Agenda and minutes

Minutes of meeting held on 27^th August 2020 (previously circulated). 

The minutes of the meeting held on 27^th August 2020 were agreed as a true record, and would be signed by the Chair at a later date.

There were no items of urgent business.

To receive declarations by Councillors of interests in respect of items on this Agenda. 

Councillors are reminded that, in accordance with the Localism Act 2011, they are required to declare any disclosable pecuniary interests which have not already been declared in the Council’s Register of Interests. (It is a criminal offence not to declare a disclosable pecuniary interest either in the Register or at the meeting). 

Whilst not a legal requirement, in accordance with Council Procedure Rule 9 and in the interests of clarity and transparency, Councillors should declare any disclosable pecuniary interests which they have already declared in the Register, at this point in the meeting. 

In accordance with Part B Section 2 of the Code Of Conduct, Councillors are required to declare the existence and nature of any other interests as defined in paragraphs 8(1) or 9(2) of the Code of Conduct. 

There were no declarations of interest.

Report of the Information Governance Manager.

The Information Governance Manager submitted a report updating the committee on the outcome of the Investigatory Powers Commissioner’s Office (IPCO) inspection; changes to the authority’s RIPA policy and procedure in response to that inspection; and reviewing the authority’s use of RIPA since it was last considered and approved by the Audit Committee on 27^th November 2019. A regular review and update of the RIPA policy was necessary to ensure it supported the Council’s officers and protected the rights of the public when surveillance was carried out.

It was proposed by Councillor Geoff Knight and seconded by Councillor Stephie Barber:

“That the recommendations as set out in the report be approved”.

It was agreed by all, and the Chair declared the proposal to be carried.

Resolved:

That the revisions to the Regulation of Investigatory Powers Act 2000 (RIPA) policy as set out in the report be approved, and the outcome of the IPCO inspection, and the lack of authorisations issued by the Council under RIPA since 2014, both be noted.

Report of the Head of Financial Services.

The CFO presented a report which, once approved by the Committee, would revise the Contract Procedure Rules in order that they fit the Council’s Management structure, synchronise with the changes to the Constitution (of 2019), and assist in the achievement of the Council’s ambitions to deliver environmental, local wealth-building, and economic benefits to the district.

The CFO informed the Committee he wished to record his thanks to Helen McMahon, Procurement Manager, who had undertaken the majority of the work on the Contract Procedure Rules (first adopted in January 2013). In response to questions from the Committee, it was confirmed that the revisions would certainly assist in the procurement process; that Senior Officers and Members had been consulted on the proposed revisions; and that procurement staff regularly assisted suppliers to register upon the corporate supply portal, and subsequently submit tenders through it.

It was proposed by Councillor Stephie Barber and seconded by Councillor Geoff Knight:

“That the recommendations as set out in the report be approved”.

It was agreed by all, and the Chair declared the proposal to be carried.

Resolved:

That the revisions to the corporate Contract Procedure Rules as set out in the report be approved. 

Report of the Internal Audit and Assurance Manager.

The IAAM presented a report advising the Committee of the latest monitoring positions of both the 2020/21 Internal Audit plan and the implementation of the Annual Governance Statement (AGS) action plan for 2019/20.

The Committee were reminded that redeployment during the Covid19 pandemic had caused the original 2020/21 internal audit plan to be revised (approved at the 27^th August 2020 meeting). A priority piece of work (HR assurance) had then been identified that required extensive work during September and October, and from which an action plan with 35 recommendations had been issued. This had been judged to be sensitive in nature, and consequently had received limited circulation only, including the Chief Executive, the Section 151 Officer, the Monitoring Officer, the External Auditor, and the Chair of the Audit Committee.

The IAAM confirmed to the Committee that the issues identified would be closely monitored and a follow-up review would be completed after the new year. Given the nature and seriousness of some of the issues in the report, and its restricted circulation, the Chair requested that the IAAM provide an update and assurance to him personally of ownership and acceptance of the action plan, and that he be advised of the timescales for completion of the action plan, within the next 7 days. The Chair stated that he would advise the Committee if he was not satisfied with the assurance he received.

Following the above additional work, it was noted that there were now only 4 months remaining to pursue the 2020/21 internal audit plan. Consequently, the work areas of Psychological safety / staff wellbeing, and Property Investment Strategy, would now be moved into the 2021/22 plan if still required. The intention was still to roll out risk management training and implementation of operational risk registers, and have them up and running before April, possibly utilising e-learning resources. Progress had also been made in the implementation of some of the actions in the AGS action plan for 2019/20, although some areas of work had been delayed due to the on-going pandemic.

Resolved:

(1)  That the latest monitoring position in relation to the 2020/21 audit plan be noted.

(2)  That the latest progress in relation to the AGS action plan for 2019/20 be noted.

