Agenda and minutes

Governance and Audit Committee - Thursday, 14th March, 2024 6.30 pm

Venue: Meeting Room 1, Council Offices, Priory Road, Spalding

Contact: Democratic Services  01775 764693

Items
No. Item

41.

Declaration of Interests

(Where a Councillor has a Disclosable Pecuniary Interest the Councillor must declare the interest to the meeting and leave the room without participating in any discussion or making a statement on the item, except where a Councillor is permitted to remain as a result of a grant of dispensation).

 

Minutes:

There were none.

42.

Minutes pdf icon PDF 207 KB

To sign as a correct record the minutes of the Governance and Audit Committee meeting held on 18 January 2024 (enclosed).

Minutes:

AGREED:


That the minutes of the Governance and Audit Committee meeting held on 18 January 2024 be signed by the Chairman as a correct record.

43.

Procurement Card Audit Management Response pdf icon PDF 103 KB

To provide the Committee with a management response from the Council and PSPS in respect of the Procurement Card Audit.

 

Minutes:

AGREED:

 

That the discussion relating to agenda items 5 and 6, the ‘Procurement Card Audit Management Response’ and the ‘Internal Audit Progress Report’ respectively, be combined and noted at minute item 45.

44.

Internal Audit Progress Report - March 2024 pdf icon PDF 451 KB

To provide the Committee with an update of internal audit activity (report of the Head of Internal Audit – Assurance Lincolnshire enclosed).

 

Additional documents:

Minutes:

Consideration was given to the Internal Audit Progress Report – March 2024, which updated the Governance and Audit Committee on the work of Internal Audit since the last report.

 

As noted at minute item 44, the Procurement Card Audit Management Response (agenda item 5) was considered alongside this item.

 

The Head of Internal Audit introduced the report and following main points were highlighted:

  • The Performance Dashboard on page 5 of the report detailed the progress of the audit plan to date; all planned audits were underway and would be completed, or be in a draft form, by the end of March 2024;
  • An update on internal audit activity on page 6 of the report presented a summary of the progress report, with one ‘limited’ assurance review and one ‘no’ assurance review;
  • Responses had been received for two overdue high priority management actions; 
  • Two financial audits had been postponed, which due to cyclical workloads, would be rescheduled appropriately to align with greater capacity within the Finance team;
  • An outline of work undertaken and assurance opinions given were shown in a table at page 7 of the report; the majority of findings were positive with two ‘substantial’ and two ‘adequate’ opinions; and
  • The summaries of work undertaken for each audit were outlined from page 9 of the report.

 

Members considered the report and made the following comments:

 

  • Members queried the nature and consequences of the account coding issues raised during the Payroll Control Account Reconciliation audit review and asked for examples of when this had occurred and how often.
    • The Chief Finance Officer (PSPS) responded that incorrect code mapping had occurred within components of the monthly payroll file when these were interfaced with the ledger. This generally only applied to new items. Appropriate coding was subsequently identified to rectify the issue; and
    • The Senior Finance Business Partner (PSPS) added that although the issue occurred fairly frequently, the Payroll and Finance teams reviewed any issues on a regular basis.
  • The Chief Finance Officer (PSPS) stated that a briefing note would be provided to the Committee which outlined examples of the issue.

 

  • Members asked whether payroll reconciliations were completed on a monthly basis.
    • The Chief Finance Officer (PSPS) responded that payroll reconciliations for PSPS and the three authorities of the partnership were completed on a monthly basis. At the time of the meeting, the payroll reconciliations for January 2024 had been signed off and those for February 2024 were in progress.

 

  • Members referred to the ICT Disaster Recovery audit and noted the comment that, ‘a schedule to carry out scenario-based disaster recovery exercises on an agreed periodic basis had not been developed’. Could further information regarding this matter be provided. 
    • The Chief Executive (PSPS) responded that the requested details would be ascertained and reported back to the Committee.

 

  • Members referred to the Procurement Cards audit and queried the following:

45.

Internal Audit Plan 2024/2025 pdf icon PDF 294 KB

To set out the annual plan for internal audit activity for 2024/2025 (report of the Head of Internal Audit enclosed).

Minutes:

Consideration was given to the report of the Head of Internal Audit which set out the annual plan for internal audit activity for 2024/2025.

 

The Head of Internal Audit introduced the report which outlined the following areas:

  • The purpose of the Internal Audit Plan and conformance with Public Sector Internal Auditing Standards (PSIAS);
  • Conflicts of Interests;
  • Sub Regional Strategy priorities;
  • Development of the Internal Audit Plan 2024/2025; and
  • The Internal Audit Plan 2024/2025 activity and schedule; the plan covered a wide range of key issues across the council which aligned with strategic risks and corporate priorities, and which would inform the Internal Audit annual opinion at the end of the 2024/2025 year.

 

Members considered the report and made the following comments:

 

  • Members requested that agenda items be considered and that highly technical items be spaced out across different meetings where possible.

