Agenda and minutes

Audit & Governance Committee
Monday, 18th September, 2017 7.00 pm

Venue: Council Chamber - Civic Offices. View directions

Contact: Gary Woodhall (Governance Directorate)  Tel: 01992 564470 Email:


No. Item


Webcasting Introduction

I would like to remind everyone present that this meeting will be recorded for subsequent repeated viewing on the Internet and copies of the recording could be made available for those that request it.


By being present at this meeting it is likely that the recording cameras will capture your image and this will result in your image becoming part of the broadcast.


You should be aware that this might infringe your human and data protection rights. If you have any concerns please speak to the webcasting officer.


Please could I also remind members to put on their microphones before speaking by pressing the button on the microphone unit.

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The Chairman made a short address to remind everyone present that the meeting would be broadcast live to the internet, and would be capable of repeated viewing, which could infringe their human and data protection rights.


Declarations of Interest

(Director of Governance) To declare interests in any item on this agenda.

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There were no declarations of interest pursuant to the Council’s Member Code of Conduct.




(Director of Governance) To confirm the minutes of the last meeting of the Committee held on 26 June 2017 (previously circulated).


Click here for Audit & Governance Minutes 26-Jun-17

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That the minutes of the meeting held on 26 June 2017 be taken as read and signed by the Chairman as a correct record.


Matters Arising

(Director of Governance) To consider any matters arising from the previous meeting.

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There were no matters arising from the previous meeting for the Committee to consider.



Audit & Governance Work Programme 2017/18 pdf icon PDF 75 KB

(Director of Governance) To consider the attached Work Programme for 2017/18.

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The Chief Internal Auditor presented the Audit & Governance Work Programme for 2017/18, and noted that the unallocated item on the Whistle Blowing Policy would be updated at the November meeting.



Statutory Statement of Accounts 2016/17 pdf icon PDF 175 KB

(Director of Resources) To consider the attached report (AGC-006-2017/18).

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The Director of Resources, Mr Palmer noted that one of the key roles of this Committee was scrutinising the annual Statutory Statement of Accounts. All Members of the Council would have the opportunity to debate the accounts at Full Council and part of that debate would be to consider the recommendation of this Committee.

He noted that the budget for the general fund was set in February 2016 it was on the expectation that our expenditure would exceed our income by £36,000 which was not taken as a concern as we had ample in reserves to cover this. As it turned out, expenditure exceeded income for that year by £65,000.


A succession of ministers at the DCLG had expressed concerns about local authorities having excessive balances and had threatened to remove or tax these balances in some way. Our balances have been carefully managed over many years and were higher than most other district councils. Given this underspend and the concern of potential government intervention members decided to take the opportunity to increase the contribution from the general fund revenue account to the financing of the Capital Programme by £1million. This left our general fund balance at £6.2million which was £3million higher than the minimum level adopted by members. So despite this transfer the reserve levels were still comfortable. The level of variance as being reported was not unreasonable given that our gross expenditure on the general fund was approximately £70million. It was also better to have an underspend than an overspend. So overall our financial position was good and we do remain in a strong position for the end of the year.


Councillor Knapman noticed that we had a salary underspend and wondered if we had enough people. He gave an example of the land searches section taking longer than other councils. Mr Palmer said that we did not have a recruitment freeze in place. The salary budget was about £20million so a £120,000 underspend was not that much. He could ask the appropriate Assistant Director to clarify.


The meeting noted that there had been one significant change to the annual Statutory Statement of Accounts for 2016/17. For 2016/17, the segmental reporting arrangements for the Comprehensive Income and Expenditure Statement had changed with the introduction of the new Expenditure and Funding Analysis. This analysis brought together the figures as they were presented in the Statutory Statement of Accounts, following proper accounting practice, with the figures more normally seen in the Council’s budgets for the General Fund and Housing Revenue Account, based on the statutorily defined charges.


In preparing a set of accounts at a point in time it was inevitable that some of the information required would not yet be available. If an actual amount was uncertain an estimate would be used. The estimate would be based on the assessment of information available at the time the accounts were closed. When the actual figures were determined any difference was usually accounted for in the following year. If the  ...  view the full minutes text for item 19.


Audit of Accounts - Annual Governance Report 2016/17 pdf icon PDF 395 KB

(External Auditor) International Standard on Auditing 260 requires the External Auditor to report to those charged with governance certain matters before they give an opinion on the Statutory Statement of Accounts. The External Auditor has indicated that their audit of the Council’s Statutory Statement of Accounts for 2016/17 is nearly complete and that they wish to present their ISA260 report to this meeting. (AGC-007-2017/18).

