Agenda and minutes

No apologies for absence were received.

The Chairman welcomed Mr. Rob Carling, Head of Finance, Children and Young People Services to his last meeting for Bromley Council before moving to a new post. He offered congratulations and thanks to Mr. Carling for all his hard work for the Council.

Councillor Stephen Wells declared a personal interest in relation to the fact that his mother-in-law was a client of the Council’s CareLink Service.

Councillors Reg Adams, Nicholas Bennett, Simon Fawthrop, Julian Grainger and Stephen Wells declared personal interests in relation to the Local Government Pension Scheme.

Councillors Reg Adams, Lydia Buttinger, Simon Fawthrop, Julian Grainger and Stephen Wells declared personal interests as school governors.

Councillor Simon Fawthrop declared a personal interest as the parent of a child at a Bromley secondary school.

RESOLVED that the minutes of the meeting held on 6^th December 2010 be confirmed.

To hear questions received in writing by the Legal, Democratic and Customer Services Department by 5pm on Thursday 10^th March 2011 and to respond.

No questions were received.

Councillors were advised of matters outstanding from previous meetings and the progress made.

It was noted that those items on Appendix 1 of the report marked “complete” would be removed from the report unless Members stated a reason for that item to remain.

RESOLVED that progress with matters outstanding from previous meetings be noted.

The report informed Members of the Internal Auditor nominations for “Auditor of the Year”. The successful winner would be presented the award by the Mayor.

Officers were asked if the three nominees set out in the report had (a) all gone above and beyond the call of duty; (b) had identified something of great significance or (c) had raised the profile of Value for Money (VfM). Councillors were advised by the Chief Internal Auditor that all the nominees had gone above and beyond the call of duty otherwise the officer would not have been nominated. In the officer’s opinion, Nominee B had identified something of great significance and Nominee C had been instrumental in bringing about a new venture in the Greenwich Council partnership.

Councillor Fawthrop proposed, and was seconded by Councillor Wells, that Nominee B be awarded the Auditor of the Year Award for 2010/11. The vote was unanimous.

The Chief Internal Auditor thanked the Chairman for introducing this initiative.

RESOLVED that:

(a)  Nominee B, as set out in the report, be awarded the Auditor of the Year Award 2010/11 by the Mayor at the annual meeting of the Council on 11^th May 2011; and

(b)  all nominees be commended for their excellent work for the Council.

The report advised Councillors of the first annual report summarising the results of the external auditor’s 2009/10 grant claim certification work. The purpose of the letter was to provide a high level overview of the results of the certification work that had been undertaken at the Council.

The Chairman welcomed Ms. Janet Dawson and Mr. Stuart Brown from PriceWaterhouseCoopers (PWC), the Council’s external auditors, to the meeting.

Following the Government’s announcement of the abolition of the Audit Commission, the Sub-Committee asked about the Commission’s current position and, after the abolition, whether the Council would be responsible for appointing its own external auditors. Ms. Dawson responded that the complexity of dismantling the Commission had been severely underestimated. The dismantling would involve redundancies and associated costs and the planning for moving forward into a new regime. A great deal of work was being undertaken together with consultations. The Audit Commission was also fighting a rearguard action in a bid to survive. The local government transfer was not as clear as had been hoped and the remit had yet to be decided.  PWC was currently contracted to the Commission but would also be interested in continuing to participate in any future marketplace.

The Chairman asked a question in relation to the fees paid by the Council to PWC and was advised that fees were set by the Audit Commission. However, when the Commission was dismantled, the Council could then negotiate its own fees. For clarity, Ms. Dawson reported that 30% of the fees paid to PWC were passed on to the Commission. In future, this could possibly be a saving benefit for clients.

The Chairman asked about the testing in relation to children in care affordability 1 and 2 grants which had been spent. Mr. Brown elucidated there was a recommended certification specification to be applied during a grant application process which officers needed to be briefed about.  However this was not a significant issue.

The contrast in opinions regarding the Housing and Council Tax Benefit Subsidy was raised and the external auditor explained that this arose because of the follow up to recommendations made last year when the system had been improved to allow documents to be more easily retrieved.

