Stockton-on-Tees Borough Council

Big plans, bright future

Audit Committee Minutes

Date:
Monday, 27th November, 2017
Time:
4.00 pm
Place:
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

Present:
Cllr Barry Woodhouse(Chairman), Cllr Chris Barlow(Vice-Chairman), Cllr Eileen Johnson, Cllr Ross Patterson, Cllr Mick Stoker.
Officers:
Andy Bryson, Andrew Barber, Paul Johnston, Derek Macdonald(F&BS), Peter Bell(DCE)
In Attendance:
Gareth Roberts(Mazars)
Apologies for absence:
Cllr Stefan Houghton, Cllr Mrs Kathryn Nelson, Cllr Paul Rowling.
Item Description Decision
Public
A
23/17
DECLARATIONS OF INTEREST
 
A
24/17
DRAFT MINUTES FROM THE AUDIT COMMITTEE WHICH WAS HELD ON THE 25TH SEPTERMBER 2017
AGREED that the minutes be approved and signed by the Chair as a correct record.
A
25/17
EXTERNAL AUDIT - PROGRESS REPORT
RESOLVED that the report be noted.
A
26/17
INTERNAL AUDIT PROGRESS REPORT 2017/2018
RESOLVED that the report be noted.
A
27/17
ANNUAL REPORT OF THE AUDIT COMMITTEE
RESOLVED that the work carried out by the Committee be noted.
A
28/17
EXTERNAL AUDIT ANNUAL AUDIT LETTER
RESOLVED that Members note the contents of the letter.
A
29/17
TREASURY MANAGEMENT STRATEGY
RESOLVED that the report be noted.
A
30/17
STRATEGIC RISK REGISTER UPDATE
RESOLVED that the information be noted.
A
31/17
Q2 HEALTH & SAFETY REPORT
RESOLVED that information be noted.
A
32/17
THE FUTURE OF EXTERNAL AUDIT APPOINTMENTS
RESOLVED that the information be noted.
A
33/17
WORK PROGRAMME
 
4.00pm/5.15pm

Preamble

ItemPreamble
A
23/17
There were no interests declared.
A
24/17
Consideration was given to the minutes of the meeting held on 25th September 2017.

At the last meerting members requested further information regarding the other Tees Valley Local Authority's debt servicing information.
Three respondes had been received and were circulated to the Committee.
A
25/17
Consideration was given to a report that provided the Audit Committee with progress in delivering Mazars responsibilities as the Councils external auditors. It also highlighted key emerging national issues and
developments.
A
26/17
Consideration was given to a report that provided Members with an update of the work carried out by the Internal Audit Section and the progress made against the Audit Plan 2017/18.

Internal Audit was an independent appraisal function established by the Council to objectively examine, evaluate and report on the adequacy of internal controls. This 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.

Committee Members were reminded that the list of audit assignments undertaken in the current year to date had been circulated to all Councillors prior to the meeting. As reported at previous meetings significant time had been spent on training and team building. This had delayed the start of some of the audit work. The officer who was on maternity leave had now returned and the primary focus now was completing the audit plan.

Members may recall an updated approach which included setting up a system of continuous audit. Significant progress continued to be made towards this with testing now being automated on a monthly basis in a number of areas.

The Committee commented on the large resource at North Yorkshire Council and Gloucester Council advertising for trainees. Members would be supportive of the Council seeking apprentices if needed.
A
27/17
The Committee was provided with a report regarding the Annural report of the Audit Committee. The Chartered Institute of Public Finance & Administration (CIPFA) state 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.
A
28/17
Members were provided with the External Audit Annual Audit Letter for 2016/17.

Members would recall that in 2012 the Audit Commission appointed Mazars LLP to act as external auditors to the Council. Following the abolition of the Audit Commission, audit appointments were now made by Public Sector Audit Appointments Limited.

A formal stage in the annual audit process was the production of the "Annual Audit Letter". The Annual Audit Letter for 2016/17 had now been received and was provided as an Appendix to this report.

3. The Annual Audit Letter summarises the auditor's findings from the 2016/17 audit. In line with previous practice, a copy of the Annual Audit Letter will be sent to all Members of the Council. Mazars LLP are required to submit the Annual Audit Letter to Public Sector Audit Appointments Limited and it will appear on the their website in due course.
A
29/17
The Committee considered a report that informed Members of the performance against the treasury management and prudential indicators set in the Treasury Management Strategy approved by Council in February 2017.

The Council adopted the Chartered Institute of Public Finance and Accountancy's Treasury Management in the Public Services: Code of Practice 2011 Edition (the CIPFA Code) which required the Council to approve treasury management semi-annual and annual reports.

The Council's treasury management strategy for 2017/18 was approved at a meeting of the Council on 22nd February 2017. The Council had borrowed and invested substantial sums of money and was therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of risk were therefore central to the Council's treasury management strategy.

Compliance with specific investment limits for the first six months was provided. There was a short period of time in April 2017 where the limit set against the Councils own bank was breached. This was related to the initial investment in the CCLA Property fund. There was only one trading day per month for investing in CCLA so funds needed to be retained to progress with the investment on the set date.

Compliance with the authorised limit and operational boundary for external debt was provided. Since the operational boundary was a management tool for in-year monitoring it was not significant if the operational boundary was breached on occasions due to variations in cash flow, and this was not counted as a compliance failure.

The Council measures and manages its exposures to treasury management risks using the following indicators.

Interest Rate Exposures indicator was set to control the Council's exposure to interest rate risk. The upper limits on fixed and variable rate interest rate exposures, expressed as the proportion of amount invested was provided.

Fixed rate investments and borrowings were those where the rate of interest was at the point of investment. All other instruments were classed as variable rate.

Maturity Structure of Borrowing indicator was set to control the Council's exposure to refinancing risk. The upper and lower limits on the maturity structure of fixed rate borrowing were provided.

Time periods started on the first day of each financial year. The maturity date of borrowing was the earliest date on which the lender can demand repayment.

Principal Sums Invested for Periods Longer than 364 days indicator was to control the Council's exposure to the risk of incurring losses by seeking early repayment of its investments. The limits on the long-term principal sum invested to final maturities beyond the period end were provided.
A
30/17
The Committee was 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.

Members were provided with details of the high level strategic risk register and an initial risk score. The next stage of the process would be to document all controls and identify desired outcomes. It also shows the detailed risk report for those risks scoring 15 and above at the time of the last update. The reports were as yet incomplete they need updating to show desired outcomes and action plan owners/implementation dates. Work would continue with relevant officers to identify and update these, with one change (Risk 4) from the previous report to reflect the good Ofsted rating the Council received and the progress made against the action plan.
A
31/17
Members considered 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 July 2017 - 30th September 2017.

This detail encapsulates the regular, non-responsive activity of the Health and Safety Unit, and accident and assault statistics:

1. Health and Safety Training
2. Health and Wellbeing Update
3. Premise Audit Findings
4. Construction (Design and Management) Regulations 2015
5. School's Educational Residential Visits
6. Employee Protection Register Activity
7. Safety Warnings, Advice or Reminders Issued
8. Accidents Reported
9. Physical Assaults Reported
10. Verbal Assaults Reported
A
32/17
Members were provided with a verbal update that Public Sector Audit Appointments Ltd (PSAA) had informed the Council that it was minded to appoint Mazars for a further 5 year period. Formal notification would be received following the PSAA board meeting in December.
A
33/17
The Committee noted its work programme.

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