 Good Morning Members, officers and members of the public who are joining the livestream of this meeting. Welcome to this meeting of the Audit and Corporate Governance committee. My name is Councillor Michael Atkins and I am the chair of the committee. As this is the first meeting of the municipal year, I would like to thank the previous committee for their work. I am delighted that Councillors Heather Williams, Hale's a Jeff Harvey have kindly agreed to serve on the committee again and I would like to welcome councillors Peter Sanford, Vice-Chair Richard Stobart and Helen Leaming to the committee. Please can those present in the council chamber note that everything on your desk including your laptop screen is likely to be broadcast at some point. The camera follows the microphone that is currently switched on so your advice to wait a few seconds before speaking to allow the camera to catch up with you. If you're participating in the meeting by the live stream I don't believe we have any members of the committee on the live stream but if you wish to speak please do so via the chat function but do not use the chat function for any other purpose. Please make sure your device is fully charged and that you keep your microphone on mute unless you are invited to do so. Please switch off or silence any other devices so they do not interrupt proceedings. Consider using a headset when speaking and hold the microphone close to your mouth so that we can hear you clearly. And finally when you're invited to address the meeting make sure you switch your microphone on and then immediately switched off again after you have finished speaking. Please speak slowly and clearly and do not talk over or interrupt anyone. Some nice advice for life that agenda item one apologies Patrick for any apologies for today naturally have no apologies every single committee members present fantastic. Thank you all very much for being here agenda item two declarations of interest. Do any members have interest to declare in relation to any item of business on the agenda. If it subsequently becomes apparent later in the meeting please raise it then. I should probably note that I'm a non remunerated director of South Cairns Ltd trading as women's street housing. Thank you very much. Are there any other Heather Williams. Thank you chair. There are references to city deals and things in relation to the Greater Cambridge partnership of which I'm a assembly member. Thank you Councillor Williams and Councillor Joe's hails. Thank you chair. I'm not sure if these eight is actually a declaration but I'm a trustee of noble mobile warden scheme which receives a grant from South Cairns that provides mobile warden funding. Thank you. I'm I'm I've just been appointed director South Cairns one of the South Cairns directors for South Cambridge investment partnership and South Cambridge holdings LLP. Thank you Richard Patrick. Have you got all of those? Fantastic. Okay agenda item three minutes of the previous meetings. We've got before us minutes of the meetings held on the 29th of March and the 7th of April. First of all I need to ask if they're a correct record. Yes. Just to mention I wasn't present on the 29th of March so I'll have to stay from that item in case you think you're taking them together. I mean I was going to take them by affirmation but that's fine I'll take a vote in that case. There was one action arising from the meeting of the 29th of March which was a topical question from Councillor Mark Howell as to whether the council had any direct investments with Russian gas or perhaps Russia more widely. I don't know Peter Maddock Head of Finance if you have an update for us on that. Yes I can confirm that we've done it. Fantastic. Thank you very much. I think in general other Peter it would be helpful to sorry Patrick it would be helpful to have an action log perhaps for future ministers so we can keep track of some of the points that are very well raised. Okay if members are happy can I see all members in favour of approving the minutes of the 29th of March. Thank you any against or any abstentions. Very people not here. Yes 7th of April can I see some votes in favour of approving the minutes of the 7th of April. Thank you any votes against. And some abstentions for not being here. Fantastic thank you. I think those are both approved so I will sign those at the end of the meeting. Turning to the rest of the agenda we do have to reorder the items for which I apologise as there's been some late clarification as to the proper procedure for authorizing these. So we're actually going to move now to agenda item 6 the annual governance statement and local code of governance. I've been advised that this needs to be approved in advance of the draft statement of accounts so we will take agenda item 6 and then we will revert the normal running order for 4 5 and onwards. Thank you good morning. Thank you so agenda item 6 is the annual governance statement and we are being asked to approve the annual governance statement and can I please invite Jonathan Tully head of internal audit who's joining on the live stream. To please present this report. Thank you. Good morning chair. And thank you for the clarification over accommodating the change to agenda much appreciated. Good morning to all of the committee. I hope you are. So I'm just going to briefly talk you through the annual governance statement reports for today. We're heading to page 151 of your agenda pack. And so just by way of a background, it's good to recall that the council and audit regulations require the council to review our governance arrangements annually. And we prepare a document known as the annual governance statements, which are for as an AGS to accompany the statement of accounts. The main purpose of the AGS is to communicate how we're complying with our local code of governance. So explain a little bit about that in the reports. So if I can draw your attention to page 153. Just highlight, I suppose that the AGS reflects governance matters from the relevant financial year 2019 2020 plus up to the date when the accounts are signed. So obviously that's quite a long time period. Now, it's worth reflecting that the previous annual governance statement for 2018-19 was approved with the statement of accounts just recently in March 2022. So consequently, I suppose from that, what I would suggest is that there's not been any significant changes to our governance arrangements in the council since that time of publication of the previous documents. I think despite that period between the two documents, it still provides a good opportunity for us to reflect upon things which have happened in the 1920 financial year. We do that through the section called the review of effectiveness. In paragraph 14 on the same page, I'll just highlight the fact about material changes. It's absolutely right to reflect something significant between the financial year and the report dates and when the statement of accounts are signed. So for example, what we'll see in this year's annual governance statement is the impact of coronavirus. So although that really started to happen in the sort of 2020-21 financial year and its full impact, it's absolutely right to reflect it in this annual governance statement. So the AGS is actually, it's on pages 83-95 of your agenda packs. As the statement of accounts includes the annual governance statement, we wanted to try and help the environment and not print off paper unnecessarily. So hopefully you've been able to find that in there. But what we do is we have a separate agenda item for the annual governance statements because they do need to be approved in advance of the statement of accounts. That's a legislative requirement, so it helps just draw attention to that matter. So with your approval, we're going to be able to progress the documents. It will then go through the statement of accounts process of being reviewed by the external auditors. Should something materialise, hopefully it won't, but by the external auditors, we want to go back and just update the annual governance statement. Of course, we'd inform the committee of that. Also on page 153, I refer to the local code of governance. Because the purpose of the AGS is to review the local code of governance. And that's on page 155 of your packs. I'd like to apologise actually because I submitted it with track changes. So those of you that have seen the previous version could quickly see the changes. But unfortunately, when it went through the report printing process, the track changes were removed. So I'm happy to circulate a version if anyone wants to see that. But there aren't that many, so I can simply talk through them. On page 160, we update basically a definition name. The Joint Development Control Committee changed to a joint planning committee, so nothing significant changed there. On page 162, we have an equality scheme and that's been reviewed and updated. So the time period has changed from 2015 to 2020 to 2020 to 24. On page 164, one of the documents that features is to do with efficiency. We used to refer to it as efficiency programme, but now it's a transformation programme. So again, just a name change. And then finally on page 165, where we used to have what was called an executive management scheme. We now have a leadership team. So again, just a small name change. So nothing really significant there, but I'm happy to share that change. A track change version if anyone does require it, please let me know. And the final thing, which is I suppose new on the code of governance is on page 173. That's the seven principles of public life, which was something that I introduced to our code of governance a few years ago. And a lot of councils are doing that now as best practice because it applies to anyone that works in the public sector. Just to note really there that under the seven principles, the supporting narrative to explain them, that was changed and updated by the actual committee that looks at the principles of public life. So we've just reflected and updated that accordingly, but the principles are still the same. So sorry to throw you around the agenda pack, but going back to the annual governance statement itself, that starts on page 83 of your packs. The things which I would like to highlight and draw out for your attention on this are I suppose briefly the roles and responsibilities. That's a section which talks about how the governance arrangements of the council are structured. So we see different committees detailed there and no major change to previous years, but we did have changes to the senior leadership team in that period. So we reflected that in the reports on page 87. And I sort of mentioned this in the covering introduction. We include a section about the impact of coronavirus. It's absolutely right to include that there and sort of provide some assurances about how we're responding and dealing with that because it did have a big impact on our governance arrangements. On page 91, this is our review of effectiveness. So this is our opportunity to look back at how we've complied with a code of governance during the year. And what we would typically include in here are sort of one-off events. If there are things which happen regularly, that's something that features in our code of governance itself. But if it's something which has happened particularly in that financial year, then we draw attention to it here. And what I like to do, I like to categorise it by the seven different principles. So that really helps draw attention to how we're delivering each of those principles. And it's also a good gap analysis in any one of them. So that's a really good way of structuring it. On page 93, we have our opportunities for improvements. So again, just bear in mind that it's not long since our previous annual governance statement. We do refer having an action plan update in the document as well. But the three things that we've identified to work on are capacity for decision making. Resources too, and of course these have both been extremely affected by external events such as the pandemic. And the third, final one there is the financial reporting and our sort of action plan for getting back on track with approving the statement of accounts. The final part of the AGS is the conclusion. So following the external audit review, what we do is we sign the AGS as best practice just to sort of demonstrate our commitment. To good governance. So just by way of summary, coming back to my reports. So just for clarity, members, you have to approve the annual governance statement in advance of the statement of accounts. The previous annual governance statement for the previous financial year has only just been approved. So not a huge amount of change, but we have reflected 1920 matters. And yeah, it's in the statement of accounts. So that's probably all I wanted to do to talk through it. I'm happy to take comments or questions. Thank you very much, Jonathan. Councillor Heather Williams, you wanted to speak. Thank you, chair, through yourself. You haven't made any significant changes, opposite to the report, from when we saw it before. So I have no qualms with us endorsing it. I am a fan of track changes. And actually they were because I think Jonathan's nodding because I've raised that before. So if we could please find out why what happened happened because they're really very minutia points that have been changed. So for the future planning chair, if you could try and iron out these IT issues that removed the track changes that I'm ever so fond of. Thank you very much. I mean, it strikes me for an evolving document like local code of governance. It might be appropriate to have a kind of change management kind of cover sheet for it that says, you know, this version is version, you know, X point Y. These are the things that have changed since the previous version. I appreciate it's a continually evolving document, but that would help us kind of stay on top of it. Are there any other members of the committee that would like to ask any questions either about the report. Halfway through the pack or the annual governance statement at the back of the draft statement of accounts. Councillor Hales, thank you. Just a silly little thing. I'll kind of indicate to Peter on page 94 of that pack where you've got the governance chart. It's obviously self-explanatory capacity for making decisions, et cetera, and then the explanation. But the responsible officers column is far too close to the actual paragraph. And if you actually read it, you miss out one small word of A or of, it looks like it's a sentence. So I'm just wondering whether we could move that because it completely changes that context of that paragraph. Thanks. Thank you very much. I have one or two very brief questions. So obviously the action plan presented, also the opportunities for improvement presented on pages 93 and 94. There's only three items there. Will the items from the 1819 HES be carrying forward as well? So there's review of the constitution, same account, all the kind of eight or nine points that you raised there. Are those carrying on as well into the next annual governance statement? That's right. Of course, we only just agreed them recently. What I keep in the background with all my compiling documents for the annual governance statement is a sort of a workbook of all these actions. So yeah, they're still in progress. We'll see a feature about how they've been progressed in our next HES as well. Thank you. On page 91, in the start of the review effectiveness, you say that the council has a positive risk appetite. Could you just define what you mean by that? Yeah, absolutely. So risk appetite is, I'll just start with the basics. Risk appetite is how prepared we are to take risks. So you could have a very, very strong risk appetite, which could be perhaps a little bit reckless, or you could have a risk averse appetite where you're frightened to take any risks. The right healthy place to be is sort of just beyond the middle by having a positive risk appetite where we are prepared to take on those challenges and risks. We need to be able to think agilely, be transformative and think commercially in some aspects. So it does mean that it's managed. It's not completely reckless, but it is positive to actually have a risk appetite and be prepared to take on those challenges. Thank you. Turning back to page 89, just one or two of the points on the action plan from the previous HES. On the section on control accounts, it says that management now have processes in place for monitoring the reconciliations and that processes will be reviewed to perhaps simplify the process. Can perhaps either either yourself or Peter Maddock talk a little bit as to what that work is, why it's taking place and where we've got to with it. I'm happy to start off and then Peter can come in, but it's probably a joint double act. Where we were, I suppose a couple of years ago, is that the control accounts weren't being done regularly at the time. So we identified that as an opportunity improvement of something picked up by the external auditors as well. We've had various different changes. We've implemented a new financial management system. So it was just a great opportunity to make sure that all those processes were more robust. Yes, if I can just add to that, certainly over the last year we've done a lot of work looking at our reconciliation processes. I think it's fair to say some of them were quite clunky, if that's the right word. So we're looking to streamline the processes that we have, make better use of technology and just make sure that we do them in a timely fashion. And set clear targets for when each reconciliation needs to be complained about. Thank you Peter. Councillor Helen, do you want to