Agenda and minutes

To elect a Chairman of the Audit Committee for the municipal year 2024/2025.

RESOLVED that Cllr L Knight be elected Chair of the Audit Committee for the municipal year 2024/2025.

To elect a Vice Chairman of the Audit Committee for the municipal year 2024/2025.

RESOLVED that Cllr G Czapiewski be elected Vice Chair of the Audit Committee for the municipal year 2024/2025.

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

It was AGREED to continue to commence Audit Committee meetings at 5.00pm on Tuesday evenings for the remainder of the municipal year 2024/2025.

To receive any apologies for absence.

Apologies were received from Cllr A Cuddy and B Fish who was substituted by Cllr B Holdman.

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

The following questions were received from members of the public:

Mr Nick Quinn

Addressing the Draft Statement of Accounts and the 3 Rivers closure:

Q1. On page 79 of the accounts, there is a list of the assets bought from 3 Rivers and the amounts paid for each - but the Halberton Car Parking spaces and the Architectural drawings for the failed Park Nursery development, both bought from 3 Rivers, are not on the list. Why are these purchases and amounts not listed?

Response from the Cabinet Member for Governance, Finance & Risk:

Q2. How much was paid for the Park Nursery Architectural drawings? and on what date?

Response from the Cabinet Member for Governance, Finance & Risk:

Q3.  The Council paid £3.66M for the Knowle Lane land, which was valued at only £1.66M. It was already known that this land was not worth £3.66M - so this purchase breached the Council’s Financial Regulations on the Acquisition of Assets, which state that: “All purchases or leasing of land and buildings shall be on the best financial terms that can be obtained for the Council”. Will Audit Committee please look into this breach?

Response from the Cabinet Member for Governance, Finance & Risk:

Q4. On page 62 of the accounts, it says that the loss on 3 Rivers loans was £6.8M but also “the revaluation of assets purchased... resulted in a ‘notional’ loss of £2M”. This is not a ‘notional’ loss – it is real. This Council overpayment for assets, allowed 3 Rivers to repay loans which it would not otherwise have been able to do.  Will Audit Committee agree that if this £2M overpayment had not been made, the total loss of loans to 3 Rivers would have been £8.8M?

Response from the Cabinet Member for Governance, Finance & Risk:

Q5. A Revenue and Capital Outturn report went to Cabinet on 4 June 2024. In that report, the loan loss figure, shown as £6.8M, was ‘reduced’ to ‘only’ £3.384M by subtracting all the Interest and Recharge payments ever received from 3 Rivers during the whole of the previous six years. I understand that this declared income was spent in each of those years, therefore it cannot be ‘resurrected and reused’ to discount a very real monetary loss in this year. Will Audit Committee confirm that this attempt to ‘reduce’ these real losses in this year, is not acceptable?

Response from the Cabinet Member for Governance, Finance & Risk:

Barry Warren

My observations and questions are stimulated by Item 10 on your agenda – in particular the Annual Governance Statement and the principles listed in paragraph 1.5 [pages 209/210] covering Codes of Practice and Ethical Aims.

At the Annual General Meeting of the Council on the 22^nd May 2024 the Leader gave a report, which is minuted, and the relevant point stated: “The 2024/25 budget was set without any use of reserves, was fully balanced and was unanimously supported across the political spectrum.”

In a report to Cabinet on 6  ...  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 26^th March 2024.

The minutes of the meeting held on 26 March 2024 were confirmed as a true and accurate record and SIGNED by the Chair.

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

The Chair thanked Paul Middlemass (Devon Assurance Partnership) for his service to the Audit Committee over recent years and wished him a long and happy retirement.

He also thanked the Committee for electing him.

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 the Head of People, Performance and Waste providing Members with a quarterly update on the Corporate Risk Register.

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

·         This was the usual quarterly report presented to the Committee and now included target risk ratings for all Corporate Risks.

·         Any significant changes which had been made to the corporate risks since the last meeting were listed in section 2.3 of the report.

Discussion took place regarding:

·         The risk ratings relating to the delivery of the closedown of 3Rivers. This had reduced from 8 to 3. However, it was felt that the reputational risk in relation to 3Rivers was still quite significant. It was explained that all the timelines in the closedown plan had been met and the Council would be applying to Companies House in the next three weeks for 3Rivers to be struck off. Whilst there would still be some reputational risk, all the management actions that could have been taken had been delivered. The Committee requested that this continue to be monitored.

·         A view was expressed that the risk ratings in relation to the Culm Garden Village and the Cullompton Relief Road needed to be the same as they were interdependent. The officer stated that he would refer these comments back to the Director of Place & Economy.

