Agenda and minutes

Apologies were received from Cllr Dr P Butikofer.

Cllr A Brown substituted for Cllr Dr Butikofer.

To receive public questions, if any.

None received.

To determine any items of business which the Chairman decides should be considered as a matter of urgency pursuant to section 100B(4)(b) of the Local Government Act 1972.

None received.

Members are asked at this stage to declare any interests that they may have in any of the following items on the agenda. The code of conduct for Members requires that declarations include the nature of the interest and whether it is a disclosable pecuniary interest.

None.

Minutes of the meeting of the Governance, Risk & Audit Committee held on 8^th March 2022 will be approved at the June 2022 meeting.

The Chairman informed members that due to the close scheduling of meetings, the minutes of the meeting held on 8^th March would be presented to the 8^th June meeting for approval.

To review and approve the 2019/20 Final Statement of Accounts.

The Director of Resources and S151 Officer, introduced this item. He explained that the accounts presented to members were for 2019/20. He apologised for the lateness of the report and said that the Finance Team had been working hard with the Auditors to address the backlog and he was pleased to now present the Statement of Accounts for 2019/20 to the committee. He said that it included the External Auditor’s report for 2019/20 and the Letter of Representation. He added that an updated version of the Annual Governance Statement 2019/20. This had been slightly amended following discussion with the Auditors. He then said that there had been no unadjusted mis-statements, which was a positive outcome.

Before providing an overview of the Statement of Accounts for 2019/20, the Director for Resources updated members on the schedule for upcoming audits. He said that audit for 2020/2021 was scheduled for July 2022 and the audit for 2021/2022 was due for February 2023. At this point, the delays would have been addressed and the schedule would be back on track.

The Director for Resources then explained that the accounts were produced in line with the CIPFA LASAAC Code of Best Practice. He said that discussions continued as to how the Council could make the accounts more accessible and easier to understand for the public, as the document was lengthy and quite complex in parts. He added that it was a prescriptive format and the Council was limited as to how it could change the layout and presentation. There was a narrative report at the start of the document, which was prepared by the Director for Resources and which provided a commentary on the Council’s financial performance for the year. There was also a Statement of Responsibilities which was signed by himself and the Chairman of the Committee. He then outlined the key elements of the narrative statement and spoke about the core financial statements, briefly explaining each section.

The Chairman invited members to speak:

Cllr A Brown asked about gender pay balance and whether the Council was comfortable with the current position and if any contingency funds should be set aside. The Director for Resources replied that he was satisfied with the current situation. There was a robust job evaluation process in place which reviewed the equality of the job based on any requirements of the role rather than gender issues. He added that there was capacity within the general reserve to provide any funding if required but he did not anticipate this being needed.

Cllr S Penfold asked about pension funds. He asked about investments of the fund, particularly links to Russian state owned ventures. The Director for Resources confirmed that the pension fund was managed by Norfolk County Council and said that they were currently reviewing investments and any links to Russia. He said that he would share any updates on this with the Committee.

Cllr N Dixon asked about background. He said that in the past, the committee had undertaken training  ...  view the full minutes text for item 7.

To receive and approve the letter of representation.

The Chairman said that he was required to sign the Letter of Representation on behalf of members, however, he was aware of some issues, that may need to be addressed during the private session of the meeting and he therefore proposed  delaying signing until such discussions had taken place.

It was proposed by Cllr C Cushing, seconded by Cllr S Penfold and

RESOLVED

To consider the Letter of Representation following Agenda Item 12.

To review and approve the updated 2019/20 Annual Governance Statement.

The Director for Resources introduced this item. He explained that some minor updates had been made to reference the External Audit Results Report and the two Police investigations – which were included at paragraphs 5.1 and 5.2 of the revised Annual Governance Statement (AGS).

The Chairman advised that approval of this item would be held back until later in the meeting when other relevant matters had been considered.

To receive and note the EY External Audit Results Report 2019/20 and the management response to the report.

The Chairman invited Mr M Hodgson, from Ernst & Young (EY) to present the External Audit Results report for 2019/20 . He began by saying that he would split his presentation into two parts starting with the audit of the financial statements. He said that there was a materiality level of £1.21m for this audit and he was reporting any audit differences above £56k. He informed members that there was one late emerging issue which he would cover later. He explained that there were six audit differences to be adjusted. The biggest of these was the ‘Better Broadband for Norfolk’ scheme, which at £1m was below the materiality level. He said that this expenditure should have been classified as revenue expenditure classified under statute (REFCUS) rather than as an intangible asset. All of the audit differences had been adjusted now within the financial statement. 

Mr Hodgson then moved onto areas of audit focus. He explained that this section set out observations and conclusions including areas where there may be potential risk.