come in? Different question, which is to do with the digital strategy on page 88. It ties in a little bit with the control accounts as well. So I can see that the council has launched a new self-service portal in this period. And I wondered what work was done to ensure that this integrated well with the council's existing systems, whether there were controlled accounts or additional internal audit work to ensure that this new project integrated well with the other financial systems. I'm happy to take that question. So it actually is something on my long-term audit plan to do some work in that area. Exactly as you suggested to consider how well it's embedded and integrated and whether there'll be any further opportunities to improve upon that. So I haven't done anything at the moment, but it is on our forward plan. Thank you. We can perhaps come back to that when we talk about the internal audit plan later in the meeting. Is there anyone else who wants to come in on the annual government statement? Councillor Jeffer. Yes, I'm just looking at page 94. The sighting, for example, the impact of COVID-19, ongoing effects of Brexit, et cetera. I was thinking, well, if one's going to include those as I suppose risks, really we should perhaps also include what appears to be the end of a long period of global stability. And we've got very likely enough coming when we have got a cost of living crisis, but it's going to get worse this winter. And I just wondered if that was given that we've mentioned Brexit and COVID-19, that seems to be on a similar, if not greater level of concern. Again, happy to take that. Yeah, this fun enough, it was something that I was reflecting on this morning, actually fun enough. When we sort of prepare these documents, we do have to think about significant events. And it probably won't come as a surprise, I'm part of a professional network, I liaise with SIPF and things like that. And we have training and meetings to discuss these sort of things and what should be reflected. And I think of thoughts where at the time, under sort of significant issues, these didn't fall into that category as yet. But I am beginning to reflect upon that around whether it does definitely have a big impact upon our resources as we divert resources to assist with these challenges. So, I think where I sit at the moment, probably where I feel, is that probably not to include in this document, but it would be appropriate to perhaps include in the next annual governance statement. But it's definitely a very good consideration. Thank you, councillor, I'm sorry to speak. So, there was a mention just a few moments ago of the term agility in respect of, I mean the governance process and I expect in particular with reaching decisions. So, I think you were suggesting, Jonathan, that recent experience has perhaps informed the need for agility but also some of the solutions. Could you comment on the notion of agility and how it's being achieved and where it's appropriate? Yeah, it's probably quite a broad topic. Some good examples are supposed to draw upon in the context of the annual governance statement would be how we responded to the COVID pandemic. You know, we really had to move at pace in the way that we worked. We could see that in terms of governance arrangements through the way that we had public meetings and how that had to adjust, how we brought in hybrid working, how that affected our employees and colleagues as well, how we worked. Fortunately, we were quite lucky in that we did have some good ICT infrastructure set up, which enabled us to work remotely. So, a very fundamental level in terms of our capacity and capability, we had to be agile and work differently. And I think looking back personally, my opinion is that we actually coped reasonably well with that in the scope of that challenge. We did continue to do a lot of key business, but also a lot of the work which came around that with things like the risk management of trying to respond to the crisis and then delivering things at pace like the business grants. So, there's obviously a lot of internal control and risk impacts to that, a lot of sort of stakeholder engagement and customer focus. So, I think those are some really good examples of how we've had to be agile and rapidly respond to these sort of external factors. I don't know, just ask a follow-up. So, in the future if we were to say, well, things have been quite stable for a time, but we want to check how agile we are. Is there a kind of scenario set of tests that might apply to the governance process that would check it out? You know, that's a really good question, probably not one that I have got an immediate answer to. I mean, we have various different, you can look at it from two different lenses perhaps. In terms of business continuity, I mean, we do have opportunity to test plans and things like that. So, we do that, but I feel maybe even goes even broader, doesn't it, when you're thinking about agile working. It's trying to almost predict and do a little bit of horizon scanning what's going to come over the radar as well. So, and we do kind of pick up that as part of the governance process. We try and think about what emerging legislation might be and emerging risks, but whether there's a good test for it or not, that will probably be something I have to go away and have a think about. Thank you. Councillor James. Yeah, thank you. Jonathan, I'm too busy to be rude or anything like that, but I kind of like to take issue with the word reasonably when it regards to the COVID, the response to the council had with COVID. I think we use the word agility. I'd like to compare the council to a gazelle actually with regards to its agility because it felt like it was days if not perhaps a week when we were. In my humble opinion, running a full capacity when it came to responses from the council, the advice coming out from council, et cetera, et cetera. So, I just wonder whether that part could be emphasised because this was an example of our council working at 150% of its normal daily work, if you like, to deliver something to protect. Hundreds of thousands of people. I can't give you the words without bursting into tears, frankly, because it was such an emotive process. Thank you. Yes, sorry, Councillor Williams. Thank you. Thank you, Chair, for letting me come in there. I think, and Jonathan will shake or nod his head that the term reasonable is, you've been using the technical of reasonable assurance and everything else. But I would associate myself with comments that officers did work incredibly hard to divert their resources and get us up and running as quickly as they could. So, very much my views are alongside Councillor Hales on that one. I think it's just as a technical term, but for the record, I think we all agree with you. Thank you. I mean, we could perhaps look to strengthen some of the language there around the council's COVID response, but I'll leave that perhaps with Jonathan to take away. Unless there's anyone else who wants to come in, I'm going to move to recommendations. So, we have been asked to approve the annual governance statement for 2019-20. Peter, are you happy to take a note? Yes. Agreed. Okay. I've mentioned thank you very much. That concludes Gender Item 6. We now revert to the normal course of business with the Gender Item 4. So, this is the draft statement of accounts for 2019-20. The committee is asked to review the draft statement of accounts and comment. We're asked to note that the audit is ongoing, the time scales for completion and the timetable for getting the remaining accounts in order to date. I've also been asked to move a new recommendation, which I will do after we've discussed it, which is to approve the draft statement of accounts 19-20 for audit. I hope nobody objects to me moving that at this late stage. I'm sorry that the papers weren't completely clear on that front. So, I'd now like to ask the head of finance, Peter Maddock, to present the report and the attached statement of accounts. Thank you, Peter. Thank you. So, the statement of accounts itself starts on page 13. And as I talk about the accounts, I'll refer to the big page numbers, rather than the little ones in the corner. So, presented here are the draft statement of accounts for the year 2019-20. And I'll just quickly pick one or two highlights out from the accounts if that's okay. So, if we turn to page 24. So, 24 and the following three pages contain what we call the core statement. So, all local authorities will have these statements within their accounts. So, the first one is called the comprehensive income and expenditure statement. And this reports the activity for the year in terms of our income and expenditure. One thing you will notice within that statement, we report a deficit of 1.189 million. Just to clarify that in a little bit more detail, that doesn't mean to say that we made a deficit overall because you have to take the statement on page 24 and the statement on page 25 to fully appreciate the performance of both our general fund and our housing revenue account. So, if we take the general fund, for example, you'll see that the actual performance of the general fund, which is the second row up on page 25, was a surplus of 318,000. So, that was the overall performance of the general fund. So, the statement called movement to reserve statement, which we refer to sometimes as the MERS, that statement contains all of the adjusting items that we have to put in to bring us back to the amount that we can charge against the council tax or housing rents depending on whether it's general fund or housing revenue account. So, for example, in the comprehensive income and expenditure statement, we have to account for depreciation in relation to our assets, and that's in line with proper accounting practice. However, we are not able to charge that against the council tax. So, in the movement in reserve statement, we have to remove that charge. And there were a number of other items like that. So, if we move on to page 26, we have the balance sheet, and it's a statement of what we own and what we own. So, again, I'll pick up a few highlights there. For example, the largest item on that is our property, plant and equipment at £550 million. And the biggest element within that will be our council dwellings. And these are valued based on existing use with tenants in occupation. And you'll see that's increased in value by some £41 million. We have professional valueers that will look at our housing stock and will value it based on their expertise. And that will be something that the auditors will be looking at and satisfying themselves whether they've done that correctly or not. For the first time, just below that, we have a line for investment properties of £24.6 million. And we bought three such properties during the year. So, that's a new item that appears in the balance sheet for the first time. We've also reclassified long-term investments, and that relates to Erming Street. We've had the latest business plan, and that suggests that the loans that we make to them will not be paid off until 2045. In real terms, they are long-term investments rather than short-term. The other item potentially to note is that called the pensions liability. And this is an attempt to buy the actuary to estimate the value of our proportion of the pensions fund. The figures can vary quite significantly. There's a number of assumptions that are used. And they're projecting forward over a fairly long period of time. So, whilst there's a fairly large figure there for a liability, it's not a liability we're going to have to pay anytime soon. And as the years progress, that may go up or may go down depending on the performance of the fund and the assumptions used around life expectancy and things like that. And the final call statement is the cash flow statement. And effectively, that's just looking at our cash, what we've spent it on, and it then reconciles our net surplus or deficit on the provision of services to our balance sheet figures for the cash and cash equivalents. After that, between pages 29 and 66, there are a number of notes, and they just give a little bit more detail on some of the figures, either in the CIS balance sheet, et cetera. Some of the notes are quite technical, but the notes and the format of the notes that are provided within the accounts are governed by the accounting code of practice. So, there's a degree of consistency across local authorities. If we then turn to page 67, and that's big number 67, you'll see we have our housing revenue account. So, not all local authorities have a housing revenue account. We do. We have our own council stock, and we have to account for that separately from our general fund. So, there was a separate statement and a number of notes in relation to our housing revenue account. And then, on page 73, we have another account called the Collection Fund. And, as a building authority, we are responsible for collecting the business rates and council tax, not just for ourselves, but for the county council, parish councils, fire and police in terms of council tax, and on business rates for ourselves, the county council, the fire authority, and the central government. So, I don't know whether we pause there and whether we take any questions on the statements or whether you want me to continue with the further update. I think that might be a natural point to just pause and take some questions. I'd just like to say, first of all, thank you to you and your team for cracking on with this work immediately after the sign off of the previous accounts. I appreciate you must have worked quite hard to turn this around at speed, and it's obviously important in terms of keeping on track with the audit timetables. So, thank you for the work you've put in on that. But, yes, does anyone have any questions? I think probably people will. I'll take Councillor Heather Williams, and then I'll come to you, chair. Thank you. Thank you, chair. I have three or four questions. So, would you like me to take them in turn or create a list? Well, if I say them, chair, then you can decide on their substantiality. All right. So, referring to page 17, that's a big page 17. It's going to get confusing. So, for all of my references, it'll be the big numbers. There are, obviously, a lot of variances. Now, I'm assuming that those variances came in quarter four because of Covid. Particularly around, because I'm noting the health and environmental services and housing. If I could have some confirmation that I'm on the microphone. Was it come back in on those? But one figure that I wasn't sure was a majority deal, the variance of 18.1. So, some commentary as to why why that was required would be helpful, chair. Page 26, the investment properties. This is probably a timing issue, but just from a scrutiny point of view, I am aware that when we made the decision as a council to invest in the science park, 2019. So, it may be that the transaction took place after us, but if we could just clarify, because obviously then there wouldn't be a blank on the 19. So, we have clarification on that, chair. And then in relation to page 50 in the note sections of borrowing and short term and long term. Now, I appreciate that we are taking advantage and understandably of lower interest rates in short term borrowing, but that will have to be borrowed again and refinanced. If I was looking, and I'm thinking chair from a sort of public accessibility situation, if I was looking at these notes, I would make the assumption that that was going to be paid off within the 12 months, not for the purpose of refinancing. So, I'm wondering if it's wise to make reference to that in the note section somehow, that that is the reason that we're doing that, or that might be something that we're restricted as Mr Maddox says on what we can do, but it's just, it may be somewhere else, maybe I missed it, but some sort of commentary and assessment of that, because really it is long term borrowing, we're just doing it on a short term basis, unless those figures are somewhere else, I will leave Mr Maddox to, I just didn't feel that was clear in the notes, but that may be a very good reason. Thank you, Peter, you want to come back on this? So, let me see if I can remember this. Well, I'll deal with the investment property one first, because the first property was purchased in April, so it just slipped into the 1920. So, the decision was made, I think we had it to late. As in relation to the Greater Cambridge City Deal, I need to check that there, so off the top of my head, I'm not entirely sure, but it's probably sensible to make reference to it in there, because no, we don't. So, yeah, I'll need to clarify that. I can't off the top of my head, so that's Greater Cambridge City Deal. And there's another question on there around, was it environmental services? Chairman, I'm happy to take responses after the meeting, but I'd like to see if that helps to do these. I mean, I could probably find that pretty quick, to be honest. I just wanted to seek reassurance that the variances for environmental services were due to COVID and not for another reason that we're not aware of. And then it was about the short, long-term Treasury Management. Yeah, I mean, again, I'd need to check on the data about that. As regards the Treasury Management, now, the notes are fairly prescriptive, what we're putting here. And you were referring to the fact that we've got quite a bit of short-term borrowing at the moment. We are meeting with our Treasury Advisors next month to explore whether we move our borrowing longer term. We've taken advantage of really quite low rates on short-term borrowing, but we do now see the gap between the rates on short-term and long-term borrowing is closing. So, I think we now