MINUTES OF THE AUDIT COMMITTEE HELD ON THURSDAY, 12 JANUARY 2006 IN COMMITTEE ROOM 1, COUNTY HALL, NEWPORT, COMMENCING AT 6.00 PM

 

Present :   

Cllrs Anne Bishop (Chairman), Ivan Bulwer, Mike Cunningham, Jonathan Fitzgerald-Bond, Barbara Foster, Garry Price, Susan Scoccia

 

Also in attendance: 

 

Cllr David Pugh

 

Officers Present:

 

Stuart Fraser, John Lawson, John Metcalfe, Alastair Rankine (Audit Commission), Ged Richardson, Tracey Ringer, Bob Streets,

 

 

 


20.             MINUTES

 

RESOLVED :

 

            THAT the minutes of the Audit Committee meeting held on 17 November 2005 be confirmed.

 

21.             DECLARATIONS OF INTEREST

 

Cllr Susan Scoccia declared a personal interest in item 6, as the local Member for the area including Undercliff Drive.

 

Cllr Mike Cunningham declared a personal interest in item 6 as he had previously been involved with Undercliff Drive.

 

22.             INTERNAL AUDIT OUTCOMES REPORT

 

The Committee agreed to take item 3 of the Audit Report and Synopsis (Appendix A) as the first item in order to release the officer who had attended for this item.

 

(a)               Audit Services Report – Liquidation of Orbital Events

 

The Committee was advised that following a liquidation notice for Orbital Events received in September 2005, both Customer Accounts and the Associate Director of Cultural and Leisure Services had requested Internal Audit Services to seek further information.

 

Following an investigation it was established that there had been some corporate control failures, which had resulted in a potential loss of approximately £38,000.  Recommendations had been put forward regarding future Contract Standing Orders, proposing closer scrutiny regarding health and safety issues as well as the financial stability of contracted companies.


Members’ main concern was whether such a situation could happen again in the future, and what prevention measures had since been put in place.  They also queried the use of risk assessments prior to contracts being awarded.

 

The Committee was informed that the Risk and Insurance Section had recently been involved in training staff, and raising the profile of risk assessment with all managers.  Additionally, all Cowes week contracts were now undergoing a review.  The Internal Audit Section had been able to provide the appointed liquidator with good quality information, which might assist with the recovery of the monies owing.

 

RESOLVED:

 

THAT the 3 recommendations as noted in Appendix A be endorsed.

 

 

(b)               Review of Non Domestic Rates (NNDR) 2005/06

 

Members were informed that the review of the non-domestic rates had highlighted that a number of sports clubs had not registered with the Inland Revenue and therefore were not eligible to claim the full discount allowed.  The Billing Officer had been requested to conduct an exercise encouraging clubs to apply, which would result in further savings for the Council.

 

 It was also noted that an additional Bailiff had been appointed to assist with the recovery of Non Domestic Rates and Council Tax.  This had been necessary following the unacceptable performance of recovery earlier in the year.  Members were reassured that the performance of both companies was now acceptable.

 

RESOLVED :

 

            THAT  the report be noted.

 

(c)               Review of the Use of Consultants

 

The review had been undertaken as part of the 2005/06 Audit Plan, and was intended to ensure that services relating to design and construction were secured in compliance with the Council’s Contract Standing Orders (CSO’s).  The focus of the review had been on consultants used in Coastal Protection, Highways and Property Services.  Although the Council’s CSO’s had been observed in the majority of cases, Members noted that the choice of consultant was restricted for specialist work.

 

Following the review, three minor administrative recommendations had been put forward by the Internal Audit Service, which had been accepted by service managers.

 

RESOLVED:

 

THAT the report be noted.

 

23.             AUDIT OF ACCOUNTS 2004/05

 

Members had previously been advised of potential amendments to the Council’s accounts 2004/05 following a report by the Audit Commission.  The report explained the specific material amendments subsequently required under the Accounts and Audit Regulations 2003.  The amendments related to the presentation of the Accounts only and Members were informed that there was no financial impact for the Council.

