Agenda and minutes

To note the attendance at this meeting of any duly appointed Reserve Members.

RESOLVED:  To note the attendance at this meeting of the following duly appointed Reserve Members:-

To receive declarations of disclosable pecuniary or non pecuniary interests, arising from business to be transacted at this meeting, from all Members present.

RESOLVED:  That the minutes of the meeting held on 21 September 2022, be taken as read and signed as a correct record.

That the minutes of the meeting held on 21 September 2022 be taken as read and signed as a correct record.

RESOLVED:  That the minutes of the meeting held on 21 September 2022, be taken as read and signed as a correct record.

To receive references from Council and any other Committees or Panels (if any).

RESOLVED:  It was noted that none were received.

At its meeting on 21 September 2022, the Committee appointed Councillors Yogesh Teli and Antonio Weiss to the Standards Working Group. The Committee is now asked to consider the appointment of Independent Members and Reserves.

At its meeting on 21 September 2022, the Committee established the Working Group and appointed Councillors Yogesh Teli and Antonio Weiss.  The Committee was now asked to consider the appointment of Independent Members and Reserves.

In response to a question, it was noted that the Independent Members were not members of the GARMS Committee and would be invited to meetings only if there was a Standards item on the agenda.

RESOLVED:  That the membership and rules of the Standards Working Group be agreed as set out on page 11 of the agenda.

Report of the Director of Finance and Assurance

The Committee received a report of the Director of Finance and Assurance which provided an update on the progress of the 2021/22 external audit.

Stuart Firth and Paddy Sadd from LLP Mazars, the Council’s external auditors, were welcomed to the meeting and introduced the report.  Particular attention was drawn to delays during the execution phase of the audit due to additional work arising from: changes in the ledger systems during the year; the requirement for further evidence to support the valuation of property, plant and equipment and investment property; and awaiting the outcome of consultation on a national issue regarding accounting for infrastructure assets. It was noted that these factors had impacted on the timeline.  With regard to significant risks, work on the migration from SAP to D365 had progressed and, having reviewed the internal assurance, been seen as appropriate and no concerns had been raised.  Work on property, plant and equipment had progressed, potential issues had been finalised and the next steps were under discussion with the officers.  With regard to Value for Money, advice from the technical team was that until the case concluded a conclusion could not be issued.

In response to  questions as to the type of risks involved with regard to property, plant and equipment, the Committee was informed that the work was complex, highly subjective and could result in a significant difference between valuations.  A lot of in depth testing and testing of input data would take place to ensure completeness.  The use of indexes reflected market movements and could influence valuations quite dramatically.   The impact on the financial statement of the Council with regard to property, plant and equipment valuations was difficult to determine until it was complete and there could be an accounting adjustment.  Work on the valuation of tangible assets, which was essentially software, had progressed with the Council having completed the review and populating and testing were now taking place.

The Chair queried why, as the bulk of property was schools and parks, the valuations were high risk when they could not easily change hands.  The Auditor explained that it was not so much comparative values but that it was not possible to observe market price.  Furthermore, the Council owned investment property, Council dwellings, and general fund properties with a variety of rental returns, values and leases.  Local Government Audit was of the same standard as for an investment company with the same steps.  It was a large task for the Council to support the audit of individual valuations and requests for base data.

A Member referred to the challenges to the methodologies of the Council valuer and requested information on the challenges and what had changed, whether the previous valuations had been correct or would the Council need to prepare for radical change in valuations in comparison with the previous year.  The Auditor responded that it was the first time an internal valuation expert had been involved due to the levels of risk shown in the previous year.  There  ...  view the full minutes text for item 37.

Report of the Director of Finance and Assurance

The Committee received a report from the Director of Finance and Assurance which set out the Annual Governance Statement (AGS) 2021/22.

The Head of Internal Audit and Corporate Anti-Fraud introduced the report, stating that the changes made to the Statement subsequent to the submission of the draft to the Committee in July were highlighted.  Members were informed that the evidence table with details of the annual review of the cross Council approach had revealed a higher number of minor governance gaps than in recent years.  It was noted that a detailed action plan would be submitted to the Committee to enable Members to track the progress of implementation.

A Member expressed concern that the Management Assurance exercise had confirmed that only around 50% of staff had received appraisals during 2021/22 and only 71% confirmed in the staff pulse survey that they had had regular conversations with their manager about their work and development.  Furthermore, 14% of staff were unclear as to what was expected of them.  She was concerned that staff were losing out and feeling undervalued.  The Head of Internal Audit and Corporate Anti-Fraud stated that the Head of Organisational Development and CSB had already taken action to improve the position in the current year and progress would be included in the action plan.

The Director of Finance and Assurance undertook to inform the Members as to what percentage of the workforce were agency workers.  It was noted that agency workers were not included in performance appraisal interviews but were represented in the pulse survey.

Another Member stated that it was the first time he had seen a qualified Opinion.  The officer confirmed this position and stated that it had arisen due to the considerable amount of work undertaken on the significant governance gap identified in the 2020/21 Annual Governance Statement.  The opinion had therefore been based on far fewer audit reviews and less audit coverage across the Council but was back on track already this year.

In response to a question regarding availability of finance for increased training provision, it was noted that a lot of work was being undertaken by the Organisational Development Team including new mandatory training on corporate anti-fraud.

A Member sought clarification as to whether the statement that no complaint had been received on the release of information regarding the significant governance gap was correct as he had been informed that there had been at least one. 

