Agenda and minutes

To confirm as a correct record the Minutes of the meeting held on 20 January 2020 (previously circulated).

The Minutes of the meeting held on 20 January 2020 were agreed as a correct record and noted by the Chairman.

Report of the Shared Internal Audit Service (SIAS) which details the overall opinion on the adequacy and effectiveness of Welwyn Hatfield Borough Council’s control environment.

Report of the Shared Internal Audit Service (SIAS) which details the overall opinion on the adequacy and effectiveness of Welwyn Hatfield Borough Council’s control environment.

The following points were raised and discussed:

•    It is a requirement for SIAS to be externally assessed every 5 years. It had be confirmed that the assessment was deferred from November 2020 and will take place no later than May 2021, this had been deferred due to the COVID-19 pandemic.

•    There were two audits that were not finalised in the report (Agresso System and Homelessness Reduction Act) the outcome of these have not been taken into account for the overall assurance opinion for the Council.

•    Section 2.7 indicated SIAS’s general group performance with PSIAS (Public Sector Internal Audit Standards) that was based on their internal assessment. Generally conformance was the highest rating they could receive from PSIAS but there are two areas of deliberate non-conformance (same items every year).

•    Overall Assurance Opinions for financial and non-financial systems were “satisfactory” which is a good level of assurance across the year.

•    There were 8 projects that were delivered with “good” assurance, 12 with “satisfactory” assurance.

•    No limited assurance opinions this year in 2019/20. Did not raise high priority recommendation which is fantastic for the Council.

•    There was exceptional performance at Welwyn Hatfield Council up to 31 March 2020 – delivered 100% of days.

M.Chalkley thanked his audit team at SIAS, Officers, Heads of Services and Corporate Directors at the Council who fully engaged with the audit process and made it possible to deliver the plan by the end of the year and achieve this outcome.

Members congratulated SIAS on achieving 100% outcome. They also thanked Officers, Heads of Services and Corporate Directors at Welwyn Hatfield Council to help deliver the plan by the end of the year.

Question asked by Councillor S.Markiewicz in regards to the two audits that were not signed off. Audit for Agresso system – Has it been drafted but not signed off? Is that the status and is that the reason why you believe the assurance level will remain unchanged from prior year?

M.Chalkley from SIAS responded saying it is in draft, unfortunately during the period of 31 March to end of May, our partner BDO were working on this and they were some updates required to the report. The auditor responsible was absent at the time. Members were assured that the audit would have been finalised by the time this report had been written had that period of absence not taken place. There is nothing in the report that would have affected the overall assurance opinion.

RESOLVED:

(1)     The Annual Assurance Statement and Internal Audit Annual Report were noted.

(2)     The results of the self-assessment required by the Public Sector Internal Audit Standards (PSIAS) and the Quality Assurance and Improvement Programme (QAIP) were noted.

(3)     The SIAS Audit Charter 2020/21 was accepted.

(4)     Seek management assurance that the scope and resources for internal audit  ...  view the full minutes text for item 23.

Report of the Shared Internal Audit Service asking Members to note the Annual Report.

Report of the Shared Internal Audit Service asking Members to note the Annual Report.

The report summarises SIAS’s performance across the partnership.

The following points were raised and discussed:

•        The Head of Assurance retired at the end of 2019/20. The former Head of SIAS was promoted to Head of Assurance.

•        Performance Outcomes - there was a spread of opinions across the partnership as well as a number of recommendations made.

•        Targets were not achieved for Performance Indicators across both the performance against plan days and projects delivered to draft by 31 March 2020. It was noted that the impact of Covid-19 was felt in March 2020.

•        Number of draft projects was significantly impacted by Covid-19, reflected in Table 1: SIAS Business Performance in the report.

RESOLVED:

Members noted the report.

Report of the Shared Internal Audit Service on approval of the proposed Annual Audit Plan for 2020/21 (previously published as part of the 19 March 2020 agenda pack).

Report of the Shared Internal Audit Service (SIAS) on approval of the proposed Annual Audit Plan for 2020/21 (previously published as part of the 19 March 2020 agenda pack).

Due to the cancellation of the 19 March Audit Committee meeting, Audit Committee members were invited to comment on the draft 2020/21 Internal Plan via email.  For completeness the draft audit plan is presented to members at this meeting for endorsement.

Members agreed for plan to go ahead and start work on internal audit for Quarter 1.

RESOLVED:

Members approved the proposed Welwyn Hatfield Borough Council Internal Audit Plan for 2020/21.

(Note:  This item was discussed before item 7 due to a technical issue).

Report of the Shared Internal Audit Service (SIAS) which provides details on the progress made by SIAS in delivering the Council’s Annual Audit Plan for 2020/21 as at 12 June 2020.

Report of the Shared Internal Audit Service (SIAS) which provides details on the progress made by SIAS in delivering the Council’s Annual Audit Plan for 2020/21 as at 12 June 2020.

