Agenda Item 5
Minutes of a meeting of the Audit Committee held on 7 December 2010 in the Council
Chamber, Council Offices, Holt Road, Cromer at 2.00 pm.
Members Present:
Committee: Mrs A Moore (Chairman)
Mr N D Dixon
Mr H C Lanham
Mr W J Northam
Officers in
Attendance:
Also in attendance:
The Deputy Chief Executive (for items 1 – 6), the Financial Services
Manager, the Head of Internal Audit, the Corporate Risk Officer and the
Democratic Services Team Leader.
Rob Bennett - the Partner, Public Sector Assurance,
PriceWaterhouseCoopers (for items 1 – 8)
1 APOLOGIES
Apologies were received from Mr S Partridge.
None received.
3 ITEMS OF URGENT BUSINESS
None
None
5 MINUTES
The Minutes of the meeting of the Audit Committee held on 14 September 2010 were approved as a correct record.
6 AUDIT UPDATE AND ACTION LIST
Members were updated on progress on actions arising from the minutes of the meeting of 14 September 2010. a) The presentation by Rob Bennett had taken place at Full Council on 22 September
2010. b) The Annual Audit Letter had been finalised and would come to the March 2011 meeting of the Audit Committee. A clear distinction had been made between general and specific recommendations.

AUDIT UPDATE AND ACTION LIST (Continued) c) A liaison meeting between External Audit (Sarah Brown) and Internal Audit (Sandra
King) was scheduled for 13 December 2010 to discuss potential revisions to the working protocol. d) The items on Partnership and the Risk Framework were on the Agenda. e) Lease agreements: an update was provided in the Summary of Audit
Recommendations 2009/10. In total there had been 121 leases. Of these, 72 had all the documentation in place and 32 were being progressed. There had been 17 assets for which there was no copy of a lease. 13 were now in place with 4 under review. Significant progress had been made and the work was still on target. f) Howard Burton of PwC had offered to do a de-briefing for Members on NNDC’s use of natural resources. This would be discussed in more detail with the Deputy Chief
Executive. g) Update on authorisation of journals including level adopted by other councils: this would be made at Agenda Item 7. h) Briefing on International Financial Reporting Standards (IFRS): Rob Bennett made a presentation on International Financial Reporting Standards. Paper copies of the slides were subsequently provided to Members.
The presentation was discussed:
It was unlikely that new government policy would affect the requirement for IFRS.
2010/11 would be the first year for IFRS for local government and there would be a need to restate the 2009/10 accounts in line with IFRS. This would involve significant work for the Finance and Property Services Teams in the first year and was currently being done with existing resources. CIPFA guidance notes, which were due to be received on 22 December 2010 would provide detailed information on the procedure.
There was a concern that this guidance might prove too complicated.
The Financial Services Manager would provide a briefing for Members when the
Final Accounts were produced.
Rob Bennett answered Members’ questions:
1. “Employee Benefits” referred to leave which had not been taken. There were systems in place to capture this information.
2. Progress: NNDC was rated as amber because of work in progress on the leases.
3. The “Role of Members” slide provided questions that the Audit Committee might want to ask as the IFRS process was rolled out.
4. The benefits of IFRS were consistency of financial reporting across the whole private and public sector and the consolidation of public expenditure accounting throughout the UK.
5. If NNDC couldn’t comply with the entire process and some areas were not covered this would have to be reflected in the Audit opinion.
7 AUDIT OF THE STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 MARCH
2010
The report included detailed recommendations made to managers. Agenda Item 8 was a summary of all the recommendations made in the year 2009/10. Therefore there was duplication with Agenda Item 7. The summary was, however, a requirement of the Audit
Commission.

AUDIT OF THE STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 MARCH
2010 (Continued)
The report was discussed: a) The members’ allowances for 2009/10 had been published on the Council’s website. In previous years the information had been published in the EDP but the cost had become prohibitive and there was no legislative requirement to do so. b) Appendix A contained 2 detailed recommendations – budget slippages and members’ allowances. The issue regarding budget slippages was that money was earmarked for specific schemes which were not carried out within the timescale, thus disappointing public expectation. There was a need to ensure that managers were realistic in terms of timescales required to deliver the capital programme. Changes to members’ allowances were now recorded by the
Democratic Services Team Leader on a spreadsheet for each financial year. c) Appendix B, Recommendation 2, Housing and Council Tax benefit reconciliations: a concern was expressed that a further recommendation on this item provided no confidence. The Chairman would discuss this with the Deputy
Chief Executive. d) Appendix B, Recommendation 6, members’ allowances: Rob Bennett and
Members agreed that it was not worth restating the 2008/09 figures at this distance of time. The sum of £8,669 was not one of the allowances paid to
Members but was a budget for the Chairman’s civic duties. Clarity was needed about what should be published. The important thing was that the 2009/10 figures had been correct and that the figures for subsequent years should also be correct. e) Appendix B, Recommendation 8, Suspense Accounts: the majority of suspense accounts were not long-standing. f) Appendix B, Recommendation 9, Journals: the Head of Internal Audit reported that there was a range of approaches among other councils within the
Consortium. NNDC’s limit was £100,000. Above that limit authorisation was required. g) Appendix B, Recommendation 13, Netting off of debtors and creditors: this would be kept under review for 2010/11. h) Concern was expressed at the number of recommendations from the previous year that were still to be implemented. There was a need to clear them as soon as possible. The issue was about ensuring that recommendations were implemented and did not reappear as part of the 2010/2011 accounts audit. In future years there should be updated descriptions of actions taken against each recommendation. The implementation procedure needed to be improved.
RESOLVED to receive the Audit of the Statement of Accounts for the year ended 31 March 2010.
8 2009/10 SUMMARY OF RECOMMENDATIONS
Command line access to UNIX servers: the Financial Services Manager would talk to the
Revenues and Benefits Services Manager to gain more clarity about the management response.
RESOLVED to receive the 2009/10 Summary of Recommendations

