Agenda and minutes

No declarations of interest were reported at the meeting.

RESOLVED that the minutes of the meeting held in 8th July 2021, be approved as a correct record and signed by the Chair.

Members received a report which sought approval to formally receive and note the reports presented at the inquorate meeting of the Audit Committee held on 29th July 2021, as detailed at paragraph 6 of the report, and receive and agree the notes of the inquorate meeting on 29th July 2021, as attached to the report at Appendix 1.

Due to the last meeting of the Committee on 29th July, being inquorate, Members in attendance were advised that in the absence of a quorum, no formal decisions could be taken, but, the business on the agenda could be discussed amongst Members on an informal basis.  The notes of any discussions and any proposed recommendations would be ratified by the Committee at a future meeting.

At the inquorate meeting, an opportunity was provided for those present to discuss issues relating to reports on the agenda, as detailed at paragraph 6 of the report, which had been previously published and made available to Members of the Committee since 21st July 2021. This had provided all Members with an opportunity to consider and raise issues with officers, or seek further information outside of the meeting.

As formal approval was required for the minutes of the Audit Committee held on 8th July, 2021 and the Internal Audit Strategy and Internal Audit Charter, these items have been scheduled for consideration as separate agenda items at this meeting.  Therefore, Members were asked to agree the notes of the inquorate meeting which provided additional information, summarised relevant issues and provided a record of the challenge and assurance provided by those in attendance.

RESOLVED that

(1)       the reports scheduled for consideration by the Audit Committee at its meeting held on 29th July 2021, be formally received; and

(2)       the notes of the inquorate meeting of the Audit Committee meeting held on 29th July 2021, be received and agreed.

The Committee considered the Audit Committee Action Log report which updated Members on actions agreed during Audit Committee meetings, allowing Members to monitor progress against the actions ensuring that satisfactory progress was being made.

It was noted that all actions were progressing well. Of the three actions requested at the 29th July meeting and the three actions from the 29th April 2021 meeting, five had been completed and the remaining item was scheduled for completion at the January 2022 meeting of the Committee. No actions were outstanding from previous meetings.

RESOLVED that the progress being made against the actions agreed at the previous Audit Committee meetings, be noted.

Holly Wilson, Head of Strategic Procurement presented a report which detailed all Waivers and Breaches to the Council’s Contract Procedure Rules (CPR’s) for the period 1st March 2021 to 31st August 2021. The report provided a summary of the number of new Waivers and Breaches recorded for each directorate since the last audit report presented to Committee in October 2021 for comparative purposes. Further details regarding each waiver and breach were summarised in Appendices 1-3 of the report.

Members were informed that between the periods February to September 2021, there had been 3 new breaches, as detailed in Appendix 1 of the report. It was reported that one breach had been resolved, however, there remained three existing unresolved breaches. There had been an increase in the amount of waivers granted from the previous period reported to the Committee in April 2021, which had increased from 15 to 18. The Head of Strategic Procurement highlighted that as the Council was still in recovery stage following Covid 19, there had been some delays in the commissioning cycle and that many existing contracts had been extended to allow time for commissioning practices to occur. Further to the Committee’s request at a previous meeting, Appendix 3 of the report had been updated to incorporate information regarding the percentage of the number of waivers, versus the amount of contracts that had been awarded for the reporting period, including the value of those contracts.

The Head of Strategic Procurement responded to questions from the Vice-Chair, Councillor Glen Bluff seeking clarity as to the reasons for the waivers in respect of Waivers, 4, 10 and 15, as set out at Appendix 2 of the report, it was noted that :-

• The waiver in relation to the ‘Extra Care Housing’ (Adult Social Care Directorate) had been put in place as an interim measure for 6 months to allow a procurement exercise to take place due to delays in the commissioning of the contract, as a consequence of having to deal with Covid-19 outbreaks. The procurement process had now been completed and a new contract had been awarded which was anticipated to commence in January 2022.