got to the stage where we need to seriously think about going longer term with our borrowing. I think the meeting is probably the week after next. So, we'll discuss it with them. My gut feeling is it probably is now the time to think seriously about going longer term with our borrowing. Thank you. Do you want to come back in? Thank you. So, would it be wise to refer to our strategy in the notes, or is it something that, because of the way local government is, we can't make reference to in the notes? I mean, it wasn't particularly relevant to the year in question, if I'm honest, because this is something that's happened soon. Because at the time we hadn't got, other than the borrowing we had for the housing revenue account, we hadn't actually gotten in general. So, potentially it would be something we could put in the narrative statement in a later year of accounts if it relates to later years rather than the year in question. If I could put that, a request in for 2021 then, please, Chair. Thank you. I think just on that point about Treasury management, I think if we're kind of considering a change in strategic direction it might be worth bringing an item to the next meeting of this committee in September. If it's not already in to update the committee on that following your meeting with the advisers. So, we can include that. Fantastic. Councillor Jeff Harvey, I think did you want to come in? Thank you. Yes, thank you, Chair. Am I allowed two questions? But I will anyway. OK, so, first one was I just wondered a bit of clarification on the comments on the Pensions Fund. I suppose, firstly, it seems a bit of a shame for anything for us to particularly worry about. But is the liability, so it's gone from 70 million, is that right? Yes, to 57. Is that the sort of total liability or is that the liability net of what we expect the return on investments held by the county pension administrators to produce? So, I wondered whether that's kind of the return for the investments brought in in some other way in the accounts and that would be subtracted from this total liability. So, it contains all of those factors. OK. So, it looks to return on the plan assets any interest that they have to pay. But it is looking forward quite a long time and for whatever reason the actor's view is that life expectancy is going down a bit so they're thinking they're not going to be paying pensions for quite as long as they might have done. But we're actually due our next try, I can't say the word, try annual valuation. So every three years there's a full scale of the valuation of the pension fund and that's ongoing at the moment. So again, potentially we will see shifts in valuations as a result of that every year, as I say, he actually goes through the process. So, you can see some reasonably big swings because of the assumptions used. And again, the team at EY will be looking at those assumptions to see whether they're reasonable and forming a view on those. Can I just fill up on that? So, I just really wanted to clarify on whether that number is our exposure to a sort of gross pensions figure or whether it's the liability once we deduct the kind of the worst case performance of our investments in the pension fund. Yeah. Sorry, it's an attempt to value now the liability over the long term. It takes into account the performance of the pension fund, it takes into account how long with them. But as you can appreciate, in the future, there's a lot of estimation and assumptions that go into that. And you can guarantee that the figure will move by several million for the 2021. Thank you. May I, Chair, ask a further question on page 43? And I was just looking at some of the variation between the figures for 2018-19 versus 19-20. And some of them are quite sort of large figures, but obviously that's probably due to a change in the way the sort of core data is presented. I mean, for example, in the first column, sort of the fifth number down, we've got the housing revenue account net expenditure charge will to general fund. There's 166,000 in 2018-19 and 6,000. That was 6 million. So I would just say it's possible by some of the, because normally expected figures would be slightly similar year to year, even if there are changes. One of the things that can distort figures in our compliance and income and expenditure statement are changes in valuations. So if there's a downward valuation or an upward valuation, depending on the circumstances, we have to put it through the compliance and income and expenditure statement. So for example, I think on the housing revenue account, we've got an increase in surplus. So if we turn to the page wherever it was, 70 or 60 something, so on that statement, it should give you a bit more information on what that is. So let's have a look. So there was a, when it's actually only 2.3 million on here, so there was a revaluation gain of 2.3 million, which we didn't have in the previous year. But looking at that statement, we'll give you a little bit more information. So it's actually kind of what appeared to be large variations, actually small variations on a very big number, I'm guessing. And some of those variations can be things like valuations, which again we reverse out in the movement and reserve statements. So again, they don't impact on the HRA, on that one in particular. Okay. Thank you. Just on that pension's point before we leave it, if I remember correctly, so after the review is completed, we will then agree with the county council as the pension holder as to what our rates will be for the next few years, depending on where they assess as income surplus deficit. Is that correct? Yes. Triannual valuation. There will be a pension deficit figure, let's face it, there will be a pension deficit figure calculated that they will inform us and will need to build that in. And yeah, there will be a number of other things that come out of the triangle valuation. I think the timetable for knowing those numbers is the autumn. And I know they're in the process at the moment of doing that. Any further questions from the committee? Councillor Henry. Thank you, chair. I'd like to focus on a couple of notes, please. Note 12A, the property planning equipment note, please. It's on page 47. Thank you. I'm just bearing in mind the various issues around fixed assets in general. I wanted to ask about the revaluation figures, the two revaluation notes, the amount that's credited to the revaluation reserve and the revaluation applied to the CIS. They're quite, there's 24, the county dwellings, the revaluation, the £24 million, please. I wanted to ask what work is done to underpin that figure based on the new financial system, the new asset system? So, the revaluations that you see there will be driven by the valuation report initially. So, our valuers, Rookshead and Eve, have valued all our council dwellings. So, that line in particular relates to the council dwellings. So, they will have gone through a valuation process. They will be valued every year. Every year there's like a desktop valuation, but then every five years, there's a full revaluation which involves actually visiting properties. So, there's a set out process there. Now, so, you know, that's where the figures come from. The figures are obviously then checked for a reason when the information is then put into our asset register. We have to put all of our figures in a particular order so that the revaluation is calculated against the correct figures. So, that information is put into our asset register and that calculates how much of the revaluation we need to put directly to our revaluation reserve and how much we have to put through a comprehensive income and expenditure statement. So, one of the reasons for going over to an asset register is it's quite complicated and technical and to try and do it on spreadsheets is not easy and is prone to error. But if you have a system that has all the parameters set up in it, you put the information in the system as it's supposed to be. The system does all the work for you and obviously the system is used by a number of authorities, it's been tested and been found to be robust so we know that it's calculating it in the right way. So, yeah, our feds asset register system will calculate those figures for you. I can go into why some goes to the CIS and one goes to the revaluation reserve. It's quite technical, but if you're happy for me to talk about it. So, at the start of the year 2007 the revaluation reserve was introduced. So all transactions prior to that date were consolidated with what was called, I commonly remember what the other account was called, but they were brought together into something called the capital adjustment account. So your revaluation reserve at that point started at nil. So any increase in value of property after that date above the valuation you had in 2007 is put to the revaluation reserve. If it goes below the valuation you had in 2007 then that's when you start putting it through the comprehensive income and expenditure statement. If you've gone below the 2007 value and you start to increase your values again towards that number you reverse the figure first through the comprehensive income and expenditure statement then when you reach your 2007 value you then start putting it into the revaluation reserve. So the date of April 2007 is key to all of that. There are other factors you have to take into account, additions that have occurred since. It's not quite as simple as what I've explained, but broadly that's what it's looking at. It's comparing valuations to that period of time, but I'm happy to talk to you through it in more detail if you'd like to. Thank you. A separate point, please. You touched on this in your opening narrative. I was interested in the re-classification. This is page 49, note 13. This is a significant shift between the maturity of investments. What's happened there, please? Can you explain what the detail of that is? I can see it's gone from 9.9 million in 2019 to 74 in 2020. So this is the long-term, short-term re-classification. When you look at the... Sorry, yes. If you look at the balance sheet as well on page 26 you can see there's a significant shift on the 1234th line down the long-term investments line and it's sort of pulled out in this note. Yeah, so Urban Street produced their updated business plan and within that plan they're not able to pay back the lending that we've lent to them in the short-term. So the plan which has been through a committee is that they will be paying us back the lending in the long-term which is why we've been classified. So the substance of the transaction you have to look at the substance or the form of the transaction. It's pretty clear now that they're not in a position to repay that until that time. But equally, as members will be aware it's been a good investment I believe by the council providing return to support services so we have no concern there that the assets that Urban Street hold are property assets so there's no real concern around the fact that the money's not coming back in the short-term. Would it be worth perhaps putting a note that it was to do with the ending street investment here so that it's more comprehensive about what the change is? I don't know whether you want to add that but it's an extra sentence to explain that it's to do with reclassification in the business plan. Thank you. Thank you. Thank you. It's just a point of clarification for me through you, chair. You said the pension fund is held by Cambridge Accounting Council. That was news to me. So there you go. This isn't something that necessarily needs to be discussed today but I would just wonder if I could come through Peter and ask that he could provide a kind of a short-potted history if you like about the pension fund itself and as to its strength weaknesses. I don't want to rob a Maxwell situation if you get my drift and what have you so. We need to make sure that's as robust as it may well be and if there are any risks associated with our pension scheme being held by county rather than holding it ourselves so to speak. Can you give me some thoughts on that as well but that would be for something that you to add your leisure perhaps. Thanks. Thank you. Any further input from members of the committee? Helen, want to come back in? Thank you chair. It's a general point actually rather than going into the details of the notes and it's slightly touched back on the earlier point in the agenda. I've just gone back to page 88 which is one of the annual government statement comments. I wanted to just check it's the middle paragraph talking about the process the challenging process of preparing these accounts. As a general point how are you managing this challenging time scale and it talks about close management being required. I just wanted you to talk a little bit about what you're actually doing to manage this process for this year's accounts of this set of accounts. I was going to go on to talk about that once we're finished with the statement of accounts and take that up as a part of that and that's okay. Thank you. A few brief points from me. On page 21 I would like to be chair rather than chairman if that's not too much to ask. On page 45 it strikes me that there's quite a lot of separate reserves accounts that are broken out on that page and I think there are probably not even sure that's necessarily all of the different pots of reserves that are held by the council. Do you think it would be worth at some point this committee reviewing, it's no point looking at on a historical basis but looking at the present value of our reserves and are they being used for the best benefit of the council that there aren't bits of money that are being put aside and forgotten about there I say. As part of our budget process we do review our reserves I think a couple of years ago we did quite a detailed review and then every year we would review them and I mean I'm happy to do a more detailed review if that's felt necessary I think there probably is some merit and we do hold substantial reserves and it's always good practice to either check whether they're adequate or in fact whether we actually still need them so yeah I'm more than happy to do that. Thank you, would that be an interest to the committee, lots of hands gone up. Councillor Williams now come to you Richard. Thank you chair, I mean your principles are sound on that one I would just stress that our job is to scrutinise the audit and governance arrangements on the way that money is used that is the responsibility of cabinet and a political function this committee is not a political function it's a scrutiny of the executive so I have nothing against your drive and ambition to look at it but I do wonder if it is appropriate I mean that's something that we do through the budget setting process as for council all I'd say is it wouldn't affect me as much as it would perhaps affect the others in the room if we were to tread on the toes of cabinet. Thank you that's a fair point I suppose there's a sort of there's a slight kind of grey area when it comes to classification of reserves and if things are being appropriately earmarked but I agree that we shouldn't step into the budgeting process and perhaps we can come back to that suggestion offline and see if there's a role for this committee to provide some support there. Sorry Richard do you want to come in on the spell? Risk of going off on a complete tangent I mean we were talking about valuations and of course this is a changing scene if you were to conduct a major program of perhaps energy improvement in regard to the housing stock that could result in a significant change in valuation I was just interested in how valuation influences perhaps project decisions about do we do this or do we do that in terms of its effect on the balance sheet if you will? I think I'd be quite cautious about using the balance sheet value in particular our council darlings for any of those sort of decisions there's a prescribed way of valuing those and they're valued on the basis of the city intent and for this part of the country the factor is 38% of its open market value now that's a set down percentage and obviously using the values in the balance sheet I think would not be appropriate but clearly valuation can have some part to play in those sort of decisions. If I can just on that topic I mean my view very much on revaluation is it's something that us as accountants spend a lot of time on dotting I's crossing T's but it has no cash reality the only reason that it would come into a decision making process is I think for investment purposes is if we were looking to sell off sell off an asset because it's a bit like with your house you know you buy a house I think we will apart from me I don't own a house but most people buy a house and see the increase happen of their property but it's only really of any effect if you're planning to downsize because then you can release the capital the reality is your house has gone up and your house is around you and therefore it's all relative and actually the fact that your house is worth more than what you bought it for is just simply on paper it doesn't affect your quality of life for your decision making processes until certain events occur so I don't know if that helps chair. Thank you that's very helpful If I could also add if you go to page 69 it actually tells you there what the vacant possession value is of our character dwellings and it's 1.289 billion so if you know it's a huge difference to what we put in the balance sheet so if we didn't have any tenants in any of our council dwellings we could get a lot more money for them and the reality is we have to value our dwellings based on those I think that's quite interesting No well I think we can all be very glad that