Agenda and minutes

To elect a Chairman of the Audit Committee for the municipal year 2021/2022.

RESOLVED that Cllr S J Penny be elected as Chairman of the Audit Committee for the municipal year 2021/2022.

To elect a Vice Chairman of the Audit Committee for the municipal year 2021/2022.

RESOLVED that Cllr A White be elected Vice Chairman of the Audit Committee for the municipal year 2021/2022.

To receive any apologies for absence.

Apologies were received from Cllr A Wyer who was substituted by Cllr F Letch.

To note the protocol for hybrid meetings.

The protocol for hybrid meetings was noted.

To receive any questions relating to items on the Agenda from members of the public and replies thereto.

There were no questions from members of the public.

Councillors are reminded of the requirement to declare any interest,

including the type of interest, and reason for that interest, either at this

stage of the meeting or as soon as they become aware of that interest.

No interests were declared under this item.

Members to consider whether to approve the minutes as a correct record of the meeting held on 23^rd March 2021.

The minutes of the meeting held on 23 March 2021 were confirmed as a true record and signed by the Chairman.

To receive any announcements that the Chairman may wish to make.

The Chairman informed the Committee that David Curnow from the Devon Audit partnership would be retiring shortly. Mr Curnow had supported the Audit Committee and had been the Internal Audit lead since 2017. He wished to thank him for all his help and support during that time. On behalf of the Committee he wished him a long and happy retirement.

To agree the start time of meetings for the remainder of the municipal year.

The Committee AGREED to continue to meet on Tuesday evenings at 5.30pm.

To receive a report from the Chief Executive providing Members with the outturn on performance against the Corporate Plan and local service targets for 2020/21.

The Committee had before it, and NOTED, a report * from the Chief Executive providing Members with the outturn on performance against the Corporate Plan and local service targets for 2020/2021.

The contents of the report were outlined and discussion took place regarding:

·         The Council aimed to work with Community Land Trusts and other organisations to deliver homes retained in perpetuity for local need.

·         It was confirmed that the Tiverton WiFi project was being progressed.

·         The Deputy Chief Executive (S151) would provide the Audit Committee with an update on the creation of the South West Mutual Bank following the meeting, the precise details were not to hand during the meeting itself. Following this, if there were issues that Members wanted to discuss they could be brought before this Committee at the next meeting.

·         The Council had received funding of £534,410 to specifically help adversely affected individuals through Hardship funding and for Self Isolation payments. Payments had continued to be made against both funds to date. An officer had been specifically appointed to signpost those in need to apply to this fund.

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from the Operations Manager for Performance, Governance and Health & Safety presenting the Committee with the draft Annual Governance Statement and Action Plan (Appendix A) and accompanying Corporate Governance Framework (Appendix B) for 2020/21.

The Committee had before it, and NOTED the draft * Annual Governance Statement and Action Plan and accompanying Corporate Governance Framework for 2020/2021.

The Committee were asked to consider whether there were any comments they wished to make regarding the draft document, did anything need to be added, removed or amended? The following comments were made:

·         An explanation was requested regarding the ‘Evolve’ project which was described as several HR workstreams; to monitor performance management on-line, a new competency framework and which could also facilitate a skills audit, this was yet to be completed and had not met the deadline in the Action Plan.

·         As a result of more hybrid working proposals, a significant investment and upgrade of the Council’s IT arrangements would need to take place and this would take some time with a completion date of 30 September 2022 in the Action Plan.

·         It was confirmed that there was no backlog of data entry work as a result of the pandemic. A system called ‘Citizen Access’ had been brought in to help customers pay council tax promptly on-line. Other arrangements for paying were still in place for those people who were not so IT competent.

·         Concern was expressed regarding the number of empty Council homes in the district. However, it was explained that the Council could simply not take back houses where there were outstanding legal issues. There was a process to go through via the courts and due to the Covid situation the courts were taking longer than usual to process cases.

