Agenda Item
5
AUDIT COMMITTEE
Minutes of a meeting of the Audit Committee held on 6 December 2011 in the
Committee Room, Council Offices, Holt Road, Cromer at 2.00 pm.
Members Present:
Committee:
Mr N D Dixon (Chairman)
Mr B Jarvis
Mrs A Moore
Mr J Punchard
Mr D Young
Officers in
Attendance:
The Acting Financial Services Manager, the Deputy Audit Manager, the
Interim Accountancy Manager, the Policy and Performance Management
Officer (for minute 30), the Environmental Health Manager (for minute 31)
and the Democratic Services Team Leader (MMH).
Also in
Attendance
Julian Rickett (for items 1 – 10), Sarah Brown (PriceWaterhouseCoopers)
36 APOLOGIES
None received.
37 SUBSTITUTES
None.
38 PUBLIC QUESTIONS
None received.
39 ITEMS OF URGENT BUSINESS
None
40 DECLARATIONS OF INTEREST
None
41 MINUTES
The Minutes of the meeting of the Audit Committee held on 13 September 2011 were
approved as a correct record.
Audit Committee
1
6 December 2011
42 AUDIT UPDATE AND ACTION LIST
Members were updated on progress on actions arising from the minutes of the meeting
of 13 September 2011.
a) To review the working protocol: the draft Protocol for 2012/13 had been prepared.
There were no significant amendments. The Committee had previously agreed that
they only required any significant amendments to be reported in future.
b) Partnership arrangements: a report was on the Agenda.
c) Network Audit report: a briefing note had been provided for Members and was on the
Agenda.
d) September Audit Committee: the 2012 meeting had been programmed for 18
September. The 2012/13 Programme of Meetings was expected to be approved by
Full Council on 14 December 2011.
e) Terms of Reference: the Audit Committee Terms of Reference had not yet been
amended. This would be addressed as part of the review of the Constitution in the
New Year.
f) Business Continuity: an oral update was on the Agenda.
43 AUDIT OF THE STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 MARCH
2011 AND ANNUAL SUMMARY OF RECOMMENDATIONS
The report supplemented the matters that were reported to the Audit Committee on 13
September 2012 in the 2010/11 report to those charged with governance (ISA 260 (UK &
I)). Although this report had not been listed on the forward work programme it had been
scheduled as a report that would normally come to the Audit Committee in the meeting
following the presentation of the ISA 260. The Democratic Services Team Leader
undertook to contact the Manager, PWC in between meetings to ensure that the work
programme accurately reflected the reports.
The summary included 20 recommendations, all of which had been agreed by
management. Timetables were in place for their implementation.
Members discussed the report:
a) Overpayments had been made to Members who had changed their role after the
2011 election. This had been the result of human error and the money had been
recovered. The Acting Financial Services Manager suggested that a trigger be put in
place on the Human Resources system to prevent a recurrence. He would confirm to
Members when this trigger was in place.
b) In reply to a Member’s question Julian Rickett explained that the wording “We
reiterate our original recommendation” was used when a recommendation had been
proposed in a previous year. Officers pointed out that sometimes recommendations
were not implemented because it was not possible. The limitations of the Civica
system was an example of this. The Audit Committee had to consider the balance
between risk, recommendations and operational necessity.
c) There had been a significant number of recommendations regarding Asset
Management. The Acting Financial Services Manager had been discussed this with
the Council’s valuer within Property Services to ensure that recommendations were
carried out and that there was an improvement for next year.
d) Suspense accounts: having a balance at the year end was discouraged because
they could mask other transactions. The balance held in the suspense account at the
year end was £7,052.80, made up of 3 items. The Acting Financial Services Manager
had presented this to the Audit Committee in September and had explained the items
and the reasons they were held in suspense. Sometimes credits were received
Audit Committee
2
6 December 2011
AUDIT OF THE STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 MARCH
2011 AND ANNUAL SUMMARY OF RECOMMENDATIONS
(Continued)
without description. They were held in suspense until they could be allocated. In other
organisations such accounts were called “Other Creditors” or similar.
RESOLVED
To note the report.
44 ANNUAL AUDIT LETTER 2010/11 AUDIT
The purpose of the letter was to provide a high level summary of the results of the
2010/11 audit work that PriceWaterhouseCoopers (PWC) had undertaken at North
Norfolk District Council.
Reports already issued included the Audit opinion for the 2010/11 financial statements,
including the value for money conclusion, the Report to those charged with Governance
(ISA (UK&I) 260) and the Audit of the Statement of Accounts for the year ended 31
March 2011/ summary of audit recommendations.