the housing stock is being put to the use it's being put to but it's an interesting point Peter, thank you I just wanted to pick up quickly on the cash and cash equivalents on page 51 we've got this is a kind of treasury management point again really we're listing kind of bank overdrafts of somewhere north of a million despite obviously having significant deposits what's the kind of rationale just for your sufficiently interest low that it makes sense to carry on holding overdrafts in that situation I'd probably need to do a little bit have a look at that because it would be the present value of overdrafts that would be of interest rather than so we do have a number of short-term investments and obviously there was 19 million in those I'd probably need to take them one way I think maybe if we can include that on treasury management what's the level of overdrafts what interest are we paying on it and so therefore what's the rationale for it when we're kind of relatively current asset rich to still be holding still be holding those if I may I'd just like to make maybe just one or two general points this is not so much for this version obviously I think we all appreciate this sort of need for speed at the moment in terms of getting these accounts accurately compiled and presented and audited and then out into the public domain but in more general terms this should be a kind of key document that the council produces I sort of go backwards and forwards as to how much people will actually look at a document like this but it is the sort of thing I think that people might look at either the general public because they're interested in how their money is being spent a business might look at it when deciding whether or not to do to enter into contracts with us potential employees might look at it if they want to kind of get a sense of you know is this an organisation that I want to kind of hitch my career to and so in that context I wonder if we can do some more work just even just on the kind of the visual presentation of these reports in the future I think you know this is a you know my experience in my sort of short time today has been that this is a very modern professional council and I think we want that brand to speak through a key document such as this and I think also in the so that's a sort of you know graphic design dare I say issue in terms of obviously a lot of this is proscribed as you say by the accounting standards but when it comes to the the narrative report obviously we've got more freedom there in terms of what we say and I wonder there again if we can do some more work thinking about what are the key questions that people are going to have when they come to look at this document and are we really answering them in the narrative report I mean you know things that would occur to me are you know is the council collecting enough in council tax rates and grants to meet it's kind of core business needs is the is the council's portfolio of council houses is that you know is there a service, is there a deficit on that is the council being able to reinvest in that you know and perhaps maybe you know what kind of you know what's the what's the kind of state of the council's balance sheet and how is it managing its money and I think at the moment the narrative you know there's a lot of good stuff in there in the narrative section but I do slightly get a sense that it's slightly accountant speaking to accountants which in this present exalted company is all well and good but I wonder if we can just really tighten up how we approach those sections happy if you want to come in on that so so it's interesting point you make about the accounts and that they are done basically in excel but we are intending for we're hoping for 2021 and that's certainly my intention to produce these in some form of a word document and you're right it will look a bit more professional it will give us the ability because one of the issues we do have is that we may have noticed some of the tables are quite small and it will probably be better to put them in landscape just so it's a bit easier to read so we are thinking that for 2021 we would do the accounts differently we get to look at that in a huge amount of data we started thinking about it over the next few weeks we'll start to keep that process off as regards the narrative report yes I would probably agree a number of years ago there was talk about using a narrative statement to tell the story tell the story of the authority so there probably is some merit in making it a bit more user friendly and telling the story of the local authority rather than being and yeah it's probably a fair point it's a bit accountancy speaking we can probably do a bit more on that one of the things that occurs to me is that if I want to know what's the surplus or deficit on a particular fund now because of the accountancy regulations if you look in three different places you'll probably get three different numbers and so trying to even just for my own benefit trying to figure out what is the surplus or deficit on the household revenue account for instance is not kind of immediately I can find several possible numbers and I think I've now found myself the note that links all of those together and it's all correct but I think it's those sorts of things that we can tie up but anyway I absolutely appreciate that the focus at the moment is on the accuracy of the numbers because obviously there's no point trying to present a professional view if we're not up to date with our accounts that's obviously priority one so thank you very much for that there is some things that need to be in the narrative statement but we do have a degree of freedom thank you are there any further comments before I move to the recommendations well thank you all it's a real privilege for me to be in a room of such expertise as I am now and I hope I hope Peter and Liz feel the time sorry Peter did you want to talk further about some of the other I was just going to say a little bit about the forward program if that's okay yes please do so there's a little bit of commentary on the 2019-20 audit of accounts which started on the 13th of June we weren't able to present a statement of accounts at that time but our colleagues in EY were able to at least make a start and carry out some of the work that they need to carry out we have now provided the draft statement of accounts that will enable them to do further work we think the audit is potentially going to go be completed either at the end of October it might possibly slip into November but we can't be certain of that because it does depend on what comes out of the audit for 2021 we have started to look at that process already we have a dedicated resource that's looking at that in particular we're intending to use our finance system a bit better so that we can get information direct from that system rather than use slightly clunky Excel spreadsheets et cetera so there is an intention not only to use our finance system a bit better but also to hopefully produce a statement of accounts that does indeed look a little bit better and potentially in word and then for 2021-22 and later years the intention would be to do the accounts and audit those during the 23-24 financial year but again we can't be sure exactly on the timing because it's dependent on the years before that I've forgotten your question I was just asking how it was going and you used to mention that it was a challenging process and that close management would be required but you've elaborate I think I would say 1920 I think it's gone reasonably well obviously our colleagues from EY can comments by what they would pull but I do feel it's gone better than past years but I'm sure there's still room for improvement which hopefully we can do as the years progress thank you councillor how the Williams I think you indicated you wanted to speak on that yes thank you chair it was just in relation to obviously we've got the timetable here but we did have a full council meeting on the 18th of October and there was a resolution from that of when we'd be caught up and I don't think we're going to quite meet that so I'm wondering whether it would be wise for because it was for the accounts to be up to date by October 22 and that was all of the accounts so we're not there for whatever reason but I do wonder whether it is wise that given that we made that commitment and we voted on it and that it went through that we need to update all members in a briefing note or something to explain and keep them informed because obviously this is for whatever reasons it's not matching what we committed to back then and I know there's we've known from Covid things getting away but I do think it would be wise to clarify that for the broader council membership thank you council that's really helpful to know perhaps Patrick do you think you could get me a copy of that resolution just from my own records and I will consider what the best way is to update all members and I'm aware that this is obviously of interest to the wider council and the public so thank you it's good to make clear thank you any further comments on the timetable I think we're happy well I'm going to move the recommendation to this item and then we're going to come on to the audit plan if that's alright so the recommendations are stated in your packs on page 7 which are that the committee review the draft saving of accounts for 1920 and comment as appropriate I think we've definitely done that and that we note the 1920 audit timetables and the proposed timetables for the many accounts and all it's up to date and we've been asked to add a new recommendation that we approve the draft statement of accounts for the audit or words very similar to that which people confirm to Patrick and we can check in the minutes are you happy with those words yeah chair we have to know what we're voting on I think sorry as I just said so that the committee approves the draft statement accounts for 1924 the audit nope I think we're happy with that okay Peter are you happy to second those okay does anyone object to those recommendations any abstentions nope okay I think those are affirmed thank you very much so that was one of the big substantial items of the day thank you all very much for your input there we're going to turn now to agenda item 5 which is the external audit plan and we're being asked to note this report I believe we have some representatives from Ernst Young on the call so could I please ask Janet Dawson from Ernst Young to please present this report thanks very much chair and good morning committee a quick introduction I think would be helpful for those of you who are new to the committee so I'm Janet Dawson I'm the partner at Ernst Young and I lead the audit and provide the opinion on behalf of the firm on the statements of accounts and also on your value for money arrangements and if I can introduce my colleague Mark Russell who is the senior manager who runs the manages the audit runs the team and leads on a lot of the day to day linkage back to Peter and his team to deliver the audits so you've got in your pack the audit strategy for the work that we believe we need to undertake to be able to provide an opinion on the financial statements for 1920 and if I take you to the executive summary which starts on page 111 of your large numbers where we start to set out the key risks as we see it in terms of the work that we need to do and I'm conscious that there's lots of reference to esteemed colleagues who are accountants so I'm hoping that you'll feel fairly familiar with the world of audit but let me just take you through what those risks mean and then the work that we do in relation to those so you'll see the first two are to do with misstatements due to fraud or error and a specific aspect around within local government the ability to manipulate the position by inappropriate capitalisation of revenue expenditure now that these are we as auditors are required to consider the risk of fraud or error in every audit that we do and within local government that's typically where you'll find it manifest within the plan so hopefully you're not concerned that we think that there is a great risk of fraud and error across your organisation we are required to do this under the international standards of auditing we then go on to capital accounting entries and you'll be aware from the history of the last two audits that the council has really struggled in terms of records and the implementation of a new fix asset register in previous years and that's one of the significant areas of difficulty that we've had in audits in the past so we've put this as a significant risk we are hopeful that the work that we had done with the council last year for the 1819 accounts puts us all in a very strong position however we do need to make sure that we are sceptical that we have additional procedures planned to ensure that we have fully addressed the risk that there are still issues within that system that would affect the reporting in 1920. The next risk that we've identified there is around valuation of investment properties and there's already been some discussion about those in that they're new this year the reason that we've got that as a significant risk is obviously the basis of valuation for those is different from your property plant and equipment that you've reported in previous years now actually it is three properties where hoping that the valuation process will be relatively straightforward however they are a significant number and it is a different basis of valuation this year but those and therefore we will be required to do some additional and different procedures to get assurance over those numbers if I take you on to the next page we've included the non-domestic rate appeals provision and the reason that this has resulted in a higher risk rating than in previous years is because you've changed your specialist who was supporting you in deriving that number in this year and therefore we need to understand how the specialist goes about their work, what their methodology is, what their qualifications are to then determine whether or not that provision has been derived appropriately and it sits at in the previous year at 3.5 million which is material and will come on to the levels of material materiality that we use but that is a material number in the accounts hence its elevation to inherent risk you'll be pleased to note that the next risk has come down from significant risk to inherent risk and that is to do with the presentation and disclosure of accounting items and this really reflects what Peter has been talking about in terms of dedicated resource a focus on getting the 2019-20 accounts in a good shape for the audit and the level of quality assurance that's gone into producing those accounts and then the working papers to support them so we believe that actually all of that positive effort will allow us to reduce the focus on the presentation and disclosure of accounting items and bring it down out of our top risk rating to inherent risk the next two are risks that we would look at due to the significance of the numbers in your accounts and again we've talked about those already in the committee so evaluation of other land and buildings and the number that's included in your accounts there and your reliance on the specialist to derive that number and similarly the pension liability valuation and the level of complexity and assumption that goes into that and the reliance on actuary so again we have those at a higher inherent risk level and then the final two which are on page 113 are around the group accounts which you prepare so clearly we need to do some additional procedures to be comfortable that those are reflected appropriately and then going concern in terms of increased scrutiny through the auditing requirements on going concern so whilst within local government you have a presumption that you will continue unless Government determines you won't and that your services will continue what we need to look at is your levels of reserves your ability to meet your liabilities as they fold you without having to take any specific action to reduce your services so we will look at reserves cash position cash flow forecast for the 12 months post the approval and opinion date for the accounts I said I mentioned materiality within local government clearly you've got a very significant balance sheet but actually what your readers of your accounts are most interested is in your gross and net expenditure on services and so that's the basis on which we set our materiality which gives us a much lower number to then look across your reported statements so you'll see that we set that at 2% of gross expenditure in the year and that comes out at just over 2 million we'll report any differences that we identified during the audit that are over 100,000 to the committee and it would be good if the committee could confirm that they're comfortable with those once I've finished my presentation the other element that I was going to take to was around the value for money responsibilities that we have within the public sector audit regime so that's set out from page 124 and that requires us to look at the arrangements that the council has in place to secure economy efficiency and effectiveness and in 1920 we're operating under what was the national audit offices code that was excellent at that time it's subsequently changed but for the 1920 reporting we're required to conclude on whether or not those arrangements were appropriate and in place and we've identified at this stage one risk that we'll be addressing which is around the point that we raised last year and qualified on which is have you got a suitable arrangements in place to produce reliable