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from the Deputy Chief Executive (S151) presenting the draft version of the annual Statement of Accounts to Members published on the website and presented for external audit in May.

The Committee had before it, and NOTED, the draft version of the annual Statement of Accounts. The final set of accounts and the audit opinion would be presented to the September Committee.

Consideration was given to:

·         A review of the impairment provision against 3 Rivers Developments Ltd had concluded that no further or indeed reduction in impairment was required. It was explained that there was significant opportunity for the company to repay the loans before they were due. Small loans were being issued post impairment but repayments were being made.

·         A request was made to provide Members with full details in relation to the cumulative lending for 3 Rivers operating costs as well as a repayment schedule. The Deputy Chief Executive (S151) that he would be happy to meet with any Member having concerns in this area to go through the detailed accounting in relation to this issue.

·         The meaning of a ‘smoothing’ reserve.

·         Concerns regarding the pensions liability. It was forecasted that a higher contribution rate would need to be paid in the future.

Note: * Draft accounts previously circulated; copy attached to the signed minutes.

To receive a report from the Devon Audit Partnership monitoring the progress of the internal audit function.

The Committee had before it, and NOTED, a report from the Devon Audit Partnership presenting a summary of the work undertaken by internal audit to date.

A summary of the contents of the report was provided and reference was made to:

·         Overall, based on work performed during 2021/2022 and experience from the current year progress and previous years’ audit, the Head of Internal Audit’s Annual Opinion at this time was one of ‘Reasonable Assurance’ on the adequacy and effectiveness of the Council’s internal control framework.

·         The number of audit recommendations had increased slightly as a result of recent audits.

·         The Corporate Debt Recovery Policy would be reviewed in the coming year to see if it was being implemented effectively.

·          

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from the Devon Audit Partnership updating the Committee on the work performed by the internal audit during the financial year 2020/2021.

The Committee had before it, and NOTED, the DAP Annual Report *  updating it on the work performed by internal audit during the financial year 2020/2021.This should be considered alongside the Council’s own Annual Governance Statement.

The contents of the report were outlined with particular reference to the following:

·         The opinion of ‘Reasonable Assurance’ was explained as being a good outcome during a pandemic.

·         DAP were satisfied that adequate controls had been maintained.

·         Details included in the assurance map indicated some trends the Council needed to focus on such as 3^rd party resilience and governance, fraud, input processing and output controls. It had been identified that perhaps a more proactive approach needed to be taken to identify and address areas of weakness.  

·         Internal audit assessments could be discussed with any Member of the Council so long as confidential elements were respected.

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from Grant Thornton providing an update on progress in delivering their responsibilities as the Council’s external auditors.

The Committee had before it, and NOTED, a report * from Grant Thornton providing an update on progress in delivering their responsibilities as the Council’s external auditors.

The following was highlighted within the report:

·         It was confirmed that they had received the draft accounts and their audit had commenced in the previous month.

·         There was still work to do in relation to the Devon Pension Fund, however, their audit findings would be presented to the September Committee.

·         The concept of ‘Management over-ride of controls’ was described as being the processes and controls in place in areas such as journals and estimates to prevent management intentionally misstating transactions. The external auditors would be undertaking a review of this area to assess whether there had been any management bias.

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from Grant Thornton providing an overview of the planned scope and timing of the statutory audit of Mid Devon District Council’s Accounts for 2020/2021.

The Committee had before it, and NOTED, a report * from Grant Thornton providing an overview of the planned scope and timing of the statutory audit of Mid Devon District Council’s accounts for 2020/2021.

Consideration was given to the following within the report:

·         A new code in relation to Value for Money arrangements.

·         Analysis of accounting estimates and control of risk would play a key part in the external audit.

·         An increase in the audit fee and how this was justified? It was explained that the Redmond Review had highlighted that there had generally been an undercharge of audit fees nationally but an increase in the number of regulations that needed to be complied with by external auditors.

