Minutes for Audit Committee meeting, Sep 26 2012, 7.30PM official page

To confirm the minutes of the meeting held on 27 June 2012.

RESOLVED that the minutes of the meeting held on 27June 2012 are confirmed as a correct record. 

Appendix A

Covering report

Annex 1

Statement of Accounts                     separate enclosure

Annex 2

Auditor’s Annual Governance report           separate enclosure

Annex 3

RBK Letter of Representation

Annex 4

Pension Fund Covering report

Annex 5

Pension Fund Auditor’s Annual Governance Report

Annex 6

RBK Pension Fund Letter of Representation

The District Auditor has issued an unqualified opinion on the Council’s accounts.  This means that they have been prepared properly and present fairly the Council’s financial transactions during the 2011/12 financial year and its financial position at 31 March 2012.

Overall the District Auditor’s report highlights the continued focus and resource the Council has dedicated to the production of the Statement of Accounts, and the quality of the working papers supporting the audit procedure.

At the date of publication of the agenda the District Auditor had a handful of outstanding areas left to complete in checking the consistency of amendments throughout the financial statements.  An update on these was circulated at the meeting, a correction on the Investment Property balance was reflected across all the statements but did not change the bottom line figures.

The District Auditor’s report is more detailed than in previous years on the extent of the audit, the areas covered and the risks identified, thereby giving Members greater assurance on the Statement of Accounts.  . 

The Audit Plan reported to the March meeting listed the risks identified by the District Auditor as

accounting for and recognising Heritage Assets;

accounting for the effects of the move to HRA self-financing;

the completeness of financial reporting;

journals posted to the general ledger;

valuation of Property, Plant and Equipment

the correct accounting treatment of schools transferring to Academy status.

There were no significant indications of these risks in the District Auditor’s findings.

The Audit Plan also identified specific areas where the District Auditor would be carrying out work to address gaps in controls assurance.  These were

payroll;

the fixed asset register;

accounts receivable sundry debtors; treasury and housing repairs.

 The additional audit testing and findings show no significant adverse findings other than those referred to in the District Auditor’s 9 recommendations

The 9 recommendations have been agreed by the Council and cover 2 categories - those involving the production of the Statement of Accounts and those resulting from the Value for Money conclusion.

An Action Plan has been prepared to ensure that these recommendations are addressed with the exception of one which concerns a small number of immaterial errors, in total less than £50,000.  Under audit methodology these were extrapolated to ascertain if the problem was more widespread and the conclusion was that it was not.

The Letter of Representation required by the District Auditor – Annex 3 of the report – explains why the Council does not consider it necessary to adjust the accounts for these immaterial errors

In responding to points raised by the Committee the District Auditor confirmed that work outstanding when the agenda was published had all been completed and there were no matters which prevented an unqualified opinion being issued.

The investment valuation adjustment is complex and involved new accounting procedures

The Council’s Value for Money (VFM) arrangements meet, and in some instances exceed requirements; whilst the Ofsted judgement has an impact in one service area this is not such as to unbalance these arrangements.  ...  view the full minutes text for item 11.

 The 2011/12 Annual Governance Statement (AGS) was agreed by the Audit Committee on 27 June and formally approved by Policy & Resources Committee on the 28 June 2012.

Following consultation with the Council’s External Auditors, the AGS has been amended to reflect the outcome of the Ofsted inspection of Children’s Services. The opportunity has also been taken to make minor improvements to the Statement in order to ensure that it is in line with best practice. A revised version was submitted for approval

The Action Plan to address the areas of improvement was presented for agreement. The specific actions will be monitored by the Strategic Leadership Team (SLT) and the Audit Committee during 2012/13. Improvements need to be implemented by 31 March 2013 with quarterly progress reviews by SLT and the Audit Committee.

As reported in Appendix C of the agenda– see also Minute 13 -  there is a separate stream of work underway to assess assurance arrangements in the light of the Ofsted report.

RESOLVED that:

1.              the revised Annual Governance Statement, 2011/12 set out at Annex 1 is approved and forwarded to the Policy and Resources Committee for its approval.