and timely financial reporting so we'll continue to update our assessment on that before we report and then we'll include commentary on that within our audit results report at the conclusion of the audit so we're going to stop there but more than happy to take comments and to Peter's point you may find it helpful to have Mark just give you an update on where we've got to you on the progress of the 1920 audit thank you Janet Janet says I'll just quickly comment on where we are with the 1920s so following on from Peter's comments we agreed with officers back in June what work we'd be able to commence through June and July and that was based on the working papers they were able to produce so these were based on working papers not on the draft statement of accounts because they weren't available until a few weeks ago so the main areas we've been focusing on is around the balance sheet so things like debtors, creditors, the cash balances and also elements of the PPE such as valuations the work has done so far we've made reasonable progress against the plan we agreed with management and officers and I'd say our initial find is that there is an improvement in the work in papers and the transaction listings and the evidence that's available in a shorter time frame than we've probably seen in prior years so there is a definite positive trajectory for 1920 clearly that's at a point in time looking at a small proportion of the accounts we'll come back later in the year to complete our work and hopefully that trajectory will continue but as I say so far a positive trajectory and I think that's all I wanted to say on that at the moment but similar to Janet happy to take comments of that or the audit plan thank you both very much and perhaps for the benefit of those of us who are slightly newer to this committee how would you contrast your experience of the audit so far with say the previous audit for me to pick that up Janet I think as I mentioned so overall we are in a better position so what we've found in prior years is that the council's ability to support a balance it presents in its statement of accounts so what we look for as auditors is clearly for any given balance there'll be a listing of transactions which we'd then go sample and then we'd collect the evidence to support those transactions we've selected so what we've looked at so far the council's ability to support those balances and the working papers they've provided through a transaction listing and evidence has been better than in prior years there's probably some way to go as Peter suggested it's baby steps in some respects but we are showing definitely a better picture than prior years for those balances we've looked out so far thank you please indicate if you want to come in on this item I'm going to start with the Councillor Heather Williams thank you Councillor thank you chair and my questions are probably directed in three different directions so I will focus firstly in relation to those two that I believe would be with EY if that's okay with you chair so looking at page 112 I see the new risk essentially we've got a new expert I'm just wondering how serious a risk do we do we take the fact that if we've got something new is it just because it's a change I mean the clue is expert in it we've not gone and asked Joe Blobs off the street to do things so if you could give some explanation as to why you you are untrusting of experts you also mentioned in your opening statements about being sceptical but obviously for you have to have for your ethical standards open mindedness so can you assure me from your opening remarks that you will be treating this in an open minded manner as required to do so in relation to page 125 and 126 you have done a value for money assessment and of course we have to do this with all things I'm just wondering whether you reflect on your own value for money in your assessments or is that something reserved for the council and on page 138 chairman I have serious questions as you may gather so happy to pause if required but I'm sure Ms Dawson let's take those questions so far and then come back to you so yes would either of you from us respond to any of those yes more than happy to so international standards of auditing require us to understand what the organisation has done to report out its numbers and where it chooses to rely on an expert we then need to determine the basis of that expertise as it were to then understand what those qualifications are, understand the methodology that's been adopted and then look at the work to be comfortable that that's appropriate and where it's a very complex position for example in pension liabilities with actuarial advice we would tend to use our own specialists or experts to look at the work and to re-perform some of that to assess whether it's been done to an appropriate standard so councillor Williams is right where there's a change we would then question what's the basis of that change and who is now doing the work and then we need to go back to that square one and understand what work they've done and why they are classified as an expert to be able to build assurance that they are appropriate to be doing that work and they've done it appropriately so that the number is reliable so that's the first question she's absolutely right on ethical standards and a requirement to be open minded we then come down into the requirements of auditors and again international standards of auditing which require us to be skeptical in our mindset for work and also the financial reporting council sets that within the UK of auditors that is an expectation that we come with a sceptical mindset and look for counter evidence contradictory evidence and challenge management's assumptions and positions to be able to determine that we have sufficient comfort over what they are telling us and what we're reporting on so it's an interesting situation to come open mindedly but sceptically so that's the balance that we have to bring to our work on the value for money assessment now clearly we're looking at the arrangements in place that the organisation puts to achieve value for money we don't assess whether or not you have achieved it and obviously within our own operation we continually assess the quality and efficiency to make sure that we are carrying out our work in accordance with our regulators don't know whether you want to go on Ms Dawson I have some further questions as a councillor of this committee and so you've just said about your self-assessment so I would be interested to hear your self-assessment and what improvements that EY would be making as I think to say that we have been disappointed as a committee is an understatement of the service that we have been given and with that I will draw my next question to page 138 I assume you've not put any years on there and some people may think this is a sarcastic question but I think in the current circumstances it's quite a genuine one I take it you're referring to from March 2022 to February 2023 of which point we are already through some of it so I want to know if you have the resources allocated in place and whether you're resourcing fully what is in front of us and clarify which year and then page 144 the words that came to mind when I read this were probably unconstitutional and I cannot use but we had a very frank discussion around fees at our previous meeting of which Ms Dawson claimed that we were never charged for delays and yet here we see it overruns and delays being charged for and on the page 145 it says delays and deficiencies in the council's ability to prepare are charged for and what we have seen is not the fees go down which we had hoped and expected but gone dramatically up so can I ask which is it are there charges for delays why not and if there are not then perhaps some revision of the way that this is portrayed for transparency purposes would be quite helpful and also you know why on earth have we got to 350,000 we have looked previously and I myself have looked previously when we had Suresh and the failures of EY on time were taken into account why are we not seeing this now Thank you cancer I'll invite Eunce Young to respond in a minute I believe I think Mr Malik you wanted to comment a bit on the fees and where we are in terms of those negotiations and I'll come back to you Yes I haven't spoken in detail to EY about the fees for 18, 19 but I do need to pick that up as soon as I possibly can but normally what would happen I think the level of fees would go to the public sector audit appointments for them to to look at in form of you I suspect they would want to see some evidence to support the fees that are being requested and they'll make a ruling but I'm certainly intending to speak to EY in the first instance about the fees and gain a bit more of an understanding around how those have arisen Thank you Peter So it's subject to that conversation perhaps Mr Dawson you would like to respond to Councillor Williams's questions Certainly thank you chair So on the point about page 138 this is the audit plan for 1920 so it does just deal with this year this year under audit and it is to do with 2022 so that is the timeframe and as Peter and also Mark have explained we are on track with that we are resourced to do that clearly if other issues arise in the audit and there are there's further work required then we will need to revise or revisit that resource plan but as it stands at the moment we are planned and resourced to deliver to that timetable In terms of on page 1444 we have had that discussion about delays and we do not charge for delays to do with EY's time and resource these are delays caused by the council's inability to respond to our questions in the audit on a timely basis so I'm more than happy to make that very clear in the wording in here to say that these are council delays Thank you you want to go back in Thank you We were informed by yourself that not yourself chair sorry through you so delays weren't charged for there was no further explanation given them that delays weren't charged for if we haven't been able to do something on time you haven't been able to do that work so you're saying that you charge us for things that you don't do Thank you To add in before you come in I would appreciate an explanation as to it's not immediately obvious why a delay in providing you with evidence means that you incur costs and perhaps if you could clarify what those costs are clearly this will all come out presumably as part of the review by the PSSA but if you could give us a flavour of that I think that would help committee members understand the situation Certainly so I think the context of the previous conversation was that we were being challenged on charging for delays caused by EY's resourcing limitations so I think we need to be clear that that was the context for that previous discussion I'm more than happy to go back and have a quick check of the minutes because to present that it was we said we didn't charge for any delays at all is not actually the context of the conversation that we had at the previous audit committee delays for us when we are waiting for information coming through means that we are unable to perform the work at the time that it's being resourced and we are not able to determine what level of resource we need to be able to address the issue and quite significantly the delays in being able to get a response first time mean that we are in a position where we're given some information we look at it again and we determine that it's not the complete information it doesn't support the numbers in the accounts or actually it's actually inaccurate so we have to ask another question and actually that is the main type of issue that we experienced during the previous years audit which was that we were given incomplete information or inaccurate information and that we had to ask a number of times and then were delayed as a result so again I'm more than happy to make that crystal clear within our wording that that's the definition of delays as we have charged for within this report Thank you I think the committee would appreciate as much clarity that you can give around those fees particularly when you I certainly appreciate the sentiments of what you're saying but the validity of saying oh well you know it's like a third of our fees is us having to ask questions a second time that doesn't necessarily ring kind of that doesn't necessarily add up to a third of your fees in my head so I think there's much clarity as you can provide and then I think further evidence and discussions to be had between yourselves and management on this would be appreciated and if I may chair and if I may chair just to be very clear it's to ask a second time and a third time and a fourth time and a fifth time so you know more we really do need to understand the context of that audit last year to be able to reflect that so we will go back and we will set that all out for the committee more than happy to do that and take it through Peter in the first instance Yes I'd like to move on from fees if I can unless you did you want to add something further on this matter Councillor Williams Great, before you do that there's one point I just wanted to piggyback off one of the points you made which was this, the audit risk around the non-domestic rate of appeals provision if I can just jump ahead of the queue quickly since we brought it up already I appreciate this as a new expert and I appreciate it's a material estimate but correct me if I'm wrong what we should be concerned about is the risk of material misstatement and even though this estimate in itself is above the materiality threshold it would only be mis-stated if it was out by a factor of you know two, three, four, five, six, ten you know if it's oh actually it's out by ten percent and that's not even close to material and it seems unlikely I mean we have a real value for this that went through the accounts of the past year of three and a half million it seems unlikely to me that the value of this the correct value of this is going to be zero or ten so I just want to push you a bit on why you think there should be an area of focus when the risk of material misstatement by an independent expert would seem to me to be quite small Mark if I can ask you Yeah that's fine so I think so the non-domestic rate appeals provision is based on a range of assumptions on the likelihood of businesses appealing against their domestic rates appeals so different experts use different information and do that assessment differently and so with any change in expert the underlying assumptions and the methodologies they use to derive the figure can change because they can use different assumptions and different methodologies so whilst it is as you say it would need to be either zero or you know six million for it to be wholly binterially incorrect it's the increased risk of misstatement that's the key there because our reporting threshold obviously is 100 we use as we've put our a horrible error in there is lower than the two million because which reflects the risk on the audit so but it's around the expert use different assumptions and methodologies that would drive a differing figure and we don't know where that differing figure at the time of writing the audit plan because it was based on obviously the prior year we don't know where they have landed with their valuation so the valuation I'm not sure where it's landed in the 1920 accounts would sort of drive that reassessment of where we are on that risk scale I suppose all right perhaps maybe don't go to town on it do you want to come back in on a few further points thank you chair but I I think more information would definitely be required on the fees just as a final because I am not happy with what I'm seeing which you may have guessed chair and equally this is public money and we have seen not the best of service from EY in my view so I want to make sure that public taxpayer money has been spent very wisely so if we could see that breakdown and not just be at the mercy of whatever figures have been plucked and put in front of us looking internally to some questions now chair I have some for Mr Maddox and some for Councillor John Williams who I believe is on teams on teams today so I'll start with Mr Maddox so we've had obviously a bit of discussion about the expert we have changed expert is there a reason for this because obviously it's sent EY into a new risk and I'm just wondering who were our experts before to see if there's how do we process this do we see it as a risk or is this belts, buckles, braces and a lot of extra unnecessary work and then also resource wise and I note from page 111 there is a reference and I use the words of EY because unconstitutional for us to question the competence of officers and quite rightly but it does refer here we found that the council had a lack of understanding of how the new fix asset register operated their words not mine have we sufficient training have we given as a council enough resources to the accounting department to have that training and is any more required that questions probably more to Councillor John Williams in the support that we are giving as councillors to ensure that we are resourcing and we will be going through the budget process so are we sure that we've got enough finances to give the finance team the support they need and enough resources I'm not expecting Mr Maddox to answer that but that's a question for the council of John Williams and does Mr Maddox have confidence that we can move on from this and get caught up caught up with things is there anything that we can do as a committee to support that process because it is in everybody's interest that we get caught up in the benefits from the situation other than perhaps