Agenda and minutes

To approve as a correct record and sign the Minutes of the meeting held on 11 June 2014.

The Minutes (copies of which had been circulated) of the meeting held on 11 June 2014 were approved as a correct record and signed by the Chair, subject to the following amendment:-

Minute 6, ‘Annual Report of the Internal Audit & Risk Manager, include resolution (2) ‘That in order to ensure appropriate oversight of the financial robustness of Solutions SK,  the Corporate Director for Corporate and Support Services be requested to submit Solutions SK Audit reports to this Committee prior to their consideration by the Solutions SK Board.’

(NOTE: The Corporate Director for Corporate and Support Services informed the Committee that he would not be able to accede to the resolution as the auditing of Solutions SK by the Council was subject to a contractual agreement and the provision of internal audit reports to this Committee prior to their consideration by the Solutions SK Board. It was suggested that the Contributors Committee would be a more appropriate body through which the Council could monitor internal audit findings)

No declarations of interest were made.

Members of the public are invited to put questions to the Chair and Audit Committee on any matters within the powers and duties of the Audit Committee, subject to the exclusions set out in the Code of Practice.  (Questions must be submitted prior to the commencement of the meeting on the card provided.  These are available at the meeting. You can also submit via the Council’s website at www.stockport.gov.uk/publicquestions)

No public questions were submitted.

To consider a report of the Corporate Governance Group.

The report provides for comment the Council’s Annual Governance Statement for 2013/14. The report has been prepared by the Corporate Governance Group in line with guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) Finance Advisory Network.

The Audit Committee are requested to consider and comment on the report.

Officer Contact: John Pearsall on Tel: 474 4033 or email: john.pearsall@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) setting out the Council’s Annual Governance Statement for 2013/14.

RESOLVED – That the Annual Governance Statement 2013/14 be approved and the Leader of the Council and the Chief Executive be recommended to sign the document.

To consider a report of the External Auditor.                              (To Follow)

Mick Waite (Grant Thornton) submitted a report (copies of which had been circulated) detailing the findings of the 2013/14 audit including key messages arising from the audit of financial statements and work undertaken to assess the Council’s arrangements to secure value for money from the use of its resources.

Mr Waite stated that the Auditors had no hesitation in offering an unqualified opinion on both the financial statement and on value for money. Furthermore, he commended the Council for the quality of its accounts and documentation and expressed his thanks to officers at the Council for their co-operation in the audit process.

The following issues were highlighted:-

·         The Council had demonstrated good and robust medium term financial (MTFP) planning. There was demonstrable constructive challenge provided by the councillors to the MTFP and council performance.

·         Changes to the CIFPA criteria in relation to the valuation of assets. Despite concerns about the precise provisions of the Guidance, the Auditors were satisfied that compliant valuations were taking place.

·         The Council’s approach, along with partners, to the Better Care Fund was wisely cautious given the scale of the challenge and the as yet unproved savings that could be made.

The following comments were made/ issues raised:-

·         Discussions were ongoing with CIPFA regarding their guidance in relation to asset revaluation in order to ensure a consistency across local authorities.

·         Concerns were expressed that the Better Care Fund would see the medicalisation of wellbeing which would diminish adult social care. It was stated that a constructive relationship with the Clinical Commissioning Group should reduce the risk of this.

RESOLVED – That the external audit findings be noted and the Corporate Director for Corporate and Support Services and those involved in the preparation of the Council’s financial and audit documentation be thanked for their hard work.

To consider a report of the Corporate Director for Corporate and Support Services.

The report sets out for consideration the 2013/14 Statement of Accounts. Grant Thornton LLP is the Council’s external auditor who undertook the audit of the Council’s Statement of Accounts for 2013/14. 

The Audit Committee is asked to consider the issues that have arisen during the audit and approve the Statement of Accounts presented at Appendix One (NB amendments made to the Statement of Accounts since 30 June 2014 are highlighted).

Officer Contact: Paula McDonald on Tel: 474 4708 or email: paula.mcdonald@stockport.gov.uk

The Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) providing the Audit Committee with an opportunity to comment on and approve the 2013/14 Statement of Accounts. An amended version of the Accounts that incorporated minor amendments and subsequent changes that arisen as part of the external audit (copies of which were circulated).

Councillors asked questions and points of clarification, including:-

·         Information of Manchester Airport Group financial performance provided through information on dividends paid to shareholders.

·         Demographic changes being factored into budgeting and regularly monitored.

