Agenda and minutes

(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).

There were none.

To sign as a correct record the minutes of the 12 September 2024 Governance and Audit Committee meeting (enclosed).

AGREED:

a)    That the minutes from the meeting of the Governance and Audit Committee meeting held on 12 September 2024 be signed by the Chairman as a correct record; and

b)    That the exempt minute from the meeting of the Governance and Audit Committee meeting held on 12 September 2024 be signed by the Chairman as a correct record.

An update on actions that arose at the 12 September 2024 Governance and Audit Committee meeting and the tracking of outstanding actions (enclosed).

Consideration was given to the actions that arose at the 12 September 2024 Governance and Audit Committee Meeting

·      Regarding action 51b 23/24, the Democratic Services Officer stated that as recruitment of the Co-opted Independent Members across the partnership had been completed, progress would be made towards arrangements regarding Pensions training.

·      Members referred to action 45a 23/24 and sought assurance that  matters concerning tax liabilities paid by employees, including P45 and P60 documents, were correct.

o   The Chief Finance Officer (PSPS) responded that:

§  The details for the employee were correct but that the identified error had arisen when the payroll file was transferred and coded to the financial ledger;

§  The payroll reconciliation served to identify any such errors which would then be corrected, therefore ensuring that the financial ledger was a correct representation of the payroll system;

§  The introduction of new pay components (such as maternity/paternity pay) had been identified as the cause of the errors, however the control processes were in place and up to date to the end of October 2024. Items were being identified in a timely manner; and

§  A follow-up Payroll Control Account Reconciliation audit was underway which, it was hoped, would assure members that such matters had been addressed.

·       Members welcomed the comprehensive response regarding this matter.

AGREED:

That the update on actions be noted.    

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

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

The Business Intelligence and Change Manager introduced the report which included:

• Background to the Risk Report;
• A summary of all risks and scores which were detailed within the appendices;
• Overall risk spread;
• Risk treatment;
• The Strategic Risk Register was at Appendix A;
• The SHDC Housing Revenue Account (HRA) Risk Register was at Appendix B; and
• The Partnership Register was at Appendix C.

An error was noted on page 21 of the agenda pack in that ‘South Holland Strategic Risks should read ‘HRA Risks’.

Members considered the report and made the following comments:

• Members asked how often the risk registers were reviewed and whether the review process involved internal stakeholders.
  • The Business Intelligence and Change Manager responded that:
    • All risks were reviewed on a quarterly basis;
    • Each Assistant Director (AD) had committed to review risks relevant to their respective service areas;
    • Monitoring processes were in place to ensure reviews were undertaken. Any review not undertaken would be escalated to the Senior Leadership Team (SLT);
    • The risk registers were reported to the Corporate Management Team (CMT) on a monthly basis and to the Governance and Audit Committee on a quarterly basis; and
    • Operational risk registers were in place at service level. Any risk deemed to be ‘critical’ for two review cycles would be escalated to the strategic level. Likewise, if deemed acceptable, a risk could be moved from the strategic level to the operational level.

• Members queried the back-up processes in place to protect the council from IT threats, such as a ransomware attack.
  • The Business Intelligence and Change Manager would refer the query to the IT Manager and report back to the committee; and
  • The risk scores for IT were set at a level of toleration. Whilst the risk would always be ‘high’ due to the impact of a potential incident, mitigations were in place to reduce the likelihood of occurrences.

• Members referred to regular video communications to staff, noted on page 28 of the agenda, and asked whether the number of ‘views’ were assessed. The data could serve to inform whether the issue needed to be ‘treated’ rather than ‘tolerated’ in order to impact staff retention.
  • The Business Intelligence and Change Manager stated that the videos were accessed via an internal YouTube link which tracked the number of views. The data would be reported back to the committee; and
  • Staff surveys captured feedback regarding whether the workforce felt informed. Although the scores had been low, new mitigations had been implemented and the results were to be analysed after quarter three 2024/2025. The feedback would inform any changes to the treatment of this risk.

