Agenda and minutes
Venue: Committee Room 4, Brent Town Hall, Forty Lane, Wembley, HA9 9HD. View directions
Contact: Joe Kwateng, Democratic Services Officer Email: joe.kwateng@brent.gov.uk, (020) 8937 1354
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Declarations of personal and prejudicial interests Members are invited to declare, at this stage of the meeting, any relevant financial or other interest in the items on this agenda. Minutes: None |
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Deputations Minutes: None. |
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Minutes of the previous meeting PDF 129 KB Minutes: RESOLVED:-
that the minutes of the previous meeting held on 15 June 2011 be approved as an accurate record of the meeting subject to “Councillor Butt” being shown as in attendance. |
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Matters arising Minutes: Key management risk and risk management strategy
Clive Heaphy, Director of Finance and Corporate services informed the Committee that the report on key management risk and risk management strategy would be submitted to the Corporate Management Team (CMT) before being brought to this Committee. Consequently, the report would be put on the agenda for the next meeting. |
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Statement of Accounts 2010/11 and Annual Governance Reports PDF 70 KB This report which the Council’s external auditors, the Audit Commission, produce following completion of the audit of accounts is intended to identify any changes to the accounts, unadjusted mis-statements or material weaknesses in controls identified during the audit work. A separate Annual Governance Report has been produced for the Pension Fund accounts and this will also be considered by the Pension Fund Sub-Committee.
Representatives from the Audit Commission will attend the meeting to provide an update on the audit and respond to any matters raised by the Committee.
Additional documents:
Minutes: Andre White (District Auditor), Paul Viljoen and Jonathan Ware (Auditor Managers) were in attendance.
The Committee gave consideration to a report produced by the Audit Commission, the Council’s external auditors, based on the audit of accounts. The report was intended to identify any changes to the accounts, unadjusted mis-statements or material weaknesses in controls identified during the audit work. A separate Annual Governance Report produced for the Pension Fund accounts was also on the agendas for consideration.
Clive Heaphy, Director of Finance and Corporate Services introduced the report. He set out a number of reasons why the process for producing the statement of accounts for 2010/11 had been considerably more complex than in previous years.
Firstly, the fundamental change in the Council's financial processes which required a migration of financial information from multiple disparate systems previously in place to a single Council-wide system. In addition, the Finance Modernisation project resulted in a significant reduction in team numbers and a fundamental shift away from producing accounts locally in directorates to production via a central team.
Further, during 2010/11 the Council completed the mandatory transition of its accounting statements to comply with International Financial Reporting Standards (IFRS) which govern the way financial transactions were brought into account and how they were reported. The transition had affected both the appearance of the Council’s accounts and reported balances.
He continued that whilst the timetable for the production and audit of accounts was tight than in any normal year, the combination of all of the above factors made the 2010/11 process particularly problematic. He was quite confident that the investment in time and effort now would enable significant improvements to be achieved in future with consequent reductions in audit fees. The Director continued that he formally approved the draft Statement of Accounts in line with the Accounts and Audit Regulations on 30 June 2011, prior to the start of the audit.
The Director informed the Committee about a post balance sheet event resulting from Brent Housing Partnership’s (BHP) involvement in settled homes initiative. Although there would be no impact on the Council, the Director had provided BHP's auditors with assurances of the Council's support for BHP.
Mick Bowden, Deputy Director of Finance and Corporate Services gave an analysis of the key figures in the accounts and highlighted the significant changes in the balance sheet.
In welcoming the report, members expressed a view that the accounts and the statements were informative and paid tribute to the Director and his team for the sterling efforts made in presenting the accounts and statements. The Chair added that officers should consider submitting a shorter, more reader friendly version of the accounts in addition to the mandatory statements, to future meetings of the Committee.
Andrea White, District Auditor (DA) in providing a summary of her findings on the audit of the Pension Fund accounts stated that subject to the completion of her final review and audit closure, her audit was substantially complete. She proposed to give an unqualified audit ... view the full minutes text for item 5. |
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2011 Treasury annual report PDF 130 KB This report attaches the 2011 Treasury Annual Report that was approved by Full Council, and updates members on recent treasury activity.
Minutes: Mick Bowden, Deputy Director of Finance and Corporate Services introduced the report which provided information to members on borrowing and investment activity, and performance compared to prudential indicators during 2010/11. The recommendations of the report which were submitted to Full Council without any further comments were also being reported to this Committee as part of the scrutiny function required under the 2009 Treasury Management Code of Practice issued by CIPFA.
