Agenda and minutes

General Purposes & Audit Committee
Wednesday, 18th July, 2018 6.30 pm

Venue: Council Chamber, Town Hall, Katharine Street, Croydon CR0 1NX. View directions

Contact: Michelle Gerning
020 8726 6000 x84246  Email: michelle.gerning@croydon.gov.uk

Items
No. Item

6/18

Minutes of the Previous Meeting pdf icon PDF 83 KB

To approve the minutes of the meetings held on 15 March 2018, 26 March 2018 and 23 May 2018 as an accurate record.

Additional documents:

Minutes:

The minutes of the meetings held on 15 March, 26 March and 23 May 2018 were agreed to be signed by the chair as an accurate record of the meeting

7/18

Disclosure of Interests

In accordance with the Council’s Code of Conduct and the statutory provisions of the Localism Act, Members and co-opted Members of the Council are reminded that it is a requirement to register disclosable pecuniary interests (DPIs) and gifts and hospitality to the value of which exceeds £50 or multiple gifts and/or instances of hospitality with a cumulative value of £50 or more when received from a single donor within a rolling twelve month period. In addition, Members and co-opted Members are reminded that unless their disclosable pecuniary interest is registered on the register of interests or is the subject of a pending notification to the Monitoring Officer, they are required to disclose those disclosable pecuniary interests at the meeting. This should be done by completing the Disclosure of Interest form and handing it to the Democratic Services representative at the start of the meeting. The Chair will then invite Members to make their disclosure orally at the commencement of Agenda item 3. Completed disclosure forms will be provided to the Monitoring Officer for inclusion on the Register of Members’ Interests.

Minutes:

There were none.

8/18

Urgent Business (if any)

To receive notice of any business not on the agenda which in the opinion of the Chair, by reason of special circumstances, be considered as a matter of urgency.

Minutes:

There were no items of urgent business.

9/18

Local Government & Social Care Ombudsman pdf icon PDF 407 KB

The report of the Local Government & Social Care Ombudsman is attached.

Minutes:

The Head of Housing Solutions presented the report which detailed the actions taken by the Council following a complaint by a service user that was escalated to the Local Government and Social Care Ombudsman (LGSCO). The Council accepted the LGSCO findings as published in its report and accepted all recommendations made. The Team went on to complete the recommendations ahead of the time scales.

 

Officers took note of a Member comment on the poor quality of the medical advisors report in this case and advised that this would be fed back to the relevant teams.

 

A Member commended the team on their response time to the recommendations made by the LGSO and was reassured that lessons learnt would prevent further occurrences of this nature.

 

In response to a member query on whether details of lesson learnt would be made available or incorporated into performance management systems, officers stated that they would and statistics as requested would be circulated to Committee members.

 

 

The Committee RESOLVED: That

 

1. The content of the LGSO report be noted

2. Further details on lesson learned be circulated to Members of the Committee.

 

 

10/18

Audit Report for Brick By Brick Croydon LTD 2017 Accounts pdf icon PDF 380 KB

[Report to Follow]

Additional documents:

Minutes:

The Head of Operations introduced the report which provided the company’s overall financial position as issued by the auditors Grant Thornton and included their opinion on the final accounts. The Auditors issued an unqualified opinion on the Financial Statements with no recommendations made in relation to the company’s system of internal control or significant risks identified.

 

In response to a member  query as to whether the reports would be provided by Brick by Brick and not just their accounts, the Cabinet

Cllr Mary Croos arrived at 6:50pm

 

Member for Finance and Treasury stated that a report would be brought to Cabinet periodically as well as the business plan for approval by Cabinet once a year.

 

In response to a member Comment as to why the accounts were completed in December, officers responded that an initial decision was made for the statements to be prepared in the financial year and not calendar year in order to make it easier to consolidate figures. This may be reconsidered in the future.

 

 

The Committee Resolved: That

1. The Independent Auditors report on the Brick by Brick final accounts issued by the company’s external auditors, Grant Thornton be noted.

11/18

Financial Performance Report for 2017-18 pdf icon PDF 366 KB

The report on the progress on the delivery of the Council’s Financial Strategy.

Additional documents:

Minutes:

The Director of Finance Investment and Risk presented the report which outlined the Councils financial performance and outcome for the period of 1 April 2017 to 31 March 2018.

 

The Committee was informed that although the outturn for 2017/18 was an overspend of £5.03m, this was an improvement from the anticipated overspend at q3. This was achieved through careful and strong financial management. The areas of overspend were reported to Cabinet throughout the year and were areas that were impacted by demand and statutory responsibilities.

 

In response to a member comment that Croydon historically had low levels of reserves compared to other Local Authorities, the Executive Director of Resources stated that as part of the financial strategy, they had been looking at the principles around reserves. Croydon was doing all it could to maintain a prudent position.

 

A Member queried if the surplus in collection funds was repeatable. Officers responded that the collection fund could not be budgeted for every year. The Committee was informed that there were three keys things that drove council tax performance which were the number of properties that provided income, tax base was increasing at a rapid rate with growth playing a big part in financial strategy. The amount collected from Council Tax, Business Rates and Discount relief exemption.

