Agenda and draft minutes

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Contact: Lesley Little  01670 62214

Items
No. Item

89.

CHAIR'S ANNOUNCEMENTS

Minutes:

The Chair advised that this was the last Audit Committee of the current Administration and offered her thanks to all Members of the Committee, past and present; the Internal and External Auditors past and present; Councillor Swinburn, the Deputy Chair; Kay Norris, who had clerked the meeting and had now retired; Alison Mitchell and Kevin McDonald for all their help and support over the last four years.

 

90.

APOLOGIES FOR ABSENCE

Minutes:

Apologies were received from Councillors G Castle and L Rickerby and K Angus

 

91.

MINUTES pdf icon PDF 162 KB

Minutes of the meeting of the Audit Committee held on 27 January 2021, as circulated, to be confirmed as a true record and signed by the Chair. 

Minutes:

In response to a question regarding confidential items discussed at the meeting being included in the open minutes, the Chief Executive advised that previous advice from the Monitoring Officer in relation to this was that whilst the actual discussions which might have disclosed information of a confidential nature would not be included in the open minutes, for transparency purposes information which did not disclose specifics could be included.

 

RESOLVED that the minutes of the Audit Committee meeting held on 27 January 2021, as circulated, be confirmed as a true record and signed by the Chair.

 

92.

STATEMENT OF ACCOUNTS 2020-21 pdf icon PDF 358 KB

The purpose of this report is to provide the Audit Committee with an overview of the timetable for publishing the 2020-21 Statement of Accounts and the Accounting Policies to be adopted in compiling the 2020-21 Statement of Accounts.

Minutes:

In response to a question from Councillor Grimshaw in relation to the 2019/20 accounts not being received and not being in the public domain, the Interim Executive Director of Finance advised that these had not yet been completed and a verbal update on these would be provided by C Waddell of Mazars.  This report set out the timetable for producing and publishing the accounts for the current year 2020/21.  It was an unusual position to be in. 

 

Mr Waddell advised that the draft accounts for 2019/20 were published on the Council’s website as this was a requirement of the regulations.  Due to the pandemic and other factors at the end of November 2020 there were approximately 55% of Local Authority audits which had missed the deadline and at the current time there were still approximately one third outstanding and therefore the situation in Northumberland was not unusual.   Specific details in relation to Northumberland would be provided later in the meeting and he clarified that he had not stated that the Pandemic was the only reason for the delay. 

 

The Interim Executive Director of Finance advised that the report set out the timetable for the publication of the draft accounts and then the audited accounts for 2020/21 with the team about to start work on producing the draft accounts within the next few weeks.   She advised that confirmation had now been received from MHCLG that the publication deadline for the draft accounts would be 1 August for the next two years accounts i.e.  2020/21 and 2021/22 with the audited accounts to be published by 30 November.  The changes were expected and the work programme later on the agenda did reflect these dates.   She advised that there would be some minor changes to the accounting policies with the most significant being that Northumberland was no longer the Pension Fund Authority.

 

The Chair outlined the recommendations as set out in the report and on a show of hands it was unanimously

 

RESOLVED that:

 

1.    The key dates in the final accounts process for 2021-21 be noted.

2.    The Accounting Policies to be adopted for the 2020-21 Statement of Accounts be approved.

 

93.

COUNTER FRAUD INTERIM REPORT pdf icon PDF 181 KB

The purpose of this report is to update the Audit Committee on work undertaken by the Corporate Fraud Team within the Council covering the period 1 April 2020-30 September 2020. 

Minutes:

The Interim Executive Director of Finance provided a brief introduction to the report which provided an update to the Committee on the work undertaken by the Corporate Fraud Team since the previous report in September 2020 and the steps being taken to recover any monies owed to the Council.

 

In response to a question from the Chair in connection with fraudulent Covid grant claims, Members were advised that the Council was required to undertake both pre and post payment checks which were quite onerous.  The Council also cooperated with other local authorities and there was a national database to cross-verify to identify any large scale fraud.   There had initially been a drive to pay out Covid business grants quickly with an emphasis on post-payment checks however with the other grants coming online more pre-payment checking was now being undertaken in relation to these grants.  The Council continued to report to Government and participate in national data matching exercises.

