Agenda and draft minutes

            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

There were no Declarations of Interest made.

The Committee will be asked to approve as a correct record the Minutes of the Audit & Governance Committee held on 30 November 2023.

The Minutes of the meeting held on 30 November 2023 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).

No public questions had been submitted for this meeting.

Now that the Committee system has been in place for some time [since May 2021] it is timely to undertake a review of all allowances, and because the last full review was undertaken in July 2019.

The Regulations require the Council’s IRP to review its Members’ Allowances Scheme every four years.

[30 minutes]

The Chair thanked the Independent Remuneration Panel (IRP) for their hard work, and then invited the Group Head of Law and Governance to introduce the report. Appendix 1 contained the report and completed by the Panel, the work for which had commenced in July 2023. The last full review of the Members’ Allowances Scheme had been approved by Council in July 2019. An interim review had been undertaken by the IRP in November 2020 which hadreviewed the Special Responsibility Allowances (SRAs) of the Leader and Deputy Leaderof the Council and Cabinet Members in preparing for the Council’s move from a Leader and Cabinet form of governance over to a Committee system. It was acknowledged at that time that a full review would be required in subsequent years. The Group Head of Law and Governance thanked each of the Panel members for the huge amount of work they had undertaken, the quality of their report, and the clarity of analysis. He also thanked the Committee Services Manager for her work in supporting the Panel and the process. The Panel’s report provided sound evidence based analysis and conclusion that took into account the experience of the Council and Councillors since the move to the Committee system, and data from a range of sources. He explained that it was within the power of the Committee to ask for the Panel to carry out further work. In that scenario the Committee would need to extend the terms of office for the Panel, to allow time for this work to be carried out.

The Chair then invited the Chair of the Panel, John Thompson to present the Panel’s report. He explained the role of the IRP was to make recommendations to the Local Authority, which only needed to take account of them. What tended to happen with IRP reports was that most recommendations were accepted, few were amended and very occasionally some were rejected. He highlighted that the SRA for the Leader of the Council had been low, and they aimed to increase this to a level that was fair but not over-generous. He highlighted that one Member had asked questions in advance of the meeting around this, and answers had been provided. The Panel had undertaken an extensive amount of work around SRAs for the Chair’s and Vice-Chairs of Service Committees, looking at workloads and responsibilities, comparing these to both previous Cabinet and current Statutory Committees. The recommendation was to bring the SRA for these broadly in line with the Statutory Committees, as the workload was comparable. They noted the workload of all Councillors had increased and it was felt the savings from the reduction of Chair and Vice-Chair of Service Committees SRAs should be added to the basic allowance. The Planning Committee remained very busy, and it was felt a small increase for the Chair and Vice-Chair of Planning was justified. They felt the SRA for the Leader of the Opposition should be broadly in line of that paid to Chairs  ...  view the full minutes text for item 645.

The Internal Audit Plan provides the mechanism through which the Chief Internal Auditor can ensure most appropriate use of internal audit resources to provide a clear statement of assurance on risk management, internal control and governance arrangements. This report presents the plan for 2024-25 for approval by the Committee.

[10 minutes]

The Chair welcomed Iona Bond, Senior Audit and Counter Fraud Manager, from Southern Internal Audit Partnership (SIAP), who then presented the report to the Committee. Pages 46 – 48 contained general information around the role of SIAP. Page 48 showed the Council Vision and how SIAP took this into consideration. Page 49 set out the key strategic risks at the time of producing the draft plan. Page 50 contained more detail of processes they followed when formulating the audit plan, which showed the substance behind the finished plan. Page 51 – 54 set out areas identified through the planning process that they aimed to cover in 2024-25 and the indicative proposed timings. The Senior Audit and Counter Fraud Manager attended the Corporate Management Team (CMT) meeting in advance of each quarter to revisit those audits coming up, and to make sure the timings were still appropriate. The Internal Audit Plan was a fluid document, and would most likely be subject to changes doing the year. If any such changes were made, the Committee would be updated through the progress reports, highlighting the rationale for the changes.

The recommendations were proposed by Councillor Purser and seconded by Councillor Goodheart.

The Chair thanked the Senior Audit and Counter Fraud Manager for her report, and invited questions and debate from the Committee. It was asked whether Climate Change was the only audited area that was not a statutory requirement of the Council, as there was concern around the cost of this. It was confirmed that SIAP audited the areas adopted by Council as its key aims and strategies.

