Agenda and minutes

To note that at the Annual Council Meeting held on 21 May 2018, Councillor N. Pace was appointed Chairman and Councillor G. Michaelides as Vice Chairman of the Committee for the municipal year 2018-2019.

It was noted that at the Annual Council Meeting held on 21 May 2018, Councillor

N. Pace was appointed Chairman and Councillor G. Michaelides as Vice Chairman of the Committee for the municipal year 2018-2019.

To note any substitution of Committee members made in accordance with Council Procedure Rules 19-22.

The following substitution of a Committee Member had been made in accordance with Council Procedure Rules 19-22:

Councillor T. Lyons for J Broach.

An apology for absence was received from Councillor J. Broach.

To confirm as a correct record the Minutes of the meeting held on 22 March 2018 (previously circulated).

The Minutes of the meeting held on 22 March 2018 were confirmed as a correct record and signed by the Chairman.

To note declarations of Members’ disclosable pecuniary interests, non-disclosable pecuniary interests and non-pecuniary interests in respect of items on this agenda.

Councillor P. Zukowskyj declared a non-pecuniary interest in items on the agenda as appropriate by virtue of being a Member of Hertfordshire County Council.

Report of the Chief Executive which presents a revised Local Code of Governance.  The Council has had a Local Code of Governance since 2003.  This has been revised every three years since then, mainly to take account of minor changes.

Report of the Chief Executive which presented the revised Local Code of Governance.  The Council has had a Local Code of Governance since 2003 and this has been revised every three years since then; mainly to take account of minor changes.

Local authorities were encouraged to develop and maintain their own codes of governance.  The Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) produced a framework document entitled ‘Delivering Good Governance in Local Government’ that authorities were encouraged to use to help them develop local codes.

The framework document was reviewed by the Standards Committee on 19 June 2018.

Councillor P Zukowskyj advised that he did not support the Code and voted against the recommendation.

RESOLVED

(1 against and 6 for)

That the Local Code of Governance be approved.

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.  It shows the outcomes of the self-assessment against the Public Sector Internal Audit Standards (PSIAS) incorporating the requirements of the Quality Assurance and Improvement Programme (QAIP).

It also shows SIAS’s performance in respect of delivering the Council’s audit plan and presents the 2018-2019 Audit Charter.

Report of the Shared Internal Audit Service (SIAS) which provided details of the overall opinion on the adequacy and the effectiveness of Welwyn Hatfield Borough Council’s control environment.  Reference was made to significant matters and the key themes.  It showed the outcomes of the self-assessment against the Public Sector Internal Audit standards (PSIAS) incorporating the requirements of the Quality Assurance and Improvement programme (QAIP).  It also presented the 2018-2019 Audit Charter.

Officers advised that the Audit Committee was responsible for overseeing the effectiveness of SIAS and holding the Head of Assurance to account for delivery.  This being achieved through the approval of performance targets set by the SIAS Board and receipt of regular reports.

The following points were raised and discussed:

·         Levels of Assurance –Substantial.  Officers explained that it was very unlikely that any council would have full assurance.  The approach was across all councils.

·         Anti-Fraud arrangements – work being undertaken to ensure that necessary provisions are in place.

·         Auditing projects – Officers explained that this was being undertaken.

·         Open data – this information had been reported to Council.  Officers will be providing a written response to Committee Members.

·         Officers advised that the bill was paid on account of number of days worked.

RESOLVED that Members:

1)    Note the Annual Assurance Statement and Internal Audit Annual Report.

2)    Note the results of the self-assessment required by the Public Sector internal Audit Standards (PSIAS) and the Quality Assurance and Improvement Programme (QAIP).

3)    Accept the SIAS Audit Charter.