 

In response to the Chairs question on how Croydon’s reserves match up against other LA’s, officers said that Croydon had one of the lowest reserves in London whilst inner London Boroughs had greater reserves. Croydon does not budgeted to use its reserves whilst some Boroughs had. Croydon had usable reserves in capital receipts and this could be utilised to fund transformation and not just to fund capital expenditure.

 

In response to a Member question as to whether the Council had learnt to be more careful with its reserves, and what figure would be acceptable in 2019/20 for reserves, the Cabinet Member for Finance and Treasury stated that this remained a challenge. The Council had to be careful to manage pressures in areas such as Adult Social Care but there was also no choice in how some of the reserves were used. An extra £1m had been put into contingency to manage risks in 2019/20.

 

The Chair commented that there was significant over spend in areas such as Special Education Needs (SEN), asked if underspend in some areas was leading to overspend in others and how exceptional were the items reported. Officers stated that overspend was as a result of significant pressures in specific areas. Expenditure that had been incurred throughout the year was reported periodically to Cabinet. The Costs were exceptional due to the level of costs the LA had to bear such as Universal Credit which had a £2.5m deficit following the pilot which was covered by the Council.

 

The Chair commented that it would be helpful in future if a breakdown was provided on earmarked reserves for specific projects. – Officers notes that these are provided in the annual accounts.

 

In response to whether  ...  view the full minutes text for item 11/18

12/18

Audit Finding Reports pdf icon PDF 317 KB

[Report to Follow]

Additional documents:

Minutes:

Thomas Slaughter and Sarah Ironmonger from Grant Thornton presented the Audit findings reports for both the Council’s general fund and Pension Fund accounts.

 

Following review, the Auditors set six recommendations for the Council accounts and one for the Pensions Funds.  It was recognised that the Council had strong plans for growth and robust mechanisms in place to deliver despite the significant pressures that would be faced in years to come.

 

The report also highlighted the importance of cost control and the arrangements in place to drive revenue. It was felt the Council had clear plans to manage this in the medium term.

 

Grant Thornton anticipates to issue unqualified opinions for the Council’s accounts and Pensions Funds accounts by the 31st July 2018.

 

In response to a Member comment on levels of reserves being a concerns, officers said that the key was whether there was enough cash flow to continue operating until July 2019 without using reserves and there was. Having reviewed the factors and arrangements in place, it was concluded that there was solid foundation of elements to manage any issues that arise through value for money strategies.

 

In response to a member concerns of the possibility of Capital receipts being used as revenue, offices stated that the Councils usage was a transparent process with Capital Receipts used for specific things to contribute to transformation of services. The government had created a clear policy on the usage of capital receipt.

 

 

 

The Chair thanked the Grant Thornton representative for the work completed and the resources put in place to produce the reports within reduced timeframe.

 

 

The Committee RESOLVED: That

1. The ISA 260 (International Standards on Auditing) Reports for the Council and the Pension Fund issued by the Council’s external auditors, Grant Thornton (Appendix 1 and 2 respectively) be noted.

2. The letters of representation (in Appendix 3 and 4) on behalf of the Council and the Pensions Fund be approved.

3. The final accounts (Appendix 5) based on the adjustments recommended in the Audit Findings report for the Council (set out in Appendix 1), together with any minor changes identified under paragraph 1.4 be approved.

4. Authorisation is given to the Executive Director Resources (S151 Officer) and Chair of General Purposes and Audit Committee to sign off the Council’s 2017/18 accounts and agree any changes identified between this meeting date and the 31st July 2018, as detailed in paragraph 3.4 of this report.

13/18

Head of Internal Audit Annual Report 2017/18 pdf icon PDF 111 KB

The report details work completed by Internal Audit in 2017/18 and the overall levels of assurance for the Council’s internal control environment to support the Annual Governance Statement.

Additional documents:

Minutes:

The Director of Governance presented the annual report which detailed the Internal Audit work for 2017/18. The Head of Internal Audit was able provide Substantial Assurance in relation to the Councils system of internal control. Substantial Assurance was also given to the Councils framework for governance, risk management and control accords.

The Committee was informed that 70% of individual finalised audits received either full of substantial assurance levels and there were still a number of reports in draft with an update to be provided at the next meeting of the Committee.

 

The Committee was advised that there were still some priority one recommendations being followed up from previous years as priority one recommendations were followed up until resolved. This will alter the final figures for each year.

 

Two key issues were identified as we control weaknesses and theses were non- compliance with the Councils Contracts and issues with budgeting and financial management within the people’s departments. Further work was being work was being undertaken in these areas following recommendations made to address the issues. There had been some improvements made in the areas identified.

 

In response to Member question on what issues amounted to non-compliance and if there was any particular trends in the size of contracts, officers responded that there was variation between small and medium sized contracts. Non – compliance was identified through a number of small issues across a range of audits which built a particular picture.

