Audit Committee (ceased to operate 21/05/2019) Minutes

Monday, 23rd February, 2015
Conference Room 2, Second Floor, Municipal Buildings, Church Road, Stockton on Tees
Please note: all Minutes are subject to approval at the next Meeting

Attendance Details

Cllr Barry Woodhouse(Chairman), Cllr Ross Patterson(Vice-Chairman), Cllr Phillip Dennis, Cllr Terry Laing, Cllr Mick Moore, Cllr David Wilburn
Garry Cummings, Andrew Barber, Paul Johnston, Derek MacDonald(RES), Martin Barnes(Mazars), Sarah Whaley(LD)
Apologies for absence:
Cllr Alan Lewis
Item Description Decision
RESOLVED that the minutes be approved and signed.
RESOLVED that the report be noted.
RESOLVED that the report be noted.
RESOLVED that the briefing be noted.
RESOLVED that the report be noted.

1. the Internal Audit Audit Charter be approved.

2. the proposed Audit Plan for 2015-16 be approved.

3. the indicative strategic Audit Plan for 2016-19 and the estimated resources available to deliver that plan be noted.
RESOLVED that the report be noted.
RESOLVED that the report be noted.
RESOLVED that the work carried out by the Audit Committee be noted.

RECOMMENDED to Council that the work carried out by the Audit Committee be noted.
RESOLVED that the work programme be noted.


The Evacuation Procedure was noted.
Councillor Phillip Dennis declared a personal non-prejudicial interest in relation to item 8 'Internal Audit Progress Report' as he was a School Governor for Egglescliffe CE Primary School.

Councillor David Wilburn declared a personal non-prejudicial interest in relation to item 8 'Internal Audit Progress Report' as he was a School Governor for St John the Baptist and Crooksbarn Primary School.

Councillor Barry Woodhouse declared a personal non-prejudicial interest in relation to item 8 'Internal Audit Progress Report' as he was a School Governor for Oakdene Primary School.
Consideration was given to the minutes of the meeting which was held on the 1st December 2014 for approval and signature.
Consideration was given to a report that updated Members on Mazars progress in meeting their responsibilities as the Council's external auditor. Also included in the report were key emerging national issues and developments which could be of interest to the Audit Committee and actions that may want to be considered.

Following the Committee meeting on 29th September 2014 and the Council meeting the following day, Mazars issued an audit report including an unqualified opinion on the Council’s financial statements on 30 September 2014. The audit report included a conclusion that the Council had proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources.

Mazars reported to the National Audit Office (NAO) on 30th September 2014 that the Council’s 2013/14 Whole of Government Accounts consolidation pack was consistent with the audited financial statements. This enabled Mazars to certify completion of the 2013/14 audit in the report.

The Annual Audit Letter for 2013/14 had been issued and agreed with the Council, and presented to Cabinet at its January meeting.

Audit of the 2014/15 financial statements were in the early planning stages. Mazars were updating their knowledge of the key financial systems that underpin the production of the annual financial statements. A strategy would be presented to members at the next Audit Committee.

Members were informed that Mazars would be working closely with the finance team in relation to the 2014/15 accounts, and that a final accounts workshop had been held. There were issues to resolve around Voluntary Aided Schools(VAS) and all councils would have to account transport infrastructure properly. Both the accounts and highways teams had attended a workshop on this subject. On a positive note it was highlighted that Stockton Borough Council were already ahead of other Councils in relation to the above.

In respect to the Value for Money(VfM) conclusion the Audit Commission had issued updated guidance. The guidance was similar to last year and was detailed in full within the main report. The guidance also set out what the typical characteristics for each of the two criteria Mazars would assess. Mazars planned to use these as a framework to inform their work, taking into account any local risks that may be identified. Mazars would set out their planned approach at the next Audit Committee meeting.

Mazars had completed their work on the 2013/14 Housing Benefits Subsidy Claim, and certified the claim before the Department of Work and Pensions deadline of 30 November 2014.