One Member advised he had submitted a question in advance of the meeting regarding page 53, repairs and maintenance Quarter 2 and responsive and emergency repairs Quarter 3. This was whether the internal auditors (for their 2024-25 Internal Audit Plan) were aware of the very recent decision to cease the OPSL contract with effect from 30 April 2024 and instigate a new delivery service delivery from May 2024. It was suggested this may require a review of their audit plan for housing. The Senior Audit and Counter Fraud Manager explained SIAP had been aware of likely changes at a high level. The initial timing of the housing reviews had been factored in, and in advance of each audit quarter they had discussed with CMT the timing of each review to determine that it was still appropriate. With the transitioning of arrangements, this audit may be moved back, however they would also look at whether it would be beneficial to do an audit earlier to assess the transitioning and ensure it was not having a detrimental impact on service provision for residents. This would be discussed at the time of scoping the audit with senior management. The Member felt comforted that the audit plan was so agile, and CMT were engaged in discussion about this.

The  Committee

 RESOLVED

That the internal audit plan 2024-25, as attached, be approved.

The Internal Audit Charter is a formal document that defines the internal audit activity’s purpose, authority and responsibility consistent with the Definition of Internal Auditing, the Code of Ethics and the Standards.  The Public Sector Internal Audit Standards require the charter to be reviewed and approved annually.

[5 minutes]

Upon the invitation of the Chair, the Senior Audit and Counter Fraud Manager presented the report to the Committee. The Internal Audit Charter was a formal document that defined the internal audit activity’s purpose, authority and responsibility consistent with the Definition of Internal Auditing, the Code of Ethics and the Standards. The Public SectorInternal Audit Standards required the Charter to be reviewed and approvedannually. There had been no material changes since the 2023/24 Charter had been presented last year.

The recommendations were proposed by Councillor May and seconded by Councillor Turner.

The Chair invited questions and debate from Members. Clarification was sought on paragraph 4, page 64 regarding ‘Internal auditors will be alert to the possibility of intentional wrongdoing, errors and omissions, poor value for money, failure to comply with management policy and conflicts of interest’. It was asked who would be responsible for this, and whether it would be the Chief Executive Officer (CEO) or Group Heads. The Senior Audit and Counter Fraud Manager explained it was the internal auditors that would be alert to the possibility, and they would take into account the areas fraud may be more likely. If Officers identified areas of irregularity the onus would be on management to make internal audit aware of these. The Chair also advised that the Monitoring Officer ensured statutory compliance in matters, and there was also an open door to whistle-blowers in the authority.

The  Committee

 RESOLVED

That the internal audit charter, as attached, be approved.

The report outlines the progress of the Council’s Internal Audit service against the approved Internal Audit Plan for 2023/24 from 1 April 2023.

[15 minutes]

Upon the invitation of the Chair, the Senior Audit and Counter Fraud Manager presented the report to the Committee. The report outlined the progress of the Council’s Internal Audit service against the approved Internal Audit Plan for 2023/24 from 1 April 2023. Very good progress was being made and they were on track to deliver all audit work as scheduled, which would be incorporated into the 2023/24 Audit Opinion. This strong position reflected the work of staff and managers across the Council. Section 4 of the report showed the analysis of live audit reports, where there were outstanding management actions. The Senior Audit and Counter Fraud Manager was satisfied progress was being made on these outstanding actions. There were 2 audits effecting the medium priority actions overdue, which were the decision making audit and the fraud framework audit. This was due to capacity and resourcing within the 2 teams of the Council dealing with those management actions. Section 5 showed there were no audit reports concluded with a ‘limited’ or ‘no assurance’ since the last progress report in November. All quarter 4 work had now been scoped and all work scheduled throughout the year that remained outstanding was underway, which was very positive. Page 79 showed no further adjustments had been made to the plan since last reported to Committee. A full summary of audit work would be presented to the Committee as part of the Annual Opinion report for the June/July meeting. Page 80 onwards contained a summary of overdue high priority management actions, and a tally of overdue low and high priority actions. One overdue high priority action had been added for Information Governance since the last report, however 2 high priority actions for Business Continuity had been cleared.

          The Chair invited questions and debate from Members. One Member had submitted two questions in advance, the first being around Information Governance and ‘Reasonable Assurance’ (page 80). He was concerned about the lack of focus on Councillors GDPR Data Management. Councillors were Data Controllers, however there was no plan to map and audit Councillors' data practices and holdings. Until the delayed Data Protection training has been conducted, he felt Councillors may be breaching legislation. He asked whether a grading of ‘Reasonable’ was appropriate or whether this should be ‘Limited’. The Group Head of Law and Governance explained the Data Protection training was something he was seeking to deliver as soon as possible. Training would be provided to enable Councillors to consider their obligations under the act. He confirmed that mapping would be for Councillors to carry out themselves, however this could be included in the training.

