and bulletin.

    Additional documents:

    Minutes:

    Witnesses:

     

    David John, Audit Manager

     

    Key points raised during the discussion:

     

    1. Action A2/18 - the Chairman highlighted that he intended to request a report on business continuity and emergency management towards the end of the Council’s transformation. A Member highlighted that times of change could lead to higher potential risks. In response to this, it was suggested that business continuity plans should be considered by the Corporate Overview Select Committee when scrutinising the transformation plans.
    2. Action A8/18 - the Audit Manager highlighted that he had previously circulated information outside of the meeting which noted that the service did not specifically consider schools non-adherence to Schools Travel Plans to be a risk. Members felt that this did have a place on the risk register and discussed the possibility of further referring concerns on to the Chairman of the Planning and Regulatory Committee or the relevant Select Committee. Members also considered requesting an internal service audit on the implementation of the plans.
    3. Further to discussion, the Chairman stated that he would write to the Member of Parliament for South West Surrey to highlight his concerns around the Council’s lack of power to enforce terms of school planning applications.                                                                                                                    

    Action/Further information to note:

     

    Members requested that the response from the Chief Executive on her position on the Audit & Governance Committee’s role when considering the Governance Strategy and Code of Corporate Governance be circulated.

     

    RESOLVED:

     

    That the Committee noted the report.

     

41/18

STATEMENT OF ACCOUNTS 2017/18 pdf icon PDF 113 KB

    To inform the Committee of the result of the external audit of the Council’s 2017/18 Statement of Accounts, to receive the external auditor’s Audit Findings Report and to approve the Council’s letter of representation from the Director of Finance. 

     

    Annex B to follow.

    Additional documents:

    Minutes:

    Will Forster left the meeting at 11:28am

     

    Witnesses:

    Nicola O’Connor, Finance Manager

    David John, Audit Manager

    Russell Banks, Chief Internal Auditor

    Marcus Ward, Grant Thornton

    Ciaran McLaughlin, Grant Thornton

     

    Key points raised during the discussion:

     

    1.     The Finance Manager introduced the report and highlighted that Members had previously attended a briefing session on the Surrey County Council (SCC) Accounts. Members noted that there had been changes to Annex A following the publication of the agenda. These were as follows:

    ·        Page 44 onwards – ‘Notes to the Accounts’ was replaced with ‘Notes to the Financial Statement’

    ·        Page 125 – ‘Firefighters’ Pension Scheme’ was replaced with ‘Firefighters’ Pension Scheme Financial Statement’.

    ·        Page 69 – Note 7 – highlighted that the Section 151 Officer had been replaced with an Interim Section 151 Officer.

    2.     Annex B was published in a supplementary agenda on 23 July 2018. An amended Annex C was tabled at the meeting and is attached to these minutes as Appendix A.

    3.     Members sought clarification on why the Value for Money (VFM) Conclusion had not yet been submitted. Representatives from Grant Thornton explained that work was delayed as SCC had separately requested the Chartered Institute of Public Finance and Accountancy (CIPFA) to carry out a review of the Council’s financial resilience that would have had considerable overlap with Grant Thornton’s work. It was then understood that the review was unlikely to overlap and that work would have to continue as previously planned. Due to this Grant Thornton was not in a position to issue the VFM conclusion on time. It was confirmed that the VFM conclusion would be issued in the coming weeks.

    4.     Members requested that the recent CIPFA review be circulated to Committee Members once available.

    5.     Members discussed the various figures in the Comprehensive Income & Expenditure Statement where it was requested that officers circulate an analytical review for more information.

    6.     Members requested clarification on why income in relation to Place, Development & Waste had decreased, particularly as Community Recycling Centres (CRCs) had started charging some fees. Officers agreed to provide a response outside the meeting.  

    7.     In the narrative report to the statement of accounts it was noted that it was estimated that over 23,000 children in Surrey are living in poverty. Some Members felt this could be further clarified to give better understanding around the definition of poverty. Officers noted Members comments and agreed to pass them on to the Communications Team.

    8.     Officers highlighted that the Council continued to use short-term borrowing to cover short-term cash flow requirements, rather than borrowing long term.

    9.     Members noted that the service had resolved an outstanding issue o in the firefighters’ pensions fund relating to injury awards.

    10.  Members requested a clear copy of the 2017/18 Council income and expenditure graph on page 33 of the agenda. It was also asked if Members could receive a similar graph for the 2018/19 figures.

    11.  Representatives from Grant Thornton provided a short summary of audit  ...  view the full minutes text for item 41/18

42/18

SURREY PENSION FUND - LOCAL GOVERNMENT PENSION SCHEME ACCOUNTS 2017/18 AND GRANT THORNTON EXTERNAL AUDIT FINDINGS REPORT pdf icon PDF 57 KB

    This report presents the audited financial statements of the Pension Fund for the year ended 31 March 2018, in light of the County Council’s obligations as the administering authority under the Local Government Pension Scheme (LGPS) Regulations.