In the view of PWC the underlying quality of the process for producing the accounts,
including the supporting papers, was good subject to several concerns that were
discussed in detail with the Audit Committee on 13 September 2011.
External Audit had issued an unqualified opinion on the accounts for 2010 – 11 and the
value for money conclusion. There were no matters which they wished to bring to the
Committee’s attention.
RESOLVED
To note the Annual Audit Letter 2010/11
45 PROGRESS REPORT ON INTERNAL AUDIT ACTIVITY, APRIL – OCTOBER 2011
The report provided an update to the Committee on the outcomes of audit work
completed since the previous report (up to August 2011), and assessed the performance
and effectiveness of the Internal Service in delivering the Annual Audit Plan between
April and October 2011. Three additional audit assignments had been completed since
the previous report to Committee, 57% of the work had been completed and the audit
plan remained on schedule to deliver the Annual Report and Opinion of the Head of
Internal Audit. Internal Audit continued to deliver an effective service to the Council.
The Business Continuity audit had been moved to December because of changes in
service management but would now take place in Quarter 4 because it would be more
effective. The Audit Committee was receiving regular quarterly updates on this service.
The audit on communications had been deferred as it was considered that there were no
areas where an audit could add value. Three additional assignments had been
completed since the September progress report. The outcomes of these audits were
included at Appendix B to the report. The review of the waste management contract with
Kier had resulted in a limited assurance opinion being awarded. One high priority item
was raised in respect of the income payable to the Council for garden waste collections.
Subsequent to the completion of the audit fieldwork, management had confirmed that the
income due had now been received.
Audit Committee
3
6 December 2011
PROGRESS REPORT ON INTERNAL AUDIT ACTIVITY, APRIL – OCTOBER 2011
(Continued)
There had been significant improvement in timeframes to deliver final reports once the
draft report had been issued. This meant that the overall time to deliver audit reports had
also improved. In response to a Member’s question the Deputy Audit Manager explained
that some audit reports had taken longer to deliver because of the very robust internal
review process required. There was no significant impact if a report went 4 or 5 days
over the target date. The quality of the report was more important than the target.
RESOLVED
to note the progress made in delivering the Annual Audit Plan, and the outcomes of the
work of Internal Audit completed at this stage.
46 THE STATUS OF AGREED AUDIT RECOMMENDATIONS DUE FOR
IMPLEMENTATION BY 30 SEPTEMBER 2011
The report provided an overview of the progress made in implementing the audit
recommendations due at 30 September 2011. No high priority issues due at this stage
remained outstanding, and the overall number of outstanding items had continued to
reduce. Action had been taken to address areas of weakness in respect of network
infrastructure in particular. There had been significant improvement in follow-up over the
past year.
5 recommendations remained outstanding in respect of partnerships. The Interim
Accountancy Manager was undertaking work on the Council’s partnership framework
and the audit recommendations were being considered as part of this work. There were
4 outstanding recommendations in respect of the Environmental Health Service which
had arisen from difficulties in finalising the contracts for pest control and dog kenneling
services.
In response to a Member’s question the Deputy Audit Manager said that it was easy to
track the progress of recommendations because they were held in the TEN performance
management system. However, there was more work to be done on updates. When a
recommendation was implemented it should be updated on the TEN system but there
were occasions where this did not happen.
It was acknowledged that TEN was not a user-friendly system. Other systems were
available but there were no plans to upgrade at present. The Acting Financial Services
Manager would discuss this with the Performance Management Officer. TEN held
service plans, policies, consultations and frameworks as well as audit recommendations.
Training needed to be provided if the TEN system was to be retained. Members
expressed concern that the TEN system had significant limitations and that the system
should be reviewed in light of the best way forward for the future.
RESOLVED to
1. Note the progress made to implement audit recommendations, and the areas where
further work is required.
2. Add a review of the TEN system to the Audit Committee action list.
47 AUDIT COMMITTEE SELF-ASSESSMENT
This item had been deferred from the meeting of 13 September 2011. However, it was
agreed that to work through the Self-Assessment now could be disadvantageous to new
Members who might not make input or be able to identify training needs. Members were
Audit Committee
4
6 December 2011
AUDIT COMMITTEE SELF-ASSESSMENT
(Continued)
requested to complete the Self-Assessment in their own time and to return it to the
Deputy Audit Manager by 16 December 2011. The Deputy Audit Manager would collate
the responses into an action plan which she would bring initially to the pre-Agenda
meeting, then to the March meeting of the Committee.
