To receive apologies for absence.

Cllr Birch, committee chairman, welcomed Kevin Henderson to his first meeting at the council.

Apologies were received from Cllr Brian Jones and Derek Broom, Group Manager for Finance and Property, who were both attending a South West Audit Partnership meeting in Yeovil.

To confirm the minutes of the meeting held on 22 September 2011 (attached).

The minutes of the meeting held on 22 September 2011 were confirmed and signed as an accurate record.

The chairman to identify any items of urgent business.

The chairman identified no items of urgent business on this occasion.

To receive any declarations of interest in any matter to be discussed at the meeting.  Members and officers are requested to identify the nature of the interest and indicate whether it is personal or prejudicial.

No declarations of interest were made.

The chairman to sign the staff and member gifts and hospitality registers and the fraud and corruption register.

Cllr Birch, chairman of the committee, confirmed that he had inspected and signed the gifts and hospitality registers and the fraud register.

Kevin Henderson, Audit Commission, to present the report for consideration.

Kevin Henderson, Audit Commission, presented the report, referring members to agenda page 15, which set out the planned outputs and commenting that work was at an early stage for the year. He explained that for the externalisation of the audit practice (agenda page 16), bidders would be informed of outcomes on 24 February 2012. On 6 March 2012 details of which auditor would be working in which sector would be published. There would be introductory events held during April and May 2012.

Cllr Hogan asked for clarification regarding any choice councils might have in 2015/16, since auditors would already be in place.

Kevin Henderson explained that the contracts awarded in 2012 would be between three or five years. At the end of the contract for its area, the council would be able to choose its own external auditor.

Cllr Winship asked if any reduction in cost achieved by the competitive bidding process would be passed on to councils.

Kevin Henderson replied that his understanding was that this would be the case.

Cllr Bill Evans asked what the value was in having to include in the code of transparency (agenda page 17, paragraph 17) the ratio between the highest and median salaries paid at the council.

Peter Barber, Audit Commission, replied that it was best practice and that the new code required it. He added that it might be linked to the matter covered in recent national news.

The Head of Paid Service commented that the council went further than it needed to in publishing information. It put all spending on its website, not just that above £500. A new requirement for a Pay Policy Statement would be presented to Full Council in February 2012. She added that the Hutton report had suggested that there would be concern if the highest salary were more than 20 times the lowest in authorities. At this council that ratio was approximately six to one. The council would continue to take forward the issue of data transparency.

The committee noted the report.

Peter Barber, Audit Commission, to present the letter.

Peter Barber, Audit Commission, reminded the committee that the letter dealt with the Commission's opinion on financial statements and conclusion on value for money and internal controls. Nothing in the letter should be new information for the committee, since the Commission brought it regular reports through the year. The letter was more outward focused and councils were encouraged to publish it on their websites. The Commission had been able to give an unqualified opinion on financial statements and a clean value for money conclusion. It had been impressed with work relating to the newly introduced International Financial Reporting Standards. Internal controls were generally effective, although the Commission had identified control issues regarding empty properties for national non-domestic rates (NNDR) purposes.

Cllr Hogan said that he assumed the Commission would address the NNDR matter in the 2011/12 letter, which was some time away. He asked if there were any early indications as to progress being made.

Peter Barber replied that he believed measures and action plans were in place.

The Head of Paid Service said that the council had included the issue in the annual governance statement action plan, which confirmed that procedures were now in place to address the matter.

Jacqui Gooding, SWAP, added that she had recently completed internal audit work on the control and concurred that procedures were in place.

The committee noted the report.

Kevin Henderson, Audit Commission, to present the report for consideration.

Peter Barber, Audit Commission, presented the report, highlighting NNDR and Housing and Council Tax Benefit scheme, which were the two areas mentioned in his qualification letter to the Department for Communities and Local Government (DCLG). He referred to rent allowance errors identified by initial tests and additional ones requested by the Department for Work and Pensions (DWP) as at agenda page 43. The Commission had sent results to the DWP and was waiting for a response.

Cllr Bill Evans asked how the council could ensure that officers complied with bad debt write-off procedures (agenda page 45).

Peter Barber said that the advice was for all write-offs to be subject to approval.

Cllr Hogan was concerned that there had been 70 per cent non-compliance in the cases tested. He assumed that lower level staff had been following procedures and asked what had been done at a higher level. He asked if there had been any impropriety concerning the non-compliance.

The Finance Manager replied that the introduction of Agresso, the council's new finance and HR system, automatically required approval from the budget holder before an item could be moved forward. This function was being rolled out for the end of March.

The Head of Paid Service stated that there had been no impropriety in this regard and that an update on this matter would be brought to the committee’s next meeting.

Cllr Birch asked if the council had stepped levels for financial actions.

The Finance Manager answered that there were six levels for purchasing and that budget approval was formally delegated to the relevant managers.

Cllr Hogan asked how the council ensured correct rent allowance payment to people whose income fluctuated week by week.

