Agenda Item
5___
AUDIT COMMITTEE
Minutes of a meeting of the Audit Committee held on 7 June 2011 in the Council
Chamber, Council Offices, Holt Road, Cromer at 2.00 pm.
Members Present:
Committee:
Members in
Attendance:
Officers in
Attendance:
1
Mr N D Dixon (Chairman)
Mr B Jarvis
Mrs A Moore
Mr J Punchard
Mr D Young
Mr K Johnson, Mr P W Moore
The Deputy Chief Executive, the Strategic Director – Information (for
item), the Financial Services Manager, the Deputy Audit Manager, the
ICT Manager (for item 16), the Environmental Health Manager (for item
17) and the Democratic Services Team Leader.
CHAIRMAN’S ANNOUNCEMENT
The Chairman welcomed Members to the first meeting of the new Audit Committee.
Introductions were made, followed by a guide to the work of the Audit Committee,
presented by the Chairman. This is attached at Minutes Appendix A.
Councillor Ann Moore was thanked for her Chairmanship of the Committee from 2007 –
2011. It was hoped to maintain the energy and enthusiasm she had brought to it.
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APOLOGIES
Apologies were received from Mr R Oliver.
3
PUBLIC QUESTIONS
None received.
4
ITEMS OF URGENT BUSINESS
None
5
DECLARATIONS OF INTEREST
None
Audit Committee
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7 June 2011
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MINUTES
The Minutes of the meeting of the Audit Committee held on 8 March 2011 were
approved as a correct record after the following drafting amendment. Mr P W Moore had
been in attendance.
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AUDIT UPDATE AND ACTION LIST
Members were updated on progress on actions arising from the minutes of the meeting
of 8 March 2011. Item 3 (“To provide more detailed results of NNDC’s use of natural
resources”) was discussed. The Deputy Chief Executive explained that the regime
requiring this information had been abolished. She would ask PriceWaterhouseCoopers
for any work they had done on this and would report back to the next meeting.
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REVIEW OF THE EFFECTIVENESS OF INTERNAL AUDIT
The Accounts and Audit Regulations 2011 required that a Council the size of North
Norfolk must perform a review of the effectiveness of the internal audit function, and that
this review be undertaken by the same body that reviewed the effectiveness of the
system of internal control (namely the Audit Committee).
Through undertaking a review of internal audit’s effectiveness, members could be
satisfied that the critical assurances provided were reliable and based upon a firm
foundation, and that the service itself was operating effectively. The review (attached at
Appendix A to the report) evaluated the service provided to North Norfolk District
Council against a range of 7 measures which had been established by the Head of
Internal Audit to benchmark the effectiveness of the service. As a result of the review it
had been deemed that the internal audit service was effective,
The report was discussed:
a) The assurances tended to be about the processes used rather than the outcomes.
The Chairman requested that, in future, the evidence which underpinned the
assurances could be included. The Deputy Audit Manager explained that this
information came to the Committee via other reports.
b) It was requested that, in future, more information should be provided on supporting
the development of the System of Internal Control.
c) Work could be done outside the meeting between the Deputy Audit Manager and the
Chair of Audit to ensure that specific elements were included in the review.
d) External Audit’s Reliance on Internal Audit’s Work: there were mechanisms for
evaluating this. A revised Audit Working Protocol had been approved by the Audit
Committee in March 2011. The Annual Audit Letter for 2010/11 reinforced the
intention of External Audit to place reliance on the work performed by Internal Audit.
During the year meetings had been held with the Engagement Leader and
Engagement Manager to evaluate how to work most effectively together to reduce
the cost of audit to the Council. Regular meetings were held between key audit staff
to discuss progress, key findings and issues arising. The Chairman commented that,
as in the effectiveness of internal audit, this demonstrated the processes, rather than
the reliance.
RESOLVED
To note the findings of the review and take this into consideration when receiving
Internal Audit’s Annual Report and Opinion, and the Council’s Annual Governance
Statement.