·         Capital receipts from housing and other projects being less than previous years. These were ring-fenced for specific purposes for future reinvestment. Overall capital receipts were higher than the previous year.

·         Clarification on the rate of borrowing being linked to cash flow.

·         The contractual arrangements for the Stockport Exchange Car Park and the return for the Council.

·         The use of the CSS Reserve to cover the costs the officers taking voluntary redundancy and leaving the Council part way through the year.

·         Changes to the insurance liabilities actuarial valuation leading to an increase in the Insurance Reserve but a reduction in the Insurance Provision.

·         Changes to Council Tax support being accounted for differently than the previous Council Tax Benefit.

·         Continuation of Car Loan scheme following ceasing of the lease scheme.

·         Process for the sign-off of exit packages.

RESOLVED – (1) That the 2013/14 Statement of Accounts be approved.

(2) That the Corporate Director for Corporate and Support Services be requested to include clarification notes in future accounts on pension capital spend in relation to redundancies.

To consider a report of the Corporate Director for Corporate and Support Services.

The report sets out the progress made by internal audit against the approved 2014/15 internal audit plan for the period 1st June 2014 to 31st August 2014.

The Audit Committee are requested to consider and comment on the report.

Officer Contact: John Pearsall on Tel: 474 4033 or email: john.pearsall@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) detailing progress made against the approved 2014/15 internal audit plan for the period 1 June 2014 to 31 August 2014.

A concern was raised in relation to the findings identified in a recent audit of direct payments for children. In response it was stated that where there was limited assurance provided ongoing monitoring would take place.  Furthermore a planned follow up audit was scheduled for quarter 3 and the results of that would be reported to the next Audit Committee.

RESOLVED – That the report be noted.

To consider a report of the Corporate Director for Corporate and Support Services.

The report outlines Cipfa guidance on the effectiveness of Audit Committees which states that the terms of reference of the committee should be reviewed on an annual basis, and updated where necessary.

The Audit Committee are requested to consider and comment on the report.

Officer Contact: John Pearsall on Tel: 474 4033 or email:john.pearsall@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) inviting the Audit Committee to review its terms of reference in light of CIPFA Guidance. It was not proposed that any changes be made to the Terms of Reference recently approved by the Council Meeting in September 2014.

RESOLVED – That the report and the Audit Committee Terms of Reference be noted.

To consider a report of the Corporate Director for Corporate and Support Services.

The update report aims to give members an overview of the work undertaken since April 2014, to work with and embed automated processes for key areas of the Council and the outcomes of some of the early testing undertaken.

The Audit Committee are requested to consider and comment on the report.

Officer Contact: John Pearsall on Tel: 474 4033 or email: john.pearsall@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) providing an overview of the progress made in developing Continuous Auditing approaches, as previously reported to the Audit Committee, and the outcome of early testing of automated processes within the key systems of payroll, council tax, business rates and housing benefits.

Councillors welcomed the positive engagement by council staff with the new continuous auditing model.

RESOLVED – That the report be noted.

To consider a report of the Corporate Director for Corporate and Support Services.

The report explains that the production of a Fraud Annual Report helps Stockport Council to demonstrate its commitment to identifying and managing fraud risk by outlining key activities, processes and findings from the previous year.

The Audit Committee are requested to consider and comment on the report.

Officer Contact: John Pearsall on Tel: 474 4033 or email: john.pearsall@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) proposing a process for the production of an Annual Fraud Report, in accordance with CIPFA Guidance.

RESOLVED – That the process for the production of an Annual Fraud Report as set out in the report be approved.

To consider a report of the Corporate Director for Corporate and Support Services.

The CIPFA best practice publication ‘A Toolkit for Local Authority Audit Committees’ recommends that an Annual Report is prepared by the Chair of the Audit Committee. The report outlines a suggested process for the publication of that report.

The Audit Committee are requested to consider and comment on the report.

Officer Contact: John Pearsall on Tel: 474 4033 or email: john.pearsall@stockport.gov.uk

A representative of the Corporate Director for Corporate and Support Services submitted a report (copies of which had been circulated) outlining a proposed approach for the preparation of an Annual Report by the Chair of the Audit Committee, in accordance with CIPFA recommended best practice.

The Chair emphasised his intention to involve all committee members in what he envisaged to be a collaborative document.

RESOLVED – That the process for the preparation of an Annual Report by the Chair of the Audit Committee as set out in report be approved.