The Head of Paid Service said that she understood payment should be based on six payslips, but that the council needed to balance that with timely payment, and diarised reminders to request further payslips should be made by staff to ensure the correct number of payslips were acquired.

The committee noted the report.

Peter Barber, Audit Commission, to present the report for consideration.

Peter Barber presented the report, commenting that now the 2010/11 audit had been completed he was in a better position to assess the plan for 2011/12. He highlighted two significant risks as at agenda page 55 in addition to the usual raft of tests to be undertaken. He had no concerns over disposal and exchange of land assets, but would need assurances, as reflected in the balance sheet. The new general ledger system, Agresso, had inherent risks as a new system regarding accurate transfer of data and efficiency of operation. The Commission would undertake substantive testing at year-end.

He commented that financial stability represented a risk as it did in most other councils. The Commission would adopt the approach it had in previous years to ensure that savings targets were realistic and achievable. He ended by noting that the Commission's proposed fee had reduced by £10,650 on the previous year for 2011/12. Additionally a rebate of £8,220 would be returned via a reduction in monthly instalments.

Cllr Birch thanked Peter Barber and the Commission for the reduction. He asked how the Commission viewed internal audit arrangements for the GO shared service project.

The Head of Paid Service replied that there would be two sets of internal audit, comprising SWAP and the partnership used by the other three authorities involved.

Peter Barber commented that as the external auditor, the Commission looked at the plan and sought reliance from the internal auditors and would seek further assurances from officers. There would be substantive testing to ensure accounts were complete and accurate.

Cllr Bill Evans asked if the Commission could refine the risk further, as it was a very important area for the council.

Peter Barber replied that the materiality level of £1.1 million was correct. The Commission would look at controls and undertake substantive testing to ensure accuracy. The Commission would speak with internal auditors and officers to inform its work on testing.

The committee noted the report.

Ian Baker, SWAP, to present the report for consideration.

Ian Baker, SWAP, presented the report. He said that the IT asset item as at agenda page 77 did not represent a significant corporate risk, but needed to be addressed. He reported that the improvements needed for contract management were currently being implemented and the issue was around officers' understanding. The council was not alone in this, which remained an issue for most partners in SWAP. The partnership viewed this as an important learning point for all partners to share good practice.

He explained that due to unforeseen sickness and maternity absence among SWAP staff, only 95 per cent of the audit plan would be completed. That could be regarded as a success generally, but represented an achievement for this council, given that it had experienced 20 days with one auditor missing.

Cllr Hogan was concerned that officers were still not compliant with the rules and sought assurance that the matter would be addressed urgently.

The Head of Paid Service reported that the council had run purchasing workshops during the current week and that the new Agresso system offered an extra level of control, which the previous paper-based process could not. The council would also hold a procurement conference on 21 March for all group managers and team leaders. The council was aware that it could not let up on increasing officer understanding.  Officers had shown best intentions and had achieved results, but not always done things correctly. The matter was covered in the Annual Governance Statement action plan.

Cllr Bill Evans asked what examination of the current policy had taken place when looking at next steps to ensure that procurement could lead to best value savings.

Ian Baker said that SWAP believed the process to be robust, citing the street cleaning contract as an example of best practice within the council. However the process had not always been followed correctly.

The Solicitor to the Council added that the council was working on procurement with partners in the GO project and now had its own in-house procurement specialist solicitor. The council's contract procedure rules would have to be revised to be in line with the GO partnership and a report would be presented to Full Council in April 2012. She confirmed that the council could not let up on training, emphasising that the procurement conference would be an annual event.

The Head of Paid Service said that once all partners were using the Agresso system, it would be easier to analyse spending to identify areas for joint procurement. Previously there had been no resource to do the exercise manually. The council was the first to implement the system and would therefore develop experience.

Cllr Birch commented that from his experience he had always been nervous about changing expectations of shared contracts and how they were monitored.

Cllr Connell asked if the definition of control assurance was subjective or based on scientific methodology.

Ian Baker replied that it involved a degree of subjectivity, based on guidelines, such as the number of  ...  view the full minutes text for item 10.

The Head of Paid Service to present report F.148 for consideration.

The Head of Paid Service presented report F.148, highlighting important areas from page 88, paragraph 2.1, particularly in relation to the continuing need to make savings. She confirmed that there were no issues identified as amber or red, because the council was where it expected to be at this time on each action. She emphasised that this did not mean any identified matter was perfect.

Cllr Bill Evans asked how many officers had authority to procure items.

The Head of Paid Service replied that officers had different levels of authority and would send a written answer to committee members detailing the exact number.

The Risk, Insurance and Procurement Officer clarified that junior officers processed orders, but needed approval from their managers who were budget holders.

The committee noted the report and progress being made.

The Head of Paid Service to present report F.147 regarding strategic risks.

The Risk, Insurance and Procurement (RIP) Officer presented report F.147, explaining that there had been three amendments to the risk register.

The Single Status exercise, SR-B1.01, as at agenda page 105, had been delayed due to a series of circumstances around timely meetings but the process was continuing and hopefully implementation would be in the new financial year.

