Agenda and minutes

Councillor Simon Fawthrop recorded apologies for lateness.

Councillors Julian Grainger and Stephen Wells declared personal interests in relation to the Local Government Pension Scheme and as local authority appointed school governors.

During consideration of the Internal Audit Progress Report, in relation to the Debtors, Councillor Simon Fawthrop declared a personal interest as an employee of a utility company.

To hear questions received in writing by the Legal, Democratic and Customer Services Department by 5pm on Tuesday 30^th November 2010 and to respond.

No questions were received.

RESOLVED that the minutes of the meeting held on 16^th September 2010 be confirmed.

The following outstanding matters were discussed:-

(a)  Waivers (Minute19(h), 16^th September 2010)

Members noted that a report would be considered by the Sub-Committee every six months.  As the Sub-Committee had last considered a report in September 2010, the next report should be presented in March 2011 however, the Deputy Chief Internal Audit explained that the report may be presented in June 2011.

(b)  Risk Management (Minute 19(I), 16^th September 2010)

The Chairman noted that the one page guide to risk management had been circulated amongst appropriate officer networks and suggested that this could now be removed from the matters outstanding.

This report is also due to be considered by the Executive on 8^th December 2010. The accompanying documents, the 2009/10 report to those charged with governance and the 2009/10 Annual Audit Letter, are being circulated under separate cover.   

Report DR10108

The Sub-Committee considered a report summarising the results of the external audit work undertaken by PriceWaterhouseCoopers for the 2009/10 audit.  The report set out:

- Matters arising from their audit of the financial statements, including the pension fund accounts, which they are required to report to Members under the Audit Commission’s Code of Audit Practice and International Standard on Auditing (UK & Ireland) 260 - “Communication of audit matters with those charged with governance”
- The results of their work under the Code of Audit Practice, to support the Value for Money conclusion
- Any changes to the audit plan(s) presented to Members in November 2009
- An audit fee update.

The auditors had also prepared the Annual Audit Letter to provide a high level summary accessible for members and other interested stakeholders. The matters reported in their Annual Audit Letter were those that they considered were the most significant for the Authority and a summary of the key recommendations that they had made could be found in Appendix A of the letter attached to the report.

Representatives from PriceWaterhouseCoopers attended the meeting and answered Members questions.  During questioning the Sub-Committee was told that during the external audit process internal audit processes and controls had been reviewed.  External auditors worked closely with the Council’s internal audit department and information gathered through this process had been used to develop testing for the financial statement audit.

The Chairman asked the External Auditors for their observations on International Financial Reporting Standards (IFRS).  The Auditors explained that IFRS was a significant exercise and LBB had been making good progress on the standards for having work completed in time for the publication of the 2010/11 accounts.

The Sub-Committee considered the importance of Value for Money (VFM) and the External Auditors stated that it was good that the Council’s Internal Audit had a role in monitoring VFM.  In terms of reviewing use of resources, the Auditors reported that they would be undertaking targeted VFM work and as part of this they had to assure themselves that the Council had processes in place to monitor the use of resources.  A Member of the Sub-Committee asked the Auditors to comment on use of resources work as, despite a reduction in the work that was required, the fee for the work had remained the same and had not reduced.  The Auditors explained that the work reported in the financial statement was work that had been undertaken in 2009, prior to the requirements being reduced.  For 2009/10 the Auditors had undertaken all the work required for the use of resources report, however the requirement to publish the report had been withdrawn.  The Director of Resources had been provided with the indicative scores for the Council. The fee for this year’s work on use of resources would be reported in the 2010/2011 financial statement.

Referring to the Key Lines of Enquiry and the issue of financial reporting, a Member of the Sub-Committee asked who the stakeholders were and how the  ...  view the full minutes text for item 30.

Report DR10103

The revised Code of Corporate Governance had been drafted by officers and was issued for consultation with the Standards Committee and the Audit Sub-Committee.  The revised Code incorporated the additional governance requirements resulting from CIPFA’s Statement on the Role of the Chief Financial Officer in Local Government (2010). It also provided a framework for ensuring that the Annual Governance Statement reflected compliance with the CFO Statement.

