Agenda and draft minutes

Venue: Committee Room 1 - Bromley Civic Centre

Contact: Steve Wood  020 8313 4316

Items
No. Item

49.

APOLOGIES FOR ABSENCE AND NOTIFICATION OF SUBSTITUTE MEMBERS

Minutes:

Apologies for absence were received from Councillor Stephen Wells.

50.

DECLARATIONS OF INTEREST

Minutes:

Councillor Robert Evans declared an interest as a Governor of Saint Olave’s School.

51.

CONFIRMATION OF THE MINUTES OF THE MEETING HELD ON 15th JULY 2020--EXCLUDING THOSE CONTAINING EXEMPT INFORMATION pdf icon PDF 328 KB

Minutes:

The minutes of the meeting that took place on the 15th of July 2020 (excluding exempt information), were noted and agreed as an accurate record.

52.

QUESTIONS TO THE AUDIT SUB COMMITTEE

In accordance with the Council’s Constitution, questions that are not specific to reports on the agenda must have been received in writing 10 working days before the date of the meeting. So questions to the Audit Sub-Committee that are not specific to the agenda, should have been received by Democratic Services by 5.00pm on Tuesday, October 20th.   

 

Questions specifically concerning reports on the agenda should be received within two working days of the publication date of the agenda.  Please ensure that questions specifically regarding reports on the agenda are received by the Democratic Services Team by 5pm on Wednesday 28th October.

 

Minutes:

No questions were received.

53.

QUESTIONS ON THE AUDIT REPORTS PUBLISHED ON THE COUNCIL WEBSITE

Please ensure that any questions pertaining to the audit reports published as Information Briefings on the Council website are received by 5.00pm on Wednesday, 28th October. 

 

The Information Briefing consists of:

 

 

The information briefing has been published on the Council website on the following link:

 

https://cds.bromley.gov.uk/ieListDocuments.aspx?CId=559&MId=7042&Ver=4

 

 

 

Minutes:

No questions had been received concerning the internal audit reports that had been published on the Council website.

54.

ANNUAL AUDIT LETTER pdf icon PDF 202 KB

Additional documents:

Minutes:

Janet Dawson from Ernst & Young attended the meeting to provide the update regarding the Annual Audit Letter from the external auditors.

 

The Committee noted that the Council’s external auditors were required to issue an annual audit letter to the Council following completion of their audit procedures for the year ended the 31st of March 2019.

 

Ms Dawson referred to Ernst and Young's Annual Audit Letter and the relevant key points contained therein and explained that this related to the audit undertaken for year ending 31st of March 2019. The letter outlined the work that had been undertaken and the key points and issues raised. The main findings of the audit had been reported back to the General Purposes & Licencing Committee .

 

The Chairman referred to page 22 of the agenda which was Ernst and Young's executive summary. This highlighted issues that could impact on Ernst & Young’s risk assessment--being defined as ‘disclosures on going concern.’ The commentary indicated that financial plans for 2020/21 and medium-term financial plans would need revision because of the impact of COVID-19. Ernst and Young considered that the unpredictability of the current environment could give rise to a risk that the Council would not appropriately disclose the key factors relating to ‘going concern’. The Chairman asked for more clarity on what this meant. Ms Dawson explained that Ernst & Young were reporting on the accounts ending in March 2019, but approval for those accounts was not signed off until August 2020. Ms Dawson said that as the accounts had been signed off late, then they had to note a possible impact that Covid 19 may have had on the Council’s accounts and financial position.

 

The Chairman enquired, (with respect to the matter of ‘going concern’), if Ernst & Young would treat the Council differently from a private sector company, as the Council may have access to funds that would not be available to a private company. Ms Dawson responded that the requirements for auditors were set out in the International Auditing Standards—they applied equally to the Council as they would to a corporate entity. The Government had issued guidance known as ‘practice note 10’ which outlined the fact that councils should be treated as going concerns unless there were any planned legislative changes that could alter that position by ceasing the existence of a Council within the next 12 months.

 

Ms Dawson stated that the auditors were obligated to examine a council's financial resilience and cash flow position to assess if they were still able to undertake the various services that they were expected to undertake. The auditors also had to satisfy themselves that councils had sufficient financial resilience and cash flow to satisfy and fulfil their various financial obligations without having to borrow money or take out any loans.

 

The Vice Chairman referred to the problems highlighted by E&Y with the valuation of Strategic Property. He asked Ms Dawson what the situation was regarding the valuations undertaken in the previous audit by KPMG.

 

Ms Dawson answered that  ...  view the full minutes text for item 54.

55.

THE REDMOND REVIEW OF LOCAL AUTHORITY FINANCIAL REPORTING AND EXTERNAL AUDIT pdf icon PDF 221 KB

Additional documents:

Minutes:

The Head of Audit and Assurance briefed the Committee on the main points of the report on the Redmond Review of Local Authority Financial Reporting and External Audit. The Committee noted that the report set down the results of the Redmond Review and that there were a number of recommendations in the report which may impact on the Council in the future.

