Agenda and minutes
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Contact: Amelia Christopher Email: amelia.christopher@surreycc.gov.uk
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APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
To receive any apologies for absence and substitutions. Additional documents: Minutes: Apologies were received from Terry Price, Stephen Cooksey and Richard Tear.
Jonathan Hulley acted as a substitute for Richard Tear.
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MINUTES OF THE PREVIOUS MEETING - 18 JANUARY 2023
To agree the minutes as a true record of the meeting.
Additional documents: Minutes: The Minutes were approved as an accurate record of the previous meeting. |
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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. Additional documents: 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 (2 March 2023). 2. The deadline for public questions is seven days before the meeting (1 March 2023). 3. The deadline for petitions was 14 days before the meeting, and no petitions have been received.
Additional documents: Minutes: There were none. |
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RECOMMENDATIONS TRACKER AND WORK PLAN
To review the Committee’s recommendations tracker and work plan. Additional documents: Minutes: Witnesses: Nikki O’Connor - Strategic Finance Business Partner Key points raised during the discussion: 1. The Chairman queried why on the work plan concerning the 10 May 2023 meeting there was an item on the external auditor’s audit findings report and to approve the letter of representation as that was an item on the current agenda. The Strategic Finance Business Partner confirmed that the Chairman was correct and that it should be removed.
RESOLVED:
Actions/further information to be provided:
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STATEMENT OF ACCOUNTS 2021/22
To inform the Committee of the result of the external audit of the council’s 2021/22 Statement of Accounts, to receive the external auditor’s final Audit Findings Report and to approve the council’s letter of representation from the Council’s s151 Officer (Deputy Chief Executive & Executive Director of Resources).
Additional documents: Minutes: Witnesses:
Barry Stratfull - Chief Accountant (Corporate) Ciaran McLaughlin - Grant Thornton Nikki O’Connor - Strategic Finance Business Partner Russell Banks - Orbis Chief Internal Auditor David John - Audit Manager
Key points raised during the discussion:
1. The Chief Accountant (Corporate) introduced the report noting that there had been some delays in the audit, since January’s Committee meeting the service had worked with Grant Thornton to finalise the accounts and a high-level lessons learned report was appended regarding the process for future years. 2. The Grant Thornton representative noted that the audit was near to completion and an unqualified opinion was anticipated. He highlighted the potential understatements in the pension fund accounts due to timing differences, a decision would be made by the partner panel on 14 March. The final documentation was going through a ‘hot review process’ with the statement of accounts reviewed against the Chartered Institute of Public Finance and Accountancy (CIPFA) code. Grant Thornton was satisfied that there were no significant risks concerning: management override of controls, revenue recognition, Level 3 investments - private equity infrastructure type assets - the assessment of the key judgements and estimates; and no material misstatements concerning: the valuation of land and buildings which had taken a large amount of time to complete due to the level of challenge and information to be reviewed, investment properties, the pension fund net liability. Regarding the consolidated group accounts, the draft group Movements in Reserves Statement (MiRS) presentation was not compliant with the CIPFA code and that had been amended in the final version. He concluded that the quality of working papers and data cleansing were being reviewed to make improvements for next year, and the estimated final fee for the audit was not expected to change. 3. A Committee member asked how the valuations were done on the Council’s properties, some of which were specialised. The Grant Thornton representative explained that under the CIPFA code, specialised properties were valued at a depreciated replacement cost as opposed to what the Council might receive if sold on the open market, to recognise the use of the asset to the Council and any obsolescence. 4. A Committee member referred to the three investment properties that were not revalued and asked what process had been put in place to ensure that those would be revalued regularly. The Chief Accountant (Corporate) explained that the Council was required to revalue assets over a five-year period. For investment properties this is annually and three had been missed within that timeframe and had been revisited. The Grant Thornton representative noted that the issues occurred in last year's accounts (2020/21) and confirmed that for the current accounts he was satisfied that the investment properties had been valued appropriately. The Strategic Finance Business Partner noted that the process had been changed and Finance was confident that those would not be missed going forward in line with CIPFA’s annual revaluation requirement and the Council’s five-year rolling programme. 5. Responding to the Chairman’s query on ... view the full minutes text for item 19/23 |
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INTERNAL AUDIT PROGRESS REPORT - QUARTER 3
The purpose of this progress report is to inform members of the work completed by Internal Audit between 1 October 2022 and 30 December 2022.