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The External Auditors introduced the audit report for the year ended 31 March 2017. They had substantially completed their audit procedures in accordance with the planned scope and their objectives had been achieved, subject to resolutions of matters set out in the report.  They had identified two further significant risks during their updated risk assessment, which were previously reported as ‘normal risk’. The two upgraded risks were Property, Plant and Equipment Valuations and Pension Liability; but given the size and sensitivities of these estimations the risks were considered ‘significant’. There were no other changes made to their risk assessments, although they would be making a small number of presentational changes, but nothing of significance.


They still had 10 outstanding matters to consider and would report back on their status at a future Audit and Governance Committee meeting.


They thanked the finance team for their help and for providing the information required.


Councillor Knapman commented that this was as good an audit report that he had come across, but wanted to know if the work would be done on time. He was told that it would be; they had the staff in place to finish it by the end of the week.




That the external auditors annual governance report for 2016/17 be noted.


Annual Outturn Report on the Treasury Management and Prudential Indicators 2016/17 pdf icon PDF 160 KB

(Director of Resources) To consider the attached report (AGC-008-2017/18).

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The Director of Resources, Mr Palmer introduced the annual outturn report on the treasury management and prudential indicators for 2016/17. This was a requirement of the Council’s reporting procedures. It covered the treasury activity for 2016/17 and confirmed that there were no breaches of policy during the year.


It was noted that:

·         The Council had planned to borrow to finance the capital programme. However, an underspend on the programme and the availability of sufficient cash had allowed the external borrowing to be deferred.


·         The risk involved with the Capital Activity is the impact on reducing the balances of financial reserves to support the capital programme. This risk has the following potential consequences: loss of interest; loss of cover for contingencies; financial strategy becoming untenable in the long run; service reductions required; and Council Tax increases required.


·         The Council’s underlying need to borrow is called the Capital Financing Requirement (CFR).  This figure is a gauge for the Council’s debt position. The Council has borrowed £185.456m to finance the payment to Government for Housing Self-Financing.  This resulted in the Council’s CFR becoming an overall positive CFR (HRA and Non-HRA). No further borrowing was incurred in 2016/17.


The Council did not breach any of the following indicators:


(a)        the Maximum Upper Limit for Fixed Rate Exposure during 2016/17 was 83% for Debt and 61% for Investments (limit set at 100%) and Maximum Upper Limit for Variable Rate Exposure during 2016/17 was 17% on Debt and 39% on Investments (limit set at 25% and 75% respectively);


(b)        the maximum amount of the portfolio being invested for longer than 364 days was £0m (limit set at £15m); and


(c)        the maximum limit set for investment exposure per country outside of the UK was £5m. Average £2m in Sweden. Standard Life MMF is domiciled in Guernsey, so is also Non-UK. Average £5m.


Interest Rate Risk – the risk of fluctuations in interest rates. The Council     allows a maximum of 75% of its investments to be invested in variable rates, and the remainder are in fixed rate deposits.  This allows the Council to receive reasonable rates, whilst at the same time, gives the Council flexibility to take advantage of any changes in interest rates.


The Council has continued to finance its capital programme through the use of internal resources. Whilst the capital receipts reserve had been fully exhausted, it was anticipated that future right to buy sales would fund some part of the programme, and the Major Repairs Reserve would be available to support the on-going capital maintenance of the housing stock, before the need to borrow arises sometime late into the 2017/18 programme. The Council did not breach any of the treasury prudential indicators during the year.


Councillor Knapman asked for an update on the shopping centre as its one of the two main risks that had been identified. Mr Palmer noted that we had incurred some delays around the highways works and difficulty with the County Council. These issues have all been resolved now. Several  ...  view the full minutes text for item 21.


Audit & Governance Committee Training Programme pdf icon PDF 119 KB

(Chief Internal Auditor) To consider the attached report (AGC-009-2017/18).

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The Chief Internal Auditor introduced the report outlining the training programme for the Committee for the next 12 months. It was proposed that a 30 minute training session was delivered prior to each Audit and Governance Committee. Such training would consist of short topical briefings by Council officers with input where appropriate, from external auditors.


Asked if there was opportunity to work with other councils and share lessons and to see how they worked Mrs Marsh said that in order to maintain maximum benefit from the training provided, all members of the Council would be invited to attend and also where appropriate members from neighbouring Councils. Also training opportunities at Broxbourne and Harlow will continue to be offered to Epping Forest Councillors.


The Committee agreed that it was an excellent idea to provide this type of short course training before meetings.