It was detailed within the report that the Council was required by funding bodies to arrange independent certification of a range of grant claims and returns that were now outside the Audit Commission regime. In recent weeks Mazars had discussed and agreed engagement terms with the Council, including the procedures to be undertaken and the form of the report, for certification of the following funding claims and returns:

•2 schemes under s256 Health Act 2006 involving £3.5 million income from the NHS, the fee being £2,000;

•Initial Teacher Training for the National College of Teaching and Leadership, the fee being £2,000;

•Teachers Pension Return, the fee being £2,750;

•For Tees Valley Unlimited(TVU), returns for two schemes involving £13.5 million funding from the Regional Growth Fund, with total fees of £9,700 over 2 financial years.

Mazars informed the committee that there had been very few failures to meet deadlines for most types of principal authorities in 2013/14, and financial reporting was consistently strong. However it was highlighted that the key financial reporting challenges for 2014/15 and beyond, were, in particular, new accounts and audit regulations. These would come into effect from 1st April 2015 and would bring forward the accounts publication date for principal bodies from the 30th September to the 31st July for 2017/2018 accounts. Following consultation, 100% of the responses received had indicated that the new deadline of the 31st July had been received negatively. To prepare for the new deadline, accounts would be prepared in advance in the run up years.

In relation to Protecting the Public Purse the Audit Commission’s latest report on fraud in local government revealed the highest value of fraud detected by England’s councils since the Audit Commission turned the spotlight on 25 years ago. Fraud valued at £188 million was detected in 2013/14, a ten-fold increase since 1990 and beating all records for the past 25 years.

The Audit Commission had recently distributed NFI information packs.

In relation to 2015/16 proposed fee scales and work programme, Audit Commission, October 2014 the Audit Commission had concluded its consultation on its 2015/16 proposed work programme and scales of fees, which DCLG had asked it to set before it closed on 31 March 2015. The Commission was proposing to reduce scale fees by a further 25 per cent from 2015/16 based on the scale fees applicable for 2014/15. The Commission had also highlighted in a press release that it would be returning a further £6 million to its audited bodies in rebates. The Commission had also recommended contract extensions for a further 2 years, however as yet there had been no commitment from government.
Consideration was given to a report on Mazars Certification of Claims and Returns.

Stockton on Tees Borough Council (‘the Council’) received more than £300m in funding from various grant-paying government departments. These departments attached conditions and restrictions to these grants which the Council must meet otherwise funding could be withdrawn or clawed-back.

It was therefore important that the Council could demonstrate that it:

- had put in place adequate arrangements to prepare and authorise each claim and return; and

- could evidence that it had met the terms and conditions put in place by the grant paying body for each claim and return.

As the Council’s appointed auditor, Mazars acted as an agent of the Audit Commission to certify specified claims and returns.
The Audit Commission, in consultation with the grant-paying bodies, set out a programme of work in the form of Certification Instructions (‘CIs’) that Mazars must follow. It also set an overall framework under which Mazars would carry out their certification work:
- For claims and returns below £125,000 the Audit Commission did not make certification arrangements and as such Mazars were not required to carry out any certification work.

- For claims and returns between £125,000 and £500,000, the Audit Commission required Mazars to undertake limited tests to ensure that entries on the claim form agreed with underlying records.

- For claims and returns over £500,000, Mazars assessed the control environment the Council had put in place for preparing the claim to decide whether Mazars could place reliance on these arrangements. Where Mazars could place reliance on the Council’s arrangements they undertook limited testing to ensure that entries on the claim form agreed with underlying records (as above). Where Mazars could not place reliance on the Council’s control environment they would carry out the full programme of testing in the Audit Commission’s CI.
During the year Mazars had also been engaged directly by the Council to undertake assurance work on the following claims and returns:

- European Regional Development Fund - Digital City;
- Teachers Pensions EOYCa return;
- Initial Teacher Training Programme 2013/14.

As these engagements were outside the Audit Commission’s regime Mazars had reported separately to funding bodies, officers and the Audit Committee on the outcome of the work.

