Agenda and minutes

Audit and Governance Committee - Friday 28 July 2017 10.00 am

Venue: Cabinet Suite - Shire Hall, Gloucester. View directions

Contact: Andrea Griffiths 01452 324206 

No. Item


Appointment of Chairman for the meeting.


In Councillor Oosthuysen’s absence, nominations to the chair the meeting were called.  Councillor Windsor Clive proposed Councillor Norman, this was seconded by Councillor Tipper.  There being no other nominations,  Councilllor Norman was appointed as Chairman for the meeting. 


Declarations of Interest

Members of the Committee are invited to declare any pecuniary or personal interests relating to specific matters on the agenda.


Please see note (b) at the end of the agenda



Councillor Parsons declared he was a member of the Pension Committee. 


Election of Vice-Chairperson

To elect a Vice-Chairperson. 


Nominations were called for the appointment of a Vice-Chairperson. Councillor Windsor Clive proposed Councillor Norman, this was seconded by Councillor Tipper.  There being no other nominations for the Vice-Chair.  It was therefore:   




That Cllr Norman was duly appointed as Vice-Chairman for the Committee. 


Minutes pdf icon PDF 109 KB

To approve as a correct record the Minutes of the Meeting held on 7th April  2017.

Additional documents:


All matters arising had been dealt with and communicated to members of the committee. 




That the minutes of the Audit & Governance Committee held on the 7th April 2017 be approved as a correct record and signed by the Chairman. 


Grant Thornton Audit Findings Report pdf icon PDF 905 KB

The Committee is asked to note the report.

Additional documents:


Liz Cave, Engagement Lead, Grant Thornton presented the report which informed the Committee of the key matters arising from the audit of Gloucestershire County Council’s financial statements for the year ended 31st March 2017. 


The new timeline for the production and audit of the accounts were discussed by the Committee.  It was noted that officers had produced the accounts two months earlier than in previous years, which had taken a great amount of effort.  Liz Cave explained that the earlier production of the accounts had enabled a smoother audit process and allowed time for officers to provide detailed explanations when applicable. She added that there were very few amendments to the accounts, which were deemed to be good and a positive step forward.  As such Grant Thornton was in a positive position to sign the accounts. 


Members appreciated the expertise, hard work and effort of the finance team in compiling the early accounts and agreed they should be congratulated on their exceptional effort.  The Chief Financial Officer explained her team’s position in preparing a complex set of accounts and the effort that had gone into producing the earlier set of accounts.  The Chairman reiterated members’ appreciation and also wished to extend thanks to Grant Thornton on behalf of the Committee. 


Liz explained that Grant Thornton was unable to issue a value for money conclusion at this stage until they had considered an objection relating to the energy from waste scheme.  In response to a question, it was noted that officers were compiling a response to Grant Thornton in relation to the objection. 


The Committee were informed that based on the work completed to date, Grant Thornton expected to issue an ‘except for’ value for money conclusion due to the recent Ofsted Inspection which found the Council’s Children’s Services inadequate.


Members requested that at a future meeting, the Committee could revisit the concept of value for money and discuss the issues further.  The Director of Strategic Finance agreed to take this action away and discuss with Grant Thornton.  David Bray, Grant Thornton explained that the definition of ‘Value for Money’ was set by the National Audit Office.


Members were informed that overall materiality was determined to be £15m. 


The Committee discussed the Audit Findings in relation to the significant risks. 

Grant Thornton explained that there were no issues identified that would change the presentation of the local authority statements.  Liz explained that Grant Thornton were not qualified to judge adult or children’s services and referred members to page 40 of the report, which detailed Ofsted’s findings and conclusions.  The Committee were also referred to page 50 which detailed the action plan, in relation to the Ofsted report.  


In response to a question, the Director of Strategic Finance explained that the Pension Fund was undergoing major changes, as legislation required LGPS pension funds to pool.  It was noted that Gloucestershire had become a member of the Brunel Partnership, however the Pension Committee and Board would still be maintained with their current responsibilities.  ...  view the full minutes text for item 5.


Grant Thornton Audit Fee Letter pdf icon PDF 260 KB

The Committee is asked to note the report. 


David Bray, Grant Thornton presented the report, which informed the Committee of the audit work to be undertaken for the 2017/18 financial year for Gloucestershire County Council and the fee involved. It was noted that the Council’s scale fee for 2017/18 was £98,010 and the Pension Fund Audit was £23,799.  