• With regard to the ‘Homelessness Accommodation and Support Service’, in the Adults. Health and Wellbeing Directorate, this was part of a wider programme which linked to the Council’s Homeless Strategy which was a complex area as many of the contracts tied in with the overall Strategy. Significant changes were to be made to the commissioning model for homelessness provision due to complex historical issues with the leases which needed to be resolved before the contract could move forward.

• The waiver in the Economy and Environment Directorate with regard to ‘Ecologist Planner’, related to monies given to the Yorkshire Wildlife Trust (YWT) regarding biodiversity gains land. The Council own a piece of land that is adjacent to land that is owned by the YWT. Due to the proximity of the land, the Council have entered in to an agreement with YWT to  ...  view the full minutes text for item 20.

Peter Jackson, Head of Internal Audit presented a report which summarised the work of the Internal Audit team during the period July to September 2021. The report set out details of the planned audit work completed in the period which had not previously been reported and the level of management actions and revised implementation dates, which were appended to the report at Appendices A and B, respectively.

The Head of Internal Audit advised that the work of the Internal Audit team was returning back to normality, however he highlighted that there remained a lot of outstanding Covid related work that was being progressed. In summarising the key points in the report, the Head of Internal Audit highlighted in particular, two main areas of work relating to the North Bridge Stores Transformation Project which required additional work in supporting this area and Covid-19 Grants which had taken more time than anticipated.  He also referred to the overdue management actions, as set out in Section 3 of the report which showed a static position with regard to the number of overdue actions. Internal Audit had continued to work closely with management during this period to bring the actions forward. He highlighted that the main area of concern relating to regulation and enforcement around Trading Standards and Food Safety which remained a problem and that there was limited progress in this area.

Members were informed of the results of a Pulse Survey carried out in July 2021, which had provided reassurance and very positive feedback that the service was working well and was valued by its customers.

It was also reported that an External Quality Assessment review was currently being carried out in the form of a Peer Review by Dave Webster, the Head of Internal Audit at Rotherham Council, to assess the Internal Audit team’s compliance against the United Kingdom Public Sector Internal Audit (PSIA) Standards. Further to the request of the Chair, the Head of Internal Audit provided an update on progress on the review which was progressing well. Internal Audit had submitted a self-assessment questionnaire against its compliance against the standards that had been forwarded to the Head of Internal Audit at Rotherham. File reviews of work by the team were being undertaken and interviews being undertaken with key stakeholders, including the Assistant Director of Finance finishing with the Head of Internal Audit in mid-November. The outcome of the review would be reported at the Audit Committee meeting in January 2022. 

The Chair and Members welcomed Dave Webster who was in attendance to observe the meeting. Further to a question from the Chair, he confirmed that he was on track to complete the External Equality Assessment in January. The Chair pointed out that the membership of the Audit Committee had changed this year to previous years and that there were a number of new Members on the Committee. As a consequence of this, Member training had been tailored for both new Members and long standing Members of the Committee to  ...  view the full minutes text for item 21.

Scott Cardwell, Assistant Director of Development and Dave Stimpson, Head of Property Services presented a report which updated Members of progress in the Stores management review regarding the long standing concerns relating to North Bridge Stores operational activities The review was instigated following audit work carried out by Internal Audit in 2019 and their involvement in the Personal Protective Equipment (PPE) stocktaking in 2020.

This management review was implemented in May 2021.The review has identified the key issues that were driving the shortfalls and a plan was now being executed to correct the issues and operate Stores using the correct operating processes by the end of December 2021, with a further review period to assess wider service area impacts to take place up to the end of March 2022. The review would also look at the interactions of other service areas and processes that were involved with the entire Stores process, either as a customer or a stakeholder.