 

The Head of Audit and Assurance explained that the Redmond Review was one of four reviews that had taken place recently, which examined the transparency and efficiency of external audit within the UK. It also examined whether or not external auditors had been properly identifying those local authorities that were in financial difficulties soon enough. It looked at issues like whether or not the current system was fit for purpose and if the public had lost faith in the external audit process.

 

The Head of Audit and Assurance referred Members to section 9.3 of the Redmond Report which stated that audit work was currently under-resourced and that to address this weakness, a fundamental review of the fee structure was necessary. The report noted that evidence had suggested that audit fees were at least 25% lower than was required to fulfil current local audit requirements effectively. It was also pointed out in the report that the current deadline of the 31st of July was viewed as being unrealistic--there was a compelling argument to change this date to the 30th  September.

 

Some of the new regulations could be implemented without legislation, except for the recommendation that a new Regulator be established. 

 

The Head of Audit and Assurance explained that with regard to the recommendations in the report, it was expected that the Ministry for Housing Communities and Local Government would need to respond. It was recommended that an annual report from the external auditors should be submitted to Full Council after the 30th of September. A key recommendation that was of interest to the Audit Sub-Committee was the recommendation to consider whether or not one independent member with sufficient training and expertise should sit on local audit committees to aid in support and scrutiny. There was also a recommendation that the Head of Paid Service, the Section 151 Officer and the Monitoring Officer should meet with one of the key partners from external audit on a regular basis.

 

The report also recommended that a simplified breakdown of costs and services statement should be made available to the public, and that this should be subject to audit. The intention was that this would be trialled next year without being audited, and then the following year it would be published in a similar manner to other audited statements.

 

The Head of Audit and Assurance asked the Committee how they would like to progress the issue regarding recruiting an independent member to the sub- committee.

 

The Chairman asked the Head of Audit and Assurance if the extended deadline for the publication of accounts could result in reduced audit fees. The Head of Audit  ...  view the full minutes text for item 55.

56.

INTERNAL AUDIT PROGRESS REPORT pdf icon PDF 563 KB

Additional documents:

Minutes:

The Head of Internal Audit and Assurance explained that in the first part of the year members of the Audit Team had been seconded because of the Covid  pandemic to work in other areas, this included working with the Shielding Team to support vulnerable people. As the number of Covid cases had dropped and restrictions eased, members of the Audit Team had been relieved of these duties, and so the Audit Team had commenced work on the internal audit recovery plan which had been shared with the CLT.

 

The Audit Team had been undertaking work supporting the processing of business support grants, and later with respect to the test and trace support payment scheme, and variations of support to business as a result of the three-tier coronavirus alert system. The role of Internal Audit was to advise on controls within the system and to perform assurance work when it was functioning. The Head of Audit and Assurance  informed the Committee that two members of the Audit Team had been notified that because of the recent rise in Covid cases, they were being put on notice that it was likely they would be required to return back to resourcing the Covid Support Team. The Chairman and the Committee thanked the members of the Audit Team who had been seconded to Covid Support Work. 

 

The Chairman highlighted Section 3.210 of the report which referred to work on local restriction grant payments that was due to take into effect, if and when the borough went into ‘Tier 3’. The Chairman mentioned that because Bromley had  now moved from ‘Tier 3’ into more of a full lockdown, would those services now  be triggered. The Head of Audit and Assurance responded that the Audit Team were waiting for new guidance which was expected over the next few days.

 

The Head of Internal Audit and Assurance explained that members of the Audit

A Member commented that he had been in contact with the Director of Finance to ask about fraud related to Covid business grants. The Member felt it necessary to draw the Committee’s attention to the associated response from the Director of Finance, which was dated, 12th of October 2020. It was noted in the response that 3500 payments had been made and only seven of those were cases involving possible fraud which needed further investigation. This number was very low. It was the case that because of controls introduced by the Head of Audit and Assurance and his team, these controls were now recognised nationally as examples of best practice.

 

The Member had also been in contact with the Portfolio Holder for Resources and Contracts who commented that those councils that had initially been applauded in Parliament for the rapid distribution of money were now having to claw back money that had been paid in error. The Committee expressed their thanks to the Audit Team for their sterling work in this area, and for the fact that the work was of such high quality  ...  view the full minutes text for item 56.

57.

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.

Minutes:

RESOLVED that the press and public be excluded during consideration of the items of business listed below as it was 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.

58.

INTERNAL AUDIT FRAUD AND INVESTIGATION REPORT

Minutes:

The Head of Internal Audit and Assurance presented the Internal Audit Fraud, Investigation and Exempt Items Report. This report provided an outline of the Council’s counter fraud work that had been undertaken in 2020/21. The report informed the Committee regarding recent activity on fraud and investigations that had taken place across the Council.

 

The full minutes relating to this are detailed in the Part 2 (confidential) minutes.

 

The Committee noted the report and made various comments on matters arising.

59.

EXEMPT MINUTES OF THE MEETING HELD ON 15th JULY 2020

Minutes:

The Committee noted the exempt minutes of the meeting that had taken place on the 15th of July 2020. The minutes were agreed as a correct record.

 

Original Text: