Agenda and minutes

Venue: Committee Room 1 - Bromley Civic Centre. View directions

Contact: Steve Wood  020 8313 4316

Items
No. Item

13.

APOLOGIES FOR ABSENCE AND NOTIFICATION OF SUBSTITUTE MEMBERS

Minutes:

Apologies were received from Councillor Nicholas Bennett; Councillor Russell Mellor attended as substitute.

 

Apologies were also received from Councillor Steven Wells, Councillor William Huntingdon Thresher attended as substitute.  

14.

DECLARATIONS OF INTEREST

Minutes:

Councillor Fawthrop declared an interest as his wife was employed by Bromley Adult Education.

 

Councillor Reddin declared an interest as a governor of St Olave’s School, and as the parent of a child at Warren Road Primary School.

 

Councillor Fawthrop declared an interest as the parent of a child attending a Bromley school.

 

Councillor Onslow declared an interest as he worked for the Zurich Insurance Company.

 

Councillor William Huntingdon Thresher declared an interest as a Member of the scrutiny panel of Affinity Sutton Homes.    

15.

CONFIRMATION OF THE MINUTES OF THE MEETING HELD ON 25th JUNE 2014 EXCLUDING THOSE CONTAINING EXEMPT INFORMATION pdf icon PDF 269 KB

Minutes:

RESOLVED that the minutes of the meeting held on the 25th June 2014

(excluding exempt information) be confirmed.

16.

QUESTIONS BY MEMBERS OF THE PUBLIC ATTENDING THE MEETING

In accordance with the Council’s Constitution, questions to this Committee must be received in writing 4 working days before the date of the meeting.  Therefore please ensure questions are received by the Democratic Services Team by 5pm on 21st November 2014.

 

Minutes:

No questions had been received.

17.

MATTERS OUTSTANDING FROM THE LAST MEETING pdf icon PDF 167 KB

Minutes:

Report CSD 14119

 

There was a previous issue noted regarding the rate of compliance with the Full Budget Monitoring Process. It was noted that the rate of compliance had increased to 92%, and so this matter could now be closed.

 

The other matters raised in the Matters Arising report were either implemented or covered within the Internal Audit Progress Report or the Internal Audit Fraud and Investigation.

 

RESOLVED

 

(1) that the Matters Arising report be noted.

18.

ANNUAL AUDIT LETTER & LETTER OF REPRESENTATION pdf icon PDF 110 KB

Additional documents:

Minutes:

The Committee were updated with respect to the Annual Audit Letter and the Letter of Representation. It was noted that the Committee normally received the Annual Audit Letter, and that this document summarised the work of the external auditors PWC, for audit work taken in 2013/14. The Letter of Representation was noted by the Committee. The letter detailed the key undertakings given by the Director of Finance to the External Auditors. 

 

Members were informed that the 2013/14 external audit could not be concluded (and the relevant certificate issued) as there had been an objection to the 2012/13 accounts in relation to the Authority’s parking enforcement contract. 

 

The Committee were informed that the auditors had issued an unqualified opinion of the accounts, and that they had made four recommendations:

 

·  use of a pension bank account

·  refresher training to be provided to surveyors regarding accruals

·  amending and review of bank mandate

·  recommendations relating to pension leavers on the administration system

 

With respect to fees, Members heard that the expected fee for dealing with the objection relating to parking enforcement had increased to approximately £32,000--£35,000. The total of the external audit fees was expected to be in the region of £193,000. It was explained to Members that the Annual Audit Letter was a requirement under the Audit Code of Practice, and Statement of Responsibilities of Auditors and Audited Bodies. 

 

The Committee heard that there were four main areas that the auditors wished to highlight:

 

1) The audit raised concerns with how the Authority was going to manage its projected medium term budget gap. It was estimated that the budget gap in 2017/18 would be in the region of £53.1m.

 

2) The way that the Authority accounted for the capitalisation of fixtures and fittings was not in line with Accounting Standards 

 

3) The Authority’s pension liability was the most significant estimate. The 2013 triennial valuation calculated that the pension deficit at that time was in the region of 18%. To recover the pension deficit over 15 years, it was recommended that the employer contribution rate be set at 15.3%, and that an annual lump sum past-deficit contribution, be set at £5.9m. 

 

4) It was noted that from 2013/14 there had been changes to the accounting for defined benefit schemes and termination benefits. The auditors considered that these changes had been dealt with adequately.

 

Councillor Mellor was of the opinion that it may be prudent to have a separate bank account for the Pension Fund.  Members enquired:

  • What the estimated cost of setting up a separate pension bank account would be
  •  Confirmation that there were robust controls to ensure that the fund was ring fenced to pension related transactions.  

 

These questions were subsequently emailed to the Director of Finance for clarification, and an update will be provided to Members in due course.

 

RESOLVED:

 

1) that the Annual Audit Letter from PWC, the External Auditors, be noted

 

2)  that the Letter of Representation from the Director of Finance be noted

19.

INTERNAL AUDIT PROGRESS REPORT pdf icon PDF 434 KB

Additional documents:

Minutes:

Report: CEO 1402

 

I.  Transforming Community Equipment Services.

 

The Committee were reminded that previously, audit had identified three priority one recommendations in this area. These areas were Invoicing, Stock/Reconciliation and Charges/Contract monitoring.  The Committee were provided with a detailed update, and it was noted that good progress had been made. Members heard that previously, Internal Audit had recommended that a more robust method of checking orders and invoices be introduced in compliance with financial regulations, and that these recommendations had been acted upon.

