Meeting documents

1 EMERGENCY EVACUATION PROCEDURE

The Clerk read out the procedure.

2 ELECTION OF VICE-CHAIR(PERSON)

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

3 APOLOGIES FOR ABSENCE AND SUBSTITUTION

Apologies were received from Cllrs Armand Edwards and Bryan Organ. Cllr Nicholas Coombes substituted for Cllr Armand Edwards.

4 DECLARATIONS OF INTEREST

There were none.

5 TO ANNOUNCE ANY URGENT BUSINESS AGREED BY THE CHAIRMAN

There was none.

6 ITEMS FROM THE PUBLIC - TO RECEIVE DEPUTATIONS, STATEMENTS, PETITIONS OR QUESTIONS

There was none.

7 ITEMS FROM COUNCILLORS AND CO-OPTED AND ADDED MEMBERS

There were none.

8 MINUTES: 28^TH SEPTEMBER 2009

These were approved as a correct record, subject to the following amendment:

They were duly signed by the Chairman.

9 REVISED AUDITED STATEMENT OF ACCOUNTS 2008/09

The Divisional Director - Finance presented the report. He reminded Members that this was the third time that the 2008/09 Accounts had come before the Committee. He said that there were three main things to note:

The Director of Resources and Support Services said that he had signed off the accounts in his capacity as Section 151 Officer. The District Auditor commented that he had received two valuations of the Investment Estate, one in-house, the other from an independent valuer. He believed that a sensible resolution of the issue between the Council and the auditors had been reached. A Member suggested that the levels of voids and market rental values were better indicators than indices based on sales. The Director of Resources Support Services responded that void levels of Council properties were very low. However, it had been difficult to increase rents when they were reviewed, so that rent income had not increased by as much as assumed when preparing the budget.

The Chairman noted that Members had been advised that the adjustments were simply balance sheet issues, but wanted clarity about any potential future impact on the Council' future finances. The Director of Resources and Support Services replied that matters were included in the accounts because their disclosure was required by regulations. If the Council were an investment company the valuation of the property estate would be a significant issue, but he felt that it was not significant for the Council.

A Member asked why the settlement of the Bath Spa dispute had been entered in the 2008/09 accounts. The District Auditor clarified that this was because it was an accounting principle that material events occurring after the end of the accounting period but before the completion of the audit and which might affect the fairness of the picture given by the accounts should be noted in them. The accounting period ended on 31 March and the accounts were originally signed off in September, but the issue of the audit opinion had been delayed until 30 November because of outstanding issues. The settlement of the Bath Spa claim had been agreed in November and was a material event, so it was necessary that it should be recorded in the 2008/09 accounts. The Chairman asked whether money put into the exceptional risk reserve as a contingency against Bath Spa claims was now available for other purposes. The Director of Resources and Support Services replied that money from the settlement would be received in instalments over two years. It would be taken into account when the exceptional risk reserve was adjusted as part of budget setting for 2010/11 and would be recorded in the 2009/10 accounts, subject to the resolution of disclosure issues. He reminded Members that the exceptional risk reserve had been established to meet potential claims from the Spa and from Single Status.

RESOLVED that the Committee notes the decisions already taken by the S151 Officer and Chair of the Audit Committee in signing off the 2008/09 accounts by 30^th November and formally recognises those decisions.

10 EXTERNAL AUDIT AND THE AUDIT COMMISSION: PRESENTATION BY THE DISTRICT AUDITOR

The District Auditor gave a presentation. A copy of his slides is attached as an appendix to these minutes.

He explained the difference between the statutory role of the Audit Commission and its role when appointed as External Auditor. Its statutory role was defined by the Audit Commission Act 1998. Audit Commission staff who were acting as External Auditors were subject to the Code of Audit Practice for Local Government Bodies 2005 and acted independently of the Audit Commission. The Code of Audit Practice was reviewed every five years and was subject to Parliamentary approval. The Code set out the auditors' powers and the framework for the conduct of the audit and for the Value for Money judgement.

A Member asked whether the External Auditors intended to revert to the previous practice of issuing an audit plan indicating proposed outputs and timescales. The District Auditor replied in the negative, commenting that the plan used to be produced in January or February, but referred to work that would take place 18 months later. The Fee Letter was more detailed and more up to date, because it listed work that would be done in no more than 12 months time. The Member expressed concern that the delivery process and timescales for the proposals in the Fee Letter were not clear and that there was no linkage between the External Audit proposals and the plans of Internal Audit. He felt that a costed plan with timescales for outputs would facilitate better monitoring. The District Auditor replied that an external inspector had criticised the separation of the Fee Letter from the workplan and the issuing of a workplan 18 months before the work was to be done.

