Agenda and minutes

The Chairman welcomed Members and Officers of the Internal Audit &

Finance teams and Jason Jones (Audit Manager) from Ernst & Young to the

meeting.

A special welcome was extended to Carley Lavender the Committee’s

new Committee Services Officer.

Members and officers are invited to make any declarations of pecuniary, personal and/or prejudicial interests that they may have in relation to items on the 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 officers should make their declaration by stating:

a) the item they have the interest in

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

c) the nature of the interest

There were no Declarations of Interest made.

The Committee Services Manager will provide a verbal update on Panel recruitment.

The Committee received a verbal update from the Committee Services Manager on the outcome of the recruitment exercise undertaken to recruit further members to its Independent Remuneration Panel to review the Council’s Members’ Allowances Scheme.

The Committee was reminded that since its last meeting held on 26 July 2018, a recruitment exercise had been undertaken to recruit new members to the Council’s Independent Remuneration Panel – this was following the resignation of one of the Panel Members in July 2018.

The Committee was advised that on 8 October 2018 interviews had taken place and four new Panel Members recruited, making a new Panel size of 6. All Group Leaders had been consulted on the recruitment proposals which were very quickly approved. Both the Chairman and Vice-Chairman of this Committee had sat on the interview Panel along with John Thompson as Chairman of the current Independent Remuneration Panel.

At the start of November, following an Induction process, the Panel immediately started its work on reviewing the existing Members’ Allowances scheme and was making good progress. However, it was important for the Committee to understand that the timescale that the Panel was working to, to complete this review, was extremely tight.

In the past Panels had been allocated between six and eight months to complete a review. The Panel has just three months to ensure that a draft report would be ready to bring to this Committee in February 2019 with recommendations then being forwarded onto Full Council on 13 March 2019.

The Panel had just circulated to Members its questionnaire for Members to complete and it was explained that interviews were planned to take place soon. Between now and this time, the Panel’s report outlining its recommendations would also need to go through the consultation process and there was much information gathering for the Panel to do too.

Members were advised that the Panel was willing to work to a timetable that aimed to deliver its final report by February 2019, but to achieve this, they needed Members’ support, particularly in delivering the process and timescales.

The Committee having received the Committee Services Manager’s presentation then noted the update provided.

The Committee is requested to note the attached correspondence.

The Audit Manager presented Ernst & Young’s Annual Audit Letter and Progress Report and confirmed that the purpose of the letter was to communicate the key issues arising from Ernst & Young’s audit work.

Members were reminded that Ernst & Young had already reported its detailed findings from its 2017/2018 Audit Results Report to the Committee at its last meeting held on 26 July 2018. This letter represented a very brief summary of that work.

The Annual Audit Letter reconfirmed that Ernst & Young had issued an unqualified audit opinion from the 2017/2018 Audit Results Report and an unqualified value for money conclusion in July 2018.

The Audit Manager then drew Members’ attention to some sections within the report entitled “Focused on your Future” in terms of Financial Instruments; Revenue from Contracts with Customers; and Leases and some updates were provided to the Committee.

Following some further discussion, the Committee expressed its thanks to Ernst & Young and noted the content of the Annual Audit Letter and Progress Report.

The Committee is asked to approve the Annual Certification Report for 2017/18 which is attached.

The Committee received and noted Ernst & Young’s Annual Certification Report for 2017/2018.

Attached is the Treasury Management Interim Report for 2018/2019.

The Senior Accountant and Investment Officer presented to the

Committee the Treasury Management Mid-Year Review Report for 2018/2019 and advised that this covered activities to 30 September 2018 in detail.

Some updates were provided to the Committee. The Treasury

Management update provided to Members prior to this meeting had outlined the changes happening in treasury management.

It was reported that the Council was still doing well in terms of its investment return which had outperformed its benchmark. Updates were also provided on the Housing Revenue Account (HRA) self-financing regime as the

Government has placed a limit on the amount of housing debt which could be held by each local housing authority. The limit for this Council was £81,630,000. An update was also provided on the Property Fund Valuation.

The Committee, in receiving the report, wished to have recorded its thanks to the Treasury Team for the returns that had been achieved in a particularly difficult economic environment.

The Committee then

RECOMMEND TO FULL COUNCIL – That

(1) the actual prudential and treasury indicators for

2018/2019 contained in the report be approved;

(2) the treasury management report for 2018/2019 be noted;

and

(3) the mid-year treasury activity for the period ended 30

September 2018, which has generated interest receipts of

£169,920 (0.97%) for the quarter and £364,203.64 (1.18%) for

the year to date be noted against a budget of £480,000 (1.14%)

for the full year.

The Council implemented a new Financial Management System (FMS) that went live in October 2016.

A post implementation review of the Accounts Payable module of the FMS was carried out as a result of a request by the Corporate Management Team and the

Financial Services Manager, with a report issued in June 2018.

This report is supported by a presentation providing members with an overview of the FMS and more detail on the key findings in conjunction with the associated risks identified during the review.

Improvements identified during the review are included in Appendix 1 to this report.

Prior to receiving the Senior Internal Auditor’s report, the Committee received a presentation from the Financial Services Manager explaining that a post implementation review of the Council’s new financial management system had been undertaken to ensure that the system was operating efficiently and effectively.