 

The Committee were informed that finance had developed new electronic systems to check and to identify discrepancies between orders and invoices, and that as a result of changes recommended by Internal Audit, there had been improvements in the speed of delivery of community equipment.

 

It was agreed by the Committee that the recommendations concerning invoices could now be regarded as implemented.

 

The Committee then proceeded to look at the issues concerning stock reconciliation and stock charges. It was clarified that “non stock” items were simply items that were non-standard, and were not in stock. The Committee were informed that management had acted upon recommendations, and had visited the depot to initiate a reclassification of non stock items to stock items. This process had resulted in a credit to LBB by the contractor of almost £2,000. Other administrative checks had been put in place to increase efficiency and accuracy, and as a result, the Committee regarded the previous recommendations as implemented.

 

The Head of Internal Audit updated the Committee with respect to the previous problems that had been noted with contract monitoring. In view of the recommendations that had been actioned, Members agreed that the recommendations be regarded as implemented.

 

II.  Looked after Children

 

The Committee went on to discuss the two priority one recommendations that had previously been highlighted regarding payment authorisation and the timely completion of assessments, reviews, and Care Plans. It had been revealed in the most recent audit, two out of the last five cases audited did not have a current care plan, and it was therefore considered that more work was required from management to rectify these issues. It was agreed that this would be tested and reported to the next meeting of the Audit Sub Committee. 

 

III.  Main Accounting System

 

  It was highlighted at the previous meeting of the Audit Sub Committee that  the percentage of budget holders actively participating in the full budget monitoring process was statistically low, around 26% to 64%. It had been decided that if future monitoring revealed participation levels below 85%, then this could result in Chief Officers being called before the Audit Sub Committee to explain why this was the case. It was noted at the Committee that this figure now stood at 92% compliance and the recommendation was considered to have been implemented.

 

 

IV.  Learning Disabilities Follow Up

 

Members were reminded that previously, sixteen recommendations had been made in this area, and twelve of these were priority one; the previous audit had resulted in a  ...  view the full minutes text for item 19.

20.

QUESTIONS ON THE AUDIT SUB COMMITTEE BRIEFINGS

The briefing comprises:

 

·  Parking Income Audit

·  Dorset Road Infants Audit

·  Final IT Licences

·  Keston Church of England School-Pre Academy Closure

·  Learning Disabilities Audit

·  Purchase Card Audit

·  Princes Plain Primary School Audit

·  Lessons Primary School Audit

·  PCN Audit Report

·  Housing Benefit Audit

·  Castelcombe Primary School

·  Troubled Families Audit

·  Essential Car User  Audit

·  Family Placements Audit

·  Final CRC Internal Audit Report

·  St Olaves Audit

·  Agency Staff Audit

·  Council Tax Audit

·  Leaving Care Audit

·  St John’s Audit

·  Single Person’s Discount Audit

·  Scott’s Park Academy

·  Southborough Primary School

·   SEN Transport Audit

·  Treasury Management Audit

 

 

Members and Co-opted Members have been provided with advanced copies of the briefing via email.  The briefing is also available on the Council website at the following link:

 

http://cds.bromley.gov.uk/ieListDocuments.aspx?CId=559&MId=5183&Ver=4

 

 

Minutes:

The following question was raised by Councillor Ian Dunn prior to the meeting:

 

A number of the reports mention lack of processes and procedures and untrained staff. How does the Council ensure that it does have proper processes in place and that staff are properly trained? Is there some sort of project methodology whereby any business change project has standard deliverables of approved processes and trained staff? Also, how do we obtain this assurance when the process is being carried out by a contractor?

 

 

The answer to this question was provided by the Head of Audit:

 

Any audit recommendations--whether it is to do with processes, procedures, client monitoring, document retention and quality/lack of reporting made by Internal Audit, are followed up by us to ascertain progress on implementation. This would include evidence of action by management, testing on our part and interview of key staff. Therefore in the query you raised on processes being implemented by a contractor, we would look for evidence such as contractor/client meeting minutes that the client side had raised this, and it had been implemented by the contractor. If this was not readily available we would test the process ourselves as we would have rights of access to information.

 

The follow up process is that if it is a priority one issue reported to Audit Sub Committee we test within six months if possible. Priority two and three recommendations are followed up within a year span or at the next audit if it is an annual audit which most major systems such as creditors, debtors, council tax are.

 

21.

LOCAL GOVERNMENT ACT 1972 AS AMENDED BY THE LOCAL GOVERNMENT (ACCESS TO INFORMATION) (VARIATION) ORDER 2006 AND THE FREEDOM OF INFORMATION ACT 2000

  The Chairman to move that the Press and public be excluded during consideration of the item of business listed below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

22.

EXEMPT MINUTES OF THE MEETING HELD ON THE 25TH JUNE 2014

Minutes:

The exempt minutes of the previous meeting of the Audit Sub Committee held on the 25th June 2014 were agreed.

23.

INTERNAL AUDIT , FRAUD & INVESTIGATION REPORT

Minutes:

This report was written to inform Members of recent internal audit activity on fraud and various other investigations across the council. The report provided updates on previously reported cases, expanded on cases of interest, detailed cases on the fraud register, provided information on the forthcoming 2014 National Fraud Initiative exercise, and detailed the reasons given for exemptions sought for not publicising two investigation reports.

 

These minutes are not published here as they are Part 2 (Private) reports.

 

RESOLVED:

 

(1) that the Internal Audit Fraud and Investigation Report be noted

 

 

(2) that the Committee agree the two exemptions from publication being sought    

 

Original Text: