Agenda and minutes

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

There was no public participation.

Meeting of the Governance and Audit Committee held on 26 July 2016

                     RESOLVED that the Minutes of the meeting of the Governance and Audit Committee held on 26 July 2016be 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 course of the meeting.

There were no declarations of interest made at this stage of the meeting.

Members gave consideration to the Matters Arising Schedule which set out the current position of all previously agreed actions as at 7 September 2016.

With regard to the green action entitled “report format” the Chairman advised that this matter had been further discussed at his most recent briefing meeting. The Authority was in the process of introducing a new committee management system and it may be feasible for some of the suggested areas for improvements to be addressed through this.  Officers undertook to engage with members where appropriate through the system’s development.  Councillor Brockway and Mr Morriss indicated that they were happy to be engaged in the process.

RESOLVED that progress on the Matters Arising Schedule as set out in report GA.20 16/17 be received and noted.

Consideration was given to a report from the Authority’s Auditor KPMG, which presented their report to those charged with Governance (ISA 260 Report) in relation to the Statement of Accounts and Annual Governance Statement 2015/16, the headlines of which included: -

·A proposed unqualified audit opinion on the 2015/16 Statement of Accounts;

·no material audit differences had been identified;

·All presentational audit differences identified have been adjusted for;

·There had been no significant risks identified within the Financial Statements; and

·The Annual Governance Statement complied with recommended practice (Delivering Good Governance in Local Government; A Framework) and was consistent with the Auditor’s understanding of the Authority.

In presenting the report, the Auditor outlined the headline findings to the Committee as detailed on page 3 of the report.  Committee’s attention was drawn to the Audit Adjustments required, referenced on page 3 of the report with further detail contained on page 10, and it was stressed that this was a misclassification of receipts in the Cash Flow Statement, amounting to £1.135m.  This had been adjusted and the overall balance of the Cash Flow Statement was unaffected.   Confirmation was given that the work referred to as outstanding on page 8 of the report was now completed.

The External Auditor placed on record his thanks to the finance team for their professional and helpful approach in responding to queries throughout the audit process and highlighted to the Committee the fees associated with undertaking this work.

In responding to Members comments, the “risk” associated with the impact on the pending changes to NNDR retention, was further clarified, but it was stressed that this was a similar position to other authorities.

RESOLVED that the information contained within the report be received and noted.

Members gave consideration to a report which presented the 2015/16 Statement of Accounts for scrutiny and adoption. 

The Section 151 Officer, first thanked the Financial Services Manager and her team, for the work they had undertaken in completing the Statement of Accounts, in accordance with the statutory requirements.  The overall financial position was summarised during which Members noted the following: -

·      the revenue out-turn reflected a gross surplus of £1.255m after deductions for approved carry forwards and unapplied grants an amount of £0.798m had been transferred to the General Fund Balance;

·       the Capital Investment totalled £0.965m;

·      In respect of Useable Reserves, the Authority remained in a healthy position with balances as follows: -

·         The General Fund working balance totalled £3.715m (£4.160m in        14/15)

·         The General Fund Earmarked reserves totalled £13.817m (£10,658m             in 2014/15)

·         Capital receipts totalled £2.984 (£2,407m in 2014/15)

·         Capital grants unapplied for totalled £0.476m (£4.486m in 2014/15)

The amendments to the Statement of Accounts which had been made and which were summarised at Section 2 of the report were highlighted to the Committee.

The contents of the explanatory foreward were summarised to Members.

Members asked a number of technical and pertinent questions particularly concerning the pension liability and sought further details and clarity as to whether this trend would continue.  Officers gave assurance that the figure referred to was not the amount the authority had to pay and this was an accounting presentation issue and used as a comparator.  Assurance was given that arrangements were in place to manage any deficit in the fund over the next 20 years.  It was stressed that the pension liability was developed on a national basis.  It had been agreed that the position would be reviewed every 3 years against a set of indicators, and level was set dependent on the outcome of this review.  It was stressed that West Lindsey District Council was broadly in the same position as other local authorities in respect of this matter.  However West Lindsey did make a lump sum contribution against its deficit, this had now become recommended practice for local authorities, and the treatment applied to the pensions deficit was the same across the country.