On completion of the specified work, Mazars would issue a certificate, the wording of which depended on the level of work Mazars had performed on each claim. The certificate stated whether the claim had been certified either without qualification; without qualification following amendment by the Council; or with a qualification letter. Where Mazars would issue a qualification letter or the claim or return was amended by the Council, the grant paying body may withhold or claw-back grant funding.

As required by the Audit Commission’s CIs, Mazars had assessed the control environment for one claim.

Mazars had not noted any weaknesses in Stockton Borough Councils control environment for any claim or return.

As in previous years, on the Housing Benefit and Council Tax Benefit Subsidy claim there were minor errors found in sample testing and minor differences in reconciliations supporting the claim. The matters arising were reported to the Department of Work and Pensions, resulting in a qualification of the certificate. The number and severity of the issues identified and reported continued to reduce, reflecting on-going improvements in practices and arrangements for administering complex benefits schemes.

A full analysis of all claims and returns on which Mazars carried out certification work were provided at Appendix A to the main report.

The claim certified by Mazars in 2013/14 was amended by the Council, and issued with a qualification letter.

For 2013/14 the total fees charged for certification work was £15,965. This represented a significant reduction on fees charged in previous years (2012/13 £30,713) as a result of a reduction in the number of claims and returns for which the Audit Commission had made certification arrangements.

A breakdown of the fees charged for each claim or return was provided in the attached report.
Members were given a briefing from Mazars on Protecting the Public Purse Fraud Briefing 2014.

The Fraud Briefing covered the following areas:-

- Provide an information source to support councillors in considering their council’s fraud detection activities

- Extend an opportunity for councillors to consider fraud detection performance, compared to similar local authorities

- Give focus to discussing local and national fraud risks, reflect on local priorities and the proportionate responses needed

- Be a catalyst for reviewing the council’s current strategy, resources and capability for tackling fraud

- Questions elected members and decision makers may wish to ask


- Contextual and comparative information needed to interpret

- Detected fraud is indicative, not definitive, of counter fraud
performance (Prevention and deterrence should not be

- No fraud detected does not mean no fraud committed (Fraud
will always be attempted and even with the best prevention
measures some will succeed)

- Councils who looked for fraud, and looked in the right way, would find fraud (There was no such thing as a small fraud, just a fraud that had been detected early)

Total detected cases and value 2013/14 (Excluding Housing tenancy fraud), Stockton on Tees had detected 58 cases of fraud. The value of detected fraud was £352,222. Average for other Unitary Authorities was 375 cases, with a value of £700,277.

Housing Benefit (HB) and Council Tax Benefit (CTB) 2013/14, Stockton on Tees detected 55 cases of this type of fraud. The value of
detected fraud was £352,033. The average for other Unitary Authorities was 164 cases, valued at £548,745

Stockton on Tees did not detect any cases of Council tax discount fraud for 2013/14. The average for other Unitary Authorities was 173 cases, valued at £86,424.

Disabled parking (Blue Badge) fraud 2013/14, Stockton on Tees did not detect any cases of this type of fraud. The average for other Unitary Authorities was 19 cases.

Procurement: Stockton on-Tees did not detect any cases of this type of fraud. Total for other Unitary Authorities was 25 cases, valued at £832,190

Insurance: Stockton on Tees did not detect any cases of this type of fraud. Total for other Unitary Authorities was 34 cases, valued at £988,636

Social care: Stockton on Tees did not detect any cases of this type of fraud. Total for other Unitary Authorities was 47 cases, valued at £731,379

Internal: Stockton on Tees detected 1 case of this type of fraud. The value of detected fraud was £1,307. Total for other Unitary Authorities was 319 cases, valued at £1,029,191

Correctly recording fraud levels was a central element in assessing fraud risk. It was best practice to record the financial value of each detected case.

Members credited staff in the benefits section of Stockton Borough Council for a job well done and achieving as near to perfection as one could hope.
Consideration was given to a report on the work carried out by the Internal Audit Section and the progress made against the Audit Plan 2014/2015.

