Agenda and draft minutes

This informal meeting will be held virtually via Zoom and streamed live. The link for this can be found by clicking on the meeting date., Governance and Audit Committee - Thursday, 13th January, 2022 4.00 pm

Venue: The informal meeting will be held virtually via Zoom and streamed live, via the following link: www.facebook.com/SouthHollandDCofficial/

Contact: Democratic Services  01775 764454

Link: View Facebook Livestream of the meeting

Items
No. Item

24.

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.

25.

Minutes pdf icon PDF 165 KB

To sign as a correct record the minutes of the meeting held on 11 November 2022 (copy enclosed).

Minutes:

The minutes of the meeting of the Governance and Audit Committee held on 11 November 2021 were agreed, and would be signed by the Chairman as soon as practicably possible.

 

The following matters arose:

 

·         Under minute number 18 (Strategic Risk Register), reference had been made to the Safeguarding item and supporting evidence for ‘clear referral pathways’.  The Chairman confirmed that officers had circulated a response relating to the risk assessment query, and information around Safeguarding, earlier in the week.

 

·         Under minute number 20 (Follow Up Report on Internal Audit Recommendations), members had commented that any extension to the timeline relating to Asset Management SH1809 should be brought back to the Committee for discussion – had relevant officers been made aware of this requirement?  It was felt that any extensions for any item going forward should be treated in the same way.

o   The Internal Audit Manager confirmed that it had been addressed with the relevant officer, and that if a deadline extension was requested, that it would be included within the next follow up report in March, for discussion by the Committee.

 

·         Under minute number 20 (Follow Up Report on Internal Audit Recommendations), the Committee had asked, with reference to Asset Management (SH2108) what the relevance in the notes to the partnership was when the service was place-based?

o   The Internal Audit Manager confirmed that a response had been provided by the officer – as a result of the new partnership, the Assistant Director responsible for the area was reviewing it, and to see if the Asset Management Plan should be duplicated across the partnership.  As a result, an extension to September 2022 had been requested and this would be considered by the Committee upon consideration of the Follow Up Report at the next meeting.

 

·         Under minute number 20 (Follow Up Report on Internal Audit Recommendations), the Committee had requested an explanation regarding the relevance of planned maintenance programmes to capital bids.

o   The Internal Audit Manager advised that the delay was as a result of much remedy work being required, hence the reference to capital bids.  Again, an extension had been requested, to December 2022, and this would also be considered as part of the Follow Up Report at the next meeting.

 

·         Under minute number 21 (Mid Term Treasury Report 2021/22), members had requested an explanation of the history of the Council’s £67 million debt.  The Committee was advised that officers were currently heavily involved in the budget setting process however, once this work had been completed, the explanation requested by the Committee would be circulated to members.

26.

Treasury Management Policy & Treasury Management Strategy Statement, Minimum Revenue Provision Policy Statement and Annual Investment Strategy 2022/23. pdf icon PDF 105 KB

To provide pre-decision scrutiny to the strategy being proposed (report of the Deputy Chief Executive – Corporate Development (S151) enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Portfolio Holder for Finance, Commercialisation and Partnerships and the Deputy Chief Executive – Corporate Development (S151) which provided information for the Committee to undertake pre-decision scrutiny to the proposed Treasury Management Policy and Treasury Management Strategy Statement, Minimum Revenue Provision Policy Statement and Annual Investment Strategy 2022/23.

 

Members considered the information within the report and the following issues arose:

 

·         Members commented that in November 2016, £50,000 of bonds had been bought from the Municipal Bonds Agency which appeared to have been written off. Did this policy ensure that this could not happen again?

o   Officers commented that, in line with accounting policies, the fair value of the bond at the end of the last financial year had been calculated at zero.  It was also clarified that the investment had not been written off but was currently at a low value.  Members were reassured that the issue would be looked into – there was a framework in place, restrictions on investment activities had been included within the policy and Link Group had provided external advice.

 

·         Members noted that the Authority continued to use Link Group to provide external advice – how often was this situation reviewed to ensure the best advice was provided?

o   Officers responded that information on the contract with Link Group (when it was last awarded and when it was due for renewal) would be provided to members.  It was always useful to scrutinise this area and the Committee could potentially provide this scrutiny when the contract next came up for renewal.

 

·         Members referred to the second table at section 2.1 (Capital Expenditure) of Appendix B to the report, relating to prudential indicators.  The figure for 2021/22 in the Capital Reserves column was £9,826,000 dropping to £3,845,000 for 2022/23 – in hindsight, had this been the right course of action or should things have been differently (e.g. more financing)?

o   Officers responded that when the current financial year had ended, it would be useful to look through figures to ascertain the situation and see if anything changed, prior to scrutinising the situation and identifying any alternatives.

o   The Assistant Director Finance added that the use of Capital Reserves funded both the HRA and General Fund Capital Programme – most of the reserve value would be in relation to reserves in the HRA to fund the capital investment in the HRA assets.  Whenever the funding of the capital programme was undertaken, consideration was given to the best use of funding available.

 

·         Members referred to a paragraph within section 2.4 of Appendix B, referring to loans issued or equity investment made in Welland Homes and South Holland Local Housing Company.  Had the annual review taken place, and what would be the effect of taking the alternative approach have?

o   Officers stated that this paragraph was inserted into the template via the advisors link  With regard to SHDC, the only finance leases held were for recycling vehicles.  The MRP figures for the current  ...  view the full minutes text for item 26.

27.

