Agenda and minutes

Audit and Governance Committee - Friday 30 October 2020 10.00 am

Contact: Andrea Griffiths 

Items
No. Item

1.

Declarations of Interest

Minutes:

No declarations of interest were made.

2.

Minutes of the previous meeting pdf icon PDF 107 KB

To approve the minutes of the previous meeting held on January 2020.

Minutes:

Resolved

 

That the minutes of the previous meeting were approved as a correct record. 

3.

Grant Thornton External Audit Findings Report for GCC pdf icon PDF 663 KB

The Committee is asked to note the report. 

Minutes:

Pete Barber, Key Audit Partner, 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 2020.

 

 He explained that the 2019/20 audit had presented a number of issues, in light of the Covid 19 pandemic and the report reflected the additional challenges for Grant Thornton and the Authority in undertaking our respective responsibilities.  It was noted that the 

 

A revised deadline for the audited financial statements was 30th November 2020, both parties were pleased to report that this work had been undertaken and completed a month in advance of the deadline.  Given the challenges, especially those of remote working a more in-depth audit was required.   It was noted that the reports were longer due to the underwriting standards, as the external auditors were required to report across a wide range of areas and the Committee was required to be fully sighted on the issues. 

 

The Key Audit Partner wished to thank to all concerned and the council for the good cooperation.   He added there had been some challenging and robust conversations but it had all been done in the common interest of getting the accounts signed off and conducted in a professional manner. 

 

 It was explained that the external auditor responsibilities were to ultimately look at the draft accounts presented to audit for materiality accuracy. 

 

Members were referred to page 16 the report, which detailed the audit approach.   It was noted that materiality for the financial statement was at £14.6m and in respect of the financial statements it was important to note that External Audit had not identified any material errors or uncertainties in the draft accounts. 

 

The Committee noted that in terms of property, plant and equipment the valuers employed by the County Council included a material uncertainty in their final valuation reports.  As such Grant Thornton had requested a note on this area be included in the financial statement disclosure given its significance. 

 

The External Auditor advised the Committee that subject to the satisfactory completion of the outstanding issues it was their intention to issue a qualified opinion on the council's financial statements in due course. 

 

It was noted that this presentation needed to be taken in that context with that overarching conclusion, the Key Audit Partner felt it provided reassurance that there were good governance arrangements in place for producing financial statements even in these unprecedented times. 

 

 The Committee were advised that property, plant and equipment was one of Grant Thornton’s biggest areas of focus and it took up an inordinate amount of our time, as it was   a very large figure at the top of the balance sheet.   One of the impacts of Covid on the financial statements on that property plant and equipment disclosure was clearly set out on page 19 of the report.  This was intended to draw to the reader’s attention, the acknowledgement within the financial statements that there was a material uncertainty of  ...  view the full minutes text for item 3.

4.

Grant Thornton External Audit Findings report for the GCC Pension Fund pdf icon PDF 427 KB

The Committee is asked to note the report.

Minutes:

Peter Barber, Key Audit Partner, Grant Thornton presented the report. The report highlighted the key issues arising from the audit of Gloucestershire Pension Fund financial statements for the year end 31st March 2020.

 

Members were informed that Grant Thornton had identified no adjustments that affected the Funds reported financial position.  It was anticipated that an unqualified opinion would be issued on the funds financial statements. 

 

The Committee noted that materiality levels had been revised to reflect the fall in net assets at year end, the materiality level was £22.4m and there were no material errors to report.  The disclosure note amendment had been circulated to members of the committee for information. 

 

In response to question relating to the tremendous fall in the value of any oil investments and the vast majority of the equity investments were all at risk.  David Bray, Senior Manager, Grant Thornton explained that it wasn’t in terms of risk associated with the investment this was purely in terms of the valuation at the year end and the various levels of investment.   As such an extra disclosure had been included for readers of the accounts pointing out the extra uncertainty this year in the audit report for clarity. 

 

The performance of the fund was the responsibility of the Pensions Committee.   It was noted that the auditors did not provide a separate value for money conclusion on the Pension Fund.

 

Resolved

 

That the report be noted.

5.