The Vice-Chairman asked about the amended value of claims and how the Council benchmarked against other local authorities. She was advised that most councils were very good at putting together grant claims as they were very familiar with the process. Only small errors had been found and this was very encouraging.

RESOLVED that the report be noted.

The Sub-Committee was informed of the external audit activity for 2010/11 annual audit plan and pension fund plan. The External Audit Plan had been prepared to inform officers and Members about the responsibilities the external auditors have and how they planned to discharge them.

In response to a question, the external auditor explained that the annual audit for each local authority complied with national standards. However the approach could be slightly varied based on perceived risk. The external auditors would look at the tri-annual valuation and maybe use this information to reduce the work of the annual audit.

A Councillor asked if PWC would make comment on their methodologies to the Pensions Investment Sub-Committee as it would be significant because of the pension recovery plan. PWC advised that they would comment but only within the scope of audit.

The Chairman thanked Ms. Dawson and Mr. Brown for attending the meeting and answering Members’ questions and noted that they would next be attending the September 2011 meeting of the Sub-Committee.

RESOLVED that the report be noted.

         3.1  Outstanding Matters

  3.11  Previous Priority One Recommendations

  3.15  Debtors

  3.18  Progress and new issues since the last meeting

  3.24  Waivers

  3.32  Value for Money (VfM)

3.46  Current Matters

3.47  New Priority One Recommendations

3.49  Housing Benefit Update

3.52  Partnership Working

3.54  Risk Management 

The report advised of the recent audit activity across the Council and provided updates on matters arising from the last meeting of the Audit Sub-Committee in December 2010.

(a)  Notification of Fraud Prosecutions to Benefits Claimants (Appendix A)

The Chairman drew Members’ attention to Appendix A which was a leaflet that would be sent to all residents who received the Council’s annual benefit statement. The leaflet, which appeared in the agenda as black and white, would be reproduced in the Council’s corporate logo colours.

The Sub-Committee commented on the design and wording of the leaflet and whilst some felt that the wording setting out the risk of prosecution for fraudulent behaviour was not strong enough, many others felt that the leaflet’s message was couched in the correct wording, used the right tone, and assumed that most recipients were not of a criminal frame of mind. It was suggested that the line “Help your Council to protect your public funds” be highlighted. After a few more design suggestions, the Chairman asked that Officers change the leaflet as they felt necessary in light of Members’ comments.

RESOLVED that officers be authorised to amend the leaflet attached at Appendix A of the report as appropriate.

(b)  Reclaiming Staff Costs for Successful Prosecution

The Chairman advised that a progress report on this subject would be submitted to the Sub-Committee at its meeting in March 2012.

RESOLVED that a report on the Reclamation of Staff Costs for Successful Prosecutions to be submitted to the March 2012 meeting of the Audit Sub-Committee.

(c)  Housing Benefit Future Proposals

The Chairman drew Members’ attention to a letter he had sent to Lord Freud on this subject and agreed to circulate it to Members of Parliament for the Borough.

RESOLVED that the letter written by the Chairman of the Audit Sub-Committee to Lord Freud be circulated to all Members of Parliament for the Borough.

(d)  Officer Expenses

The Sub-Committee was advised that the perceived increase in staff expenses within Children and Young People Services was as a result of payments previously being paid from petty cash and payments now being paid through the payroll system.  The Head of Finance (CYP) stated that all managers had been informed that staff expenses should be claimed through payroll in future.

(e)  Progress and New Issues Since the Last Meeting

A question was raised in relation to schools applying for academy status and those schools not having internal audits carried out by the Council. The Head of Finance (CYP) advised that the government had discontinued the rules for financial management in schools in November 2010. Schools would still be required to have an audit but they would not be obliged to buy services from the Council. It was noted that private accountants could carry out systems audits. Members asked if schools would save money if they did not use the Council services and whether the Council audit was considered “too tough”. The Chief internal Auditor advised that the feedback  ...  view the full minutes text for item 44.

The Director of Children and Young People (CYP) Services had submitted a series of report updates on the Government’s reform agenda for education, schools and wider children’s services to meetings of the Children and Young People Policy Development and Scrutiny (PDS) Committee (20.07.10, 07.09.10, 30.11.10, 24.01.11 and 22.02.11). The reports provided an overview of the policy direction and key areas for reform with particular focus on the academies agenda.