[Cllr Brian Webber left the meeting at this point.]

11 ANNUAL AUDIT LETTER - AUDIT 2008/09

The District Auditor introduced this item. He said that everything in the letter, which was aimed at the general public, should already be familiar to Members. The key messages were set out on pages 3 (financial statements) and 4 (value for money). The External Auditors were broadly happy with the governance arrangements for Council/PCT integration and the West of England Partnership, as indicated on pages 11 and 12.

A Member noted the statement in paragraph 6 on page 3 that two objections had been received from members of the public to the Council's financial statements, and wondered whether these related to Bath Western Riverside. The District Auditor replied that they did not, though another member of the public had stated they might bring such an objection. The subject matter of the two objections so far received was described in paragraph 18. The External Auditors had to make fine judgments in relation to complaints from the public and could be challenged by judicial review if they failed to give them due consideration. A Member asked whether there was scope for refusing to investigate complaints on the ground that they were vexatious. The District Auditor replied that there was no provision for classifying complaints as "vexatious". Repeat complaints also had to be given due consideration, otherwise the Auditors could be accused of having predetermined views. However, investigation of complaints took up a lot of time and it might be possible to adopt a more robust approach to determining which ones really merited investigation.

A Member noted the comments in paragraph 22 about the fall in the funding level of the Avon Pension Fund and suggested that there needed to be a detailed audit plan for the Fund, to include a review of the performance of its investment managers. He also suggested that the relationship between Corporate Audit Committee and the Pension Fund needed to be formalised. The District Auditor replied that there was a separate Fee Letter and audit plan for the Pension Fund, though the Corporate Audit Committee approved its Governance Statement. The Director of Resources and Support Services said that the Avon Pension Fund Committee (APFC) had established an Investment Panel, one of whose functions would be to scrutinise the performance of the investment managers. He added that the APFC had undergone significant changes in the year, including the appointing of voting member nominated by the other three Unitary Authorities, the higher and further education sector and the trade unions. The governance of the Fund was now an example of best practice. It was true that the level of the Fund had dropped significantly because of the fall in the stock market, but its performance was, nevertheless, in the upper quartile of local authority pension funds.

RESOLVED to approve the Annual Audit Letter for the year 2008/09.

12 USE OF RESOURCES - 2008/09 ASSESSMENT

The District Auditor introduced this item. He said that the scores given for the various Themes and Key Lines of Enquiry (KLOEs) fed into the Council's overall value for money rating. He explained that a score of 2 or above for any Theme or KLOE meant that it was at least "adequate". Bath and North East Somerset's arrangements for delivering economy, efficiency and effectiveness were adequate and no individual Theme or KLOE was rated as less than adequate.

Replying to a Member who had asked how much work would need to be done to raise the ratings of 2 to 3, the District Auditor said that in some cases not much at all, in others a bit more. Mr Hackett added that the Council needed to demonstrate that it had reviewed and changed arrangements in the areas scoring 2.

A Member commented that basing the assessment on financial years prevented the consideration of more current evidence. The District Auditor agreed that the assessment and the value for money judgment were retrospective. He had had to form his view by 30 September following the end of the relevant financial year. The Comprehensive Area Assessment (CAA), however, could take somewhat later information into account. The Director of Resources and Support Services said that he was concerned by how outdated some of the evidence used in the assessment was. The comment on the Council's use of natural resources was actually written before work on the Council's policy on this had begun. A number of lean reviews had recently been completed, which had demonstrated a keen awareness of costs. A Member noted that some of the recommendations in the assessment had already been implemented, that carbon reduction in B&NES was ahead of schedule and that B&NES was one of the leading Councils on this. The District Auditor responded that the use of resources assessment process would remain the same in 2009/10, but would undergo a route and branch review during 2010, which might impact on the form of the process in 2010/11.

The Chairman noted the contrast in the comments about the Council's financial reports in paragraphs 29 and 30 of the Assessment. The District Auditor replied that paragraph 29 referred to forecasts and paragraph 30 to the accounts. The contrasting comments reflected the fact that the Council had put a higher priority on, and more effort into, forecast reports than the accounts. The Director of Resources and Support Services commented that the errors in the accounts related to only a tiny proportion of the total spend, though it certainly was an aspiration to reduce the number of adjustments required to the accounts.