(1)        That the Committee agreed the training sessions for the next 12 months as set out below:


(a)        November 2017 – Role of the Audit Committee, incorporating an interactive session facilitated by the Chief Internal Auditor in order for the Committee to gauge   its own effectiveness;


(b)        February 2018 – Project Management, including a demonstration of the Council’s Project Management and Performance System (Covalent);


            (c)        March 2018 – Risk Management, to coincide with the Committee’s            Effectiveness of Risk Management review;


(d)        June 2018 – Assurance Framework, ahead of the Committee’s approval of the Annual Governance Statement; and


(e)        September 2018 – How to Read a Set of Accounts, ahead of the Committee receiving the Statutory Statement of Accounts for 2017/18.


(2)        That the Chairman of the Audit and Governance Committee be given delegated authority to approve the training programme for the Committee in future years.




Internal Audit Monitoring Report - June to September 2017 pdf icon PDF 135 KB

(Chief Internal Auditor) To consider the attached report (AGC-010-2017/18).

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The Senior Auditor, Ms S Linsley introduced the internal audit monitoring report (June to September 2017) updating members on the work completed by the Internal Audit Shared Service. She noted that good progress was being made against the 2017/18 Audit Plan and an additional audit had been included for this year to follow up the Health and Safety at Townmead Depot audit which was carried out in September 2016.


The report gave a summary of the audit reports issued since the last update in June 2017. These reports were about:


·         Fire Risk Assessments – audit reviewed the policies and processes around the Fire Risk Assessments (FRAs) in Council owned residential blocks of flats and communal areas. It was found that properties requiring FRAs were complete and accurate and completed within agreed timescales. Following the Grenfell Tower incident, FRAs will now be undertaken every two years in all Council owned residential blocks.


·         Cyber Security – this was a non-technical audit designed to assess the adequacy of the Council’s framework in relation to both internal and external cyber threats. It was found that the security of the Council’s computer network and servers was well managed and there were effective controls in place to detect unauthorised access and suspicious activity. Cyber awareness training was given to new staff and refresher training and security updates ensured existing staff are kept informed of current threats.


·         Planning Applications Processes – this reviewed the processes around the external publicity of planning applications submitted to the Council and checked that planning applications were determined in accordance with the Council’s Scheme of Delegation. They recommended that the relevant polices, procedures and the Scheme of Delegation were reviewed ahead of adoption of the Local Plan to identify any areas where efficiencies can be made in order that processing times were not affected by any increase in the number of planning applications.


Another item that Internal Audit was involved in was the General Data Protection Regulation (GDPR) working party. In May 2018 the Council will be required to ensure compliance with the principles of the new GDPR legislation and work was in hand to ensure the Council was compliant with the new requirements. Internal Audit was playing a key role in the preparation of a Council-wide Information Asset Register. This involves identifying the Council’s information assets (manual records and electronic information) to ensure personal data was recorded and used responsibly.


Internal Audit was also actively involved in improving risk management processes throughout the Authority and as part of this work has revised the risk management strategy. They were also involved with the Corporate Fraud Team and the work they were doing.


Ms Linsley was asked who carried out the fire risk assessments for the Council. She replied that the high risk properties assessments were carried out by a specialist fire risk firm; the lower risk properties assessments were carried out by Council Officers.


She was then asked if the council needed evacuation plans for its sheltered accommodation sites. She responded that  ...  view the full minutes text for item 23.


Any Other Business

Section 100B(4)(b) of the Local Government Act 1972 requires that the permission of the Chairman be obtained, after prior notice to the Chief Executive, before urgent business not specified in the agenda (including a supplementary agenda of which the statutory period of notice has been given) may be transacted.

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There was no other business to be considered.


Exclusion of Public and Press


To consider whether, under Section 100(A)(4) of the Local Government Act 1972, the public and press should be excluded from the meeting for the items of business set out below on grounds that they will involve the likely disclosure of exempt information as defined in the following paragraph(s) of Part 1 of Schedule 12A of the Act (as amended) or are confidential under Section 100(A)(2):


Agenda Item No


Exempt Information Paragraph Number





The Local Government (Access to Information) (Variation) Order 2006, which came into effect on 1 March 2006, requires the Council to consider whether maintaining the exemption listed above outweighs the potential public interest in disclosing the information. Any member who considers that this test should be applied to any currently exempted matter on this agenda should contact the proper officer at least 24 hours prior to the meeting.


Background Papers: 

Article 17 of the Constitution (Access to Information) define background papers as being documents relating to the subject matter of the report which in the Proper Officer's opinion:


(a)        disclose any facts or matters on which the report or an important part of the report is based;  and


(b)        have been relied on to a material extent in preparing the report and does not include published works or those which disclose exempt or confidential information and in respect of executive reports, the advice of any political advisor.


The Council will make available for public inspection one copy of each of the documents on the list of background papers for four years after the date of the meeting. Inspection of background papers can be arranged by contacting either the Responsible Officer or the Democratic Services Officer for the particular item.

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The Committee noted that there was no business which necessitated the exclusion of the public and press from the meeting.