Agenda and minutes

There were none.

RESOLVED That the minutes of the meeting held on 21 March 2016 be confirmed and signed by the Chairman

The Chairman referred to information which had been circulated to members regarding the external audit arrangements for Entrust; and to a letter from the Leader of the Council in response to a recommendation from the Audit and Standards Committee, regarding overall financial management within the Cabinet. 

Update from the Director of Strategy, Governance and Change

The Director of Strategy, Governance and Change outlined progress made in implementing the Corporate Governance Action Plan 2015-16. At the end of April 2016, CIPFA/SOLACE published a revised Code of Corporate Governance framework with guidance for English authorities. The revised framework contained a number of key changes to the six core principles previously used to determine the County Councils governance arrangements. There were now seven principles within the 2016 framework. The existing Code would remain applicable during the period that the evaluation exercise is conducted.

RESOLVED That

(a)   the progress made on implementing the Corporate Governance Action Plan 2015-16 be noted, and

(b)   the current Code of Corporate Governance be revised to reflect the core new principles contained within the 2016 framework.

Progress Report from Ernst & Young LLP

Mr Steve Clark, Ernst and Young LLP, updated the committee with regard to the External Audit Plan received by the committee at their meeting in March 2016.  Ernst and Young had not identified any significant issues or changes to the risk assessment as a result of their ongoing work.

A member asked for clarification regarding the role of external audit in helping the County Council to ensure it obtains Value for Money: a statutory duty of the Council. The member believed there were instances where the County Council had not received Value for Money.

Mr Clark explained that it was the duty of External Audit to give an opinion not about whether the County Council had obtained value for money, but whether it had appropriate procedures in place to enable that outcome to be delivered. Accordingly, they monitored a range of activity including whether the County Council were making informed decisions which resulted in achievable outcomes, whether they had resilient and sustainable resources and were working effectively with partners. External Audit were open to receive matters of significant concern raised by individual members. 

The member believed that value for money should be evaluated in an impartial and measurable way so that the County Council could clearly evidence that it obtained value for money for its tax payers. He questioned how the County Councils Senior Leadership Team satisfied itself that a particular project was delivering value for money.  The Head of Financial Strategy and Service Support stated that Commissioners should be clear, in drafting specifications, about expectations around value for money linked to outcomes. Invariably such specifications would be tested under a competitive process. He undertook to produce a further briefing note on the subject.

In relation to the Local Government Audit Committee Bulletin, it was noted that CIPFA had recently published consultation on the Draft Code of Practice on the Highways Network Asset which required local authorities to implement new measurement requirements.  In response to a question, the External Auditor acknowledged that some local authorities around the country were frustrated by this additional accounting requirement on the grounds of cost and resources required. The External Auditor explained that if the Highways Network Asset measurement was not undertaken, the County Councils accounts would have to be qualified to record non-compliance.          

RESOLVED That further briefing papers be produced in relation to

(a)  the measurement of Value for Money for specific projects and,

(b)   the resource implications arising form the Highways Network Asset new measurement requirements.

·         Outturn Report 2015-16

·         Strategy and Plan 2016-17

·         Charter

Report of the Director of Finance and Resources

The Chief Auditor presented the Internal Audit Outturn Report which included the annual internal audit opinion for 2015-16. Internal audit offered an independent, objective assurance and consulting activity designed to add value and improve the organisations operations.  

Internal Audit are required by professional standards to deliver an annual internal audit opinion and report to those charged with governance timed to support the Annual Governance Statement.  The annual internal audit opinion must conclude on the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and control.  Audit opinions are awarded for individual systems and compliance audits within one of the following categories – substantial, adequate or limited assurance. 

A high level summary of the work undertaken by the Section was detailed in the report. For those areas awarded “limited assurance”, action plans had been or were in the process of being agreed with the relevant Director / Head of Service. 

During 2015/16, the Committee continued to receive full copies of all “Limited Assurance”, High Risk Auditable areas (regardless of opinion) and Major Special Investigation reports.  Internal Audit would continue to track and report on the implementation of High Level Recommendations, including those contained within reports awarded “Adequate Assurance”.

Areas where assurance could not be provided in 2015/16 together with areas of improvement and high level recommendations were detailed in the report.

The report included a summary of work undertaken in relation to fraud and corruption and the outcome of special investigations. Overall, there were indications that that there had been some lapses in applications of controls, increasing the risk of potential fraud. Reports had been issued and to ensure that the control weaknesses have been addressed and recurrence prevented.

The methodology used as the basis to form the assessment of the overall internal audit internal control environment had previously been endorsed by the Committee and was detailed in the report. 

Overall, an “adequate assurance” had been given on the overall adequacy and effectiveness of the organisation’s governance, risk and control framework, i.e. the control environment in 2015/16. A number of audit reviews during 2015/16 had identified high level issues, which have resulted in the system being awarded a limited assurance opinion.  The key actions identified must be implemented as agreed and progress monitored to strengthen the control environment. This would be a key focus for the 2016/17 Internal Audit Plan.

Internal Audit Strategy and Plan 2016/17

Members considered a report of the Director of Finance and Resources, illustrated by slides, on the proposed Internal Audit Strategy and Plan 2016/17.

The Audit Plan had been prepared in line with the Audit Strategy detailed in the report.  As part of the agreement process for this year’s plan, detailed discussions had been held with the Commissioners to highlight the Internal Audit work proposed; complimented and added value to the process. This allows greater certainty regarding delivery of these audits within 2016/17.

To meet the requirements of the External Auditor increased emphasis will be placed on fraud and corruption work, particularly in  ...  view the full minutes text for item 26.

Report of the Director for Strategy, Governance and Change

The Head of Democracy introduced a report recommending a change to the County Councils constitution to review the list of Politically Restricted Posts following recent restructuring within the Senior Leadership team.

RESOLVED That the list of Politically Restricted Posts and consequent changes to the Constitution contained in the report of the Director of Strategy, Governance and Change be recommended to full Council for approval.

RESOLVED The Work Programme for 2016/17 for the Audit and Standards Committee be noted.

RESOLVED That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraph of Part One of Schedule 12A of the Local Government Act 1972 (as amended) indicated below.

The Committee then proceeded to consider reports on the following issues:

PART TWO

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Exemption paragraph 3

Report of the Director of Finance and Resources

The appendix to item 6 was considered and noted. 

Exemption paragraph 3

Report of the Director of Finance and Resources

Exemption paragraph 3

Members received a report summarising the results of an Internal Audit review of the systems, controls and risks relating to the administration and control of the processes in place for dealing with those aspects deemed to have limited assurance.  Three Limited Assurance reviews related to Special Educational Needs Transport; DBS Safer Recruitment and Procurement (Outside the Commercial team).

Members discussed the detail of the reviews and were assured that in each case satisfactory progress was being made to rigorously address the areas of risk identified by Internal Audit.

Exemption paragraph 3

Verbal update from the Director of Finance and Resources

Exemption paragraph 3

Members were updated regarding the management of risk around the County Councils non receipt of its share of the Better Care Fund.

Members had a frank discussion and agreed that whilst the principle of integrating adult social care and health was sound, the mechanism of integration had not worked as envisaged and had exposed the County Council to a potential new pressure within its Medium Term Financial Strategy and which the Council was seeking to mitigate in 2016-17 by the introduction of a Spending Control Process. Such mitigation was deemed good financial management.