Agenda, decisions and minutes

That Councillor A. Woolley be appointed Chair of the Committee for the rest of the meeting.

The Chair read out a press release which she had circulated in which she stated her intention to adjourn the meeting and the reasons for doing so in relation to the despatch of papers for the Statement of Accounts.  Councillor A. Woolley raised a point of order and asked if any motion to adjourn a meeting must conform to the majority wish or whether the Chair could arbitrarily adjourn the meeting without a vote.

Before a decision could be reached, the Chief Executive said it was important to clarify the statutory obligation of the Council to adopt the accounts before the statutory deadline of 30 September and that if a decision was taken to adjourn the meeting, this would not preclude the process of submitting the Statement of Accounts to full Council for adoption.  It was intended at this meeting to fully report on changes which had been made to the accounts for any observations to be made to Council by the Committee, noting that (1) the accounts had been submitted to the Committee in draft form in July; (2) the accounts had been available for inspection since; and (3) it was standard practice in any accounting year for the draft accounts to be amended to include any material changes which had occurred since their drafting and the recommended changes and amendments of the external auditors.

The Democracy & Governance Manager explained that this was a legally convened meeting and pointed out that whilst the Statement of Accounts had not been made available five clear working days before the meeting, it had in fact been made available five clear days (including Saturday and Sunday) beforehand, which more than complied with legal and Constitutional requirements - the same arrangement as last year.  He advised that Council Procedure Rules did not entitle the Chair to arbitrarily adjourn the meeting.  The Chair could adjourn the meeting in certain circumstances such as to allow time to deal with disturbance by the public, but there were no such circumstances existing.  He confirmed that Procedural Rule 5, whereby notice had been given of the meeting to Council Members, had been followed.

The Chair stated her dissatisfaction that the same arrangement had occurred in the previous year but felt that the Committee was being undermined in its ability to scrutinise and was not willing to proceed with the meeting.

The Chief Executive said that this was not the case and that the preferred position was for the Audit Committee to provide a commentary to Council as was the annual practice.  He had a duty to present the accounts to Council if the Committee chose not to do this.  He said that failure to adopt the accounts within the deadline could incur a penalty and had reputational risks for the Council.

The Head of Finance spoke about the availability of the draft accounts from 17 July 2013 which were then subsequently made available for scrutiny over the summer period, together with drop-in sessions on 12 and 13 September 2013  ...  view the full minutes text for item 34.

Councillors Haydn Bateman, Alan Diskin and Ian Roberts each declared a personal interest in Agenda Item 4: Statement of Accounts 2012/13.

Councillors A.G. Diskin, G.H. Bateman and I.B. Roberts each declared a personal interest in Agenda Item 4: Statement of Accounts 2012/13 as they were respectively Chair and Vice-Chair of the Clwyd Pension Fund Panel and member of the Pension Scheme.

To confirm as a correct record the minutes of the meetings held on 17 July and 30 July 2013 (copy enclosed).

That both sets of minutes be approved as a correct record and signed by the Chair.

The minutes of the meetings of the Committee held on 17 July and 30 July 2013 were submitted.

30 July 2013

Minute 27: Treasury Management Annual Report 2012/13 and 2013/14 Update - A written response to queries previously raised by Councillor G.S. Banks was circulated at the start of the meeting.

As a point of accuracy, Councillor G.H. Bateman sought clarification on interest amounts paid on investments with Landsbanki.  The Finance Manager (Strategy & Technical) confirmed that the claim which had been submitted to the winding-up Board was for the Council’s original investment plus contract interest.

RESOLVED:

That both sets of minutes be approved as a correct record and signed by the Chair.

(a)       That the final version of the Statement of Accounts 2012/13 be recommended to County Council, noting that the Committee support the management decision not to adjust the uncorrected understatement of £899K;

(b)       That the reports from the Wales Audit Office be noted;

(c)        That the Letter of Representation - Flintshire County Council and Letter of Representation - Clwyd Pension Fund be recommended to County Council; and

(d)       That the Committee note the reassurance for further work to be undertaken on asset management.

The Head of Finance introduced the Statement of Accounts for 2012/13, together with the Wales Audit Office (WAO) reports in connection with the audit of the financial statements and Letters of Representation for Flintshire County Council and Clwyd Pension Fund.

Since the draft version of the accounts had been presented to the Committee in July 2013, drop-in sessions were arranged for all Members in September 2013 to answer any queries from Members.  There was a statutory duty for the accounts to be considered and approved before the end of the month deadline, during which time the audit officially continued for post balance sheet events and the like, but had now been substantially completed.  The Head of Finance said that in collating the accounts in a prescribed format from across an organisation such as this, it was inevitable that issues would be raised.  It was also important to remember that the document related to the accounting treatment and classification of assets and liabilities within the accounts.  She advised that the final accounts included changes agreed by WAO during the course of the audit and that these had been discussed with officers with appropriate actions put in place to amend processes where necessary.  The liquidation of AD Waste which had been finalised over the last fortnight had resulted in complex accounting entries being made to bring the assets and liabilities from that company fully into Flintshire’s balance sheet in line with accounting policies.  She thanked the officer team for their work in preparing the accounts within the deadline and invited WAO colleagues to present their findings.

