Members will be asked to make any declarations of interest in respect of items on this Agenda.

The following declaration of interest was made in accordance with the code of conduct –

To confirm the minutes of the meeting held on 23 September 2011.

Agreed the minutes of the meeting held on 23 September 2011.

To receive reports on business which, in the opinion of the Chair, should be brought forward for urgent consideration.

Recruitment of Independent Member

The Chair reported that whilst there had been some initial interest to the advertisement no-one had actually applied for the role.  The Chair had discussed the matter with the Council’s Corporate Communications Manager with a view to running a new advertising campaign in the new year.

In accordance with Section 100(B)(4)(b) of the Local Government Act 1972, the Chair brought forward the above items of business in order to inform Members).

The Council’s external auditor, Grant Thornton, will submit the Financial Resilience Review report.

The City Council’s external auditor, Grant Thornton, presented the Financial Resilience Review.  Members were advised that the report focussed on the arrangements that the Council had in place in terms of financial planning and how those plans were monitored throughout the year to ensure delivery of the financial savings required.  Overall, the review found that the arrangements in place were robust and that plans were clearly defined and linked well to the city priorities.  However, a number of areas for improvement had been identified as follows –

• the Council should continue to develop delivery plans to meet the funding shortfall expected in 2012/13 and beyond;
• zero based budgeting, focussed on priority areas, should be developed across the Council;
• the Council should continue to ensure that delivery plans were based on realistic assumptions, that they were deliverable in the planned timescales across departments, and that there were alternative delivery plan options for implementation where intended plans were unlikely to produce the planned level of savings;
• the content of the joint performance and finance reports should be kept under review to ensure that it contains sufficient detailed information to enable appropriate action to be taken where performance or spending was not in line with expectations.

Despite this, the external auditor reported that he was very pleased with the work done by the Council and was happy to recommend the authority as an example of best practice to others.

In response to questions raised, Members heard that –

The Committee welcomed the report and noted the recommendations.

The Council’s external auditor, Grant Thornton, will submit the Annual Audit Letter for 2010/2011.

The City Council’s external auditor, Grant Thornton, presented the Annual Audit Letter 2010/11 for consideration.  The Letter summarised the key messages and conclusions which had arisen from the work of Grant Thornton during their 2010/11 audit, namely –

• auditing of the 2010/11 year end accounts;
• assessing the Council’s arrangements for securing economy, efficiency and effectiveness to ensure value for money is achieved;
• certification of claims and returns to various grant paying bodies.

In addition, the following key areas where the Council had not yet completed recommendations to further improve its arrangements for 2011/12 were highlighted –

• roll out of the new draft project management procedures across the Council combined with the planned training programme;
• continued refining of financial planning and control arrangements to maintain strong financial performance in an increasingly challenging financial environment.

Concerns were raised about whether the rationalisation of staff and new transparency agenda would provide increased opportunity for acts of fraud or corruption.  The external auditor commented that where rationalisation of staff occurred it was sometimes possible that jobs which had responsibility for elements of internal controls could be lost or forgotten.  In addition, incidents of fraud or corruption could increase as a result of the economic climate with people willing to take more of a risk. 

Members were advised that the National Fraud Authority and Audit Commission had done lot of work to address these concerns and had produced a ‘Fraud Resilience Self Assessment Tool’ which local authorities could use.  Another example of helpful material available to local authorities was the ‘Fighting Fraud Locally’ document, which contained good advice on identifying risk and preventing it.

The Annual Audit Letter 2010/11 was noted.

The Council’s external auditor, Grant Thornton, will submit the Certification Work Report for 2010/2011.

The City Council’s external auditor, Grant Thornton, presented the Certification Work Report 2010/11 for consideration.  The report –

In order to help Members better understand the significant issues identified in the claim relating to the Housing and Council Tax Scheme, the Assistant Director for Finance Assets and Efficiencies and the Revenues and Benefits Service Manager gave a presentation on the Revenues and Benefits Services.  A copy of the presentation was tabled at the meeting.

In response to questions raised, Members heard that –

The Committee noted the Certification Work Report 2010/11 and agreed that four members of the Support Services Overview and Scrutiny Panel be nominated to monitor performance within the housing benefit service and recommended commencement of the task and finish group at the earliest opportunity.

(The meeting adjourned for a comfort break at 11.50 am and reconvened at 12 noon)

The Committee will receive an update report in respect of Operational Risk Management.

The Head of Corporate Risk and Insurance presented an update on Operational Risk Management.  The report –

A number of queries were raised in regard to the arrangements put in place to mitigate the risk of failing to maintain trees on the corporate estate.  As the specifics of this arrangement fell outside the remit of the Head of Corporate Risk and Insurance it was suggested that the relevant officer be invited to attend the next meeting of the Committee.

The Committee noted the Operational Risk Management Update and agreed that the relevant officer be invited to the next meeting to update Members on the amber risk – failure to maintain trees on the corporate estate.

The Assistant Head of Devon Audit Partnership will submit the Six Monthly Internal Audit Progress Report.

The Head of Devon Audit Partnership presented the Six Monthly Internal Audit Progress Report.  The report –

• reviewed audit work carried out since April 2011;
• commented on current commitments and performance;
• outlined proposed audit coverage for the remainder of the financial year.

In response to questions raised, Members heard that –

The Committee noted the report.

The Committee will receive an update on the constitution from the Assistant Director for Democracy and Governance.

Further to minute 64 of the Audit Committee meeting held on 21 January 2011, the Assistant Director for Democracy and Governance, updated the Committee on progress following the Annual Review of Financial Regulations.  Members were advised that –

The Committee noted the update.

The Director for Corporate Support will submit the Treasury Management Strategy 2011-2012 Mid-Year Review.

The Head of Finance presented the Treasury Management Strategy 2011/12 Mid-Year Review.  The report provided the Committee with an update on the progress and outcomes against the Treasury Management Strategy for the six month period ending 30 September 2011, including details of  –

• New borrowing
• Debt rescheduling
• Investment activity
• Benchmarking
• Compliance with Prudential Indicators
• the latest Icelandic Bank situation

Discussion focussed on the pros and cons of paying less interest on the Council’s borrowing compared to receiving less interest on its investments.

(This item was taken simultaneously with minute no. 45 below).

The Committee will receive a report from the Director for Corporate Support providing a supplement to the Treasury Management Strategy update submitted to Cabinet on 29 November 2011.

The Head of Finance presented the update to the Council’s investment policy/strategy as approved by Cabinet on 29 November 2011.  The Committee was advised that amendments were required to the Strategy and as the next meeting was not until March approval would need to be delegated to the Director for Corporate Support in consultation with Chair and Vice-Chair.

Agreed that –

(This item was taken simultaneously with minute no. 44 above).

The Committee considered the letter from the Audit Commission to the Council’s Chief Executive.  The letter informed the Council that –

Members were further advised that a further update would be presented to the next Audit Committee meeting in March 2012.

The Audit Commission Update was noted.

The Committee will note its work plan for the forthcoming year.

The Committee’s Forward Work Plan for 2011/12 was noted.

To consider passing a resolution under Section 100A(4) of the Local Government Act 1972 to exclude the press and public from the meeting for the following item(s) of business on the grounds that it (they) involve the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act, as amended by the Freedom of Information Act 2000.

There were no items of exempt business.