EY's pocket and so I think that's the main thing and I am seeking a commitment from us as a committee I suppose that if extra committee meetings are required to help to speed up this process I know council house in the past but we are a new committee have expressed the will and effort that we will sit in this chamber as many times as is necessary to get things caught up and we as councillers made a commitment to officers that we will do our part but as we are a new committee we could reaffirm that commitment and in the 2018 accounts what we had was a sub-committee that met regularly to go through where we were at with the audit and given that we've all got a desire to resolve this issue is this something that the chair would think of for the accounts going forward it was very useful and very productive as was the meeting of the PSAA so I realise I've covered a range of topics happy to clarify if you require chair Thank you counciller certainly just for my own part I'm happy to call additional meetings of this committee to the extent that that's necessary to keep bits of paper moving up their appropriate speed I'm not going to ask other people to publicly sign up to unknown meetings at unknown times in the future but I recognise that we've had full attendance this morning and there are plenty of substitutes as well and the quality is reasonably generous I think it's three or something so I can't imagine we would have difficulty in transacting business at those meetings I'm going to come to Peter Maddock first if that's okay I know counciller John Williams is on the team he's obviously not a full member of this committee so he's not required to attend so I'll ask him if he wants to respond but he is a cabinet member so I'll ask him if he wants to respond but he may also wish to provide you with a written answer which I would also accept from him in this case since he's not a substantive member of this committee but I will come first to Peter Maddock Thank you So the previous people that were doing the NNDR appeals provision, the name escapes me but we had a contract with him to do do the valuations for a period of time and that contract came to an end so we just then retended and Wiltshead and Neve came out as the best option going forward I have worked with Wiltshead and Neve before in my previous authority and I found them to be really good at what they do so I've got every faith in the work that they've done that calculated this in an appropriate fashion Thank you Councillor John Williams are you with us on the call and do you wish to respond at this time? Thank you chair yes I'm quite happy to respond this is a question that Councillor Williams has brought up virtually every time this committee is met and my answer is the same is that we have always provided the finance team with what they've asked for at no point have we said to the finance team that they cannot staff up to the requirement that they needed to complete the audit particularly last year's audit it has been difficult because we're all experiencing difficulties in recruiting staff particularly accountancy people but I now have every faith and confidence in the team that we have now to carry forward this task but to answer Councillor Williams' question as on previous occasions there has never been an opportunity or situation where I as lead current member for resources have not agreed to give the resources that have been asked for by the finance team Thank you Councillor sorry I have just remembered that also asked about instituting a sub-committee my sense is at the moment is that good progress is being made so I would suggest that we get an update at the last September meeting and if we have concerns then that stuff hasn't moved forward as quickly as it should have done then we can institute a sub-committee at that point to kind of take us through the rest of the year doesn't seem to be much point putting one in place for say August when I think most people will be on leave in any case so that would be my suggestion there if that's acceptable Do any other members of the committee wish to comment on anything in this report sorry here we go down the line Councillor Jess Hales and I'll come to you Jeff in a moment Thank you Just to be clear I agree with what Heather said that we'd be more than happy to do an extra meeting so you've got two of us at least it's a question for Mr Dawson if I may I kind of appreciate the new risks the red flags if you like but being a simplistic chap I just wonder whether or not and a newly appointed expert apparently so that was very kind of you that's a first for me but I wonder if these are fixed if you like for the next year because obviously these are going to be public documents or are these a fluid process throughout the year so how long does it take for us to gain confidence with the Wilkeshead and Eve people to show that they can actually do the job they're asked to do and that then turned green and obviously the same for the capital accounting entries and the valuation of investments in properties etc and the comments that you've made I just wonder at what point in the future do we have a change to that that's the first thing if I may I'm heartened that you'll be willing to give us a full and frank report if you like on the delays that you outline should I say with regards to us as a council and as the other one was a three year chair request I don't know who this goes to but Mr Dawson made reference to the minutes I wonder if that would be something that we could ask for an absolute definition from Mr Dawson as to what she meant referring back to the minutes that we could also then look at the minutes here and I think that's me done, thanks Thank you Don Dawson are you happy to respond to those? Yes absolutely so you're absolutely right councillor the assessment of the risks is an ongoing process it is a fluid process so this is our initial assessment as we start the audit for the 2019-20 accounts as we work through that work we will be determining whether the planned procedures are needed or not depending on what we find whether we need to do more work whether we need to actually we find that it's well run it's organised and that we can rely on that specialist but we'll need to do that work in the first instance for this year because of the change but as we go through our audit we're constantly reassessing that risk assessment and when we report back to you at the end of the audit we'll tell you what our findings were whether the risk levels stayed the same whether it changed, whether it increased in any of the areas of risk that we've identified or any new areas of risk because that's what we're required to do to be able to adapt to our approach to get sufficient assurance to be able to provide you with an opinion so on the specifics of use of a specialist if the audit work that we carry out for the 2019-20 audit identifies that the specialist is perfectly well qualified uses an appropriate methodology we're comfortable that they haven't made any errors and that their numbers are appropriate we will reduce the risk for the following year and we'll bring it back down to our moderate level because we know that we can then rely on the specialist and we can do less work in that area similarly with the accounting entries the capital accounting entries and the valuation of investment properties if we find that actually those areas are run well that we're able to get sufficient assurance and that the information supports the numbers in the account we'll take all of that into our assessment for the following year's audit and you may well see we would all like to see that risk level come down so that we can then move through the audit more smoothly Fonland-Frank report absolutely no problem with that at all and on the minutes I was referring back to the minutes of the previous committee meetings where we've discussed delays in the past so I was concerned that we ensure that we're having that conversation about what we've said in the context of what the questions were that were asked to us at the time thank you councillor Jeff Harvey I'll come to you and then to you Helen yes thank you chair but I'd like to add my surprise or disappointment to councillor Williams on the level of charges but as I make a further point that I presume that under the line you know risk fixed asset registers we've got 152,000 there and I'll presume that that wasn't a planned fee when this work was first undertaken and so if that 152,000 doesn't include some of the categories under which you're charging additional overrun delays then that sort of implies that EY didn't really properly scope the work in the first place and so it looks to me as though we're being penalised twice once under the category of fixed asset register data migration 152,000 and then again under the 106 so I just think when you look at the fact that most of the overruns as I understand it were associated with the work on the fixed asset register effectively that's almost a quarter of a million pounds I don't know what your sort of day rate is but given that we're told that whoever is working on it couldn't work on it when they wanted to it seems a little implausible to me Thank you. Have you got anything further to add on those points? I think what I would like to do is bring you that full and frank report and it won't make pleasant reading I'm very conscious that the some of the councillers on the committee haven't been on the committee as that process is being taken so I absolutely appreciate that the number looks highly surprising and some of you are taken aback by the sheer magnitude of that but the work that was required to deliver that audit spanned two years we scoped out the work that the fee starts with the PSAA's baseline fee so we're not in a position to scope out the work and give you an associated prediction of the fee in the way that we would in a corporate environment and the work around the fixed asset register in particular there was no way that we could have scoped that it would have been so poor so let us bring that full and frank report back to the next committee and then I think hopefully we can bring that to life for the councillers who weren't present at the time. Thank you councillor Helen Leaming Thank you chair I would like to go back to page 138 please the audit timetable I'm just sort of looking at the way that this is set out please forgive me if I'm missing something we've got the 1920 accounts in front of us now in July but it looks like nothing's happening in August and half of September is that correct please? Yes so originally the audit was planned to take place from we actually had time at the end of April early May and the council was not ready for us to come in with the substantive amount of work to be undertaken from mid June through to the end of July and as Peter has explained the financial statements weren't ready for the start of that period either. Now we had planned our resourcing on our for our teams throughout the summer and allocated time for South Cam's 1920 audit through the end of April and into May and then from mid June through to the end of July in order to accommodate the delays and getting access to the information we need to undertake the audit we then had to put in this additional substantive testing period which as I said earlier is fully resourced but we've had to move it back because our teams are committed through the periods of August and into September on other responsibilities and commitments so that's why we have that delay. Thank you I'm not seeing any further indications I want to make one one very minor point the risk around investment properties you say you're going to examine a sample of the investment properties but I think there's only three if I'm right so are you just going to look at all three of them? We'll look at all three. Perhaps you could update your plan to reflect that. Unless there's anything else I think I'm going to draw this item to a close we've been asked to note the report I think we've done that at a good substantial depth so thank you very much everyone for your input and thank you to Janet Dawson and Mark Russell for your contributions as well I'm going to take a short five minute adjournment now for a comfort break and then we will come back and look at the internal audit governance update and internal audit plan thank you very much I'll see you back here in five minutes internal audit and corporate governance update I apologise we weren't live we're now resuming with item seven we took item six earlier in the meeting so item seven is the internal audit and corporate governance update we're being asked to note this report can I ask Jonathan Tully head of internal audit to please present the report thank you Thank you chair this is a brief topical document the purpose is to basically update the committee on audit and governance themes we bring these to you sort of typically quarterly according to how the committee cycle falls so if I could bring you to page one seven five of your agenda packs that's where we are and just to take you through some of the documents and comments inside it's not a long document starting on page one seven seven I just provide you with an update on the output and some audit work that we've done some internal audit work just to note there we've been doing a lot of work recently on grant assurance for bay is the government department and this is in follow up to all the grant funding that they gave us for business stimulus grants during the pandemic now we're getting towards the end of that process they're looking for assurance that adequate internal controls are in place to mitigate the risk of fraud and error and so what they're doing is reaching out to the internal audit teams locally to say can you provide the assurance the sampling methodology and the sample it's their choice of which ones to test so it's independent and then we do that and feed that back to them pleased to say that from those five that we've looked at so far they've all been good so we've given full assurance on that other outputs payroll which is a review we tend to do very regularly just because it's high in materiality for the council so we look at key controls just to make sure they continue to work effectively which was particularly important as we start to work differently following the pandemic but I'm pleased to say following that bit of work we're able to provide the committee with full assurance on that the other one that I've highlighted is value added tax VAT so we've worked with the finance team to review that we've looked at controls we've also done substantive testing on actual transactions just to make sure that the right VAT codes are applied and we're pleased to say that generally everything's going really really well so we've given that reasonable assurance we have identified a couple of opportunities for improvements just tidying up some of the master data in the actual system itself will help produce the risk of any fraud that could materialise in future so that will be a positive step and also the team have agreed to help do training to some of the people throughout the council because we can really help promote awareness of correct VAT practice that helps again reduce the chances of fraud or error materialising so that's generally positive moving on to page 179 just for your awareness I thought this would be useful was to provide an interim update of our work on the asset register because I know this is an extreme interest to the committee we've probably spoken a lot about it already in a couple of previous items on the agenda so just to pull out the relevant bits from our internal audit perspective in terms of our progress we've started the work there and it's generally looking very positive which is quite good but what we have done we've taken a pause just to help make sure that Peter and his team had the capacity to get on and deliver the statement of accounts work for 2019-20 so we're going to reconvene we're going to resume the work in August and you can see from the previous item that fits in with their calendar of events so we'll go in there and complete that work so generally it's looking very good but of course I have to caveat and say we haven't finished as yet so we'll report the final outcome once that work is completed the next thing I probably like to draw your attention is on page 181 so Taran Upbin King, our counter fraud manager requested we put in a little bit of information about the key amnesty projects which we're looking to start this will help basically reduce the risk of fraud and error and so it would be a useful thing for the committee to be aware of as good counter fraud practice is part of our overall governance arrangements and then following on from that we include fraud statistics so this is just a retrospective look back from the previous quarter on some of the work that's been done across different themes and categories to give you just a bit of a flavour about the work that's been taken by Tara and her fraud team and then probably the final one which I think would be of interest if I can draw your attention to page 186 training and development so just for you to be aware as a committee that is issuing some new guidance which we're expecting late summer now on audit committees and local governments so once that comes out we'll want to have a look at that and sort of do a self-evaluation to make sure that our terms of reference to the committee are sort of reflecting the latest best practice guidance and I think we're always thinking about forward plan of training that might help inform some of those topics which we might want to look at in the future so as soon as that's published we will look at that and that was all the items Chair that I wish to talk