Agenda and minutes

Audit & Accounts Committee - Friday, 14th February, 2020 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 77 KB


RESOLVED – That the Minutes of the meeting of the Audit and Accounts Committee held on 25 October 2019 be APPROVED as a correct record and signed by the Chair.


External Audit - 2019/20 Audit Plan pdf icon PDF 443 KB


Michael Green – External Audit Key Audit Partner – introduced the report as an overview of the planned scope and timing of the audit.


There was still a need to conduct a ‘Group Audit’ in respect of Ascent PLC until such time as Ascent was dissolved.


3 ‘significant risks’ were identified as:-


·         Management over-ride of controls;

·         Valuation of land and buildings;

·         Valuation of the pension fund net liability.


The only ‘other’ risk shown was ‘International Financial Reporting Standard (IFRS) 16 Leases (issued but not adopted). This was to be implemented from 1 April 2020 to replace IAS 17 Leases and the 3 interpretations that supported its application.


Financial Statement Materiality followed previous practices of being a proportion (2% - £653k) of the gross expenditure of the group and Council. The Triviality figure was < £33k. There were no significant risks identified in the initial risk assessment on Value For Money.


The planned audit fee which was set by Public Sector Audit Appointments (PSAA) was £41,895, with an increase of £7,250 which was made up of:-


·         Raising the bar - £2,500;

·         Pensions Valuation - £1,750;

·         PPE Valuation - £1,750; and

·         New standards / developments - £1,250.




External Audit - Informing the Risk Assessment pdf icon PDF 362 KB


The purpose of this report was to contribute towards the effective two-way communication between the Council’s external auditors and the Council’s Audit and Accounts Committee.


The report contained six sets of ‘questions and answers’ regarding:-


1.    General enquiries of Management;

2.    Fraud;

3.    Laws and Regulations;

4.    Going concern;

5.    Related Parties; and

6.    Accounting estimates.




Accounting Policy Amendment pdf icon PDF 114 KB


Claire Hazeldene – Deputy Director and Head of Finance – sought approval to make changes to the Authority’s accounting policies.


The Council accounted for its financial transactions according to a set of policies which followed statutory requirements and best practice. An amendment was required due to the need to streamline accounting procedures to produce the annual statements within a tighter deadline.


Specifically, the “Accruals of Income and Expenditure” policy was recommended for amendment in relation to ‘Transaction Accruals’, where resources used in identifying accruals were to be targeted at transactions of £10,000 or above, rather than the existing level of £5,000 or above.


RESOLVED – That the following change to accounting policies be APPROVED:-


The Accruals of Income and Expenditure policy to have the ‘minimum value’ in the following bullet point increased from £5,000 to £10,000: The resources available are concentrated on identifying and accruing individual transactions of £10,000 and above.


Annual Governance Statement - Progress against the 2018/19 Action Plan pdf icon PDF 81 KB

Additional documents:


Andrew Stokes – Executive Director and Chief Finance Officer – outlined the report which was produced under the requirements of Regulation 6 (1) (a) of the Accounts and Audit Regulations 2015 to conduct a yearly review of the effectiveness of its system of internal control and approve an Annual Governance Statement (AGS).


The AGS action plan was appended to the report, outlining the progress made as at 31 December 2019. The main action that had been completed was:-


·         The revised Corporate Plan had been approved by Cabinet in October 2019 and communicated to all staff through ‘Team Talk’ and ‘Keeping You Informed’ and was available on the Intranet.


Actions still being progressed were:-


·         A revised Procurement Strategy was due for presentation during the March / April 2020 committee cycle which would include reference and, if deemed applicable, defined processes in relation to Social Value;

·         Further work was ongoing to develop the approach to identifying and managing corporate fraud risk to ensure compliance with the Code of Practice on Managing the Risk of Fraud and Corruption (CIPFA 2014);

·         The next and final tranche of the transfer of services to AES (street cleansing and grounds maintenance) was now expected to take place on 1 April 2020 – the governance arrangements were currently being audited by the Internal Audit service.


Responding to member queries, Andrew confirmed that:-


·         Procuring local suppliers was always part of the overall procurement consideration;

·         The budget was ‘dynamic’ in nature and would be able to accommodate expenditure relating to Climate Change as a contingency;

·         The Council was working with other authorities in some areas and would be adopting some of the principles of the ‘Preston Model’. The would be a concept paper tabled at the next Resources O & S Panel;

·         Each report produced by SMDC contained a section covering Environmental Impact (previously known as ‘LA 21’, then ‘Sustainability’). This aspect of reporting would become more focussed.


RESOLVED – That the report be NOTED.


Treasury Management Strategy 2020/2021 pdf icon PDF 87 KB

Additional documents:


In accordance with the Local Government Act 2003, the Council was required to produce the statement before the commencement of each financial year.  The Council was required to have regard to the CIPFA Prudential Code and Treasury Management Code of Practice, setting prudential and treasury indicators for the next four years to ensure that the Council’s capital investment plans were affordable, prudent and sustainable.


Emily Bennetts – Financial Business Partner – confirmed that the 2020/21 statement comprised three principal areas:-


1.    Capital Programme

·         The capital plans and the prudential indicators;

·         The minimum revenue position (MRP) Policy.


