Agenda and minutes

Audit and Governance Committee - Tuesday, 27th June, 2017 6.30 pm

Download documents using the MOD.GOV app

Venue: Committee Room A, Town Hall, Royal Tunbridge Wells, TN1 1RS. View directions

Contact: Mike McGeary  Democratic Services Officer

Items
No. Item

AG5/17

Chairman's opening statement

Minutes:

The newly-appointed Chairman, Councillor Moore, began by thanking the members of the Committee for agreeing to put back the start time of meetings to 6.30pm, which she hoped was a more convenient time for those in employment and which also achieved consistency with the vast majority of Borough Council formal meetings.

 

Councillor Moore gave a summary of her professional background and Council experience, leading towards her appointment at the Annual Meeting of the Council as Chairman. She also focused on the key objectives for Committee members, namely: (i) to note reports, where appropriate, and to comment on these; (ii) to consider changes to the Council’s Constitution presented to the Committee by the Constitution Review Working Party; and (iii) to contribute in the debate on those reports which required the approval of Full Council.

AG6/17

Declarations of Interest

To receive any declarations of interest by members in items on the agenda.

 

For any advice on declarations of interest, please contact the Monitoring Officer.

Minutes:

There were no declarations of interest made, within the provisions of the Code of Conduct for Members.

AG7/17

Notification of Visiting Members Wishing to Speak (in accordance with Council Procedure Rule 18)

Members should indicate which item(s) they wish to speak on and the nature of their concern/question/request for clarification.

Minutes:

There were no other members of the Council who had registered their wish to address the Committee, within the provisions of Council Meetings Procedure Rule 18.

AG8/17

Minutes of the Previous Meeting pdf icon PDF 251 KB

The Chairman will move that the minutes of the previous meeting, dated 4 April 2017, be signed as a correct record. The only issue relating to the minutes which can be discussed is their accuracy.

 

In accordance with Council Meetings Procedure 16.1, the Chairman will sign the minutes of today’s proceedings at the next scheduled meeting.

Minutes:

The minutes of the meeting of the Audit and Governance Committee dated 4 April 2017 were submitted.

 

While there were no issues of accuracy raised, Rich Clarke, the Head of Audit Partnership, provided a short update on minute AG53/16 – Safeguarding – where, in April, the Committee had asked for a full update report to be submitted to this meeting.

 

Mr Clarke advised that, on 31 May, an interim update report had been circulated to members of the Committee (2016/17 membership) by the Mid Kent Audit Manager, as required by members. He added that the remaining actions recommended in the Internal Audit report which had not yet been implemented – which required a longer period to carry out – would be the subject of a further report; he suggested that this made to the Committee in September. Mr Clarke said that this way forward had been discussed with relevant officers and had also been proposed to the Chairman, who had indicated her support.

 

Mr Clarke also said that the Democratic Services Officer would circulate the interim report to members of the Committee who had been appointed this municipal year.

 

The Chairman sought the agreement of the Committee to proceeding on this basis, to which they agreed unanimously.

 

RESOLVED – That the minutes of the Audit and Governance Committee dated 4 April 2017 be approved as a correct record.

AG9/17

Update on Complaints Received under the Members' Code of Conduct pdf icon PDF 163 KB

Minutes:

Keith Trowell, the Senior Lawyer and Deputy Monitoring Officer, presented an update report on complaints received under the authority’s Members’ Code of Conduct, for the period to 13 June 2017.

 

Mr Trowell advised that, since the meeting of the Committee held on 4 April, no further complaints had been received; he added that there were no outstanding complaints under consideration.

 

RESOLVED – That the update report on complaints received under the Members’ Code of Conduct be noted.

AG10/17

Proposed Changes to the Constitution (Planning Scheme of Delegation) - Planning Call-in Wording pdf icon PDF 118 KB

Additional documents:

Minutes:

The Chairman invited Mr Tony Quigley to comment on this issue, in his capacity as Chairman of the Constitution Review Working Party, where this proposed change to the Constitution had been considered in detail. Mr Quigley advised that he was fully supportive of the report and its recommendations.