The presentation also provided Members with an overview of the new system; information outlining the key findings from the review and associated risks which had been identified during the review. The improvements identified looked at:

§   Training and Awareness

§   System Reports and Monitoring Compliance; and

§   System Changes

The Committee having asked some questions noted the key findings from the review and it endorsed the improvements agreed in the management of the risks identified.

The Council’s Strategic Risk Register has been reviewed and revised to reflect changes since its last update in December 2017.

The Committee received a report from the Chief Internal Auditor outlining that the Council’s Strategic Risk Register had been reviewed and updated to reflect changes since its last publication in December 2017.

Since then it had been reviewed, updated and re-scored by the Council’s Governance & Risk Group in September 2018. The updated document had also been considered by the Corporate Management Team (CMT); the Lead Officer (the Chief Executive) and Lead Member for risk management (the Cabinet Member for Corporate Support) and their comments had been incorporated.

Since the last update, significant changes had taken place nationally that would affect the Council going forward. Some of the risks identified as high risk last year had been downgraded to a lower risk this year – an example of this was the Council’s Local Plan now that this had been adopted by Full Council in July 2018.

The key issues brought to Members’ attention were that Finance, Homelessness, Partnerships, Cybersecurity, Corporate Stock Compliance Issues and Brexit implications had been identified as significant risks for the Council.

As the Committee was being asked to note the content of the report and to approve the revised Strategic Risk Register it agreed to focus on each of the risk categories and their relative positioning starting with Finance at Risk 1 and ending with Brexit Implications at Risk 18.

The points brought to the Committee’s attention are set out below:

§  Risk 1 – Finance – due to much uncertainty surrounding government funding this was a major risk. There was still uncertainty around the outcome on business rate charges and Community Infrastructure Levy (CIL) charges. Members were reminded that Cabinet had received the Financial Prospects 2018/19 to 2023/24 report in September 2018 with subsequent reporting to Full Council and that this report included details of the risks.

§  Risk 2 – Change Management and Service Transformation - the Chief Internal Auditor explained why this risk had been set at amber. This was down to the outcome of the management restructuring. The Council was still undertaking an ongoing programme of service transformation work affecting a number of service areas. No comments or questions were asked.

§  Risk 3 – Regeneration and Economic Development – The Director of Place had requested that level of risk for this area be increased. Members were aware of the Council’s major initiatives progressing for the redevelopment of areas such as Hothamton in Bognor Regis, the purchase of the Bognor Regis arcade and also major infrastructure proposals affecting the area, such as the A29 realignment and the Arundel By-pass.

§  Risk 4 – Contracts Management – this focused upon major contracts let such as waste collection, leisure and greenspace. The decision had been made this year to feature as a separate risk the Littlehampton Leisure Centre rebuild. The Council’s Insurance Contract was also due to go through a procurement exercise. No comments or questions were raised by the Committee.

§  Risk 5 – Member Engagement and Capacity – this  ...  view the full minutes text for item 263.

The Committee is required to oversee the provision of an adequate and effective internal audit service. Part of this process is to monitor delivery of progress against the Audit Plan and to receive summaries of reports issued.

The Committee is requested to note the contents of the reports attached.

The Chief Internal Auditor presented a report which monitored the delivery of progress made against the Internal Audit Plan. The annual plan had been presented to the Committee at its meeting held in February 2018, this was an outlined plan only as although the revised management structure had been finalised, some lower level organisational changes were still being progressed and there was uncertainty as to where audit resource might be required in the year.

The aim of the Plan was to ensure that mandatory work was completed and there was appropriate involvement in the progress of the Vision 2020 initiative and ongoing transformation and to progress audit work on the priority/highest risk areas identified.

The appendix attached to the report set out the main areas of work undertaken by the Internal Audit since February 2018 which the Committee then noted.

In discussing the report, the Committee wished to have placed on record it thanks to the Internal Audit Team for the professional work that it had undertaken during 2018, especially with the audit review of the E5 system.

The Committee is presented with the summary of the significant findings arising from audit reports issued between June and October 2018.

The Committee received and noted the summary of findings from reports issued June to October 2018. A background page on Audit Entity

REO4 2018-19 - Purchase Ledger for Corporate Credit Cards was circulated at the meeting as this had been omitted from the agenda.

The Committee is requested to approve the attached draft work plan for 2018/19.

The Committee received and noted its Work Programme covering meetings from February to July 2019.

The Chief Internal Auditor confirmed that at its next meeting the

Committee would receive an update on the Council’s Property Investment Fund. This would also be an opportunity for the Committee to suggest items for its work programme for 2019/2020. The Committee also requested an update on the Partnerships review.

The Cabinet Office has issued its National Fraud Initiative report covering the period 1 April 2016 to 31 March 2018 – this can be accessed by clicking on this link: National Fraud Initiative Report

A hard copy of this document has been placed in the Members Room or can be obtained upon request from Committee Services.

CIPFA has issued its Fraud & Corruption Tracker report covering the period 2017/18 – this can be accessed by clicking on this link: Fraud & Corruption Tracker Report

The Committee received and noted the information/advisory documents received from the Cabinet Office and CIPFA.