Agenda and minutes

Apologies for absence had been received from Councillors O’Neill, Jones and Purser.

            Members and Officers are reminded to make any declarations of pecuniary, personal and/or prejudicial interests that they may have in relation to items on this agenda and are reminded that they should re-declare their interest before consideration of the item or as soon as the interest becomes apparent.

            Members and officer should make their declaration by stating :

a) the application they have the interest in

b) whether it is a pecuniary, personal and/or prejudicial

c) the nature of the interest

d) if it is a prejudicial or pecuniary interest, whether they will be exercising their right to speak to the application

Councillor Haywood declared a Personal Interest in agenda item 8 as a Member of Littlehampton Harbour Board.

Councillor Stanley declared a Personal Interest in agenda item 9 as an employee of Nationwide Building Society.

The Committee will be asked to approve as a correct record the Minutes of the Audit & Governance Committee held on 16 July 2024.

The Minutes of the meeting held on 23 July 2024 were approved by the Committee. These would be signed after the meeting.

There were no urgent matters for this meeting.

To receive questions from the public (for a period of up to 15 minutes).

There were no urgent matters for this meeting.

The External Audit Update Report will be presented to Members of the Audit & Governance Committee by representatives from Ernst & Young LLP.

[10 Minutes]

          Upon the invitation of the Chair, Simon Mathers, External Audit Partner from Ernst and Young LLP presented the report to the Committee. Details of the 2022/23 audit commenced on page 14 of the agenda pack. The External Audit Partner reminded Members that at the last Committee meeting he updated about national measures to address the backlog in local government audits, and there had been significant movement in respect of this. In September 2024 legislation had been laid before parliament, which then came into force on Monday 30 September 2024. The statutory backstop date for completion of 2022/23 audits had been fixed at 13 December 2024. Backstop dates had also been set for subsequent years, and audits had to be completed by these dates, with Councils having published accounts and audit reports completed. If the work was not finalised by these dates, an audit report based on what had been done would be formed, which essentially meant the auditors would issue some sort of modification or qualification to that report.

          Ernst & Young LLP had previously set out their strategy, which was not to attempt the 2022/23 audit in order to clear the backlog. They had communicated to Members at the last meeting that they expected to disclaim the 2022/23 audit. They had now moved forward with their programme of work, and were required to complete their work across all local authorities by the end of November, giving time for local authorities to complete the signing and publication of the accounts by the backstop dates. The next scheduled meeting of the Audit & Governance Committee was 03 December 2024, so the report could be brought to that meeting, accounts for year ending 31 March 2023 could then be approved, and Ernst & Young LLP could sign the disclaimed report. The accounts and disclaimed report could then both be published together, hitting the backstop date, which would be tight, but manageable.

          Details of the 2023/24 audit started on page 16 of the agenda pack, and it was clear there was a significant amount of work that needed to be done in a short space of time. Ernst & Young LLP’s resources were finite, and they had therefore had to undertake a prioritisation review. A letter had been sent to all Section 151 Officers in August 2024, setting out that they would be looking at all Councils that had not published accounts by the end of July 2024. They updated this assessment in early September, and Arun District Council’s (ADC) 2023/24 accounts had not been published, although Officers had indicated the accounts were in a position to be published, and working papers could be made available. Ernst & Young LLP, had taken the difficult decision to deprioritise the audit and move the resources to those councils that had published their accounts on time, or onto the team undertaking the work to complete disclaimed audits for 2022/23. This was a change from their position at the last Audit & Governance Committee. ADC were not alone in this position.

          Ernst & Young  ...  view the full minutes text for item 254.

The report outlines the progress of the Council’s Internal Audit service against  the approved Internal Audit Plan for 2024/25 from 1 April 2024.