 

Stephen Baughen, the Building Control and Development Manager, explained the background and rationale for the proposed change. He said that, while an earlier version of the Constitution enabled members to call-in a planning application for consideration by the Planning Committee where there was “a significant level of local concern”, this wording had been omitted from the current document.

 

Mr Baughen advised that the proposal to reinstate the ‘local concern’ element had been considered by the Constitution Review Working Party at its meeting held on 10 March 2017. He said that, after that discussion, all members of the Council had been invited to consider the matter and feed in their views to their political groups’ representatives on the Working Party, who had met again on 2 June to examine and agree the final wording of the proposed amendment.

 

Mr Baughen reported that, not only was there unanimous support for the change to be implemented, but it was also agreed to propose that the ‘call-in’ period be amended from “21 days or publication of the weekly planning list, whichever is the latter” to “within five weeks (35 days) of the date that the application is originally made valid”.

 

Mr Baughen said that, to give effect to the above, the Working Party was proposing revised wording to the Constitution in respect of: (i) paragraph 8.1 of Table 3 of Annex C to Part 3 (described in paragraph 2.4 of the report) and (ii) paragraph 5.1 of the Planning Committee Procedure Rules in Part 4 (as set out in paragraph 2.5 of the report).

 

Councillor Ms Palmer asked when the five week period (during which a call-in could be made) would start. Mr Baughen said that this would be from the date when the planning application achieved ‘valid’ status.

 

Councillor Ms Palmer enquired how members of the Council would know when an application had reached the ‘valid’ point. Mr Baughen advised that members would be able to see this from the publication of the weekly planning list, which was (a) e-mailed to them and (b) published on the Borough Council’s website.

 

The members of the Committee signalled their unanimous support for the proposals, which would be submitted to the Full Council on 26 July for final determination.

 

RESOLVED – That, in order to ensure the Constitution is up-to-date and provides for good decision-making, the Full Council be recommended to approve revised wording to:

(a)   Paragraph 8.1 of Table 3 of Annex C to Part 3 of the Constitution, as set out in paragraph 2.4 of the report; and

(b)   Paragraph 5.1 of the Planning Committee Procedure Rules in Part 4 of the Constitution, as set out in paragraph 2.5 of the report.

AG11/17

Proposed Changes to the Constitution - Amendment to Contract Procedure Rules pdf icon PDF 175 KB

Additional documents:

Minutes:

As with minute AG10/17 above, the Chairman invited Mr Tony Quigley to comment on this issue, in his capacity as Chairman of the Constitution Review Working Party, where this proposed change to the Constitution had been considered in detail. Mr Quigley advised on two aspects of the proposal: (i) the one key change being proposed was for contract values within a very low price range, where two quotes would be required instead of only one, as at present – a change which he fully supported; and (ii) he stressed that the whole of the authority’s procurement processes were conducted under the control of internal audit, which provided a high level of reassurance for members.

 

Jane Fineman, Head of Finance and Procurement, summarised the proposal to amend the Council’s Contract Procedure Rules. She advised that there had been some major legislative changes in procurement since the current document had been put in place, which had driven the need to update the rules within which the Borough Council operated. However, Mrs Fineman emphasised that a degree of practicality and balance had also been applied, to ensure that legislative requirements were met while at the same time there was not an unacceptable increase necessary in procurement resources.

 

Mrs Fineman drew attention to the analysis set out in the agenda which showed how Tunbridge Wells compared with 10 other district councils in Kent – as well as with Kent County Council and Rother District – in terms of its revised contract procedure rules. This showed that the proposed thresholds were very much in line with those of other authorities.

 

Members of the Committee indicated their unanimous support for the proposed changes, which were set out in full as an appendix to the report and which would proceed to the Full Council meeting on 26 July for consideration.