9 THE STATUS OF AGREED ACTIONS ARISING FROM FINAL AUDIT REPORTS AS
AT 31 OCTOBER 2010
The report informed Members of the progress made in implementing agreed audit recommendations as at 31 October 2010. A total of 36 system recommendations and 6 computer recommendations remained outstanding. This was a higher number than the
27 previously reported but there were only 2 high priority recommendations warranting further action.
13 of the outstanding recommendations drawn to the attention of the Committee related to Sundry Debtors and Council Tax Benefits – management had not provided a status update prior to audit verification work and the preparation of this report, so the true position regarding these recommendations was unclear, although planned audit work in
Quarter 4 would be revisiting these to establish whether further progress had been made regarding their implementation. Aside from these items cooperation was being received from managers regarding the completion of audit recommendations. It was also noted that 6 recommendations applying to partnerships had been partially actioned.
All the outstanding recommendations in the areas of Corporate Governance and Risk
Management, Car Allowances, Property Services, Project Management and
Procurement, and Remittances had now been implemented.
Only 3 of the 9 computer audit recommendations due to be progressed by this stage in the financial year had been notified as complete. However no high priority recommendations had been raised which had required implementation. A total of 4 of the outstanding recommendations were also noted as requiring action at the end of June and management had not identified that these had progressed significantly since the previous report.
RESOLVED to note the progress made in implementing audit recommendations and where further work is still required to ensure the necessary action has been undertaken.
10 PROGRESS REPORT ON INTERNAL AUDIT ACTIVITY COVERING THE PERIOD
SEPTEMBER – NOVEMBER 2010
At 22 November 2010 67% of the Annual Audit Plan had been delivered, resulting in 8 completed audit assignments. The fieldwork was either underway or complete in respect of 5 additional assignments. The contractor’s performance in delivering audits continued to improve and it was expected that the Annual Audit Plan would be substantially complete by 31 March 2011.
The Committee’s attention was drawn to 2 final reports that had been awarded “good” assurance levels. The areas concerned were Payroll and Human Resources and Data
Quality and Performance Indicators.
Members commended the officer’s report and expressed confidence in the Internal Audit
Team, considering that much progress had been made since the inception of the Audit
Committee in 2006.
RESOLVED to note the progress made by Internal Audit in delivering the Annual Audit Plan for
2010/11.

11 RISK MANAGEMENT FRAMEWORK
The Performance and Risk Management Board had reviewed the updated Risk
Management Framework on 26 November 2010. They had not made any changes.
Appendix One detailed roles and responsibilities in the Council’s risk management framework. The Overview and Scrutiny Committee was not included in the list because it had no specific responsibility in this area. Risk was the remit of the Audit Committee.
RESOLVED to approve the Risk Management Framework.
12 PARTNERSHIP REGISTER
It was observed that a system other than using green, amber and red would have been more successful in categorising risks. The Performance and Risk Management Board had made a similar observation and a different method would be used in future.
The future of some partnerships would be subject to the outcome of new government legislation. The Corporate Risk Officer would continue to receive checklists from lead officers and report to the Performance and Risk Management Board. He would bring the
Partnership Register, with any changes, back to the Audit Committee in March 2011.
Members commented that partnership working would become increasingly important to deliver services because of the resource challenges the Council was facing. Concern was also expressed that there could be duplication of work. The Council should be getting value from partnership working. The Corporate Risk Officer explained that a checklist, filled in by the Lead Officer, ascertained what resources the Council was putting into each partnership. The checklist also ensured that partnerships had appropriate governance arrangements in place. Formerly there had been a partnership list and a partnership risk register. The Partnership Register combined both documents.
The risk in each partnership was categorised according to expenditure, resource commitment and compatibility with the Corporate Plan.
RESOLVED to note the current position with regard to the Partnership Risk Register and to receive a further report on 8 March 2011.
13 CORPORATE RISK REGISTER
The Performance and Risk Management Board had reviewed the Corporate Risk
Register on 26 November 2010. The item on Waste Management (Risk 10) had been updated to reflect the award of the contract.
A concern was expressed regarding the top risk, Central Government Funding, and what controls could be put in place to mitigate the risk. The Financial Services Manager explained that until the announcement regarding grant funding was received it was necessary to work on assumptions. Different approaches had been prepared and would be used as necessary. A Member commended the Finanacial Strategy report which had gone to Cabinet on 1 November 2010.
RESOLVED to note the current position with regard to the top ten risks.

14 AUDIT COMMITTEE WORK PROGRAMME
RESOLVED to note the Audit Committee Work Programme.
The meeting ended at 4.03 pm.
______________________
Chairman