Members received a report that provided an update on the Academy Programme, developments within Bromley and the potential strategic implications for the Council.

The Chairman asked why so many schools were applying for academy status in Bromley. The Director explained that there were five main drivers:

1.  the overall good performance of schools which placed Bromley in the top quartile nationally;

2.  ranking by Ofsted as Outstanding or Good with Outstanding Features gave schools the automatic right of conversion from the Secretary of State for Education; 

3.  the Borough already had the highest percentage of Grant Maintained (GM) schools and it was a relatively short step to gaining academy status from GM;

4.  a high number of head teachers in Bromley were accredited as National Leaders of Education;

5.  the autonomy and perceived increased funding offered by academy status were seen by many schools as very attractive. 

The Director confirmed that the momentum of academy conversions during 2010/11 had placed the Borough in a  unique position in the UK with a very high number of schools pursuing both individual academy conversion and ‘clusters’ of schools forming academy trusts.

The Borough’s Chief Executive advised the Sub-Committee that so far 16 out of 17 secondary schools and 7 primary schools had applied for academy status.

The Director of CYP replied to a question about financial liability by advising that the Council retained statutory responsibility for a number of functions including place planning, admissions, children out of school, Special Educational Needs (statemented children) and Pupil Referral and Behaviour Support Services.  The Council would retain these functions irrespective of schools’ status.

Members were advised that a Commercial Transfer Agreement (CTA) must be completed to include the transfer of liabilities relating to staff, pensions, land and building assets and, in the case of some schools, dual use facilities and Special Educational Needs (SEN) units. The purpose of the CTA would be to protect the Council against any risks or financial liabilities and secure the Council’s future interests in the case of dual use and SEN provision.

It was noted that in the case of the five schools that had already received formal approval to convert to academy status, the CTA’s had yet to be signed off to the satisfaction of the Council.  Officers were asked if it was appropriate for the Children and Young People PDS Committee to consider the risk analysis relating to academy status. The Director confirmed that regular reports on the academy programme had been submitted to the CYP PDS Committee and the Portfolio Holder for  ...  view the full minutes text for item 45.

Appendix 1 to follow.

The Sub-Committee considered the internal audit plan for 2011/12.

The issue of not having to provide an audit service to those schools converting to academy status was raised. The Chief Internal Auditor responded by confirming that the Council’s Audit team would carry out the closure audit on these schools. If the schools no longer required the services of the Audit Team then resources would be redirected accordingly. The officer felt that redundancies could be avoided as the service had already had to find 25% cuts as part of the savings options so had already reduced staff numbers. If the service could not provide a certain minimum number of audit days then the service could not provide an appropriate level of assurance. The officer was always happy to receive suggestions regarding issues that required an audit.

The Deputy Chief Internal Auditor pointed out that in addition to the 25% savings, a further cut of £30k was being clawed back by Children and Young People Services from the audit budget due to the abolition of FMSiS.

The Chairman asked if anyone would like to be sent a link to the comprehensive Audit Manual. It was suggested that a paper copy be placed in the Members’ Room. This was agreed subject to Members understanding that information contained in electronic links within the document would not be available.

With regard to Appendix A and the number of audit days allocated, it was noted that some subjects seemed to attract a disproportionate number of days. The Chief Internal Auditor advised that the number of days allocated to each subject was built up from previous experience where available.

The Sub-Committee was advised that a Councillor had noticed that the Hospitality Register and the Members’ Interest register were not always completed correctly. This was especially true of the Members’ interest form with subjects such as owning a property within the Borough and political party membership often being left blank. The Chief Internal Auditor agreed to look into this matter.

RESOLVED that the Internal Audit Plan for 2011/12 be noted.

  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.

RESOLVED that the Press and public be excluded during the consideration of the items of business referred to 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.

The exempt minutes of the meeting held on 6^th December 2010 were confirmed.

The Sub-Committee considered a report informing Members of recent Internal Audit activity on investigations across the Council and providing an update on matters arising since the last meeting of the Audit Sub-Committee. The report detailed new areas investigated, expanded on cases of interest, detailed the cases on the fraud register and provided a further update on the results of the National Fraud Initiative (NFI).