Annual Statement of Accounts pdf icon PDF 211 KB

The Committee is asked to approve the Statement of Accounts for the year ended 31st March 2020, including the Gloucestershire Pension Fund Accounts 2019/20.

Additional documents:

Minutes:

Paul Blacker, Director of Finance presented the report.  The purpose of the report was to formally present the Account of Gloucestershire County Council and the Pension to the Audit & Governance Committee for its approval.  The accounts had been produced in accordance with the CIPFA Accounting Code of Practice based on International Accounting Standards.  

 

The Director of Finance wished to thank Grant Thornton and the Finance team for their hard work and sterling efforts to produce the Annual Statement of Accounts.   It had been a very challenging year but a good robust relationship with the external auditors, had allowed the Authority to finalise the accounts ahead of schedule. It was noted there were two minor amendments to the accounts and the disclosure notes, these amendments had no financial impact on the financial statements.  Copies of these amendments were circulated to the Committee ahead of the meeting and a copy was attached to the signed minutes. 

 

In response to a question, it was noted that the amendments related to the financial statement so it was more of a timing issue that need to be corrected and the second amendment related to the Pension Fund,  where there was an incorrect reference to Councillors being Directors of UBICO and Brunel.  

 

Councillor Theodolou confirmed he had never been a Director of UBICO or Brunel and neither did he sit on the Board.  It was noted Cllr Theodolou as Chair of the Pension Committee was a representative for the County Council as corporate shareholder for the Brunel Pension Partnership and Councillor Stowe, as Cabinet Member for Finance was a corporate shareholder representative on UBICO.  The Director of Finance agreed to amend the wording to reflect this amendment. 

 

The Committee were advised the Statement of Accounts was a very detailed technical document and to assist members in their duties a detailed training session had been arranged prior to the formal meeting, in an effort to assist Members in their understanding. 

 

The Committee noted that no members of the public had formally objected to the statement of accounts during the 30 day period of inspection.  As such, the Section 151 and the Chief Finance Officer had approved the statement of accounts as presenting a true and fair view of the financial position of the council as at the 31st of March 2020. 

 

The Director of Finance explained there were no material errors or adjustments and the external auditors gave an unqualified opinion of the accounts.  He felt this was a great achievement due to the outstanding objection relating to the energy from waste scheme and were unable to conclude their value for money work. 

 

The Committee formally approved the Statement of Accounts and the Chair of the Audit and Governance Committee agreed to sign the letter of representation on behalf of the County Council and the Pension Fund. 

 

Resolved

 

That the Committee formally approved the Annual Statement of Accounts year ending 31st March 2020. 

 

That the Chair agreed to sign the letter of representation on behalf of the  ...  view the full minutes text for item 5.

6.

Annual Governance Statement 2019/20 pdf icon PDF 61 KB

The Committee is asked to review and approve the Annual Governance Statement, which is accompanied by the Local Code of Corporate Governance, Council wide assurance map and risk maturity level assessment. 

Additional documents:

Minutes:

The Chief Internal Auditor (CIA) presented the report in detail and explained that the AGS summarised the Council’s corporate governance arrangements in place during 2019 / 2020.  It was noted the majority of the year was unaffected by Coronavirus, although the pandemic had been recognised with the statement.

 

The CIA confirmed that the Council’s AGS and associated assurance framework had been developed in accordance with the CIPFA / SOLACE publication Delivering Good Governance in Local Government 2016. This year’s annual review had identified 5 key corporate governance matters, the details of which can be found from page 271 of the reports pack:

 

-       Future Financial Sustainability / Covid-19 Impact;

-       Ofsted inspection of Children’s services;

-       Gloucester Fire and Rescue Service (GFRS);

-       Recruitment and retention of employees in hard to fill, critical positions; and

-       Covid-19 impact on governance.

 

It was noted that these matters would be kept under review and a further update on actions taken to address them would be provided to the Committee, at its January 2021 meeting.

 

In respect of the Ofsted matter, a question was raised regarding the retention of social workers and Members raised concerns that the County Council would train social workers and they would then leave, thus leaving the Authority in the same position. Due to these specific questions raised, the CIA suggested that the relevant senior managers who owned the above governance actions could attend the meeting, to update members on progress with these governance matters. This was agreed by the Committee.