Audit of Financial Statements Report for Flintshire County Council 2012/13

Mr. J. Herniman of WAO spoke of the complex task and time dedicated to producing local government accounts, including some areas requiring technical discussion on the treatment of issues within the accounts and inevitable adjustments which were normal practice.  He advised of the intention to issue an unqualified (clean) opinion on the financial statements.  Whilst reporting on the corrected misstatements identified, which had been agreed with management, he advised that the issue with balancing entries in the accounts had been resolved.

Mr. P. Williams asked why the prior period adjustment of £12.752m on non current assets had not been recognised previously.  Mr. Herniman explained that this had been identified through a sample check in the audit where the issue had been incorrectly treated in the accounts for 2011/12 and 2012/13.  Mr. Williams referred to the £13.8m adjustment for non-enhancing capital expenditure and the impact on depreciation which would require regular review of assets to ensure there was no repeat.

The Chief Executive advised Members on the outcome of the final liquidation of the assets and liabilities of AD Waste which had fallen late in the accounting period due to the legal process.  The changes were a reflection of fact on liquidation and had not occurred due to any new decision by the Council on the close of the company; liquidation was simply a closing legal process.  ...  view the full minutes text for item 37.

That the content of the report be noted and welcomed.

The Internal Audit Manager explained that the item had arisen following previous concerns raised by the Committee on outstanding recommendations from an audit on the use of Section 106 Agreements.  The Head of Planning was invited to present the report and provided background on the process of Section 106 Agreements which had led to him commissioning the audit.

The Head of Planning gave an overview of actions detailed in the report which had been taken to address the audit recommendations and advised that in compiling a list of all Section 106 Agreements signed since 2000, officers had reviewed over half of these to date.  As an example of the work undertaken so far, copies of a spreadsheet were circulated showing information on agreements for Buckley which had been shared with the Town Council.  Such information had been generally well received by Town and Community Councils and was helpful in clarifying the process and demonstrating transparency.  Further work carried out to date was detailed in the report.

Following a query raised by Councillor T. Newhouse, the Head of Planning explained the need for the introduction of Community Infrastructure Levy (CIL) to go through a parallel process to the Local Development Plan (LDP) which was evidence-based and therefore links would need to be made to satisfy any Inspector.

Councillor G.S. Banks sought a response on the comment that the audit had identified a lack of confidence in processes for Section 106 Agreements.  The Head of Planning replied that this referred to the inability to trace what payments had been sought and that this was now included in the monitoring sheets.  Work had since been done to improve and clarify the process.  In response to a question on differences in triggers, he said that this was dependent on the size of the site.

When asked by Mr. P. Williams about the extent of the backlog, the Head of Planning indicated that there were currently 40-50 unsigned legal agreements in the system but was unable to give an estimated value of payments included within them.  He said that CIL should simplify the process and provide opportunity to focus on attracting funding to mitigate the impacts of particular developments..  Any developer who breached the triggers would instigate formal enforcement procedures, however the enforcement officer had been successful in informally resolving outstanding financial issues.  In response to questions on potentially halting a development, the Head of Planning spoke of the difficulties in providing evidence of actual harm, but said that CIL would simplify the process.

In response to further queries, the Head of Planning explained that each planning application was determined on its own merits and could not take into account the past history of the developer and their track record of payments of Section 106 funding, or otherwise.  On the enforcement of triggers, he advised that officers physically went out on site to carry out monitoring.  The Democracy & Governance Manager pointed out that in addition to the Council’s enforcement procedures, local searches carried out  ...  view the full minutes text for item 38.

That Agenda Item 7 be brought forward for consideration before Agenda Item 6.

The Chair indicated that there would be a slight change in the order of business to bring forward Agenda Item 7 before Agenda Item 6.  The remainder of the items would be considered in the order shown on the agenda.

That the report be noted.

The Internal Audit Manager presented the report on Risk Management following the issuing of the final report by Internal Audit in August 2013.  He explained that risk management was one of the three areas that had to be included in the Internal Audit Annual Report brought to the Committee in June.  This work had been completed by then and the Risk Management report was now finalised.  The delay had meant that management had been able to use Internal Audit’s work in their refresh of the Risk Management Strategy.  The Internal Audit Manager gave an overview of the recommendations which concentrated on linking risks to Council objectives, and developing risk management in collaborations and projects.

Following a comment from the Chair, the Internal Audit Manager confirmed that actions had been taken through the refreshing of the Strategic Assessment of Risks & Challenges (SARC) which would require continued review.

Mr. P. Williams welcomed the improvements and remarked on the need to link risk management profiling with operational issues and to monitor.  He asked if the changes to the SARC process would be reflected in the Annual Governance Statement.  The Democracy & Governance Manager explained that as the AGS had been developed for this year, this would be pursued through the working group for next year.

Councillor G.H. Bateman sought information on the six significant risks listed in the Internal Audit report.  The Internal Audit Manager replied that this represented where specific risks were considered and how they were reported.

