Agenda and minutes

The Democratic Services Officer read out the procedure.

RESOLVED that a Vice-Chair was not required on this occasion.

There were none.

At this point in the meeting declarations of interest are received from Members in any of the agenda items under consideration at the meeting. Members are asked to indicate:

(a) The agenda item number in which they have an interest to declare.

(b) The nature of their interest.

(c) Whether their interest is a disclosable pecuniary interest or an other interest,  (as defined in Part 2, A and B of the Code of Conduct and Rules for Registration of Interests)

Any Member who needs to clarify any matters relating to the declaration of interests is recommended to seek advice from the Council’s Monitoring Officeror a member of his staff before the meeting to expedite dealing with the item during the meeting.

There were none.

Members agreed that the next meeting of the Committee, currently scheduled for 3 February 2015 would be deferred until 26 March 2015.

There were none.

Councillor Sandry thanked Councillor Furse for chairing the Committee during his leave of absence and also thanked officers for their support.

John Barker offered Members a choice of dates for a training seminar. It was agreed that the preferred date was 2 February 2015, with the second preference as 5 February 2015.

These were approved as a correct record and signed by the Chair.

The Finance and Resources Manager presented the report. He said that because of deadlines this report had already been to Cabinet and Council. The budgeted rate of return for investment return had remained 0.35% for four years. The average rate earned was 0.43%. Only small sums were invested. Investments continued to be focussed on UK banks. The UK was introducing legislation to implement the provisions of the EU Bank Recovery and Resolution Directive a year ahead of most EU countries. This Directive would reduce the ability of governments to bail out failing banks and would transfer risk to bank shareholders. It was anticipated this would have an adverse impact on the credit rating of banks. The Council had therefore been asked to approve an amendment to the Treasury Management Policy in line with the changes shown in Appendix 8, to allow investment in lower-rated banks, but only for very short-term loans.

[Councillor Curran arrived at this point.]

A  Member referred to paragraph 2.8 of the report. He wondered why the shortfall of £8m in cash flow had not been forecast, and why the money had been not been borrowed in the money markets. The Finance and Resources Manager explained that at the time it was known that interest rates would fall, so borrowing was deferred for a week; it did not make sense to borrow at a higher rate than would shortly be available. To reflect this type of situation a non-mandatory prudential indicator of exposure to liquidity risk had been adopted as detailed in paragraph 2.14.

A Member asked whether a credit rating of BBB would become the equivalent of a current A rating and what would be the impact if the UK left. The Finance and Resources Manager replied that the impact of the EU Directive would be spread over a few years. The UK would one of the first to implement it and other EU countries would follow over the next 2-3 years. It was to be expected that there would be a general reduction in the credit ratings given to banks. The main factor that would affect credit ratings was the degree of financial support given to banks by governments. It was difficult to say what the impact of EU exit would be.

RESOLVED:

1.  To note that the Treasury Management Report to 30^th September 2014 has been prepared in accordance with the CIPFA Treasury Code of Practice;

2.  To note the Treasury Management Indicators to 30^th September 2014;

3.  To note the amendments to the 2014/15 Treasury Management Strategy set out in paragraphs 5.19-23 and Appendix 8.

The Risk Manager presented the report. He referred to the Audit and Risk Dashboard for the second quarter of 2014/2015 and noted that only 39% of planned work had been completed. This was because of various factors as detailed in paragraph 4.3 of the report. Critical/high risk recommendations implemented stood at 67%. This figure would have been higher had 2 high risk recommendations been implemented by June, but there had been delays as detailed in paragraph 4.6. Management had now provided assurance that these recommendations would be implemented. Referring to Appendix 2, he said that of the 27 audits completed, only 3 were rated as less than satisfactory; these were detailed in paragraph 4.5 of the report. There would be a follow up for IT software licensing in August 2015 and for Parks and Green Spaces in March 2015. One of the findings in respect of Parks and Green Spaces was that the Council’s tree stock was not being inspected in line with the timescales adopted by the service. In fact it was not possible for the service to comply with these timescales within current resources, and they were reprioritising the inspection regime according to risk level.