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from Grant Thornton setting out queries in relation to some accounting estimates in the financial statements and the MDDC management response.

The Committee had before it, and NOTED, a report * from Grant Thornton setting out queries in relation to some accounting estimates in the financial statements and the MDDC management response.

Note: * Report previously circulated; copy attached to the signed minutes.

To receive a report from Grant Thornton, the purpose of which is to contribute towards the effective two-way communication between Mid Devon District Council's external auditors and Mid Devon District Council’s Audit Committee, as 'those charged with governance'. The report covers some important areas of the auditor risk assessment where the external auditors are required to make inquiries of the Audit Committee under auditing standards.

The Committee had before it, and NOTED, a report * from Grant Thornton setting out what was needed with regard to the two way communication process between them and the Council’s Audit Committee in matters where risk needed to be assessed.

Note: * Report previously circulated; copy attached to the minutes.

During discussion of the following item it may be necessary to pass the following resolution to exclude the press and public having reflected on Article 12 12.02(d) (a presumption in favour of openness) of the Constitution. This decision may be required because consideration of this matter in public may disclose information falling within one of the descriptions of exempt information in Schedule 12A to the Local Government Act 1972. The Committee will need to decide whether, in all the circumstances of the case, the public interest in maintaining the exemption, outweighs the public interest in disclosing the information.

To consider passing the following resolution so that exempt information may be discussed.

Recommended that under Section 100A(4) of the Local Government Act 1972 the public be excluded from the next item of business on the grounds that it involves the likely disclosure of exempt information as defined in paragraph 3 respectively of Part 1 of Schedule 12A of the Act, namely information relating to the financial or business affairs of any particular person (including the authority holding that information).

Prior to considering the following item on the agenda discussion took place as to whether it was necessary to pass the following resolution to exclude the press and public having reflected on Article 15 15.02 (d) (a presumption in favour of openness) of the Constitution.

RESOLVED that: under section 100A (4) of the Local Government Act 1972 the public be excluded from the next item of business on the grounds that it involves the likely disclosure of exempt information as defined in paragraph 3 respectively of Part 1 of Schedule 12A of the Act, namely information relating to the financial or business affairs of any particular person (including the authority holding that information).

(Proposed by the Chairman)

At the Cabinet meeting held on the 13/5/21, during the discussion on the monthly performance update from 3Rivers, it was proposed that the Council reflected on the process taken to dispose of the old Grounds Maintenance depot (Park Nursery), Park Road, Tiverton and to consider whether there were any lessons that could be learned.

The Audit Committee was requested to undertake a lessons learned review, providing a report to Cabinet on the financial and other impacts from the process followed for the sale of Park Road Nursery and recommending what improvements might be made in future.

A briefing paper setting out the relevant issues is attached.

The Committee had been requested by the Cabinet to undertake a ‘lesson learned’ review of the sale of Park Hill nursery and to report back having considered the financial and ‘other’ impacts from the process followed and to provide recommendations for future such endeavours.

Following consideration of the briefing paper provided, it was confirmed that the Committee’s observations and recommendations would be taken back to the Cabinet for their consideration.

The meeting returned to open session.

Note: *Briefing paper previously circulated.

Members are asked to note that the following items are already identified in the work programme for the next meeting:

·         Annual Governance Statement (final version for sign off)

·         Statement of Accounts (final version for sign off)

·         Internal Audit Progress Report

·         PSAA Consultation and new auditor appointment process

·         Redmond Review update briefing

·         Grant Thornton - Letter of Representation

Note: This item is limited to 10 minutes. There should be no discussion on the items raised.

In addition to the items listed in the work programme the following was requested to be added to the agenda for the next meeting:

·         The need for a second member of the Committee to volunteer to attend DAP Board meetings alongside the Chairman.

·         To discuss a potential increase of numbers on the Audit Committee.