2.    Treasury Management

·         Current Treasury position;

·         Treasury Indicators;

·         Prospects for Interest rates;

·         The Borrowing Strategy.


3.    The Annual Investment Strategy

·         Investment Policy;

·         Creditworthiness Policy;

·         Investment Income.


RESOLVED – That the Annual Treasury Management Strategy Statement (TMSS) 2020/21 be RECOMMENDED TO COUNCIL FOR APPROVAL.


Treasury Management Update pdf icon PDF 67 KB

Additional documents:


Produced to enable the robust scrutiny of the Council’s Treasury Management performance in 2019/20, the report was presented by Emily Bennetts in compliance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management and generally accepted good practice.


The main headlines were:-


·         The Bank of England base rate remained unchanged at 0.75% with the next forecast increase at March 2021;

·         A shortfall of £28,000 was forecast against the investment income budget due to the delayed increase in interest rates and continuing internal borrowing;

·         A surplus of £9,310 was anticipated from the Ascent debenture and loan income subject to the timing of 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 currently forecast to be £83,000 under budget owing to the use of internal borrowing and reprofiling of the capital programme;

·         The average return on investments was 0.75% during the period 1st October to 31st December. This compared favourably to short-term industry benchmarks;

·         The Council’s investment portfolio totalled £13.8million spread across six separate institutions as at 31st December 2019;

·         The Council’s current level of debt was £10million at an average annual borrowing rate of 1.50%.


RESOLVED – That the Treasury Management position as at 31 December 2019 be NOTED.


Risk Management Update pdf icon PDF 147 KB

Additional documents:


The Council’s Strategic, Operational and Project Risk Registers were shown in the half-yearly report as at 31 December 2019. The review was presented by Vanessa Higgins – Information Business Partner – on an exception basis with appendices attached to the report (A – Strategic, B – Operational, C – Project and D – Opportunity).


Of the 15 strategic risks, 40% (6) were rated as ‘high’ and were listed. Of the 32 operational risks, 16% (5) were rated as ‘high’ and were listed. 2 of these risks were newly identified as:-


1.    September 2019 – snap election in the context of Brexit uncertainty. Added to the Legal & Elections register. To be reviewed when the UK had left the EU;

2.    Escalation of the public markets risk within the Regeneration register due to the failure to attract potential contractors for the procurement exercise to assist with the erection of market stalls.


The Project risk register covered 12 projects with a profile as:-


·         0% Critical;

·         3% High – 1;

·         23% Medium – 7;

·         74% Low – 23.


One new Project risk had been added – Assets Database implementation.


RESOLVED – That the Council’s current risk position be NOTED.


Internal Audit Periodic Report 2019/20 pdf icon PDF 76 KB

Additional documents:


Head of Audit John Leak presented the interim report covering the period 1 October 2019 to 31 January 2020.


7 audit reports were detailed in Appendix 1, 6 of which gained a ‘Satisfactory’ assurance and 1 with a ‘Substantial’ assurance. All audit recommendations had been agreed and 88% of the 2019/20 recommendations that were due had been implemented. 11 audits were in progress, 2 of which were at the ‘quality control’ stage.


72% of the Audit Plan for the 2019/20 year had been completed and it was anticipated that a satisfactory year end position would be achieved.


RESOLVED – That the Internal Audit progress information be NOTED.  


Regulation of Investigatory Powers Act Policy & Procedures pdf icon PDF 82 KB

Additional documents:


The Council was compelled to have arrangements in place to ensure compliance with the Regulation of Investigatory Powers Act 2000 (RIPA). Such arrangements were subject to inspection by the Investigatory Powers Commissioner’s Office (IPCO). John Leak confirmed that the Council’s policy and procedures had been in place since 2002 and were to be reviewed annually. There was also an IPCO inspection every 3 years and the latest inspection had taken place in November 2019.


The powers had not been used by the Council since 2008, since which time the Protection of Freedoms Act 2012 had been introduced requiring that all Local Authority RIPA authorisations and notices had to be granted by a Justice of the Peace. In addition, a crime threshold was introduced meaning that directed surveillance under RIPA could only be authorised to prevent or detect criminal offences punishable, whether on summary conviction or indictment, by a maximum term of at least 6 months’ imprisonment or are related to the underage sale of alcohol or tobacco.


The Council’s Policy and Procedures were appended to the report, changes to which were as follows:-


·         Paragraph 1.3 – Delete “benefit fraud investigations, other”;

·         Paragraph 7.8, bullet point 1 – Delete “interference with property or wireless telegraphy and”;

·         Paragraph 9.1 – Delete “Dai Larner” and add “Neil Rodgers”;

·         Paragraph 9.16 – Add after functions, “if covered by the wording of the original authority.”.


RESOLVED – 1. That the committee NOTED the Council’s use of RIPA powers and the outcome of the November 2019 IPCO Inspection report.


2.  That the updated RIPA Policy and Procedures as amended above be APPROVED  and ADOPTED.


Work Programme pdf icon PDF 71 KB


The Committee considered the Work Programme for the remainder of the 2019/20 Municipal Year and into 2020/21.


RESOLVED – That the Work Programme for 2019/20 and into 2020/21 be APPROVED.