Agenda and minutes

The Chairman reminded everyone present that the meeting would be broadcast live to the Internet, and that the Council had adopted a protocol for the webcasting of its meetings.

To confirm the minutes of the last meeting of the Committee held on 25 September 2014 (previously circulated).

Resolved:

(1)        That the minutes of the meeting held on 25 September 2014 be taken as read and signed by the Chairman as a correct record, subject to the addition of the External Auditors as attendees.

The Vice-Chairman of the Committee requested an update on the development of a Prudential Borrowing Policy agreed at the last meeting (minute 25 resolution 2 refers), as it had not been included in the Mid-Year Treasury Management report to be considered later in the meeting. The Principal Accountant (Treasury Management) informed the Committee that the issue of Prudential Borrowing was being added to the Treasury Management Statement and would be considered by the Committee at its next meeting scheduled for 5 February 2015.

(Director of Governance) To consider the attached Work Programme for 2014/15.

The Committee noted its Work Programme for the current municipal year.

(Director of Governance) To consider the attached report (AGC-014-2014/15).

The Committee agreed to consider this report as the next item of business of the meeting.

The Director of Governance introduced a report on the review of the Council’s current structure of Scrutiny Panels, which included details of possible options for the future structure, being undertaken by a Task & Finish Panel during 2014/15. This report had been provided for the Audit & Governance Committee to comment on the proposals which had a potential impact upon it.

The Vice-Chairman of the Overview & Scrutiny Task & Finish Panel reminded the Committee that the Task & Finish Panel had been established in February 2014 to examine the existing framework of the Council’s Scrutiny Panels, and suggest how the future structure could complement the new management structure of the Council. The Task & Finish Panel had met on two occasions so far, with a third meeting due to take place the following evening. In addition, a Member workshop had recently taken place. At the second meeting of the Panel, all of the current Scrutiny Panel Chairmen had offered their views on the current and possible future arrangements.

The three Appendices to the report were highlighted to the Committee by the Vice-Chairman of the Task & Finish Panel. Appendix 1 illustrated the current structure and indicated those areas of responsibility that were not tacitly covered by one of the current Scrutiny Panels. Appendix 2 demonstrated how the Scrutiny Panels could be aligned with the new Directorate structure implemented in April 2014. This approach would also lend itself to a ‘Commissioning Model’ whereby a separate Task & Finish Panel or Work Group could be set up to examine a particular issue in detail. Appendix 3 revealed a potential five Panel Thematic ‘Select Committee’ approach, which would include a combined Audit & Standards Select Committee under the umbrella of the Overview & Scrutiny Committee. The current Constitution & Member Services Scrutiny Party could become a Working Party to complete its review of the Council’s Constitution.

The Vice-Chairman of the Task & Finish Panel informed the Committee that the recent Member Workshop had favoured the merger of the current Audit & Governance and Standards Committees, and the Commissioning Model was not popular although elements of it could prove useful. It was also felt that the current Housing Scrutiny Panel worked very well, and had a heavy workload which would preclude its combination with another Panel. The Committee was asked to consider and comment upon the review.

The Chairman of the Audit & Governance Committee expressed his concerns about the comments that had been attributed to him in the report, specifically paragraph (3) as the Chairman felt that he had been quoted out of context and had not made the statements quoted in the report. The Chairman clarified the context for his comments was that the original proposal for the review was for the structure of the Scrutiny Panels to match the structure of the new Directorates; it was not envisaged that this review would encompass the Audit & Governance Committee or the Standards Committee, as both of these bodies report direct  ...  view the full minutes text for item 32.

(Director of Resources) To consider the attached report (AGC-012-2014/15).

The Principal Accountant (Treasury Management) presented the mid-year progress report on Treasury Management and Prudential Indicators, which covered the treasury activity for the first half of 2014/15, and was a requirement of the Chartered Institute of Public Finance & Accountancy (CIPFA) Code of Practice on Treasury Management.

The Principal Accountant reported that, during the first half of the year, the Council had continued to finance all capital expenditure from within internal resources. The revised estimate for the Capital Programme during 2014/15 had indicated expenditure of £26.452million, which would be financed by capital grants, capital receipts and revenue. The Capital Programme for the three-year period ending 31 March 2017 had forecasted expenditure of £60million, with £1.8million available in usable capital receipts and £4.1million in the Major Repairs Reserve. Therefore, it was considered that adequate resources existed for the Council’s Capital Programme in the medium term.