Internal Audit was an independent appraisal function established by the Council to objectively examine, evaluate and report on the adequacy of internal controls. The role ensured that there was proper economic, efficient and effective use of resources. It also ensured that the Council had adequate accounting records and control systems.

The attached update report showed the current position in respect of the progress against the 2014/2015 audit plan and the results of the work that had been undertaken.

The mains points highlighted were as follows:

- Although 29 Audits were still to be commenced they were still achievable.

- A number of Audits had overrun however this was due to a new more in depth approach to carrying out audits.

- The Audit Plan was constantly revised during the year to take account of changing requirements. Amendments to the Plan agreed on 24 February 2014 were summarised within the attached update report.

- 2014/15 planned Audits Amalgamated/Cancelled/Deferred.

- 2014/15 Unplanned Audits Added to the Plan.

- The annual fraud survey was completed and submitted to the Audit Commission on the 16 May 2014. Stockton borough Council were only able to identify two types of fraud during 2013/2014, Housing Benefits and Council Tax Support Scheme. The National Fraud Initiative had undertaken data matching to support the detection of Council Tax Discount fraud, at the time of submitting the survey the work to verify these matches had not been undertaken due to council tax staff being involved in the annual billing process, this work had now started.

Results from the National Fraud Initiative had now been received and the matches were currently being reviewed.

Included in the service review was the creation of a Risk & Special Projects Officer post within the Internal Audit Team to undertake additional counter fraud work including the actions identified in the Counter Fraud Strategy.

Members were reassured that although there had been recent budget cuts in relation to resources within the Audit Team, the same level of service would be maintained. Staff were to be trained across all areas of the service. The team would focus on bigger audits but there would be less of them. This would result in improved audits and improved skills of auditors.
Consideration was given to a report on the Internal Audit Charter and proposed annual Audit Plan for the financial year 2015/16.

The requirement for the Council to have an internal audit function was outlined in Section 151 of the Local Government Act 1972. More specific requirements were detailed in the Accounts and Audit (England) Regulations 2011 which required the Council to:

“undertake an adequate and effective system of internal audit of its accounting records and its system of internal control in accordance with the proper practices in relation to internal control”.

The Council had delegated this responsibility to the Corporate Director of Resources.

The Public Sector Internal Audit Standards were published on 18th December 2012. These standards, which were based on the requirements of the Institute of Internal Auditors (IIA), were intended to promote further improvement in the professionalism, quality, consistency and effectiveness of internal audit across the public sector. They were mandatory and were applicable to all internal audit service providers, whether in-house, shared or outsourced.

There were three distinct areas covered by the standards:-

• A new definition of Internal Auditing;
• A Code of Ethics designed to promote an ethical, professional culture; and
• The International Standards for the Professional Practice of Internal Auditing.

CIPFA had provided guidance on the application of Public Sector Internal Audit Standard in the form of an Application Note. The Internal Audit Charter (attached) had been prepared in accordance with the Public Sector Internal Audit Standards and this guidance.

Under the standards, the Head of Finance, Governance and Assets is required to prepare an Internal Audit Charter. This was a high level statement of how the Internal Audit Service would be delivered to meet the requirements of the legislation and the standards.

The charter attached set out the approach for the period 2015-2019 and gave details of:

•Purpose of the Internal Audit Service
•Scope of Internal Audit work
•Access to Information
•Resourcing of the Service
•Future Development of the Service

The Internal Audit Charter was attached to the report.

The standards stated that a risk based plan designed to implement the audit charter and allow an annual internal audit opinion to be prepared should be produced. During the year the risk assessment process and the audit portfolio had been reviewed and updated to ensure work was focussed on the areas of highest risk to the authority. The revised risk assessment process also ensured the ability to direct resources to areas of highest risk within each audit.

The risk assessment used a number of factors to determine the likelihood of issues occurring including an understanding of the full scope of systems in operation, major change, concerns/external interest and results of previous audit work. It then assessed the impact any issues may have on the council’s strategic objectives, reputation, financial plans, assets and also the potential impact on individuals and/or the environment.

To aid members understanding of some of these changes the full strategic plan for the period 2015-2019 was included within the report. The plan identified the intended scope of each of the audit reviews for the full period.