Another question was around Business Continuity on page 82 regarding ‘Limited Assurance’. It was felt training was a recurring issue possibly made worse by staffing gaps, reliance on agencies, working from home and staff over-stretch.  It was feared this would worsen following the announcement of recent staff reduction measures. The Group Head of Finance and Section 151 Officer updated that CMT had recently  ...  view the full minutes text for item 648.

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 Finance & Risk Manager introduced the report explaining it provided the quarterly update on the Corporate Risk Register. High risks were reviewed quarterly, and there had also been some updates to the medium risks. Appendix 3 contained the Corporate Risk Register Summary, which highlighted any changes to the scores and any additions to the register. Pages 92 – 112 contained the detailed risk register entries, where updates were also highlighted. At its meeting in November, the Committee requested an enhanced update on 3 of the risks, which was included as Appendix 4.

On behalf of the Group Head of Housing, who was unable to be at the meeting, the Group Head of Finance and Section 151 Officer presented the CRR1-B Balance of Housing Revenue Account (HRA) written update (page 113). He explained that a report to the Housing and Wellbeing Committee in November had forecasted that the HRA reserve balance would fall to under £1million by the end of the financial year, however this situation had now worsened and it was forecast to fall to around £550k. This reserve was expected to build up to around £1million by the end of 2024/25, however there was clearly risk involved with this. Members would receive frequent updates around this, and the risk would remain on the Corporate Risk Register and be discussed by CMT until it was resolved. Several action plans had been put into place including generating more income from service charges; an ongoing review of some of the financing costs charged to the HRAs; looking to improve the procurement processes around housing that would achieve a better value for money service. There was money in the proposed budget for planned and cyclical maintenance which was hoped would offer better value for money for customers and reduce repair costs in the long term.

Members were invited to ask questions and it was asked whether Officers had confidence the reserves would rise up to £1million by the end of the financial year. The Group Head of Finance and Section 151 Officer thought this was achievable and felt it was a robust budget, however acknowledged there were elements of risk, as they were working to financial forecasts which were subject to change. The Group Head of Housing was aware of all issues and was reporting regularly to Housing and Wellbeing Committee and Policy and Finance Committee.

A verbal update on CRR2 - Organisational Capacity to Deliver was deferred to the next Committee meeting. One Member wished it to be recorded that he was awaiting a response from the Group Head of Environment and Climate Change regarding concerns around Business Continuity, and he wished CMT to consider whether Business Continuity failure should be added as an effect of the issue of training, within CRR2.

Another Member highlighted that flexible working (page 94) should be encouraged and it was felt this attract many talented working parents.

The Climate Change and Sustainability Manager went through his enhanced written update on  ...  view the full minutes text for item 649.

The report allows the Audit and Governance Committee to consider and note the accounting policies that will be applied to the Statement of Accounts 2023/24 for approval by the Committee. The statutory deadline for completion of the draft accounts is 31 May 2024 and approval of the final audited accounts is 30 September 2024. Should there be any changes to these deadlines, Members will be informed.

[5 minutes]

Upon the invitation of the Chair, the Group Head of Finance introduced the report. The report allowed the Audit and Governance Committee to consider and note the accounting policies that would be applied to the Statement of Accounts 2023/24 for approval by the Committee. The accounting policies for 2023/24 remained substantially unchanged from 2022/23.

There were no questions from Members.

The Committee noted the report.

The report has been prepared to ensure that the content complies with the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management 2021.

Section 12 of the Local Government Act 2003 Act provides local authorities with the power to invest for any purpose relevant to its functions, or for the purposes of the prudent management of its finances. Broadly speaking, this means that its cash resources must be invested under the ‘SLY’ principles of Security, Liquidity and then Yield.

[15 minutes]

Upon the invitation of the Chair, the Senior Accountant (Treasury) introduced the report, which was the annual Treasury Management Strategy Statement, and explained there were few changes from the 2023-24 Strategy. It was a requirement of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management that this document be produced and presented to Members each year.

The table on page 150 included an additional column for estimated outturn as per Quarter 3 budget monitoring. There was an increase from 2022-23 largely due to the Bognor Regis Arcade, the Levelling Up Fund, Alexandra Theatre, Sheltered Accommodation and Stock Development.