Officers explained that the local audit function was governed by a code of practice and had been procured nationally.


The Director of Strategic Finance informed members that the fee was set by the Public Sector Audit Appointments (PSAA).  It was explained that the PSAA were involved in the procurement process of external auditors, an announcement was expected by December 2017 confirming GCC’s external auditor appointment.




That the report be noted.



Annual Statement of Accounts pdf icon PDF 170 KB

The Committee is asked to approve the  Statement of Accounts for the year ended 31st March 2017, including Gloucestershire Pension Fund Accounts 2016/17.

Additional documents:


Jayne Fuller, Financial Accounting Manager presented the report in detail.  It was explained that the draft accounts were produced and presented for audit on 1st June 2017, nearly a week earlier than last year.  The Director of Strategic Finance approved this Statement of Accounts for 2016/17.  By doing so the Director of Strategic Finance confirmed the accounts presented a true and fair view of the Council’s financial position as at the 31st March 2017 and the income and expenditure for the year. 


In accordance with the Accounts and Audit Regulations 2015, the draft accounts were available for public inspection for 30 working days, which was required to include the first two weeks of July. The inspection period for 2016-17 was from 12th June 2017 to 21st July 2017. It was noted that this included access via the Council’s website.


Since production of the draft accounts and during the audit of accounts the appropriate amendment for one non-trivial misstatement in the accounts had been made.  This related to incorrect coding of schools income and expenditure for cheque book schools of £3.7 million. The Comprehensive Income and Expenditure Statement and supporting disclosures had been amended accordingly.


It was important to emphasis that this amendment did not change the Council’s outturn position approved by Cabinet in June 2017 or the level of usable reserves or balances reported in the balance sheet.


A number of other minor changes and updates agreed with Grant Thornton Ltd had also been incorporated.


Members were made aware that at the time of dispatch of the Committee papers the formal audit process of the accounts remained outstanding. It has now been identified that an additional disclosure is required under Note 4 of the accounts, in order to comply fully with the accounting regulations. A copy of the proposed disclosure was tabled at the meeting (a copy is attached to the signed minute book) for consideration and approval. This note showed the revenue received from customers through fees and charges. It was proposed to incorporate this disclosure within the published statement of accounts, following the Committee’s approval.


The Accounts & Audit Regulations 2015 required the annual Statement of Accounts to be produced and published by 30th September, and that they were approved by this Committee. Members were reminded that an extensive accounts training session was recently held to provide members with an opportunity to ask detailed questions about the accounts.


It was reported that there was a net valuation gain of £77.6 million.  This was largely as a result of changes to the cost of building, and the BCIS index which was used to value school premises.  In addition, it was explained that schools reserves were 100% ring-fenced to schools.


Officers explained that the capital fund reserve is fully committed to fund the approved capital programme.  In addition, non-schools earmarked reserves had increased between 2015/16 and 2016/17 by £5.8 million, the movement in reserves was detailed in note 2 of the accounts.


Members were informed that general reserves had remained unchanged  ...  view the full minutes text for item 7.


Annual Governance Statement/Local Code of Corporate Governance 2016/17 pdf icon PDF 69 KB

The Committee is asked to review and approve the Annual Governance Statement and Local Code of Corporate Governance.  ,

Additional documents:


Theresa Mortimer, Chief Internal Auditor (CIA), presented the report.  It was explained that the Council was required under the Accounts and Audit Regulations 2015 to produce an Annual Governance Statement (AGS) which was a public statement, detailing how the Council directs and controls its resources, which is to be signed by the Leader of the Council, Chief Executive and Director of Strategic Finance. It was noted that the AGS was published alongside the Annual Statement of Accounts. 


Members were informed that GCC operate through a governance framework that had been summarised within a revised Local Code of Corporate Governance 2016/2017 which was consistent with the seven core principles of the CIPFA/SOLACE Delivering Good Governance in Local Government framework, 2016 edition. 


The CIA explained the Council’s Local Code of Corporate Governance was a public statement of the Council's commitment to these principles and specifically identified the key actions taken by GCC in relation to each of the core principles. It was noted that the code was reviewed and updated annually and should be read in conjunction with the AGS.


The CIA explained that to enable the development of the AGS, an embedded assurance framework was required, that not only provided the relevant assurances, but also a framework that underpinned and evidenced the statements made within the AGS.


