Agenda and minutes

To receive apologies for absence and to note the attendance of any substitute members.

Apologies were received from Councillor Walker and Councillor MacCracken, for whom Councillor Mrs Ballin substituted.

To receive any declarations of personal or prejudicial interests, and the nature of that interest, in respect of any matter to be considered at this meeting.

There were no declarations of interest.

To approve as a correct record the minutes of the meeting of the Committee held on 29 September 2009.

The minutes of the meeting held on 29 September 2009 were approved as a correct record and signed by the Chairman.

Matters arising

Under item 17, the Committee asked what fee had been negotiated with the District Auditor, and was told £255,200.

The purpose of this report is to present the Annual Audit and Inspection Letter (AAIL) which has been received from the Audit Commission.  The External Auditor will attend the meeting to present the Letter and answer any questions.

Alan Nash, Chief Officer: Financial Services introduced the annual audit inspection letter. He told the meeting that the letter summarised the 2008/2009 Audit, and gave four recommendations which it was proposed would be picked up by Directors to go into their 2010/2010 business plans.

Phil Sharman, District Auditor, gave background to the letter. He told the meeting that the Audit Commission had decided that Audit and Inspection reports would be published separately in future. The audit report was available earlier this year than in previous years, and had been agreed with officers in December 2009. The financial statements on page 11 of the agenda papers had been re-approved at the last meeting of Governance and Audit, and the overall outcome was that in spite of a challenging year, he had been able to give an unqualified opinion on the financial statements.

Under value for money and use of resources, which was a new part of the report, the District Auditor had been able to given an unqualified opinion as all requirements had been met. The Council had also performed well in managing use of natural resources. The Council continued to focus on value for money, procurement had been strengthened, and risk management developed. Data quality had also been strengthened and governance arrangements were being strengthened.

The recommendations in the letter gave potential areas for improvement. There were common areas across three East Berkshire unitary authorities, and partnership working was in place, giving opportunities for further development. An impairment for the Icelandic banks had been provided for in the 2009/2009 accounts. Treasury management had been strengthened.

On the subject of his fee, Mr Sharman told the meeting that it was a significant investment of resource, but represented less than 0.5% of Council spending. There was a statutory requirement that the fee should cover only the cost of services, with no element of profit.

The Chairman thanked the District Auditor for his comments, and asked for questions. He was asked whether the four-point scale, of which the Auditor had spoken, consisted of equal divisions or a matrix. He was told that Level 1 was the lowest, and it would be rare for a unitary authority of this size to have any Level 1 scores; Level 2 indicated that the Council met professional standards; Level 3 met professional standards, arrangements were embedded, and were yielding positive outcomes. Level 4 was awarded for national exemplars, and there were very few of these. The District Auditor told the meeting that it was purely a judgement, but from the first year of scoring on these levels, there was a spread of scores.

The Committee drew the Auditor’s attention to paragraph 30 of the letter, noting that the Auditor had recognised the Council’s consistently-managed spending over the past 11 years, and asked whether there were exemplars the Council could learn from. In response, he was told that there was more detail on page 21 under Appendix 1 where the KLOE 1.2 score was already at Level 3.  ...  view the full minutes text for item 24.

This report provides a summary of Internal Audit activity during the period April to December 2009.

Sally Hendrick, Head of Audit and Risk Management, introduced Jay Hussain from HW Controls and Assurance, the Council’s contractor for internal audit. She then gave an overview of the internal audit assurance report for April to December 2009, which had been circulated, and  told the meeting that individual internal audits in the Plan would be delivered by HW Controls and Assurance. Twenty-seven reports had been finalised, 12 had been issued in draft, and six were going through quality review and in 8 cases audit work was in progress. She then drew members’ attention to the Limited Assurance section on page 31/32. Under Environment, Culture and Communities, “Sustainability”, Mr Hussain explained that this issue was about CRB checking of volunteers working on open spaces. It was unclear what CRB checks have been made. In response to questions about the need for volunteers to be CRB checked, Mr Hussain told the meeting that under the Protection of Children and Vulnerable People policy, it was deemed necessary for volunteers to be checked if they were likely to make contact with children or vulnerable people in the course of their work.

The meeting discussed the issue of financial control at The Pines School and concluded that the school needed to ensure that enough time was given to the Bursar for all finance work to be done on time. The decision on this would rest with the Governing Body, and the Chairman asked that a message be conveyed to The Pines School that the Governance and Audit committee expected this to be resolved very quickly.

In response to a question about recovery of overpayments, the Head of Audit and Risk Management told the meeting that it would be deducted from future payments, and the Chief Officer: Financial Services reported that a small proportion of the loss would be born by the Council. The Head of Audit and Risk Management offered to ask Benefit Fraud Investigators to attend a future meeting of the Governance and Audit Committee, and this was agreed.

The Chairman thanked Sally Hendrick and Jay Hussain for their report.

The committee RESOLVED to note the report.

This report is to appraise the Committee of a proposal to abolish the Constitution Review Group and to transfer its functions to the Governance and Audit Committee.

The Borough Solicitor introduced this information item which proposed that the functions of the Constitution Review Group be transferred to the Governance and Audit Committee. The Constitution Review Group had agreed at their meeting that the group should be abolished. The Committee unanimously agreed to the proposal.

The purpose of this report is to consider whether Members of the Council should be required to complete an annual declaration of “Related Party Transactions” in the same fashion as senior officers are required to.

The report on Related Party Transactions had been circulated, and the Borough Solicitor introduced it. The recommendation was that Members of the Council be required to complete an annual declaration of Related Party Transactions in the same way that senior officers were required to do. He told the meeting that this was a transparency issue, and the form was not onerous. The Committee asked how they would know if they had to declare a matter relating to a relative or a company in which they had a shareholding, and the Borough Solicitor explained that it only required filling in those areas which were within the Member’s own knowledge. The Committee accepted in principle that all Members should have to complete a declaration of Related Parties Transactions but felt that the current form and guidance was too ambiguous.

It was unanimously RESOLVED in principle that Members of the Council be required to complete an annual declaration of Related Party Transactions, subject to the form being revised and clarified.

To inform the Committee of the implications of the pending introduction of International Financial Reporting Standards.

The Chief Officer: Financial Services introduced this information item concerning the implications of the pending introduction of  International Financial Reporting Standards, which had been circulated. He explained that this was an attempt to bring private sector financial standards into local authority finance.

The Committee RESOLVED to note the report.

To note the future meeting dates at 7.30pm:

• 26 January 2010 in Function room – Closed session for committee training with Ian Fifield. Both Members and Substitute Members are welcome.

• 29 March, 29 June, 21 September, 23 November and 22 March 2011.

Future meetings of the Governance and Audit Committee will take place on

29 March 2010

29 June 2010

21 September 2010

23 November 2010

22 March 2011