The Deputy Director gave an outline of the economic and market background during 2010/1 including quantitative easing (QE), the movement of interest rates and the potential impact of defaults by Ireland, Portugal and Greece on European banks and the euro. He then drew members’ attention to the level of rates charged by the Public Works Loan Board (PWLB) and borrowing activity and added that as a result of debt re-structuring, the Council was able to save around £1.5m per annum. He also drew attention to the appendices to the report that set out the Council’s current outstanding loans together with yields and maturity dates.
RESOLVED:-
that the treasury management annual report and recent treasury activity be noted.
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Audit Commission Progress Report PDF 271 KB The purpose of this progress report is to brief members of the audit Committee on work currently being planned or undertaken by the audit Commission. Minutes: The purpose of the progress was to brief members of the Committee on work currently being planned or undertaken by the Audit Commission. Andrea White, District Auditor in introducing the report stated that the Commission had finalised their interim report and agreed with officers an action plan which was attached to the progress report.
She advised members that she had finalised her performance review detailed in the Audit plan including a follow up review of the Council’s One Council Project and summarised the key findings as follows;
· Good progress had been made on the One Council Project with effective governance arrangements in place. · Risks existed in regards to capacity, accurate monitoring of financial benefits, transparency of revisions to financial projections and a systematic way to capture non-financial benefits at project level.
The District Auditor continued that in line with her statutory duties, she was also focussing on the following matters which had come to her attention during the course of her audit;
· Issues relating to the Council’s arrangements over blue badge usage, enforcement and anti fraud arrangements. · Issues relating to governance and audit arrangements at a school. · Implications arising from the review of school leases and the legality of contracts.
She confirmed that as the audit was taking longer to complete additional fees to be agreed with the Director of Finance and Corporate Services would be charged and reported to the Committee. The District Auditor then drew members’ attention to the Audit externalisation schedule as set out in the report and added that although the timetable had initially slipped, contracts for 3 or 5 year terms with TUPE agreements were expected to be approved by March 2012. She added that the contracts would be divided into North London and South London sectors with Brent being in the former sector.
RESOLVED:-
that the progress report on work being undertaken by the Audit Commission be noted. |
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Audit Commission One Council Follow Up Report PDF 220 KB This report provides progress on the Council’s ambitious and forward looking transformation programme which aims to deliver service improvements, cost savings and to create a more efficient streamlined Council. The programme which covers a 4 year period of 2010-2014 aims to achieve budget savings of £94m by 2015. Minutes: Andrea White, District Auditor, introduced the report. Clive Heaphy, Director of Finance and Corporate Services in commenting on the report stated that the progress report was the Council’s four year ambitious forward looking transformation programme which aimed to deliver service improvements and cost savings of £94m by 2015. He advised the Committee that the Council had made positive progress towards implementing the One Council Programme over the last 12 months. Governance arrangements were in place and working effectively with regular monitoring which allowed risks, costs and benefits to be identified at corporate and individual project levels.
The Director emphasised that capacity remained a risk to the success of the individual programme and in recognition of that the Council was addressing it through internal appointments as well as lessening its reliance on external consultants. He referred to the following list of recommendations and added that its adherence was paramount in achieving an overall success.
· Continue to monitor capacity at project level given the need to deliver significant number of projects in 2011/12 to achieve the savings targets.
· Review how project costs and financial benefits were reported at corporate and project level.
· Specify and set out non-financial benefits set out at the start of projects.
· Monitor non-financial benefits in a meaningful and accurate way as projects progressed.
RESOLVED:-
that the Audit Commission’s one Council follow up report be noted.
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Annual Governance Statement PDF 63 KB This report sets out the revised Annual Governance Statement for inclusion in the council’s accounts for 2010/11 as required by the Accounts and Audit Regulations 2003 (as amended). Additional documents: Minutes: This report set out the revised Annual Governance Statement for publication as required by the Accounts and Audit Regulations 2003.
