|The evacuation procedure was noted.|
|There were no interests declared.|
|Consideration was given to the minutes of the meeting held on 27th November 2017.|
|Consideration was given to a report that set out progress on the external audit for 20171/8.|
Since the committee last met, external audit had:
- held internal planning meetings as part of our planning process for the 2017/18 audit;
- had update meetings with finance in respect of planning for the 2017/18 interim and final audit visits;
- undertaken planning work to refresh its documentation in respect of the Councils systems (including undertaking walkthrough testing);
- refreshing our understanding of the processes in place at the Council that inform the preparation of the financial statements;
- undertaken its risk assessment as part of planning for our 2017/18 VFM conclusion; and
- developed and agreed its 2017/18 Audit Strategy Memorandum (Annual audit plan) with Officers which would be presented separately to the Audit Committee at its February meeting.
The audit work was on track for this time of year, and there were no matters to raise with the Committee at this stage of the audit.
|The Committee considered a letter that provided details of the results of certification work 2016/17. As the Councils appointed auditor, Mazars acted as an agent of Public Sector Audit Appointments (PSAA). The Local Audit and Accountability Act 2014 transferred the Audit Commissions responsibilities to make certification arrangements for specified claims and returns to PSAA. For 2016/17 the only claim or return within this regime was the Housing Benefit Subsidy claim. This letter reported the findings from this work.|
In 2016/17 the prescribed tests for the auditors Housing benefits work were set out in the HBCOUNT module and BEN01 Certification Instructions issued by PSAA. On completion of the specified work the auditors issued a certificate. 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 it issued a qualification letter or the claim or return was amended by the Council, the grant paying body may withhold or claw-back grant funding.
The 2016/17 Housing Benefit Subsidy claim at the Council was amended and subject to a qualification letter. Detailed findings, including the extrapolation of errors identified, were reported in the qualification letter to the Department for Work and Pensions dated 15 November 2017. Details of the findings was provided.
|The Committee considered the Audit Strategy Memorandum for Stockton-on-Tees Borough Council for the year ending 31st March 2018. The report summarised external audits approach, highlight significant audit risks and areas of key judgements and provided Members with the details of the audit team. As it was a fundamental requirement that an auditor is, and was seen to be, independent of its clients, Section 7 of this document also summarised considerations and conclusions on its independence.|
External audit considers two-way communication with the Council to be key to a successful audit and important in:
- reaching a mutual understanding of the scope of the audit and the responsibilities of each of us;
- sharing information to assist each of us to fulfil our respective responsibilities;
- providing the Council with constructive observations arising from the audit process; and
- ensuring that external auditors, gain an understanding of your attitude and views in respect of the internal and external operational, financial, compliance and other risks facing the Council which may affect the audit, including the likelihood of those risks materialising and how they were monitored and managed.
The document, which had been prepared following external audits initial planning discussions with management, was the basis for discussion of their
audit approach, and any questions or input the Committee may have on their approach or role as auditor.
The document set out materiality at the planning stage that will be applied in the audit, and also the significant risks identified by the auditors at the planning stage of their audit for both their audit of the financial statements and value for money conclusion.
The document also contained specific appendices that outlined our key communications during the course of the audit, and forthcoming accounting issues and other issues that may be of interest.
|The Committee considered a report that outlined to Audit Committee the findings of the Monitoring Officers annual review of the operation of the Constitution and to propose to outline the timetable for the conclusion of the review and the process for consultation and approval by Members of an updated version of the Constitution. |
The Council adopted a new constitution for the Authority in October 2008 and since that time it had been reviewed and updated on an annual basis by the Monitoring Officer, with up-to-date versions maintained on the Councils website and intranet.
The Constitution had served the organisation extremely well, however in 2017, in order to fulfil the duty to carry out regular monitoring of the Constitution the Monitoring Officer determined that a more fundamental review may be appropriate in light of the fact that:
a. The current constitution had been in place in its current format since 2008 and therefore the latest version is in the form of the 2008 version as amended by nine years of updates. The current constitution had, over time, become a little unwieldy, having 760 pages and 50 separate sections.
b. Changes were required to reflect the creation of Tees Valley Combined Authority
c. Updates were required to reflect the General Data Protection Regulations and other legislative updates.
d. It was also recognised that the Senior Management changes had led to a loss in corporate knowledge about why things were where within the Constitution.
Consequently a more in-depth review had been carried out in 2017.
Following an initial internal desk-top exercise it was decided to engage external specialist advice in order to carry out a full health check of the constitution and sought proposals for ensuring any review encompasses best practice and improvements. Bevan Brittan were appointed in October 2017 to carry out an initial exercise. They were a law firm with significant experience of advising local authorities on governance and decision making and have undertaken many reviews of constitutions for council clients. The initial scope of work was to:
a. Complete a statutory compliance checklist of the current constitution.
b. Consider ways in which the constitution could be re-structured to make it more easily understandable, usable and accessible for the public, Members, Officers and partners and stakeholders of the Council.
c. Consider ways in which the document could be made future-proof and more easily maintained.
Overall the statutory compliance check found the Council's Constitution to be largely legally compliant. A few areas were identified where further information was needed to be contained in the Constitution to meet the statutory requirements but these could be easily remedied and were no more than would be expected on any regular review.