 

It was noted that the Committee undertook a training session on the 9th October which explained in more detail the AGS development, associated assurance framework and the review process.  

 

During the discussion, it was noted that some members had difficulty distinguishing between the colour keys within the report.  The CIA accepted this issue and agreed that this would be rectified for future reports for the sake of clarity. 

 

Members were reminded that the audit committee’s overarching role was to monitor standards of conduct for members.  It was explained that officers also had standards of conduct to abide by too. 

 

A question was raised regarding the AGS sign off arrangements asking whether the Monitoring Officer should also sign off the statement. The CIA and Executive Director of Corporate Resources informed the Committee that there was only a requirement for the Leader and Chief Executive to sign off the statement and the assurance framework that underpinned this approval includes the Monitoring Officer and the Corporate Leadership Team.

Resolved

 

The Annual Governance Statement was unanimously approved by the Committee.  

 

 

7.

The Treasury Management Update Report pdf icon PDF 369 KB

The Committee is asked to note the report.

Minutes:

The Director of Finance presented the report and gave a midyear review of Treasury Management activity to date.  The Committee noted that no long term borrowing had matured.  He added that in terms of investment returns this period since the beginning of the financial year, had been dominated by Covid and a low interest rate environment. 

 

The Committee noted that there was not much activity on the borrowing front but the Authority had maintained income returns.   It was noted that all the Treasury management activity has complied with CIPFA code of practice.  

 

A member suggested that in terms of Environmental, Social and Governance (ESG) it should be included within the statement.  Especially as there was more interest in ESG Investments and their impact, in particular on the Pension Fund.   The Director of Finance explained if the Committee had a strong feeling this could be included in future reports in order to highlight in ESG in relation to public interest.   It was noted that a lot of those newer investments in green technologies were actually proving to be reasonably profitable which wasn't always the case.  

 

In response to a question, the Director of Finance explained that the Treasury Management Strategy complied with the council amendment to not have any new investments in fossil fuels.  However, this wasn’t specifically stated within the report.  The Committee requested that this statement be included in future reports. 

 

Resolved

 

That the report be noted.

 

8.

Internal Audit 2020/21 Quarterly Progress Report pdf icon PDF 50 KB

The Committee is asked to note the report. 

Additional documents:

Minutes:

At this point the Chairman announced that this would be Theresa Mortimer, CIA, last meeting of the Audit & Governance committee as she was retiring at the end of the year. 

The Chair on behalf of the Committee commended the CIA on her efforts and support given and that she delayed her retirement to cover the pandemic crisis period.  The CIA remarked that it had been a pleasure working with the committee and thanked the committee members for their kind words and their support over the years.  

 

The CIA explained the purpose of this report was to present the current progress of Internal Audit (IA) activity against the 20/21 audit plan.  The CIA drew members’ attention to Page 318 of the report which highlighted the outcomes of Internal Audit’s recent External Quality Assessment undertaken by the Chartered Institute of Internal Auditors.

 

The Committee were informed that the assessment concluded the Authority met all professional standards and there were no formal recommendations made for improvement.  It was noted the full EQA report could be found by clicking on the link within the report.

 

In addition, the CIA wished to draw members’ attention to the three limited assurance audit reviews. These could be found from page 324 onwards within the report and related to:

 

-       Disposal of Assets – Vehicles; and

-       2 Children’s Services audit reviews around unregulated placements and packages of support for fostering.

 

Resolved

 

That the report be received and the committee requested that the relevant management attend the next meeting of the committee to provide an update on the actions taken to address the recommendations made relating to the above two reviews.

9.

Revised Internal Audit Plan 2020/21 pdf icon PDF 54 KB

The Committee is asked to consider the proposed changes to the Internal Audit Plan 2020/21; and approve the revision (subject to any further change requested by Members) as detailed in Appendix 1.

Additional documents:

Minutes:

The CIA presented the report and explained due to the pandemic and required changes in the council’s working arrangements, systems and processes, she  decided to undertake a mini refresh of the audit plan to ensure it remained fit for purpose and continued to reflect the risk profile and assurance needs of the Council during the pandemic period.