about on that agenda item Thank you so just to clarify before I bring in other members of the committee in terms of the training so is your suggestion that we wait for this updated sort of model terms of reference decide what we want to incorporate and then on the basis of the new terms of reference think about some kind of training plan for committee members Well yes I mean it would make sense wouldn't it to see what the latest changes are but I mean I would say they're going to be sort of key themes which exist in both in the current standards and the new standards I mean a lot of things that we do are going to be the same we recently sort of benchmarked a couple of years ago our terms of reference against the current standards so I'm kind of not expecting massive change we'll have to wait and see what comes out of the guidance one of the things which and this is perhaps not so much for training but just to be aware of I think there's going to be a requirement for our independent members to be appointed the committee something that we discussed before but because it's been spoken so much at a sort of a professional level I think it's probably going to become quite likely that that will be an expectation so if there's any burning issues we could certainly plan them now but it would be better informed once the new guidance comes out okay thank you Councillor Williams if you wish to speak Thank you chair through yourself can I just put a request in that as on other reports we do have a recommendation sheet with the committee update report just for transparency purposes so the public and us know exactly what we're meant to be doing on these issues it won't be for noting I know but for transparency to chair then on page 184 now I know and have seen first hand the incredible work and forensic work that Mr Maddox and those in the fraud prevention team have done and there's been a great deal of effort in recent years to pull that together and to tackle fraud I perhaps am a little old fashioned beyond my years but for me it's a very principled matter this is not our money this is taxpayers money and if somebody receives money that they shouldn't or defraud this council they're defrauding the pocket of all of our residents and when I look at page 184 I am a little concerned about the un-economical to investigate the 12 there now I do realise that you if it's 10p then you know we have to let it go but I would like to record and I would welcome if other members are as well that we should be fighting the injustice of fraud not just even if it isn't financially viable to us because we will never be able to record how much money is saved through prevention and if people know that we will be tough on it and we will enforce it they are less likely to try their luck okay so I'm hoping that we will see some other figures but can I just have some reassurance that our threshold for A14 is very very low so that would be my first request chair the other is page 185 please can we have some abbreviations of LAFs and Locto and everything else on the basis of transparency I know we've had this conversation before and it seems like RIPAA for example those of us that have been around a while now we know exactly what they are but having for the public having the CT abbreviated council tax we've got some helpful hints there chair but we haven't got a complete set of accessible documents currently so well done to the team that are looking into this as well I know that they put immense effort and detail into it just want to make sure that that isn't wasted and that we do actually persecute people who have defrauded our residents thank you chair I'm assuming did you mean prosecute in the you said persecute it's like a strong word persecution could be persecution sorry Peter did you want to come in on that yeah so yeah I can't remember what the figure was off the top of my head I can finally have it it's quite a low figure we do get particularly on some of the housing benefits we do see some really quite small numbers we do do an investigation up to a point but there does sometimes come a time when it doesn't quite stack up to continue to pursue when we talk about quite small amounts I think the point is really well made about fraud and public money I don't know whether it's been reported as committee about the work we've done on some of the grant frauds for example Government COVID grants were issued at speed and Jonathan referred to that earlier and we did pursue a number of people who have claimed those grants fraudulently we had a really quite high profile success in relation to one of those schemes and I don't know whether this committee has been made aware of that previously or not I can't call it but you know there are some quite high profile successes we've had and a lot of work goes into doing that but you know from a chief finance officer point of view it's the right thing to do it's the right thing to make sure that public money is used in the right way and I wouldn't mind commenting a little bit more on the key amnesty as well because that's a project we've been looking at tenancy fraud is a big area of fraud it's in a number of guises but it is the area of greatest risk to all councils that hold housing stock there are people that have tenancies that don't live there there are people that hold tenancies with more than one council there are people that sell their keys on to other people to live in the property and we know that it's the biggest area of risk and it concerns me that potentially people are holding council properties and depriving those that really should be having those council properties so we came to the conclusion it would be a really good idea to do some joint working with housing to try and get the message out there that this is going on we've talked to tenants associations and tenants representatives already and they're quite keen there's still quite a bit of work to do but we'll bring some more information back to members so a couple of months before we intend to do the project I think it's an important project to do just to raise the profile of these sort of things because I think sometimes it hasn't in the past and I know local authorities in particular have previously been criticised for the lack of what they do in this sort of area so yeah, thanks for your comments Thank you, I'm sure we'd look for some more information on that Yeah, page 184 it looks like maybe I'm reading numbers incorrectly but we have 36 live investigations but nothing has yet been brought to a conclusion, isn't that just no time yet? So I think again that the timing of this report a lot of those have come to the conclusion April and May so there's always a significant number of cases ongoing so we did have quite a backlog I don't remember where during COVID we weren't allowed to issue fraud to its conclusion so we had a significant period of time where we got behind and it's been quite difficult to catch up we've got a relatively small team but we have taken on an additional member of staff to clear the backlog so we will see in the first quarter of this year a lot of those 36 cases come to fruition because I know particularly during May we've made quite a lot of progress on that but unfortunately COVID did create a backlog and it's been really quite difficult to resource up and get through that backlog but we're now making really good progress Thank you, are there any further comments from members of the committee or shall we move on to the next item we've been asked to note the report which we have done thank you Jonathan for providing it we now move on to agenda item number 8 which is the internal audit plan the committee has been asked to approve the draft audit plan and strategy and the supporting charter and code of ethics can I ask Jonathan Telley head of internal audit to please present this report so the purpose of this report because it is quite a long one to break it down to some bite-sized chunks it's to communicate the next six months of audit work which we want to undertake also feedback from work which we've done in the last six months and that's going to enable us to have a current opinion on the control environment which enables me to provide my statements in the annual governance statements and then secondly it's to approve the plan and also the supporting charter and code of ethics there's been no change to the charter or code of ethics but we still include these annually to demonstrate how we comply with public sector internal audit standards and it's really really helpful for us as internal audit to get that support and endorsement from user committee so that's why we bring them back and unfortunately that does make it a very lengthy document but by having that high profile it's really good for our governance arrangements On page 188 I start to talk about the background of how we have an internal audit plan so we now operate a short six month plan we've been doing that for a couple of years I spoke earlier on about the organisation being agile it's important that we as an internal audit are agile as well that helps us respond to lots of demands and for new audit work and what we've moved to doing updates through like the previous gender item sort of quarterly updates to the committee to help keep you more informed We may bring back further supplementary reports bigger ones like this throughout the year but we're trying to keep you engaged regularly and just I suppose to provide a bit of flavour about I talk about being agile and then demand I mean since even writing this report and submitting it I've had a further request from central government another bit of audit work quite quickly another bit of grant assurance work on COVID related grants for a protect and vaccinate scheme so it gives you a bit of a feel for what the pace of change is like these days so attach the report basically the four appendices the audit plan the PENIX B, the update and opinion and the charter and then the code of ethics so I'll briefly try and pull out for you the important salient points so scrolling through page 192 this is about how we sort of identify work in the plan and so we have lots of consultation with various people I have a big universe we have all the potential audits we could look at and I sort of benchmark with peers and professional people to work out what thematic and emerging risks are and then once we've got that we go through a continuous process of evaluating these reviews to try and work out what we think are the priority items and it's a constantly shifting sort of landscape on page 193 it's helpful to talk about resources councils are big and they're complex we do a lot of different varied activities so it's safe to say there's always going to be more demand than what we've got resources to to deliver to order a council and it's entirety will probably take five years so that's why we prioritise the work on the basis of risk Talking of risk on section 5 on the same page I've just provided a little graphic which are some of the topical risk themes which are sort of emerging at the moment and these are some of the factors that have helped inform my plan On the next page 194 I talk about assurance type and key themes and these are things which are really useful for us because it helps to communicate the different types of reviews that we do and the different lenses that we look through our work so the first one, the first table 6.2 there, it sort of articulates that we have corporate plan objectives so these are always going to be risk based reviews things which help us deliver our corporate priorities and help mitigate the risks of things going wrong then we've got things which are core assurance reviews these are things which are crucial critically important or they may be things which are statutory and mandatory for us to complete and we've been having a lot of those recently I just mentioned we've had another grant certification request come in they fall into that category and then we may have third party assurance as well where we may take assurance from partners or other people that have done work in that area we try to avoid duplication because that creates an unnecessary burden on the teams being reviewed so we do try and work effectively with our partners and we can even include working effectively with Ernst and Young as our external auditors too on the following page table 6.4 these are what I would sort of suggest looking at the reviews we want to do over the 12 months are the key themes transformation and continuous improvement is very very important resilience and recovery of course looking at how we've been adapting to rapid change across the council and that becomes almost a standing item in a lot of reviews that we do are you working differently are there any changes to the control environment governance is always going to be a key thing there because we need to provide that assurance for the annual governance statements council frauds as we've mentioned earlier there's been a higher risk profile I think recently mainly because of the business grants so mitigating that fraud risk or at least making sure there's adequate controls in place and providing assurance back to you is been an important aspect of what we've been doing and so that features very much in our plan and then finally of course environmental so we consider that during our audits we're actually undertaking a couple of environmental audits it's something that we've done for quite a period of time now at this council which is quite positive so we feel that's a very important theme and then I can't deliver the report without mentioning the paragraph underneath follow ups it's important to mention that we issue reports and there's a higher level of actions which are very very important we will follow those up we will go back to the team see how they're progressing just to make sure that they have been implemented and that we can get improved level of assurance from the team so if I was to go forward now let's have a look at page 197 so this is the overall summary of the internal audit plan so I look ahead for six months of work because that's realistically what we can plan for now but as with budgets I tend to think over an annual cycle and this is how I feel our resources are going to be allocated throughout the year 400 days of work splits amongst different themes and what I show here is the current year in previous year and this is to sort of communicate to you as a committee how the type of work we do may be the same or it may change now I think this year I think it's going to be a change for the past few years we spent a lot of time on business grants which was much more consultancy work rather than standard assurance work and I think now we've come to the sort of end of that process we're going to see more of a return to traditional type assurance reviews I'll caveat that there's obviously a lot of important things going on in the world at the moment with sort of the cost of living and the global issues so that may change but at this stage we're anticipating a return to more normal reviews then on page 198 this is the list of our planned review for the six months so it's listened to corporate plan objectives and core assurance work and it gives you just a flavour of what we're trying to look at and what I would say is what we're looking for from the committee is are there any other high critical areas which you might want us to review this is a good opportunity a good forum to raise them and then we can start to consider adding those to my plan the corporate plan objectives those are the risk based ones I said earlier on the core assurance work this is the sort of statutory stuff and so we've already made a start on that in some areas you'll be pleased to hear what I would sort of highlight is that I've put in the report the financial management code twice and it's not because it's that important that I want to review it twice but it's just I changed the category and I unfortunately didn't remove it from the other table so it's in there as both core assurance work which is what it should be and also risk based work now I've put it in as core assurance because it's a key component of the annual governance statement on page 201 this is a chart which I put in to illustrate the type of assurance we provide and I think what we can say here the key point is we're spending a lot of time and compliance work at the beginning of the year and a lot of time on that grant assurance work where I mentioned we're doing the grant certifications I expect those to reduce over the longer term and there'll be more of an increase in the other types of assurance types listed below then on the following on page 202 governance risk and control so this is just to highlight some of the other areas of work that we do so it's not pure assurance work because we're internal and we're permanently working with the council we have a great opportunity to add value across a lot of areas and this gets classed more of consultancy type work and it's just to really recognise that we do that we feature that in the plan just for full information and that can be really helpful because rather than come along after something's happened and providing a critical review we can proactively work with teams to avoid issues before they materialise that's obviously a much smarter way of working then on appendix B which is page 204 this is our progress updates there's probably not a lot of new things here because it includes items which we've reported to the committee through the previous updates reports that we're doing on a quarterly basis but we're including it here for completeness because we know that our colleagues are earning some young like to see assurance that this document is considered as part of the