RESOLVED to note the results of the Use of Resources assessment for the year 2008/9 and to monitor the implementation of recommendations at the April 2010 meeting of the Committee.

13 EXTERNAL AUDIT REVIEW OF THE INTEGRATION OF ADULT AND CHILD SOCIAL CARE, HEALTH AND HOUSING

The District Auditor introduced the item. He said that the External Auditors were working closely with the PCT. The aim of the review had been to ascertain how good the integration arrangements were. The main conclusions were given on pages 5 and 6 of the review report. Overall the conclusions were positive, though the two organisations were not yet taking all opportunities to exploit their respective strengths and did not clearly express how the success or otherwise of the integration would be measured and demonstrated to stakeholders.

The Chairman said that he wanted a clear understanding of the risks involved in the integration, as this was a concern to many Councillors. He wanted to understand the risks that were common to all such partnerships and those that were specific to this one. He noted that a new Chief Executive of the PCT/Director of Adult Services was being recruited and that a B&NES Councillor would be participating in the recruitment process. The Head of Audit, Risk and Information said that consideration was being given to a joint Council/PCT audit committee meeting to consider joint risks for the partnership. The Chairman said that a fact-finding meeting would need to take place to determine whether formal joint committee arrangements were needed. A Member expressed concern that when public spending cuts were made the Council might have to assume the full funding of something that had previously been jointly funded. The Director of Resources and Support Services recommended that Members read the report by the Audit Commission entitled Means to an End: Joint Financing across Health and Social Care in which B&NES is commended as an example of good practice. He added that because there was as yet no national framework for this kind of partnership, there were differences in the way they were implemented in different areas.

A Member was concerned that the auditors had felt it necessary to make Recommendation 1 in the report:

The Director of Resources and Support Services responded that there had been some relevant information in the report that went to the Council in May. He thought this Recommendation was closely linked to Recommendation 5:

and that the current direction of travel was right, though the objectives needed to be developed. However, the Member thought there were issues of leadership and communication with the staff in the partnership. The Chairman concurred, and said that the staff would work better if they had a better understanding of what they were doing and why they were doing it. The Member at first wished to move a motion seeking a response from a Cabinet Member, but accepted the advice of the Head of Audit, Risk and Information that as the action plan was near to completion it would appropriate to wait until it came to the Committee for approval together with the responses of relevant parties.

RESOLVED to note the results of the review and monitor the implementation of recommendations at its April 2010 meeting.

14 EXTERNAL AUDIT REVIEW OF THE COUNCIL'S MANAGEMENT OF ITS IT CONTRACT

Mr Hackett introduced this item. He said that the audit plan process centred on the identification of management risk. The results of the review had been discussed with officers and that actions were being taken in response.

The Director of Resources and Support was pleased to report that the Council's relationship with its IT contractors, Mouchel, had significantly improved.

A Member noted Recommendation 2:

and asked whether the next ICT contract would be more tightly specified. The Head of Audit, Risk and Information said that three things were required in order to implement the recommendation: proper management of the ICT contract, clarity about technical standards and the right advice from a technically competent person. The Director of Resources and Support thought that there was no evidence that the Council's IT objectives could be achieved through contract specification. Contract negotiations were always challenging, and would be increasingly so in future with government funding cuts on top of the usual requirement for 4% efficiency savings. Some local authorities were hamstrung by the rigidity of their ICT contracts, but B&NES was lucky that Mouchel recognised where the Council wished to go and was being responsive. The Head of Audit, Risk and Information added that the current ICT contracts, which commenced 6 years ago, aimed to secure innovation from the contractor. The challenge when negotiating the next ICT contract would be to combine scope for innovation and effective response to a changing environment with the necessary clarity and rigour.

RESOLVED to note the results of the review and to monitor the implementation of recommendations at the April 2010 meeting.

15 EXTERNAL AUDIT PROGRESS REPORT UPDATE

The District Auditor introduced this item. He said that the Auditors' report listed the planned outputs with their planned and actual delivery dates.

He explained that in the case of the West of England Partnership, the draft report would be circulated to the four Chief Executives and once they had agreed it, it would be presented to the Chief Executive of the Partnership and the four Group Leaders. He then thought it should go to the Partnership Board and be signed off by the Chief Executive of the Partnership..

RESOLVED to note the report.

16 DATES OF FUTURE MEETINGS

Members noted the dates of the meetings in 2010:

2^nd February, 4^th May, 22^nd June, 21^st September, 7^th December.

The meeting finished at 7.25 pm.

Chairman................................

Date signed and confirmed.........................