 

As a result of consultation with Executive Directors / Directors the CIA proposed the revised IA plan in Appendix 1 of the report (from page 368). Members noted that each original audit activity from the current plan had been reviewed with a proposal in the last column as to how it would be progressed, i.e. continued, in progress or deferred.

 

The CIA explained there hadn't been a lot of change which was very positive and Internal Audit were able to continue with the original plan.  The CIA proposed the deferral of 8 activities, as detailed in Appendix 1, (3 high and 5 medium priority activities). The rationale for deferrals was explained in detail on page 366 of the report.  It was noted these were mainly due to Covid 19 and included the ERIC System and the St Johns arrangements as the Authority were unable to progress these arrangements in the current climate. 

 

Members were informed that to offset the deferrals, new activity had arisen as a result of Covid 19. These were noted as:

 

-       Consultancy/Children & Families support to supplier relief / Integrated Transport Unit (ITU) supplier payments;

-       Volunteering;

-       Worked with Strategic Finance to review and provide assurance regarding a premium for care providers; and

-       Covid -19 relevant irregularities i.e. shielding claims

 

The Committee noted the plan however continued to be dynamic and was flexible to respond to any emerging risks.  Members were advised that all changes would continue to be reported to the Audit and Governance Committee.

 

A member suggested that risk exercises should be included within the risk register and should include detail about what to do in a pandemic and the response. It was suggested that it would be beneficial to go through a whole series of looking at what we could do better and see whether there were lessons to be learnt.  It was suggested that this would be an informative piece of work to see how well the risk register worked in terms of preparedness.  

 

The CIA gave assurances and advised members that there were two strategic risks on the risk register regarding business continuity and emergency response arrangements.  These risks were monitored on a quarterly basis and were reported to the relevant Scrutiny Committee and to Cabinet.   It was noted that Internal Audit were also running a strategic risk register workshop on the 3rd of November with the Corporate Leadership Team and would raise this issue at that session. 

 

Resolved

 

That the report be received by the Committee.

10.

GFRS Action Plan Internal Audit Progress Report pdf icon PDF 56 KB

The Committee is asked to review and considers the actions taken to address the recommendations made and progress to date.

Additional documents:

Minutes:

The CIA informed the Committee that Internal Audit (IA) undertook 18 audits within GFRS, with a number of them providing a limited assurance opinion on the control environment.  The report provided the committee with an update on the progress made with the implementation of those recommendations and provided independent assurance to the committee they had been or were being addressed.

 

The suite of appendices attached to the report provided details of the current position and comments made by the Improvement Board Members and Lead Officers involved in this process.  

 

The CIA acknowledged that even during this extremely challenging period, GFRS via the Improvement Board had made positive progress and applied a strong drive to complete the implementation of the IA recommendations by the end of this financial year.

 

The CIA acknowledged this had not been an easy task when considering the service’s other Covid 19 commitments, but this continued focus demonstrated a strong commitment to driving good governance within GFRS.

 

A further progress report would be provided to the committee at its meeting in March 2021. However, if there were any further updates these would be provided to Committee in January 2021.   . 

 

In response to a question the Cabinet Member explained there had been significant efforts to work through the processes that were identified through audit but also from Her Majesty's Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS).  He thought it was necessary to remember that we had the issues that arose in 2018 and the comments that were made were about the previous Chief Fire Officer.  The HMICFRS was a difficult report to read and was a real challenge for people within the service.  It was not possible to change culture overnight, and the service had now begun a cultural journey for the Fire and Rescue service.  It was noted that it could take three years to actually fully embed the Fire Rescue service, the new chief and the team continued to get more integrated into the County Council.

 

Members noted that the County Council is the Fire Authority for Gloucestershire; the Cabinet Member felt assured that the service was working even closer with the teams and the departments within Shire Hall.  He aimed to move away from the vision that waterwells was an island on its own.   The Cabinet Member explained under his stewardship and under the direction of our current chief officer and principal team we will work long hard to embed a new culture into a service and get a stronger form of governance as part of the County Council.  

 

The Executive Director of Corporate Resources added that he was also working closely with the Chief Fire Officer and he clarified comments that the Cabinet Member had made.  The Chair commented from his own experience on the cabinet panel, as one of the indicators of cultural change was the staff survey.  He thought under the previous regime they weren't taken seriously and they now were.   The Cabinet Member confirmed this was the case and  ...  view the full minutes text for item 10.

