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Declarations of Interest
Members are asked to declare any disclosable pecuniary or affected interests in respect of any matter to be considered at this meeting.
Any Member with a Disclosable Pecuniary Interest in a matter should withdraw from the meeting when the matter is under consideration and should notify the Democratic Services Officer in attendance that they are withdrawing as they have such an interest. If the Disclosable Pecuniary Interest is not entered on the register of Members interests the Monitoring Officer must be notified of the interest within 28 days.
Any Member with an affected Interest in a matter must disclose the interest to the meeting. There is no requirement to withdraw from the meeting when the interest is only an affected interest, but the Monitoring Officer should be notified of the interest, if not previously notified of it, within 28 days of the meeting.
To approve as a correct record the minutes of the meeting of the Committee held on 31 October 2018.
RESOLVED: that the minutes of the meeting of the Committee held on the 31 October 2018 be approved as a correct record, and signed by the Chairman.
Urgent Items of Business
Any other items which, pursuant to Section 100B(4)(b) of the Local Government Act 1972, the Chairman decides are urgent.
There were no urgent items of business.
To consider and review the 2018/19 Mid-Year Review Report and to review the Treasury Management Report for 2019/20.
Calvin Orr, Head of Finance and Business Services attended the Committee and presented the 2018/19 Mid-Year Review Report and the Treasury Management Report for 2019/20 and explained that:
· The report was brought annually to the Governance and Audit Committee (G&A) and filled 2 criteria.
The current Council debt was outlined.
The second element of the report was the Treasury Management Report for next year (2019/20) which outlined the Treasury Strategy, investment criteria and the Minimum Revenue Provision (MRP) policy.
The Minimum Revenue Provision policy was explained, in particular, the timings needed explanation.
To note the External Auditor’s Annual Report on grant claims and returns for 2017/18 presented by the Council’s External Auditor.
The Council’s External Auditor Ernst & Young attended the Committee and provided the Annual Report on Grant Claims and Returns for 2017/18.
Justine Thorpe, Manager: Ernst & Young advised Members that:
· There was only one claim to audit. This was the Housing Benefit Subsidy for 2017/2018.
· The claim was for £29million.
· There was a qualification with the claim but it had not been amended.
· Some overpayments had been found.
· Assessments of Housing Benefit were complex, and errors were not unusual.
· The Department for Work and Pensions (DWP) wanted errors recording to the penny and then extrapolated across the population.
· There had been an overpayment of benefits of £254.48.
· Extrapolated over the population this amounted to an overpayment of £6396. It is unlikely the DWP will want to claim this back.
· Errors were down to small human errors inputting data.
The Chairman gave congratulation to Stuart McKellar, Director: Finance and his team.
RESOLVED: that the External Auditor’s Annual Report on Grant Claims and Returns for 2017/18 presented by the Council’s External Auditor be noted.
To note the Audit Plan for the 2018/19 financial year from the Council’s External Auditor.
The Council’s External Auditor Ernst & Young attended the Committee and presented the Audit Plan for the 2018/19 financial year.
Andrew Brittain, Associate Partner: Ernst & Young highlighted the main audit risks and areas of focus of the Audit Plan 2018/19 for Members and explained:
In response to Member questions, Andrew Brittain, Associate Partner: Ernst & Young explained:
To note the report that summarises the internal audit activity during the period April to December 2018.
Sally Hendrick, Head of Audit and Risk Management attended the Committee and provided the internal audit activity report that summarises the internal audit activity during the period April to December 2018.
Sally Hendrick, Head of Audit and Risk Management advised the Committee that:
· This was the latest interim report, that last report was provided to the Committee in October 2018 and covered the period April to September 2018.
· This report covered the period April to December 2018.
· Section 3.2 set out the summary of the outcome of all of the audits to date.
· There was a high number of limited assurance reports compared to last year. There were a number of further audit reports currently received in for client side for review with limited assurance
· There were a number of repeated limited assurance reports that needed flagging at this time where issues had not been addressed.
· Appendix B showed the follow up position on previous limited assurance areas where major issues had been identified.
· Section 3.4 identified the major control issues that had a limited assurance opinion.