The current annual plan for Internal Audit is contained within the Internal Audit Strategy and Annual Plan 2022-23, which was approved by this Committee on 28 March 2022. Additional documents: Minutes: Witnesses:
David John - Audit Manager
Key points raised during the discussion: 1. The Audit Manager introduced the report and highlighted that the audit on the Children, Families and Lifelong Learning (CFL) panel process was given Reasonable Assurance which was encouraging, and recommendations were made to management to action. He highlighted the follow-up audits on the Officer Code of Conduct and the Public Sector Accessibility Regulations, the level of assurance had increased to Reasonable Assurance, confirming that management had acted on the recommendations and actions. He highlighted two audits given Partial Assurance: one out of the five schools being audited received that opinion due to an accumulation of issues and those were being addressed; and the audit on Social Value in Procurement, positive responses were had from the Corporate Leadership Team and management to ensure that the strategic objectives were aligned more to the procurement advantages. He highlighted the list of additional audits added, some removed and some deferred. 2. Referring to the planning audit received at January’s Committee meeting which had Partial Assurance, the Chairman asked when that review would be complete. The Audit Manager explained that management were following up actions with an implementation date between December and the end of March that year; a follow-up audit would be scheduled later in quarter 1. 3. Referring to the Home to School Transport audit received at January’s Committee meeting, the Chairman noted that the internal review indicated that parents would see an immediate improvement; he asked when the Committee would receive the results of the survey. The Audit Manager was unsure about the survey as that was service led, he noted that the follow-up work was being done in parallel with the new responsible officer. The results of the follow-up audit to be reported to the Committee within the first two quarters.
RESOLVED: That the Committee noted the report and considered any further action required in their response to issues raised. Actions/further information to be provided:
None.
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INTERNAL AUDIT STRATEGY AND ANNUAL AUDIT PLAN 2023/24
The purpose of this report is to present the Internal Audit Strategy and Annual Internal Audit Plan for 2023/24 to the Committee.
Under-pinning the work of the Orbis Internal Audit Service in delivering the Annual Internal Audit Plan are the key principles and objectives as set out in the Internal Audit Strategy and Charter. These are presented alongside the Annual Internal Audit Plan for 2023/24 as good practice dictates that these should be updated and reviewed on an annual basis. Additional documents: Minutes: Witnesses:
Russell Banks - Orbis Chief Internal Auditor David John - Audit Manager Nikki O’Connor - Strategic Finance Business Partner
Key points raised during the discussion: 1. The Orbis Chief Internal Auditor introduced the report and noted that the Annual Audit Plan was risk-based, drawn from on a range of sources of information and it was fluid with time included for emerging risks; an anticipated major change concerned the go live of MySurrey and integrated financial systems run through that would need to be audited. There were challenges around resourcing and there was a clear strategy to address that through recruitment and investment in training and development. He noted that a slight reduction in the number of audit days had been made across the Orbis partners, it was a prudent estimate of what could be realistically delivered. He clarified that the Committee would receive information on the KPIs throughout the year. 2. A Committee member asked whether the number of potential audits of maintained schools was significantly more than had been done previously, as in quarter 3 there had been five audits. The Orbis Chief Internal Auditor responded that the scheduled 30-35 school audits represented a new normal level compared to a few years ago - more than other Orbis partners - as the Council had separately funded a programme of work of school audits. He noted that the aim was not to audit every school within a five-year period, it was not a purely cyclical process, schools were targeted based on risk. 3. A Committee member asked for the percentage of how short staffed the service was. The Orbis Chief Internal Auditor noted that there were around 38 staff and within that there were 5 vacancies. Internal Audit resourcing was expressed in the number of audit days that could be delivered, there was a challenge of trying to match the resources to the work both in terms of the days but also the calibre of staff. The Internal Audit Plan was becoming more complex, the approach of growing in-house staff took time and investment, supplemented with contractors. 4. A Committee member referred to the Highways Contract audit which was carried forward from 2022/23, as it was a large issue for residents and Members he asked whether Internal Audit was confident that it would be audited in the current cycle. The Audit Manager confirmed that it would be delivered in 2023/24 as enough time had been given for that contract to bed in, with nine to twelve months’ worth of data to audit; it was carried forward on a predetermined basis. 5. Following up the response to key point 3, the Committee member understood that therefore Internal Audit was down 12-15% on staff numbers and the problem was more acute than that due to the lack of senior staff members, he asked what support could be given by the Committee around improving that situation. The Orbis Chief Internal Auditor explained that Internal Audit had sufficient resources in terms of budget, ... view the full minutes text for item 21/23 |
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ETHICAL STANDARDS ANNUAL REVIEW 2022-23
To enable the Committee to monitor the operation of the Members’ Code of Conduct over the course of the last year.
