Agenda and minutes
Venue: Committee Room 4, Brent Town Hall, Forty Lane, Wembley, HA9 9HD. View directions
Contact: Bryony Gibbs, Democratic Services Officer (020) 8937 1355, Email: bryony.gibbs@brent.gov.uk
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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: There were no declarations of interest. |
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Deputations Minutes: None. |
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Minutes of the previous meeting PDF 117 KB Minutes: RESOLVED:-
that the minutes of the previous meeting held on 27 June 2012 be approved as an accurate record of the meeting. |
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Matters arising Minutes: There were no matters arising. |
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Annual Governance Statement PDF 62 KB This report sets out the Annual Governance Statement for 2011/12 as required by the Accounts and Audit Regulations 2011. Additional documents: Minutes: Mick Bowden (Deputy Director of Finance) presented a report to the committee setting out the Annual Governance Statement (AGS) for 2011/12. The committee was advised that the AGS explained how the council complied with the principles established by the ‘Delivering Good Governance in Local Government’ framework developed by the Chartered Institute for Public Finance Association (CIPFA) and the Society of Local Authority Chief Executives (SOLACE), which were reflected in the council’s local Code of Corporate Governance, set out at Part 7 of the Council’s constitution. The AGS had been informed by the corporate governance review which had drawn upon existing documentation and information from various sources across the council including performance information, risk management, service directors, internal and external audit and inspectorates and partners.
Mick Bowden asserted that the AGS was very frank document which indicated how the council delivered against the 6 core principles of the local code of governance, established what progress had been made against issues raised in the previous year’s review, and set out the challenges that the council faced in meeting these principles in the forthcoming year. Issues of continued significance included the pressure on schools places in the borough, pressures on social care services, the impact of the welfare reforms and concerns regarding the governance arrangements within schools. Following the 2011 census which had revealed that the population served by the council was 58,000 more than was recognised through the Formula Grant process, therefore resulting in chronic and on-going underfunding, the council was seeking to ensure that the borough’s true population was properly reflected in future grant calculations.
During members’ discussion Councillor Al-Ebadi queried whether, the council could recover any of the funding lost to the borough as a result of the underestimate of Brent’s population. Mick Bowden advised that the council would make representations to that affect but it was unlikely to be successful. The Leader of the council explained that this issue would be discussed with London Councils and the leaders of other London councils to explore a joint response to this issue. Councillor Ashraf noted that the AGS included a comment on the recent departure of the Chief Executive and queried whether, in view of the current suspension of the Director of Finance, further exploration of the way in which these changes would be accommodated by the senior management team, needed to be reflected in the AGS. The Chair noted that the purpose of the governance statement was to examine the processes and systems in place and the expectation would be that the organisation would continue to apply these in the absence of any specific members of staff. It was important that if any member of staff at any level of the organisation was absent, the organisation was sufficiently resilient to ensure that the workload of that member of staff was covered.
RESOLVED: -
that the Annual Governance Statement be approved. |
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Brent Council Statement of Accounts 2011/12 and Annual Governance Reports PDF 69 KB Additional documents:
Minutes: Andrea White (Audit Commission) advised that there were two Annual Governance Reports (AGRs) before the committee; the London Borough of Brent Audit 2011/12 and the Brent Pension Fund Audit 2011/12; an updated version of the former had been tabled for the committee’s information. The AGRs were produced by the council’s external auditors, the Audit Commission, following the completion of the audit of accounts. The reports sought to highlight changes to the accounts, unadjusted mis-statements or material weaknesses in controls that had been identified during the audit process.
Turning first to the London Borough of Brent Audit, Andrea White highlighted that the key message of the report was that the council had made significant progress against the recommendations made in the 2010/11 AGR and there had been considerable improvement to the council’s year-end financial control and closure process. There had been a high number of mainly presentational errors made, however, and whilst these had not been fundamental to the main statements within the accounts, further improvements to the closure processes should be made for 2012/13. One non-material uncertainty had been identified in relation to the council’s intent to implement componentisation accounting; however officers had estimated that the maximum possible error equated to £3.5 million in the council’s balance sheets and the council’s cash position and usable reserves would not be impacted. The council had undertaken to review the error and implement componentisation accounting. Andrea White explained that it was her intention to conclude that the council had secured value for money in the use of resources and added that there was sound financial management in place. There would be more pressure to achieve further savings in the immediate future and it was recommended that members continue to monitor financial performance closely to ensure that the council achieved its short and medium term financial plans. It was expected that the formal opinion would be issued on 28 September 2012 and that the Council’s accounts would be certified by 5 October 2012.
Martin Searle (Audit Commission) advised that subject to the final audit closure and review processes, and receipt of the letter of management representation, the District Auditor intended to issue an unqualified opinion on the financial statements by 30 September 2012. There had been one material error identified, which had been the misclassification of £84.3 million Other Housing Services Income and Expenditure. The statements had been amended and there was no impact on the total Cost of Services or the balance sheet. With reference to Table 1 set out in the AGR, Martin Searle highlighted some of the key findings, against the risks identified in the 2012 Audit Plan. In particular, it was noted that the council needed to be alert to its reliance on a small number of finance staff who had experience in technical areas and it would be important for the council to maintain sufficient capacity to facilitate the efficient preparation of future statements. Other findings which had arisen from the audit included that related party disclosures were in ... view the full minutes text for item 6. |
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The Treasury Management Annual Report 2011/12 PDF 119 KB This report attaches the Treasury Management Annual Report 2011/12 that the Executive has recommended to Full Council to approve at its meeting of 19 November 2012, and updates members on recent treasury activity Minutes: Mick Bowden presented the Treasury Management Annual Report 2011/12 to the committee, explaining that the report summarised the council’s borrowing and investment activity and performance compared to prudential indicators. Having considered the report at its meeting on 19 September 2012, the Executive had made a recommendation to Full Council, that it approve the report at the meeting scheduled for 19 November 2012.