 

RESOLVED –

 

(1)        That the updated Standing Orders on Procurement and Contracts, as set out in Appendix A to the report, be approved for inclusion in the Council’s Constitution; and

 

(2)        That the Committee recommends the updated Standing Orders on Procurement and Contracts for approval by the Full Council on 26 July 2017.

AG12/17

Draft Annual Financial Report for 2016/17 pdf icon PDF 179 KB

Additional documents:

Minutes:

Jane Fineman, Head of Finance and Procurement, introduced the draft Annual Financial Report for 2016/17 and stressed that this was unaudited at this stage.

 

Mrs Fineman summarised the headline figures in the accompanying Statement of Accounts, which had been set out in detail as part of the report: (a) the achievement of a surplus of £908k compared to the budget; (b) a decrease of £3m in ‘usable’ reserves; (c) a rise of £9.6m in the value of the authority’s property, plant and equipment; and (d) an increase of £8.2m in the Council’s net liability for future pension costs, an element that Mrs Fineman described as being subject to quite considerable fluctuations on an annual basis but where actual contributions made by the authority were reviewed by actuaries on a triennial basis.

 

Mrs Fineman drew attention to some other key elements of the draft Financial Report. She advised that a number of mortgages which had been provided for residents under an earlier scheme were all due to mature this year. She added that there had been no defaults to date and that the repayment of these mortgages would result in £128k being returned to the General Fund.

 

In respect of business rates, Mrs Fineman advised that with a number of outstanding appeals, there was a potential ‘worst case’ impact of £4.8m, of which £1.9 would fall to the Borough Council’s Collection Fund. She said that it was extremely difficult to calculate a provision for this policy but added that, with the publication of a new ratings list effective from 2017 no further rating appeals could be made on the 2010 ratings list.

 

Mrs Fineman reported that the accounts were due for sign-off by the end of July; she added that the public inspection period was currently under way and that all of the information requested by the external auditors had been provided by the required deadline.

 

The Chairman thanked Mrs Fineman for the clarity of the ‘narrative report’ which formed the first section of the Annual Financial Report and congratulated her – and her team – on meeting all the required deadlines.

 

Councillor Barrington-King sought confirmation that it was the local authority mortgage scheme referred to in the report; Mrs Fineman confirmed that this was the case.

 

Councillor Barrington-King also commented on the business rate appeal process which had brought much consternation because of the way in which the Valuation Office had excluded any local authority involvement in its appeal proceedings, even though it was councils such as Tunbridge Wells that had to deal with its findings. He regretted the lack of transparency over this process.

 

Councillor Neve referred to the ‘officers’ remuneration’ section of the draft Statement of Accounts. He asked if the authority was prepared for any adverse publicity which might arise from publicising the amount of compensation paid to the former Director of Planning and Development, set out on page 116 of the agenda. Lee Colyer, the Director of Finance, Policy and Development, said that this was the  ...  view the full minutes text for item AG12/17

AG13/17

Strategic Risk Review pdf icon PDF 104 KB

Additional documents:

Minutes:

Lee Colyer, the Director of Finance, Policy and Development, presented a risk management report, which described the authority’s arrangements for managing strategic risk. The report provided an update on the evaluated threat level as well as the controls in place for each of the 10 risks identified.

 

Mr Colyer drew attention to the decision by the Council’s Management Board to replace risk scenario 6 from ‘missing something significant (£100k - £250k impact)’ to ‘service interruption’. He added that the rationale for this change was to focus more attention on the risks associated with cyber security, terrorism and extreme weather.

 

With that in mind, Denise Haylett, the Head of Business Support, was introduced to members and invited to report on the key elements of risk scenario 6.

 

Ms Haylett provided a summary of the current controls in place and actions being taken under the ‘service interruption’ risk, which included the most recent tower block fire in London and lessons learnt from a local perspective.

