Agenda and draft minutes

Audit and Governance Committee - Wednesday, 13 March 2024 10.00 am

Venue: Surrey County Council, Woodhatch Place, 11 Cockshot Hill, Reigate, Surrey, RH2 8EF

Contact: Amelia Christopher  Email: amelia.christopher@surreycc.gov.uk

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No. Item

11/24

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

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    To receive any apologies for absence and substitutions.

    Additional documents:

    Minutes:

    Apologies were received from Ayesha Azad (remote).

     

12/24

MINUTES OF THE PREVIOUS MEETING - 17 JANUARY 2024 pdf icon PDF 111 KB

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    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.

13/24

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:

    Regarding item 6: Internal Audit Progress Report - Quarter 3, Terry Price declared a non-pecuniary interest noting that he was an examiner for a set of school accounts for a voluntary school.

     

14/24

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 (7 March 2024).

    2.  The deadline for public questions is seven days before the meeting (6 March 2024).

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

     

    Additional documents:

    Minutes:

    There were none.

15/24

RECOMMENDATIONS TRACKER AND WORK PLAN pdf icon PDF 77 KB

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    To review the Committee’s recommendations tracker and work plan.

    Additional documents:

    Minutes:

    Witnesses:

     

    Nikki O’Connor, Strategic Finance Business Partner (Corporate)

    Paul Evans, Director of Law and Governance, and Monitoring Officer

    Amelia Christopher, Committee Manager

    David John, Audit Manager

     

    Key points raised in the discussion:

     

    1.    The Chairman asked for a verbal update on completed action A5/24, he understood that one Member had not signed the requisite documentation. The Strategic Finance Business Partner (Corporate) explained that the External Audit Plan 2023/24 ideally would have come to March’s Committee meeting, it would however be brought to June’s Committee meeting. She noted that the new external auditors Ernst & Young (EY) had to delay the beginning of their audit planning work by a month as they could not start that work until they had a complete set of independence questionnaires from all Members and senior officers. She was actively chasing the outstanding questionnaire from a Member.

    2.    The Chairman referred to action A16/23 noting that the target date for completion was still outstanding. The Strategic Finance Business Partner (Corporate) explained that Grant Thornton had responded that Public Sector Audit Appointments (PSAA) had approved a series of ‘bake in’ variations which had been included on the audit plan for 2022/23, they do not however approve any additional variations on top of that until after the accounts are signed. The Strategic Finance Business Partner (Corporate) noted that they were close to signing off the 2022/23 Statement of Accounts. Final checks were underway, and it was hoped that it would be signed by early next week; once signed off the fee variation would be formally approved.

    3.    Regarding action A38/23 the Director - Law and Governance, and Monitoring Officer referred to the report going to March’s Health and Wellbeing Board which outlined how health integration was improving. The Committee Manager noted that she sent the update to Committee members yesterday afternoon attaching that report titled: Health and Wellbeing Board and Surrey Heartlands Integrated Care Partnership/Integrated Care Board Governance Review.

    4.    A Committee member referred to action A1/24 which was scheduled to be deleted, he noted ongoing concerns about the issue of late payments to members of staff; he welcomed the response provided and the progress being made, however he had not had a response to confirm that the issue had been resolved. From his research he found that there were many outstanding issues and having asked a question on the website, the answer given was that a response would be provided in three months. He requested an up-to-date response as to how all the complaints around late payments concerning the new Unit4/MySurrey system were being progressed. The Audit Manager noted that an audit was planned to start in March/April looking at the schools’ payroll function and it was hoped to be completed within quarter one, an audit was currently underway on the corporate payroll system.

    5.    The Cabinet Member for Finance and Resources explained that the issues around payroll had been well publicised, and a lot of work had been done and was underway to resolve the issues concerning  ...  view the full minutes text for item 15/24

16/24

INTERNAL AUDIT PROGRESS REPORT - QUARTER 3 pdf icon PDF 176 KB

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    The purpose of this progress report is to inform Members of the work completed by Internal Audit between 1 October 2023 and 31 December 2023.

     

    The current annual plan for Internal Audit is contained within the Internal Audit Strategy and Annual Plan 2023-24, which was approved by this Committee on 8 March 2023.