 

The Chair thanked officers for the report

 

The Committee Resolved that:

1. The Head of Internal Audit Report 2017/18 (Appendix 1) and the overall Substantial level of assurance of the Council’s systems of internal control be Noted.

14/18

Internal Audit Review of Effectiveness 2017/18 pdf icon PDF 112 KB

The report details the Executive Director Resources (Section 151 Officer)’s review of the effectiveness of the Council’s internal audit.

Minutes:

The Director of Governance presented the report which detailed the effectiveness of the Councils Internal Audit function as directed to be reviewed on an annual basis by the Audit and Accounts Regulations 2015.

 

The audit looked at levels of implementation of recommendations as well as contractor performance targets. The audit service delivered 100% of the audit plan against key targets for 2017/18.The Council also participated in the CIPFA Audit benchmarking Club 2017 in order to continuously improve its internal Audit service.

 

A Committee Member commented on the good quality of reporting and the sustainability of effective internal auditing.

 

In response to a member query on how to address the low level of internal stakeholder feedback, officers stated that engagement continued to be challenging and they would continue to look at ways to increase participation.

 

 

The Chair thanked officers for their report.

 

The Committee Resolved that

1. The content of the report be noted.

15/18

Anti-Fraud Update Report: 1 April 2017 - 31 March 2018 pdf icon PDF 115 KB

The report of the Council’s Corporate Anti-Fraud Team performance and developments during April 2017 to March 2018.

Minutes:

The Director of Governance presented to the Committee the annual performance report. Members were directed to the performance indicators of the report which highlighted that the team has exceeded its annual target for successful outcomes and the service was delivered in budget for 2017/18.

 

A Member queried whether the work completed by the team was benchmarked against other LA’s, officers replied that this was not currently done as recording of investigations differed amongst LA’s. There was currently an initiative in place on data matching across LA’s which may provide opportunities for standardisation of recording in the future.

 

In response to a Member question on availability of a network of managers to discuss best practice, officers stated that there was a network of fraud mangers as well a forum where they discussed issues such as current trends as well as best practice.

 

 

The Chair thanked officers for the work that had been completed.

 

The Committee Resolved: That

1. The Anti-Fraud activity of the Corporate Anti-Fraud Team for the period 1 April 2017 – 31 March 2018 be noted.

16/18

Annual Governance Statement 2017/18 pdf icon PDF 103 KB

The report of the Annual Governance Statement of 2017/18 is attached.

Additional documents:

Minutes:

The Head of Insurance, Risk and Corporate Programme Office introduced the Annual Governance statement which detailed the effectiveness of the Councils Governance.

 

The Report sets out the values, purpose of the governance framework and how significant issues can be drawn from different sources through the review of the Councils internal systems.

 

Details of progression on 2016/17 risks and actions taken as well as identified key risks for 2017/18 had been tabled in the report. Steps would be taken to identify new ways to address the matters identified.

 

The Committee Resolved to

1. Approve the Annual Governance statement for the year 2017/18 at appendix 1 to this report in relation to scope of responsibility, purpose of the framework, governance framework detail and review of its effectiveness.

2. Agree the statement on ‘outcomes’ in relation to ‘Issues raised in 2016/17 Statement and progress to date’

3. Agree the significant governance issues identified in relation to 2017/18 and the actions being taken to mitigate those risks.

17/18

GPAC Independent Non-voting Member Recruitment pdf icon PDF 73 KB

This report summarises the proposed process in relation to the appointment of an independent non-voting co-opted Member on the General Purposes and Audit Committee.

Minutes:

The Director of Governance presented the item and informed the Committee that the Constitution allowed for two non-voting members to be appointed to the Committee.

 

There was currently one vacancy for a member to provide outside knowledge and experience to inform the audit work of the committee.

 

A report would be brought back to the Committee to enable a recommendation to be made to Full Council for confirmation of appointment once a suitable candidate had been identified

 

 

The Committee Resolved to:

 

1. Approve the process and procedure for appointment of independent non-voting co-opted members of the Committee as set out in Appendix 1;

 

 2. Delegate authority to the Director of Governance, in 

     consultation with the Chair of General Purposes and

     Audit Committee to:

     2.1 commence recruitment by way of advertisement of

           the vacancy for an independent non-voting co-opted

           member of the Committee (in respect of audit

           functions only),

     2.2 undertake shortlisting and interviews and

     2.3 report the outcome of interviews to the next meeting

           of the Committee for onward recommendation to full

           Council for appointment;

 

18/18

Exclusion of Public and Press

The following motion is to be moved and seconded where it is proposed to exclude the press and public from the remainder of a meeting:

 

“That, under Section 100A(4) of the Local Government Act, 1972, the press and public be excluded from the meeting for the following items of business on the grounds that it involves the likely disclosure of exempt information falling within those paragraphs indicated in Part 1 of Schedule 12A of the Local Government Act 1972, as amended.”

 

Minutes:

This was not required.