The council had implemented the Agresso system as part of the GO project, SR-B1.02. As the shared service moves forward savings should start to be made from October 2012.

The risk around information security, SR-B3.05b, as at agenda page 107, would be addressed through training for all staff and an all-member councillor event. The cabinet had approved the new policy in October 2011 and there would be no reason to report this risk at future meetings.

Cllr Birch reported that he had done his own audit of how the other GO partner audit committees were kept informed on the project and how this council's committees had considered the issue. He had discovered that West Oxfordshire and Cotswold councils shared senior officers and that Cotswold and Cheltenham were already working together. He also noted that while Cotswold District Council's audit committee had received a highly detailed report, others had received only basic information.

The Head of Paid Service clarified that as the employing authority with the increased risks that went with that, one would expect Cotswold District Council's audit committee to have more detail.

Cllr Bill Evans said that the partnership offered the opportunity for best value for money and that there was inherent risk for procurement in partnership working. He believed that the matter should be fully scrutinised.

The committee noted the report.

The Group Manager for Finance and Property to present report F.141 for consideration.

The Finance Manager presented report F.141, explaining that the strategy was set each year and changes from the previous year were summarised on agenda page 109. On page 123 the words used had been changed for 'part-nationalised banks' for clarity. On page 123 Treasury bills, corporate bonds and Local Authority Mortgage Scheme were new for the current year. She referred to agenda page 115, paragraph 16, explaining that the council was looking for better investment returns while retaining security, as borrowing costs were low. There would be a report to the cabinet in the Spring to consider the matter further. There was also the opportunity for additional income streams and a report would be prepared for the cabinet later in the year.

Answering a question from Cllr Connell, the Finance Manager referred to the table at the bottom of agenda page 119, which showed the lending and borrowing rates. She also confirmed that the council was not allowed to operate as a bank to make money.

The Head of Paid Service informed the committee that the strategy would also be presented to the Full Council in February.

RESOLVED -

To approve the key elements of report F.141 and recommend these to Cabinet for adoption by Full Council:

a.      Treasury Management Strategy for 2012/2013 to 2014/2015 contained in Annex B.

b.      The prudential and treasury indicators and limits for 2012/2013 to 2014/2015 contained in Annexes A, B and B2 of this report.

c.      The Minimum Revenue Provision (MRP) statement at paragraph 14 of Annex A of this report which sets out the Council’s policy on MRP.

d.      The Authorised Limit prudential indicator contained at paragraph 14 of Annex B to this report.

e.      The Investment Management Strategy for 2012/2013 contained in paragraphs 28 to 33 of Annex B of this report.

The detailed criteria included in paragraph 44 of Annex B to this report.

The Group Manager for Finance and Property to present report F.144 for consideration.

The Head of Paid Service presented report F.144, explaining that the level four and five recommendations would include deadlines not met, new deadlines and action plans to achieve the deadline. Sometimes officers were unrealistic in their expectations, and it was important to keep the committee abreast of changes.

The committee noted the report.

The Group Manager for Finance and Property to present report F.145 for consideration.

The Finance Manager presented report F.145, which followed on from the update given by Kevin Henderson earlier in the meeting. She highlighted the fact that councils would be able to share external auditors, once the initial three to five year interim arrangements ended.

Cllr Birch informed the committee that two relevant publications from KPMG, an audit provider, would be available to read in the members' room.

The committee noted the report.

The Risk, Insurance and Procurement Officer to present report F.146.

The Risk, Insurance and Procurement Officer presented report F.146, which set out the council's procedures to ensure consistent operation of the strategy. The current strategy had taken into account the removal of the post of Chief Executive and the introduction of the Bribery Act 2010. He said that there would be awareness training in the forthcoming year.

Cllr Frankie Evans asked if there had been any recent cases of whistle blowing at the council.

The Head of Paid Service was not aware of any and reminded members that current policy was for individuals to refer whistle blowing issues to SWAP in the first instance.

Ian Baker confirmed that there were no current cases of whistle blowing.

Cllr Birch asked how officers responsible for investigating fraud operated.

Ian Baker replied that SWAP had set up a specialist fraud team that was proactive in setting preventative measures, but that was also reactive. The team was currently putting together a process.

Cllr Frankie Evans asked if the council ever used the Investigative Powers Act.

The Solicitor to the Council confirmed that the council did use the act and kept a record. Use of the act was authorised by the relevant group manager or The Head of Paid Service in the case of young people.

RESOLVED - to approve the revised Anti-fraud and Corruption Strategy as at report F.146.

All meetings at 5.30pm with a training session at 4.30pm (unless otherwise stated)

Thursday 17 May 2012                                           Thursday 21 June 2012  

Thursday 27 September 2012                           Thursday 24 January 2013  

All meetings at 5.30pm with a training session at 4.30pm (unless otherwise stated)

Thursday 17 May 2012                                           Thursday 21 June 2012  

Thursday 27 September 2012                           Thursday 24 January 2013