     

    Additional documents:

    Minutes:

    Witnesses:  

     

    David John, Audit Manager

    Paul Evans, Director of Law and Governance, and Monitoring Officer

    Simon White, Audit Manager - Counter Fraud

    Paul Fielding, IT Audit Manager

     

    Key points raised in the discussion:

     

    1.    The Audit Manager outlined the breakdown of the twenty completed assignments in the last quarter, the level of assurance was fairly high. He referred to the two Partial Assurance audits: Schools Alliance for Excellence (SAfE) Contract and Unofficial School Funds (USFs). Regarding the SAfE Contract there were no issues with the quality of the service being delivered, the issues were around internal contract management processes and due to Covid-19, an insufficient level of input from procurement. The service had been responsive in agreeing actions to address the weaknesses identified, a follow up audit would take place in next year's plan. Regarding USFs, the audit had been scheduled in response to the £500,000 fraud case at Hinchley Wood Primary School, to ensure that the process set out in the Schools Finance Manual is transparent, robust, and followed good practice. The problem was the low level of assurance to the Council that schools had got the funds properly under control and that schools finance colleagues know what the balances being held were and how they were examined. Actions had been agreed and once schools are up to speed with that guidance, a follow up audit would be undertaken late in the next financial year.

    2.    The Audit Manager highlighted the Surrey Fire & Rescue Service (SFRS) Contract Management Arrangements Follow-Up audit which had an upgraded opinion from Partial to Reasonable Assurance. SFRS had been responsive to the agreed actions and the area would be kept under review.

    3.    The Audit Manager noted that nine schools audits had been undertaken in the quarter, one had Partial Assurance although there was no fundamental weaknesses of grave concern just a cumulative level of findings within the control environment.

    4.    The Audit Manager noted that the performance of the Productivity and Process Efficiency aspect delivered by the Internal Audit Service was rated at Amber with a delivery of 67.5% for the Audit Plan - completion to draft report stage indicator against the 90% target, the service was striving to meet that by the end of March.

    5.    A Committee member welcomed the USFs audit being carried out as there was a reputational risk in terms of the Council not knowing the balances held by schools. Being an examiner himself, he was not totally surprised by some of the findings and it would take time to embed the changes, it was important that inspection certificates are provided to the Council as well as the details about how much money has been held as it varied by school. The Audit Manager agreed regarding the reputational risk, noting the time and effort that went into the fraud case against a Council employee concerning Hinchley Wood Primary School, employees should be clear about what they should do and that the processes are fit for purpose. He  ...  view the full minutes text for item 16/24

17/24

INTERNAL AUDIT STRATEGY AND ANNUAL AUDIT PLAN 2024/25 pdf icon PDF 129 KB

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    The purpose of this report is to present the Internal Audit Strategy and Annual Internal Audit Plan for 2024/25 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 2024/25 as good practice dictates that these should be updated and reviewed on an annual basis.

     

    Additional documents:

    Minutes:

    Witnesses:

     

    David John, Audit Manager

    Russell Banks, Chief Internal Auditor

    Simon White, Audit Manager - Counter Fraud

     

    Key points raised in the discussion:

     

    1.    The Chairman highlighted that the Committee had a training session on the plan.

    2.    The Audit Manager explained that the content of the plan was drawn from consultation with management and Members and takes a risk-based approach, sought the Committee’s endorsement that the approach and the content seem reasonable and fit for purpose. Noted that due to the implementation of Unit4/MySurrey this year some of the key financial systems would be assured next year as a priority. Reiterated that Internal Audit undertakes follow-up audits given Minimal or Partial Assurance, to check management has actioned what they agreed to and that the controls have improved. Highlighted that the plan adapts to emerging issues whereby there were 400 days of contingency time, and any audits not completed in the year would be rolled over. Noted that the number of audit days increased back to the 2022/23 amount, that includes 225 dedicated days of schools audit time equating to 30 to 35 schools audits.

    3.    A Committee member noted the discussion last March about staffing and the difficulties in recruiting to fill vacancies, sought an update on the current situation. The Chief Internal Auditor noted that there were some vacancies within the service, recruitment was ongoing and some successful appointments had been made. Due to the national challenges of recruiting experienced qualified auditors, the approach taken was to hire entry level people and invest heavily in their professional development. The gap at senior principal auditor level was being filled through external contractor resource, the ambition was to not have to use that external resource going forward. Noted confidence in having the resources to deliver the plan, hence the increased number of audit days.