As part of the process, the plan was subject to consultation with the Council’s external auditors. High priority was given to key financial systems, any significant corporate projects and specific areas requested by Management. A lower priority was given to systems which, although very important to stakeholders, had less impact corporately. All areas of activity were reviewed at least once in a four year period.

Continuous assessment of organisational risks was required given that some risks could escalate or diminish over time, whilst other risks could disappear altogether or be superseded by new risks over fairly short timescales. The plan was therefore indicative as it was inevitable that changes would be made during the year as the risk profile of the Council changed. This would be achieved through on-going review and amendment in consultation with the Corporate Director of Resources. The Audit Committee would be informed of any significant changes to the plan.

The current level of resources within the service could be identified as gross audit days based on 7.6 FTE’s with 1 officer part-time, which was equivalent to 1992 audit days. Allowances had been made for annual leave, bank holidays, sickness, training and administrative duties. No allowance had been made for staff turnover. The productive audit days to deliver the 2015-2016 Audit Plan was detailed within the report.

The proposed Internal Audit Plan for 2015-16 and indicative plans for 2016-17, 2017-2018 & 2018-19 were attached within the report.

It had been assumed at this time that the same level of annual resources shown above would be available for the entire period 2015-2019. Based on this assumption there appeared to be adequate resources available to achieve the strategic plan as shown in the attached report.

The service was continuously striving to improve the way it operated and the following actions had been identified to further enhance the service:

• Extend the amount of specific anti-fraud work being undertaken, specifically additional data matching.

•Review and update monitoring and reporting procedures.

•Improved promotion of the service to provide managers and individuals with more information about the audit service and the audit process itself.

•Bringing together audit instructions/documentation into a single audit manual to reflect recent changes.
Consideration was given to a report on the Corpoate Risk Register - Qtr 3 Update.

Members were reminded that quarterly reports on the Corporate Risk Register were presented for the purpose of reviewing the key risks that had been identified as having the potential to deflect services from achieving their objectives over the next 12 months and beyond. They also set out the actions being taken to ensure that the risks, and possible adverse outcomes, were minimised.

As a reminder, risks were scored on a scale of one to five for both ‘impact’ and ‘likelihood’. The scores were multiplied to generate a total score and any risks with a score of 15 or above were included on the Corporate Risk Register. For information, any risks scored between 9 and 12 were included on Service Group Risk Registers.

The Committee had requested that, in the absence of substantial changes to the register, quarterly reporting should be confined to highlighting significant additions and amendments since the previous update, with a detailed report incorporating a review of the Council’s risk management process being produced annually at the end of Quarter 4.

The interim report covered the period 1 October to 31 December 2014. All Service Groups had been contacted subsequently and the returns indicated that there had been two risks removed from the Corporate Risk Register. In addition there had been some minor updating to the risks previously included on the Authority’s risk register over the months in question. The changes were comprised of a general update to all risks to reflect on-going progress.

As a result, the total number of significant risks in the Corporate Risk Register at the end of Quarter 3 was 10.

For purposes of record, the changes referred to above had been incorporated in the latest version of the full Corporate Risk Register. This was available in the attached report.
Consideration was given to a report that detailed the regular non-responsive services provided by the Council’s Health and Safety Unit to monitor, improve and to ensure compliance of the health, safety and well-being control environment for the period 1st October to 31st December 2014.

This detail encapsulated the regular, non-responsive activity of the Health and Safety Unit, including:-

1. Health and Safety Training
2. Health and Wellbeing Update
3. Accidents Reported
4. Physical Assaults Reported
5. Verbal Assaults Reported
6. Premises Audited
7. Construction (Design and Management) Regulations 2007 (CDM)
8. School’s Educational Residential Visits
9. Employee Protection Register Activity
10. Tendering Contractor Health and Safety Policy Appraisal
11. Safety Warnings, Advice or Reminders Issued

Members discussed further Health and Safety Training, where the Committee heard that 9 programmed corporate health and safety training sessions had been delivered to a total of 93 delegates, with 9 further bespoke courses delivered to 76 delegates within departments.