Taking the above sections together, he said that the report provided the committee with assurances that there was a low level of audit differences and none were individually material and there were no unadjusted differences. EY had gained all the assurances that they required against the audit risk areas. In conclusion, he said that ordinarily this would lead him to conclude that External Audit could issue an unqualified opinion on the financial statements presented to the committee. However, he said that there was an emerging issue nationally regarding infrastructure assets which had come to light in the last 2 -3 weeks. This was referenced on pages 68 and 69 of the Financial Statements. He said that the carrying value of infrastructure assets was £5.3m – above the materiality level of £1.21m. The issue was that for this type of asset (in this case coastal defences), any addition to the balance sheet should either be a new asset or a replacement part for an existing asset, with the replacement part being de-recognised and removed from the balance sheet. He said that it was very difficult to place a value on some of these assets as they had been constructed so long ago and records no longer existed. The challenge was that many of the ‘carrying values’ as at 31^st March 2020 were often over-inflated as they included the original value and any additional costs with nothing removed, so they were materially mis-stated. He said that External Audit was working with the Council’s finance team to establish which assets the Council’s infrastructure records related to, when were they originally put in, had they exceeded their useful life (20 years) and are any additions a new asset or a replacement for an existing asset. This was taking some time. CIPFA was considering this issue and there was a consultation underway which may result in a change going forwards, however, it was likely to be at least two months before an  ...  view the full minutes text for item 10.

To review the Governance, Risk & Audit Committee Work Programme.

The Democratic Services Manager advised the committee that there were no substantive changes to the work programme. It would be updated to reflect the approval of the accounts for 2020/21 and 2021/22 – as advised by the Director for Resources.

To pass the following resolution, if necessary:

a.         That under section 100A(4) of the Local Government Act 1972 the press and public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in paragraph 1 & 2, Part 1 of schedule 12A (as amended) to the Act, and:

b.         That the public interest in maintaining the exemption outweighs the public interest in disclosure for the following reasons:

Agenda Items              Paragraph of Part 1 Schedule 12A

13                                1 & 2

Information relating to any individual or information which is likely to reveal the identity of an individual and the public interest in maintaining this exemption outweighs the public interest in disclosure

The Chairman explained that members would now go into private session to consider the next agenda item. He said that the following members were invited to remain as in his view, they were able to bring a special contribution to the issue being considered. These Members were Cllr N Dixon, Cllr V Gay, Cllr E Seward. Cllr R Kershaw may be joining the meeting later.

It was proposed by Cllr A Brown, seconded by Cllr P Fisher and

RESOLVED

As detailed in item 12 of the agenda, under section 100A(4) of the Local Government Act 1972 that the press and public be excluded from the meeting for the following items of business (discussion of a supplementary page in the EY Audit Results Report) on the grounds that they involve the likely disclosure of exempt information as defined in paragraphs 1 & 2 of Part 1, Schedule 12A to the Act.

The Committee considered this item in private session.

At 1.00pm, it was proposed by Cllr A Brown, seconded by Cllr P Fisher and

RESOLVED

To admit the press and public to the meeting and move back into public session.

The Chairman welcomed the press and public back to the meeting. He said that the following items had been discussed earlier in the agenda and now needed to be resolved:

1)    Agenda Item 7: Final Statement of Accounts 2019/20

It was proposed by Cllr A Brown, seconded by Cllr S Penfold and

RESOLVED

That subject to resolution of the Infrastructure Assets query, delegated authority be given to the Chairman alongside the Chief Financial Officer to approve the Final Statement of Accounts 2019/20

2)    Agenda Item 8: Letter of Representation 2019/20

It was proposed by Cllr A Brown, seconded by Cllr S Penfold and

RESOLVED

To sign the Letter of Representation 2019/20 with the following additional wording at Section B, start of paragraph 4:

‘With the exception of ‘Section 5 - Value for Money Statement’ within the Annual Audit Results Report and the resolution of the infrastructure assets issue’

3)    Agenda Items 10 and 13 – EY External Audit Results Report 2019/20

It was proposed by Cllr A Brown, seconded by Cllr H Blathwayt and

RESOLVED

To receive and note the External Audit Results Report 2019/20 and Management Response and to agree subject to the resolution of the Infrastructure Assets query (as at Agenda item 7) and the decision taken under Exempt Item 13 below:

Agenda Item 13 – EY External Audit Results Report 2019/20 Supplementary Page, Section 5, Value for Money Statement

To consider an external desktop report, prepared on the learning points from a review of the Council’s disciplinary procedures and for the learning points to be considered at a future Governance Risk & Audit Committee meeting, a date for which will be advised by the Democratic Services Manager