Agenda and draft minutes

Audit & Governance Committee - Friday, 28 August 2020 10.30 am

Venue: Remote Meeting

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

Note: Please note that due to the Covid-19 situation this meeting will take place remotely. 

Media

Items
No. Item

23/20

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

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    Apologies were received from Stephen Cooksey.

24/20

MINUTES OF THE PREVIOUS MEETING (22 May 2020) pdf icon PDF 96 KB

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    To agree the minutes as a true record of the meeting.

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    Minutes:

    The Minutes were approved as an accurate record of the previous meeting.

25/20

DECLARATIONS OF INTEREST

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    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.

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    Minutes:

    There were none.

26/20

QUESTIONS AND PETITIONS

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    To receive any questions or petitions.

     

    Notes:

    1.  The deadline for Member’s questions is 12.00pm four working days before the meeting (24 August 2020).

    2.  The deadline for public questions is seven days before the meeting (21 August 2020).

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

     

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    Minutes:

    There were none.

27/20

RECOMMENDATIONS TRACKER pdf icon PDF 95 KB

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    To review the Committee’s recommendations tracker.

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    Minutes:

    Witnesses:

    David John, Audit Manager

     

    Key points raised during the discussion:

     

    1.     In regards to action A2/19, the Audit Manager confirmed that the report had been published and had received reasonable assurance. The Committee agreed that the action could be marked complete.

    2.     In regards to action A2/18, Member highlighted that, in light of changes to business due to the COVID-19 pandemic, it was now an appropriate time to request a report outlining the council’s process to support business continuity.

     

    Action/Further information to note:

     

    A20/20 - Committee Manager to discuss with key officers an appropriate time for the Committee to consider a report on business continuity which takes into account situations which affect home working. 

     

    RESOLVED:

     

    The Committee noted the actions tracker.

     

28/20

Risk management update pdf icon PDF 97 KB

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    To provide an update on the procurement of a strategic risk partner to enable the committee to meet its responsibilities for monitoring the development and operation of the council’s risk management arrangements. 

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    Minutes:

    Witnesses:

    Anna D’Alessandro, Director – Corporate Finance

     

    Key points raised during the discussion:

     

    1.     The Director – Corporate Finance introduced the report and provided Members with a brief overview. It was noted that risk management consultants, Gallagher Bassett, had carried out a Baseline Review of the Council’s Strategic Risk Management arrangements at the end of 2019 and a number of recommendations were made. The council procured a strategic risk partner to support the implementation of the recommendations with the aim of raising the profile, impact and effectiveness of the council’s approach to risk management and ensuring clear policies were in place, adequately resourced and had full engagement across the Council. The contract for this work was awarded to Ernst & Young (EY) and details of their approach were outlined in the report.

    2.     Members sought financial details of the contract awarded to EY. Officers stated that financial information was confidential and agreed to circulate details outside of the meeting.

    3.     The Committee agreed to invite EY to the next meeting on 1 October 2020 to provide an overview of their approach and details of next steps.

     

    Action/Further information to note:

     

    1.     A21/20 - The Committee agreed to invite EY to the next meeting on 1 October 2020 to provide an overview of their approach and details of next steps.

     

    RESOLVED:

     

    The Committee considered the contents of the report and confirm they were satisfied with the next steps.

     

29/20

Internal Audit & Counter Fraud Annual Report and Opinion 2019-20 pdf icon PDF 92 KB

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    The purpose of this report is to give an opinion on the adequacy of Surrey County Council’s control environment as a contribution to the proper, economic, efficient and effective use of resources. The report covers the audit work completed in the year from 1 April 2019 to 31 March 2020 in accordance with the Internal Audit Strategy for 2019/20.

    Additional documents:

    Minutes:

    Witnesses:

    David John, Audit Manager

    Russell Banks, Chief Internal Auditor

    Anna D’allessandro, Director – Corporate Finance

     

    Key points raised during the discussion:

     

    1. The Audit Manager introduced the report and provided Members with a brief summary. Members noted that the purpose of the report was to give an opinion on the adequacy of the council’s control environment as a contribution to the proper, economic, efficient and effective use of resources. The report covered the audit work completed in the year from 1 April 2019 to 31 March 2020 in accordance with the Internal Audit Strategy for 2019/20. Officers stated that this year an overall opinion of reasonable assurance had been given which was an improvement on the previous year. Members note that Pensions Administration and Health and Safety would continue to be a focus for the service.
    2. Members of the Committee stated that they were happy with the content of the report and that it was positive the council was moving in the right direction. 
    3. The Committee sought further information on the situation around Pensions Administration and the actions which had been taken. The Director – Corporate Finance confirmed that the service was now within her remit and provided a brief overview. Members noted the complexity of the situation as the pension service dealt with six funds and therefore a lot of work needed to be done to make positive changes. Sonia Sharma had been engaged to act as Programme Manager and currently managed five to six different streams of work to turnaround the service. The Committee agreed to invite the Programme Manager to the next meeting to brief Members on work undertaken on Pensions Administration and the agreed approach. Further to this, Members noted that a follow up audit on Pensions Administration would likely be held in quarter four of 2021.
    4. Members of the Committee had a discussion based on the details of antifraud and corruption which were outlined in the report. Officers stated that 19 allegations were not an unusually high number and that work was ongoing to ensure the services were aware of the right processes to follow when dealing with a potential antifraud or corruption situation.
    5. Members noted that some internal audits had received ‘no opinion’ and asked for additional information of why no opinion was given. Officers stated that as a service, Internal Audit were doing more proactive work to support the council by providing advice to services and therefore a formal opinion would not be appropriate. Officers further stated that this would be clearer in future reports and they may potential change ‘no opinion’ to something outlining ‘advice only – no formal opinion’.
    6. Members stated that it may be beneficial to better promote the work of Internal Audit internally and externally. Officers stated that this was an area being investigated by the Counter Fraud team as it would be positive for their work to raise awareness.
    7. A Member of the Committee said there was a need to use clear and easy-to-understand language when explaining  ...  view the full minutes text for item 29/20