Additional documents: Minutes: Witnesses:
Paul Evans - Director of Law and Governance Key points raised during the discussion: 1. The Director of Law and Governance introduced the report and noted that there had not been any changes to the Members’ Code of Conduct in the last year. Members had received training following their induction post-election and received regular reminders on registering their interests. In the Spring all political groups would have a session on the Member-Officer Protocol. He noted that there had been six complaints compared to eleven the previous year and he provided a breakdown of those. He noted that Member conduct in the Council was generally good and there had not been any complaints between political groups. Residents’ grievances were resolved and investigated as appropriate. 2. Committee members made no comments.
RESOLVED: 1. Noted the Monitoring Officer’s report on recent activity in relation to the Members’ Code of Conduct and complaints made in relation to Member conduct. 2. Noted the further training and development planned for the coming year at paragraph 12.
Actions/further information to be provided:
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This paper provides both a forward perspective in terms of the external operating environment and planned activities over the next financial year, as well as a review of the findings from two recent audits on risk management.
Additional documents: Minutes: Witnesses: David Mody - Head of Strategic Risk Key points raised during the discussion: 1. The Head of Strategic Risk introduced the report which set out the macro level risks as well as the top risks for the Council as detailed in the Corporate Risk Register. The risk plan for the next year was ambitious and the four areas targeted would support the Council going forward. He noted that Committee members had received training over the past few months. Two audits on risk management had been undertaken over the past six months, one by Internal Audit which gave a Substantial Assurance, and the other audit done by Grant Thornton; an overlap between the two was the desire to provide more online training to have a wider reach and that was being factored in. An update would be provided in September on the Constitution Review Group’s consideration of delegated approval to the Committee on the Risk Management Strategy. 2. A Committee member commended the document which was clear, concise and user-friendly; the Chairman echoed the thanks to the Head of Strategic Risk for his work. The Head of Strategic Risk noted that the organisation had been supportive.
RESOLVED: That Members noted the update on risk management. Actions/further information to be provided:
1. A5/23 - The Head of Strategic Risk will provide an update in September on the Constitution Review Group’s consideration of delegated approval to the Committee on the Risk Management Strategy.
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REVISED FINANCIAL REGULATIONS
The Financial Regulations provide the framework of control, responsibility and accountability for the proper administration of the Council's financial affairs. The Council’s current processes and procedures are reflected within the Financial Regulations.
The Financial Regulations are part of the Constitution – Part 5 – Rules of Procedure. Any changes to the Financial Regulations require Council to approve any amendments. In advance of this and as part of the Regulatory Framework, the Audit & Governance Committee is asked to consider the amendments.
Additional documents: Minutes: Witnesses: Nikki O’Connor - Strategic Finance Business Partner Paul Evans - Director of Law and Governance
Key points raised during the discussion: 1. The Strategic Finance Business Partner introduced the report which would go to the next Council meeting for approval, she noted that most of the updates proposed related to title and structural changes in the organisation, and processes had been clarified and the wording of various sections strengthened. Regarding the Scheme of Delegation, she noted that Committee members had received a briefing note concerning special severance payments, ensuring that the thresholds and the regulations were aligned to the Localism Act 2011. 2. The Chairman sought clarification on whether special severance payments over £100,000 would be first reviewed by the select committee and if Members were not in agreement it would go to a Council meeting for a vote. The Director of Law and Governance noted that the approval of normal severance payments, redundancy for example, would go to the People, Performance and Development Committee (PPDC) if over £150,000. Whereas special severance payments concerned a matter over and above contractual time, for example a dispute with someone, and the Council has an option to pay a settlement if there was a risk of a tribunal. The proposal was that if the figure was over £100,000 it would need to go to a meeting of the Council, however there were exceptional circumstances. Ex gratia payments between £20,000 - £100,000 would be signed off by the Chief Executive and Chairman of PPDC, they could choose to refer significant cases to PPDC or choose not to sign it off. 3. Responding to a Committee member’s query around special severance payments if someone was asked to leave or chose to leave for example regarding a structural reorganisation or where there was a disciplinary or grievance matter, the Director of Law and Governance clarified that the guidance was rigorous regarding what needed to be considered when granting a payment. 4. The Chairman asked how the process was done before, the Director of Law and Governance explained that payment sign offs were done via normal approval processes, it would be taken to PPDC if there was a contentious element. He noted that there was previous guidance that anything over £100,000 needed to go to a Council meeting, but that was uncommon due to the short timescales.
RESOLVED:
That the Audit and Governance Committee agreed that the Financial Regulations are proposed to County Council for approval (Annex A).
Actions/further information to be provided:
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DATE OF NEXT MEETING
The next meeting of the Audit and Governance Committee will be on 10 May 2023. Additional documents: Minutes: The date of the next meeting of the Committee was noted as 10 May 2023.
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