To receive apologies for absence.

Apologies were received from George Healey.

To confirm the minutes of the meeting held on 5 April 2011 (attached).

The minutes of the meeting held on 5 April 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. However he welcomed new committee members and reminded the committee that it operated as a critical friend. He informed members that he had attended a recent SWAP partnership board meeting.

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 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.

To appoint the committee chairman as the council’s representative and the vice chairman as deputy to the South West Audit Partnership Board.

The committee appointed Cllr Roy Birch as the council’s representative and Cllr Brian Jones as deputy to the South West Audit Partnership Board.

Alex Walling, Audit Commission, to present the report for consideration and noting.

Alex Walling, Audit Commission, explained that this was an annual report, detailing how the Commission sought to avoid duplication and placed reliance on the South West Audit Partnership (SWAP), the council’s internal auditors. It also considered how the two bodies ensured coordination and good lines of communication.

Cllr Birch asked if the matter of the housing benefits system upgrade (agenda page 14) would be brought to the committee.

The Head of Paid Service said that she would bring the council’s improvement plan to a future meeting, which would include the matter.

Cllr Hogan asked if the matter formed part of the GO project plan.

The Group Manager for Finance and Property explained that the council had been offered an upgrade to the old system, which would give commonality with Cheltenham Borough Council’s system and the two councils were talking about the possibilities of sharing. Currently other GO partners used a different system, but discussions were beginning about future closer working and use of common systems across the GO partnership.

Cllr Birch asked who raised invoices relating to the section marked ‘Creditors’ on agenda page 18.

The Group Manager clarified that the council would be introducing front loading for the authorisation of orders, rather than waiting for invoices, which would enhance the system. The Head of Paid Service added that the new system would be electronic rather than paper-based and this would make tracking much clearer.

The committee noted the report.

Peter Barber, Audit Commission, to present the letter for consideration and noting.

Peter Barber, Audit Commission, highlighting his reduction of a further £5,000 on the fee to take into consideration the council’s improvement in value for money and use of resources (paragraph 2 on agenda page 26). He added that the Commission was also discussing the possibility of a further rebate later in the year.

Cllr Connell asked what the difference was between proposed and planned fees.

Peter Barber explained that the Commission was still working on the 2010/11 audit, and that while the fee had been agreed there remained the possibility of an increased fee, if further work were needed.

Peter Barber clarified for Cllr Birch that he had highlighted significant improvement in addressing risks and that, being aware that even more improvement could be made, the council had decided to keep its action plan.

Cllr Frankie Evans asked how the Commission would calculate the cost of any extra work.

Peter Barber replied that in the event he would discuss with senior managers at the council how the work was to be undertaken and agree a fee dependent on the resource needed.

The Group Manager commented that there were two big system changes planned for 2011/12, which added to possible risk. There might be work required to verify transfer data mid-year. The Commission or SWAP could do that work.

Cllr Connell asked how the Commission worked out the fee.

Peter Barber explained that historically the fee had contained a fixed element linked to the type of council and a variable element determined by the individual risks for a council. However in 2010, after central government had announced its abolition, the Audit Commission had adopted a central approach. It had decided to base the fee in the letter for approximately 98 per cent of councils on the fee for the previous year. The Forest of Dean District Council fell into the remaining two per cent that needed adjusting due to individual circumstances.

Cllr Birch thanked Peter Barber for the report and for securing the £5,000 reduction.

The committee noted the letter.

Alex Walling, Audit Commission, to present the report for consideration and noting.

Alex Walling presented the report, explaining that the Commission undertook two key visits to the council per year. Her visit in January had helped to compile the interim report. The only control issues related to the national non-domestic rates (NNDR), as detailed on agenda page 32. She understood that processes were in place for 2011/12 to address this matter. She had found good progress made in introducing the International Financial Reporting Standards (IFRS).

Cllr Bill Evans asked how far away the recommendations relating to the NNDR were from being achieved.

Alex Walling said that officers had done additional checks and the Commission was assured that arrangements were in place.

Cllr Robinson, as cabinet member with responsibility for finance, suggested that relief for empty properties was limited to a short time by rollover and those with changed charity status were probably rare. He asked how many cases there had been and what impact they had made.

Alex Walling replied that she doubted if the impact of changed status properties was material. However the Commission was obliged to report all. She would look into the issue of rollover.

Cllr Frankie Evans asked for a further update on IFRS, as they seemed a complex issue.

The Head of Paid Service and the Group Manager assured her that there were plans to either offer an extended training session several days before the next meeting or to arrange for an external professional to deliver a session to all councils in the county in September.

The Group Manager confirmed for Cllr Birch that the go-live date for the Openrevenues system had been brought forward because of a clash with the upgrade date for Agresso.He also clarified that the NNDR issue related to verification that the council had collected all it could to pay to central government.

Cllr Birch asked if the disaster recovery plan had been tested in May, as at agenda page 34, paragraph 13.

The Group Manager replied that it had not, but that the council was aware of the risk. The Head of Paid Service added that the council was reviewing all business continuity plans and would inform members of the testing date for the disaster recovery plan by email.