    4.    The Chairman asked whether there had been many identified cases from the National Fraud Initiative (NFI). The Audit Manager - Counter Fraud noted that the Pensions Administration team had updated all the mortality matches, the savings in concessionary travel were lower compared to the previous exercise which cleared off many cases, it would be a biennial exercise going forward. Results using the new Unit4/MySurrey system were uncertain regarding creditors and preventing duplicate payments, and some payroll matches were being looked at.

    5.    The Audit Manager - Counter Fraud responded to the Chairman noting that Blue Badge fraud was still being looked at, that was administered by a national body and the Council received matches, referrals concerning misuse were infrequent.

    6.    The Audit Manager - Counter Fraud responded to the Chairman noting that 150 days were set aside for counter fraud, if needed more days could be allocated if other areas in the plan are reprioritised. Hinchley Wood Primary School fraud case had exceeded that allocation over the past few years, however large scale cases were not frequent, investigations were usually 10 or 15 days. Every two years there was a peak when collating  ...  view the full minutes text for item 17/24

18/24

ETHICAL STANDARDS ANNUAL REVIEW 2023-24 pdf icon PDF 248 KB

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    To enable the Committee to monitor the operation of the Members’ Code of Conduct, including complaints made concerning councillors, the declaration of gifts and hospitality and Interests over the course of the last year.

     

     

    Additional documents:

    Minutes:

    Witnesses:

     

    Paul Evans, Director of Law and Governance, and Monitoring Officer

     

    Key points raised in the discussion:

     

    1.    The Director of Law and Governance, and Monitoring Officer explained that the annual report on the operation of the Member Code of Conduct had expanded to include sections on declarations of interest, and gifts and hospitality. Members received induction training on the Code with ongoing development throughout the year such as on social media and refresher training on the Member-Officer Protocol. Noted that ten complaints had gone through the complaints process, none were formally investigated and no breach of the Code was found. Noted the importance of Members being aware of how their comments are perceived by others, particularly on social media. Members were required to register their interests and a reminder was sent every six months to update it. There were nine declarations last year at decision-making meetings, officers were not aware of any issues where a Member has not declared an interest at a meeting when they should have done. Noted that Members must register any offers of gifts or hospitality over £50, whether accepted or refused; there were 18 entries last year mainly relating to the Leader. Noted the suggestion that a more targeted reminder be sent to those roles more likely to be offered gifts and hospitality. At present, the suggestion of requiring a nil return by all Memberswas considered disproportionate based on the entries.

    2.    The Chairman agreed that it would at present be disproportionate to ask all Members to submit a nil return regarding the gifts and hospitality register.

    3.    A Committee member agreed that it would be disproportionate, noting that even as former Chair of the Council she paid her own way; it was vital to remind Members to declare their gifts and hospitality, the Director of Law and Governance, and Monitoring Officer noted that the last reminder was sent in December 2023.

    4.    A Committee member welcomed the annual report which covered the Member Code of Conduct and queried whether there should be a similar report covering senior officers alongside the report on Members. The Director of Law and Governance, and Monitoring Officer explained that a report was monitored on a quarterly basis for gifts and hospitality, interests and whistleblowing at an officer level. The proposal for some time had been to report it to the Committee, he understood that the Unit4/MySurrey system generated those reports and once those declarations were coming through reliably, the report would be brought to the Committee.

     

    RESOLVED:

     

    1.    Noted the Monitoring Officer’s report on recent activity in relation to the Members’ Code of Conduct, including Registration of Interests and Gifts and Hospitality, and complaints made in relation to Member conduct.

    2.    Noted the further training and development planned for the coming year at paragraph 14.

     

    Actions/further information to be provided:

     

    1.      A10/24 - The Committee will receive the report on gifts and hospitality, interests and whistleblowing at a senior officer level alongside the annual report  ...  view the full minutes text for item 18/24

19/24

APPOINTMENT OF INDEPENDENT MEMBER TO THE AUDIT AND GOVERNANCE COMMITTEE pdf icon PDF 110 KB

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    This report details the process undertaken to date to recruit an Independent Member to the Audit and Governance Committee and confirms that the preferred candidate will be recommended to County Council for appointment as the Independent Member to the Audit and Governance Committee.

