Agenda and minutes

To receive any apologies for absence.

Apologies were received from Cllr Lance Kennedy.

To receive any questions from members of the public and replies thereto.

The following questions were asked by members of the public:

Paul Elstone 

My Questions relate to Agenda Item 8 Grant Thornton Interim Audit Findings for 2022/2023:

Question 1

Page 5 of the Report - Headlines - says the following. As set out in the Value for Money section of this report the Council have made loans to its subsidiary company i.e. 3 Rivers,   totalling circa £23 million.

This loan figure is higher than previously stated. Therefore, what is the exact amount of the 3 Rivers loan today?

Answer

£22.171m

Question 2

The report also says that the Council has previously recognised impairments of around £5.3 million. That its assessment in November 2023 for a further impairment of £3.7 million.

Therefore, a total impairment or write off or loss to this Council of £9 million. This as a result of its lending to 3 Rivers.

For full clarity can it be confirmed that the £9 million is the actual amount of impairment sitting on MDDC’s accounts today, this as the figure seems to be rapidly escalating ? 

Answer

No, the impairments to date are the c£5.3m, the c£3.7m are the likely further impairments incurred in soft closing the company. These are still estimates based on a number of commercial variables.

Question 3

Reference to Agenda item 6, Corporate Risk Register CR9a – Reputational Risk of 3 Rivers.

Despite this administration saying they will not apportion any blame in their investigation into 3Rivers, it seems officers are willing to blame the general public for asking questions even threatening criminal action. The general public are justifiably very concerned because they can see that £9m is being written off.

Amongst other things they are aware of, the S151 Officer said as early as 2019 and I quote ‘We have taken on the St George’s Court Scheme, there was obviously no profit in it. If 3Rivers had been offered it on a commercial basis, it would not have taken it’.

This was after he had recommended to Members that 3Rivers build this development. Also at the Cabinet meeting taking decisions involving 3Rivers the Cabinet Member for Finance asked the Chair of Scrutiny to withdraw a comment about ‘cooking the books’ which they declined to do.

My question is directed at Grant Thornton on this or even Bishop Fleming. Will the external auditors examine each of these points made?

Answer

In terms of the work that we are looking at as part of the audit, all audit years relating to 2021/22 and prior have already been completed, conducted and closed and in reference to our previous external auditors reports you will see, certainly in terms of the Value For Money findings, areas where we have identified a number of recommendations over a number of those early years of the company. I would draw your attention to those previous audit reports and those findings.

I can only comment about the audit year that is still open and has yet to be certified as you’ll see from the  ...  view the full minutes text for item 44.

To record any interests on agenda matters.

There were no interests declared under this item.

To consider whether to approve the minutes as a correct record of the meeting held on 24^th October 2023.

The minutes of the meeting held on 24 October 2023 were confirmed as a true and accurate record and SIGNED by the Chairman.

In agreeing the minutes a query was made as to progress in relation to appointing an independent member to the Audit Committee. It was confirmed that the S151 Officer had spoken to the Managing Director of DAP who had informed him that an advert had gone out requesting independent members who would, between them, cover Committees across all the Devon Districts. Interviews would be held in early January and any appointments would be notified to the Committee as soon as possible after that.

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 and the Corporate Manager for People, Performance & Waste 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 and Corporate Manager for People, Performance and Waste providing it with a quarterly update on the Corporate Risk Register.

Discussion took place regarding:

·       The risk ratings in the Corporate Risk Register for the Culm Garden Village (20) and the Cullompton Relief Road (25). It was understood that one was dependent upon the other and that delivery of each scheme was dependent on funding, however, it was felt that the scores should be the same in relation to both due to the severity of the risk of non-delivery in each case. A suggestion was made that the severity score in relation to the Garden Village could be increased from 4 to 5 meaning that the overall risk rating would be 25. It was explained that this was a management document and that a decision would need to be taken by Leadership Team as to any amendment.

RECOMMENDED to Leadership Team that the risk ratings in relation to the Culm Garden Village and the Cullompton Relief Road both be set at 25.