Appointment Of External Auditors pdf icon PDF 339 KB

To agree the process for the appointment of the External Auditors (report of the Deputy Chief Executive (Corporate & Development) and S151 Officer enclosed).

 

Additional documents:

Minutes:

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151 Officer), which asked the Committee to provide its views on the process for the appointment of the External Auditors.

 

The Committee was advised that the current auditor appointment arrangements covered the period up to and including the audit of the 2022/23 accounts.  Public Sector Audit Appointments Limited (“PSAA”) were undertaking a procurement for the next appointing period, covering audits for 2023/24 to 2027/28.  All local government bodies had to make important decisions about their external audit arrangements from 2023/24.  The 3 options available to the Council were to arrange their own procurement and make the appointment themselves or in conjunction with other Council bodies, or they could join and take advantage of the national procurement scheme administered by PSAA.

 

The Committee discussed the options available, and the following points were made:

 

·         Members asked if the proposed recommendation was agreed, but the outcome of the chosen auditor was not acceptable, did the Authority then have the right to pursue other avenues and select an auditor of its choice?

o   Officers advised that if the authority chose to join the national procurement exercise, it was opted in and could not then opt out.  The procurement exercise would conclude in August 2022 at which point, PSAA would liaise with audit firms and local authorities to advise which auditors were available to them and a decision and appointment would then need to be made by December 2023.  If the Authority did not join the national procurement exercise, and was then unsuccessful in appointing an auditor, after 1 April 2023 it could ask the PSAA if it could join at that point however, it could not be guaranteed that the Council’s request would be accepted, and there was a high risk attached to this route.

·         Members asked what input could be provided to the group – could it feed into the exercise and have its views taken account of?

o   Officers commented that there would be consultation but they were unsure as to how PSAA would take this feedback on board.  Fuller information on this point would be provided when consideration was given to the options at Council in March.

 

·         Members had some misgivings - if the Authority did chose to be part of the national process, it was important that the differences between SHDC and some larger authorities were not ignored. 

o   Officers advised that, with regard to ensuring that the Authority’s interests were represented, should it chose to opt in to the national procurement exercise, a covering letter could be sent to the PSAA, setting out concerns, observations and key messages for them to consider during the auditor appointment process.

 

·         Members asked what the preferences were for the other two authorities within the S&ELCP Partnership?

o   Officers confirmed that the current officer recommendation for both East Lindsey District Council and Boston Borough Council was to join the national procurement exercise.

 

·         The Chairman shared the concerns of the  ...  view the full minutes text for item 27.

28.

Governance and Audit Committee Self-Assessment exercise pdf icon PDF 91 KB

To note and update the attached checklist from 2020, ensure that this is still an accurate reflection, and to reflect on whether any suggested improvements have been completed where best practice was not demonstrated last year (checklist provided by the Head of Internal Audit enclosed).

Minutes:

Consideration was given to the 2020 Self-Assessment checklist to ensure that this was still an accurate reflection of the work and performance of the Governance and Audit Committee.  The Committee also reflected on whether any suggested improvements had been completed where best practice was not demonstrated in the previous year.

 

Attached to the report was the self-assessment undertaken in 2021 which assessed how the Committee complied with the CIPFA position statement.  Some areas (although more minor) had been scored as ‘partly’ and these would be addressed as part of the discussion – any comments would be noted and reflected within the full self-assessment report to be presented to the next meeting of the Committee on 17 March 2022.  The Head of Internal Audit stated that the assessment last year had been positive, that the Committee operated very positively and that there was a lot of good practice demonstrated. 

 

The following points were raised

 

Item 4 – Is the role and purpose of the audit committee understood and accepted across the authority?

·         The Head of Internal Audit commented that generally, it was felt that the role and purpose of the Committee was understood, but could more be done?  She also advised that, in the past, a report/leaflet had been prepared to Council and this was good practice – as a result of working more digitally, was this still appropriate?

·         Members commented that it was difficult to assess whether holding meetings virtually was beneficial or not – some individuals felt that they might not be as effective and issues may not be so well publicised.  However, this may be clarified or disproved by the Committee obtaining feedback on its performance from those interacting with the Committee or relying on its work (item 18)

·         Some members felt that meetings were more effective face to face than virtually.  It was important that as many members as possible were aware of the work of the Committee.

·         Members commented that many people considered that the main focus of the Committee was reviewing the finances of the Authority, and were not as aware of its audit function.  There had been a great improvement in this area, specifically with the progress of ensuring that outstanding audit recommendations were dealt with – could a summary report be produced to show the journey from then to the current position?  The Committee did operate well, but new members were always welcome and demonstrating the Committee’s success could help.

·         The Head of Internal Audit commented that they had recently produced a member’s informal bulletin/update, demonstrating the type of work undertaken by the committee.  The Governance and Audit Committee at SHDC had been instrumental in driving down the reduction of outstanding historical recommendations.  A more informal document to the annual report, reflecting the work of the Committee could be useful.

·         Members felt that Item 4 should retain its ‘partly’ score.

 

Item 15 – Has the membership of the committee been assessed against the core knowledge and skills framework and found to be satisfactory?  ...  view the full minutes text for item 28.

29.

Governance and Audit Committee Work Programme pdf icon PDF 173 KB

To set out the Work Programme of the Governance and Audit Committee (report of the Assistant Director – Finance enclosed).

Additional documents:

Minutes:

Consideration was given to the report of the Assistant Director – Finance, which set out the Work Programme of the Governance and Audit Committee.

 

AGREED:

That the report be noted.

30.

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.