     

    Additional documents:

    Minutes:

    Witnesses:

     

    Paul Evans, Director of Law and Governance, and Monitoring Officer

    Amelia Christopher, Committee Manager

     

    Key points raised in the discussion:

     

    1.   The Director of Law and Governance, and Monitoring Officernoted that the date for the recruitment panel to interview the suitable candidates would be confirmed in the next few weeks; there had been six applicants.

    2.   The Committee Manager confirmed that Group Leaders had been consulted and the four Committee members that formed the recruitment panel would be: Victor Lewanski, Richard Tear, Steven McCormick, Stephen Cooksey.

     

    RESOLVED:

     

    Noted the recruitment process being undertaken and following an interview process, will recommend the preferred candidate to County Council to be appointed as the Independent Member to the Audit and Governance Committee.

     

    Actions/further information to be provided:

     

    1.    A11/24 - The Committee Manager will send out an email to the recruitment panel noting the next steps.

     

20/24

RISK MANAGEMENT pdf icon PDF 105 KB

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    To provide an update on risk management.

    Additional documents:

    Minutes:

    Witnesses:

     

    David Mody, Head of Strategic Risk

     

    Key points raised in the discussion:

     

    1.    The Head of Strategic Risk outlined the progress made in 2023 as set out in the report, covering: Risk Management Strategy, risk ‘intranet’, Local Working Instructions, Risk Management training, completed Risk Management actions, Grant Thornton’s review of Risk Management, and welcomed the two nominations to Risk Management for the Council’s Stars in Surrey ‘Team Award for Outstanding Customer Service’. Compared to the previous year, 2024 was more outwardly focused with best practice being sought from other councils’ risk managers to see what they were doing and what could be applied to the Council, and would look at benchmarking against their Corporate Risk Registers; progress had been made.

    2.    A Committee member congratulated the officer for receiving those nominations. He highlighted ST.34 and asked why that risk regarding Home to School Travel Assistance had been removed from the Corporate Risk Register. The Head of Strategic Risk noted that over the last few years there had been 37 corporate risks and there were currently 22 corporate risks; areas which had improved were removed and new priorities were added in. Regarding Home to School Travel Assistance, improvements had been made over the past year so it was decided that it be removed as it did not need to be monitored from a corporate level, it continued to be monitored at directorate level and a report went to Informal Cabinet last year.

    3.    The Chairman noted a typo regarding ST.27 which had an overall score of 10 and it says that it ‘was 2’, should that be ‘was 12’ as the score had decreased. The Head of Strategic Risk clarified that ‘was 2’ was an error in the old version of the report, the published agenda correctly noted that the overall score is 10 and ‘was 15’.

     

    RESOLVED:

     

    Noted the update on risk management.

     

    Actions/further information to be provided:

     

    None.

     

     

     

21/24

VOTE OF THANKS TO RETIRING INDEPENDENT MEMBER

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    The Chairman to report.

    Additional documents:

    Minutes:

    Witnesses:

     

    Anna D’Alessandro, Director - Corporate Finance and Commercial, and Interim Section 151 Officer

     

    Key points raised in the discussion:

     

    1.    The Chairman noted that the Committee’s Independent Member, Terry Price, was retiring and he thanked him for all his contributions over the past two years; he wished him all the best for the future and noted that it had been a pleasure to have him on the Committee. The Independent Member noted that he was leaving to do fewer things, he thanked the Chairman, Committee members, and Cabinet Member for Finance and Resources, and officers for addressing his queries; noting that he had enjoyed his time as a Committee member.

    2.    The Chairman echoed the Committee member’s comments about the officers thanking them for all their hard work in preparing the Committee’s reports. The Director - Corporate Finance and Commercial, and Interim Section 151 Officer welcomed that thanks.

     

    RESOLVED:

     

    That a vote of thanks was given to the retiring Independent Member.

    Actions/further information to be provided:

     

    None.

     

22/24

DATE OF NEXT MEETING

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    The next meeting of the Audit and Governance Committee will be on 5 June 2024.

    Additional documents:

    Minutes:

    The date of the next meeting of the Committee was noted as 5 June 2024.

     

    The Chairman noted that Paul Evans, Director of Law and Governance, and Monitoring Officer would be leaving the Council, he thanked him for all his exemplary legal advice provided to the Committee. The Director of Law and Governance, and Monitoring Officer welcomed the Committee’s thanks.