Agenda and minutes

To elect a Chairman of the Audit Committee for the municipal year 2023/24.

RESOLVED that Cllr L Kennedy be elected Chairman of the Audit Committee for the municipal year 2023/2024.

To elect a Vice Chairman of the Audit Committee for the municipal year 2023/24.

RESOLVED that Cllr L Knight be elected Vice Chairman of the Audit Committee for the municipal year 2023/2024.

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

It was AGREED that the start time of meetings for the remainder of the municipal year be 5pm on Tuesday evenings.

To receive any apologies for absence.

Apologies were received from:

·         Cllr M Binks who was substituted by Cllr Mrs F J Colthorpe

·         Cllr C Connor who was substituted by Cllr E Buczkowski

·         Cllr J Frost

·         Cllr R Roberts

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

The following questions were asked during Public Question Time:

Barry Warren Council Tax Payer. Former Leader of Council for a short while.

My questions relate to Agenda Item 12 starting on page 83 of the bundle.

My questions are mainly directed to the Devon Audit Partnership Officers please.

1.         On the third line of the introduction you report ‘We agreed the review would include’.  Who were ‘WE’ please? 

2.         Was I consulted on the Terms of Reference?

3.         On 16^th February 2023 did Mr Middlemass write an email to the S151 Officer, Mr Jarrett, as the result of the then Leader, Councillor Deed, raising concerning issues? 

4.         In that email were the words “I envisage we do a quick piece of work to help allay some basic concerns related to the payment of funds from MDDC to 3 Rivers” and “I suggest we meet to discuss the terms of reference for our work in the next few days.”

5.         Does that give confidence that a thorough independent review of concerns is going to be carried out?

6.         At the bottom of page 85 you refer to advice given. Do you have evidence that I received such advice as I have no recollection?

7.         In relation to the matter referred to on page 89 reference is made to information given by the Managing Director of 3 Rivers and the S151 Officer – a former Director of 3 Rivers.  Did you enquire of anyone else as I and others received a totally different explanation at the time of a Director giving permission for the bricks to be borrowed?

8.         Were you told that I had reported to the Chief Executive my witnessing a tradesman attempting to purchase materials through the 3 Rivers account?

9.         On page 90 reference is made to the resignation of the 3 Rivers Financial Director.  Did the investigations reveal the email from that Director to a number of people dated 31^st January 2023 in which he set out a lot of detail and then wrote “All of this places me in the position that I have to resign as a Director of 3 Rivers Developments Limited and St George's Court (Tiverton) Management Limited. I will lodge the resignations promptly at Companies House. I will also advise Simpkin Edwards, Hall & Scott, Absolute PR and Paul Steele Accountants of my resignation.”

In response, the Chairman stated that none of the Members of the new Committee were qualified to answer the questions, he therefore asked if any of the officers could? Mr Tony Rose from the Devon Audit Partnership (DAP), stated that he would like to check what had been said against the records held by Paul Middlemass, the Audit Manager. Much was down to interpretation. If there was more evidence available regarding the statements already made then DAP needed to have sight of that. Certain comments made had, in his view, been taken out of context. The fraud allegations had been investigated based  ...  view the full minutes text for item 5.

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 28 March 2023.

The minutes of the meeting held on 28 March 2023 were NOTED and signed by the Chairman.

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

The Chairman had no announcements to make.

To receive a report from the Corporate Performance and Improvement Manager providing Members with a quarterly update on the Corporate Risk Register.

The Committee had before it, and NOTED, a report * from the Corporate Performance and Improvement Manager providing Members with a quarterly update on the Corporate Risk Register.

Discussion took place regarding:

·       Why the Cullompton Relief Road had a risk rating of 25 but only 1 action against it. The Corporate Manager for People, Governance & Waste stated that he would look this and come back to the Committee.

