To receive apologies for absence.

Apologies were received from Marie Rosenthal, Monitoring Officer.

To confirm the minutes of the meeting held on 27 January 2011 (attached).

The minutes of the meeting held on 27 January 2011 were confirmed and signed as an accurate record.

The chairman to identify any items of urgent business.

The chairman identified no items of business. However he took the opportunity to thank Cllr Dormer, who was not standing for re-election, for his work on the committee.

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.

There were no declarations of interest 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 register and the fraud register.

Alex Walling, Audit Commission to present the report.

Alex Walling, Audit Commission, presented the report, commenting that the value for money conclusion would need to be made by the end of September 2011. She had received the relevant papers and had met officers to discuss them.

She informed members that the interim audit was complete and had relied heavily on the work of the internal audit team. She would conduct year-end testing in a few weeks’ time. Having completed a risk assessment of IT, the Commission had concluded that controls were in place in a sound governance environment. She understood that the ICT Manager was addressing the first of the two suggestions on agenda page 17, paragraph 7. The second suggestion related to the ability of users to manipulate data that should not be editable. She would bring the annual opinion to the committee in June.

She then explained that setting fees had been made more complicated by the abolition of the Commission. The Commission had decided not to include an inflationary increase from the 2010/11 fees and to cut district council scale fees by five per cent.

Cllr Hogan accepted that the charges for 2009/10 and 2010/11 had reflected the additional work carried out by the Commission as a result of the council’s low Use of Resources score. However, the position had changed and additional work might not be required in 2011/12. In that case the fee being based on those previous years, when they should be less, would disadvantage the council.

Peter Barber, Audit Commission, agreed with the statement, but emphasised that the Commission had made the decision on fees centrally. Normally he would have been able to adjust the fee according to risk. The basis for setting the 2011/12 fees had been out for consultation and responses would be considered. He could not categorically state what would happen with the Forest of Dean District Council fees, but he should know by 8 April. The Commission had pledged a rebate for councils of up to £7.2 million in total during the year if finances allowed. He said that he would share the letter from the Commission regarding fees with all committee members before May.

The committee accepted the report.

Ian Baker, SWAP, to present the report reviewing the charter.

Jacqui Gooding, SWAP, presented the charter, which the committee had seen previously. From agenda page 23 she highlighted the move to reviewing the charter on a quarterly basis. This reflected the possible changes in risk associated with the scale and speed of changes in the council’s circumstances.

The Group Manager for Finance, Land and Property (and Section 151 Officer) added that he supported the regular quarterly meetings with SWAP to consider emerging risks relating to pressures on reducing budgets.

RESOLVED - to agree the revised internal audit charter presented on 4 April 2011.

Ian Baker, SWAP, to present the report setting out the internal audit plan for 2011/12.

Jacqui Gooding presented the plan, which the Audit Commission recognised needed to be approved by the relevant committee. The plan had been developed to take into account an ever-changing risk environment. It was indicative, allowing for flexibility to address issues as they arose. The plan included the number of days for audits, as agreed by the Group Manager for Finance, Land and Property and the Corporate Leadership Team.

Cllr Hogan commented that the plan seemed to contain a prodigious amount of work. He saw no indication of when each piece of work would take place, which would be useful in keeping abreast of progress.

Jacqui Gooding said that SWAP had agreed a provisional timetable with the council, which would be reviewed quarterly. She would bring that timetable to the committee in June.

Cllr Henchley asked for clarification on the car park audit.

Jacqui Gooding replied that the Group Manager for Finance, Land and Property had asked SWAP to do some advisory work. The group manager added that the council wished to take advantage of SWAP’s knowledge of other councils in the partnership to pool information.

Cllr Stephens said that he was pleased to see printing and photocopying as an item on the plan.

The committee noted the internal annual audit plan for 2011/12.

The Group Manager for Finance, Land and Property to present report F.111.

The Group Manager for Finance, Land and Property presented report F.111, stating that the report picked up on work the committee had done at a training session. He said that he would bring the part dealing with internal audit to the June committee meeting. He would add to paragraph 2c on agenda page 37 that the current chairman had also been chairman of the Two Rivers Housing Audit Committee, representing a wealth of experience.

He intended updating the activity annually at the committee’s January meeting. The committee would also prepare an annual report for the council beginning in 2012.

The committee agreed to begin meetings at 5.30pm from June 2011.

Cllr Birch asked how the Audit Commission and SWAP viewed the effectiveness of the committee.

Peter Barber replied that from his viewpoint the committee was fulfilling its terms of reference in the key areas. He was happy that the committee was challenging the Commission, and cabinet and officer decisions in the right areas. It was undertaking its statutory role effectively.

Jacqui Gooding agreed that the committee was challenging reports in an effective way.