[10 Minutes]

          Upon the invitation of the Chair, Nick Barrett, Audit Manager for Southern Internal Audit Partnership (SIAP), presented the report to the Committee, the purpose of which was to update on internal audit progress. He highlighted section 3, the performance dashboard, which indicated SIAP were slightly behind the curve in delivery, however since the report had been completed a number of the reviews had progressed. The review of housing voids had concluded with a reasonable assurance opinion; the section 106 review had completed with a substantial assurance opinion; the final report on the UK prosperity fund review had been issued that afternoon with a substantial opinion; the close of audit meeting for the parks and greenspaces review was scheduled for the following week; the accounts payable and housing benefits review were nearing reporting stage; the payroll, community safety and environmental health and protection review were underway; the review of Wi-Fi security had now been finalised and the disaster recovery review, originally scheduled for quarter 2, had now been allocated a resource and would be commenced in quarter 3; it had been agreed with the Senior Leadership Team that the cleansing services review, originally set for quarter 1, would move into quarter 3 and scoping meetings for this and other quarter 3 reviews were currently being arranged; the neighbourhood services and tenancy management review originally in quarter 1, had moved into quarter 3 following discussion with the Group Head of Housing. He hoped this would provide Members with assurance on SIAP’s progress, and he remained confident they would be in a position to produce their annual report and opinion at the end of the year.

          The Audit Manager also highlighted the action tracking, explaining SIAP were comfortable that there were not many actions running over the target dates and were satisfied for the reasons of any slippages.

          The Chair invited questions and the following points were raised:

• It was asked whether there was an update on the management actions regarding the Corporate Information Asset Register. The Group Head of Finance explained that this area was not in his remit, however he stated Members could ask for an update on this or other areas by way of the relevant manager’s attendance at the Committee meeting or an email update circulated to Members.
• Business Continuity on page 32 was listed as limited, and only medium priority. Had management changes been put in place and were they likely to get a better result once this had been done? The Group Head of Finance explained that his teams had been ensuring business continuity plans were online and up-to-date. He would ask other Group Heads to provide an email update to Committee regarding their areas.

The Committee noted the report.

The Corporate Risk Register is reviewed and updated in line with the requirements of the Council’s Risk Management Framework.

Quarterly updates reflecting revisions are reported to the Audit and Governance Committee, this report highlights the changes since the last update.

It is proposed that the Committee considers and notes the revised Corporate Risk Register.

[20 Minutes]

          Upon the invitation of the Chair, the Group Accountant presented the report to the Committee, the purpose of which was to highlight the updates to the Corporate Risk Register since it was last brought to Committee. He highlighted appendix 3, and explained the risks had remain stable, the CEO had taken over responsibility for CRR2 (organisational capacity to deliver) and CRR3 (change management and transformation). As of 20 August 2024 four items had been removed from the Corporate Risk Register, and had been moved to the relevant operational risk registers. Some of the detailed working had been updated for CRR1b, CRR7, CRR10 and CRR1a, with amendments highlighted in yellow. Appendix 4 was an example of an alternative reporting format which Officers planned to use going forwards.

          The Chair invited questions and the following points were raised:

• The new reporting format was welcomed and felt to be easier to understand.
• CRR2 – concern was expressed about the stress members of staff were under and it was asked why ADC were having difficulty recruiting and holding onto staff. The Group Head of Finance explained the issue of staff wellbeing was being addressed, it was staff wellbeing week the following week; there was an employee assistance programme available to all staff; and when staff were off sick, managers were in contact with them. He suggested the risk owner appear before the Committee at its next meeting to give a full update on this.
• CRR11a – the Alexandra Theatre Project risk was concerning and it was asked whether an update could be provided. The Internal Audit Manager confirmed regular progress reports regarding the Alexandra Theatre Project were taken to the Policy & Finance Committee meetings.
• One Member congratulated the housing team, as she had received positive feedback from a resident about them stating how much improved things were with the support they had been getting.
• CRR5 – Corporate Business Continuity – it was asked that the CEO also take responsibility for CRR5 as it was strongly linked to CRR2. The Group Head of Finance would take this request to the Corporate Leadership Team, however felt this was being taken very seriously by the Council.
• CRR1b – when referring to Housing Revenue Account (HRA) it says ‘are now at critical levels’, which was concerning. The Group Head of Finance explained reserves were well below the Council’s self imposed target of £2m. Quarterly updates were provided to Housing & Wellbeing Committee and the HRA accounts were reported to the Corporate Leadership Team on a monthly basis, where any necessary actions were addressed. The situation was being actively managed.