The committee noted the report.

Alex Walling, Audit Commission, to present the report for consideration and noting.

Alex Walling explained for new committee members that she brought a progress report to every meeting of the committee, which updated them on progress towards a value for money opinion and other key issues outlined on agenda page 43. She had already begun work on the complex issue of housing benefit subsidy, which represented a massive figure for the council.

Peter Barber presented issues relating to the future of local audit on agenda page 44. The consultation had ended on 30 June. There was very little lead-in time for new arrangements, so for the interim, the Commission had broken the country into areas and would seek bids for local contracts. The Commission itself would also submit bids as an owner mutual. It was hoped that councils would have a say in the appointment of auditors, but the areas might be even larger than county size. He was expecting clarification on those arrangements shortly.

The Group Manager added that after discussion with the Commission it seemed unlikely that councils would be going out to tender before 2015.

The committee noted the report.

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

Ian Baker, SWAP, presented the report, which included his opinion for 2010/11 and issues arising during the year. He confirmed that all reports were at a final stage and included action plans. He was pleased with the above average customer satisfaction score given by the council’s officers, which showed a willingness to improve and act on recommendations. He had on balance given the council reasonable assurance for the year, considering the positive actions of the management and the work of this committee. He intended to follow up some of the level four and five risk recommendations to ensure that they had been rightly signed off. The Corporate Governance Group had acted on SWAP’s recommendations. It had also decided to call in all partial assurances.

Cllr Bill Evans asked if SWAP was comfortable with the procedures in place to address the land disposal accounting issue on agenda page 56.

Ian Baker said that he believed the issue to have been a one-off and that the matter had not been a fundamental critical error and had been addressed. The Group Manager added that the issue would have come up as part of the council’s work on IFRS.

Cllr Birch asked why the opinion on cash and bank had been deferred (agenda page 50)

Ian Baker replied that other work had arisen during the year. The Group Manager added that here was now much less exposure to cash handling in the council.

The committee noted the report.

The Group Manager for Finance and Property to present report F.114 for consideration.

The Group Manager for Finance and Property presented report F.114, commenting that it represented a statutory requirement, since the council relied on assurances SWAP gave. He commented that the council had only joined SWAP in mid-2009, so comparisons were still difficult. Unusually there had also been eight special reviews in 20010/11. He would aim to get more feedback responses from managers in the following year. He believed that SWAP continued to give the council good value for money and had not increased its fee from the previous year.

Cllr Birch commented that he thought internal audit performance had improved each year.

The committee noted the report.

The Finance Manager to present report F.115 for consideration.

The Group Manager for Finance and Property presented report F.115, reminding members that they were required to consider these issues every year. He highlighted the fact that the council had no borrowing, referring to agenda page 68, paragraph 2.3. However the council’s balance sheet showed borrowing, because of changes introduced by IFRS. The new standards required such items as vehicles used under the waste contract and printing machines to be shown as borrowing, even though the revenue budget specifically included the costs.

He said that any changes in interest would be known in September 2011 (agenda page 69, paragraph 4.2) and pointed out that the council achieved low returns because of its strict lending criteria to avoid risk.

He pointed out that the council’s fund manager, who managed some investments, had outperformed the national benchmark, as at paragraphs 8.3 and 8.4.

He informed the committee that as Section 151 Officer, he had authorised the council to break the upper limit for variable rate investments once due to the need for cash to be available for large precept payments at a particular time. (agenda page 77, paragraph 9.1). He believed that it was better to raise the limit to £9 million as at recommendation c) in the report, rather than increase the risk to the council by using lower rated institutions.

He finished by confirming from the training session that he would circulate details relating to a question on the Santander Bank (agenda page 81).

Cllr Connell commented that the county council paid 10 per cent interest on its borrowings and asked if this council were able to lend it money.

The Group Manager answered that the county council would have borrowed from the Public Loans Work Board and would incur penalties to pull out. For a short-term loan, this council would probably not achieve more than the current rate. The council also needed flexibility in its capital and the county would be looking for long-term loans.

Cllr Robinson, from his experience as a county councillor, believed that the county council was locked into its current arrangements, but said that it was an idea worth investigating.

RESOLVED –

a)     To approve the actual 2010/201111 prudential indicators within report F.115;

b)     To note the treasury management stewardship report for 2010/2011 and

c)      To recommend to Full Council that the upper limit on variable rate investments be increased from £8 million to £9 million.

The Group Manager for Finance and Property to present report F.117 for consideration.

The Group Manager for Finance and Property presented report F.117, explaining that this was a regular report to each meeting of the committee.

Answering Cllr Birch he said that the matter relating to stock control was in hand to be completed by the end of July (agenda page 87).

The committee noted the report.

The Head of Paid Service to present report SD.71 for consideration.

The Head of Paid Service presented report SD.71, explaining that she had presented updates at previous meetings of the committee and that this report looked back over 2010/11, but also looked forward in identifying key areas of focus for 2011/12. The council had followed CIPFA guidance in producing a report that was small enough to be readable with other documents feeding off it. At future meetings she would give updates on the 2011/12 actions as at annex B. The Corporate Governance Group, SWAP, the Audit Commission and senior managers had all been sources of evidence for the statement. She pointed out that some headings, such as data quality and procurement, were the same as the previous year, because the council could not afford to let them slip.