• Members queried whether any feedback had been received from local businesses regarding potential impact of the increased minimum wage.
  • The Business Intelligence and Change Manager would enquire and feedback to the committee after the meeting.

• Members noted the risk score of 16 for  ...  view the full minutes text for item 44.

To receive a report from the External Audit Manager E.Y. (enclosed).

Consideration was given to External Audit Completion Report 2022/2023, produced by Ernst Young (EY).

The Senior Manager (EY) introduced the report which included the following main areas:

• Executive summary:
  • A background to the disclaimer audit opinion for the 2022/23 financial statements was outlined;
  • Following the anticipated backstop legislation being enacted by central government on 30 September 2024, and a new National Audit Office Code of Audit Practice linked to the new legislation being enacted on 14 November 2024, EY had now completed its work on the 2022/23 audit; and
  • A final piece of information to be provided by central government and the National Audit Office was imminent which would inform whether the whole of government accounts could be concluded as outlined.
• Work Plan:
  • Minimum procedures had been undertaken regarding the financial statements for the production of the disclaimer, in line with the legislation enacted in September 2024 (statutory instrument 907);
  • Procedures undertaken on the financial statements related to: audit risks, materiality, understanding the working methods of the council in order to identify fraud risks, communications relevant individuals to assist with the identification of risks which may have arisen; and
  • No issues were identified regarding EY’s ‘independence’ status with the council.
• Results and Findings:
  • Due to the limited audit procedures performed, there were no control observations regarding the financial statements, and no audit differences had been identified for 2022/23; and
  • EY recommended that the council checked the casting of the accounts to ensure that comparators correctly referred to audited accounts of previous years, and to check movements from the draft statement of accounts published on 18 July 2024.
• Audit Report:
  • Narrative regarding the draft disclaimer audit opinion was provided.
• Value for money:
  • An interim report to management had been issued on 24 May 2024;
  • No new risks had been identified since the interim report was issued; and
  • A ‘significant weakness’ risk had been identified due to the delays in the production of the draft financial statements 2022/23. In respect of the governance arrangements of this matter, EY had given a recommendation that the council re-assessed the capacity of the finance team and support arrangements provided by PSPS.
• Responsibilities of the council to conclude the 2022/23 statement of accounts were in hand and included that:
  • The council notify EY of any adjustments made since the draft accounts were published; and
  • The council submit a Management Representation Letter to EY.

Regarding the appendices:

• A Management Representation Letter example template was at Appendix A;
• Information regarding fees was at Appendix B;
• Required communications with the Governance and Audit Committee were outlined at Appendix C;
• Non-Compliance with Laws and Regulations (NOCLAR) was outlined at Appendix D; and
• PSAA Statement of responsibilities was at Appendix E.

Members considered the report and made the following comments:

• Members sought clarification for the delay in the audited accounts for 2022/23 which was one year behind expectations.
  • The Senior Manager (EY) stated that:
    • The delay was due to a known backlog of completion of local authority audits nationwide which had  ...  view the full minutes text for item 45.

To seek approval of the Annual Governance Statement 2022/23 and approval of the Financial Statements 2022/23 (report of the Deputy Chief Executive – Corporate Development (S151) enclosed).

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which sought approval of the Annual Governance Statement 2022/23 and approval of the Financial Statements 2022/23.

The report was introduced by the Finance Manager – Corporate (PSPS) which detailed the Annual Governance Statement 2022/23 and Financial Statements for 2022/23 with three recommendations in respect of the Annual Governance Statement, Financial Statements and Letter of Representation.

The draft Annual Governance Statement and Unaudited Financial Statements 2022/23 had been considered by the Governance and Audit Committee at its 18 July 2024 meeting and no further amendments had been made. Approval was required by the committee on these matters to enable the opinion by EY to be issued by the backstop deadline of 13 December 2024.