Cllr Birch said that he would like to see the strategic risk register on every committee agenda.

The Head of Paid Service reminded him that the council formally reviewed the register quarterly, so the update had not been completed for quarter four. However it would be put on all future agendas.

The committee noted report F.111.

The Head of Paid Service to present report SD.69 for consideration.

The Head of Paid Service presented report SD.69, stating that its purpose was to make the committee aware of the process for compiling the annual governance statement. She would bring the statement itself to the committee in June after which she and the Leader of the Council would sign it. It represented a key source of assurance and gave the opportunity to consider how robust the council had been in terms of its governance and to identify areas for focus in the coming year. It picked up on work done by the Audit Committee, the Corporate Leadership Team and the Corporate Governance Group. She emphasised that annex B was draft and that the final version would include more financial matters. Managers would be expected to highlight areas for further development.

RESOLVED – to approve the process for compiling the annual governance statement.

The Finance Manager to present report F.108 for consideration.

The Finance Manager presented report F.108 regarding progress on introducing the International Financial Reporting Standard (IFRS) begun in Summer 2010. The process of restating the accounts for 2009/10 was complete and the restated accounts appeared at annex B.

Major changes required by the IFRS comprised the following requirements:

To include finance leased assets and lease balances on the balance sheet.

To include the accrual for  staff leave not taken.

To remove capital grants unamortised from the balance sheet and repost to the revenue account.She then explained the reconciled statements at annex A. The sheets dealing with reserves and the balance sheet showed the adjustments made for the new rules and the resulting closing balance sheet. The new format income and expenditure account now included the actuarial gains/losses on the pension scheme assets, hence the difference in net expenditure of £18m under the new rules.

The other changes were in format and terminology, as at agenda page 71. IFRS required the income and expenditure accounts to show expenditure and income separately for both years, instead of just the net figure for the previous year, , reserves in the balance sheet  were now shown as usable and unusable reserves and fixed assets are now called non-current assets.

Cllr Birch asked for clarification on contract termination costs, agenda page 67.

The Finance Manager answered that some contracts had not ended when the council aligned the Xerox contracts 18 months previously, resulting in a termination loss now being disclosed. In cash terms there was no differencein the amounts being paid to Xerox.

George Healey, independent committee member, asked if he could see the contracts concerned and why costs had been incurred.

The Head of Paid Service explained that there had been an internal audit report at the time, which she would arrange to be sent to all committee members.

Cllr Birch asked why the figure of £1.7 million for grants was in brackets on the reserves movement schedule.

The Finance Manager replied that the figure was for grants received but not amortised to match assets identified with those grants, now written out of the balance sheet. Under the IFRS rules those figures are moved from the balance sheet to reserves.

The committee noted report F.108.

The Group Manager for Finance, Land and Property to present report F.110 for consideration.

The Group Manager for Finance, Land and Property presented report F.110. For SWAP024, agenda page 76 he reported that the Risk, Insurance and Procurement Officer had run training sessions in March and the issue was due for completion by the end of April. For SWAP028 he gave an updated due date of June 2011, as it related to the report he had earlier said he would bring to the committee’s next meeting. SWAP035 was on course for completion in June 2011. He intended to use a committee training session to give members information on the process relating to SWAP039 (housing benefit fraud). SWAP040 would be updated to state that it was on target.

The committee noted report F.110.

To note report F.112, which was presented to the Corporate Scrutiny and Review Committee on 13 January 2011.

Cllr Birch reminded the committee that in this period leading up to the local elections, they must not make any comments relating to any person.

The Group Manager for Finance, Land and Property presented report F.112 for the committee to note. He explained that it had come to the committee as a direct result of the resolution the committee had made at its previous meeting to bring back to the committee any work SWAP undertakes at the request of any of the council’s other committees. He continued that the issue was well documented and the findings on agenda page 87 were still valid. The recommendations contained a lot of common sense, in particular the need to take time to step back, think carefully and not rush in to making decisions.

Cllr Hogan said that he had attended the scrutiny meeting where the report had been presented and had spoken to SWAP. He understood the limitations of the review and emphasised the important lessons the council had to learn from the way in which the CIC request had been handled.

Cllr Birch said that he had considered all the relevant documents carefully and believed that some scrutiny members’ decision not to accept the report had been unjust. It had been evident that given the timeline and details of memory, it had been difficult for SWAP to reach conclusions. He believed that the task had been hampered by limited details from individual recollection, no real project management, the risk never being in the risk management strategy and a lack of clarity and openness from the recipients of the grant.

It was time to close the book on the issue.

The committee noted report F.112.

All meetings at 5.00pm, preceded by a training session at 4.00pm, unless otherwise stated on the agenda.

All meetings at 5.30pm, preceded by a training session at 4.30pm, unless otherwise stated on the agenda.