Agenda, decisions and draft minutes

Apologies for non-attendance were received from Mark C Stocks (Grant Thornton).

Apologies for non-attendance were received from Mark C Stocks (Grant Thornton).

Councillor Anne Lee declared an interest in item 6 as a Trustee of Groundwork Northants.

Members commented on the withdrawal of the Terms of reference report from the previous committee and requested that the updated terms of reference be circulated to members of the committee and an update training session be offered to members following the approval of the updated terms of reference at Full Council.

It was then  

RESOLVED                That the minutes of the meeting of the Audit and Governance Committee held on 27^th November 2023 be approved as a correct record and signed by the chair

Members commented on the withdrawal of the Terms of reference report from the previous committee and requested that the updated terms of reference be circulated to members of the committee and an update training session be offered to members following the approval of the updated terms of reference at Full Council.

It was then  

RESOLVED                That the minutes of the meeting of the Audit and Governance Committee held on 27^th November 2023 be approved as a correct record and signed by the chair

Paul Harvey attended the meeting on behalf of Grant Thornton (External Auditor) and provided an audit update report which stated that Grant Thornton’s audit planning for 2021/22 financial statements had been delayed due to outstanding legacy council audits. It was stated that this had also had an impact on the Council’s ability to prepare financial statements for 2021/22.

Planning work has been undertaken by External Audit in relation to:

·       Preliminary going concern assessment

·       Review of the journal control environment

·       Review of the IT environment

·       Gained an understanding of some businesses processes for significant transactions in the financial statements.

It was reported to the committee that work in these areas identified issues in relation to the IT and the Journal control environment. 11 significant deficiencies, 14 deficiencies and 3 improvement opportunities were identified in relation to the IT environment.  Majority of deficiencies related to legacy IT systems and risk mitigation had been identified and implemented.

An update was also provided in relation to the current backlog of Local Government audits where the Government is implementing a backstop. It was noted that the consultation period was due to commence imminently on a 30^th September backstop date. Members heard that the backstop would require auditors to issue a disclaimed opinion on all audits up to and including 2022/23 that had not been signed off by September 2024.

External Audit were planning to commence planning work for the 2023/24 audit in February 2024 with an eye to present an audit plan to members of the Audit & Governance Committee at its next meeting in April 2024.

Members heard that North Northamptonshire Council was working with West Northamptonshire Council to disaggregate the closing balances of Northamptonshire County Council. Although both authorities have been able to agree a significant proportion of these balances there area a small number of areas whether there is a disagreement on how the balances should be split. For these areas the Council’s were seeking arbitration to determine the disaggregation. External Audit stated the matter as a significant weakness in their Value for Monney assessment of the Council for 2022/23 and raised concerns regarding the process.

It was heard that determination arrangements had been put in place following correspondence by both authorities to the Secretary of State. The Council was yet to receive a response regarding arrangements for next steps. Conversations remained ongoing with West Northamptonshire Council and Grant Thornton.

Grant Thornton issues their Value for Money arrangements for 2021/22 and were undertaking work on the arrangements for 2022/23. No significant weaknesses in arrangements identified but improvement recommendations were made in relation to financial sustainability, Governance and Improving economy, efficiency and effectiveness.

Members then received an update regarding Corby Borough Council legacy accounts. It was noted that the accounts were yet to be signed off by Ernst & Young (External Auditors). The accounts were yet to go through the professional review where there were five separate items under review. Three items had been completed and may potentially require minor disclosure changes.
Both officers  ...  view the full decision text for item 150.

Paul Harvey attended the meeting on behalf of Grant Thornton (External Auditor) and provided an audit update report which stated that Grant Thornton’s audit planning for 2021/22 financial statements had been delayed due to outstanding legacy council audits. It was stated that this had also had an impact on the Council’s ability to prepare financial statements for 2021/22.

Planning work has been undertaken by External Audit in relation to:

·       Preliminary going concern assessment

·       Review of the journal control environment

·       Review of the IT environment

·       Gained an understanding of some businesses processes for significant transactions in the financial statements.