Mick Bowden explained that economic growth in the UK had been slow in 2011/12 and interest rates had continued to be relatively low, reflecting the low demand for credit and desire for security. With reference to Table 2 set out at paragraph 3.6 of the report, the committee was advised that there had been a reduction in the level of fixed rate borrowing from the Public Works and Loans Board (PWLB) during 2011/12, largely due to the repayment by the Department for Communities and Local Government of £198m debt relating to the Housing Revenue Account (HRA). It was anticipated that this would allow the HRA to be self-financing in the long term while accruing interest. The council had also borrowed £20 million from the PWLB in 2011/12 at a low interest rate. Turning to the council’s lending activity, Mick Bowden advised that due to the current climate of low returns and concerns over financial institutions, the council had sought to restrict the investments to a select few institutions. The council had been successful in the recovery of approximately £13 million of the £15 million loan that had been made to Icelandic banks, prior to their collapse. Mick Bowden concluded by noting that the remaining aspects of the report referred to the regulatory requirements during the 2011/12 financial year.
The Chair commented that officers should consider initiating the process of obtaining approval of the Treasury Management Annual Report earlier, noting that it should be available following the end of the financial year.
RESOLVED: -
That the Treasury Management Annual Report 2011/12 be noted. |
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Corporate Risk Register PDF 61 KB The purpose of this report is to present an updated version of the Council’s Corporate Risk Register to be noted by the Audit Committee. Additional documents: Minutes: Aina Uduehi (Audit Manager) advised that this update report on the Corporate Risk Register had been provided at the request of the committee. The current version of the Corporate Risk Register had been approved by the Corporate Management Team at its meeting on 13 September 2012. The key changes that had been made to the document related to the reduction in some of the inherent risk scoring to adjust for a previous omission, and the addition of further detail concerning the control of the risks associated with the welfare reforms.
During members’ discussion, Councillor Ashraf queried how often the register was updated and was advised that the Head of Audit and Investigations meets with the Corporate Management Team on a quarterly basis to review and update the strategic and operational risks. Councillor Ashraf further queried whether external risks where captured on the corporate risk register. In response, Aina Uduehi drew members’ attention to those risks which referred to the policies of central government such as the proposed changes to welfare benefits and the effects of the recession.
RESOLVED:-
That the updated Corporate Risk Register be noted.
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1st Internal Audit Progress Report 2012/13 PDF 129 KB This report summarises the work of Internal Audit and the Investigations Team from 1st April 2012 to 31 August 2012. The attached report provides further details of this together with assurance ratings of reports issued. Additional documents: Minutes: atAina Uduehi introduced the 1st Internal Audit Progress report for 2012/13 to the committee and noted that it reflected the work of both Internal Audit and the Investigations team from 1 April 2012 to 31 August 2012. The Internal Audit Plan for 2012/12 comprised 1,200 days, of which 905 were allocated to Deloitte Touche Public Sector Internal Audit Limited. The remaining 295 days were allocated to the in-house team. As of 31 August 2012, 368 days had been delivered against the overall Plan, which equated to 31 per cent of the Plan and was in line with the levels of delivery for 2011/12. The committee was advised that it had not been possible to conduct audits in a number of areas due to requests for deferral relating to work or restrictions regarding the move to the new Civic or the Olympic Games and due to changes in procedures or structural changes which required time to embed prior to being reviewed. It was intended that by December 2012, 60 to 70 per cent of the Plan would be delivered and much of the work for this had already been scheduled. Aina Uduehi concluded by drawing members’ attention to the list of audits completed during this period.
In the subsequent discussion members raised a number of issues. With the permission of the Chair, Councillor Gladbaum queried whether, in view of the negative reputation of Brent’s Schools in relation to financial management, a more robust financial auditing process was required. The Chair queried whether either the audit team or officers in the Children and Families team communicated collectively with schools, through for example meetings with head teachers or school governors. The Chair further queried whether the audit reports were sent direct to the governors of the schools. Councillor Ashraf suggested that the role of the Chair of governors should be developed to encourage greater independence from Head Teachers. Councillor Ashraf also queried how the audit team overcame difficulties associated with schools perceiving their actions as negative or critical, to achieve a positive auditing process. Councillor Van Kalwala queried whether the council could draw on examples of good practice from other local authorities in how to better encourage a good relationship between the council and local schools. Councillor Van Kalwala further queried whether a template of the audit framework was sent to all schools for their information
In responding the committee’s initial queries, Aina Uduehi advised that the audit process for schools was very robust; however there had been a period of two to three years where the council had not conducted full audits of Brent’s school as it had instead been required to conduct Financial Management Standards in Schools (FMSiS) assessments. All of Brent’s schools would visited by the end of next year, by the audit team. The council had a very detailed audit programme for schools, which had been viewed by the external auditors. Various training was available for all head teachers and school governors in Brent. The council worked ... view the full minutes text for item 9. |
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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 Minutes: The committee noted that the next meeting would be held on 9 January 2013. |