Agenda item ___5
AUDIT COMMITTEE
Minutes of a meeting of the Audit Committee held on Tuesday 19 March 2013 in the
Committee Room, Council Offices, Holt Road, Cromer at 2.00 pm.
Members Present:
Committee:
Mr N D Dixon (Chairman)
Mrs A Moore
Mr R Reynolds
Officers in
Attendance:
The Head of Finance, the Head of Internal Audit, the Revenues and
Benefits Services Manager and the Democratic Services Officer (IV).
Also in
Attendance:
Julian Rickett, Aphrodite Antoniades (PriceWaterhouseCooper)
Mr B Jarvis
Miss B Palmer
Mr D Young
39. APOLOGIES
None received.
40. PUBLIC QUESTIONS
None received.
41. ITEMS OF URGENT BUSINESS
Although there were no items of urgent business, the Chairman reported upon informal
discussions held before the meeting, to help inform the way that the Committee moved
forward. In recognition of a shortfall identified in training and development, he had
discussed with the External Audit Engagement Leader the provision of a session to
widen the skills required by Audit Committee Members. He asked that Democratic
Services make arrangements for the scheduling of such a session.
42. DECLARATIONS OF INTEREST
None.
43. MINUTES
The Minutes of the meeting of the Audit Committee held on 04 December 2012 were
approved as a correct record.
On Minute 34: Progress on Internal Audit Activity, Mr D Young enquired as to progress
on the recruitment to the Procurement Officer vacancy. The Head of Financial Services
stated that, following an earlier unsuccessful attempt to recruit, the role had now been
incorporated into that of Chief Accountant. Interviews would be taking place in the next
week and Members would be updated at the next meeting.
Following the confirmation of the commitment to reinstate the ICT Strategy Group, as
mentioned under the same Minute, Mr Young asked whether the Group had met. The
Head of Finance said that the Group had not yet been set up. The Democratic Services
Officer undertook to look into this matter.
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19 March 2013
In reply to a question from Mr R Reynolds on the absence through sickness of a member
of staff referred to in Minute 36: Business Continuity, the Head of Finance reported that
the officer had now returned to work.
44. AUDIT UPDATE AND ACTION LIST
Members were updated on progress on actions arising from the minutes of the meeting
of 04 December 2012.
A revised version of the Constitution had been completed and recently published,
incorporating all agreed changes and details requiring amendment since the previous
edition. Mrs A Moore was disappointed that it had not been possible to produce this in
the loose-leaf format for which a preference had been expressed.
The Revenues and Benefits Services Manager reported on changes whereby the
Council’s fraud investigation officers would be merged with those of the Department of
Work and Pensions, prior to the introduction of universal credit. It was now understood
that this had been put back to April 2014. The Fraud Policy would need to be amended
to reflect the changes to Council Tax Benefits. A report would go to Cabinet in
September.
The Revenues and Benefits Services Manager gave a detailed progress report on data
merging proposed under the Shared Services Partnership and subsequent events. The
situation had previously been reported to the Overview and Scrutiny Committee. The
new software incorporated the integration of Council Tax, business rates, benefits and
workflow.
The original intention had been a merged database between North Norfolk and the
Borough of King’s Lynn and West Norfolk. Following conversion, there had been
technical difficulties accessing the data held at King’s Lynn. Given these issues,
backlogs at both authorities, coping with legislative changes and poor staff morale, it
had been agreed to delay the data merge until April/May 2013.
The technical problems of accessing the data had continued, impacting on performance
and staff morale problems. It had been agreed by the Steering Group and Partnership
Board that the data would have to be returned to Cromer. Data had been transferred
back in December for testing and then “live” (subject to further testing) in January.
Deadlines had been affected by the approaching annual billing process. The system now
operated in a stable and reliable environment, with the speed of operation,
performance and staff morale improving considerably. Benefits claims were now being
processed in 10-11 days, as opposed to 44 days. The year end had been challenging,
but Council tax bills and benefits statements had all been issued.
In thanking the Revenues and Benefits Services Manager for her report, the Chairman
asked whether she felt any lessons had been learned by the Council. In reply, the officer
stated that assurances had been given that the software would work; this was confirmed
by testing, but not supported when volume was applied. In reply to a question from Mr B
Jarvis, she added that this experience had not been discouraging; the need to be more
challenging had been taken on and had to be put into practice if similar projects were to
be undertaken.
Business Continuity was considered under a separate agenda item (see Minute 48
below).
Other actions had been completed as set out in the report.
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45. CERTIFICATION REPORT (2011/12) – REPORT TO THOSE CHARGED WITH
GOVERNANCE
Julian Rickett, External Audit Engagement Leader, explained that the issue of the Annual
Certification report met an Audit Commission requirement. Certification work was carried
out by external auditors, effectively as agents for the Audit Commission, as a form of
assurance engagement in relation to bodies who made grants to local authorities; it
involved the application of prescribed tests in accordance with certification Instructions,
to give reasonable assurance that claims and returns were fairly stated and in
accordance with specified terms and conditions. He drew attention to claims and returns
certified, with qualifications, in respect of the Housing and Council Tax Benefits Scheme
and the National Non-Domestic Rates, and appendices covering the Management Action
Plan and Certification Fees.
`Mr D Young noted that, in both certified claims, the original and final values remained
constant. Mr Rickett confirmed that this meant that in each case the claim had been
accurate. In reply to a further question from Mr Young, Mr Rickett explained that the
statement on the possibility of a reduction of fees in certain circumstances (Appendix A)
was a standard comment; the areas shown where an authority’s performance could
possibly be improved was not an indication of any weakness on the part of North Norfolk
in these fields.