 

  • Members noted that the plan had been shared with Assistant Directors and Portfolio Holders and asked whether any comments had been forthcoming regarding the scheduled audits.
    • The Head of Internal Audit responded that the Internal Audit Plan 2024/2025 had been welcomed. Positive relationships/engagement with management was key in enabling audits to be completed in a timely manner, which therefore remained effective and relevant.

 

AGREED:

 

That the Internal Audit Plan 2024/2025 be noted.

 

46.

Q3 Treasury Management Update 2023/24 pdf icon PDF 237 KB

To provide members with an update on Treasury Management performance and activity to ensure best practice is maintained (report of the Deputy Chief Executive – Corporate Development (S151) enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which provided members with an update on Treasury Management performance and activity to ensure best practice was maintained.

 

The Interim Treasury and Investment Manager (PSPS) introduced the report which had been prepared in compliance with the Chartered Institute of Public Finance and Accountancy (CIPFA) code of practice for Treasury Management, and which recommended that members be updated on treasury management activities at least quarterly.

 

The Quarter 3 2023/2024 Treasury Management update was detailed at Appendix A and included the following main areas:

  • Economic update with commentary provided by Link Group;
  • Interest rate forecasts;
  • Annual Investment Strategy;
  • Borrowing position of the council;
  • Debt rescheduling; and
  • Compliance with Treasury and Prudential indicators;

Appendix A2 detailed the following:

  • General Fund Capital Expenditure 2023/2024;
  • Financing of General Fund Capital Expenditure 2023/2024;
  • Housing Revenue Account Capital Expenditure 2023/2024; and
  • Financing of Housing Revenue Account Capital Expenditure 2023/2024.

 

Members considered the report and made the following comments:

 

  • Members expressed hope that the £67.456million debt to central government would be cancelled at some point in the future. 

 

  • Members were encouraged that Link Group’s economic update commentary referred to the ‘mildest of mild recessions’.

 

  • Members were reassured by the financial situation of the council and praised officers for both the level of detail provided within the report and the controls which were in place.

 

 

AGREED:

 

That after receipt and review of the report at Appendix A by members of the Governance and Audit Committee, the contents be noted.

 

47.

Financial Statements 2023/24 - Accounting Policies pdf icon PDF 181 KB

To review and agree the Accounting Policies for inclusion in the Financial Statements 2023/24 (report of the Deputy Chief Executive – Corporate Development (S151) enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which asked the Governance and Audit Committee to review and agree the Accounting Policies for inclusion in the Financial Statements 2023/2024.

 

The Senior Finance Business Partner (PSPS) introduced the report which was presented to the Governance and Audit Committee on an annual basis. The following main points were raised:

  • The Accounting Policies detailed specific principles applied by councils in the preparation and presentation of Financial Statements in accordance with CIPFA’s Code of Practice on Local Authority Accounting;
  • The Accounting Policies for 2023/2024 were detailed at Appendix A, and the following points were highlighted:

o   Financial statements were prepared on an accruals basis, which recognised transactions when they occurred rather than when payment was received or made;

o   The Local Government Pension Scheme was accounted for as a defined benefits scheme; and

o   As a result of previous discussions held with auditors, the ‘Infrastructure Assets’ outlined on page 163 of the agenda pack, was included for completeness detailing the accounting treatment.

 

Members considered the report and made the following comments:

 

  • Members were pleased that an accruals method was in use, as any non-compliance could be identified sooner.

 

  • Pensions training was to be arranged for Committee members in due course.

 

AGREED:

 

That the Accounting Policies for 2023/24 at Appendix A be approved.

48.

Recruitment of Co-opted Independent Members to the Governance and Audit Committee pdf icon PDF 261 KB

To consider the recruitment of Co-opted Independent Members to the Governance and Audit Committee (report of the Assistant Director – Governance (Monitoring Officer) enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Assistant Director – Governance (Monitoring Officer) which asked members to consider the recruitment of Co-opted Independent Members to the Governance and Audit Committee.

 

The report was introduced by the Assistant Director – Governance which outlined the following main points:

  • Background to the report which included CIPFA’s identification that the appointment of Independent Members to audit committees was beneficial;
  • That the Governance and Audit Committee had recommended, to Full Council, an amendment to its committee membership to include 2 Non-Voting Co-Opted Independent Members; this recommendation was approved at the Full Council meeting held on 29 February 2024; and
  • Following approval at Full Council, the current report outlined the next steps which sought members views on the recruitment pack and requested volunteers from the Committee to join the interview panel.

 

Members considered the report and made the following comments:

 

·       Members stated that the addition of Independent Members would benefit the committee however external expertise needed to be taken on balance with continuous internal training.

 

·       Members asked how the positions would be advertised.

  • The Assistant Director – Governance responded that the positions would be promoted through the council’s usual recruitment channels of website and social media, and through professional bodies/organisations.
  • Members stated that the local press was widely read and should also be utilised.

