MAIDSTONE BOROUGH COUNCIL
AUDIT COMMITTEE
Minutes (PART i) of the meeting held on
16 January 2012
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Present: |
Councillor Nelson-Gracie (Chairman) and Councillors Butler, Field, Warner and Yates |
67. Apologies for Absence
There were no apologies for absence.
68. Notification of Substitute Members
There were no Substitute Members.
69. Notification of Visiting Members
There were no Visiting Members.
70. Disclosures by Members and Officers
There were no disclosures by Members or Officers.
71. Disclosures of Lobbying
There were no disclosures of lobbying.
72. Exempt Items
RESOLVED: That the item on Part II of the agenda be taken in private as proposed.
73. Minutes (Part I) of the meeting held on 28 November 2011
RESOLVED: That the Minutes (Part I) of the meeting held on 28 November 2012 be approved as a correct record and signed subject to the amendment of the second sentence of the second bullet point in Minute 58 to read:-
Of the seventeen projects completed during the six month period, one project identified that a high level of control assurance was in place at the time of the audit, six projects identified substantial assurance and six identified limited assurance.
74. Matters Arising from the Minutes (Part I) of the Meeting Held on 28 November 2011
(1) Minute 57 – Appointment of Independent Member of the Audit Committee
In response to a question by a Member, the Head of Finance and Customer Services updated the Committee on the efforts being made to recruit an Independent Member of the Audit Committee. It was noted that the position had been advertised with a formal role description and person specification, but only one application had been received. At the request of the previous Chairman of the Committee, the position had been re-advertised, but no further applications had been received. The Chamber of Commerce had been asked to put forward nominations, and a response was awaited. However, an Independent Member of another Committee of the Council had expressed an interest in the position, and the person who had responded to the first advertisement had been asked whether they were still interested.
It was suggested that in addition, neighbouring authorities should be approached to ascertain whether appropriately qualified retired members of staff might be interested in the position. Also local accountancy firms should be approached to find out whether any of their employees might be interested in the appointment.
RESOLVED:
1. That the position be noted.
2. That in addition to the expressions of interest received to date, the Head of Finance and Customer Services should approach (a) neighbouring authorities to ascertain whether appropriately qualified retired members of staff might be interested in being appointed as an Independent Member of the Audit Committee and (b) local accountancy firms to find out whether any of their employees might be interested in the position.
(2) Minute 58 – Internal Audit – Six Monthly Interim Report – Limited Levels of Control Assurance
In response to concerns expressed by a Member about the number of audit reviews which had identified that a limited level of control assurance was in place at the time of the audit, the Head of Audit Partnership agreed that the number of limited levels of control assurance was higher than usual. However, the list of audit projects which had been completed during the six month period had not included the Council’s main financial systems. The service areas where limited levels of control assurance were identified were one-off areas where controls (not necessarily financial) needed to be improved. There was no particular connection except they were mostly service areas which were slightly remote to the main Council offices (for example, the Cemetery and Crematorium and the Museum). A follow up to each report was completed usually three to six months after the date of issue of the original report. The follow-up allowed the adequacy of controls to be reassessed, and Management was expected to have taken the necessary action to address the control weaknesses before the follow-up was undertaken. An update on the follow-ups could be reported to the next meeting to reassure Members that improvements were being made.
RESOLVED: That the Head of Audit Partnership should submit a report to the next meeting updating Members on the follow-up reviews being undertaken in respect of the six service areas where a limited level of control assurance was identified at the time of the audit.
(3) Minute 58 – Internal Audit – Six Monthly Interim Report – Control of Capital Projects
In response to a question by a Member, the Director of Regeneration and Communities updated the Committee on the High Street regeneration project and the project management arrangements. She explained that she was a member of the project management board and was able to assure Members that in terms of cost and schedule, the project was running according to plan and was within budget. The project board met on a monthly basis to review the programme of work and the budget (actual to date and committed) and very robust contract oversight arrangements were in place. On- site project management included liaison with the various utility services and stakeholder meetings, organised by the Council and Maidstone Town Centre Management, were held regularly.
RESOLVED:
1. That the position be noted.
2. That a progress report on the High Street regeneration project and the project management arrangements should be submitted to the next meeting of the Committee.
75. Budget Strategy 2012/13 Onwards
The Committee considered the report of the Head of Finance and Customer Services setting out the risk assessment of the budget strategy 2012/13 onwards. It was noted that the risk assessment considered operational risks rather than strategic risks and as such the actions to mitigate these risks would form part of the Finance Section’s service plan for 2012/13 onwards. Specific reference was made in the report to the key elements of the monitoring and control processes in place to identify the emergence of factors that triggered these risks.