The Committee welcomed the inclusion of the Commercial Performance Section and commented that it could now be seen that a number of previously agreed projects were now coming to fruition.

Members asked a number of further technical and pertinent questions in respect of pending changes to NNDR retention, and the impact this could have. It was noted that a workshop was being held the following week, to which all Members had been invited, to inform them further of the impact.  A consultation response had been prepared by the Authority, and it was considered of vital importance that a re-evaluation be undertaken, if the North and Midlands were not to suffer in the future.

Referring to page 19, Members requested details of the number of fixed term contracts currently in existence across the Council.  The Director of Resources undertook to  ...  view the full minutes text for item 35.

The Committee received a briefing on the process for changing governance arrangements and consideration to appointing a Member/Officer Working Group to consider feedback from Members and the public, discuss options in detail and make recommendations for change to the Governance and Audit Committee.  The briefing included a staged outline timetable, and the steps required.

Members questioned whether the timeline was realistic, noting that a number of actions were already nearing their completion date.  It was noted that any slippage would be reported, through to the Governance and Audit Committee, and the final implementation date of any change would be dependent on the extent of the changes agreed, as outlined in the paper.

All were agreement that it was appropriate to undertake a review, even if the answer remained unchanged.  Nothing was being ruled in or out at this stage of the process and whilst devolution and its impact should be a consideration, it was not a reason to not undertake a review.

RESOLVED that:-

(a)       the process and timeline as presented be noted;

(b)       that Councillors White, Bond and G McNeill be appointed to serve   on the Task and Finish Group;

(c )      the Terms of Reference for the Governance Arrangements Task    and Finish Group, as appended to the report, be agreed.

Members gave consideration to a report, the purpose of which was to provide assurance to members of the Governance and Audit Committee that appropriate arrangements were being put in place to manage the risks of a wholly owned limited company.

By way of background Committee Members were advised that in June of this year WLDC had acquired a local business operating as a staffing agency in the district and surrounding area.

This company would continue to operate as an independent limited company that was wholly owned by the Authority. In addition, a second subsidiary would be created to act as a TECKAL company for the supply of the same services to public bodies. The TECKAL status currently allowed Authorities to give work to such companies without an open tender process.

At its meeting in July, Corporate Policy and Resources Committee had agreed a governance structure for recommendation to Full Council.

That same report was being presented to members of Governance and Audit Committee in order that they could review the arrangements, seek assurance that appropriate governance was in place and make any comments that may be raised by the Chair of the committee at the meeting of Full Council.

Discussion ensued and in response to Members’ questions the role of the Executive Director and Non-Executive Director were clarified.   Initially there were concerns that a Board was not being established for the company, however an independent member with experience of managing a large private sector business confirmed that he would not expect a company of this size to have a Board.  It was questioned whether Members would see management accounts.  The Director of Resources stated that as a non-executive Director he would see the accounts and would present a summary to the Corporate Policy and Resources Committee as part of the Annual Business Plan by which the company would be operated.

Officers also confirmed that there was a resourcing agreement between the agency and the Council, in order that State Aid Rules were adhered to.   It was confirmed that the Council, as a Corporate Body, was the Shareholder, not individual Councillors, and the Director of Resources would be the named shareholder. Payroll Services were provided by the Council. Terms and Conditions for persons employed through SureStaff were not the same as those of people directly employed by the Authority, as this was a separate entity. 

It was confirmed that the extra recommendation requested by the Corporate Policy and Resources Committee, namely that, which related to the appointment of an independent Member as a Non-Executive Director,   would be included within the report prior to it being submitted to Full Council.

RESOLVED that having reviewed the governance arrangements in the attached report, the committee have assurance that appropriate governance is in place and that there are no comments that they wish the Chair of the Committee to raise at Full Council.

Members considered their work plan for the remaining meetings during the ensuing civic year.

The External Auditor, indicated that in light of the revised “sign off of accounts timetable” a number of his reports due for submission, would maybe need to have their timelines revised.    He undertook to liaise with the Governance and Civic Officer regarding any revisions required.

The Director of Resources indicated that he would also prepare a report, for discussion at the next Chairman’s Briefing meeting, and for possible subsequent submission to the Committee, setting out the timeline for the early closure of accounts.

RESOLVED that the work plan as at 7 September 2016 be noted.