11.

Annual RIPA Report pdf icon PDF 112 KB

The Committee is asked to note the report.

Minutes:

Gillian Parkinson, Assistant Director of Legal Services and Karen Smith, Head of Regulatory Services and Consumer Protection presented the report.  The report informed the Committee of the use of directed surveillance and covert human intelligent sources and reported on the results of the inspection undertaken by the Investigatory Powers Commissioners Office in 2019/20.

 

The aim of this item was to ensure that members of this committee had the oversight at member level in terms of the statutory RIPA powers.   It was noted that Annex A, detailed at page 466 of the report set out three phases in terms summary of actions. 

 

The Head of Regulatory Services and Consumer Protection explained the differences between RIPA and non RIPA surveillance activities, which officers conducted in their day to day activities.  It was noted that priorities had shifted in light of the Covid 19 pandemic and officers would provide a detailed update at a future meeting of this committee.  The Committee welcomed this approach. 

 

The Committee noted the inspection report and appreciated the collaborative working approach being undertaken with the District Councils. 

 

In response to a question relating to fraud investigations, the CIA explained that Internal Audit had a Counter Fraud Team which investigated on the Authorities behalf, if commissioned to do so.  In addition, it was noted that the surveillance of illegal drugs was not within the powers of the Local Authority this was a matter for the Police. 

 

Resolved

 

That the Committee noted the outcome of the inspection by the Investigatory Powers Commissioner’s Office. 

 

The Committee agreed the conclusion of the report and confirmed the current procedural guidance and the arrangements for authorising applications remained fit for purpose. 

 

12.

Local Government Ombudsman's Annual Review Letter pdf icon PDF 83 KB

The Committee is asked to note the report. 

Additional documents:

Minutes:

Bonnie Styles, Principal Lawyer and Business Partner with Legal Services presented the report in detail.  The report informed the Committee of the Council’s arrangements for handling complaints and investigations by the Local Government Ombudsman (LGO). 

 

The Committee noted that in 2019/20 the LGO received 83 complaints about the County Council, 12 of which were upheld.  The Principal Lawyer continued to explain the breakdown of complaints and referred the Committee to page 469 of the report, which detailed the figures. 

 

In response to a question, it was noted in 2018/19 11 cases were upheld and in 2017/18, 8 cases were upheld by the LGO.  It was noted that both complaints and compliments were welcome, as it gave modern organisations a broad overview and helped to improve its processes. 

 

Gloucestershire County council took all complaints seriously and continued to understand the importance of learning from them, as well as using them to identify if there were any broader organisational risks or governance issues. The complaints were confidential, but any lessons learned were applied across the service affected and amended or new processes would be introduced as a result of such complaints.

Members were advised that cases were reviewed on a regular basis by the Chief Executive, Monitoring Officer and the Chief Finance Officer.  

 

Resolved

 

That the Committee received the Local Government Ombudsman Annual Review Letter 2019/20. 

13.

Member Code of Conduct Annual Report pdf icon PDF 86 KB

The Committee is asked to note the report. 

Additional documents:

Minutes:

Gillian Parkinson, Assistant Director of Legal Service presented the report which reminded the Committee of the statutory arrangements governing the conduct of elected members. 

 

The Assistant Director of Legal Services reported that there had been no reason to convene the Hearings Panel in 2019/20. 

 

Members were in advised that in May 2021, the two independent persons term of office would come to an end and a recruitment process would have to be undertaken again. 

 

It was explained that the standards in public life committee had produced a review of local government ethical standards in January 2019 and which included a number of recommendations in relation to member’s code of conduct. 

 

The Local Government Association had, in response, commissioned a piece of work to develop a Model Code of Conduct that could be used to provide greater consistency across Local Government.  The Committee noted that a link to the report was available within the Committee papers.   It would be for individual councils to consider whether to adopt this Model Code of Conduct.  However, going forward it is recommended that, once published, Gloucestershire County Councils uses this as the basis for reviewing its own code.  This would ultimately be a matter for the Constitution Committee to consider with recommendation to the County Council.

 

Resolved

 

That the report be noted.