Hounslow Council


Agenda and minutes

Venue: Committee Room 2, Civic Centre, Lampton Road, Hounslow. View directions

Contact: Mike Smith, tel 020 8583 2069, e-mail  mike.smith@hounslow.gov.uk 

Items
No. Item

18.

Minutes of the meeting held on 11 September 2013 pdf icon PDF 59 KB

Minutes:

The minutes of the meeting held on 11 September 2013 were confirmed.

19.

Any matters arising from the minutes

Minutes:

Diane Makepeace, Interim Head of Finance and Performance, confirmed that the recommendations of the External Auditor, referred to in Minute 12, had all been implemented.

20.

Declarations of interest

Members are reminded that if they have a pecuniary interest in any matter being discussed at the meeting they must declare the interest and may not take part in any discussion or vote on the matter.

Minutes:

21.

Annual Audit Letter and Audit Plan 2013-14 pdf icon PDF 62 KB

Additional documents:

Minutes:

Diane Makepeace, Head of Finance and Performance, referred Members to the Annual Audit Letter issued by the Authority's external auditor Deloitte. The Authority had made very significant progress in implementing the external auditor's recommendations.

 

It was intended to start the external audit process for the 2013-2014 accounts earlier in the year. Ian O'Donnell, Treasurer, commented that there had been a large reduction in the audit fee compared to the previous year. In response to a question, Diane Makepeace stated that there were insufficient staff to undertake independent checking of all journal entries. However, journal entries were not a significant area of the Authority's financial processes.

 

Andrea White questioned the accounting treatment of the residual waste contract - how value for money would be monitored and account taken of benefit realisation. Ian O'Donnell undertook to raise this matter with the external auditor. He stated that there were staff being retained for the implementation phase of the contract and 3 staff working in the area of contract management. There was also a role for Boroughs to feedback on the contract. Jim Brennan, Director, stated that the first 12 months would be a mobilisation period.  The client management role would be kept under review. There would be a performance management framework and robust testing of data supplied by SITA. The external auditor would examine the Internal Audit review of contract management. There were sanctions and remedies as part of the contract which could be applied should issues around performance or the quality of data occur.

 

Resolved -

 

(a)      That the Annual Audit Letter and its recommendations be noted.

 

(b)      That the Authority's agreement of the recommendations be noted.

 

(c)      That the Audit Plan for 2013-2014 be noted.

22.

Internal Audit pdf icon PDF 72 KB

Please note that appendix 1 concerning the audit of contract management is attached seperately as a confidential document as it contains commercially sensitive information.

Additional documents:

Minutes:

See report of the Treasurer (Agenda Item 6).

 

Susan Dickson, Head of Internal Audit, updated Members on the Internal Audit Plan for 2013 and the audit reviews which were being conducted. She confirmed that all but one of the recommendations proposed regarding the audit review of contract management had been accepted. All the recommendations regarding the cash audit review had been accepted. The outcomes of the income and expenditure audit review were now all green. Barry Lister, Assistant Director, confirmed that the software change recommended in Section 3.2 of the cash and receipts audit had been actioned. A summary of performance indicators for Internal Audit were circulated at the meeting. Susan Dickson confirmed that Internal Audit followed up outstanding recommendations until the risk rating was reduced to amber. It was agreed that the internal audit report should in future include a note on progress of reviews indicating any issues or trends.

 

Susan Dickson confirmed that there had been some delay in finalising the Audit Review of Contract Management as this had been a quite complex review and the Authority had needed time to consider its response to the Internal Audit recommendations. It had also been the case that there had been some delay as Internal Audit had had to divert its resources to priority work elsewhere for a period.

 

Resolved -

 

(a)      That the Contract Audit Report attached as a confidential appendix together with the Management Response to the recommendations be noted.

 

(b)      That the Cash Audit Report attached as Appendix 2 together with the management response to the recommendations be noted.