The Assistant Director of Development and Head of Property Services outlined the key developments in relation to progress made since the last update provided to the Committee in July, in particular, with regard to early completion of the stocktake of the stores in mid-September and the departure of the Stores Supervisor. It was noted that following a comprehensive stock take of the Stores and interventions now put in place, the Council was in a much better position and it was expected further improvements would being made with regard to variances. An officer had been seconded into the Stores Supervisor post. Positive changes had been made which also involved reconfiguring the stores. Since the Committee’s last meeting, the Transformation Board had met on 3 occasions to assess the progress being made with positive feedback received from stakeholders who sat on the Board. It was anticipated that during December the standard operating procedures and physical reorganisation of the stores would be put in place as well as a stock take and staff ICT training with completion of the supply chain contracts next year.

In response to a question from the Chair, it was reported that whilst there had been a change in management at the stores, this had not negatively impacted on the delivery of the review and the operation of the stores function. The stores had continued to operate and had been resilient in resolving ongoing issues and managing day to day work and the review of the stores. It was noted that during the last 6 weeks there had been significant improvements to the day to day operations of the stores which was more streamlined and operating effectively. Within the last 3 weeks the physical reconfiguration of the stores had changed. Staff were being more proactive in terms of the day to day management of stores activities in relation to the creation of goods in and goods out, preparation of goods in advance of collection and prompting customers and stakeholders regarding goods ready for collection. Work had also started to define  ...  view the full minutes text for item 22.

Perminder Sethi, Engagement Senior Manager, Grant Thornton introduced the external auditors progress report for year ending 31st March 2021, which highlighted the progress made on work undertaken by external audit as at 11th October 2021 in delivering their responsibilities in auditing the Council’s accounts. The report also provided a summary of emerging national issues and developments of relevance to the Council. 

The Engagement Senior Manager gave an overview of the following key aspects of the report:-

• Progress at 11 October 2021
• Audit Deliverables
• Results of Interim Audit Work
• Sector Update

The Chair asked whether Grant Thornton were still on track to complete the audit by the end of November. The Engagement Senior Manager advised that work was in progress and was currently on plan, however he highlighted that there were issues that were currently being discussed with management in relation to the significant risk area of Plant Property and Equipment and that subject to completion of this work, it was anticipated that the audit was to be completed by the end of November, however he was unable to provide a definite answer at this stage.

Following a further question from the Chair whether there were any issues that had come to light that needed to be addressed at the interim stage of the audit, the Engagement Senior Manager confirmed that no issues had been identified that needed to be brought to the Committee’s attention but, pointed out work was yet to be completed including over ICT controls.

RESOLVED that the contents of Grant Thornton’s, External Auditor’s progress report and Sector Update as at 11th October 2021 (for Year Ending 31st March 2021) be noted.

The Head of Internal Audit presented a report, setting out the Internal Audit Strategy for the period 2021 to 2024 and the Terms of Reference for Internal Audit, as set out in the Internal Audit Charter, for Members consideration and approval.

The Strategy and Charter had been reviewed in July 2017 in order to take into account the significant changes to the Public Sector Internal Audit Standards (PSIAS) and recommendations made in the Peer Review carried out by Kirklees Council in 2017.  The Strategy and Charter had been reviewed and updated annually since then and this review was to ensure that it was ‘fit for purpose’ as a consequence of recent changes to the operation and work of the Internal Audit service with special regard to working during and after the Covid-19 pandemic.

It was noted that three main updates to the Charter were; Agile audit approach, Agile audit plans and Assurance Services provided by External Parties which were detailed at paragraph 10 of the report.

The Head of Internal Audit, in summarising the key points in the report, highlighted the importance of the Charter which sets out the role and responsibilities of the Internal Audit and its priorities and work programme for the coming year. He drew Members’ attention to Pages 14 and 15 of the reports, which set out the factors that had been considered when compiling the Charter and Strategy, which had brought together the Audit Plan for this year, which would evolve as the year progressed.

In answer to a question from the Chair, the Head of Internal confirmed that the Internal Audit team had sufficient skills, experience and capacity in the team to deliver the requirements of the Charter. He further advised that developmental areas had been identified in the Strategy, which were subject to a review of the resources, skills and capacity of the team going forward. It was anticipated that this would allow the team to operate in a more efficient way, but he highlighted that this required a certain level of investment. He assured Members that no areas of concern had been identified in delivering the work going forward, but envisaged a slight change in terms of service delivery.