· Detail on limited assurances already reported in the October 2018 report had not been repeated.
In response to questions from Members, Sally Hendrick, Head of Audit and Risk Management advised the Committee that:
· There were a number of ‘repeat offenders’ with limited assurances. This was possibly down to a number of new officers and their level of understanding of opinion levels not being as great as it might be. There were a variety of different influencing factors. Further action needed to be taken to make sure limited assurance reports were reviewed closely at DMT level to make sure that agreed actions were implemented and actually done. This would reduce the level of repeated limited assurance reports.
· Within the follow up of areas previously audited with major control issues, there were 8 cases that had been revisited and re-audited. In 7 cases priority 1 recommendations were raised again.
· Some areas had not yet been revisited for a follow up audit but were due to be.
· If, during the follow up audit, areas received a limited assurance again, they would be revisited for a third time to address the situation.
· Home to School Transport was one of the areas that had been re-audited and recommendations were raised and reported to the Committee in October 2018. It was asserted that the issues on DBS checks were to a large extent because DBS checks were not controlled by the transport team, the team were working on taking mitigating actions and required assistance from other council areas, to address the issues they faced.
· Pressures in ICT with staff working on transformation projects and staff turnover may have contributed to issues on the cyber security audit not being addressed.
· ICT had asset management issues going back to 2015 and had issues with controls over IT equipment and stock. These were revisited this year (2018) and the audit showed similar issues that weren’t expected.
· Accounting system blips had ... view the full minutes text for item 30.
To provide feedback on the completeness of risks and appropriateness of risk scores including the score for risk appetite in the Register attached at Appendix 1.
Sally Hendrick, Head of Audit and Risk Management attended the Committee and presented the Strategic Risk Register.
The Committee considered the updated Strategic Risk Register and provided feedback on the completeness of risks and appropriateness of risk scores including the score for risk appetite in the Register.
Sally Hendrick, Head of Audit and Risk Management advised the Committee that:
· The Strategic Risk Register was reviewed on a quarterly basis, by the Corporate Management Team (CMT) every 6months and by Governance and Audit Committee every 6 months.
· The key proposed changes agreed at the Strategic Risk Management Group (SRMG) and the Corporate Management team (CMT) were to:
o Decrease the financial risk.
o Reduce the transformation risk.
o Reduce the staffing risk.
o Include an overarching Brexit risk to replace the global economy risk.
o Reduce the demand for services risk
· There was an additional further risk of note following a report to CMT. This was the potential relocation of Vodaphone which would impact on business rates in 2020. This would be brought back into the Risk Register on Thursday 7 February 2019.
Following questions and comments from Members, Calvin Orr, Head of Finance and Business Services advised that:
· There were 2 risks associated with the Vodaphone relocation of its data centre from Bracknell to Newbury.
o The reform of business rates in 2020/21 where it was believed they would move to central list.
o The combination with the rest of the business rates in 2021.
· The Council had only become aware in the last few weeks that Vodaphone was moving its main data hub in Waterside Park to Newbury. At the moment they were constituted as being based in Bracknell and, if they moved before 2021 this would result in loss of income. The move was unlikely to be done quickly but there was a risk to the business rates reform if they moved back on central rates.
· It was unlikely business rates would be reformed in 2019/20 as the Valuation Office were unlikely to do it quickly.
· The Vodaphone business rates income was a large source of income for the Borough.
· The public announcement of the move was this week but it was unknown how advanced the move was.
The Chairman commented that it was good to see that there had been quite a few reductions in strategic risks and the picture looked slightly less bleak.
The Chairman thanked Sally Hendrick, Head of Audit and Risk Management for attending the Committee and providing the Strategic Risk Register.
To note that Ernst & Young LLP has been appointed to undertake the required audit of the Housing Benefit Grant Claim for 2018/19.
The Committee were notified of the appointment of the Council’s External Auditor Ernst & Young to undertake the required audit of the Housing Benefit Grant Claim for 2018/19.
NOTED: The Governance and Audit Committee noted that Ernst & Young LLP had been appointed to undertake the required audit of the Housing Benefit Grant Claim for 2018/19.