The Principal Accountant advised the Committee that the Council had £62.1million under investment at 30 September 2014, and the average net investment position of the Council had been approximately £62million throughout the first half of 2014/15. The Council’s investments as at 30 September 2014 had consisted of £38.3million in fixed investments, £13.8million in variable investments and £10million in long-term investments. The Council had also received a further dividend from the administrators of the Heritable Bank; the Council had now received 94% of the value of its deposits. It was anticipated that further dividends would not be received until all outstanding litigation had been settled and the administration process had been completed.

The Principal Accountant stated that the Council held loans totalling £185.47million at 30 September 2014, which had funded the self-financing of the Housing Revenue Account. It was not anticipated that the Council would require further loans in 2014/15, but it was expected that a further £20million would be borrowed in 2015/16. The timing and exact amounts of this borrowing was still uncertain as it depended on the progress with various economic development schemes and the Council’s share of developments in St John’s Road, Epping and the Epping Forest Shopping Park in Debden. The Public Works Loans Board would be the Council’s preferred source of borrowing in 2015/16, given the transparency and controls that it continued to provide, and this additional borrowing would not exceed the Council’s authorised limit of £230million for total borrowings.

Finally, the Principal Accountant added that there had been no breaches of any of the prudential indicators relating to capital activity, the indebtedness for capital purposes and the Council’s overall Treasury position.

The Committee welcomed the report and noted that the Council was getting a good return with minimal risk from its investments, and that the interest rates were declining for long-term loans from the Public Loans Works Board. The Director of Governance confirmed that the proposed capital expenditure for the two schemes in Epping and Debden had been agreed at the last meeting of the Council.

Resolved:

(1)        That the mid-year progress report on Treasury Management and the Prudential Indicators for 2014/15,  ...  view the full minutes text for item 33.

(Director of Resources) To consider the attached report (AGC-013-2013/14).

The External Auditor presented the Annual Audit Letter for 2013/14, which summarised the key issues that had arisen from the External Auditor’s work during the year.

The External Auditor reported that an unqualified true and fair opinion on the Council’s Financial Statements had been issued on 30 September 2014, and that the Council’s significant financial systems were adequate for producing the Financial Statements. No material misstatements had been identified during the audit, however, it had been noted that the control environment could be strengthened for the monthly reconciliations between the Housing Rents system and the General Ledger. It was considered that proper arrangements had been put in place by the Council to secure economy, efficiency and effectiveness in its use of resources, and an unqualified value for money conclusion had also been issued on 30 September 2014.

The External Auditor stated that they were satisfied the Annual Governance Statement was not inconsistent or misleading with information from the audit of the Financial Statements, and also complied with the guidance “Delivering Good Governance in Local Government” issued by the Chartered Institute of Public Finance & Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE). The Council’s Whole of Government Accounts (WGA) return was consistent with the audited Financial Statements, although an amendment for the Pension Deficit figure was required, resulting in a reduction of £496,000 for the Pension liability, following a revised statement from the Actuary. The review of the Housing Pooled Capital Receipts return had been completed, which resulted in one adjustment, whilst the review of the Housing Benefits Subsidiary claim for 2013/14 was in progress and would be reported in January 2015.

The External Auditor concluded that the work of the Council’s Internal Audit team could be relied upon, and that the assistance and co-operation provided by the Council during the audit was much appreciated. In response, the Chairman thanked the External Auditors for their efforts throughout the year.

Resolved:

(1)        That the Annual Audit Letter for 2013/14, issued by the External Auditor, be noted.

(Chief Internal Auditor) To consider the attached report (AGC-015-2014/15).

The Chief Internal Auditor presented the Internal Audit Monitoring report for the second quarter of 2014/15, which provided a summary of the work undertaken by the Internal Audit Unit between July and September 2014. The report detailed the overall performance to date against the Audit Plan for 2014/15 and also enabled the Committee to monitor the progress of Priority 1 actions issued in previous reports.

The Chief Internal Auditor advised the Committee of the audit reports that had been issued during the period:

(a)        Full Assurance:

·                      None;

(b)        Substantial Assurance:

·                      Business Plans;

·                      Commercial Property Management;

·                      Reprographics;

·                      North Weald Airfield; and

·                      Key Performance Indicators;

(c)        Limited Assurance:

·                      Facilities Management; and

·                      Planning Fees

(d)        No Assurance:

·                      None.

The Chief Internal Auditor also highlighted that there were a further six reports being drafted concerning: Car Mileage Claims; Corporate Procurement; Contracts – Fraud Prevention; Private Sector Housing Grants; Corporate Asset Register; and Car Parking Contract. The Committee’s attention was drawn to the Outstanding Priority 1 Actions Status report, all of which would be reviewed in follow-up audits, and the Limited Assurance Audit Follow Up Status report. It was also noted that the Audit Plan for 2014/15 had been appended to the report to allow the Committee to monitor progress against the Plan.