 

  • The Assistant Director – Governance requested volunteers to join the Chairman (Councillor Beal) on the interview panel.
    • Councillor Brewis and Councillor Geaney volunteered.

 

AGREED:

 

a)    That after consideration of the draft Co-opted Independent Member Recruitment Pack at Appendix A, the comments of the Committee be noted; and

 

b)    That the composition of the interview panel to undertake the recruitment exercise be Councillor Brewis, Councillor Geaney and Councillor Beal.

49.

Q3 Risk Report 2023/24 pdf icon PDF 261 KB

To provide an update on the Council’s current strategic risks (report of the Assistant Director – Governance enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Assistant Director – Governance which provided an update on the Council’s current strategic risks.

 

The report was introduced by the Assistant Director – Governance, on behalf of the Business Intelligence and Change Manager, which ensured that council risks and the management of risks were communicated and detailed.

 

Attention was drawn to point 2 of the report which gave an overview of the identification of four new risk scores. These risks were detailed within the full Risk Register at Appendix A.

 

Members considered the report and made the following comments:

 

  • Members welcomed the level of detail presented within the Risk Register which provided members with valuable information.

 

  • Members requested that the report be reformatted so that the content was more easily readable when printed.

 

AGREED:

 

That after consideration of the report and Appendix A by the Governance and Audit Committee, the contents be noted.

 

50.

Governance and Audit Work Programme pdf icon PDF 176 KB

To set out the Work Programme of the Governance and Audit Committee (report of the Democratic Services Manager enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Democratic Services Manager which set out the Work Programme of the Governance and Audit Committee.


The Democratic Services Officer introduced the report and updated the Committee on the following points:

  • In respect of Appendix A, a number of items which had been due to come forward at the current meeting had been postponed and these were noted on ‘Pending Items’ at page 202 of the agenda pack. On confirmation of the schedule of meetings for 2024/2025, pending items would be rescheduled in liaison with PSPS Finance colleagues; and
  • The Training record at Appendix B would be updated when further training had been identified and arranged/completed. A further pension training session would be arranged in due course to include counterpart committee members from across the partnership.

 

In respect of the postponed reports:

  • The Chief Finance Officer (PSPS) responded that:
    • The Financial Statements had been drafted for 2022/2023 which were currently undergoing the due diligence process with the intention that they would be published by the end of March 2024.

 

Members considered the update and made the following comments:

 

  • Members requested that they be invited to attend any training sessions that were to be arranged following appointment of the Independent Member(s).

 

  • The Chairman referred to a separate update he had received from the External Audit Director (KPMG) and asked for a further explanation regarding the delay of the external audit report.
    • The External Audit Director (KPMG), who was in attendance virtually, responded that:
      • The initial timeline of 31 March 2024 for the external audit plan and risk assessment work was revised due to competing pressures and priorities at PSPS which had included matters relating to historic audits, preparation of Financial Statements for 2022/2023, the annual budget setting processes and internal audit requests; 
      • The deadline for the plan had been rescheduled to the end of April 2024 and progress had been made regarding the plan and risk assessment regarding the Financial Statements;
      • The risk assessment relating to the ‘value for money’ aspect of KPMG’s engagement remained the main outstanding piece of work. In this respect, KPMG awaited the return of the ‘Value For Money Self Assessment’ which the S151 Officer had given assurance would be prioritised;
      • Assuming that the plan and risk assessment could be finalised by the end of April 2024, the full plan, including value for money risk assessment, could come forward to the next scheduled Governance and Audit Committee meeting; and
      • Weekly engagement meetings with PSPS were taking place to keep the situation on track.

 

  • Members asked for clarification of the situation regarding the 2022/2023 Financial Accounts which needed to signed off by the previous auditors, Ernst Young (EY)
    • External Audit Director (KPMG) responded that:
      • New legislation was currently proceeding through Parliament in respect of a local government audit reset to implement a backstop date for historic incomplete external audits – the date of which was likely to be 30 September 2024. This would enable a disclaimer opinion to be signed by  ...  view the full minutes text for item 50.

51.

Any other items which the Chairman decides are urgent.

 

 

NOTE:            No other business is permitted unless by reason of special circumstances, which shall be specified in the minutes, the Chairman is of the opinion that the item(s) should be considered as a matter of urgency.

Minutes:

There were none.

52.

Exclusion of Press and Public

Minutes:

Under section 100A (4) of the Local Government Act 1972, the press and public were excluded from the meeting for the following items of business on the grounds that they involved the likely disclosure of exempt information as defined in Paragraph 7 of Part 1 of Schedule 12A of the Act

 

53.

Report on a Fraud Case

To provide the Committee with an update on a case that has been investigated (report of the Deputy Chief Executive – Corporate Development (S151)).

 

Minutes:

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which provided the Committee with an update on a case that had been investigated.

 

AGREED:

 

That the contents of the report be noted.