Up to 15 minutes are allowed for public participation. Participants are restricted to 3 minutes each.

There was no public participation.

To confirm and sign as a correct record the Minutes of the Meeting of the Governance and Audit Committee held on Tuesday 9 November 2021.

A Member of Committee raised that his representation about his attendance at the committee, due to changing the meeting time, had not been not recorded properly. Further concerns were raised that the change in time had not been properly notified at previous meetings of the committee.

In light of these comments the following amendment was proposed, and duly seconded: 

“That point 40 in the Minutes of the previous Meeting of the Governance and Audit Committee held on 9 November 2021 be corrected to reflect the point raised.”

On being put to the vote the amendment was unanimously supported and on that basis it was:  

RESOLVED that the Minutes of the previous Meeting of the Governance and Audit Committee held on 9 November 2021, as amended, be approved, and signed as a correct record.

Members may make any declarations of interest at this point but may also make them at any point during the meeting.

There were no declarations of interests made at this point in the meeting.

Matters Arising schedule setting out current position of previously agreed actions as at 31 December 2021.

With the only comment from the Chairman expressing gratitude to Council for agreeing with the committee’s request to send a letter regarding standards, the Matters Arising Schedule was duly NOTED.

Members considered the Internal Audit Quarter 3 Report 21/22 by Assurance Lincolnshire against the 2021/22 annual programmes agreed by the Governance and Audit Committee in March 2021.

The Report was introduced by Amanda Hunt. In the presenting report, the Officer highlighted to the Committee that two assurance audits had been completed during the period.  

•      Local Land Charges, which was given a ‘High’ assurance.

•      ICT Helpdesk, which was given a ‘Limited’ assurance.

Of the revised plan, 50% had been completed.

Whilst Committee were advised that the Audit Plan was slightly behind target assurance was offered that it was still anticipated all work would be completed by the conclusion of Quarter 4 as planned. Notice was given regarding seven audits currently in progress with two of these at draft report stage.

The seven which were currently in progress, included:

•      A follow-up on Vulnerable Communities, which was at the draft report stage.

•      A follow-up on Golden Thread, which was at the draft report stage.

•      A report on Insurance, which was at the fieldwork stage.

•      A report on the ICT Network infrastructure, which was at the fieldwork stage.

•      A report on Strategic Risk, which includes an inability to maintain critical services and deal with emergency events, which was at the fieldwork stage.

•      A report on Flooding, which was in the Terms of Reference process.

•      A report on the Key Project Enterprise Resource Planning System, with the review underway.

There had been some changes to the plan as priorities had changed during the year. The Wellbeing Audit had been postponed, and was replaced by a report on the certification of the flood grants. The Plan also now included a planned follow-up audit of the ICT Helpdesk, due to the limited rating. The Value for Money audit previously placed on hold would now take place in quarter 4.

The combined assurance work had commenced in the period and the report was expected to be considered by the Committee at its next meeting.

Finally, the Officer advised Committee that there were no overdue actions to report.

Debate ensued on the contents of the report, with Members questioning multiple aspects, and giving statements on the report.

During this session, the ICT Manager was asked to address the Committee. There should have been Authority specific gradings in the report, specifically on page 14. The ICT Manager explained that this report only looked at specific parts of this process managed by the ICT service, not every aspect of work undertaken.

Members enquired as to whether the Key Performance Indicators (KPIs) in this audit were made with the collaboration of the Corporate Policy and Resources Committee prior to this decision to include the Helpdesk in this report. It was stated that the ongoing KPI dashboards were present to each Authority’s partnership meetings, since the meetings were Officer led. Members also learnt that the 70% reduction in the number of ICT Helpdesk tickets was based on the original 700 tickets figure.

In response  ...  view the full minutes text for item 45.

Members considered the Draft Treasury Management Strategy 2022/23, Prudential indicators and Minimum Revenue Provision (MRP) Policy, introduced by the Section 151 (S151) Officer, and presented to the committee for scrutiny prior to being presented for approval by Full Council in March.