whole annual governance process so we're including it for that purpose so it talks about some of the reviews which you already would have been appraised on but some key points for me page 204 just to give you some assurances we need to be fully staffed within the team and actually a big thanks to my team for the work we've been doing over the past sort of 6 to 12 months because they don't come to this committee so you don't see them they obviously do a lot of the hard work to get us where we are then progress against plan as I say we've covered this before but it's on pages 207 so these were previously reported to the committee so other things which we include in the reports section 7 on page 2 on 1 the national fraudan initiative this is where we extract data from systems for collation nationally other councils do this and it goes into big pop managed by the cabinet office and we use that to help identify cases of fraudan error so we've continued to work on that over the past 12 months and we're going to be starting to prepare for the next exercise that's going to be around October time and then yes mention business grants of course because that was a significant amount of our resources consumed on that I'd like to just verbally confirm that we're maintaining compliance with the public sector internal audit standards so we make reference to that in the reports and that's on page 212 and then we'll say we get to the internal audit charter this is a document which hasn't changed since previously but it's important for you to be aware of and supports because it's our right of access it sets out what we're going to do in the council so very important for us Code of Ethics is what we comply to each year so again very important and then hopefully if I find it useful we like to include a glossary of terms because we are guilty of using a lot of acronyms in internal audits I hope you find that useful so that's me walking through the report happy to take comments and questions thank you Jonathan and thank you to both the work of yourself and your team in bringing this plan together and for the work that you've done over the past well past several years for you which I appreciate it being very challenging I'm sure you'll be glad to get back to a bit more business business as usual and some kind of core internal audit work comments from the committee please I think Councillor Williams indicated thank you chair and through yourself Focusing on pages 216 217 I just want to have assurance from Mr Tully that the shared service obviously not under our direct control the shared service is supporting Mr Maddox and the team you've mentioned a lot about working with EY what I would like is maybe a little less of that and a bit more support of our team that are working to try and resolve these issues so can we have your assurance that internal audit are supporting our finance department and is there more that you can do and if so how do we make that happen thank you chair thank you councillor Williams absolutely I'd mention EY because it's often overlooked and it's just trying to provide the committee with the assurance that we're not doubling up on work we're trying to be as efficient as possible but yeah I absolutely I work with Peter quite a lot we have regular catch ups in terms of the work that we do we try to proactively support and that there's two big factors here it's looking at the work they're doing to help identify improvement in controls to get things working as quickly as possible but also as I mentioned in the update earlier on is that we're not being a burden and giving Peter the chance to prioritise those key bits of work so yeah it's really important that Peter and I maintain that regular dialogue and I certainly do that with Peter sorry I think Peter Maddick wants to come in and I'll come back to you thank you so yeah I'd endorse everything that Jonathan said there quite a lot of the work that the internal audit team do is a little bit behind the scenes so it's supporting stuff that then details and then goes into the audit so yeah I'm more than happy with the work that Jonathan does and it also provides significant support to our corporate fraud team as well the two teams work together very closely so those are the accountancy and corporate fraud are obviously the two areas where they sort of deal with us in finance most and yeah the support is very good very helpful timely and always useful thank you sorry I can't so much thank you for that reassurance from both of you I'd also and this will be the first time I think I have ever said this and Councillor Hales has obviously known me for quite a long time now and I'm normally hating to the word duplication I'm very cautious of in this situation however only this situation if some duplication is required in order to help with that process please do it and you know please do help but I caveat it chair because it pains me to say it as an account that we don't like waste but I wouldn't consider it a waste in this case I think it would perhaps would be much necessary and appreciated support thank you for those comments and councillor I think you want to sorry councillor Jeff Harvey wanted to come in thank you chair and through you um age 210 which is carbon management interest to me as one of the vice-chairs on the Climate and Environment Committee and I hadn't realised that this is where our data on carbon is coming from your department so that's great work I'd like to raise that I think 3.5% of global emissions is down to data processing and when I last checked on this we kind of haven't really got a handle on this I mean if you remember going back through 4 years ago we used to have a data processing room within South Cams Hall and at that time the baseload consumption there was 100kW so that would have translated into 200 tonnes a year of carbon which is quite a significant amount and of course if the data processing room were still there then we'd be able to account for that and the reduction of that due to the new solar panels we have in the car park which I think everyone agree are rather splendid but the problem is that since then the data processing centre became a sort of shared service undertaking I think we were first told it had been relocated to Passfinder House and then I think some of it was then at Shy Hall I presume that's no longer at Shy Hall because county had now relocated to Alcambri but the point is unless we actually have a handle on this we can't really do anything with it I mean for example if we knew where the shared service were locating this equipment never mind what our share of it would be then looking at well for example our new micro grid facility that we're hopefully going to be building at Water Beach to support the waste operation service I mean there may be a possibility that we could sleeve some of the power from there using peer to peer in order to power the data processing so I think it's just important that we get some data on that because without data we're kind of really stuck Thank you Jonathan was anything you wanted to add on that? Thank you, yeah I was taking notice of what you said there's some really good points we'll make sure we pick that up going forwards. Thank you, any further comments from members of the committee? Councillor Helen Lee-Ming Thank you I would like to propose something to add to the internal audit programme of work please Would it be possible to do some targeted work around the self-service portal to check how that's functioning, how it interacts with the standard approach through the council? Thank you yes, that is something we've got in our forward plan going forwards over the longer term it is actually a thing which I probably had scheduled around the end of the financial year or beginning of the new financial year so yeah please be noted it's on our long term plan I suppose the question would be are you happy with that sort of time scale or would it be something that would need to be accelerated? Could I ask about the volume of transactions that are now going through the self-service portal I think that would influence my comment on that Okay If it's okay to leave it as it is positioned towards the sort of end of the financial year I can just provide you assurance that it's in our plan going forwards Thank you Thank you There were two items that have been suggested to me as possible areas for Interlordid to look at one was on the completeness of the land records that the council holds so less on the kind of valuation side on moron have we clearly identified all the kind of parcels of land that are owned by the council I appreciate this is difficult in a rural environment but I wonder if you could comment on that and whether that's part of part of your work your work plan in the future Thank you yes It is part of our work plan going forwards because it is a challenge isn't it in rural areas there's potential scope for discrepancies so it's kind of scheduled around 23, 24 but we could accelerate bringing that forwards I've already been having discussions with my auditor who's been working on the actual asset register review and there's some clear synergies there with him developing his knowledge and understanding of the system I think it is a sensible thing to do and we can certainly be sampling things back to other data sets to provide assurance that things have been recorded, accounted for, if there's anything which requires updating conditions or dilations Thank you I think given the wider issues around the asset register it might be worth given that you're working on that at the moment to take full value of that synergy it might be worth pulling that forward slightly but I'll leave you to consider that and the other area that was suggested to me was around management accounts and budgetary control I think given some of the things we've been hearing about historic processes for production of the annual accounts there's a natural follow on question as to the process for more regular monthly management accounts and how budgetary control is exercised does that feature in your audit plan? Yes it does again it is one that's probably a little bit further on the future it's one we had probably scheduled around the end of the financial beginning of the next one so it's definitely on our forward plan conscious that we have had new financial systems implemented so we're keen to look at that the various different components and aspects of it to do with the data going in being loaded, the budgets being set and around the regular reporting around how managers and what their involvement is in the forecasting updating the actual figures and then the outputs of that Peter and I have already been having conversations early conversations around that order and what it could look like and I think in the context of the statement of accounts there's no concern because they sort of exist probably I don't know what the correct word to say is but they're not dependent upon each other and the late statement of accounts doesn't mean that we're not doing regular budget monitoring it is there but as I say it would be good to provide a committee with that assurance that it's working well Yeah thank you I think I'd be keen to see that come to the committee I mean it sounds like it's already relatively soon in the pipeline anyway but I would be very keen to see that come to this committee Are there any final comments on this before we close this item not seeing anyone waving desperately so we are asked to approve the draft audit plan strategy and also approve the supporting charter and code of ethics Are we happy with all of that not seeing any disagreement I think we can, yep that's a firm thank you very much we move on to, thank you very much Jonathan Tully for your time today we now move on to agenda item number nine it's an update on the use of regulation of investigatory powers act known as RIPAA Could I please ask Roy McKenna the monitoring officer to present his report Thank you chair so chair through you the purpose of the report is to update members of the committee on the use of RIPAA powers since they last met now those members who are returning will be well used to this report it is a short report and the committee are to receive quarterly updates on the use of RIPAA powers now RIPAA regulates covert investigations by a number of bodies including local local authorities and the council comprehensively reviewed its policy in September 12 and it was last updated in March this year the council was subject to a remote inspection in February 21 and I'm pleased to say that it concluded that the information provided demonstrated a level of compliance that removed for the present requirement for a physical inspection chair I can report that since the committee last met that RIPAA powers have not been used and that's the end of my very short report happy to take any questions if there are any, thank you thank you very much are there any questions on this report Gareth Heather Williams thank you chair and thank you Mr McKenna for your moment at the end of every audit meeting and I say this because you do always have to wait for us no matter how long our meetings are at the end for this agenda item so I'm just wondering is this a meeting that you would normally through your self-chair normally have to attend which case there's no issues with being at the end or could we take mercy on you and bring it to the start of the meeting I did ask Mr McKenna if he wanted to go early on and he said you said you were happy to just attend remotely at the end I'm at the hands of the committee as I say Patrick kindly give me a nudge at the previous item to join so I'm happy to join happy to take it at the start and get it out of the way actually maybe doing it at the start would be better if the committee are happy with that I'd be happy to see this item taken first in future meetings we take note of that, thank you second that chair okay we're asked to note that the council's not used surveillance powers since we last met thank you very much item number 10 now please item number 9 the topic of interest the opportunity for officers members to raise any matter of interest council head of wiliams would wish to raise a matter of interest not with an exasperating tone I'm sure Chair but if we don't get it sorted soon you will become very familiar with the audit effectiveness tool kit that I've asked for at nearly every meeting I feel I'm so committed to this now, Chair, that I have to keep asking for the question, but especially with what's going on, I think there is an obligation on us as councillers to reflect on ourselves just as much as officers for their work and the external auditors. We're all part of this system. We all have to function correctly. For the first time of asking yourself, Chair, although I would say your previous Chair, at the last meeting committed to the effectiveness toolkit, so I wait for an update with fated breath and some weariness. Thank you, House. Just from my benefit, so this is a toolkit that would form a sort of training element for the committee for members to undertake. Is that correct? I can confirm that Heather has been asking for this for some time. It's a toolkit that EY have. Interestingly enough, I was actually discussing with Jonathan last week or the week before, and we think there's actually something better. Well, Jonathan probably knows more than me about this, but we had a bit of a discussion and I forgot what it was called. Jonathan, can you recall what we were? Thanks. I think the EY toolkit was based on good governance for audit committees in general. When we're looking at it, it has this assessment criteria at the back. I think if we can wait until late summer, what we'll probably see with the SIP for guidance on audit committees is an evaluation toolkit in the back of that. I haven't seen it, so I can't make any promises, but that would be my expectations and I would expect that it's probably also going to be tailored to local government rather than a more general audit committee toolkit, which is what EY we're offering. I'm loath to make promises on something which might not materialise, but I'm reasonably confident that will come later in the summer. If that's any help for you. Thanks very much. Councillor Jess, how do you want to come in? Thank you. I'd just like to congratulate Mr Maddock on Slope's shoulder and that one onto Jonathan. That was a perfect move. Thank you. Councillor, do you want to come back in? Yes, thank you. Can I make a suggestion? I don't want to leave any time on this, but we do both. I think we have an issue with audit in particular, so let's make sure that we are fully briefed. We need to do our part as well. We haven't ever had training in relation to audit other than a workshop in 2018 and a sit for day. I just think it would be a productive, useful thing for us to do and make sure that we're doing our jobs properly as well. Let us all reflect, Chair. Thank you, Councillor. I'm not averse to the suggestion that we do both if that's not going to be duplication. Perhaps we investigate both and come back in September with a full training plan or at least the start of a training plan that we can then work on over the next couple of years. I can't remember what I mentioned. We're hoping to do some training on Treasury management. I think that's going to be an area of interest as well. Thank you all very much, Members. That was a long meeting, but I think a very useful and productive one. I'm very grateful for all your input. Thank you very much to Jonathan, Peter, Patrick and Jonathan again. Everyone's got the same names and Roy is one of your contributions. I'm going to close the meeting now at five minutes past one. Thank you all very much. The meeting is the 29th of September at 10 a.m.