Clive Heaphy informed the Committee that during the course of the year, Brent Housing Partnership (BHP) had been purchasing homes for temporary accommodation under the settled homes initiative backed by loans of more than £54m from the Council. Whilst the scheme appeared to be operating well, a number of problems had arisen in respect of out-of-borough purchases which suggested that in this particular area, internal controls including financial controls were not as robust as required. Work was being undertaken to strengthen the controls and ensure that no repetition could take place in the current or future years. He then set out a number of significant governance issues which had been identified, together with a summary of the actions taken to date, or being proposed for 2011/12 to deal with them. These included the following;
· The One Council programme had continued to progress during 2010/11 and robust governance arrangements were in place to manage the programme to ensure the delivery of efficient and effective services to the public. This remained the key area of focus for the Council going into 2011/12. In addition to staffing, the Council was also looking at all its services to identify possible further areas for savings and in that regard consultation with residents and all other key stakeholders would continue to be of significant importance as were equalities issues.
· The introduction of significant changes of a single accounting system (Oracle) to replace a multitude of departmentally based systems and the local government of International Financial Reporting Standards (IFRS) had generally been smooth but not without its challenges.
· The Council had been progressing with the construction of the new civic centre, which was expected to be in use by March 2013. As well as significant financial benefits of between £2.6m - £4.3m per year through reduced rental, running and maintenance costs, there were also significant risks associated with the project, given its scale both in capital terms, rationalisation of the Council’s property portfolio and the changes to new ways of working.
· The Government’s decision to abolish the Building Schools for the Future (BSF) programme during 2010/11 had a significant impact on the Council as four schools had been allocated a total of £80million under the programme. Children & Families had identified a potential of approximately 188 unplaced Reception pupils for September 2011 and actions were being determined to avoid the Council failing to meet its statutory duty to ensure sufficiency of school places, but this represents a key area of challenge.
· Progress had been made in recovering deposits following the collapse of the Icelandic banks with the Council expected to recover about 80% of the £10m deposited with Heritable Bank. The position in respect of Glitnir was still being determined and may take much of 2011/12 to fully resolve.
· Progress had been made in developing more sophisticated models of the financial performance in Environment and Neighbourhood in particular, ... view the full minutes text for item 9. |
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Internal Audit Progress Report PDF 65 KB This report sets out a summary of the work of Internal Audit for the period 1st April 2011 to 31st August 2011. The attached report provides further detail together with the assurance ratings and priority 1 recommendations for limited assurance reports and management responses for those audits for which final reports have been issued since April 2011 (including reports for the 2010/11 financial year). Additional documents: Minutes: Simon Lane, Head of Internal Audit and Investigations introduced the report that set out a summary of the work of Internal Audit for the period 1st April 2011 to 31st August 2011 and provided further detail together with the assurance ratings and priority 1 recommendations for limited assurance reports and management responses.
He advised the Committee that a number of systems audits had been completed and were in progress across the Council including the new Project Management Framework being developed and implemented by Regeneration and Major Projects. Computer audit work was also progressing.
Simon Lane advised the Committee that the final key area of work was in relation to schools which formed a significant part of the annual coverage. Majority of the 16 primary schools included in the 2011/12 plan had been visited before the summer holiday and his team were awaiting further information and documents to be able to finalise the audits. In addition, a number of reports for Secondary schools audited in 2010/11 were still in draft at the time of the last meeting had now been finalised although majority of secondary schools failed to provide management responses to draft reports.
As was the case in 2010/11, key areas of weakness identified across several of the schools audited so far in 2011/12 related to compliance with the Financial Regulations for Schools around high value procurement and leasing arrangements. In addition, issues were identified in respect of the salary levels of Headteachers and other members of the Leadership Teams in the context of non-compliance with the national School Teachers Pay and Conditions Document 2010 (STPCD).
In welcoming the progress report, the Chair drew members’ attention to the following 4 reports that were long overdue from 2010/11; · Network infrastructure (IT) · Corporate Property Service Model · Michael Sobell Sinai school · Our Lady of Lourdes
With reference to the pie chart representing recommendations implemented, the Chair advised that early warning signs be given to those service areas which had not fully implemented the recommendations and possibly the post title of the head of service be named in the report. He noted that lack of resources was suggested as the inhibiting factor, however, officers needed to maintain a sharp focus and keep the Committee fully informed of developments.
RESOLVED:-
that the progress made in achieving the 2011/12 internal audit plan be noted.
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Any other urgent business Notice of items to be raised under this heading must be given in writing to the Democratic Services Manager or his representative before the meeting in accordance with Standing Order 64. Minutes: None.
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Date of next meeting The next scheduled meeting of the Audit Committee is scheduled to be held on Thursday 15 December 2011 at 7:30pm Minutes: It was noted that the next meeting would take place on 15 December 2011.
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