Audit Committee
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7 June 2011
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INTERNAL AUDIT’S ANNUAL REPORT AND OPINION 2010 - 2011
The report followed on from the previous item.
On the basis of audit work undertaken in 2010/11 it was the overall opinion of the Deputy
Audit Manager that the Council’s overall control environment was adequate in
accordance with the definitions/categories in Appendix E to the report. The majority of
the work had been previously reported to the Audit Committee.
The Committee had received periodic reports on the progress in delivering the Annual
Audit Plan, including summaries of completed audit assignments. The Internal Audit
Annual Report and Opinion 2010 - 2011 included an overview of the work delivered
within the 2010/2011 Annual Audit Plan, management summaries of the completed audit
assignments not previously presented to the Committee and the audit opinions that had
been given since 2008/09 under the present audit arrangements.
In response to a Member’s question the Deputy Audit Manager reported that all high
priority recommendations had now been resolved.
RESOLVED
To receive and note Internal Audit’s Annual Report and Opinion for 2010/11, particularly
the overall opinion on the Council’s control environment.
10 THE STATUS OF AGREED ACTIONS DUE FOR IMPLEMENTATION BY 31 MARCH
2011
The performance in implementing agreed recommendations remained largely as before
with just over 50% being implemented by the due date.
The Environmental Health audit had 3 medium and 3 low priority recommendations
outstanding across several different elements of the service (licensing, contaminated
land, pest control and stray dogs). In respect of the 3 medium priority recommendations,
2 required the letting of formal contracts, the tendering for which was in progress; the 3rd
recommendation related to the updating of the contaminated land system, which
management report was now “60%” complete.
There were no high priority recommendations outstanding.
RESOLVED
To note the progress made in implementing recommendations, and those areas where
further work was required.
11 ANNUAL REPORT OF THE AUDIT COMMITTEE 2010 - 2011
An introduction had been written by the previous Chairman. This would be incorporated
into the final document which would go to Full Council on 28 June 2011. Members
discussed if it was necessary to produce an Annual Report from the Audit Committee.
There was no statutory requirement to do so, but it was considered to be best practice
and raised the profile of the Committee at Full Council. Members were asked to consider
if they wished to produce a report for 2011 – 2012 and to take economies into account.
The report was discussed:
Audit Committee
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7 June 2011
ANNUAL REPORT OF THE AUDIT COMMITTEE 2010 – 2011
(Continued)
a) The Internal Audit Consortium would not be making a joint response to the
consultation of the Future of Local Public Audit. This was because the Councils
within the Consortium had differing arrangements and would be making individual
responses.
b) The Committee would make input into NNDC’s response via the Chairman. A date
would be arranged for Members to meet together and discuss their response.
c) A concern was expressed that Audit Committees could, in the future, have a
proportion of non-elected representation.
RESOLVED
to approve the Annual Report and Introduction ahead of its presentation to Full Council.
12 PARTNERSHIP WORK AND RISK
An oral report was given by the Deputy Chief Executive.
Partnership Work was the one area where there were still outstanding recommendations.
A Partnership List and Risk Rating document had been presented to the Audit
Committee on 7 December 2010. This showed the partnerships which had been
evaluated from a governance point of view. The Deputy Chief Executive was preparing a
report for a complete review of all partnerships and outside bodies, as requested by
Cabinet. The report would also come to the Audit Committee.
The Partnership List was discussed:
a) The partnership with NORSE had been contractual and had now ceased.
b) The North Norfolk Community Partnership was the local strategic partnership and
faced change because of the Localism Bill. It received funding from NNDC of
£70,000 per annum which was a significant sum.
c) Concessionary travel was now the responsibility of Norfolk County Council.
d) The list needed a complete review and update with more comprehensive information.
Some of the partnerships involved significant sums of money and their effectiveness
needed to be considered.
e) The Audit Committee supported the review.
RESOLVED
To note the current position regarding the partnership review.