The Committee asked a number of questions of the Officers relating to the reasons for the underspend of just over £0.4m against the profiled budget and whether “underspend” was the correct word to use as it implied slippage; the implications of the provisional formula grant settlement and the planned localisation of business rates and potential top slicing of the baseline to fund New Homes Bonus; the use of the New Homes Bonus primarily to mitigate the cash flow risks currently inherent in the Capital Programme (thus reducing the risk profile to D III); the action to be taken to mitigate the impact of additional budget pressures arising from the introduction of Universal Credit and the possible recommendation of a zero percent increase in Council Tax and acceptance of the Council Tax freeze grant for 2012/13; the value of the two unexpected asset sales (Cemetery Cottage and Raigersfeld Lodge totalling £440,000), the receipt from Golding Homes from Right to Buy sales (£90,000) and the receipt from HM Revenue and Customs in relation to a VAT Rebate (£80,000); the results of the consultation on the potential savings available from variations in the level of customer service; and the risks associated with Pension Fund changes.
The Committee indicated that it understood the risks associated with the limitation of Council Tax increases, but wished the Cabinet to give consideration to the consequences of any decision to accept the Council Tax freeze grant for a second year before making that recommendation. The Committee also indicated that it wished to receive further information as to how it was proposed to find the resultant increase in savings required.
RESOLVED:
1. That the Cabinet be recommended to agree the risk assessment of the budget strategy 2012/13 onwards subject to (a) the risk profile in relation to capital financing being amended to D III to reflect the proposed use of New Homes Bonus funds to mitigate the cash flow risks currently inherent in the Capital Programme and (b) consideration being given to the consequences of any decision to accept the Council Tax freeze grant for a second year before making that recommendation.
2. That details of how it is proposed to find the increase in savings required as a result of any decision to accept the Council Tax freeze grant for 2012/13 should be circulated to Members of the Audit Committee for information.
76. Treasury Management Strategy 2012-13
In accordance with CIPFA’s Code of Practice on Treasury Management, the Committee considered the report of the Head of Finance and Customer Services setting out the draft Treasury Management Strategy 2012/13, including a series of Treasury and Prudential Indicators. It was noted that the only major change proposed related to the use of leading building societies for investment purposes. In considering the effectiveness of the decision taken by the Head of Finance and Customer Services (acting under delegated powers) to reduce the number of building societies from top ten to top five ranked on asset size of the society, an alternative ranking system had been identified that used a combination of management expenses (operational overheads, not running costs) and asset size. This approach had been discussed with the Council’s Treasury Management advisers and was considered to give a better indication of how the group would fare in difficult economic conditions.
RESOLVED: That the Cabinet be recommended to agree the Treasury Management Strategy 2012/13 as set out in the report of the Head of Finance and Customer Services.
77. Exclusion of the Public from the Meeting
RESOLVED: That the public be excluded from the meeting for the following item of business because of the likely disclosure of exempt information for the reasons specified, having applied the Public Interest Test:-
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Head of Schedule 12 A and Brief Description
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Minutes (Part II) of the Meeting held on 28 November 2011 |
3 - Financial/Business Affairs 5 - Legal Professional Privilege/Legal Proceedings
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78. Minutes (Part II) of the meeting held on 28 November 2011
RESOLVED: That the Minutes (Part II) of the meeting held on 28 November 2011 be approved as a correct record and signed.
79. Matters Arising from the Minutes (Part II) of the Meeting Held on 28 November 2011
Minute 65 – Maidstone Museum East Wing Development Review
In response to questions by Members, the Director of Regeneration and Communities updated the Committee on matters relating to the Maidstone Museum East Wing project, including the work being undertaken to establish the correct value of the final account; the claim in relation to inaccurate surveying; and the scope of the review of the project.
RESOLVED:
1. That the scope of the review to be undertaken of the Maidstone Museum East Wing project be noted.
2. That, when the information becomes available, details of the timescale for completion of the review reports should be circulated to all Members of the Audit Committee for information.
3. That, if possible, the review reports should be made available to the Audit Committee at the same time that they are reported to the Leader of the Council, the Cabinet Member for Economic Development and Transport and the Cabinet.
80. Duration of Meeting
6.30 p.m. to 8.15 p.m.