It was reported to the committee that work in these areas identified issues in relation to the IT and the Journal control environment. 11 significant deficiencies, 14 deficiencies and 3 improvement opportunities were identified in relation to the IT environment.  Majority of deficiencies related to legacy IT systems and risk mitigation had been identified and implemented.

An update was also provided in relation to the current backlog of Local Government audits where the Government is implementing a backstop. It was noted that the consultation period was due to commence imminently on a 30^th September backstop date. Members heard that the backstop would require auditors to issue a disclaimed opinion on all audits up to and including 2022/23 that had not been signed off by September 2024.

External Audit were planning to commence planning work for the 2023/24 audit in February 2024 with an eye to present an audit plan to members of the Audit & Governance Committee at its next meeting in April 2024.

Members heard that North Northamptonshire Council was working with West Northamptonshire Council to disaggregate the closing balances of Northamptonshire County Council. Although both authorities have been able to agree a significant proportion of these balances there area a small number of areas whether there is a disagreement on how the balances should be split. For these areas the Council’s were seeking arbitration to determine the disaggregation. External Audit stated the matter as a significant weakness in their Value for Monney assessment of the Council for 2022/23 and raised concerns regarding the process.

It was heard that determination arrangements had been put in place following correspondence by both authorities to the Secretary of State. The Council was yet to receive a response regarding arrangements for next steps. Conversations remained ongoing with West Northamptonshire Council and Grant Thornton.

Grant Thornton issues their Value for Money arrangements for 2021/22 and were undertaking work on the arrangements for 2022/23. No significant weaknesses in arrangements identified but improvement recommendations were made in relation to financial sustainability, Governance and Improving economy, efficiency and effectiveness.

Members then received an update regarding Corby Borough Council legacy accounts. It was noted that the accounts were yet to be signed off by Ernst & Young (External Auditors). The accounts were yet to go through the professional review where there were five separate items under review. Three items had been completed and may potentially require minor disclosure changes.
Both officers  ...  view the full minutes text for item 150.

Rachel Ashley-Caunt, Chief Internal Auditor attended the meeting and presented the Risk Management Policy and Strategy for the Committee’s review. The Risk Management Policy and Strategy set out how the Council would manage risk - both in business as usual and in transformational activity. It also explained how risk was managed at each level of the organisation and how a hierarchy of risk registers (from the strategy risk register down to directorate and project risk registers) was used to communicate and escalate risks.

It was noted that since the original Risk Management Strategy was produced and approved in July 2021, the Council had sought to further develop its risk management framework and embed risk management within the organisation.  The draft Risk Management Policy and Strategy was intended to reflect the informed and developed risk management approach, with an emphasis on sources of assurance and developing further to align with recommended practice.

It was noted that following the progress made in this area, a new Risk Management Policy and Strategy had been drafted to reflect the updated approach and to seek to continue this development of the risk management framework and culture. 

Areas where the document provides further clarity include:

•                  Details on how risks should be identified and recorded, at each level of the organisation;

•                  Support on the application of the risk scoring methodology and tolerances;

•                  Guidance on the importance of the ‘sources of assurance’ section of the risk register and how this should be used to inform high risk areas for internal audit coverage;

•                  An outline of the roles and responsibilities of key officers, including in the escalation process between the different layers of risk register;

•                  How the Council will seek to develop and embed risk management further, including the roll out of officer and Member training;

•                  Reference to the development of fraud risk registers, the process for which will be detailed further in the Counter Fraud Strategy; and

•                  Linking the approach to the Council’s values.

Following debate it was:

RESOLVED            That the Risk Management and Strategy be approved for adoption.

Rachel Ashley-Caunt, Chief Internal Auditor attended the meeting and presented the Risk Management Policy and Strategy for the Committee’s review. The Risk Management Policy and Strategy set out how the Council would manage risk - both in business as usual and in transformational activity. It also explained how risk was managed at each level of the organisation and how a hierarchy of risk registers (from the strategy risk register down to directorate and project risk registers) was used to communicate and escalate risks.