A strengthened governance assurance process was developed and implemented during 2016/17 to provide a framework for the annual assessment of the effectiveness of the governance arrangements operating within the Council. This included the relevant Lead Cabinet Member overview and oversight, governance assurance statements obtained from Directors and Heads of Service and robust challenge by the Council’s Statutory Officers i.e. Chief Executive, Monitoring Officer and Director of Finance.  


Members were informed that following the review, four key improvement areas were identified to further enhance the governance arrangements.  These were identified within the AGS action plan and related to:

1.         Future Financial Sustainability;

2.         Ofsted Inspection of Children’s Services;

3.         Implications of the Policing and Crime Act; and

4.         Contracting / Commissioning Care Services.


The CIA explained that the Committee would receive updates on actions taken to address the issues identified to the January 2018 Committee meeting. 


Members were reminded that the CIA had provided a detailed presentation on the AGS and the Local Code of Corporate Governance at the recent training session. 



In response to a question, members were informed that whilst there were generic principles/assessments that were required to be covered within the statement, the AGS included reference to all the key governance issues that had occurred during 2016/2017. In addition, the key improvement areas identified, including the actions taken in response to the Ofsted inspection,  were detailed within the action plan, which was attached to the AGS. 


It was noted that there was reference within the AGS to the Ofsted Inspection.  Some members welcomed this statement.  However, some members felt there had been significant failures by the Senior Leadership Team and as Councillors, found it difficult to comprehend the failures.  It was suggested  ...  view the full minutes text for item 8.


Annual Report Treasury Management pdf icon PDF 300 KB

The Committee is asked to consider the Treasury Management Annual Report 2016/17.


Paul Blacker, Head of Financial Management, explained that each year the Council produced an Annual Report covering its Treasury Management activities for the financial year ending 31st March.  The annual report for 2016/17 was submitted to the Audit and Governance Committee to allow greater scrutiny under the Treasury Management Code. 


The Committee were advised that the Treasury Management Strategy and the Annual Investment Strategy were agreed by full Council as part of the annual budget setting process.  The Committee discussed the report in great detail. 


It was explained that significant amounts of money were involved in Treasury Management with a borrowing and investing programme in excess of £300m.  Despite turbulent and uncertain market conditions and a low interest rate environment.  The council had managed to maintain a good level of interest return on investment, achieving £3.8m (1.22%). 


This had been achieved as the Council had locked into long term deals, whilst still maintaining liquidity and security, with the percentage now invested for over 12 months increasing from 31.9% to 42.6%.  In addition, to this the Council had reduced exposure to unsecured bank and building society deposits (from 19.4% to 9.8%). 


On the borrowing side it was reported that early redemption still remained expensive, so the Council had not been able to redeem any loan early during the year.  However, all the maturing loans had been repaid in full (£4.86m) during the year and the overall borrowing requirement had been reduced by £8.7m to £308.8m. 


It was noted that the Council complied with all the limits set for borrowing and investment as laid down by the prudential indicators as stated in Appendix D.  


In response to a question, members were informed that the premiums imposed by Public Works Loans Board (PWLB) for early repayment meant that early debt redemption was currently not cost effective.  The Head of Financial Management explained the Council received regular advice from Arlingclose, the Council’s Treasury Management advisors. 


The Committee were informed that it was not within their remit to reword or amend the Treasury Management Strategy, as this document belonged to the Administration.  Officers worked closely with the Administration to look for opportunities for investment. 




That the Committee considered the Treasury Management Annual Report for 2016/17.


Annual Report on Risk Management Activity 2016/17 pdf icon PDF 60 KB

The Committee is requested to note the Annual Report on the Corporate Risk Management arrangements in place during 2016/17.

Additional documents:


Theresa Mortimer, Chief Internal Auditor detailed the Risk Management (RM) activities undertaken during 2016/2017. The key activities to highlight were summarised which included the revision of the RM strategy, guidance toolkit, training, and project management support. 


It was noted that in order to promote the new strategy and toolkit a communications brief would appear on PC desktops commencing the 7th August 2017 and awareness briefings within Members, Managers and Staff newsletters.


Members were informed that the requirements of the strategy was that Risk Management continued to be fully integrated into key business systems and processes such as performance,  option appraisals, business planning, financial planning and decision making processes.  It was essential that Risk Management continued to be one of the key mandatory standards within the Council’s corporate programme and project management governance arrangements.