(3)  The IAAM to update the Chair regarding the HR assurance report, specifically the acceptance, ownership and timescales for implementation of the action plan within 7 days of this meeting.

Verbal update from the Internal Audit and Assurance Manager.

A revised version of the Strategic Risk Register was circulated to the Committee prior to meeting, replacing the version published with the agenda, and is attached as an Appendix (Strategic Risk Register at 25 November 2020) to these minutes.

The IAAM gave a verbal report to the Committee that progress had been delayed due to the Covid19 pandemic, but that the Executive Team had now taken ownership of the register and were to invite the Principal Auditor to future Executive meetings to carry out quarterly reviews. The register would be visible through publication of the Audit Committee agenda, and also available on the intranet. It was also explained that the Grace risk management software would be accessible to risk owners to review and amend content and that the software can produce more detailed reports if required. Members of the Committee were invited to be ambassadors of the strategic risk register, review the content on a regular basis and challenge any identified risks that are not being effectively mitigated.

Resolved:

That the Council’s updated strategic risk register be noted.

Report of the Chief Finance Officer.

The CFO reported that the Statement of Accounts had been published on the Council website on 28^th August 2020 and also circulated out to Councillors. Training for Councillors on general matters of local authority finances had been undertaken, with further bespoke training potentially available.

Following the Covid19 pandemic, the external auditors had on advice withdrawn from Lancaster Town Hall. The CFO and the external auditors had been in regular contact since, discussing how the audit could be progressed.

There were no significant matters to report to the Committee, though the CFO was aware of 2 objections that had been submitted to the external auditor by residents, both currently progressing through the appropriate procedure. The CFO informed the Committee that costs arising from the objections would be additional and not included within the external auditor fee, and thus have to be borne by the Council.

The CFO reported that an additional Audit Committee meeting may need to be scheduled – details about this would be circulated in due course.

Resolved:

That the report on the progress of the audit of the Statement of Accounts for the year ended 31^st March 2020 and matters arising to date be noted.

Report of the Chief Financial Officer.

(Appendix A: Lancaster Council Audit Plan 2020 – report published 18:11:2020)

The CFO reported that the external auditors, Deloittes, had provided an external audit plan for 2019-20.

The external auditor informed the Committee that 3 areas of significant risk had been identified: a) the valuation of properties; b) the cut-off of service line expenditure; and c) management override of controls. The valuation of pension liabilities was also being kept under review.

The Committee were informed that while the misstatement reporting threshold of £0.096m could be lowered if they wished, it would consequently increase the number and length of reports. Any misstatements above that threshold, or that were material in nature, would be brought to the attention of the Committee by the external auditor. Lancaster was also considered an outlier in terms of value for money for both Council Tax and Housing Benefits administration, and also Culture and Sport – these areas in particular would receive attention. Two objections had been received from residents, they were currently under review.

It was proposed by Councillor Geoff Knight and seconded by Councillor Paul Stubbins:

“That the recommendations as set out in the external audit plan be approved”.

It was agreed by all, and the Chair declared the proposal to be carried.

Resolved:

That the identified areas of significant risk be noted, and that the materiality threshold of £1.9m and the misstatement reporting threshold of £0.096m both be accepted as appropriate.

Report of the Chief Financial Officer.

The CFO presented the report from the Financial Reporting Council (FRC) into the quality of 12 major local audits (defined as having income or expenditure greater than £500m). Those reviewed included 9 local authorities and 3 NHS bodies.

Three areas identified in the report as key for external auditors to focus upon included: cut-off line expenditure; pension liabilities; and property valuations.

Resolved:

That the report be noted.

Report of the Chief Finance Officer.

The CFO reported that the review (known as the Redmond Review) introduced a new audit regime and oversight body for the audits of local authorities.

The review had been wide ranging, with particular developments for the Committee to note including: an annual report to be presented to Full Council from the external auditor; the appointment of a qualified independent member to the Audit Committee; the recognition of internal audit as a support for external audit; and potential changes to the date of publication of audited accounts (possibly to 30^th September).

Resolved:

That the report be noted.

Report of the Internal Audit and Assurance Manager.

The IAAM reported that the CIPFA Self Assessment had been completed with regard to the Audit Committee, with two areas identified as requiring further improvement:

a) periodic report for 2019-20 to be completed and submitted to Full Council for approval;  

b) new Audit Committee members to receive training on the execution of their terms of reference.

It was confirmed that work on the periodic report was progressing. The Chair requested that any committee member who wished to contribute should contact himself and the IAAM. Additional training opportunities were also being considered.

It was proposed by Councillor Geoff Knight and seconded by Councillor Stephie Barber:

“That the recommendations as set out in the report be approved”.

It was agreed by all, and the Chair declared the proposal to be carried.

Resolved:

That the two areas identified for further improvement from the CIPFA Self-Assessment of Good Practice be approved.