The following points were raised and discussed:

•      It was noted that members of the SIAS team had been redeployed for the last three months to assist with the County Council’s response to Covid-19.

•      In paragraph 2.1 of the report, SIAS has delivered 12% of their audit days as at 12 June 2020. As of this meeting the audit days have increased to 60 days now which is 20%.

•      SIAS have not delivered any final reports yet for 2020/21. This has been a result of Covd-19.

•      Audit plans were paused in April for most of the clients.  Discussions with the SIAS Board and Head of SIAS are taking place on how the impact will reflect across the rest of the year. Any significant changes will be brought up at the committee in September 2020.

•      SIAS have followed up six recommendations, four have been implemented and two have revised target dates. The two revised dates were amended due to the impact of Covid-19 and so were unable to meet original target date.

•      Received a further two satisfaction surveys back from work completed in 2019/20. They met the minimum standards.

•      Appendix B demonstrates all the work that is currently underway. There are 7 projects, 2 projects are a long way into the project fieldwork- heading to draft report soon.

Question by Councillor D.Bell (Executive Member, Resources) – In the current 2020/21 year, will you be required to do any anti-fraud type work on various Covid-19 relating grants we’ve been dispensing under Government guidelines?

Answer from M.Chalkley, SIAS – Currently there are no audits relating to that in the plan. We are discussing with Officers, SIAS, SIAS Board and Head of SIAS what we can do in terms of a response to Covid-19. We have currently agreed that any audit we do take will be discussed with Officers if there is a Covid-19 angle that we need to include or risks rather than specific projects related to Covd-19 response.

Answer from the Corporate Director (Resources, Environment and Cultural Services) – In terms of business grants and other discretionary grants that we receive funding from the government, that we plan it out to businesses so there are various different checks and assurance framework that the government has issued to the local government to adhere to. The council is definitely following that framework and using a national agency which holds third party bank account data, doing this as part of our payment check.

Question by Councillor J.Boulton – Are you and the team happy that we should be back on track by the end of this financial year (March 2020/21). If no, are we prioritising particular areas of importance?

Answer from M.Chalkley, SIAS – Part of the discussion that is ongoing at SIAS board level, is  ...  view the full minutes text for item 26.

Report of the Chief Executive which presents the draft Annual Governance Statement.

Report of the Chief Executive which presents the draft Annual Governance Statement.

As in previous years, the production of the AGS has been co-ordinated by the Governance Group, an officer group chaired by the Chief Executive in his capacity as Head of Paid Service.

The Governance Group has considered the following sources of assurance:-

Internal - existing policies and procedures, internal review activity (at both Member and officer level), Directors’ and Heads of Service’s Management Assurance Statements, the work of the Shared Internal Audit Service, Performance Management, Procurement and Risk Management.

External - the work of the Council’s External Auditors.

The Annual governance statement went through Standards Committee on 1 June 2020 and it was recommended to come to Audit Committee on 25 June 2020 for approval.

Members were asked to note that there were no significant governance issues highlighted in the annual governance statement for the last financial year.

Question from Councillor M.Birleson stating that it is quite worrying that covid-19 is having a significant diverse effect on the economy, it is also effecting the services that the Council deliver. Councillor Birleson stated we should be monitoring quite closely to see how we can support/ continue to support the homeless and rough sleepers. Also she said the financial pressures which amount to £7million will have a big effect on the council’s services.

The Corporate Director (Resources, Environment and Cultural Services) answered the questions saying that the Council has been really pro-active in the way we have dealt with the Covid-19 situations and all the actions are summarised in the May’s Council report and Cabinet meeting to highlight the £7million budget pressure. The May Cabinet report mentioned the scale of challenges that we are facing and Welwyn Hatfield is not alone. We will continue to work with the Government for further funding, there has been a further updated report to Cabinet in June 2020 which considered the Council’s response to covid-19 and there will be a further report to Full Council in July 2020.

Councillor M.Bireleson asked if we have been put forward for government funding for Welwyn Hatfield Council?

The Corporate Director (Resources, Environment and Cultural Services) answered the question saying that out of the £7million budget pressure that we have so far, we have received £1.28million and the Leader of the Council has written to the Secretary of State quite early on to seek his commitment to give the council more funding, not just to Welwyn Hatfield but to the local government sector as a whole. The letter was appended in the Cabinet in May and we will continue to work within our capacity – the S151 officer is currently a member of the Executive Committee of the society of district treasurers. We will continue to work with the LGA to lobby for more funding to the local government sector.

Councillor D.Bell (Executive Member, Resources) stated that there was no reference to the Peer Review. It was a positive aspect of the governance and got positive feedback from  ...  view the full minutes text for item 27.

Report of Ernst and Young LLP which provides an update on the status of the 2019/20 Audit Plan, considers the known and potential impacts of Covid-19 at this stage on the audit and provides an update on the PSAA scale fees for the audit.