30/20

2019/20 Treasury Management Outturn Report pdf icon PDF 167 KB

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    This report summarises the Council’s treasury management activities during 2019/20, as required, to ensure compliance with the Chartered Institute of Public Finance and Accountancy’s Treasury Management in the Public Services: Code of Practice (the CIPFA Code) which requires the Authority to approve a treasury management annual report after the end of each financial year.

    Additional documents:

    Minutes:

    Witnesses:

    Anna D’Alessandro, Director – Corporate Finance 

    Haley Woollard, Manager - Treasury Centre of Expertise for Orbis

    Key points raised during the discussion:

     

    1. The Manager - Treasury Centre of Expertise for Orbis introduced the report and provided Members with a brief summary. It was noted that the report was an outturn report for 2019 / 2020 which outlined the council’s performance against indictors which had previously been agreed by the Audit and Governance Committee. Members noted that all indicators had been met throughout the year. Full details were noted and can be found from pages 57 of the agenda.
    2. The Committee noted that join treasury management training with the Resources and Performance Select Committee would be taking place at the end of the year.
    3. Members noted that the future of the strategy was uncertain however, Arlingclose, the council’s treasury advisors, would continue to consider the appropriateness of the council’s treasury strategy.

     

    Action/Further information to note:

     

    None.

     

    RESOLVED:

     

    The Committee noted the content of the Treasury Management Outturn Report for 2019/20 and compliance with all Prudential Indicators.

     

     

     

     

     

     

31/20

Any Other Business

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    Additional documents:

    Minutes:

    Witnesses:

    Ciaran McLaughlin, Grant Thornton

    Anna D’Alessandro, Director – Corporate Finance 

     

    Key points raised during the discussion:

     

    Surrey County Council and Pension Fund External Audit Verbal Update – Grant Thornton

     

    1.     Ciaran McLaughlin, Grant Thornton, provided Members with an update on the council and pension fund external audit. Members noted the following details:  

    ·        Almost all areas of the audit were in progress, and all samples had been selected. There were minor disclosures where work needed to be commenced. Audit aim to turn around all sample testing in the next two weeks.

    • The audit was subject to a ‘hot review’ by Grant Thornton’s audit technical team – there was so far nothing ground-breaking coming out of the review compared to others
    • A small number of minor amendments and some disclosure points had been proposed and agreed by the council. There were no material adjustments to the accounts at this stage.
    • In regards to journals, sampling had been completed. There were 24 manual journals to test and evidence had been received from Council
    • In regards to Property, Plant and Equipment (PPE), methods for the council’s valuations had been reviewed by Grant Thornton’s internal expert, Gerald Eve, with one key item highlighted with regards to the valuer’s methodology of using a rating manual for build costs.
    • In regards to surplus assets, in the draft accounts the council had moved £11m of properties from Surplus Assets to Investment Property which was the result of an exercise through which the council re-assessed the portfolio. As there was no clear in-year change of use that is required under IAS40 for such a transfer management considered reversing the transfer. Grant Thornton were considering this matter.
    • That the bulk of the work was completed on pension liabilities.
    • In regards to Minimum Revenue Permission (MRP), the Panel concluded that while the Council’s approach was not explicitly unlawful it did lead to potentially imprudent MRP charge in the year.  Grant Thornton recognise that this was at odds with the views of officers. Grant Thornton’s view was that the council’s approach to MRP with regard to third party loans and loans to purchase equities assumed that the loans could be repaid in full or the assets could be sold at full value to allow the council to repay the debt. In the current economic environment, Grant Thornton believe that this cannot be guaranteed, and this represents a risk to the local council taxpayers. Further to this, the panel agreed that Grant Thornton should comment on this in the audit findings report to those charged with governance and should ask the Audit Governance Committee to confirm that they were satisfied that the Council’s approach results in a prudent MRP being recognised in the year. It was also recommend that the Council reviewed and considered revisions to the policy.
    • Subsidiary audits had been signed off.
    • In regards to Collection Fund Disclosures, there had been a delay in documentation received from the Districts.

    ·        In regards to Value for Money, the existing qualification  ...  view the full minutes text for item 31/20

32/20

DATE OF NEXT MEETING

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    The next meeting of Audit & Governance Committee will be on 1 October 2020.

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    The date of the meeting was noted as 1 October 2020