Members considered the report and made the following comments:

• Members referred to the Peer Challenge Review recommendations, noted at point 2.3 of the report, and queried whether progress/outcomes in respect of the recommendations would be reported to the Governance and Audit Committee. It was felt that a measure of assurance regarding identified issues needed to be made available.
  • The Assistant Director – Governance responded that the route of Peer Review progress reports through the council would be investigated and reported back to the Governance and Audit Committee; and
  • The Chief Finance Officer (PSPS) responded that the Peer Review was undertaken in 2023. The recommendations referred to within the report had resulted from the follow-up review in 2024 which found that improvements to identified issues had been made within the twelve-month window.

• Members referred to note 30 of the report regarding ‘officers’ remuneration’ and queried a redundancy payment of £36,949 made to an officer where an identical post was filled the following day.
  • The Chief Finance Officer (PSPS) would seek clarification from the Section 151 Officer and report back to the committee.

• Members referred to the note 3 of the Housing Revenue Account on page 181 of the agenda, and queried whether the allowance for bad debts was a council provision.
  • The Finance Manager – Corporate (PSPS) responded that the note referred solely to the HRA and represented an allowance for bad debt for funds not recovered. A provision was set aside for the uncollectable value.

• Members referred to note 7 regarding the expenditure and income analysed by nature on page 137 of the agenda, and queried whether a breakdown could be provided in respect of the ‘employee benefit expenses’ and the ‘other service expenses’.
  • The Finance Manager – Corporate (PSPS) responded that:
    • Note 7 was a comprehensive breakdown of the income and expenditure statement;
    • As an overview, the ‘employee benefit expenses’ referred to elements such as gross pay, national insurance and pensions, whilst ‘other service expenses’ included elements such as materials, insurance and clothing; and
    • A breakdown of the information would be provided after the meeting.

AGREED:

a)    That following consideration by the Governance and Audit Committee that the Annual Governance Statement 2022/23 be approved;

b)    That following approval of the Annual  ...  view the full minutes text for item 46.

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).

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 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 Mid-Year Treasury Management Report 2024/25, to September 2024, was at Appendix 1 which included the following main areas:

• Capital Strategy and Treasury Management background;
• Introduction to the report;
• Economics and interest rates with commentary provided by Link Group;
• Treasury Management Strategy and Annual Investment Strategy Update;
• The Council’s capital position (Prudential Indicators);
• Borrowing position;
• Debt rescheduling;
• Compliance with Treasury and Prudential limits;
• Annual Investment Strategy; and
• Changes in risk appetite;

Appendix 1A detailed the capital expenditure and financing 2024/25 for the General Fund and the Housing Revenue Account.

Members considered the report and made the following comments:

• Members referred to page 236 of the agenda and queried whether the amount of £8.2 million invested in the CCLA Money Market Fund was close to the investment limit in that fund.
  • The Interim Treasury Manager (PSPS) responded that within its Treasury Management Strategy, the council had set a limit for investment with the CCLA Money Market Fund of £10 million. This limit could be reached however the fund acted as the council’s instant access fund.

• Members referred to the provision for lighting within the General Fund Capital and Financing 2024/25 and asked for clarification of the lighting owned by the council.
  • The Interim Treasury Manager (PSPS) would clarify this position after the meeting.

AGREED:

a)    That after consideration by the Governance and Audit Committee, the report and treasury activity detailed at Appendix 1 be noted; and

b)    That the comments of the Governance and Audit Committee be noted and considered by Council at their meeting on 29 January 2025.

To receive a progress report from the External Audit Manager - KPMG (enclosed).

Consideration was given to the report of the Director KPMG which provided the committee with an External Audit Progress Report for the year ended 31 March 2023.  