 

RESOLVED:

 

THAT in accordance with the Accounts and Audit Regulations 2003, the responsible officer had informed the Audit Committee of the material adjustments made to the 2004/05 accounts.

 

24.             CAPITAL BUDGET MANAGEMENT – ADVANCE OUTLAY

 

This report had been requested by the Cabinet at their meeting held on 22 November 2005 in order to identify the risks associated with capital programmes where significant spending had been incurred prior to funding being secured.

 

Projects falling within the capital programme category included the Coastal Protection Schemes such as Seaview Duver, property assets, Council assets awaiting disposal and major highways schemes.  All of these areas carried potential risks to Council finances and reputation, but the biggest financial risks were the major highways schemes.  Members’ were advised that £1.7 million had been spent on Undercliff Drive and £340,000 had been spent on Ryde Interchange to date.  A further £560,000 would have to be spent on Ryde Interchange under new DfT guidelines, before the Council could approach the Government for release of the approved funding.  The expenditure incurred to date had been provided from slippage on other highways projects, although the Committee acknowledged that this could have a detrimental impact on other schemes.

 

Following consultation with service managers and the Audit Commission, it was suggested that the provision of relevant, up to date financial information to elected members on a regular basis, is a key element of effective performance management.

RESOLVED

 

i.                    THAT the Audit Committee recommend to Cabinet that:

 

(a)               all capital projects should be evaluated in accordance with the Council’s risk assessment process;

 

(b)               all capital projects which are judged as medium or high risk, having undergone the process, should be recorded in the Council’s risk register to acknowledge the impact they can have on both the Council’s financial well-being and delivery of the Council’s strategic objectives;

 

(c)               all such projects recorded in the risk register should be the subject of regular progress reports (via the quarterly financial exception reports), in order that Members are kept up to date with all aspects of project delivery;

 

(d)               all major capital projects should be subject to a Gateway review process in order to provide assurances as to progress through the various project stages up to and including procurement processes, and to include value for money considerations to ensure that the project continues to offer good value for money for the Council;

 

(e)               the Scrutiny Committee be asked to investigate the impact on the Council’s financial well-being if the funding could not be found internally from slippage of other schemes.

 

ii.                  THAT the Audit Committee recommend to Cabinet that where appropriate, resources should be made available for advance design works in order that an inventory of projects is available to replace those delayed for any reason.

 

25.             REVIEW OF THE STATEMENT OF INTERNAL CONTROL

 

Internal Control was one of the main concerns for the Audit Committee and therefore the review of the Statement of Internal Control (SIC) was of particular importance.  The SIC had become a requirement of the Accounts and Audit Regulations for the year 2004/05 and it was therefore incumbent on the Audit Committee to ensure continued quality improvement of the way in which the SIC process operates.

 

The Audit Commission had compared the Council’s SIC with Cipfa guidance and subsequently suggested some amendments.  Their recommendations had been incorporated into an action plan for the service.  Part of the action plan included a timetable which would enable the Audit Committee to undertake an in-depth review before formally adopting the SIC for 2005/06.

 

RESOLVED:

 

i.          THAT the report be noted.

 

ii.         THAT a development briefing be arranged for the Audit Committee prior to the review of the SIC for 2005/06.

 

26.             AUDIT COMMISSION REVIEW OF ETHICAL GOVERNANCE AND GOOD CONDUCT

 

The Committee heard that the Audit Commission had reviewed the Council’s existing policy framework for counteracting fraud and corruption, and found it to be satisfactory, although some improvements had been proposed.

 

The Council’s response to the review, Appendix 2 of the report, had included consultation with officers and managers regarding remedial actions.   Staff training had been identified as a key element for future improvement.  Immediate actions included updating the Council’s Anti-Fraud and Corruption Strategy with better accessibility for all staff as well as better dissemination of information.

 

RESOLVED:

 

THAT the recommendations in the Audit Commission’s report, and the Council’s response to the report, be endorsed.

 

 

 

CHAIRMAN