MINUTES OF A MEETING OF THE AUDIT PANEL HELD AT COUNTY HALL, NEWPORT, ISLE OF WIGHT ON TUESDAY, 25 NOVEMBER 2003 COMMENCING AT 2.00 PM

 

Present :

 

Mr M J Cunningham (Chairman), Mr J F Howe, Mr P D Joyce, Mr R G Mazillius (deputising for Mr K Pearson), Mr I R Stephens

 

Apologies :

 

Mrs M J Lloyd, Mr K Pearson

 

Also Present (non voting) :

 

Mr R A Sutton

 

4.      MINUTES

 

RESOLVED :

 

THAT the minutes of the meeting held on 25 June 2003 be confirmed.

 

5.      DECLARATIONS OF INTEREST

 

There were no declarations at this time.

 

6.      AUDIT OF IMPLEMENTATION OF NEW LEGISLATION

 

The Head of Legal and Democratic Services outlined the report of the Audit Commission on the Council’s preparation for implementing the requirements of the Freedom of Information Act 2000.

 

The Audit Commission had commended the Council on its progress in most of the areas involved. Although this was encouraging there were still a number of actions to be undertaken to enable the Council to meet the statutory deadline in 2005. Consideration was given to the Action Plan and associated target dates. The Head of Legal and Democratic Services was confident that this could be complied with. Members also noted that there was a specific budget for implementation of the Act.

 

RESOLVED :

 

THAT the Audit Commission’s report be noted, together with the action plan associated with the delivery of the Council’s statutory obligations under the Freedom of Information Act.

 

7.      AUDITORS REPORT ON THE ACCOUNTS (SAS610)

 

The District Auditor tabled his report on the Audit of the Council’s accounts for 2002/03. He advised members that it had been agreed that the Panel would consider the report on the Statement of Auditing Standards (SAS 610) in advance of the Audit Commission’s report on the annual financial statement of the Council.

 

After a short adjournment to enable the Panel to read the tabled report consideration was given to the areas where the Audit Commission identified where misstatements had been made, material weaknesses in accounting and internal control systems and qualitative aspects of accounting practices and financial reporting.

The misstatements related to capital charges (notional interest), in the Consolidated Revenue Account (CRA), being understated by between £1m and £3m and the effect on depreciation charged to the CRA as the result of this. In addition Housing Benefit overpayments were not being recovered via the debtors system and therefore did not appear as debtors in the accounts. There was also the view that potential liabilities under Section 117 of the Mental Health Act were understated.

 

The Chief Financial Officer outlined the actions being taken on these issues. Members were however advised that the processes involved had been in place for a number of years and had not been commented on by the previous District Auditor. It was also noted that some of the related financial information fed into the Council’s Best Value Performance Indicators and these would require amendment.

 

In respect of material weaknesses in the accounting and internal control systems these related to reconciliation of the asset register to the financial accounts. There was no de minimis in relation to capital expenditure and the council had no system in place to track recovery of amounts due to the Pensions Fund. The Chief Financial Officer explained that action was being taken to rectify these problems by the adoption of revised procedures.

 

On the qualitative aspects of accounting practices and financial reporting, the District Auditor raised issues related to the overall balance and clarity of information contained in the Council’s Annual Report.

 

The Panel noted that there would be no financial implications arising from taking appropriate action to deal with the comments of the District Auditor.

 

RESOLVED :

 

THAT the report of the District Auditor relating to the Statement of Auditing Standards, together with the action proposed by the Chief Financial Officer, be noted.

 

8.      PARTNERING

(During the debate Mr R G Mazillius declared a personal interest and left the room).

 

The Compliance and Risk Manager gave a presentation on Isle of Wight Partnering Framework Contracts.  The Executive had, at its meeting on 18 June 2003, given approval to the establishment of a pilot Partnering scheme for the Schools Building Programme from 2004/05.

 

The disadvantages of the existing approach to tendering for large contracts were outlined together with the principles of partnering. Details of cost comparisons of traditional and partnered school projects were also given. It was anticipated that partnering could save 10% - 20% per annum on building costs.

 

The selection process for the pilot partnering scheme was explained. Six Design Teams and five Contractors had been shortlisted and they had been asked to submit Tender Documents by 19 December 2003. Interviews would be held during January 2004 with the award of the contract  in February 2004.  Evaluation of awards would be done by officers, with the Portfolio Holders for Education, Resources and the Deputy Leader taking the final decision.

 

Although the pilot scheme would involve the education building programme in the first instance similar arrangements were being investigated for highway schemes as the next step. Other services areas could also be the subject of the same process at a later date.

 

RESOLVED :

 

THAT the principles of the Partnering Framework Contracts be noted.

 

9.      THE BEST VALUE REVIEW ON PROCUREMENT

 

The Compliance and Risk Manager reported on the Best Value Review of Procurement that was currently being undertaken. The Council spent approximately £90m per annum on the purchase of a wide range of goods and services. It was anticipated that the report and Improvement Plan would be available early in 2004.  The report had the potential of helping the Council make significant steps forward in the way it managed its procurement. Members stressed the need to ensure that all strands of procurement, particularly E-procurement, were taken into account by the review.

 

RESOLVED :

 

THAT the report be noted.

 

10.  INTERNAL AUDIT PROGRESS REPORT

 

The Chief Internal Auditor reported on his Section’s activities since the June 2003 meeting. The role of the Panel in overseeing the Internal Audit activity was stressed. It was also noted that it had been possible to employ a contractor to specifically provide ICT audit on four pieces of work. If financial resources permitted this approach might be adopted for other audit activities.

 

In noting the 12 Reviews undertaken the Panel discussed how the implementation of the recommendations arising from these should be monitored. Officers indicated that they could look at the introduction of a reporting mechanism for Internal Audit reports within the Select Committee process. Members considered that as an initial measure the summary of each audit report should be made available to Chairman of the Panel, relevant Select Committee Chairman and Portfolio Holder. 

 

The 2004/05 Audit Plan would be submitted to the next meeting of the Panel for its approval.

 

RESOLVED :

 

a)      THAT the Chief Internal Auditor and Head of Select Committee and Best Value Support draft a process for the consideration of Internal Audit Reports by this Panel and Select Committees.

 

b)      THAT as part of the reporting mechanism for Internal Audit reports, a copy of the summary be sent to the Chairman of the Panel, relevant Select Committee Chairmen and Portfolio Holder for information.

 

 

 

 

 

 

 

 

CHAIRMAN