2.              the Annual Governance Statement Action Plan set out at Annex 2 to this report is endorsed; and

3.              the process put in place to provide the Committee with the necessary assurance in terms of the areas identified for action, as set out in paragraphs 6-9 of this report, is endorsed.

Reason for decision

To recommend approval of the revised the 2011/12 Annual Governance Statement and to endorse the process to enable the Committee to monitor progress on the implementation of improvements identified in the Statement

Voting – unanimous

In response to the recent Ofsted inspection of Children’s Safeguarding and Looked After Children the Council has initiated a dedicated and focused programme of improvement within Learning and Children’s Services.  In addition a review has taken place to identify and address any issues arising that may have implications for the Council’s wider assurance framework.

The work undertaken to date was reported together with the planned next steps.

The findings detailed have also been reflected in an updated Annual Governance Statement  - see minute 12.

The Committee considered the action being taken to address the direct governance implications raised by the inspection, and also to update the annual review of the effectiveness of the governance framework on which the current Annual Governance Statement was based. 

There are specific governance and performance arrangements that come into being to ensure that the improvement agenda for Children’s Services is being applied correctly, and these are not the direct responsibility of the Audit Committee.  It is however proper that the Audit Committee should be the route by which the wider governance and assurance issues are considered.  

Reference to this work is included in the updated Annual Governance Statement presented in Appendix B of this agenda

A review team was set up to look at the implications of the Ofsted inspection with the objective of identifying any areas where immediate action was necessary to maintain the effectiveness of the governance framework. No areas beyond those identified directly by the inspection report were flagged as requiring urgent remedial action. A number of areas for further investigation and review have been identified as set out in paragraph 14 of the report, progress on these will be included in the quarterly update on the Annual Governance Statement to the December meeting.

 RESOLVED that

1.                  the programme of work underway to address the issues relating to the Council’s assurance framework arising from the Ofsted inspection. Is endorsed

2.                  the conclusions of the work to date and the actions undertaken in response are noted.

Reason for decision

To endorse the action to ensure that the effectiveness of the assurance framework is maintained and areas for improvement are addressed 

Voting – unanimous

RBK is responsible for ensuring its business is conducted in accordance with the law and proper standards, so that public money is safeguarded, properly accounted for and used economically, efficiently and effectively.

To meet these responsibilities and demonstrate its commitment to good governance the Council has in place a Local Code of Governance. This Code reflects the six core principles and requirements of the 2007 CIPFA/SOLACE Framework: Delivering Good Governance in Local Government.

The Local Code of Governance is reviewed every two years. Following the 2012 review there are no substantial amendments to the code but it has been updated to reflect, amongst other things, the change in the Council’s formal decision making processes and the outcome of a recent internal audit review.

The updated Code is attached as Annex 1 to these minutes.

RESOLVED that theupdated Local Code of Governance is approved and the biennial reviews of the Code are continued.

Reason for decision

To approve a Local Code of Governance that continues to meet the requirements of the 2007 CIPFA/SOLACE Framework. 

Voting unanimous

A summary of the work carried out by internal audit since March 2012 was presented. The 2011/12 Audit Plan was complete except for the audit on Housing Repairs, which was at draft report stage.

A schedule outlined the work on these audits and the number of days delivered, together with the assurance level for completed audits.  14 internal control issues were drawn to the Committee’s attention and two audits had a limited assurance level. Internal audit is currently working on a review of outstanding recommendations from previous year’s audits and discussing progress in their implementation with the relevant Heads of Service

The 2012/13 Audit Plan is on target for completion and the Internal audit team will be fully staffed from 1 October. 

RESOLVED that the report is noted and the actions taken by Internal Audit endorsed.

Reason for decision

To note a summary of the most significant issues arising from internal audit work and obtain assurance that appropriate action is being taken on those issues.

Voting – none against

Two risks from the Corporate Register are reviewed each year to give the Committee assurance that the Councils Risk Management processes are effective in practice. The risks to be reviewed in this year are risk 16 (change management/One Kingston) and risk 36 (emergency planning). The current arrangements for the management of these risks were reported and the December meeting will consider actions to mitigate these.

RESOLVED that the review of risks 16 and 36 is agreed and the approaches being taken to manage these risks are noted.