13 MONITORING OFFICER ANNUAL REPORT 2010 - 2011
At NNDC there were 3 statutory roles – the Head of Paid Service, the Section 151
Officer and the Monitoring Officer.
The report of the Monitoring Officer was produced every year and contributed toward the
Annual Governance Statement. The role of the Monitoring Officer was to ensure that the
Council was doing what was right and legal. The principal duties of the Monitoring Officer
were set out in the report.
a) The Code of Conduct would change significantly over the next 12 months. There had
been a significant reduction in the number of complaints the Council had dealt with in
2010/2011. Only 2 breaches had been found as opposed to 10 the previous year.
Audit Committee
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7 June 2011
MONITORING OFFICER ANNUAL REPORT 2010 – 2011
(Continued)
Standards for England would shortly be abolished by the Government. The Register
of Members’ Interests would become the key document for the future. It was believed
that the Monitoring Officer would still be the first point of reference when considering
if a complaint should be referred to the police.
b) Any future Standards regime needed to be effective so that it gave confidence to
those who had cause for complaint. Any complaints system needed to be sufficiently
flexible to resolve complaints at the lowest possible level.
c) Three audits had been undertaken of relevance to the work of the Monitoring Officer.
They were an Ethical Governance audit, a Conveyancing, Data Protection, Freedom
of Information and Gifts and Hospitality audit and a Corporate Governance and Risk
Management audit. The audit opinion for each of these reviews was that the
Council’s arrangements provided adequate assurance.
d) The report was commended for its thoroughness.
RESOLVED
To note the report.
14 LOCAL CODE OF CORPORATE GOVERNANCE AND ANNUAL GOVERNANCE
STATEMENT 2010/11
The Annual Governance Statement was probably the most important statement received
annually by the Audit Committee. It was included in the Financial Statements. The Local
Code of Corporate Governance had been included to enable Members to consider the
Annual Governance Statement.
The Annual Governance Statement was a statutory document and had to be audited. It
derived from 6 principles identified in The Good Governance Standard for Public
Services (2004):
a) Focussing on the purpose of the authority and on outcomes for the community and
creating and implementing a vision for the local area.
b) Members and officers working together to achieve a common purpose with clearly
defined functions and roles.
c) Promoting values for the authority and demonstrating the values of good
governance through upholding high standards of conduct and behaviour.
d) Taking informed and transparent decisions which are subject to effective scrutiny
and managing risk.
e) Developing the capacity and capability of members and officers to be effective.
f) Engaging with local people and other stakeholders to ensure robust public
accountability.
The Audit Committee provided independent assurance to the Council in relation to the
effectiveness of the risk management framework and internal control environment. The
Committee received regular reports on risk management, internal control and
governance matters in accordance with its agreed work programme. Of the 18 internal
audit assignments completed during 2010/11 the level of assurance achieved was
adequate overall. Only one assignment (Network Infrastructure) received a limited
assurance, although this did not include any high recommendations and of the 18
recommendations made seven have already been implemented. The Audit Committee
asked for further work to be done on this. Two audits received a good assurance level
Audit Committee
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7 June 2011
LOCAL CODE OF CORPORATE GOVERNANCE AND ANNUAL GOVERNANCE
STATEMENT 2010/11
(Continued)
and no area reviewed had deteriorated in their direction of travel since the previous
review.
There were 2 action points arising from 2010/11 with a target date of September 2011
for completion:
a) Service level risk assessments should be completed by all service managers with all
service level risk registers added to the TEN system.
b) Review of the governance arrangements for significant partnerships and the policies
and procedures for evaluating the effectiveness of partnerships.
No other key risks had been identified.