     

    Additional documents:

    Minutes:

    Witnesses:

    Mamon Zaman, Senior Accountant

    Marcus Ward, Grant Thornton

    Ciaran McLaughlin, Grant Thornton

     

    Key points raised during the discussion:

     

    1. The Senior Accountant introduced the report and provided a brief summary of its details. It was noted that report presented the audited financial statements of the Pension Fund for the year ended 31 March 2018. The report and annexes were published in a supplementary agenda on 23 July 2018.
    2. Members requested further information on why the pension administration services spending had raised from £1,250,000 in 2016/17 to £1,626,000 in 2017/18. Officers agreed to provide a response outside the meeting.
    3. Members highlighted an error on paragraph XXI of Annex 3 which stated there had been no contact with The Pensions Regulator concerning matters of non-compliance with any legal duty. Officers agreed to amend the document to confirm that there had been contact with The Pensions Regulator.

     

    Actions/ further information to be provided:

     

    1. A14/18 - Members requested further information on why the pension administration services spending had raised from £1,250,000 in 2016/17 to £1,626,000 in 2017/18.
    2. A15/18 - Officers to amend paragraph XXI of Annex 3 to confirm that there had been contact with The Pensions Regulator.

     

    Resolved:

     

    Subject to the revisions/corrections agreed at the meeting, the Audit and Governance Committee:

     

    1. Approved the 2017/18 Pension Fund financial statements in Annex 1.
    2. Considered the content of the Audit Findings for Surrey Pension Fund Report in

    Annex 2.

    1. Determined that no items needed to be referred to Cabinet in relation to the external auditor’s conclusions and recommendations.
    2. Considered the content of the draft representation letter as set out in Annex 3 and
    3. authorised the Deputy Chief Finance Officer to sign it on the Council’s behalf.

     

43/18

INTERNAL AUDIT & COUNTER FRAUD ANNUAL REPORT AND OPINION 2017-18 pdf icon PDF 120 KB

     

    This report summarises the work of Orbis Internal Audit and Counter Fraud (‘Internal Audit’) for the period 1 April 2017 to 31 March 2018, identifying the main themes arising from the audit reviews and the implications for the County Council.  The Audit Manager reports key findings and agreed actions arising from audits undertaken as part of quarterly reports to this Committee.

     

    A list of all audit reports issued in the period is attached at Appendix B for information.  In response to member interest in the performance of Internal Audit, a summary of progress against Key Performance Indicators for the year is shown at Appendix A.  The report also provides, at Appendix C, the summary of audit reports issued in the last quarter of 2017-18.

    Additional documents:

    Minutes:

    The Chairman considered item 8 before item 7

     

    Witnesses:

    David John, Audit Manager

     

    Key points raised during the discussion:

     

    1. Officers introduced the report and explained that report summarised the work of Orbis Internal Audit and Counter Fraud for the period 1 April 2017 to 31 March 2018. It was noted that the report also highlighted irregularities which had not previously been directly reported to the Audit and Governance Committee.
    2. Members requested further information on the audit of Pensions Administration. Officers stated that the follow-up actions had not yet been completed and that they would continue to be monitored.
    3. Members raised concern over that length of time the Police were taking to investigate the misuse of prepaid credit cards in one service, as detailed in paragraph 5.21 of Annex A. Officers explained that there were various reasons for the prolonged investigation but that officers were keen for its conclusion. Officers agreed to follow up on the Police investigation regarding the misuse of pre-paid credit cards.

     

    Actions/ further information to be provided:

     

    A16/18 - Officers agreed to follow up on the Police investigation regarding the misuse of pre-paid credit cards.

     

    Resolved:

     

    The Audit & Governance Committee:

     

    1. Noted the work undertaken and the performance of Internal Audit in 2017-18 and the resultant annual opinion of the Chief Internal Auditor; and
    2. Determined that there were no matters that the Committee wished to draw to the attention of the relevant Select Committee.

     

44/18

PSIAS EXTERNAL ASSESSMENT OF INTERNAL AUDIT pdf icon PDF 109 KB

    The purpose of this report is to present the independent external assessment of Internal Audit by South West Audit Partnership to the Committee.

     

    As part of its responsibility to oversee the work of Internal Audit and satisfy itself as to the effectiveness of the service, the Audit and Governance Committee is recommended to note the independent external assessor’s review of Orbis Internal Audit against professional standards.

    Additional documents:

    Minutes:

    Witnesses:

    Russel Banks, Chief Internal Auditor

     

    Key points raised during the discussion:

     

    1. Officers introduced the report and provided Members with a short summary. It was highlighted that there were two main requirements for assessing compliance with the Public Sector Internal Audit Standards (PSIAS); an annual self-assessment and a five-yearly external assessment to be conducted by a qualified, independent assessor or assessment team, from outside the organisation.
    2. Officers highlighted that a recommendation for improvement was made relating to updating the Internal Audit Charter to cover responsibilities for the appointment and removal of the Chief Internal Auditor. An updated Internal Audit Charter would therefore be submitted for consideration at the next Audit and Governance Committee meeting.
    3. Members discussed the advantages of obtaining an external assessment where it was determined that there was a commercial advantage.

     

    Resolved:

     

    It was agreed that the Committee note the report and in particular the external assessor’s conclusion that Orbis Internal Audit has achieved the highest level of conformance with relevant professional standards.

     

45/18

DATE OF NEXT MEETING