It was noted that the terms of reference in the CIPFA guidance were significantly
different from those in the Audit Committee Terms of Reference in the Constitution. This
needed to be reviewed in light of the changes to public audit.
RESOLVED
1. To complete the Self-Assessment and to return it to the Deputy Audit
Manager by 16 December 2011.
2. That the Deputy Audit Manager should collate the responses into an action
plan to be reported back to the Committee.
48 THE FUTURE PROVISION OF EXTERNAL AUDIT
In August 2010 the Secretary of State for Communities and Local Government had
announced that new arrangements would be put in place for auditing local public bodies
in England. Since then a consultation exercise had taken place. The report updated
Members with developments, including future arrangements following the abolition of the
Audit Commission.
Professional audit would still be necessary. It was likely that the Government would
increase the list of auditors for Auditor Choice. The Council would be able to choose its
own auditor although PWC would be retained for the audit of the 2011/12 accounts, after
which they would have a watching brief for a period after the new auditor was appointed.
The new auditors would draw up the audit plan and would have rights to use the
outgoing auditor’s working papers. The same level of audit work would still be required.
The consultation had placed an emphasis on the introduction of independent Members
to the Audit Committee. The outcome of this was awaited but it seemed that Audit
Committees could be different in the future.
A further report would be brought to the Audit Committee when there was greater clarity.
RESOLVED
To note the report.
49 REVIEW OF THE RISK MANAGEMENT FRAMEWORK
The Revised Corporate Risk Framework drew extensively on the current provisions for
identifying risk, recording risk and reviewing risk while, at the same time, developing a
different reporting structure to allow for ongoing risk assessment and review. Certain
risks needed to be reviewed by the Audit Committee on a regular basis. The Audit
Committee had a responsibility to be aware of the risks to the organization. The previous
method of reporting had given a very limited overview.
Audit Committee
5
6 December 2011
REVIEW OF THE RISK MANAGEMENT FRAMEWORK
(Continued)
The Audit Committee was asked to comment on the draft revised Framework. The
comments would be passed to the Performance and Risk Management Board for
consideration in preparing a final version.
a) There was no longer a Corporate Risk Officer. The “risk owner” was the Strategic
Director responsible for the risk and its mitigation, although the mitigation could be
owned by someone else in the directorate. Actions would be carried out by heads of
service.
b) The previous framework had lacked presentation of the dynamics, key drivers and
trends surrounding a risk. The final revised framework should be capable of
displaying these things.
c) The next step would be to populate the framework with risks and put it to the test.
d) Some authorities offered risk management training or workshops to help equip
Members and officers. The possibility of offering this at NNDC was being investigated
by the Interim Accountancy Manager and the Organisational Development Manager.
RESOLVED
That the Risk Management Framework should be taken forward to the Performance and
Risk Management Board and that the Audit Committee should keep a watching brief.
50 REVIEW OF THE PARTNERSHIP FRAMEWORK
It was an opportune time to review the Partnership Framework. Some of the partnerships
listed in the current Framework were no longer in operation and the document failed to
define or categorise partnerships effectively. The revised Framework aimed not only to
define and categorise partnerships but to provide Members with support when they
attended meetings of outside bodies, especially when their role was that of trustee.
The draft Framework was discussed:
a) Regular reports should be received on major partnerships. The revised Framework
would address this.
b) The report suggested that there were 3 levels of partnership but it was recognised
that these definitions were not absolute. The Interim Accountancy Manager would
reflect on this and revise the wording if necessary.
c) The arrangements put in place needed to be proportionate to the needs of the
partnership.
d) The governance arrangements of partnerships needed to be considered.
e) The Interim Accountancy Manager invited further comments by email.
f) The comments of the Audit Committee would be forwarded to the Performance and
Risk Management Board.
RESOLVED
That comments from the Audit Committee on the revised Partnership Framework be
collated and passed to the Performance and Risk Board to develop a final version to be
adopted by the Council.
Audit Committee
6
6 December 2011
51 PERFORMANCE MANAGEMENT FRAMEWORK REVIEW – DRAFT
The report presented the key revisions made to the Performance Management
Framework and the revised version of the document which would ensure that the
Council’s approach to performance management remained fit-for-purpose and would
ensure delivery of the priorities in the Corporate Plan.