It was noted that since the original Risk Management Strategy was produced and approved in July 2021, the Council had sought to further develop its risk management framework and embed risk management within the organisation.  The draft Risk Management Policy and Strategy was intended to reflect the informed and developed risk management approach, with an emphasis on sources of assurance and developing further to align with recommended practice.

It was noted that following the progress made in this area, a new Risk Management Policy and Strategy had been drafted to reflect the updated approach and to seek to continue this development of the risk management framework and culture. 

Areas where the document provides further clarity include:

•                  Details on how risks should be identified and recorded, at each level of the organisation;

•                  Support on the application of the risk scoring methodology and tolerances;

•                  Guidance on the importance of the ‘sources of assurance’ section of the risk register and how this should be used to inform high risk areas for internal audit coverage;

•                  An outline of the roles and responsibilities of key officers, including in the escalation process between the different layers of risk register;

•                  How the Council will seek to develop and embed risk management further, including the roll out of officer and Member training;

•                  Reference to the development of fraud risk registers, the process for which will be detailed further in the Counter Fraud Strategy; and

•                  Linking the approach to the Council’s values.

Following debate it was:

RESOLVED            That the Risk Management and Strategy be approved for adoption.

Tom Barden, Head of Performance, Intelligence and Partnerships attended the meeting and provided members with a report which sought to update the Audit and Governance Committee on progress of work to complete a self-assessment of significant partnerships, following a decision by Executive to adopt the Partnership Governance Framework and the recent amendment of the terms of reference of this Committee to oversee such work.

It was heard that North Northamptonshire Council was a key member of several partnerships with other public sector bodies, as well as with the private and voluntary sectors.  Partnerships support the delivery of the Council’s corporate strategy. The structure of partnerships can take many different forms depending on the motivation and need for working in partnership, and the different circumstances in the large range and variety of services and legal obligations that the Council is responsible for.

A partnership might take the form of a limited company, or a statutory partnership might be formed without a separate legal entity. This means that the Council needs to manage a complex set of risks associated with the partnerships it is involved with. In order to maintain an overview of the effectiveness, efficiency and governance of partnerships, a Partnership Governance Framework was adopted by Executive in October 2023, and a Register of Significant Partnerships has been created. The Partnership Governance Framework outlined the approach to partnership working and was to be used as an aid to officers and elected members who are involved in these arrangements.  Its purpose was to ensure that the Council’s interests are protected, by identifying who our significant partners are, understand the purpose of partnerships with them, how they are operated and governed, and have procedures in place to influence these arrangements when necessary.

The Framework set out a mechanism for gaining the benefits and managing the risks around partnerships by introducing a set of roles and responsibilities for officers and Members involved in partnerships, particularly the ‘Lead Officer’, who is the main point of contact between the Council and the partnership. The Framework also introduced an approval process for entering new partnerships, and an annual self-assessment process to be completed by the Lead Officer. 

Members sought to increase frequency of reports including that of the Children’s Trust where some partnerships have identified more risk then others. It was heard that officers would work in cooperation with the committee and internal audit to identify high risk partnerships that would require more frequent updates.

Members then received an update regarding previous ongoing work with the Children’s Trust. It was heard that following on from the Committee’s concerns regarding sources of assurance. The chair undertook correspondence and subsequent meetings with the chair of the Finance, Resources and Audit Committee. The chair shared the views of the Audit and Governance Committee where there was a deficiency in sources of assurance for The Children’s Trust.
It was noted that West Northamptonshire Council had recently appointed a new head of internal audit. The draft audit plan for 2024/25 has been  ...  view the full minutes text for item 152.

A report was presented to members of the Audit & Governance Committee was sought to provide the committee with a progress update on the work of the Internal Audit team and the key findings from audits completed to date. 

It was noted that during the 2023/24 financial year to date, 53% of the planned audits had been delivered to at least draft report stages and a further 46% was in fieldwork stages.  This reflected that delivery was on track for this stage in the year. Since the last meeting of the Audit & Governance Committee, finalised reports had been issued in respect of six audit assignments. 