 

Councillor Barrington-King voiced his gratitude for the way in which the IT service had kept members and staff fully informed on how the authority had dealt with the cyber attack/malware virus in May.

 

Mr Quigley noted that the ‘service interruption’ risk had been given a likelihood rating of ‘high’ (4 on a scale of 1-6) but only an impact level of ‘medium’ (2 from a scale of 1-6). He felt that the impact rating should be reviewed and made higher.

 

Ms Haylett advised that, across the county, this had been given an even lower risk assessment rating.

 

In supporting Mr Quigley in his view, the Chairman nevertheless welcomed the change in focus to risk scenario 6 and the proactive approach being taken by the authority.

 

On other aspects of the report, Mr Quigley drew attention to the fact that the authority’s risk management approach was based on the outcome of a workshop facilitated by the authority’s insurers, held in 2013. He felt that plans should be developed to review the current approach.

 

Mr Colyer confirmed that the authority’s insurance contract would shortly be going out to tender, adding that, once the outcome was known, such a review would take place with the successful tenderer.

 

Parish Councillor David Coleman felt that the authority should be examining its degree of risk associated with the RVP shopping centre, bearing in mind the level of its investment. Mr Colyer said that the Borough Council enjoyed the freehold ownership of the centre and had granted a long lease to the current operators, Hermes. He added that when this shopping centre had first been built, the Borough Council had secured a minimum income of £837k per annum by way of ground rent. Mr Colyer said that the current appearance of empty shop units was a managed process by Hermes, ahead of their plans – for which planning consent had been given – for a significant expansion. He added that the expansion plans would not impact on the minimum ground rent agreement the Council  ...  view the full minutes text for item AG13/17

AG14/17

Annual Internal Audit Report and Opinion 2016/17 pdf icon PDF 149 KB

Additional documents:

Minutes:

Rich Clarke, the Head of the Audit Partnership, presented his annual opinion on the overall adequacy and effectiveness of the authority’s framework of governance, risk management and control. He advised that, based upon the audit reviews undertaken in 2016/17 – a summary of which was set out in the full Annual Internal Audit Report circulated with the agenda – he was satisfied that: (a) the authority managed a system of internal control that offered ‘sound assurance on control effectiveness’; (b) the corporate governance arrangements complied in all material respects with ‘guidance on proper practices’; and (c) the authority’s risk management arrangements were effective and provided ‘sound assurance’.

 

Mr Clarke said that the remainder of the Audit Report and Opinion was a summary of the breadth of work which helped to form his formal opinion. He then summarised each section of the report, highlighting the key elements.

 

Mr Gary Shiels drew attention to the ‘Internal Control’ section of the report, starting on page 147, specifically the number of days allocated for ‘risk management support’ (20 planned days) compared with the actual number (five); he asked for further details. Mr Clarke said that, during 2016/17, the focus of the authority’s risk management work had been more aligned with its insurers, hence the reduction in Internal Audit involvement. Mr Clarke added that he expected his service to become more involved in risk management support during 2017/18.

 

Councillor Barrington-King said that, while he had been the Portfolio-holder for Finance and Governance, he had seen at first hand how being part of a shared internal audit service had delivered benefits to the authority. He expressed his appreciation to Mr Clarke and his staff for the effective governance role they played towards the success of the Council.

 

RESOLVED –

 

(1)     That the opinion of the Head of Audit Partnership, which states that, in the view of internal audit, the Council’s system of internal control, corporate governance and risk management arrangements have operated effectively during 2016/17, be noted; and

 

(2)     That the work underlying the opinion and the Head of Audit’s assurance that it was completed with sufficient independence and conformance with Public Sector Internal Audit Standards be noted.

AG15/17

Audit and Governance Committee - Annual Report pdf icon PDF 161 KB

Additional documents:

Minutes:

Russell Heppleston, the Deputy Head of Audit Partnership, introduced the Committee’s Annual Report for 2016/17.