RESOLVED:

That the report be noted.

That the responses to the Internal Audit report findings be noted as reflecting robust assurance of the Council’s risk management arrangements.

The Chief Executive presented the report on the response to the findings of the Risk Management audit report to give assurance on the robustness of the Council’s risk management arrangements.  He said that this was a good example of using a live piece of work and referred to the three areas of strategy, systems and operations within risk management.

Whilst the Strategic Assessment of Risks & Challenges (SARC) had been useful, it was recognised that a refresh of the format was needed to link to the Improvement Plan.  The Committee was also advised of the review of partnership registers and the capturing of risks integrated to project management.  The Chief Executive said that the improvements represented a good organisational ‘cultural change’ and would be tested when working on projects.

Mr. J. Herniman of Wales Audit Office (WAO) said that comments had previously been made on the SARC and welcomed its review.

Councillor T. Newhouse queried the number of significant risks compared with those listed in the Internal Audit final report.  The Internal Audit Manager gave assurance that there were no omissions, explaining that the two significant risks listed in section 1.06 had been combined in the previous agenda item.

RESOLVED:

That the responses to the Internal Audit report findings be noted as reflecting robust assurance of the Council’s risk management arrangements.

That the report be noted.

The Internal Audit Manager presented the update report on progress of the Internal Audit department.  It was reported that the advertisement of a part-time vacancy, due to a secondment, had not received approval under the vacancy management control procedures and would impact on the audit plan.  The Internal Audit Manager said that he and the Head of Finance were working on options and would submit a report to the Committee as soon as possible.  He gave a reminder that he was required to notify the Committee of any significant matters which could jeopardise delivery of the plan.  The Head of Finance gave assurance that potential risks were being explored for any adjustments to be made to the plan, however it was noted that certain types of audit could not be deferred.

The Chief Executive invited the Committee to recognise that the rigorous approach being taken to vacancy management applied to all areas of the Council and was due to the uncertainty over the budget gap from 2014/15 onwards.  He spoke of the importance of the Committee being able to satisfy itself on any changes made to the plan.

The Internal Audit Manager gave an overview of the key considerations advising that the current year’s plan was on target and noted that more than 200 days had been completed on the plan last year.  He explained that the backlog of work from the last financial year, due to the major investigation, had resulted in a large number of reports being finalised since the last meeting and provided further detail on the implementation of Lean recommendations and Corporate Grants.

The Chair expressed concerns that not all Council vehicles had tracking devices fitted and suggested that the Committee may wish to take a view on this.  The Chief Executive spoke of an ongoing fleet review, including trackers, and suggested that the Head of Streetscene could be invited to the Committee to report on this.  Councillor T. Newhouse welcomed this and asked that the report include information on the cost of installing trackers.

Councillor G.S. Banks congratulated the Internal Audit Manager and his team for their work and suggested that the topic of vehicle trackers may be more relevant to Overview & Scrutiny.  The Chief Executive said that this was an issue which overlapped Housing and Streetscene, and that it was relevant for the Audit Committee to consider in relation to fraud prevention.

On recommendation implementation, the previously agreed change was now in place to show comments of the relevant Director/Head of Service for their respective areas.  A database was currently being developed to generate automatic replies for this.

Mr. P. Williams thanked officers for their efforts in progressing reports.  In welcoming the improvements to the implementation of recommendations, he hoped that the inclusion of responses from Director/Head of Service demonstrated greater ownership and accountability and suggested that it might be useful to include the new date and a ‘yes/no’ column to indicate whether or not the risk was acceptable to Internal Audit.  Councillor Newhouse  ...  view the full minutes text for item 42.

That the report be accepted.

The Internal Audit Manager presented a report on actions resulting from points raised at previous Audit Committee meetings.  The report contained a summary of actions carried out to date, the majority of which had been completed.  He gave a reminder that the briefing meeting with Overview & Scrutiny Chairs would take place immediately prior to the next Audit Committee meeting.

On Collaborative Projects Arrangements, the Chief Executive reported that the collaboration protocol had been produced.

RESOLVED:

That the report be accepted.

That the Forward Work Programme be approved, with the deferment of the Treasury Management Mid Year Update and Wales Audit Office Improvement Assessment Letter to the meeting on 18 December 2013.

The Internal Audit Manager presented the report to consider the Forward Work Programme for the next year and explained that the Treasury Management Mid Year Update and Wales Audit Office Improvement Assessment Letter would be deferred from 7 October 2013 to the meeting on 18 December 2013.

Councillor T. Newhouse extended his apologies for the next meeting.

Councillor I.B. Roberts reflected on the meeting and asked for it to be noted that the Committee was satisfied in the way that the business had been conducted and thanked those on the Committee for their co-operation in enabling the Council to approve the accounts within the statutory deadline.

RESOLVED:

That the Forward Work Programme be approved, with the deferment of the Treasury Management Mid Year Update and Wales Audit Office Improvement Assessment Letter to the meeting on 18 December 2013.

There was one member of the press in attendance.

There was one member of the press in attendance.