The Strategy incorporated the requirements of the 2017 CIPFA Prudential Code.  A new Code had been issued in December 2021 for implementation by 2023/24. However, some elements were already incorporated into the Treasury Management and Capital Investment Strategies. For the Authority, new Prudential indicators were included which reflected the Borrowing Liability Benchmark which illustrated the lowest risk level for borrowing, and Commercial income as a percentage of Net Revenue Expenditure.

The Treasury Management Strategy brought together a number of strategies and policies, these being:

·         The Borrowing Strategy, which would ensure consideration was given to affordability and sustainability for the repayment of debt.

·         The Annual Investment Strategy which was to provide security of the investment, consider liquidity and cashflow requirements, and finally yield, all of which were considered in the context of the Authority’s risk appetite.

·         The MRP policy page which determined how the Authority would repay prudential borrowing on an annual basis.

·         The Committee was also requested to consider the Capital Investment Strategy, which was the framework by which capital investment and financing decisions would be made.

Draft prudential and treasury indicatorswere calculated in November. They would therefore be updated based on the final Capital Programme and Medium-Term Financial Analysis and would be further updated for the final version laid before Council. The S151 Officer also brought attention to the Non-Treasury Investments.

There was one change of note in relation to the Minimum Revenue Provision Policy, and in accordance with expected changes in legislation:

·          A Minimum Revenue Provision charge is to be made on an annual basis to reduce the level of borrowing attributed to commercial investment properties. This is rather than the existing policy of a voluntary MRP reviewed on an annual basis.

In relation to the Authority’s investment property portfolio, recent changes to the conditions for borrowing from the Public Works Loans Board excluded borrowing for commercial purposes that had the primary objective of securing a yield.

This meant that any additional property acquisitions (subject to legal advice) would need to be funded from the Authority’s resources. However, borrowing was allowed to effectively manage the portfolio, such as for a replacement asset, should a property be sold.

The Authority would continue to ensure it acted reasonably, that Members understood the policy, and it was discussed at the recent Councillors’ training session on Treasury Management that any decisions should be prudent and that any investments should be proportionate.

In addition, whist the counterparties for investment had not been amended, the authority would consider investment opportunities which promoted Environmental, Social and Governance investing where possible.

The S151 Officer then updated the Committee on Treasury Management practices. Advising that the Treasury function was carried out in line with the Treasury Management Code of Practice and the Prudential Code.

The  ...  view the full minutes text for item 46.

Members considered the Opting-In to Public Sector Audit Appointments (PSAA) Ltd. The report was introduced by the S151 Officer, who briefed the Committee on the next round of choosing external auditors, with the current external auditors (Mazars) arrangements due to expire in 2022/23.

Mazars was procured in Public Sector Audit Appointments Company, which was incorporated by the Local Government Agency in 2016. The PSAA had contacted all local authorities to participate in next round of tendering and contracting process. Members attention was drawn to both the advantages and disadvantages of entering into the PSAA process, with the S151 Officer advising that her recommendation to Members would be that the Authority entered the joint procurement process.

In response to Members’ comments and questions further information was provided, during which Members’ attention was brought to a number of issues.

It was explained that this procurement process happened every four years, with Lincolnshire County Council having gone through a similar process. However, it was stated by the Chairman that the procurement process may not give the same auditors again. Members’ were asked to consider that there had been a previous issue with the ‘over-optimism’ of what the external auditors could achieve with the price quoted.

With concern of discrepancies with past accounts, including in the 2018-19 accounts, and the issue of local authorities individually accessing external auditors, there was a general consensus that working with other local authorities would allow for better bargaining and the best possible help to getting auditors. One Member raised that it would facilitate the best procurement advice. References were also made to the difficulty in the accounting sector for local authorities to get a wide array of options.

Having been moved and seconded on being put to the vote it was unanimously:

RESOLVED that it be RECOMMENDED to Full Council that the invitation of opting into the PSAA sector led option for the appointment of external auditors for the period 2023/24 to 2027/28 be accepted.

There were no additional comments to the Workplan. The Workplan as set out in the report was NOTED.