(Proposed by Cllr E Buczkowski and seconded by Cllr S Robinson)

Further consideration was given to:

·       Cyber Security risks given reduced staffing levels and a need to manage resources to mitigate risks. The Committee were informed that a Business Continuity exercise had taken place in the previous week with particular service areas being tested. A report and action plan would be brought before Members in due course listing the learning points and mitigations proposed to address any weaknesses.

Note: * Report previously circulated.

To receive the DAP Internal Audit Progress Report for the year to date.

The Committee had before it, and NOTED, a report * from the Devon Audit Partnership summarising the work undertaken to date during the current financial year.

The following was highlighted within the report:

·       One audit had received ‘Substantial Assurance’ and nine had received ‘Reasonable Assurance’.

·       Work had been undertaken in relation to fraud detection as well as a review into the Single Person’s Discount. A follow up audit in relation to Cyber Security was due to commence shortly.

·       2 ‘High’ audit recommendations were outstanding and 22 ‘Medium’. It was felt that this was a relatively low figure for a local authority.

·       It was confirmed that there had already been several applicants apply for the independent member positions being advertised by DAP.

Consideration was given to:

·       It was anticipated that the independent members would attend 2 or 3 Committees each and they would observe in the first instance.

·       There was some work to do in terms of updating the Council’s website.

·       The audit in relation to Housing Options and the increasing demands in relation to operating the Council’s Homelessness Strategy. It was requested that a discussion take place at a future Audit Committee to better understand the pressures and costings in relation to this strategy and the subject as a whole. An update was requested from the Corporate Manager for Public Health, Regulation and Housing.

Note: * Report previously circulated.

To receive the External Auditors Interim Audit Findings Report for 2022/2023.

The Committee had before it, and NOTED, a report * from the External Auditors providing its Interim Findings for the 2022/2023 audit on the Council’s Financial Statements.

The following was highlighted within the report:

·       The report set out the interim position of the external audit for 22/23 which was dependent upon receipt of an independent audit of 3Rivers. The audit on the Council’s accounts could not be completed until this had taken place. Questions relating to the assets and liabilities of 3Rivers remained outstanding. Until these were known and audited upon, Grant Thornton were unable to issue an opinion on the Council’s consolidated accounts.

·       Government was in the process of trying to restore hard statutory deadlines, the details of which were not yet known. If matters in relation to 3Rivers remained outstanding by the Government’s yet to be determined deadline this could have an impact on Grant Thornton’s opinion of the Council’s accounts. Clarity was needed from Government as soon as possible.

·       Outside of 3Rivers the Council’s accounts were viewed in a positive light with few matters to bring to the Committee’s attention. Some small adjustments were needed to building valuations and a tightening up needed in relation to journal processes.

·       A final Value For Money report would be brought to the next Audit Committee.

·       Once company assets had either been sold or transferred back to the Council then an audit of 3Rivers could go ahead quite swiftly. It was anticipated that this would take place by the end of the financial year.

·       It was confirmed that only 10 Councils out of approximately 350 Council’s nationally had had their accounts for the previous financial year signed off.

Note: * Report previously circulated.

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

·       DAP Internal Audit Progress Report

·       Costed reports in relation to Bin-It 123 and Net Zero (tbc)

·       Statement of Accounts for 2022/23 (tbc)

·       Grant Thornton Audit Findings for 2022/23 (tbc)

·       Grant Thornton External Audit Progress Report

·       Introduction to Bishop Fleming

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 in the work programme for the next meeting. It was also requested that the following come to a future meeting of the Committee:

·       An update in relation to the cost pressures facing the Council in delivering the Homelessness Strategy.

·       A possible Part II report in relation to the 3Rivers soft closure timetable (noting that this may be better placed going to the Scrutiny Committee).

·       Update on the Financial Regulations.

It was NOTED that the Statement of Accounts for 2022/2023 would not be coming to the next meeting in January and neither would Grant Thornton’s Audit Findings for 2022/2023 as a result of this. An introduction to Bishop Fleming would also now be postponed to a more appropriate Committee date.