RESOLVED that

(1)       the Internal Audit Strategy for the period 2021-2024 be approved; and

(2)       the Internal Audit Charter be approved.

The Committee considered a report which informed Members that as part of the external auditors, Grant Thornton risk assessment procedures in respect of the audit of the Council’s financial statements, the external auditor was required to obtain an understanding of the Council’s management processes and the Audit Committee’s (as ‘those charged with governance’) oversight on the following areas:

• General Enquiries of Management,
• Fraud,
• Laws and Regulations,
• Related Parties, and
• Accounting Estimates

The Appendices to the report set out the management process and accounting estimates for the 2020/21 audit for consideration and approval by the Committee. The Council’s management had considered a series of questions on each of these areas and the responses received were detailed in the report.  The Committee were invited to confirm whether these responses were consistent with its understanding and whether there were any further comments it wished to make.

Faye Tyas, Assistant Director of Finance explained that whilst the document was used for internal purposes, explained the benefits of bringing the report to the Committees’ attention to provide the opportunity for questions. It was also felt that this would provide Members with a greater understanding of the figures in the accounts in terms of what were the identified risks and the circumstances when accounting estimates were used, and the reasons for management reliance on experts to provide such estimates. It was further highlighted that two significant areas where accounting estimates were used related to property, plant and equipment and pensions and were areas that were mostly scrutinised.

The Engagement Senior Manager further added that the update report also included general enquiries regarding fraud, laws and regulations which had previously been reported to the Audit Committee separately, however this year they had been incorporated into one document including the accounting estimates.

In response to question from the Vice-Chair, the Engagement Senior Manager confirmed that nothing had come to light to indicate that there was an increased risk in terms of directing their audit work. He explained that the process in relation to accounting estimates was a new addition to the auditors work this year as part of the final accounts. He pointed out that as part of the Council’s arrangements in place, the Council engaged with external management experts. He indicated that the challenge for the Council this year as with other authorities, was to look at what the Council have done in terms of challenging the work of external experts and being satisfied that the advice given was reasonable and appropriate. 

Following further questions, the Engagement Senior Manager confirmed that given changes to the audit environment, there was an increased level of challenge and scrutiny from both the external auditor and from management. The Financial Planning and Control Manager added that the Council’s finance team robustly challenged the assumptions by the Council’s external experts in order to gain reassurance that the figures provided were reasonable and appropriate.

RESOLVED that the contents of the report, ‘Audit Planning Risk Assessment and Accounting Estimates’, be noted.

The Committee considered a report which provided a summary of the arrangements for appointing External Auditors from April 2022 and sought the Committee’s approval to recommend to Full Council in January 2022 to appoint Public Sector Audit Appointments Ltd (PSAA) to negotiate and appoint the External Auditor for the Council.

The report outlined three options open to the Council under the Local Audit and Accountability Act 2014 as follows:-

Option 1     To make a stand-alone appointment

Option 2     Set up a Joint Auditor Panel/local joint procurement arrangements

Option 3     Continue to take part in the national procurement undertaken by PSAA

The report proposed option 3 as the preferred option to recommend to full Council for approval on the basis of the financial benefits anticipated through the PSAA’s ability to offer large contract values to firms who would be able to offer better rates and lower fees than are likely to result from local negotiation, and removing the costs of setting up a local audit panel.  There were also advantages in that conflicts of interest would be managed by the PSAA who would have a number of contracted firms to call upon and that the appointment process would be more independent that by a local panel.

It was noted that nationally virtually every local authority had identified a preference to choose the sector led-option.

RESOLVED to:-

(1)       note the options for appointing External Auditors from April 2022, resulting from the Local Audit and Accountability Act 2014, and the advantages and disadvantages of each option, and

(2)       support the recommendation to the full Council in January 2022 to appoint the Public Sector Audit Appointments Ltd to negotiate and appoint the External Auditor for Doncaster Council.