          The Chair advised Members to provide questions regarding the Corporate Risk Registers in advance of the Committee meetings, so answers could be sought from the relevant Officers and provided at the meetings.

The Committee noted the report.

The CIPFA (Chartered Institute of Public Finance and Accountancy) Code of Practice for Treasury Management 2021 recommends that Members be updated on treasury management activities at least quarterly. The 2024/25 Treasury Management Strategy states this report will go to the Audit and Governance Committee around September time. This report, therefore, ensures this Council is implementing best practice in accordance with the Code.

During the first quarter to 30 June 2024, the Council complied with its legislative and regulatory requirements, including confirmation that the authorised limit was not breached.

[20 Minutes]

[During this item, the Chair, Councillor Stanley redeclared his Personal Interest in this Item as an employee of Nationwide Building Society]

          Upon the invitation of the Chair, the Senior Accountant Treasury presented the report to the Committee, explaining it was the Quarter 1 Treasury Management report which updated on activities up to the end of June 2024. She highlighted pages 86 and 87 which provided information on the economic situation and interest rate forecasts from the treasury advisors. Their forecast on 28 May 2024 indicated that the Bank of England Base rate would reduce to 4% by March 2025 and would rest at 3.25% by March 2026, however they were currently looking to revise this forecast.

Appendix 1  provided information on the investment position at 30 June 2024 and the Senior Accountant Treasury highlighted some key points as follows: the table in 1.4 showed investments held were £48m, this had been £42.77m on 31 March 2024,  this change was largely to do with the timing of payments such as precepts which were paid on 05 July 2024; the average level of funds held throughout the quarter was £44m; 1.11 - performance against the budget was positive by 0.52%, which was largely due to better rates than expected in the budget; 1.12 - outturn was expected to achieve over £2m in investment income, which was around £140k above budget at June, but this had improved since; 1.14 - The IFRs 9 International Financial Reporting Standard (page 95) override was in place until 31 March 2025, but should it not have been in place the valuations on our CCLA funds at June would have meant an adverse impact of £477k on the Council’s revenue budget.

Appendix 2 provided information on the Councils borrowing position and the Senior Accountant Treasury highlighted some key points as follows: there had been no new external borrowing in Quarter 1; the only external borrowing was for the HRA self-financing settlement (£70.9m initially to £35.45m currently) of rates between 3.21% and 3.48% for maturity loans

Appendix 3 provided information on the Prudentials Indicators.

The recommendation was proposed by Councillor Tandy and seconded by Councillor Wallsgrove.

The Chair invited questions and debate and it was asked why ADC were investing in local authorities when it was known these were struggling. The Group Head of Finance explained no Councils had actually gone bankrupt, and local authorities were still considered to be a safe investment.

The  Committee

RECOMMEND TO FULL COUNCIL that

2.1. the Quarter 1 treasury management report for 2024/25 be noted;

2.2. the treasury activity for the quarter ended 30 June 2024, which has generated interest receipts of £563,000 (5.15%) against a budget of £1,896,310 (4.63%), be noted; and

2.3. the quarter 1 prudential and treasury indicators for 2024/25 contained in the report be noted.

The Policy provides guidance and introduces safeguards to help staff identify and report instances where money laundering is suspected, and sets out the procedures which must be followed to enable employees to comply with their legal obligations.

[10 Minutes]

          Upon the invitation of the Chair, the Internal Audit Manager presented the report to the Committee. The existing policy had not been reviewed for several years and this had been commented upon by SIAP in a recent audit. The updated policy was attached for consideration and adoption by the Committee. A recently updated document from another authority had been used as a base for the new policy, and the changes were not substantive.  It was felt unlikely that events would occur requiring action to be taken, as the Council  no longer accepts cash payments directly for its services

The recommendation was proposed by Councillor Wallsgrove and seconded by Councillor Bower.

There were no questions or comments from Members.

The  Committee

RESOLVED that

1. It agrees the proposed amendments and approves the updated Anti-Money Laundering Policy for adoption by the Council; and

2. Authority be delegated to the Group Head of Finance & Section 151 Officer to make consequential changes to the Policy in respect of any organisational/legislative changes and minor typographical corrections.

The Audit & Governance Committee is the designated body for oversight of the Council’s anti-fraud culture.