Reason for decision

To agree the review of these risks

An update on the work undertaken by the Counter Fraud and Corruption Unit during 2011/12, and in 2012/13, before the establishment of the Shared Internal Audit and Investigations Service (IAIS ) on 1 June 2012, and post this to the end of Quarter 1.

As part of the new structure, two local investigation teams have been retained working from each of the Boroughs and are overseen by the Fraud Manager and the Joint Heads of Internal Audit and Investigations.

A Service Plan for the shared IAIS has been established and agreed by the Shared Services Board. One of the key priorities is to ‘improve arrangements to protect the Council against fraud and corruption with a Shared Internal Audit and Investigations Service which is responsive to key fraud risks and works in partnership with other services and external agencies’.

The Quarter 1 report includes reporting against the service plan objectives and targets and will be a standard element of future reports.

The Counter Fraud and Corruption Policy and Framework dates from December 2009 and alongside a number of other fraud policies and procedures, will be subject to review and will be reported to the December meeting.

Fraud work is undertaken by the Shared IAIS in the following main areas:

• National fraud Initiative (NFI) – a checklist on how the NFI is used within the Council was set out in Annex 1 of the report
• Reactive Fraud investigations – the main areas are internal fraud; Blue Badge fraud and Social Housing fraud
• Benefit investigations – Housing and Council tax benefits
• Proactive Fraud work – joint working with the police, external agencies, other Boroughs, the UK Border agency and contractors

Members commented on success of work in countering Blue Badge fraud and the number of successful prosecutions across the range of fraud activities.

It was noted that changes in Universal Credit and Council Tax benefits would have an impact on the work of the team however the details of these changes is not yet known.

RESOLVED that

1.            the fraud work undertaken and performance results for 2011/12 and 2012/13 (to Quarter 1) is noted. This includes performance against the 2012/13 Service Plan for the shared IAIS.

2.            the proposal for 6 monthly update reports to be provided to Audit Committee on fraud work undertaken and the proposed template for future reports is agreed.

3.            the work undertaken by the Council on the National Fraud Initiative is noted

4.            the national development to create the Single Fraud Investigations Services (SFIS) in 2013 is noted;

5.            the future review of the Council’s Counter Fraud Policies and Procedures is noted.

Reason for decision

To update the Audit Committee on the ongoing work of Shared IAIS to reduce the Council’s exposure to the risk of fraud and corruption and to be aware of any national fraud related issues and risks.

Voting – unanimous

 A report on the delivery of the external auditors responsibilities included an update on the government’s response to public consultation on its plans for the future of local public audit.

Work is also in progress to manage a smooth transition from the Audit Practice to the Council’s  new audit provider, Grant Thornton

Key emerging national issues including the next round of work on the National Fraud Initiative, the Adult social care briefing 'Reducing the cost of assessments and reviews’ and the draft internal audit standards recently published by CIPFA were also covered.

The update was noted.

Applications for appointment to the Independent Member were invited via the website by an advertisement in the Kingston Guardian and Surrey Comet in mid August.  This was followed up with a short article in the Press in early September.

5 applications have been received.

The committee has left open the question of whether more than one independent member should be appointed.

Applications for appointment to the Independent Member were invited via the website by an advertisement in the Kingston Guardian and Surrey Comet in mid August.  This was followed up with a short article in the Press in early September.

5 applications have been received.  A brief summary is circulated separately to the Committee.

The Committee has left open the question of whether more than one Independent Member should be appointed.

The proposed process for appointment is to have a similar arrangement to that currently in progress for the appointment of Independent Person(s) to the Standards Committee.  This is a Member Officer panel to interview applicants, the Standards Committee has opted for a Member from each of the party groups.

The Committee’s views are requested.

A summary of the applications for appointment to the Independent Member post had been circulated to the Committee

It was agreed to have a similar arrangement for appointment as that followed for the Independent Person(s) to the Standards Committee. 

RESOLVED that

1                   applicants are interviewed by a  Member Officer Panel

2                   the Councillor representatives to be Councillors Karen George and Trevor Heap

3                   one appointment will be made and this will be recommended to Council for approval .

Voting - unanimous