 

Councillor Dickinson highlighted pressure Councillors were under from those businesses or individuals who did not fit any of the criteria to apply for a business grant and the need to ensure that if businesses had received grants to which they were not entitled or had submitted fraudulent claims then this be reported openly and questioned the timescale for such a report.  He also asked that Audit be advised specifically in relation to discretionary grant funding and how this was applied, where the funding was spent, what proportions and whether or not it should have been given. The Interim Executive Director of Finance advised that appropriate legal action would be taken against any business found to have claimed grants fraudulently and this would be in the public domain in line with prosecutions undertaken in relation to Council Tax and Business Rate fraud.  The timing of any report summarising the outcome of post payment checks could not be confirmed as the team were still in the process of administering grants.  It was also the intention of Government to produce a national report which would provide some context. 

 

Councillor Hill questioned if any prosecution could be undertaken against directors of companies who had gone into administration following the submission of fraudulent claims.  The Interim Executive Director of Finance stated she believed that there would be the ability to pursue Directors if there was evidence that this had been done fraudulently however businesses were liquidated all the time and even more so during the pandemic. Substantial evidence would be required that the business had been liquidated for this reason and therefore would need to be assessed on a case by case basis.   The Government had advised that it would not claw back grants from local authorities on the basis of fraudulent payments provided that the relevant guidance had been followed and checks undertaken. 

 

Councillor Purvis thanked the teams for their work in distributing the grants and questioned if any more details could be provided in relation to the other 15 cases of external fraud on page  ...  view the full minutes text for item 93.

94.

ANNUAL AUDIT COMMITTEE WORK PROGRAMME pdf icon PDF 120 KB

The purpose of this report is to propose an updated programme of core business for the Audit Committee for 2021/22, in accordance with its Terms of Reference as set out in the Council’s Constitution. 

 

 

Minutes:

The Acting Chief Internal Auditor provided an introduction to the report which proposed an updated programme of core business for the Audit Committee for 2021/22, in accordance with its Terms of Reference as set out in the Council’s Constitution.  He advised that in November 2020 Council had agreed that this Committee be designated as the Group Audit Committee and its Terms of Reference updated.   These requirements were not included in this work programme and a further update would be provided at a future meeting.  The revised dates in respect of 2020/21 and 2021/22 accounts had been built in.  It now seemed doubtful that the May meeting of the Committee would happen due to the election and the business would therefore be considered at the July Committee.

 

In response to a query regarding the possibility of a June meeting to reduce the agenda in July, the Chair advised that with the wider remit of the Committee it may be necessary to meet more frequently, but that would be the subject of a future discussion. 

 

The Chair read out the recommendations as outlined in the report and following a show of hands it was

 

RESOLVED that:

 

1.    The proposed ‘core business’ work programme set out within the report for 2021/22 be agreed;

2.    It be noted that it might be necessary to change or adapt the proposed reports to be considered, to ensure optimum timing of consideration of governance issues, and to respond to emerging trends during the year;

3.    It be noted that the Committee would receive additional reports on any ad-hoc items of business arising during the year, as these related to its responsibilities under its Terms of Reference, in the usual way; and

4.    It be noted that an update would be provided to the July meeting to establish a work programme to allow the Committee to discharge its responsibilities as Group Audit Committee for all entities as set out in the Committee’s Terms of Reference.

 

95.

ANNUAL REVIEW OF AUDIT COMMITTEE EFFECTIVENESS pdf icon PDF 169 KB

The purpose of this report is to present a self-assessment of Audit Committee arrangements, following the review of Audit Committee arrangements undertaken during 2019/20, undertaken with reference to the good practice recommended by the Chartered Institute of Public Finance and Accountancy (CIPFA). 

Minutes:

The report, introduced by the Acting Chief Internal Auditor, presented a self-assessment of Audit Committee arrangements following the review of Audit Committee arrangements undertaken during 2019/20, undertaken with reference to the good practice recommended by the Chartered Institute of Public Finance and Accountancy (CIPFA).  The amendments to the Terms of Reference had now been done and were incorporated within the Constitution.

 

Discussion took place regarding item 2 on Annex A, where it had stated that Audit Committee always reported directly to Council and that this had been fully met.  It was questioned if this should be partly as not all items discussed at Audit Committee this year had been reported to Full Council, as some recent recommendations had been reported to Cabinet and a Scrutiny Committee.   The Acting Chief Internal Auditor advised that he was of the understanding that all minutes of the Audit Committee were reported to Full Council.  Members requested clarification on whether the Audit Committee was a function of Council as had been stated as some recommendations from the Audit Committee had been reported to Cabinet and had then been changed before being reported to Council.

