Venue: Phoenix Chambers, Phoenix House, Tiverton
Contact: Sarah Lees Member Services Officer
Link: audio recording
To receive any apologies for absence.
Apologies were received from Cllr B Evans and also Cllr Mrs N Woollatt who was substituted by Cllr B Warren (via Zoom).
Public Question Time
To receive any questions relating to items on the Agenda from members of the public and replies thereto.
Mr Paul Elstone asked the following questions in respect of items 6 and 7 on the agenda:
The Grant Thornton Audit Plan, as provided to the Audit Committee in June of this year, assessed that there was “Significant risk of Material Misstatement of the GROUP Financial Statements”.
MDDC Cabinet have just agreed to lend 3 Rivers an additional £2.3 million to cover overspends on two projects.
Given the fact that Cabinet threw out a Scrutiny Committee recommendation this in the form of a resolution to have a risk review carried out by the Audit Committee and that these loans are, I believe, are well below market rates, where an impairment is in place, which may leave MDDC open to accusations of anti-competitive Government Support.
Will this have any impact on Grant Thorntons Audit Plans?
I ask this question based on the principle of continuous improvement, and in the context of the exactness of MDDC Internal and External Audits.
For necessary background, The MDDC Grant Thornton Audit Risk Assessment 2021/2022 asks the following questions:
“Are you aware of any instances of actual, suspected or alleged fraud, errors or other irregularities either within Mid Devon District Council as a whole or within specific departments since 1 April 2021?”
“Housing received one fraud case for 2021. This is currently being investigated by the Neighbourhood Team Leader”.
“Are there any areas where there is a potential for misreporting?”
“It is our assessment that it is extremely unlikely that misreporting would take place”.
With these statements in mind
I ask that, given these MDDC Management Responses, will this Audit Committee supported by both Grant Thornton and the Devon Audit Partnership, please investigate why MDDC Executive Officers failed to declare that a serious and formal fraud allegation had been made during the audit period?
The allegation in question was that an MDDC Senior Officer purposely misrepresented facts to a Property Developer in relation to a land purchase deal that MDDC required to progress promptly, for MDDC’s financial gain and ultimate benefit.
This alleged misrepresentation of fact by the MDDC Officer caused the Property Developer to incur substantial financial loss.
This alleged misrepresentations amounted to fraud, as defined in Section 2 of the Fraud Act 2006, and has the ongoing potential to form the basis of a civil compensation claim against MDDC for SUBSTANTIAL loss.
It is known, beyond all doubt, that every one of MDDC Executive Management Team, the MDDC Council Leader, and the MDDC Cabinet Members for Finance and Planning knew of the fraud allegation.
Furthermore, documents obtained following a Freedom of Information request appear to show that some of these individuals may be implicated in the fraud.
For the avoidance of any doubt, I refer the Auditors to the Minutes of the Scrutiny Meeting of 17th January 2022 at which Scrutiny Committee Members expressed concerns that allegations of fraud did not appear to be investigated internally, asking for clarification on the internal investigation process ... view the full minutes text for item 28.
Declaration of Interests under the Code of Conduct
To record any interests on agenda matters.
No interests were declared under this item.
To consider whether to approve the minutes as a correct record of the meeting held on 2 August 2022.
The minutes of the meeting held on 2 August 2022 were confirmed as a true record and signed by the Chairman.
Chairman's Announcements (00:11:00)
To receive any announcements that the Chairman may wish to make.
The Chairman had the following announcements to make:
1. It was acknowledged that the agenda for the next meeting on 22 November 2022 was going to be rather heavy and that a special meeting may be needed.
2. He had recently attended a South West Audit Chairman’s Partnership meeting online which had been useful.
To receive the Devon Audit Partnership Internal Audit Progress Report.
The Committee had before it, and NOTED, a report * from the Devon Audit Partnership presenting their internal audit progress report for the year to date.
The following was highlighted within the report which included two internal audit reports undertaken since the last meeting:
Housing Care Service Alarms Follow Up
· This audit had been given a ‘Reasonable Assurance’, however, it was pointed out that much work had been put in by the Commercial Service’s Manager to address the level of issues found within the audit.
· Better processes were now in place to rectify faults.
· Overall there was an opportunity to grow the service.
· There would be a focus on addressing the necessities needed first then a look towards the income opportunities.
· This had also been given a ‘Reasonable Assurance’ opinion.
· Everything was being done to try and meet the net zero targets, however the targets were very challenging
· A number of management actions had been agreed which were contained within the report.
Further updates were included as follows:
· The number of old recommendations continued to be at low levels.
· A Cyber Security Audit was just being finalised and a Leisure Centres audit would be commencing shortly.
· A Fraud Prevention Detection exercise was being conducted by Devon County Council.
Consideration was given to:
· The extent of the loss of income from the Care Alarm System in recent years, however, there would be a focus on income generation going forwards.
· Whether there was any merit in re-installing the machine in the reception area of Phoenix House for residents to pay bills? It was explained that Direct Debit was the best method of paying the Council. However, it was also explained that this could be done over the phone and on-line. There was also still a facility to pay with cash on site. Cheques were not the preferred method of payment but there was still an option available to do this.
· Customer satisfaction rates in relation the Development Management audit.
Note: * Report previously circulated; copy attached to the minutes.
External Audit Progress Report (00:30:00)
To receive a verbal progress report and sector update from Grant Thornton.
The Committee received, and NOTED, a verbal update from Grant Thornton as the Council’s external auditors regarding progress with their work for the 2021/2022 audit.
· Grant Thornton had just commenced the Financial Statements Audit, no issues of concern had been identified thus far. The certification of the Housing Benefits Claim was also looking positive.
· They were facing challenges as a firm regarding what was happening nationally therefore there were some concerns about meeting deadlines which they had spoken to the Council about, however, bringing in more resources would help to achieve the November deadline.
· The challenges facing Grant Thornton in terms of resourcing and timescales would also have a knock on effect to the Council.
Identification of items for the next meeting (00:37:00)
Members are asked to note that the following items are already identified in the work programme for the next meeting:
· Performance and Risk
· Revised Procurement Strategy
· Data Quality Policy
· 3RDL Business Plan
· Statement of Accounts
· Annual Governance Statement and Corporate Governance Framework
· Grant Thornton’s Audit Findings
· Internal Audit Progress Report
· External Audit Progress Report and Sector Update
Note: This item is limited to 10 minutes. There should be no discussion on the items raised.
In addition to the items already included within the work programme for the Audit Committee the following was identified as an agenda item that should come to a future meeting:
· Planning Appeals (possibly January 2023 given the Committee workload for November 2022).