 

Members noted from the proposed Annual Report how having an effective Audit and Governance Committee can deliver the following benefits to the authority: increased public confidence in the objectivity and fairness of the Council’s financial and other reporting; reinforcing the importance and independence of both internal and external audit processes; and increasing the emphasis and awareness of internal control, governance and risk management.

 

Mr Heppleston summarised the key elements of the report. He drew particular attention to a proposed programme of member development, delivered through briefings, which would assist the Committee in understanding the latest progressions in the areas of governance, risk and internal control.

 

Mr Heppleston advised that, once approved by the Committee, the Annual Report would be submitted to the Full Council meeting on 26 July.

 

The Chairman gave her full backing to the proposal for increased training and development; she sought members’ approval to the suggestion that this be delivered by means of ‘short-bite’ briefings at the end of each meeting, where the agendas had appropriate space. Having signalled their approval, members agreed that this should be added to the Committee’s work programme.

 

RESOLVED –

 

(1)     That the proposed 2017/18 Member Development Programme, as set out in the Annual Report in Appendix A to the report, be approved;

 

(2)     That the Audit and Governance Committee Annual Report for 2016/17 be approved; and

 

(3)     That the Chairman of the Audit and Governance Committee presents the report to the meeting of the Full Council on 26 July to demonstrate how the Committee has discharged its duties.

AG16/17

Planned Audit Fee 2017/18 pdf icon PDF 109 KB

Additional documents:

Minutes:

Lee Colyer, the Director of Finance, Policy and Development, reported on the planned audit fee for 2017/18, as notified by the authority’s external auditors, Grant Thornton. He added that the scale of fees had been set by Public Sector Audit Appointments (PSAA) Limited.

 

Mr Colyer advised that the fees for 2017/18 had been set at £51,230, which was unchanged from the previous year.

 

Darren Wells, the ‘Engagement Lead’ for Grant Thornton, was in attendance, to expand on any aspects of the proposal, should members have any questions about the scale of fees for the year ahead.

 

Rich Clarke, the Head of Audit Partnership, provided a further update on the procurement of an external auditor from 2018/19, under the changed system of appointments introduced by the Government. He advised that all but one of the district councils had agreed to follow the ‘opt-in’ route, under which the PSAA had been specified by the Secretary of State as an ‘appointing person’ for external audit services.

 

Mr Clarke added that Grant Thornton had been selected by PSAA as one of the auditors who would be allocated a specified parcel of work, with the actual appointment to local authorities to be determined by the end of July. He said that the process would provide local authorities with the opportunity to object to the appointment of their specific auditor, with final confirmation taking place by the end of November.

 

Mr Clarke said that the appointments would not necessarily be allocated on a geographical basis, adding that they would be for a five-year period. He also said that PSAA had stated that external audit fees under this new system would fall by an average of 18%.

 

Mr Clarke added that he would make further update reports to the Committee; the Chairman asked that this topic therefore be added to the work programme for at least the next two meetings.

 

RESOLVED – That the planned audit fee for 2017/18 be agreed.

AG17/17

Future Work Programme pdf icon PDF 26 KB

Minutes:

The Committee’s work programme was presented for members’ information.

 

It was noted that there were two additions to make, arising from issues discussed at this meeting: (a) further updates on the procurement of an external auditor (Minute AG16/17 above); and (b) ‘short-bite’ training sessions to be added (where the agenda allows), starting with the 25 July meeting (Minute AG15/17 above).

 

RESOLVED – That, with the above additions, the work programme be noted.

AG18/17

Urgent Business

The Democratic Services Officer will advise if there have been any urgent items of business which have arisen for the Committee’s consideration since publication of the agenda.

Minutes:

The Democratic Services Officer advised that there were no additional items for the Committee’s consideration which had arisen since the publication of the agenda.

AG19/17

Date of Next Meeting

Minutes:

It was noted that the next meeting of the Committee would take place on Tuesday 25 July at 6.30pm.