Paragraph 2.2 on page 150 stated the Council’s Capital Financing Requirement (CFR) could not rise indefinitely, so minimum revenue provision (MRP) charges had to be made to the revenue and HRA budget. MRP was a statutory charge that the Council were required to set aside from the budget to repay loan debt. The table on page 154 showed how much of Arun’s budgets were used for loan repayments. The Councils MRP policy remained unchanged from 2023/24 and was Option 3 as detailed in Appendix 3, page 172.

Page154 - 155 showed the investments and borrowing, which was almost £14m more in December than at 2022-23 year end. This was largely due to: the timing of the precept payment (January); a levy still not paid to WSCC regarding non-domestic rates (awaiting confirmation of when this will be paid); grants totalling £1.1m only repaid in January 2024.

Some investments have been placed with other local councils for diversification, and all investments held at the end of December 2023 could be seen in appendix 4 on page 175.

Page 156, paragraph 3.2 detailed the Operational Boundary and the Authorised Limit. The Authorised Limit represented a legal limit beyond which external debt was prohibited and this limit needed to be set or revised by Full Council and kept under review. For 2024-25 the Operational Borrowing Limit had been set at £78m and the Authorised Limit had been set at £83m. The Authorised Limit must not be breached. These limits were shown in the chart on page 157, paragraph 3.2.3, along with the CFR and borrowing levels which were below the Operational Boundary and the Authorised Limit.

Page 157 - 158, paragraph 3.3 and appendix 5 showed that the treasury management advisors, LINK, still expected interest rates to fall steadily over the next 3 years, from 5.25 to 3%, which theoretically would make borrowing more affordable.

Page 162, paragraph 4.1 explained the Council’s investment order of priorities would be security first, then liquidity and then yield. Appendix 7 on page 179-180 showed the quality counterparties available to invest with.

Paragraph 4.1 on page 163-164 detailed International Financial Reporting Standards (IFRS 9). Appendix 11 (page 184) had been added to this report to provide the valuation positions of the CCLA Diversified Income Fund and Property Fund at the end of December 2023, the current capital losses and the dividends from inception  ...  view the full minutes text for item 651.

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 has the ability to use powers under RIPA to support its core functions for the purpose of the prevention and detection of crime where an offence may be punishable by a custodial sentence of 6 months or more. There are three processes available to local authorities under RIPA: the acquisition and disclosure of communications data; directed surveillance; and covert human intelligence sources (‘CHIS’).

The Act sets out the procedures that the Council must follow if it wishes to use directed surveillance techniques or acquire communications data in order to support core function activities. The information obtained as a result of such operations can later be relied upon in court proceedings provided the Act is complied with.

The Home Office Code for Covert Surveillance and Property Interference recommends that elected Members, whilst not involved in making decisions or specific authorisations for the local authority to use its powers under the Act, should review the Council’s use of the legislation and provide approval to its policies.

[10 minutes]

          Upon the invitation of the Chair, the Group Head of Law and Governance presented the report. 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 had the ability to use powers under RIPA to support its core functions for the purpose of the prevention and detection of crime. He explained some time ago there had been publicity around local authorities’ use of the powers, and it was determined some councils were using these incorrectly. The Act and its Codes of Practice set out the procedures that local authorities must follow when undertaking surveillance. The Council was required to have a Senior Responsible Officer (SRO) to maintain oversight of the RIPA arrangements, procedures and operations. The Group Head of Law & Governance performed this function and was responsible for the integrity of the Council’s processes for managing the requirements under RIPA. The Investigatory Powers Commissioner's Office (IPCO) was responsible for the judicial oversight of the use of covert surveillance by public authorities throughout the United Kingdom. The last inspection had concluded positively, and  although there were comments on Arun’s RIPA policies and procedures, there was nothing fundamental that undermined the Councils use (or not) of the powers. The Council did not use these powers last year, and had not used them for some time. Officers had received training and he highlighted that these powers could sometimes be necessary to aid in criminal investigations. There would be a subsequent report coming to the Committee regarding the RIPA Policy. He had received a Member question in advance of the meeting regarding whether the new CEO would receive training. This was something the Group Head of Law and Governance would be speaking to the new Chief Executive about once they had started in post, to determine whether they would need the training, or whether they had recently completed it.

There were no questions from Members.

The Committee noted the report.

The Committee is required to note the Work Programme for 2023/24.

[5 minutes]

The Committee noted the Work Programme.