4)    Seek management assurance that the scope and resources for internal audit were not subject to inappropriate limitations in 2017/18.  It should be noted that management confirmed this was the case during the meeting

Report of the Shared Internal Audit Service which provides an update on the progress in delivering the Annual Audit Plan for 2018-2019 as at 8 June 2018.  It also provides the findings for the period 2 March 2018 to 8 June 2018.  Details of changes to the planned start dates of audits from the approved 2018-2019 Audit Plan together with proposed amendments to the 2018-2019 Annual Audit report.

Report of the Shared Internal Audit Service (SIAS) which provided details on the progress made by SIAS in delivering the Council’s Annual Audit Plan for 2018/19 as at 8 June 2018.  It also provided findings for the period 2 March 2018 to 8 June 2018 and details of changes to the planned start dates of audits from the approved 2018/19 Audit Plan.

The Audit Committee receives periodic updates of progress against the Annual Internal Audit Plan.  This was the first report giving feedback on delivery of the 2018/19 internal Audit Plan.

Members were advised of the key audit findings as at 8 June 2018.  Appendix A provided a status update on each individual project within the Audit Plan.

The following amendments to Audit Plan were discussed:

·         PSN Accreditation (8 days) – audit cancelled to allow for an alternative audit to be added to the Annual Audit Plan.

·         Street Scene Procurement – reduced from 10 days to 3 days at the request of Management.

·         Fire Safety (10 days) – to provide assurance that the Council has sufficient arrangements in place to ensure fire safety in Council buildings.

·         LEP Grant (5 days) – to provide assurance that the LEP Grant relating to Hatfield Town Centre regeneration has been spent in accordance with the condition of the grant.

·         Contingency in the 2018/19 Annual Audit Plan for the Council currently stands at 5 days.

It was noted that the Planned days – percentage of actual billable days against planned chargeable days as at 8 June 2018 was 19%.

The Committee were advised on the anti-fraud arrangements and the progress currently being made to ensure that the Council was protected.  It was noted that majority of the anti-fraud process had been constructed and sat around the Housing department but needed to be across the Council.  A question was raised in respect of how fraud was detected in the Council. The Officers explained that work was being undertaken and a paper would be brought to the Audit Committee for consideration.

RESOLVED that Members:

1)    Note the Internal Audit progress Report for the period to 8 June 2018 and:

2)    Note the proposed amendments to the 2018/19 Annual Audit Plan.

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

Report of the Chief Executive which presented the Draft Annual Governance Statement (AGS) for the financial year 2017/18 (attached at Appendix A to the report).  This had been compiled in accordance with best practice set out in the CIPFA/SOLACE Guidance Framework ‘Delivering Good Governance in Local Government’.

The Officer explained the proper practices required within the AGS and that in previous years the production of the AGS had been co-ordinated by the Governance Group, an Officer Group chaired by the Chief Executive in his capacity as Head of Corporate Governance.  The AGS included hyperlinks in order to reduce the number of pages and the document looked forward and not just backwards.

A comment was made in respect of using hyperlinks in public documents and how these could potentially be changed without notice; especially whereby modifications in general have known to be made to Terms and Conditions.

Councillor P. Zukowskyj advised that he did not support the document and voted against the Draft Annual Governance Statement for the financial year 2017/18.

RESOLVED

(1 against and 6 for)

1)    That the Audit Committee considers and approves the Draft Annual Governance Statement;

2)    Authorises the Chief Executive, in conjunction with the Leader of the Council, to make any subsequent amendments to the Draft Annual Governance Statement necessitated by the comments made by the Audit Committee.

3)    That the Audit Committee recommends its certification by the Leader of the Council and Chief Executive.

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

Report of the Corporate Director (Resources, Environment and Cultural Services) on the Statement of Accounts together with a presentation for the financial year 2017/18 for approval by the Audit Committee following conclusion of the external audit.  There were no material changes to the accounting policies for the 2017/18 accounts.

The contents of the accounts was largely determined by statutory requirements and mandatory professional standards as set out within The Code of Practice on Local Authority Accounting (The Code) and the Service Reporting Code of Practice (SeRCOP), published by the Chartered Institute of Public Finance and Accountancy (CIPFA).