She emphasised the need for constant monitoring and consistency in data quality, good practice in project management, preparedness for business continuity and finally monitoring the growing impact of a reducing budget.

Cllr Bill Evans asked if the council set a financial efficiency target for procurement, how many officers were able to order goods and if the procurement procedure was on the council’s website.

The Head of Paid Service replied that the council worked to the expectation of ‘cashable efficiency savings’ as a target, that there were approximately 30 cost centre managers operating under a cascade of approvals with limits and that the contract procedure rules were in the constitution on the website. The Intranet had added guidance for officers.

The Group Manager added that the council was in the process of sharing services and officers to make savings, which were identified in the council’s medium term financial plan.

Cllr Frankie Evans asked how land disposals would be monitored

The Group Manager said that the issue would appear in the next report on level four and five recommendations.

Cllr Birch commented on the need for constant monitoring of procurement practice.

RESOLVED -

a)     To note the Annual Governance Statement action plan update and the progress made;

b)     To note the Annual Governance Statement for 2010-2011, as signed by the Head of Paid Service and

c)      To request that progress updates against the areas of focus identified in the Annual Governance Statement be reported to the Audit Committee on a quarterly basis.

The Group Manager for Finance and Property to present report F.116 for consideration and noting.

The Group Manager for Finance and Property presented report F.116, explaining that he had to respond to the consultation by the end of June. He had picked up the fact that the government was considering recommending that the majority of Audit Committee members be independent from the council. Perhaps the government had been drawing parallels to the health service or MOD models. However his view was that councillors were elected to govern. In his response he had taken into account comments from individual councillors, who believed that the committee should essentially comprise elected members. He also pointed out that the consultation suggested arrangements for public audit be reviewed annually, which he believed would not encourage bidders, who would be looking for longer contracts with councils.

Along with the Audit Commission the Group Manager had concerns over the possible loss of objectivity when a council employed its own external auditor.

Cllr Birch commented that he could not see any advantage of having the majority of committee members with no knowledge of how the council worked. The current arrangements for the council where the Audit Committee had one independent member ensured an adequate check.

The Group Manager added that the requirement to assess annually the committee’s effectiveness acted as an additional check.

Cllr Bill Evans congratulated the Group Manager for his consultation response, which he was happy to support.

The committee noted the report.

The Risk, Insurance and Procurement Officer to present report F.119 for consideration.

The Risk, Insurance and Procurement (RIP) Officer presented report F.119, explaining the information generated from Covalent. He emphasised that the aim was not to remove risks altogether, but to effectively manage them.

Cllr Birch asked when councillors would receive a further GO project briefing and asked for details of its status. He then asked how the other partners were approaching the project.

The Head of Paid Service replied that the issue had been covered in a recent finance training session. Following the council’s decision to take part in the project, the Cabinet would be considering a section 101 agreement regarding the employing authority at its July meeting. All other partners’ cabinets would also consider the section 101 agreement in July. It was appropriate for the risk to be in the amber portion of the grid at present, but would expect it to be in the green one in November, when the council would implement the new system.

Answering Cllr Connell’s query, the RIP Officer explained that risk B3.05a (paragraph 2.2.2, agenda page 122) was no longer a strategic risk, but was highlighted in the report because it had recently come off the register. Similarly the council had agreed a core strategy, thus enabling the removal of risk B.10. He highlighted risk B1.04, which related to the fact that the council was undertaking five of its largest projects for some years. This risk required regular review by senior managers to set priorities in a situation of reduced capacity.

Cllr Birch asked if the committee could be given more detail on target dates for steps within the projects. He found it difficult to judge progress without those dates.

The Head of Paid Service reminded the committee that this report outlined risks at a strategic level. Large risks such as the GO project would appear separately, but each of the projects had its own operational risk register that was monitored.

Cllr Bill Evans added that it was important to know about large projects, as they had large risks, citing the staff being ‘moved’ to being employed by Cotswold District Council in April 2012.

The Head of Paid Service replied that there was a comprehensive report being presented to the Cabinet on Thursday 7 July. She emphasised that no council employees would physically move in April 2012 and would retain their current terms and conditions. There was an agreement between partners that shared services would not be delivered from one place, but she could not say where services would be located ultimately. She would ensure that councillors were regularly kept up to date on developments.

The Group Manager added that the arrangement would be similar to SWAP employees working in the council’s building, but being employed by South Somerset.

Cllr Frankie Evans asked what the term regularly meant on agenda page 1233, paragraph 2.3.2.

The Head of Paid Service replied that it depended on the project and when its board met. She gave the example of the Single Status board, which met every six  ...  view the full minutes text for item 17.

All meetings will be preceded by a training session at 4.30pm.

Thursday 22 September 2011 at 5.30pm

Thursday 26 January 2012 at 5.30pm

Thursday 17 May 2012 at 5.30pm