The report was discussed:
a) If a Civil Contingencies Manager was not appointed soon there could be a potential
risk to the authority. The Audit Committee noted that this was an action point which
needed to be monitored. The Deputy Chief Executive would add a comment and
action point on the review to indicate that the Audit Committee had concerns about
the risk regarding Business Continuity and Civil Contingencies.
b) Section 4.4.10: the following bullet point should be removed: “A Licensing
Committee, which monitors and reviews the effectiveness of the Council’s licensing
policy and procedures.”
c) A diagram of how the organisation worked should be included as an appendix.
d) In section 5.2.10 “The Audit Committee met throughout the year” should be changed
to “The Audit Committee met 4 times.”
e) It was important to include quantitative and qualitative information to strengthen the
evidence. The direction of travel over a period of time also indicated effectiveness.
f) The Deputy Chief Executive would consider the Committee’s suggestions for next
year’s report.
RESOLVED to
1.
2.
3.
Recommend to Full Council that the Annual Governance Statement 2010/11 be
approved, subject to amendments.
Note that there would be a more detailed review of the Code before the
Corporate Plan is revised in September.
Hold an informal meeting of the Audit Committee, possibly in August, to discuss
review of the Code and work on the Corporate Risk Register. (See item 15
below)
15 CORPORATE RISK REGISTER
Members were presented with the top ten risks which had been identified by the
Performance and Risk Management Board. The Register had last been reviewed on 13
March. The Performance and Risk Management Board was scheduled to meet again
soon and the Risk Register would be reviewed as part of the work on the new corporate
plan. There were no significant changes since the Risk Register last came to the
Committee in December 2010.
Audit Committee
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7 June 2011
CORPORATE RISK REGISTER
(Continued)
The informal meeting of the Audit Committee (see item 14 above) should include
discussion of the Corporate Risk Register and its current format.
RESOLVED
To note the Corporate Risk Register.
16 REPORT ON NETWORK RECOMMENDATIONS
The report was in response to a request from the Audit Committee.
The Network Infrastructure, Security and Telecommunications Audit had been
comprehensive. Although there were no high level recommendations the audit had been
given a limited assurance and the Audit Committee had expressed concern that there
might be an underlying problem. The ICT Manager told the Committee that there were
no underlying issues and that the ICT Strategy Group had reviewed the evidence and
was satisfied. There were no high risk recommendations and the action plan addressed
the recommendations made.
The Audit Committee asked for review on progress on the Medium and Low risk
recommendations for the next meeting.
17 BUSINESS CONTINUITY
a) In the last 12 months there had been little progress regarding Business Continuity
and there had been a vacant post (Civil Contingencies Manager) since February
2010. Recruitment had been postponed because of a departmental restructure and
there had been further postponement because of a possibility of partnership working
with Norfolk County Council. It had been decided that it would be more beneficial to
keep resources within the District and recruitment was now in process.
b) The Business Continuity Working Group, which had Member representation, had
remained suspended. The new Civil Contingencies Manager would have to reinstate
it as a priority.
c) There had been an arrangement with the Fire Service to provide space in the Cromer
and North Walsham fire stations should this be necessary. Since autumn 2010 there
had been a reciprocal agreement with Victory Housing Trust for space and IT
facilities. For this reason the arrangement with the Fire Service was being
terminated, saving £1600 per annum in rental costs.
d) There had been a control centre in the Committee Room which was no longer
necessary. This contract had been cancelled at a saving of £1000 per annum.
e) No events disruptive to business had occurred recently at NNDC.
f) A fire alarm test had been successfully carried out at the Cromer office on 11 May
2011.
g) The Multi-Agency Flood Plan had been revised but was subject to review by the
Norfolk Resilience Forum.
h) There had been a successful test of plans associated with major flooding. This had
provided flood wardens and residents with assurance that plans were adequate.
i) An event on 19 July 2011 would encourage town and parish councils to consider
their own resilience in the event of a long term disruption.
Audit Committee
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7 June 2011
18 AUDIT COMMITTEE WORK PROGRAMME
The Audit Committee Work Programme was noted and would be updated to reflect the
Committee’s discussions.
The meeting ended at 4.45 pm.
______________________
Chairman
Audit Committee
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7 June 2011