The Officers reported the production of the accounts and final audit work had gone very well and that the 2017/18 accounts were presented with an unqualified opinion with no material changes to the accounts.  It was acknowledged that the Council was the first authority in Hertfordshire to conclude its audit process and present the final Statement of Accounts to the Audit Committee for approval during June, a month ahead of the statutory deadline.

The report noted that the draft 2017/18 statement of accounts was signed off by the Corporate Director (Resources, Environment and Cultural Services) (the Council’s S151 Officer) on the 16 May 2018 ahead of the deadline at the end of May and the Audit Committee were required to approve the final audited accounts by the end of July.

Members commended the Finance Team on the hard work that had gone into getting the accounts signed off early.

The presentation included the following:

·         Accounts briefing objectives

·         Requirements of Audit Committee

·         Local Authority Reporting requirements

·         Significant changes in requirements for 2017/18

·         Narrative Report and Core Statements

·         Key areas to note

·         Audit and amendment of accounts

Consideration was given to the changes made to the accounts due to a revised pension valuation, which was supplied by Hertfordshire County Council’s actuary.

A question was raised in respect of employee costs and whether the figure contained the agency costs.  The Officers explained that it does include agency staff costs.  Members sought clarification in respect of Housing Revenue Account and Housing major repairs reserve and it was suggested that it may be helpful if these were reported in a different format in the future. 

The Officers explained the revaluation of the business rates and the income projected.  It was noted that the Council had applied to be included in the Government’s pilot scheme but was unsuccessful.

The Chairman thanked everyone for meeting the targets and being able to complete the accounts earlier then the proposed deadline.  The accounts to be signed following the external Auditor’s report.

            RESOLVED

1)    That the Audit Committee approve the audited Statement of Accounts for 2017/18 as shown in Appendix A and the Chairman of this Committee signs the Statement as approval.

2)    That the Audit Committee approves the letter of representation as set out in Appendix B and the S151 Officer as well as the Chairman signs the letter.

Report of Ernst & Young LLP which summarises the findings from the 2017/2018 audit, also includes messages arising from their audit of the Council’s financial statements and results of the work they have undertaken to assess their arrangements to secure economy, efficiency and effectiveness in the use of resources.

Members received a report which provided them with the Audit Results report that had been prepared by Ernst and Young LLP.

The report noted that subject to concluding the outstanding matters listed in the report it was expected that an unqualified audit opinion on the financial statements would be issued prior to the statutory deadline of 31 July 2018.  There were no matters to report on the arrangements to secure economy, efficiency and effectiveness in the use of resources.

The Council was appraised on the good quality of accounts, consistent record and for being the first Council in Hertfordshire to have the accounts approved.

The Auditor’s reported that there were no matters for attention and that they have reviewed the Annual Governance Statement and confirmed that it was consistent with other information from the audit of the financial statement and nothing further to report.

Members received information on the journal entry data insights in respect of this new section being run through the tools available to the auditors.  It was reported that they reviewed journals by certain risk based criteria to focus on higher risk transactions, such as journals posted manually by management, those posted around the year-end, those with unusual debit and credit relationships and those posted by individuals would not expect to be entering transactions.  The purpose of this approach was to provide a more effective, risk focused approach to auditing journal entries, minimising the burden of compliance on management by minimising randomly selected samples.  The analytical tool used was the Helix – Glass and it was agreed that a demonstration of the tool used be provided at a future meeting.

The Audit Committee thanked the Finance Team for all their hard work; Ernst and Young LLP for the accounts and dealing with the pension matters and noted that the Council was the first authority in Hertfordshire to complete the accounts.

            RESOLVED

That the contents of the report which provided information on the areas of Audit focus, the Audit Report, Audit Differences, Value for Money, Other Reporting Issues and Assessment of Control Environment be noted.