·       The effect of the cost of living crisis and whether risks in relation to this were accurately scored. It was explained the current risk rating reflected the risk to the Council. The Risk Register was reviewed on a regular basis by the relevant officer groups and updates brought to every Audit Committee for further review.

·       There would always be some risks shown as significant depending on the national and local circumstances at the time. Some risks would go up and down the rating scale and some would disappear and reappear depending on influencing factors at the time. Some risks were unexpected such as Covid 19.

·       A question was asked as to why the Culm Garden Village was not rated with a higher risk. The officer explained that he would speak to the relevant service area and get back to the Committee with an explanation.

Note: * Report previously circulated.

To receive a report from the Corporate Manager for People, Governance & Waste providing Members with an update on performance against the Corporate Plan and local service targets for 2022/23.

The Committee had before it, and NOTED, a report * from the Corporate Performance and Improvement Manager providing Members with an update on performance against the Corporate Plan and local service targets for 2022/23.

Note: * Report previously circulated.

To receive the Annual Internal Audit Report for 2022/23 from the Devon Audit Partnership (DAP).

The Committee had before it, and NOTED, the Annual Audit Report 2022 – 2023 from the Devon Audit Partnership.

The contents of the report were outlined with key highlights referred to as follows:

·       The different categories of assurance were explained.

·       During the year there had been some audit reports providing limited assurance, for example, in the areas of Leisure and IT. Where this occurred follow up audits were scheduled during 2023/2024 in the expectation that improvements had been made.

·       DAP were working to finalise the Cyber Security audit.

·       There had been a specific piece of work in relation to 3R.

·       There was a focus on areas of financial control.

·       The assurance map was referenced. This was designed to aid efficiency and effectiveness and also showed areas of good practice.

·       In relation to Customer Services, feedback from the public had generally been either ‘satisfied’ or ‘nearly satisfied’. The pie chart in relation to this also showed areas for challenge or issue.

·       The overall opinion from DAP was one of ‘Reasonable Assurance’ on the controls in place across the Council.

Consideration was given to:

·       DAP had to comply with Public Sector Internal Audit Standards and had to do a self-assessment against these every year.

·       There were no significant fraud issues within the Council at the current time.

Note: * Report previously circulated.

To receive a report from the Devon Audit Partnership looking at the process to agree loans from the Council to 3 Rivers and whether it was part of a formal business process where approval was provided by Members. The report also reviews the fraud allegations and considers whether further investigation or examination is merited or possible.

The Committee had before it a report * from the Devon Audit Partnership looking at the process to agree loans from the Council to 3 Rivers and whether it was part of a formal business process where approval was provided by Members. It also reviewed the fraud allegations and considered whether further investigation or examination was merited or possible.

The following was highlighted:

·         The report detailed what areas of evidence were looked at.

·         Some differences in values had been detected but the reasons why had been provided.

·         They had looked into the allegations of removal of building materials and had not found any criminality.

·         They had concluded that there had not been any fraud or corruption.

·         Simpkins Edwards, a financial firm, had been employed to aid the investigation.

·         Not everything had been found to be ‘perfect’ for example notes in relation to ‘land’ could have been more thorough.

Consideration was given to:

·         Lots of questions had been asked in relation to 3R why had the auditors only chosen to focus on those of a couple of individuals? It was explained that focus had been given to the questions asked of this Committee and by the public.

·         The Chairman stated that DAP had followed the remit given. There had been no evidence of wrong doing and it was time to move on. If individuals still had evidence which had not been investigated then they needed to seek a different route to have them addressed.

·         Allegations made had been unsubstantiated by DAP.

·         In addition to the work undertaken by DAP, which had looked at performance, a full options appraisal was being conducted by Francis Clark and the report would be available towards the end of August and would be presented to the Cabinet.

The Chairman of the Scrutiny Committee requested that the Audit Committee defer any decision in relation to this report until after the Scrutiny Committee had had a chance to discuss it. Accordingly, a proposal was made by Cllr J Downes, seconded by Cllr S Robinson to defer making a decision until after the next Scrutiny Committee. This was not supported.