The Chief Internal Auditor reported that, at the request of the Assistant Director of Resources (Facilities & ICT), an audit of Facilities Management was carried out. This resulted in a Limited Assurance audit report being issued as a number of departures from Contract Standing Orders had been noted, especially the failure to monitor expenditure and take action when financial thresholds had been reached. Assurances had now been given that procedures were in place to monitor expenditure with individual suppliers and highlight when thresholds had been reached.

In respect of the Limited Assurance audit report issued for Planning Fees, the Chief Internal Auditor stated that weaknesses within the reconciliation process had been identified. Planning staff were updating the reconciliation, with the assistance of Accountancy staff, and would ensure that future reconciliations were carried out in a timely manner.

The Chief Internal Auditor reported upon the current status of the Internal Audit Unit’s Local Performance Indicators for 2014/15:

·                     % Planned Audits Completed             Target 90%     Actual 36%;

·                     % Chargeable Staff Time                   Target 75%     Actual 78%;

·                     Average Cost per Audit Day               Target £245     Actual £227; and

·                     % User Satisfaction                            Target 90%     Actual 93%.

The Chief Internal Auditor informed the Committee that, as of 1 July 2014, the User Satisfaction Survey was being given to the relevant Assistant Director or Manager at the Audit Exit meeting for completion at the meeting. This had led to a more punctual completion of the surveys and the publication of a User Satisfaction figure for the second quarter of 2013/14.

The Chairman observed that there had been a recent theme of different reconciliations within the Council not working properly, and that perhaps this was caused by the lack of a Corporate Information Systems Policy, to enable different systems to interface with each  ...  view the full minutes text for item 35.

Resolved:

(1)        That, as agreed by the Chairman and in accordance with Section 100B(4)(b) of the Local Government Act 1972, together with paragraphs (6) and (24) of the Council Procedure Rules, the following item of urgent business be considered following publication of the agenda:

            (a)        Appointment of Co-Opted Member.

(Director of Governance) To consider the attached report (AGC-016-2014/15).

The Director of Governance presented a report on the appointment of a new Co-Opted Member of the Committee.

The Director of Governance reported that the Vice-Chairman, Mr R Thompson, had tendered his resignation from the Committee, following two terms as a Co-Opted Member, totalling six years. His second and final term would expire on 9 February 2015. The Committee was reminded that it had undertaken a similar process in 2013 to appoint the second Co-Opted Member currently serving on the Committee, Mr A Jarvis, and it was proposed to utilise the same principles and processes with this appointment. Therefore, the Committee was requested to propose to the Council that an Appointment Panel consisting of three Members be appointed with delegated authority to undertake the recruitment for the soon-to-be vacant position; that one of the Members of the Panel be the current Chairman of the Committee and the remaining Group Leaders be requested to nominate to the other positions as the normal rules of pro rata did not apply in this case; and that the outgoing Co-opted Member be invited to attend the meetings of the Panel in a non-voting, advisory capacity. Officer support to the Panel would be provided by the Director of Governance and other appropriate Officers from within the Directorate.

The Chairman of the Committee enquired as to whether both of the current Co-Opted Members of the Committee should attend the interviews. The Director of Governance reminded the Committee that it was usually the Council Members on the Panel who made the appointment, and that it was a matter for Council as to whether others were invited to attend the interviews. The Committee was content for both Co-Opted Members to attend the interviews, in an advisory capacity, and it was agreed that both should be invited.

The Director of Governance also confirmed that all available outlets would be used to advertise the vacancy, including social media. It was confirmed that Mr R Thompson could attend the next meeting of the Committee if required, as it was scheduled for 5 February 2015 and his term did not expire until 9 February 2015. Although the Council would use its best endeavours to have appointed a replacement before then.

Both the Chairman on behalf of the Committee, and the Director of Governance on behalf of the Officers, paid tribute to Mr R Thompson for his commitment and contributions to the Committee over the previous six years, particularly in the field of risk management.

Resolved:

(1)        That a report be submitted to the Council recommending the following procedure for the appointment of a new Co-Opted Member for the Audit & Governance Committee:

            (a)        That an Appointment Panel of three Councillors be appointed, to     include the Chairman of the Audit & Governance Committee, with delegated     authority to undertake the interviews following public advertisement and to         appoint the preferred candidate for the soon-to-be vacant position of Co-    Opted Member position on the Audit & Governance Committee;

(b)        That, as pro rata rules did not apply in this  ...  view the full minutes text for item 37.