The key changes to the framework were:
1)
2)
3)
4)
5)
Inclusion of the Annual Action Plan
Removal of Organisational Development Plans from the previous Corporate Plan
Removal of National Indicators
Removal of Local Area Agreement Indicators
Addition of collection of database of performance management reporting
including information about;
a. What is performance managed
b. Who is responsible
c. How it is managed/ by whom
d. How often
e. Where it is stored and in what format
6) Projects would be reported on quarterly (previously monthly) and the
performance system will show clearly where reporting has not taken place
The document would be circulated to all managers in NNDC and be discussed at the
regular meetings between the Policy and Performance Management Officer and
Managers to ensure smooth implementation.
The framework would be submitted to the Overview and Scrutiny Committee alongside
the first Annual Action Plan in early 2012. Comments from the Audit Committee would be
communicated to Overview and Scrutiny. It was intended that the framework would then
go to Cabinet and Full Council and be implemented in April 2012. Members requested
that it should come back to the Audit Committee in March, before it was signed off.
A Member asked how, with national performance indicators removed, we could compare
our performance. The Policy and Performance Management Office replied that NNDC
belonged to SPARSE who supplied key indicators for comparable councils. It was,
however, more important to set targets to fit the needs of North Norfolk.
RESOLVED
That a further report should be made to the Audit Committee in March 2012, before the
Performance Management Framework went to Full Council.
52 NETWORK INFRASTRUCTURE, SECURITY AND TELECOMMUNICATIONS AUDIT
A briefing note had been received from the ICT Manager updating Members on progress
with the implementation of audit recommendations. Members were satisfied with
progress and
NETWORK INFRASTRUCTURE, SECURITY AND TELECOMMUNICATIONS AUDIT
(Continued)
RESOLVED
to remove the Network Infrastructure, Security and Telecommunications Audit report
from the Action List.
Audit Committee
7
6 December 2011
53 BUSINESS CONTINUITY
a) The Business Continuity Working Group would reconvene on 15 December 2011,
meeting monthly thereafter. Members were asked if they wished to make a
nomination as there had previously been Member representation. The Chairman
advised Members that CIPFA guidance advised against the Audit Committee getting
involved in executive matters. It was decided that the Portfolio Holder, Mr J Lee,
should be asked to join the Group.
b) The Business Continuity Manager was producing a diagram which indicated the
potential risks in each service area. This would be included in the next report to the
Committee.
c) There had been 2 disruptive events recently:
i)
Very high tides on 26 November 2011: there had been significant work for the
flood wardens and minor flooding. This had led to a review of some of the
arrangements particularly regarding the shutting of flood barriers and ensuring
effective communications.
ii) Industrial Action on 30 November 2011: Civil Contingencies staff had gone round
the office checking services for ability to maintain services and meet legal
requirements. In most teams it had been a matter of deferring work until the next
day. There would be a debriefing at the Business Continuity Working Group.
d) Arrangements for provision of a generator were being reviewed. Members were
concerned that an arrangement had not yet been put in place and asked that this
should be actioned before the next meeting.
e) The corporate plan was under review. It was still valid but some posts had changed
or no longer existed.
f) In the event of the main office being unusable business arrangements could be up
and running in the Annexe in about an hour although some of the systems, such as
Revenues and Benefits, would take longer. It was acknowledged that if the disruption
to business had been caused by fire this arrangement might not be viable. If all else
failed there was still a reciprocal arrangement with Victory Housing Trust.
g) Future objectives for the next 6 months included:
i) Reinstating the Business Continuity Working Group
ii) Revising the template for team business continuity plans.
iii) Identifying those teams which needed plans.
iv) Ensuring that teams completed their individual business continuity plans.
h) In response to a question from the Committee the Environmental Health Manager
said that there were 41 teams but that some might be covered by an over-arching
plan. There would be more clarity on this when the next report was brought to the
Committee.
i) Members were concerned that there had been little progress with business continuity
over a significant period of time, although they recognised that there had been
problems regarding staffing.
RESOLVED
That the report made to the Committee in March 2012 should include information about
the risks to each service area, the number of team business continuity plans in place and
confirmation that arrangements for a generator were in place.
Audit Committee
8
6 December 2011
54 AUDIT COMMITTEE WORK PROGRAMME
The following updates were made to the Audit Committee Work Programme for March:
a) The Audit Plan, Audit Letter and Annual Grant Certification Report would be received
from PWC.
b) The Performance Management Framework would be brought back to the Committee.
c) The Self-Assessments would be brought to the Committee as an Action Plan.
RESOLVED
To note the Work Programme.
The meeting ended at 5.00 pm.
______________________
Chairman
Audit Committee
9
6 December 2011