The External Audit Manager (KPMG) introduced the report and the following main points were highlighted:

• KPMG wished to express gratitude to the Deputy Chief Finance Officer (PSPS) and the Finance Manager – Corporate (PSPS) for their continued engagement throughout the process;
• Following receipt of the draft financial statements, an increase in materiality levels had been made due to actual expenditure exceeding the forecasted expenditure;
• The wording of ‘significant risk’ had been refined which distinguished between two different valuations undertaken as at 31 March 2024 in relation to the valuation of land and buildings;
• A new significant audit risk to the group had been identified in respect of the valuations of investment properties held by Welland Homes;
• Regarding significant audit risk:

o   The testing of significant assumptions used in the valuation of land and buildings (BCIS indices, location factor and obsolescence factors) were found to be neutral;

• • The testing of significant assumptions used in the valuation of council dwellings (adjustment factor and comparable transactions for beacon values) were found to be neutral;
  • The testing of management override of controls were found to be satisfactory;
  • The testing of the valuation of post-retirement benefit obligations were found to be balanced; and
  • In respect of Group Risk, the testing of the valuation of investment properties were found to be neutral;
• An uncorrected audit misstatement had been identified and reported to management however the audit opinion would not be affected should the misstatement remain uncorrected;
• No corrected audit misstatements had been identified;
• Four audit disclosures misstatements had been identified and reported to management. These were to be corrected for the financial statements;
• No significant control deficiencies had been identified;
• Four medium and four low-level recommendations had been discussed with management, for which a management/responsible officer response, and due date for implementation, had been agreed; and
• All outstanding matters were detailed on page 9 of the report.

Members considered the report and made the following comments:

• Members referred to ‘control deficiencies’ on page 26 of the report and noted that bank reconciliations had not been completed on a timely basis and that a duplicate payment had not been identified. Could assurance be given that this would now continue to remain on track.
  • The Chief Finance Officer (PSPS) responded that:
    • All reconciliations were up to date as at September 2024;
    • When the bank statement reconciliation backlog was identified, management action was immediately introduced to deal with historical matters;
    • A Key Performance Indicator (KPI) was introduced to the finance service level agreement which monitored monthly bank statement reconciliation completions;
    • Payroll and bank reconciliation completions were now reported to the Senior Leadership Team;
    • The increased management oversight of the matter and enhanced internal processes would serve to identify any issues at an early stage;
    • A bank reconciliation internal audit had taken place, the findings of which would be reported to the committee  ...  view the full minutes text for item 48.

To advise members in respect to the Council’s activity and compliance with Data Protection, Environmental Information Regulation and Freedom of Information requirements (report of the Assistant Director – Governance (Monitoring Officer) enclosed).

Consideration was given to the report of the Assistant Director – Governance (Monitoring Officer) which advised members in respect of the Council’s activity and compliance with Data Protection, Environmental Information Regulation and Freedom of Information requirements.

The Group Information Manager and Deputy Data Protection Officer introduced the report and the following points were highlighted:

• The report provided an annual update for the period October 2023 to October 2024;
• There had been an increase in the use of information regulation to obtain information by social action groups such as Centre Point, The Dogs Trust, and The Tax Payers Alliance, as well as media organisations;
• 630 requests had been made during the period which represented a 3% increase on the previous year;
• A total of 63 requests had a form of exemption applied. Exemptions to disclosure were only applied where necessary following a public interest test;
• 24 refusals to process a request under the regulation were due to the requested information already being publicly available elsewhere;
• The council’s responses exceeded the Information Commissioners Office (ICO) ‘adequate’ target of 90% throughout the period of the report, and in the following months had subsequently exceeded the ICO’s ‘good’ target of 95%; and
• 33 data incidents had been reported since October 2024.

Members considered the report and made the following comments:

• Members referred to point 2.1.8 of the report which summarised the number of FOI requests validated within statutory deadlines, and queried the reason for a lower performance from October to December 2023.
  • The Group Information Manager and Deputy Data Protection Officer responded that the lower performance had resulted from capacity issues within the team however an intervention from January 2024 had resolved the issue.

AGREED:

That the Information Governance annual update be noted.

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

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 stated that:

• Appendix 1 had been updated with re-scheduled items;
• Appendix 2 summarised the training record for the committee which had been updated with the Treasury Management Training undertaken in October 2024. Arrangements for Pensions training could now progress as the Co-opted Independent members had been appointed.

AGREED:

That the Work Programme of the Governance and Audit Committee be noted.

There were none.