The review identified ways in which the constitution could be re-structured and updated. The recommendations involve developments in four areas:
a. Form and Structure
b. Updating and future-proofing
c. Re-drafting of the Decision Making provisions
d. Re-drafting of the Budget Policy and Financial Procedure Rules
An overview of the recommendations in each of these areas was set out below, however as a general comment, it was worth highlighting, that the proposals made were more about the presentation and documentation of our current constitutional arrangements rather than suggestions to make substantive changes to processes or decision-making. Where any substantive changes were proposed these would be highlighted to Members through the Members Policy Seminar and Cabinet and Council processes outlined in the report. All changes would be carefully mapped so that Members could see where provisions had been moved to other parts of the Constitution or removed.
|Consideration was given to an update report that shows the current position in respect of the progress against the 2017/18 audit plan and the results of the work that has been undertaken.|
As reported at previous meetings significant time had been spent on training and team building. This has 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. Because testing was undertaken continuously there would be a number of audits shown as on-going that would be finalised at the year end.
|The Committee considered a report that advised members of the Internal Audit Charter and proposed annual Audit Plan for the coming financial year 2018-2019.|
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 & Wales) Regulations 2015 which required the Council to:
- undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes, taking into account public sector internal auditing standards or guidance.
On the 1 April 2017 a shared service was established to deliver the Internal Audit function to Darlington Borough Council and Stockton-on-Tees Borough Council.
The audit charter was provided and had been revised to outline how this service would be delivered and the proposed plan of work will be delivered across both organisations.
The structure of the plan had also been updated to reflect the fact it serves more than one authority with different management structures.
To aid members understanding of when they could expect an area to be reviewed next the full strategic plan for the period 2018-2023 was included.
In addition to any potential changes in the plan to reflect development work it was likely that changes would be made to the plan to reflect changes in the councils risk profile. This would be achieved through ongoing review and amendment in consultation with the Procurement and Governance Manager. The Audit Committee would be informed of any significant changes to the plan.
|The committee considered a report that provided members with some background information regarding the requirement to have an external assessment of the Internal Audit service and a proposal for the scope of that review.|
Each of the other Tees Valley authorities (Hartlepool Borough Council and Tees Valley Internal Audit and Assurance Service across both Middlesbrough & Redcar and Cleveland) was in a similar position in that they were in their 5th year and therefore need to undertake an external review. It was therefore proposed that we put in place reciprocal arrangements for reviewing each other.
The standards state the external assessment requirement may be satisfied by either a full assessment or by undertaking a self-assessment with independent validation. It was proposed that since each authority undertakes an annual self-assessment as part of their Quality, Assurance and Improvement Processes that the most effective form of assessment would be self-assessment with external validation.
The self-assessment and validation would use the checklist provided in the Local Government Application Note for the UK Public Sector Internal Audit Standards produced by the Chartered Institute of Public Finance & Accountancy.
There was a requirement for the external assessor (or team) to be appropriately qualified. The standards define appropriately qualified as requiring to demonstrate competence in two areas: the professional practice of internal auditing and the external assessment process. Competence can be demonstrated through a mixture of experience and theoretical learning. Experience gained in organisations of similar size, complexity, sector or industry and technical issues was more valuable than less relevant experience.
The teams from each of the neighbouring authorities had considerable experience of working in similar organisations and with the content of the standards themselves and therefore should be considered suitably qualified to undertake the assessment.
|Consideration was given to a report that advised Members of the Anti-Fraud and Corruption arrangements for the period 2018-2019.|
The strategy had been developed in line with the code of practice with each of the 5 themes addressed. The format of the strategy had been redefined from previous versions to improve the visual appeal of the strategy and make it more effective.
The strategy was endorsed by senior management with a foreword provided by the Deputy Chief Executive as the responsible finance officer and the Chair of the Audit Committee reflecting the importance of tackling fraud within the authority.
At the core of the code was understanding the Councils fraud risk and ensuring adequate resources were provided to address the areas of greatest risk. A risk had been added to the strategic risk register to facilitate this.
Based on the results of local counter fraud activity and the national estimates of where fraud occurs it would appear the resources available and where they were deployed were commensurate with the current level of risk exposure. There were a number of emerging risk areas (specifically social care and procurement), work would be undertaken from existing resources to assess the risk posed and whether there was a need for additional controls in those areas.
There were a significant number of promotional materials available to support counter fraud efforts. Included in the strategy were a number of actions around raising awareness and ensuring everyone understands the risk of fraud therefore helping to prevent fraud occurring and where it does to ensure it was reported and appropriate action was taken.
The audit plan supported the fraud risk assessment process providing advice and guidance where controls need to be improved. Good practice suggests continuous monitoring was an effective process for detecting fraud early. Much of the work within the audit plan was moving towards continuous monitoring not only to improve the efficiency and effectiveness of the audit service but also to support the early detection of fraud reducing its impact.
|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.|
Members were advised that 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 in detail in this update. All other risks on the strategic risk register were reported in summary detail only.
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. Details of the high level strategic risk register and initial risk score was provided along with the detailed risk report for those risks scoring 15 and above at the time of the last update. The reports were as yet incomplete as they needed updating to show desired outcomes and action plan owners/implementation dates. Work would continue with relevant officers to identify and update these, discussions would take place with respective management teams during the new financial year.
|Members considered a report that provided details of the regular non-responsive services provided by the Councils 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 2017 - 31st December 2017.|
This detail encapsulated 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. Schools 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
|The Committee considered a report that informed members of the work of the Audit Committee during the past year and the sources of information upon which the Audit Committee opinion statement was based.|
Members are reminded of the role of the Audit Committee.
|Consideration was given to the work programme.|