In reply to Mr R Reynolds, Mr Rickett stated that training for benefits assessors was
ongoing, as agreed in the management response to a recommendation on the Housing
and Council Tax Benefits Subsidy Claim. On the same subject, Mr Rickett confirmed that
the issue of non-compliance with all deadlines for the submission of claim forms had
been addressed.
RESOLVED
That the Certification Report for 2011/12 be accepted.
46. EXTERNAL AUDIT PLAN 2012/13
The External Audit Engagement Partner presented the Audit Plan, which had been
developed with the assistance of Council Members and Officers. He asked the
Committee to consider the proposed scope, whether Members were comfortable with the
audit risks and approach, to consider and respond to the matters relating to fraud and to
agree fees.
The section of the plan relating to Risk Assessment highlighted the two areas of
management override of controls and revenue recognition and the risk of fraud inherent
in both areas. He stressed that the identification of both as “Significant” risks applied to
organisations generally; risks classified as “Elevated” in these areas were also common
among authorities. In reply to a question from Mr Young, he commented that the Plan
contained little in the way of material changes and that the “Significant” and Elevated”
risks were the same as for the previous year.
Members noted that the proposed fees had decreased. Mr Rickett explained that this
was mainly due to changes in the Audit Commission’s billing arrangements.
The Committee expressed its satisfaction with the scope of the plan, the risks and the
general approach taken.
RESOLVED
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1) That the External Audit Plan for 2012/13 be agreed
2) That the proposed audit fees for the year be approved.
47. INTERNAL AUDIT’S TERMS OF REFERENCE, PERFORMANCE INDICATORS,
CODE OF ETHICS, STRATEGY, AUDIT PLANS AND SUMMARY AUDIT
COVERAGE INFORMATION FOR 2013/14
The Head of Internal Audit explained that the report provided an overview of the stages
to be followed towards ensuring that the service met the requirements set out in the
Accounts and Audit Regulations 2011 and appropriate professional standards. The
report also aimed to clarify the links between the various documents presented for
approval to that end.
Current provisions mirrored CIPFA Code of Practice requirements. However, on 1 April
2013, new Public Sector Internal Audit Standards would be introduced. Detailed
guidance on the new standards would not be available before then and, once this had
been published, all aspects of service delivery and documentation would be reviewed
and updated as necessary.
It was known that the proposed Code of Ethics completely reflected the new standards.
The Audit Strategy included a rationalisation exercise which reduced standard times for
many tasks. The resultant savings were identified in the Strategic Audit Plan, which had
been prepared according to current conditions. Detailed consultation had taken place in
the preparation of the Annual Audit Plan, which would serve as the work programme for
the Council’s internal audit services contractor, Deloitte Public Sector Internal Audit Ltd.
The Summary of Internal Audit Coverage documentation provided a good overview and
a framework for the next year’s tasks; it gave service areas a good idea of where Internal
Audit would be concentrating its efforts, whilst at the same time allowing for flexibility.
The Map of Audit Assurances indicated how the controls worked.
Mr Young asked whether another audit was planned on the subject of ”Whistleblowing”
and also when the IT Network infrastructure would be looked at again. In reply, the Head
of Internal Audit said that the “Whistleblowing” problem had been rectified by the
production of a comprehensive policy; the Monitoring Officer had considered that what
had been required was an update of earlier material. The IT Network Infrastructure would
be looked at again in October.
The Chairman emphasised the importance of the documentation in setting the scene for
the coming year, bringing together Internal and External Audit, Management and the
Audit Committee. It was therefore essential that the Committee was satisfied that what
was eventually agreed represented a good approach with adequate coverage. The Head
of Internal Audit explained how Internal and External Audit worked closely together. The
Chairman recognised the benefit of this to the Council, as well as the value of the Head
of Internal Audit’s work with other organisations.
RESOLVED
That the following be approved:
Internal Audit’s Terms of Reference and Performance Indicators for 2013/14
Internal Audit’s Code of Ethics for 2013/14
Internal Audit Audit’s Strategy for 2013/14
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The Strategic Audit Plan for 2013/14 to 2015/16
The Annual Audit Plan for 2013/14
The Summary of Internal Audit Coverage for 2013/14
48. BUSINESS CONTINUITY
The Civil Contingencies Manager had been unable to attend the meeting, but had
submitted a paper providing a six-monthly update on Business Continuity planning.
The Chairman reminded Members that this topic had given rise to concerns for some
time and there was still work to be done towards the production of a plan that would
ensure an agreed standard of continuity for business operations.
Members had some sympathy with the difficulties of co-ordinating the completion of
plans for all service areas. There was general agreement with the observation by Mr B
Jarvis that a third column in the chart attached to the agenda, setting target dates, would
be useful. Not only would this give the Committee forecasts for consideration, but also
assist the Civil Contingencies Manager in securing the necessary action. The Chairman
suggested that the Civil Contingencies Manager be asked to provide this information to
Members in advance of the June meeting, so that the Committee was in a position to
review the matter at that time.
RESOLVED
1) That the contents of the report be noted
2) That the Civil Contingencies Officer be asked to attend the next meeting and, in the
meantime, to provide forecast completion dates for the respective Business
Continuity documents.
49. AUDIT COMMITTEE WORK PROGRAMME
The Chairman referred to the Work Programme for the Committee up to December
2013, as set out in the agenda. He pointed out that the subject of Risk would now be
coming to the June meeting.
RESOLVED
To note the Work Programme.
The meeting ended at 3.30 pm.
______________________
Chairman
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