Hounslow Council


Agenda and minutes

Venue: Committee Room 3, Ealing Town Hall, New Broadway, W5 2BY

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

Items
No. Item

1.

Apologies for absence

Minutes:

No apologies had been received prior to the meeting but it was later understood that Councillor Keith Burrows had been delayed and sent apologies for lateness.

2.

Declarations of interest

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

Minutes:

There were no declarations of interest.

3.

Minutes of the meeting held on 14 January 2015 pdf icon PDF 76 KB

Minutes:

The minutes of the meeting held on 14 January 2015 were confirmed.

4.

Any matters arising from the minutes

Minutes:

There were no matters arising from the minutes.

5.

Annual Internal Audit Report and Opinion Statement 2014-15 pdf icon PDF 345 KB

Minutes:

See the Annual Internal Audit Report and Opinion Statement 2014/15 – draft for Audit Committee as at 31 July 2015 – Agenda Item 5.

 

Martyn White, Internal Auditor, introduced the report, which provided a summary of the work undertaken in 2014/15. Delivery of the Internal Audit Plan had been achieved and all reports issued by 31 March. Paragraph 2.5 of the report at page 7 of the agenda pack showed the key findings from the 5 Internal Audit (IA) assurance reviews. These resulted in a reasonable assurance opinion. All were medium risk recommendations with positive management action. There were no high risk recommendations. Internal Audit had verified all the medium risk recommendations from 2014/15 as implemented. So the situation was now ‘business as usual’ with substantial assurance.

 

Section 3 of the report set out the Head of Internal Audit’s Opinion Statement in respect of internal controls, risk management and corporate governance. The opinion was based on the assurance work undertaken and other assurance from providers, external audit and management meeting notes. There were no high risk recommendations.

 

There had been no formal review of Risk Management the previous year but it was noted that the corporate risk register was report to the Audit Committee and identified actions by the management team to mitigate risk. So the internal auditors were happy with the governance arrangements. With regard to Corporate Governance, arrangements were in place via a Local Code of Corporate Governance based on best practice and approved in 2013. This might benefit from a refresh but no formal review had been undertaken.

 

It was noted that the Annual Opinion fed into the Annual Governance Statement. In respect of Internal Control, recommendations were mapped against a recognised model of corporate governance in order to identify potential control weaknesses. It was the case that the majority of recommendations related to control activities and to information and communications. Members needed to be aware of medium risks but each recommendation had been implemented and taken forward. This enabled the Head of Internal Audit to provide reasonable assurance that the system of internal control accorded with proper practice.

 

Mr White invited questions.

 

Andrea White, Independent Member, sought to understand what constituted the difference between reasonable and limited assurance. She asked whether there was a specific number of medium risk required to make this assessment. Mr White clarified that the approach was to consider the service and functions and gaps rather than numbers. Health and safety was a good example where each area had some limited and some reasonable assurance but overall considering the risks, the auditors were able to provide reasonable assurance. Mr White pointed out that the assurance levels and definitions were set out in Appendix B of the report.

 

He further explained that each audit report was subject to a three stage review to ensure consistency. So there was the opportunity through this process of review for a high risk recommendation to lead to limited assurance. There had been some health and safety concerns  ...  view the full minutes text for item 5.

6.

Internal Audit 2014-15 recommendations - follow up pdf icon PDF 322 KB

Minutes:

See the Internal Audit Follow Up report 2015/16 – Agenda Item 6.

 

This item was discussed under Item 5 above.

 

Resolved:

 

That the report was noted.

 

7.

External Auditors Report on the audit of the 2014-15 accounts pdf icon PDF 517 KB

Minutes:

See the external audit report by Deloitte – Agenda Item 7.

 

Matt Hall and Quraisha Rawat from Deloittes, introduced the report. The audit was substantially complete so they expected to be able to issue an unmodified opinion. The accounts were ready to sign that day. This had been a very smooth audit process as Jay Patel and the Finance team had been very well prepared.

 

Quraisha Rawat drew attention to significant risk areas. One such was the capital expenditure on the new SITA facility and the accounting treatment of the expenditure, for example misallocation of a single invoice could have an impact on the development. Another was around the recognition of revenue from levies. However, in both cases testing did not identify any issues. A further risk related to revaluation of properties. A specialist had been engaged to look at valuation and valuation reflected the upward movement of properties. However, for next year it was recommended that there should be a full valuation in line with the policy to value every five years. The auditors had not identified any concerns around provision for doubtful debtors. They had tested the pattern of management override of key controls through testing journal entries. There had appeared to be a large number of overrides and the auditors had focused on unusual examples. However, it appeared that the volume related to the transition to the Agresso system and new codings. It was recommended that management continued to track these overrides.

 

Andrea White, Independent Member, noted the statement at page 36 of the report that the original valuer was not compliant with professional standards. Jay Patel, Head of Finance and Performance, explained that there had been procurement activity and they had asked for a range of quotes. However, they needed to be more prescriptive about following the ‘Red Book’. In this case, the valuer had let them down and they had reviewed the work to achieve tighter performance.