The CIA explained that a risk appetite model was used as part of the risk and opportunity decision making processes to help the Council be less risk averse and enable the Council to understand which risks it could be willing to accept.  In addition, the leadership behaviours also encouraged calculated risk taking.


The report demonstrated that CoMT continued to take ownership of the strategic risk register, with each of the strategic risks being owned by a CoMT member. The Committee noted that the Strategic Risk Register was dynamic with quarterly strategic risk management reports provided to CoMT, Overview and Scrutiny Management Committee and Cabinet, to enable challenge and to gain ongoing assurance that the Council’s strategic risks were being effectively managed.


It was noted that the CIA facilitated risk workshops with CoMT to review the Strategic Risk Register to ensure it reflected the Councils current risk profile.  Member’s attention was drawn to a summary of the Strategic Risk Register attached to the report. 


During the discussion, it was suggested that ‘Risk Identified and Risk Identification’ should be emphasised as part of the RM framework.   




That the Committee noted the Annual Report on the Corporate Risk Management arrangements in place during 2016/17. 


The Committee endorsed the proposals for future improvement and development as set out in the report.


That the Committee concluded that the arrangements for managing risk within the council were sound. 



Annual Report on Internal Audit Activity 2016/17 pdf icon PDF 54 KB

The Committee is asked to note that the performance of Internal Audit meets the required standards.

Additional documents:


Theresa Mortimer, Chief Internal Auditor (CIA) presented the report in great detail.  The Committee were provided with an annual report on Internal Audit activity, which met the CIA annual reporting requirements as set out in Public Sector Internal Audit Standards 2017 (PSIAS). 


The report provided an annual opinion on the overall adequacy and effectiveness of the Council’s Internal Control environment comprising risk management, control and governance, this opinion supported the Council’s Annual Governance Statement. It was explained that a satisfactory opinion was provided, with the exception of the matters relating to children’s services.  


Members were referred to page 333 of the report which described the meaning of opinions given and page 338 which provided the Committee with a pie chart summary of the overall opinions given during 2016/2017. 


The CIA demonstrated that 83% of audited activity received a substantial or satisfactory opinion on control and 86% received on risk.  The Committee’s attention was drawn to the spreadsheet which provided a summary of the activity undertaken from which the CIA’s opinion was derived.


It was noted that the report provided a summary of counter fraud activity undertaken during the year, such as work on special investigations, participation in the National Fraud Initiative Data matching exercise, updating and reviewing the Council’s anti-fraud polices and compliance with the Local Government Transparency Code 2015.  The CIA also presented the Fraud and irregularity reporting requirements and updates on working with Gloucestershire Fraud Hub to support counter fraud work. 


The Committee noted that the PSIAS also required the CIA to annually report on compliance with the PSIAS, reporting any non-conformance; and summarise the performance of the Internal Audit function. 


It was reported that an external quality assessment had been undertaken by the Chartered Institute of Internal Auditors (national standard setters) where Internal Audit received 100% conformance.


The CIA explained that at the end of each audit review, Internal Audit requested customer feedback.  Officers were pleased to report that 100% of customers rated the service as good or excellent.


Members were informed that there were always lessons to be learnt and customer feedback was used to ensure that Internal Audit fully considered where improvements could be made. It was explained that individual staff targets had been set to assist with achieving these outcomes. 


The Committee was provided with a progress report in relation to those audits undertaken during the period April – June 2017.  Member’s attention was drawn to a limited assurance opinion provided on control relating to Retrospective Orders. It was noted that whilst management had accepted and responded positively to the recommendations made, Internal Audit would continue to monitor their implementation.  It was recommended that senior management attend the next meeting of the Committee to provide an update on the actions taken in relation to the recommendations made. The Committee welcomed this approach. 


Members suggested that the third paragraph of the Chief Internal Auditor’s Opinion on page 333 of the report, in relation to the Improvements Board be amended to include ‘Group Leaders’. 




That  ...  view the full minutes text for item 11.


Limited Assurance Audit reports pdf icon PDF 85 KB

-       Recruitment & Promotion


Recruitment & Promotion


Mandy Quayle, Head of Human Resources presented the report.  The Committee discussed the recommendations in detail and were advised accordingly of the actions being taken to address the issues. 


In response to a question, members were informed that records were sent away for high volume scanning as the Authority did not have the equipment necessary to perform such a task. 




That the report be noted