 

(c)      That the updated memorandum on the income and expenditure report be noted as set in Appendix 3 to the report.

 

(d)      That progress on the Internal Audit Plan for 2013-2014 as set out in Appendix 4 to the report be noted.

 

(e)      That the Treasurer seek tenders for the provision of internal audit services for the next 3 years.

23.

Corporate Governance pdf icon PDF 78 KB

Additional documents:

Minutes:

See report of the Treasurer, Clerk and Director (Agenda Item 7).

 

Diane Makepeace, Interim Head of Finance and Performance, updated the Authority on progress in strengthening its corporate governance as set out in the report. She confirmed that the level of overtime at Victoria Road was now falling significantly. Single Status had been implemented and there were no significant claims against the Authority. Budget savings had been identified and there was an expected underspend in the region of £1.7M in 2013-14. The pension re?evaluation had been delayed and a liability was being held against the outcome. The average sickness absence was now down to 12 days. The Authority had an older workforce and there were some extended absences. It was expected that sickness absence averages amongst remaining staff, following the transfer of staff to the new contractor, would be lower.

 

The level of reserves had improved and was now in the region of £3 to £4 million.  There would be some write?off of stock when sites were transferred to the new contractor and the Authority would no longer be holding inventories. The long term loan with Harrow Council stood at £3 million with an interest rate of 5.2%. Ian O'Donnell, Treasurer, stated that some of the reserves would need to be identified for specific contingencies. There was also a need to hold general reserves at a reasonable level as there were some big unknowns at the moment. However, the situation may change when the residual waste contract was bedded in.

 

Andrea White wished to acknowledge that very significant progress had been made in improving corporate governance and she wished to commend officers for the considerable amount of work that had been undertaken. The Landfill Allowances Trading Scheme had now ceased. The asset linked to arising for the residual waste contract was the waste plant and a liability would arise to pay for that through the 25 year life of the contract. There were a number of different asset options which could be considered at the end of the contract.

 

Resolved -

 

(a)      That the progress made with the Finance work plan set out at appendix 1 to the report be noted.

 

(b)      That the progress made with the Corporate Governance work plan set out at appendix 2 to the report be noted.

 

(c)      That the Accounting Polices of the Authority as set out in appendix 3 to the report be noted with particular reference to changes to the following policies:

 

Inventories

Landfill Allowances Trading Scheme

Minimum Revenue Provision

Public Private Partnerships

Disclosure requirements for IAS19 Pension provision

24.

Risk Register pdf icon PDF 68 KB

Additional documents:

Minutes:

See report of the Director and Treasurer (Agenda Item 8).

 

An agreement for the full recovery of the costs of operating the Victoria Road Amenity Site from the London Borough of Hillingdon was now being negotiated (Risk 23).

 

Jim Brennan confirmed that the recycling rate on average across the constituent Boroughs was approximately 40%. The contract assumption for the residual waste procurement contract was based on a reaching of 50% target for recycling. However, there was some headroom within the contract to take account of varying waste flows (Risk 3).

 

The replacement of the database for managing waste flow information remained as a task to be done (Risk 21).

 

It was suggested that it would be helpful, in the column which set out management actions planned, if there was an indication of the stage of completion and a likely timescale. The risk register was reviewed monthly by officers.

 

Resolved -

 

(a)      That the Risk Register review process be agreed.

 

(b)      That the content of the Risk Register as at December 2013 be agreed.

25.

Dates of meetings

Meetings of the Audit Committee are scheduled for the following dates at Houslow Civic Centre at 7pm on a Wednesday:

 

9 April 2014

18 June 2014

10 September 2014

Minutes:

It was agreed to change the date of the next meeting from 9 April 2014 to 19 March 2014.

26.

Internal Audit - Appendix 1 - Contract management

Minutes:

The contents of the confidential appendix were noted.  Please refer to minute 22 for a summary of the public discussion on the audit of contract management.