The Policy sets out Arun District Council’s position in relation to fraud, theft, corruption and bribery.  This includes the roles and responsibilities of employees and other parties involved in the running of the Council’s operations and its approach to the detection and investigation of incidents of fraud or corruption.

[10 Minutes]

          Upon the invitation of the Chair, the Internal Audit Manager presented the report to the Committee. The Council’s anti-fraud policy had last reviewed by the Committee in 2019, which had been raised by SIAP. The opportunity had therefore been taken to make some minor updates to the policy and also to present it in a different structure, as recommended by SIAP. The new policy was shown at pages 127-144, with the old policy for comparison at pages 145-169

The recommendation was proposed by Councillor Wallsgrove and seconded by Councillor Bower.

          The Chair invited questions and debate and the following points were made:

• One Member requested an update to a question he asked at the previous meeting around whether Arun were sufficiently resourced to tackle fraud and corruption. The Group Head of Finance explained there were specific fraud resources within Housing, and the Finance restructure would be looking at resources for this elsewhere in the Council. It was an issue being taken very seriously.
• The Housing team were congratulated on their results in tackling fraud.
• Paragraph 5.11 mentioned recovery of costs and it was asked whether this had been successfully done. The Internal Audit Manager explained this was in relation to staff for example having stolen something, and there were not believed to have been any instances of this.

The Committee

RESOLVED that

1. It agrees the proposed amendments and approves the updated Anti-Fraud, Corruption & Bribery Policy for adoption by the Council; and

2. Authority be delegated to the Group Head of Finance & Section 151 Officer to make consequential changes to the Policy in respect of any organisational/legislative changes and minor typographical corrections.

The Regulation of Investigatory Powers Act 2000 (RIPA) governs the acquisition and disclosure of communications data and the use of covert surveillance by local authorities.

The Council must have in place a policy governing its use of RIPA powers, and a set of procedures detailing how officers will implement its policy as part of investigations.

[15 Minutes]

          Upon the invitation of the Chair, the Group Head of Law and Governance presented the report to the Committee. The Regulation of Investigatory Powers Act 2000 (RIPA) governed the acquisition and disclosure of communications data and the use of covert surveillance by local authorities. The Council was required to have in place a policy governing its use of RIPA powers, and a set of procedures detailing how Officers would implement its policy as part of investigations. ADC have not used these powers for a long time, however they were available, should it be necessary and proportionate. On 13 March 2023 the Council was the subject of its periodic inspection by the Investigatory Power Commissioner’s Office (IPCO), with the process facilitated by the Group Head of Law & Governance. The inspection took place over the course of one day, and the IPCO’s inspection letter was shown as Appendix 1. The Commissioner’s report provided positive conclusion and comments regarding both the Council’s policy and procedures, and the way in which the use of RIPA was governed at the Council. Paragraph 4.9 highlighted the main actions from the inspection. Some of these were complete, including the annual update to Committee, and a review of the equipment used and how that equipment would be booked in and out. All of the other actions were for consideration at this meeting and had been included in Appendices 2 and 3.

          The Group Head of Law and Governance updated that the lists of Authorising Officers and Approved Ranked Officers on page 209 were slightly incorrect, and should read Authoring Officers: Chief Executive (Head of Paid Service) – Dawn Hudd; Director of Environment and Communities - Philippa Dart; Director of Growth - Karl Roberts;  Group Head of Technical Services – Nat Slade. Approved Rank Officers: Chief Executive (Head of Paid Service) - Dawn Hudd; Director of Environment & Communities - Philippa Dart; Director of Growth - Karl Roberts; Group Head of Law & Governance - Daniel Bainbridge; Group Head of Housing, Wellbeing & Communities – Richard Tomkinson.

The recommendation was proposed by Councillor May and seconded by Councillor Turner.

There were no question or comments from Members.

The  Committee

RESOLVED

That the revisions to the ‘Corporate RIPA Policy & Procedures’ and ‘Guidance on the Use of Social Media in Investigations’ be approved, and that the revised Policy is adopted by the Council.

The Committee is required to note the Work Programme for 2024/25.

[5 Minutes]  

The Committee noted the Work Programme.