 

The Director of Corporate Assurance advised that the Audit Committee was a Committee of Full Council and guidance around Local Authority Audits set out that was the case.  She did however advise that some matters were so unwieldly to debate that it was considered that smaller groups of dedicated Members would be more able to look at in depth and give matters the attention they deserved.  In the guidance it was recommended that there was an Annual Report from the Audit Committee or its Chair to a suitable forum, which could be Council or Cabinet and the Acting Chief Internal Auditor would be helping to prepare such a report.  In relation to recommendations from the Committee, this would depend on the forum the decision was to be made, if Audit Committee wanted to bring matters to the attention of the decision maker when they were making a decision, then the Audit Committee needed to be able to make a choice of where it reported.   Some issues might be more appropriate to Cabinet and others to Council.  Audit Committee was a Committee of Full Council and this process of making recommendations could be explored further by the Committee in the future.

 

In respect of points 15 and 16 it was questioned whether there was a structured approach to training the Committee as there was a variety of levels of experience and skills.  Members were advised that when the review was undertaken this plan was formed however with the Pandemic some meetings did not take place and this would be resurrected moving through the year providing training and briefings dependent on the subjects on the agenda.   It was commented that this would be easier to do via Zoom. 

 

The Chair asked that clarification be sought in respect of where the Audit Committee sat in relation to reporting to Full Council and what the  ...  view the full minutes text for item 95.

96.

URGENT BUSINESS

To consider such other business as, in the opinion of the Chair, should, by reason of special circumstances, be considered as a matter of urgency. 

Minutes:

(a) Proposed Additions to the Annual Governance Statement for 2019/20

 

The proposed additions to the Annual Governance Statement (AGS) for 2019/20 had been circulated the previous day and it was confirmed that this had been received by all Members of the Committee.

 

Councillor Swinburn advised that it was right that this amendment had been circulated and asked, as this matter had been ongoing for a period of time, if there was any indication of the timescale in which it would be completed and if there would be a need for any further amendments.

 

The Director of Corporate Assurance reminded the Committee of a confidential document shared by the Deputy Chief Executive in September which set out a framework for managing the items and she had been made the Executive Team Lead for these.  She confirmed that all items on that framework were actively being managed as had been described in September onwards, however there were a number of external factors and external people involved and because they were following the agreed processes this sometimes took some time.   She assured the Committee that everything was being done under proper process and would be concluded once those processes were completed.  If there were any governance issues which arose it would be appropriate for some sort of reporting to be made to Audit Committee in the future and the Acting Chief Internal Auditor and herself would ensure this happened. 

 

The Chair stated that as the Council’s Constitution contained something unlawful that had put the Council at some risk; that concerns had already been raised by her and another Member about the Constitution; and that the original working group set up to look at this, which had not included herself or the other Member, had only made cosmetic changes, asked what assurance could be provided that the Constitution would be updated and this would not happen again and that any concerns in the future would be dealt with properly.  The Director of Corporate Assurance stated that the Constitution, which had been introduced in approximately 2000/2001, was handled by Officers within the Legal Team as Constitutions were very legislative and based on a number of legal powers and she was unaware of the previous arrangements for updating it.  A very experienced Solicitor, Caroline Elwood, had now looked at and overhauled aspects which had needed revision.  Ms Elwood had worked in a number of authorities and had advised that, based on her experiences, the situation within Northumberland was not unusual.  It was now recognised that there was a requirement for a planned approach which would ensure the Constitution was kept up to date and remained fit for purpose, both in terms of the legal framework it reflected but also local circumstances.  Arrangements to ensure this happened would be discussed with the Deputy Monitoring Officers.

 

The Interim Executive Director of Finance stated that in relation to the question of any further updates to the AGS being made as the matters were being worked through, for the purposes  ...  view the full minutes text for item 96.

97.

DATE OF NEXT MEETING

The next meeting is scheduled to take place on Wednesday, 26 May 2021 at 10:15 am.

Minutes:

As had previously been discussed, the date of the next meeting was scheduled for Wednesday 26 May however as the new Audit Committee would not have been appointed by Council at that time it was expected the next meeting would take place in June or July. 

 

98.

EXCLUSION OF PRESS AND PUBLIC

The Committee is invited to consider passing the following resolution:

 

(a)    That under Section 100A (4) of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of the following item on the Agenda as it involves the likely disclosure of exempt information as defined in Part I of Schedule 12A of the 1972 Act, and

 

(b)    That the public interest in maintaining the exemption outweighs the public interest in disclosure for the following reasons:-

 

Agenda Items          Paragraph of Part I of Schedule 12A

 

11, 12, 13                 Information relating to the financial or business affairs of any particular person (including the authority holding the information). 