In support of the Control of Asbestos Regulations 2012 and the Council’s Asbestos Management Policy, an on-line e-learning platform had been made available to provide refresher training to key nominated personnel with responsibility for managing asbestos containing materials. This ensured compliance was maintained amongst services and individual premises personnel with responsibility for the effective management of asbestos containing materials.
In total 18 training courses were delivered to 169 candidates, details of which were contained within the main report.
The Chartered Institute of Public Finance & Administration (CIPFA) stated that an effective Audit Committee would produce annual reports on its work and findings.

This report was to inform members of the work of the Audit Committee during the past year and the sources of information upon which the enclosed Audit Committee opinion statement was based.

Members were reminded of the role of the Audit Committee which was:

(a) Reviewing and monitoring the Council’s approach to risk management and corporate governance including the approval of the Statement of Internal Control.

(b) Monitoring the integrity of the Council’s financial statements and approving the Statement of Accounts.

(c) Reviewing any proposed changes to accounting policies and promoting discussion around these.

(d) Considering budget reports and the effect of government announcements on the Council’s finances.

(e) Reviewing Financial Update reports identifying the impact on the Medium Term Financial Plan.

(f) Approving the role and responsibilities of the Internal Audit Service

(g) Considering the reports of External Audit, as far as the Audit Commission’s rules permit and monitoring the effectiveness of auditor’s performance

(h) Approving the internal and external audit plans

(i) Reviewing Internal Audit work on a quarterly basis; internal and external annual reports together with any management response and receiving details of specific significant issues highlighted via audit work and referring to the Executive Scrutiny Committee; the Select Committees; Cabinet or Council, as appropriate, any issues arising which were key in nature

(j) Since the demise of the Standards Committee the Audit Committee had maintained an overview of the Council’s Constitution in respect of contract procedure rules, financial regulations and codes of conduct and behaviour, and considering the Council’s compliance with its own and other published standards and controls

(k) Consider details of key ethical and wider corporate governance issues

The Terms of Reference for the Audit Committee were approved by Council, at its meeting held on 25 January 2006, and formed part of the Council’s Constitution. At its meeting in January 2011, Council also approved a Statement of Purpose for the committee:-

The purpose of the Audit Committee was to provide independent assurance of the adequacy of the risk management framework and the associated control environment, independent scrutiny of the authority’s financial and non financial performance to the extent that it affected the authority’s exposure to risk and weakened the control environment, and to oversee the financial reporting process.

The report covered the period from 1st October, 2013 to 30th September, 2014. As many other reports gave opinions or results at the end of the financial year, the timing of this report was to show that the review/ appraisal of the control environment within this Council were on-going.

The Audit Committee was in the final year of operation of this administration, and although there had been less changes in financial legislation than in previous years there had continued to be detailed and in depth questioning from members appointed to the committee all had grasped the ethos of Audit work. They had ensured a continuance of the review / appraisal process across the period of reporting and made a valuable and much appreciated contribution to the functions of the Committee.

The opinions of the Audit Committee expressed in this report were based on information supplied by the following specialist risk assessment services.

• The Council’s Monitoring officer,
• The Chief Accountant,
• The External and Internal Audit services,
• Health & Safety
• Risk Management and Insurance.
• A number of Corporate Governance reports.

The main thrust of all the specialist reports was to ensure risks were identified, managed appropriately and the resulting control environment was reliable. In receiving and challenging these reports the Audit Committee was well placed to form an independent over-view of the complete control environment including the Authorities Anti fraud Strategy as influenced by the Audit Commission report Protecting the Public Purse 2011 Fighting Fraud Against Local Government .

The membership of the committee marginally changed from the previous municipal year and therefore ensured work in progress was continued with members continuing to pose searching questions alongside the in depth probing of existing members. Alongside this it was ensured that any substitute member was experienced in the function and operations of the committee. If the Audit Committee membership were to change dramatically and members be required to report on a year of which they had no personal knowledge or experience (and therefore be reliant on the Officers upon whom they are supposed to exercise oversight), the previous Chair suggested that the Committee’s report cover the work on the Authority's control environment for the year ending 30th September.

