Agenda and minutes

Audit & Accounts Committee - Friday, 25th October, 2019 10.00 am

Venue: The Dove Room, Moorlands House, Stockwell Street, Leek. View directions

No. Item


Declarations of interest

i. Disclosable Pecuniary Interests.

ii. Other Interests.


There were no declarations of interest.


Minutes of the previous meeting pdf icon PDF 147 KB


RESOLVED – That the Minutes of the meeting of the Audit and Accounts Committee held on 26 July 2019 be APPROVED as a correct record and signed by the Chair.


External Audit Committee Update pdf icon PDF 634 KB


Avtar Sohal – Senior Audit Manager – updated members with the current stage of progress. The Audit was still in it’s early ‘planning’ stage, with little progress made as yet and no issues raised.


The audit opinion on the council’s 2018/19 Statement of Accounts was issued on 31 July 2019, completing the audit for that year. The report set out the schedule for the 2019/20 audit and how this would be reported back to the committee. Details were also enclosed regarding potential audit reforms by the Ministry of Housing, Communities & Local Government.


Responding to a member query, Avtar felt that the likely timescale for the above reforms would be 2021/22.


External Audit 2018/19 Annual Letter pdf icon PDF 447 KB


Avtar Sohal – Senior Audit Manager – outlined the letter as a statutory requirement, having followed the National Audit Office’s Code of Audit Practice and Auditor Guidance Note 07 – ‘Auditor Reporting’.


The letter summarised the previously tabled ISA 260 report, advising that an unqualified opinion had been issued. Significant Audit Risks which had been identified had been examined and found to be dealt with satisfactorily.


Members queried any potential changes in work associated with the Value For Money projections and Avtar confirmed that many of these would relate to changes in the Business Rate system, some of which could create ‘windfall income’ and resultant underspends. Many other councils were having to dip into their financial reserves to continue operating normally, whereas SMDC did not, which was a very clear indicator of good governance.


Andrew Stokes advised that the council always kept a close eye on new sources of income in the form of grants etc., some of which did not apply to SMDC.



Treasury Management Update pdf icon PDF 68 KB

Additional documents:


The mid-year report was presented to members by Emily Bennett – Finance Business Partner. The main headlines included:-


·         The Bank of England base rate remained unchanged at 0.75% and the

forecast increase had been moved back to December 2020;

·         HM Treasury had announced that with immediate effect the PWLB new

loan rates would be increased by 1%;

·         A shortfall of £32,000 was forecast against the investment income budget due to the delayed increase in interest rates and continuing internal borrowing;

·         The Ascent debenture and loan income budget was on target pending the implementation of the proposal for the Ascent Delivery model and new loan arrangement;

·         The borrowing costs budget to support the existing Ascent loan balance and a potential general fund borrowing requirement was forecast to be £60,000 under budget owing to the use of internal borrowing and profiling of the capital programme;

·         The average return on investments was 0.78% during the period 1st July to 30th September. This compared favourably to short-term industry benchmarks;

·         The Council’s investment portfolio totalled £10.8 million spread across six separate institutions as at 30th September 2019;

·         The Council’s current level of debt was £10 million at an average annual borrowing rate of 1.40%.


The most significant of the items shown above was the immediate 1% increase in PWLB loan rates, applying to new loans taken after 9 October 2019. The letter from HM Treasury advising of this increase was annexed to the report. This meant that the PWLB was now the most expensive form of borrowing available to the Council. As such, this was expected to have a negative effect on some regeneration projects. A collective response from the Local Government Association had been forwarded to HM Treasury regarding the size of the increase and the lack of notice given. An update on this situation would be given at the next meeting.


RESOLVED – That the report be NOTED.


Risk Management Update pdf icon PDF 123 KB

Additional documents:


The half-yearly overview of the Council’s Strategic, Operational and Project Risk Registers as at 30 June 2019 was presented to members by Vanessa Higgins – Information Business Partner.


The Council had identified 15 strategic risks, of which 40% (6) were rated ‘high’ and therefore above the Council’s risk tolerance threshold. These were detailed in Appendix ‘A’. 31 operational risks had been identified, of which 4 were rated ‘high’ and shown in Appendix ‘B’.


Following the scheduled adoption of the new Corporate Plan for 2019 – 2023, it was necessary to conduct an internal strategic risk review to ensure that the Council’s new ambitions were considered and assessed in order to minimise barriers to their achievement and maximise the inherent opportunities presented through their delivery.


The project risk registers covered 11 projects with a profile as follows:-


·         0% Critical

·         7% High – 2 risks

·         4% Medium – 1 risk

·         89% Low – 24 risks


RESOLVED – That the Committee NOTE the Council’s risk position and the mitigation / fruition plans summarised within Appendix A (strategic risks), Appendix B (operational risks), Appendix C (project risks) and Appendix D (opportunity risks).


Internal Audit 2019/20 Periodic Report pdf icon PDF 75 KB

Additional documents:


The report covering the period April to September 2019 was introduced to members by John Leak – Head of Audit.


5 audit reports had been issued during the period with 1 substantial, 3 satisfactory and 1 limited assurance status. These were detailed in Appendix 1 to the report.


All audit recommendations had been agreed, though none of those for 2019/20 had yet become due for implementation. 98% of 2018/19 audit recommendations that were due had been implemented. 8 audits were in progress at the time of reporting and approximately 41% of the Audit Plan was completed.


The 1 ‘limited’ assurance  related to Civica Shared Services Data Breaches. The Local Taxation databases for SMDC and HPBC were merged in November 2018. Deficiencies in the testing procedure prior to the live merge resulted in 126 instances where there were ‘cross-boundary’ accounts where individuals had lived in both areas at some point. The accounts were linked together through the National Insurance Number. Most of these instances were ‘closed’ accounts, with no resultant issues. However in 3 cases documentation was issued to an incorrect address. These ‘data breaches’ were reported to the Information Commissioner’s Office (ICO) by the council and had now been dealt with to completion. The ICO had made certain recommendations to the council as a result.


RESOLVED – That the report be NOTED.


Appointment of Independent Member


This item was added to the agenda immediately prior to the meeting and was distributed in hard copy format to members.


Following a review of the effectiveness of the Audit and Accounts Committee, it was noted that one of the three independent members posts was vacant due to Mr. Barry Steans passing away in 2018. Given Mr. Steans’ previous background in the financial sector, it was felt to be ideal to find someone with a similar background.


RESOLVED – That an advertisement be placed for the vacant position of Independent Member to the Committee.




Work Programme pdf icon PDF 72 KB


The Committee considered the Work Programme for the 2019/20 municipal year.


RESOLVED – That the Work Programme for 2019/20 be APPROVED.