A Member said that if Parks and Green Spaces did not have enough people to inspect all trees, the effect of the audit might be that they diverted resources to tree inspection from other areas of the service, which might then suffer. The Risk Manager replied that the service had its own methods for assessing risk and priorities and it was up to the professionals in the service to do that. What the audit team had told them was that they could not carry out their current inspection regime within current resources.

In response to a question from a Member, the Risk Manager informed the Committee that no new investigations had been launched in response to information from whistle blowers since April.

A Member asked why 17 recommendations had been made in respect of Payroll and only 11 had been implemented. The Risk Manager replied that it was important that recommendations relating to the main control systems were implemented. The Chair said that if there was resistance to implementing any audit recommendations the Committee would be expected to be informed about it.

A Member noted the large number of recommendations made by some audit reports and wondered whether the number of recommendations made was as much an indicator of things going wrong as the risk level of the recommendations. Mr Morris took up this point, and noted that for IT, a business-critical area, 25 recommendations were made. The Risk Manager explained that many of the recommendations related to the former Council offices at Riverside in Keynsham, where servers had been located. These problems had been resolved by the relocation to the new Civic Centre in Keynsham. Replying to a Member, the Divisional Director Audit and Risk said that there was no connection between the number of IT recommendations and the fact that IT  ...  view the full minutes text for item 34.

Mr Morris tabled the annual audit letter and apologised that it had not been possible to include it with the agenda. He said that it summarised issues already presented in previous reports from the external auditor. The letter would be posted on the Audit Commission website. He drew attention to the unqualified opinion on the accounts and the unqualified Value for Money conclusion and the key issues and recommendations.

The Chair asked how worrying were the “significant differences” identified between the fixed asset register and the property asset database. Mr Morris replied that the asset values were very large, so it was important that there should be an adequate system for recording them for the purpose of capital charges and valuations. The issue was also significant because it was a recurrent one. The Divisional Director Audit and Risk said that an action plan was in place to address this issue.

Mr Henderson commented on the external audit update (Appendix 1). He drew attention to the DCLG’s consultation on proposals to bring forward the audit deadline for 2017/2018 to the end of July 2018. The Council needed to give attention to the actions necessary to achieve this deadline. It would be good if Councils could achieve an earlier closing of accounts before this deadline was imposed.

The Chair asked about the inclusion of Voluntary Aided (VA) and Voluntary Controlled (VC) schools on the Council’s balance sheet (agenda page 47). Mr Morris replied that there were ongoing discussions about this issue. CIPFA  had issued a consultation document, but then had had second thoughts. It was likely that revised guidance would be issued.

Mr Henderson presented on the Audit Commission Protecting the Public Purse Fraud Briefing 2014.

RESOLVED to note the various updates from the External Auditor.

The Divisional Director Audit and Risk gave a presentation on the Council’s revised Financial Regulations. A copy of his PowerPoint slides is attached.

In reply to questions from Members he said:

·  the Regulations were more relevant to some staff than others; all financial staff were given appropriate training in them; an effort would be made to drew the attention of staff to the changes in the Regulations

·  the proposed Regulations had been discussed with the most relevant staff, but it was important to challenge them sometimes to ensure that there was compliance with national standards

·  the document would accessible on the intranet

He said that he would bring the final document to a future meeting, but he hoped that the Committee would be able to approve it at today’s meeting or at least delegate to the Chair power to approve the document. It was agreed that Members should send any detailed comments to the Divisional Director Audit and Risk, who would review them in consultation with the Chair and amend the document to reflect them.

RESOLVED to delegate to the Chair, having, in consultation with the Divisional Director Audit and Risk reviewed comments received from Members, the power to recommend to the Council the adoption of the revised Financial Regulations (Council & Schools).

This item was withdrawn from the agenda, because the officer due to give the presentation was unwell.