The members of the Committee had shown a strong commitment to the work for which they had been given responsibility and the committee had functioned well. The members had studied agendas and asked searching questions of officers not only presenting reports but also requesting further investigation of issues and explanation by the Chair, Vice chair and supporting officers of the committee.

The Committee were fortunate insofar as the make up of the Audit Committee membership was diverse not only geographically but also in experience and expertise. Members represented not only the North and South of the Borough but also the major conurbations and communities giving a broad spectrum of geographical and electoral knowledge.

This overview coupled with long serving members with experience of Cabinet and Chairing Scrutiny Committees and members elected more recently indicated a searching and enquiring membership with a varied and extensive knowledge capable of ensuring sound and ethical governance.

As well as looking at the Internal Audit Report, Corporate Risk Register and the Health and Safety Report at each meeting the Committee had, and would continue to include in its deliberations and debates External Audit Updates, Constitutional Updates (as required), The Monitoring Officer's Report. And last but certainly not least The Role of Internal Audit and its compliance with The Accounts and Audit Regulations 2011.

Outsourcing the Audit Commission's in-house audit practice continued providing an external overview of the Councils operations. In essence there had been no change from the previous situation although this had resulted in a substantial saving in audit fees for the Council year on year. The Accounts and Audit Regulations 2011 required an assessment of the Internal Audit service to be carried out annually against specific criteria set out in the CIPFA ‘Code of Practice for Internal Audit' (the Code). A revised standards checklist had been introduced since the last review and the assessment had therefore been carried out against that check list. The review had again been undertaken by two designated members of the Corporate Governance Group

The financial statements were once again produced under International Financial Reporting Standards. The Council prepared well for the introduction of IFRS and produced the draft financial statements in time for the new statutory deadline of 30th September.

In Conclusion:

The Audit Committee was now well established with comprehensive terms of reference. The Audit Committee had responsibility for risk management, internal control and financial reporting. The Chair of the Audit Committee prepared an annual report on the Committee's work for presentation to Cabinet. Effective corporate and ethical governance was critical to an authority’s performance and to demonstrating continuous improvement it was therefore, a fundamental element of the modernization agenda. Probity and high standards are an inherent part of corporate/ethical governance. They were also priorities in Law and Democracy’s Service Plan and in the Council Plan.

Changes during the year

Reductions in staffing, the retirement of a valued long serving officer and reorganisation of duties seemed to have been carried out in a seamless manner and the officers taking on extra duties and responsibilities had assured the Committee that the effects would not be to the detriment of the service or their personal performance.

The Council was still facing increasing budget pressures around children's and Adult social care spending and this was to be closely monitored as part of ongoing budgetary control.

In addition there were several other issues and developments that had impacted on Council budgets going forward, including devolving responsibility for Council Tax Benefit, transfer of public health budgets from primary care trusts, localisation of business rates and distribution of revenue funding to academies.

The Council had taken prompt and effective action to move towards the reductions of £11.3 million in 2013/14 and onwards these had been built into the medium term financial plan and the ongoing efficiency, improvement and transformation programme set out how the Council would review services and deliver more savings in the future with actions such as the “Big Ticket”.

Our robust and prudent investment regime had in the avoided issues similar to the collapse of the Icelandic Banks however difficult times had been faced due to a very low interest rate in the market. The continual monitoring of information on any changes in the investment sector being paramount both for internal control and the stability of the Authorities forward financial planning and officers had worked diligently to ensure maximum returns were achieved.

The Accounts and Audit Regulations 2011 changed the requirements regarding the completion and approval of the Annual Financial Statements. From 2010/11, annual Financial Statements had to be prepared by 30th June and to then pass them to external auditors for review. Authorities were now required to present audited accounts for approval by those charged with governance by 30th September which had been completed again this year.

The financial statements were produced under International Financial Reporting Standards as required.
Consideration was given to the Draft Work Programme 2015/16.

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