·         It was confirmed that in the initial stages risks were assessed by the risk owners and then assessed by the Corporate Management team.

·         Concern continued to be expressed around Cyber Security and it was requested that this particular issue receive a specific agenda item at the next meeting so that the Committee could be reassured all that could be done to mitigate risk was being done or was planned to be done. This was AGREED.

Note: * Report previously circulated.

To receive a report from the Deputy Chief Executive (S151) presenting the draft version of the annual Statement of Accounts and Annual Governance Statement for 2023/24.

The Committee had before it, and NOTED a report * from the Deputy Chief Executive (S151) presenting the draft version of the annual Statement of Accounts and Annual Governance Statement to Members published on the website and presented for external audit.

The Committee was informed that it was not expected to approve the Statement of Accounts this evening, it would be asked to do this after they had been audited, finalised and brought before it at the October Committee meeting. As a helpful aid in trying to understand what the role of the Committee was in the process a presentation was delivered that provided the following summary information:

·       The role of the Audit Committee in relation to the Annual Accounts and the Annual Governance Statement.

·       Things the Committee needed to consider, for example, previous assurance reports from internal and external audit.

·       Financial performance.

·       Was the Council a ‘Going concern’?

·       How well did the accounts ‘tell the story’?

·       What were the ‘Financial Statements’?

·       Timeframes.

·       Regulations.

·       Accounting policies.

·       Main aspects of the Accounts.

·       Main Financial Statements.

·       Key issues being:

o   The soft closure of 3 Rivers Development Ltd.

o   District Council election.

o   Cost of Living Crisis.

o   Patronage levels.

o   Bin-It 123 performance.

·       Audit Annual Report and the Audit Opinion.

·       The Annual Governance Statement.

·       External Audit outputs.

It was hoped that when the Accounts came back to the Committee in October Members would have a better understanding of their role in approving them. Members were asked to contact officers if there was anything they needed clarification on. No question was a stupid question.

Discussion took place regarding:

·       The Accounts made no mention of the upcoming General Election and this was because they represented a true and fair reflection of the Council’s finances as at 31 March 2024. There was no way of knowing what a new Government would do with regards to local authority funding in the future.

·       Several auditing firms were mentioned in the Accounts, for example, Grant Thornton, Bishop Fleming and KPMG. The role of each was explained.

·       A Committee member had recently attended a DAP event and informed the Committee that DAP now stood for ‘Devon Assurance Partnership’.

Note: * Report previously circulated.

To receive the Annual Internal Audit Report for 2023-24 from the Devon Audit Partnership (DAP).

The Committee had before it, and NOTED, a report * from the Devon Assurance Partnership (DAP) presenting their annual Outturn report for 2024/2025.

The following was highlighted within the report:

·       This was the end of year summary report and reflected back on all of the work that had taken place set against their Internal Audit Plan for 2023/2024.

·       The different types of assurance opinion were explained.

·       The Committees attention was drawn to the management actions listed under each summary report.

·       The Assurance Map was referred to.

·       The internal framework for auditors had been revised.

·       There was a 96% satisfaction rate for the audits undertaken by DAP.

Discussion took place with regard to:

·       The fact that no evidence of fraud had been detected in relation to 3Rivers, therefore it was now hoped those allegations would cease.

·       A Phoenix House fire drill had been untaken in the previous month, therefore the report needed updating.

Note: * Report previously circulated.

To receive a Management Actions Update Report from the Devon Audit Partnership (DAP).

The Committee had before it, and NOTED, a report * from the Devon Assurance Partnership (DAP) presenting the actions needing to be addressed by Management.

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

·       Any high risk areas had an agreed timeframe for action to resolve identified issues of concern.

·       On the face of it, one high level risk in relation to Cyber Security was seen as very good when compared to other local authorities. 

Discussion took place with regard to:

·       It was explained that there were 3 levels of risk identified in each audit, high, medium and low. The process needed to be very robust and whilst there was an element of subjectivity there was a framework underpinning all decisions.

·       It was confirmed that the Leadership Team looked at the Audit Recommendations on a regular basis making sure that ‘check’ and ‘challenge’ was cascaded down to the managers. Given resource levels within the Council the high risk recommendation were given priority. It was further confirmed that if the Committee were concerned about a particular service area it could call the manager to a meeting of the Committee to question them on their audit and service area.

Note: * Report previously circulated.

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

·         Corporate Risk Quarter 1

·         Internal Audit Progress Report

·         External Audit Progress Report

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. The following was also requested to be on the agenda:

·       Appointment of an Independent Person to the Audit Committee

·       Appointment of representatives to the Devon Assurance Partnership (DAP) Committee

·       An update on the Cyber Security arrangements