 

In response to a further question, Mr Patel explained that they had not seen a reduction in the journal entries. These were high but stable because of the nature of transactions. Cash back journals would be done manually as it was costly to automate these. It was aimed to reduce the numbers as much as possible.

 

Quraisha Rawat referred members to page 41 of the report and the recommendations made in respect of a number of risk management and control observations. One of these recommended an internal audit of the fixed asset register next year. She also drew attention to the Appendices. Appendix 1 showed audit adjustments, Appendix 2 the auditors’ fees and Appendix 3 the draft management authority letter. Finally, she thanked Jay Patel and his team for their co-operation and time. There were no further questions.

 

Resolved:

 

That the report was noted.

 

8.

Assurance Statements pdf icon PDF 55 KB

Additional documents:

Minutes:

See the report of the Clerk – Assurance Statements - Agenda Item 8.

 

Jay Patel, Head of Finance and Performance, introduced the report. The Assurance Statements formed part of the governance framework. They involved self assessment by managers. The Assurance Statements were set out in Appendix 1 of the report. The systems and controls in place were suitable to approve the Accounts. There were four areas to enhance including a review of the IT strategy and three actions related to contract management.

 

The Chair congratulated Jay Patel on the report.          

 

Resolved:

 

That the Committee noted the Assurance Statements in Appendix 1 of the report.

9.

Risk Register pdf icon PDF 54 KB

Additional documents:

Minutes:

See the report of the Treasurer and Director – the West London Waste Authority Risk Register – Agenda Item 9.

 

Jay Patel, Head of Finance and Performance, introduced the report. This was a standing item for the agenda. Appendix 1 of the report set out the risks for the Authority, with mitigating actions and residual risks. The traffic light system was used to highlight the level of risk. All but one was shown as ‘green’. The register was reviewed and updated every six weeks at a Chief Officer meeting. The one risk rated ‘amber’ related to a contract dispute with SITA which had been the subject of a report to the June Audit Committee.

 

Mr Patel invited questions.

 

Andrea White, Independent Member, asked about Reference P3 and the management action in April 2015 to introduce a strategy for managing contracts. Jim Brennan, Director, advised that the strategy was completed and in use. The contract for manual use was used as a blueprint for smaller contracts.

 

There was a further question about Reference P6 with regard to the IT security provided by the London Borough of Ealing and how the effectiveness of this was monitored. Jay Patel advised that the Service Level Agreement (SLA) with Ealing had been updated to include targets for data security as these were previously in the SLA. This tied the Authority into policies and procedures with extensive data security. So by default the Authority could observe how effective the service was which Ealing provided.

 

Resolved:

 

That the Committee noted the content of the Risk Register as at August 2015 (Appendix 1 of the report).

10.

Statement of Accounts for the year ending 31 March 2015 pdf icon PDF 82 KB

Additional documents:

Minutes:

See the report of the Treasurer – Statement of Accounts for the year ending 31 March 2015 – Agenda Item 10.

 

Jay Patel, Head of Finance and Performance, introduced the report. The Audit Committee were asked to recommend the Accounts to the Authority to approve. A draft of the Accounts had been available in June and external audit had considered the accounts since that date. The final outturn figure showed an improvement of £89,000 on the draft presented in June but otherwise the accounts were substantially the same as the draft seen in June.

 

The June report to the Audit Committee had highlighted financial performance from taking a more strategic view with better control of costs, including the cost per tonne. The figures now showed small surpluses and contributed to reserves. The financial strategy had seen improvement from a previous negative position in net assets. There were now healthy reserves and capacity to deal with risks in year.

 

Andrea White, Independent Member, asked where the reserves policy was and how it compared with what was before members. Jay Patel explained that reserves had been developed as part of the budgeting process over the last couple of years to ensure that there was a suitable buffer. For 2014/15 the level had been maintained but was slightly below the target level, based on various information including benchmarking of other waste authorities and identifying key risks. Authority members had that the next reserve setting should be more grounded, based on looking at individual risks.

 

Andrea White noted that there had been a small reduction in the staff numbers but a significant reduction shown in employees’ costs. Jay Patel noted that a decrease in staff numbers had led to a decrease in staffing costs. The costs had not fallen as much as they would like because of redundancy payments from the Victoria Road closure. The external auditors had included these in last year’s figures. Jim Brennan, Director, also clarified that the staffing level in 2014/15 included TUPE transfer and hence pension liability costs. The pension fund valuer was using a higher discount rate as a snapshot than the previous year. The reversal of the gain made last year illustrated the volatility of the discount rates used for the valuation.

 

Resolved:

 

The Committee recommended to the Authority that they approve the Statement of Accounts for 2014/15 as set out in Appendix 1 of the report.

11.

Urgent business

Any other items which the Chair accepts for consideration on the grounds of urgency.

Minutes:

There was no urgent business.