Agenda and minutes

Apologies were received from The Internal Audit Manager (FH), The Head of Finance and Asset Management, and the Monitoring Officer.

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 declared.

To approve as a correct record, the minutes of the meeting of the Governance, Risk & Audit Committee held on 11^th June 2019.

Minutes of the meeting held on 11^th June 2019 were approved as a correct record and signed by the Chairman.

Members to note the Final Statement of Accounts update.

The Chief Technical Accountant introduced the update and apologised that there were no audited accounts to be reviewed by the Committee at its July meeting as expected. It was explained that there were a number of reasons for this, and that at present no auditors were on site as work had been prioritised elsewhere. Members were informed that the accounts sign-off was now expected to take place at the September meeting.

Questions and Discussion

The External Auditor (MH) stated that the key reason for the delay in completing the audit of NNDC accounts was a difference of opinion between EY and the Council on how investments were treated. He added that the Council had sought a legal opinion on the matter and were awaiting a response. The External Auditor (MH) then confirmed that it was no secret that EY had suffered resourcing issues that had delayed audits elsewhere. As a result, Members were informed that EY auditors had been redirected to other authorities to allow time for an agreement to be reached on the accounting practices first. He added that there was no apportionment of blame regarding the disagreement, but stated that it had to be resolved before the accounts could be signed-off. The Chairman accepted that EY and the Council had a difference of opinion on accounting practices with regards to investments, and asked whether a compromise could be reached. The External Auditor (MH) replied that unfortunately there was no middle ground with regards to the accounting treatment of investments, and either the Council or EY would eventually have to accept the findings. The Chief Technical Accountant stated that both the Council and EY had been aware of the issue for over a year and had been working on a preliminary agreement, but had not been successful. She added that Councils that had sought a legal opinion on the issue had been supported by their findings, and as a result, it had been recommended that the Council did not change its accounts unless a decision was made otherwise. Members were informed that support was also being sought from CIPFA, and that if they backed Council’s opinion, audit firms could be expected to alter their opinion.

Cllr S Penfold asked for clarification of the reasons for the delay in signing off the accounts. The External Auditor (MH) replied that the accounting issue was the cause of the delay in signing off the accounts, and as a result, the decision had been made ten days prior to the meeting to divert resources elsewhere to authorities where there had not been a similar disagreement. Cllr S Penfold asked whether EY would be open to the possibility that they could be wrong. The External Auditor (MH) confirmed that it was possible that the legal opinion could change their position. He added that whereas the legal opinion might look at the nature of the investment, auditors approached the situation from an accounting perspective only. The Chief Technical Account stated that having to seek a  ...  view the full minutes text for item 6.

Contact Officer, telephone number and email:

Duncan Ellis, 01263 516330, Duncan.ellis@north-norfolk.gov.uk   

The Chief Technical Accountant introduced the Report and informed Members that the Corporate Risk Register would now be reviewed quarterly in order for the Committee to take on the responsibilities of the Risk Management Board.

Questions and Discussion

The Chief Technical Accountant stated that the MTFP risk score had been reduced, as Central Government had failed to announce a three year spending review. A one year review would likely be undertaken instead, with an expected 2% inflationary increase. This had the potential for the Council’s projected £2m deficit to be pushed back a year, allowing more-time to resolve the deficit.

A question was raised on mandatory business rates reliefs for NHS trusts, and it was confirmed that the Local Government opinion was that the trusts were not charities, and would therefore not be entitled to reliefs or returns. The Chief Technical Account added that NNDC was part of the business rates pool for Norfolk, meaning that if courts were to decide in favour of the NHS trusts, the Council would be liable for its share of the costs. It was stated that there were reserves of £2.5m set aside for that eventuality, but any shortfall would come from the general reserve. It was also expected that the Central Government should provide relief if the courts were to side with the NHS. The Chairman asked for clarification of the potential amount payable, to which the Chief Technical Accountant replied that nationally, the figure was approximately £1.5 billion, if backdated to 2010. It was suggested that any relief from Central Government would also take into account backdating, however, if the NHS were to win its case, the business rates pool may become less attractive to NNDC, as there were no large hospitals within the district. In response to a question from Cllr J Toye, it was confirmed that the decision could be appealed in court and this could allow Councils more time to prepare for any shortfalls by increasing their businesses rates reserves.

On coastal erosion, Members were informed that the sandscaping scheme had progressed well, and was reducing the risk posed by further coastal erosion.

On the IT outage that took place on the 11^th and 12^th June, Members were informed that a review and impact assessment was underway, but had not been prepared in time for the meeting. The Chairman added that to his knowledge, the IT issues had been caused by salt particles in the air used to cool the Council’s servers. He added that the issue would be added to the CRR.

On corporate projects, the Chief Technical Accountant informed Members that each project had its own risk register, but high risk issues would be added to the CRR.

RESOLVED

To note the Corporate Risk Register.

To note the Government’s proposed Terms of Reference for the independent review into the arrangements in place to support the transparency and quality of local authority financial reporting and external audit in England.

The Chief Technical Accountant introduced the Report and informed Members that Central Government had launched a review to check that external auditors were meeting their obligations, and it had been brought to the Committee for Members to be made aware that it was taking place.

Questions and Discussion

It was suggested that the central procurement that had been used to realise savings may have led to resourcing issues with external auditors. This suggested that savings had been made at the expense of the quality and timing of audits. It was suggested that the review was a good opportunity for local authorities to highlight their issues with external auditors to Central Government.

In response to a question from the Chairman, it was confirmed that a draft response was expected by December, and that the completion date of the review was set for April 2020. The Chairman informed Members that comments could be sent to the Chief Technical Accountant via email by October, to be ready to send by December.

RESOLVED

To note the Report.

To monitor progress on items requiring action from the previous meeting, including progress on implementation of audit recommendations.

The Democratic Services and Governance Officer (Scrutiny) informed Members that all items on the action list were complete.

As a result of the Risk Management Board work being taken on by the Committee, the Chairman informed Members that the Committee would soon begin to review the risks of projects prior to their implementation.

In response to a question from Members, it was confirmed that the Committee was fully independent and could make recommendations to Cabinet, Council or the Overview and Scrutiny Committee.

RESOLVED

To note the update.

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

The Democratic Services and Governance Officer (Scrutiny) informed Members that he would update the annual Work Programme to reflect the additional work of the RMB, and account for the final statement of accounts coming to the September meeting.

RESOLVED

To note the Work Programme.

To pass the following resolution, if necessary:

“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 part 1 of schedule 12A (as amended) to the Act.”

None.