Therefore:

The Audit Committee AGREED that the report be NOTED.

(Proposed by the Chairman)

Note: * Report previously circulated.

To receive a report from the Devon Audit Partnership concentrating on the clearance of internal audit recommendations.

The Committee received and NOTED a report * from the Devon Audit Partnership focussing on the clearance of internal audit recommendations.

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

·         The low, medium and high risk categories were explained.

·         Cyber Security had already been mentioned within the meeting as needing a follow up audit and further review during 2023/2024.

·         The Committee were directed to focus on the ‘High Priority’ column where there were overdue recommendations. They would see this table at each of their meetings going forwards.

·         The Deputy Chief Executive (S151) gave the Committee an assurance that the Cyber Security area was receiving a great deal of focus with a management group being established, including two IT managers, the relevant Cabinet Member and himself, in order to address the issues of concern.

Note: * Report previously circulated.

Committee to appoint two members of the Committee to attend DAP Board meetings in the forthcoming year.

The Committee had been asked to provide the names of two representatives to join the Devon Audit Partnership Committee.

It was AGREED that the Chairman, Cllr L Kennedy, and Vice Chairman, Cllr L Knight, be the representatives.

To receive a report from Grant Thornton considering whether, during the financial year 2021/2022, the Council had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

The Committee had before it and NOTED a report * from Grant Thornton considering whether, during the financial year 2023/2023, the Council had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

The following was highlighted within the report:

·       The role of the external auditor was explained, particularly in relation to their responsibilities in providing an annual opinion on the financial statements and Value for Money.

·       Commentary had been provided in relation to 3R and comments had been made in the report regarding recent events and the delay with the Business Plan being approved. Further analysis would be undertaken during the 2022/2023 audit.

·       Final sign off of the 2021/2022 accounts had been delayed due to an issue with the Pension Liability. This needed to be restated in the accounts. It was hoped this could be resolved in the next few weeks.

·       No significant issues or weaknesses had been found in the accounts and their opinion was that the Council did have effective arrangements in place to manage its finances. They had made some improvement recommendations which would be followed up.

·       Initiatives needed to be brought forward to address gaps in the Medium Term Financial Plan.

·       Reference was made to the positive findings of the Local Government Association following the Peer Review.

·       Performance information could include more operational measures, for example, monitoring the performance of key contracts.

Note: * Report previously circulated.

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 for 2022/23.

The committee had before it, and NOTED, a report * from Grant Thornton presenting an overview of the planned scope and timing of the statutory audit of Mid Devon District Council’s financial statements.

The following was highlighted within the External Audit Plan:

·       The Committee were informed that Julie Masci would be returning and taking over from Peter Barber as the Engagement Lead for Grant Thornton.

·       The report set out the initial planning, risk assessment work and key messages.

·       Risks in relation to the Group Accounts would be analysed including any minimal risks of intentional bias.

·       Expenditure would receive specific attention as well as trading income.

·       The evaluation of land and buildings and the assumptions made towards these would also be assessed in terms of risk.

·       Detailed work would be undertaken in the area of Pension Liability.

·       Financial sustainability was a common risk factor across all local authorities especially in relation to budget gaps identified in the MTFP.

·       ISA 315 would give a broader understanding of the IT environment but would require additional work.

The external auditors were thanked for their clear and comprehensive report.

Note: * Report previously circulated.

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

·         Corporate Risk Report

·         Draft Annual Governance Statement and Code of Corporate Governance

·         Draft Accounts for 2022/2023

·         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.

The Committee had before it, and NOTED, the items identified for the next meeting. In addition to these the following was requested to be on the agenda for the next meeting:

·         An update in relation to Cyber Security

·         Grant Thornton’s final opinion in relation to the 2021/2022 accounts

·         Corporate Performance Report