One update in relation to procurement compliance was provided to members. Compliance against contract procedure rules was undertaken and a number of sample tests were completed. In terms of compliance, testing of purchases made in the financial year to date noted that for 16 out of 25 purchases (64%) there was evidence of compliance with the requirements of the CPRs. In relation to new contracts and contract extensions, for a sample of 15 commencing in the financial year 2023/24 there was evidence available to demonstrate the procurement processed followed in 14 (93%) of cases. In all non-compliant cases noted, the value of the purchase / contract was less than £100k and therefore had not been subject to checks by the Procurement Team, who currently only review purchases over £100k. Actions had been agreed in relation to training, inclusion of procurement training in officer inductions and checks on new contracts added to the register. Based upon the fieldwork completed, a moderate assurance opinion had been given for

Control Environment and compliance with a medium organisational impact.

The second audit update was provided in relation Revenue and Benefits system implementation. A good level of assurance was provided for control environment and compliance with a low organisational impact.  

In relation to complaints and compliments management the review found that an effective framework existed to support compliments and complaints.  This was based around clearly defined expectations in the Customer Compliments, Comments and Complaints Policy; mechanisms in place to receive compliments and complaints; and the role of the Complaints team in co-ordinating and overseeing the correspondence. However, key areas had been identified, where further action is required to manage associated risks and actions had been agreed in relation to policy review; improvements to reporting to track trends on complaints and learning outcomes; strengthening escalation processes for overdue complaints; improving record keeping on remedies; and clarifying processes for compensation payments.

Based upon the fieldwork completed, a moderate assurance opinion had been given for Control Environment and compliance with a medium organisational impact. A number of the recommendations had already been implemented

An audit report was then provided in relation to Home to School transport It was noted that the disaggregation process had created challenges, where further action is required to manage associated risks:

The review had found that the Council had a clearly defined Home to School Education Transport Policy, that is  ...  view the full decision text for item 153.

A report was presented to members of the Audit & Governance Committee was sought to provide the committee with a progress update on the work of the Internal Audit team and the key findings from audits completed to date. 

It was noted that during the 2023/24 financial year to date, 53% of the planned audits had been delivered to at least draft report stages and a further 46% was in fieldwork stages.  This reflected that delivery was on track for this stage in the year. Since the last meeting of the Audit & Governance Committee, finalised reports had been issued in respect of six audit assignments. 

One update in relation to procurement compliance was provided to members. Compliance against contract procedure rules was undertaken and a number of sample tests were completed. In terms of compliance, testing of purchases made in the financial year to date noted that for 16 out of 25 purchases (64%) there was evidence of compliance with the requirements of the CPRs. In relation to new contracts and contract extensions, for a sample of 15 commencing in the financial year 2023/24 there was evidence available to demonstrate the procurement processed followed in 14 (93%) of cases. In all non-compliant cases noted, the value of the purchase / contract was less than £100k and therefore had not been subject to checks by the Procurement Team, who currently only review purchases over £100k. Actions had been agreed in relation to training, inclusion of procurement training in officer inductions and checks on new contracts added to the register. Based upon the fieldwork completed, a moderate assurance opinion had been given for

Control Environment and compliance with a medium organisational impact.

The second audit update was provided in relation Revenue and Benefits system implementation. A good level of assurance was provided for control environment and compliance with a low organisational impact.  

In relation to complaints and compliments management the review found that an effective framework existed to support compliments and complaints.  This was based around clearly defined expectations in the Customer Compliments, Comments and Complaints Policy; mechanisms in place to receive compliments and complaints; and the role of the Complaints team in co-ordinating and overseeing the correspondence. However, key areas had been identified, where further action is required to manage associated risks and actions had been agreed in relation to policy review; improvements to reporting to track trends on complaints and learning outcomes; strengthening escalation processes for overdue complaints; improving record keeping on remedies; and clarifying processes for compensation payments.

Based upon the fieldwork completed, a moderate assurance opinion had been given for Control Environment and compliance with a medium organisational impact. A number of the recommendations had already been implemented

An audit report was then provided in relation to Home to School transport It was noted that the disaggregation process had created challenges, where further action is required to manage associated risks:

The review had found that the Council had a clearly defined Home to School Education Transport Policy, that is  ...  view the full minutes text for item 153.