Councillor Grainger expressed reservations regarding the four key roles of the Local Authority listed in paragraph 3.2 of the report as he did not feel that the roles listed were core priorities for Bromley.  Referring to paragraph 3.6 of the covering report, Councillor Grainger also stressed that it was the Council that decided the arrangements for the proper administration of its financial affairs.

The Sub-Committee reviewed the changes that had been made to the Corporate Code of Governance:

Page 21:  The Constitutional Improvement Working Group had produced four reports and not three as stated.

Page 23:  Referring to the first supporting principle, Councillor Grainger suggested that this should be listed as a matter outstanding.  There were 64 functions in the Schedule of Delegations that remained unclear as they were listed under ‘Leader/Council’.  As a result of this the principle of being clear about executive and non-executive functions was not being achieved.

Page 24:  Referring to the second shaded section, the Director of Resources explained that the amendment clarified that the Director of Legal, Democratic and Customer Services was also the Monitoring Officer.  The Sub-committee suggested that to ensure clarity the amendment should read: …the Director of Legal, Democratic and Customer services (who is currently the Monitoring Officer)…

Page 28:  Referring to the fifth shaded section, the Sub-Committee suggested that the paragraph should be amended to read: …are provided with appropriate financial training and tools on an ongoing basis…

RESOLVED that the amendments outlined above be agreed and the revised Code of Corporate Governance be noted.

  3.1    Outstanding Matters

3.2  Use of Cash Payments across the Council

  3.14  Previous Priority One Recommendations

  3.17  Progress and new issues since the last meeting

  3.23  Value for Money (VfM)

3.26  Current Matters

3.27  New Priority One Recommendations

3.44  Officer expenses

3.47  Housing Benefit Update

3.50  Publicity of Housing Benefit cases

3.57  Housing Benefit - future proposals

3.67  Partnership Working

3.77  Risk Management 

Report DR10100

The Sub-Committee considered a report that informed Members of recent audit activity across the Council and provided updates on matters arising from the last Audit Sub Committee.  The following matters were raised in particular:

(a)  Use of cash payments across the Council

Members received an update on the use of purchase cards and pre-paid cards.  The Sub-Committee heard that the value of transaction on the cards was between £40 and £200.  The cards could be used for payments on travel, sundry items, hotel accommodation and internet purchases.  Members heard that there was a transparent process for monitoring usage of the cards with line managers, internal audit, corporate procurement and the finance department authorised to monitor the use of the cards.  Purchase cards were also paid every month which meant that no outstanding balance remained on the cards.

The Sub-Committee considered moving to an Oyster card based scheme for the pre-paid cards for young people leaving care.  Members felt that the use of Oyster cards would be a natural progression as young people would have experience of using Oyster cards.  The Head of Corporate Procurement stressed that young people were free to spend the money on the pre-paid cards as they wished.  The Director of Resources suggested that the use of Oyster cards would have to be explored further in the future.

The Sub-Committee were told that personalised cards would be rolled out from the end of January 2011.  In terms of the pre-paid cards for CYP a contractor had been appointed and the project would commence in January 2011.

The Head of Corporate Procurement stressed that the system of purchase cards would provide the Local Authority with better procurement intelligence and would provide all the information the Council needed in developing a procurement strategy.

RESOLVED that the Sub-Committee receive an update report on purchase cards and pre-paid cards in December 2011.

(b)  Previous Priority One Recommendations

(During consideration of this item Councillor Simon Fawthrop declared a personal interest as an employee of a utility company and the parent of a child in a Bromley school.)

(i)  Debtors

Referring to paragraph 3.16, Councillor Julian Grainger suggested that it would be helpful to have more detailed information on the debtors in each of the subsets listed in Appendix (i) as this would allow Members to have a clearer picture of whether debts were decreasing or increasing in each subset.  The Head of Benefits and Revenues responded that the detailed information was reported to the Executive and Resources PDS Committee but suggested that a more sophisticated data set could be provided to the PDS Committee in future.

Referring to Appendix (i) a Member asked what action had been taken to resolve the dispute between the school and department.  The Head of CYP Finance reported that the dispute related to fees due to the Property Division.  Following further investigation the Head of CP Finance would report back to the Sub-Committee.  Members also suggested that a report should be  ...  view the full minutes text for item 32.

  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 the Press and public be excluded during consideration of the items 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.

The exempt minutes of the meeting held on 16^th September 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 from the last Audit Sub Committee meeting. 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).