Report of Ernst and Young LLP which provides an update on the status of the 2019/20 Audit Plan, considers the known and potential impacts of Covid-19 at this stage on the audit and provides an update on the PSAA scale fees for the audit.

The following points were raised and discussed:

•      Major impacts of Covid-19 spanned year end. There were two main impacts on the external audit –

1.)   In terms of risks that it creates within the financial statements of the Council at year end.

2.)   Practicality, employees are working from home and doing external audits remotely is not the usual way.

•      Audit started in May 2020. Compared to previous planning report there have been some changes. The materiality number changed after calculation from £2.4million to £2.6million. The other change was identification of new significant entries and other areas of focus which have resulted due to covid-19.

•      Valuation of land and building, even though we are concluding in August but have already started work given that we have changed the risks from inherent risks to significant risk as a result of covid-19. We have engaged our reassessment specialist and they are currently working on sample for certain properties, in terms of valuation.

•      Currently working on going concern. Need to revisit pensions but waiting for confirmation from pension scheme. We have not started in our phase one audit. Also we need to go through the remaining procedures which we will plan to cover in August 2020.

•      Audit deadlines have been extended by MHCLG to 30 November as opposed to 31 July 2020.

•      In regards to Covid-19, EY have increased the risk level on receivables to “higher” because the pandemic had a big impact in terms of businesses and residents being able to pay any monies due at the end of the year.

Question asked by Councillor D.Bell (Executive Member, Resources) – If you did have a going concern problem, does it amount to a need for a Section 114 declaration? Is that going to be one and the same thing effectively?

A.Brittan, EY answered saying it would impact the going concern assessment and auditor reporting. If we identified things during the course of the audit which would lead us to a modified opinion in relation to that it could trigger a section 114 declaration.

Question asked by Councillor D.Bell (Executive Member, Resources) – Going concern work on 31 March 2020. It must come to an end at some point? You can’t keep waiting to see what the long term impact will be?

A.Brittan, EY answered saying there is a presumption that all local government authorities will continue as a going concern because the service provision that they provide will be supported by the government. However, there is obviously uncertainty about the funding and where it will come from. The going concern concept applies for 12 months from the date of signing so they are asserting that the Council is a going concern  ...  view the full minutes text for item 28.

Report of the Corporate Director (Resources, Environment and Cultural Services) presenting the draft Statement of Accounts.

Report of the Corporate Director (Resources, Environment and Cultural Services) presenting the draft Statement of Accounts.

The statutory deadline for approval of accounts is 31 July 2020 but due to the pandemic this was extended to 31 August 2020. Despite the additional pressures of the pandemic the team worked tirelessly to deliver the accounts in the normal timeframe. An excellent achievement that only a handful of local authorities achieved.

As outlined in EY’s report the Council have to wait for the pension fund audit to be finalised at County level. With this delay and the impact of the pandemic, the audit will be finalised in Summer 2020.

No material changes to the accounting policies for 2019/20 accounts. The accounts reflect the outturn position and the reserves movements that were reported and approved at Cabinet. As a result of the pandemic there have been a number of additions to the accounts, including the additional commentary and narrative report, the additional explanations in the critical judgement supplied and further sensitivity analysis in the assumptions and estimates made.

R.Baker thanked Helen, Yamini and the wider finance team for all their hard work and dedication in delivering the accounts at such challenging circumstances and all the auditors’ flexible approach to the audit and delivering it remotely.

Question asked by S.Markiewicz – In the report item 8.1, Law and Administration had the best part of £400,000 additional outlay this year. Planning also had additional outlay this year which has been put as ‘due to higher than budgeted use of agency staff’. What caused the excess in Law and Administration? When it comes to planning, use of agency staff is good when you got short term projects that need additional staff but is there a systemic issue that needs to be addressed?

R.Baker answered – In Law and Administration and Planning, there were difficulties in recruiting and additional costs relating to local plan – needing more resources. In terms of longer term, it will be picked up in the modernisation reviews where they will review recruitment and retention policies and the Council’s workforce strategy. The Corporate Director (Resources, Environment and Cultural Services) added that at the June Cabinet meeting it was highlighted in the Financial Outturn report why Law and Administration had an additional outlay. There were two elements highlighted – firstly, resources in the team and secondly the elections, they were elections in May and December 2019. The budget was not created for that but has been resolved going forward.

Question asked by S.Markiewicz – Item 8.4 Increase in current liabilities, later in the report it goes to look at new borrowing etc. Is some of this a timing issues? How has it become a much over-anticipated budget?

R.Baker answered – A big part of that £7million is to do with the move from long term to short term borrowing. It is to do with our repayment profile for the HRA self-financing loans.

RESOLVED:

The Committee agreed to grant delegated authority to Corporate Director (Resources,  ...  view the full minutes text for item 29.