Minutes:

RESOLVED

 

(a)      That under Section 100A of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of the following items on the agenda as they involved the likely discussion of exempt information as defined in Part 1 of the Schedule 12A of the 1972 Act, and

 

(b)      That the public interest in maintaining the exemption outweighed the public interest in disclosure for the following reasons:-

 

Agenda Items

Paragraph 3 of Part 1 of Schedule 12A

 

11, 12, 13

 

Information relating to the financial or business affairs of an particular person (including the authority holding the information).

 

 

99.

MINUTES 27 JANUARY 2021

The confidential part of the Minutes of the meeting of the Audit Committee held on 27 January 2021, as circulated, to be confirmed as a true record and signed by the Chair. 

Minutes:

RESOLVED that the confidential minutes of the Audit Committee meeting held on 27 January 2021, as circulated, be confirmed as a true record and signed by the Chair.

 

Following a request from the Chief Executive it was agreed that item 13 be moved up the agenda and be discussed next.

 

100.

STRATEGIC AUDIT PLAN

The purpose of this report is to advise the Audit Committee of the Strategic Audit Plan for 2021/22. This document outlines the planned work of Internal Audit during this period and is attached as Appendix 1. 

Minutes:

The Chief Executive presented the report which provided a further update for the Audit Committee from the Shareholder’s Representative regarding the important governance matters which had been highlighted in the confidential reports brought to the Audit Committee on 27 January 2021 regarding Advance Northumberland Ltd and Commercial Enterprises, and the action which had since been taken.

 

Following a detailed discussion, and agreement that correspondence would be shared with Members of the Committee, the Chair read out the recommendations set out in the report and following a show of hands it was

 

RESOLVED that Audit Committee noted that:

 

1.    Following the meeting of Audit Committee on 27 January 2021, at which confidential reports regarding governance and performance issues in respect of Advance Northumberland Ltd and Commercial Enterprises were considered by the Committee, and actions proposed by the Chief Executive were endorsed by the Committee, the Chief Executive / Head of Paid Service (Shareholder Representative) had made further confidential reports regarding both matters to an extraordinary meeting of the County Council’s Cabinet which took place on 23 February 2021;

 

2.    The confidential reports considered by Cabinet on 23 February 2021 comprised:

 

·       A report of the Head of Paid Service / Chief Executive in consultation with the Leader of the Council, regarding ‘Implementation of Required Governance Improvements in respect of the County Council’s Wholly Owned Company (Advance Northumberland Ltd)’; and

·       A report of the Head of Paid Service Chief Executive, regarding ‘Northumberland Enterprise Holdings Ltd – Update on Progress and Governance and submission of subsidiary business case for Northumberland Integrated Consultancy’;

 

3.   At the extraordinary meeting on 23 February 2021, Cabinet agreed all recommendations made by the Head of Paid Service / Chief Executive (Shareholder’s Representative) in both of these two reports, which were discussed further in the main body of the report; and

 

4.   The Chief Executive / Head of Paid Service was therefore currently progressing with the implementation of all required governance and performance improvements, as agreed by Cabinet on 23 February 2021 and following endorsement of these actions by Audit Committee at its meeting on 27 January 2021.

 

101.

SHAREHOLDER UPDATE – WHOLLY OWNED COMPANY ARRANGEMENTS

Further to confidential reports brought before Audit Committee on 27January 2021 by the Head of Paid Service / Chief Executive(Shareholder’s Representative), regarding Advance Northumberland Ltd and Commercial Enterprises, the purpose of this report is to provide a further update for Audit Committee from the Shareholder’s Representative regarding the important governance matters which were highlighted in those reports and action which has since been taken thereto and which is currently underway. 

Minutes:

The Acting Chief Internal Auditor presented the confidential report which advised the Audit Committee of the Strategic Audit Plan for 2021/22.  The document outlined the planned work of Internal Audit during this period and was attached as Appendix 1. It was highlighted that the plan would be flexible in order to respond to any risks identified through the 12 month period of the plan. 

 

Councillor Swinburn commented that it was unfortunate that the report was confidential, although the reason for this was understood he felt that some of the information within the report on the role and ethos of internal audit which was contained in the introduction would be of interest to a wider audience.   The Acting Chief Internal Auditor advised of the reason for the confidential nature of the report, however it would be looked at in the future to see if this could be changed.

 

RESOLVED that the Audit Committee approved the Strategic Audit Plan 2021/22 attached as Appendix 1, and the Internal Audit coverage set out therein, and noted that prevailing risks and impact on assurance needed would continue to be kept under review by the Acting Chief Internal Auditor.