The Chair referred to the new requirement that separate bodies created by local authorities should abide by Nolan principles of openness and publish their board agendas and minutes and annual reports in an accessible place.  The officer stated that it was not a significant governance gap that this did not take place as it did not have a detrimental impact on the whole organisation.  She further clarified that the requirement did not mention the publication of full financial reports.

The officer responded to a question on timescale, stating that contact would take place with all relevant managers  ...  view the full minutes text for item 38.

Report of the Director of Finance and Assurance

The Committee received a report of the Director of Finance and Assurance which set out the 2021/22 year-end report for Internal Audit which included the Head of Internal Audit’s overall audit opinion on the control environment and the CAFT (Corporate Anti-Fraud Team) 2021/22 year-end report.

The Head of Internal Audit and Corporate Anti-Fraud introduced the internal audit report informing the Committee that her overall opinion was good with some significant improvements required in a few areas.  She stated that it was a qualified overall audit opinion based on fewer reviews undertaken than in a typical year due to the considerable amount of work required to provide support on the significant governance gap during 2021/22.  The Corporate Anti-Fraud Service Manager introduced the CAFT report referring to the joint work with audit on the governance gap. It was noted that all recommendations had been accepted by management.

In response to questions from Members on the CAFT year-end report, the Committee was informed that:

·                 there was not a performance indicator for the Corporate Anti-Fraud and Corruption Strategy as it was not an annual report but covered a number of years;

·                 the overall recoverable fraud losses of £48,134.51 attributed to revenues/business rates/council tax support fraud/grants could not be extrapolated because other than a Covid grant case they were linked cases to the Team’s primary role;

·                 the officer undertook to confirm the number of fraud referrals;

·                 the tenancy recovery value and the authorities’ fraud loss formula of £93,000 had been calculated by the Cabinet Office.  It did not represent a loss of rental but was the saving made by stopping the misuse;

·                 the amount of resource available to the team could not be directly related to the collection rate because of the preventive nature of the work.

RESOLVED:  That the report be noted.

Report of the Director of Finance and Assurance

The Committee received a report of the Director of Finance and Assurance which set out the draft Corporate Anti-Fraud and Corruption Strategy.  The Committee was invited to review and comment on the strategy as part of the wider cross Council consultation process.

The Corporate Anti-Fraud Service Manager introduced the report stating that  the strategy would be supported by an annual Fraud Plan developed by the Corporate Anti-Fraud Team and reported to the GARMS Committee regularly. He further stated that in the region of 40% of crime was against individuals.

Members asked a number of questions and were informed that:

·                 there was a fraud hotline which enabled anonymous reporting of fraud;

·                 although the strategy had not been reviewed and refreshed due to resources being diverted to the significant governance gap identified mid year, the draft strategy would be reviewed in 2022/23;

·                 whilst the consultees were yet to be determined it would include CSB and all key positions in the Local Authority.

In response to a question regarding model standards, the Committee was informed that the strategy was aligned to the Fighting Fraud and Corruption Locally strategy and checklist.  The officers would undertake work on the checklist once the strategy had been approved.

RESOLVED:  That the report be noted.

To resolve that the press and public be excluded from the meeting for the following item of business for the reasons stated.

To resolve that the press and public be excluded from the meeting for the following item of business for the reasons stated.

Report of the Director of Finance and Assurance

The Committee received a confidential report of the Director of Finance and Assurance, which set out a final red assurance report undertaken by Internal Audit as part of the 2020/21 Internal Audit Plan and reported as of the significant governance gap in the 2020/21 and 2021/22 Annual Governance Gap.  The report included recommendations made to improve controls and the agreed management action to help fulfil the Committee’s purpose to provide assurance to Members of the adequacy of the Council’s governance, risk management and control framework.

The Head of Internal Audit and Corporate Anti-Fraud introduced the report and informed the Committee that all the 54 recommendations had been agreed by management.  It was noted that a follow-up of these actions was due to be undertaken in September 2022 to assess progress and re-assess the risks.  Although management had provided an update of progress made in implementing the report’s recommendations, due to staff vacancies and other ongoing reviews Internal Audit resources had not been available to undertake the review.  She stated that it was intended that the review be undertaken in January 2023 and a report submitted to the Committee in due course.

The Chair requested an overview of the key changes and officers from the review area outlined the key elements including contract management, IT systems and financial systems and payments.  It was noted that the final piece of work would be staff training on procedures.

A Member enquired whether there was a system of continual review and how any future such circumstances would be prevented.  The Committee was informed that lessons learnt would be incorporated into the implementation plan and applied when looking in detail at other areas.  In addition, the elements would be included in both Council wide and directorate risk management.

Members asked a number of questions and officers from the area responded. It was noted that the target number of expected controls to be operating was 100%.  The actual contract had not been amended and documentation issues were not considered to be high risk particularly if not applicable throughout the Council.  A peer review with another Council would be useful.  Members were informed that it was a corporate requirement to undertake monthly budget monitoring.

The Committee was informed that the review and final audit was presented to the GARMS Committee in accordance with its delegation.  Consultation would take place with CSB and senior officers.

Members noted the issues and welcomed the recommendations that had been put in place.

RESOLVED:  That the report be noted.

During discussion on the item in minute 43 and in accordance with Committee Procedure Rule 14.1.2, the Committee agreed prior to 9.00 pm that

RESOLVED:  The meeting continue until 9.10 pm at the latest.