To receive any apologies for absence.

There were no apologies for absence received.

To receive any declarations of interest.

There were no declarations of interest received.

To consider the minutes of the meeting held on 17^th May 2021.

RESOLVED UNANIMOUSLY: That the minutes of the meeting held on 17^th May 2021 were approved as an accurate record.

To receive an update on the 2019/20 accounts.

Andrew Vallance, Head of Finance, explained that Deloitte had recently written to the objectors with their provisional views on the objections to the 2019/20 accounts. Objectors had been given three weeks to respond to Deloitte.

Andrew Hill, a member of the public, asked to clarify that in the agenda pack the 2019/20 report from the May meeting of the Audit and Governance Committee was referred to as the ‘final’ report. Andrew Hill asked if this should instead say the ‘latest’ report.

Jonathan Gooding, Deloitte, confirmed that this was correct and that there would be a further report in due course to summarise the objections that had been made.

Councillor Sharpe asked when the final report on the 2019/20 accounts would be available.

Jonathan Gooding explained that the only work left was on the objections. Objectors had been written to, setting out Deloitte’s provisional view. They had three weeks to request documents and submit their comments. If there were no comments submitted, the accounts could be concluded very quickly after the three week deadline. The final report would not be available immediately after the deadline as the audit letter would still need to be reviewed.

The Chairman asked if the report would be ready for the September meeting of the Committee.

Jonathan Gooding said that it was possible but was unable to give any guarantees.

Councillor Baldwin asked if there was a legal obstruction to having members of the Committee who were meeting in person at the Town Hall also join by Zoom so that those on the call and watching on YouTube could hear and see clearly what was going on.

Emma Duncan, Monitoring Officer and Deputy Director of Law and Strategy, said that Democratic Services were looking at potential solutions to improve the accessibility and transparency of broadcasting council meetings.

To receive an update on the 2020/21 accounts.

Jonathan Gooding said that the 2020/21 accounts were in the process of being completed. The audit plan was in the agenda pack for both the statement of accounts and the pension fund, which set out the scope and timing of the work. Three significant audit risks had been identified. One was around properties being valued incorrectly, another was around expenditure which had been capitalised when it should not have been, and the final risk was around management override of controls. For the pension fund, override management of controls had also been identified as a significant risk, as well as the longevity swap not being appropriately valued. For these audit risk areas, Deloitte planned to test the controls. There was a change with consideration to value for money, as the requirements were now broader. There would also be a change in reporting, with an annual audit report produced in addition to the ISA260. The deadline for this report would be three months after the opinion was issued on the statement of accounts.

Andrew Hill asked when and how the period of inspection on the accounts was publicised by RBWM. He said that of the three risks Jonathan Gooding had mentioned, he asked for clarification that the first two were specific to RBWM where as the third risk was a general risk amongst most local authorities. Andrew Hill also asked for clarification on if Deloitte meant the RBWM Property Company or property owned by the council when it was mentioned in the report. Andrew Hill asked if Deloitte had already identified capitalisation of expenditure as a risk in the 2020/21 audit.

Jonathan Gooding said that significant risks were not the only thing that the auditors looked at. There was a set of presumed risks which Deloitte had to presume for all audits it undertook, including the risk of management override of controls. Another risk was revenue recognition, but Deloitte was keeping this under review to see if there were any changes. This was a similar position to most other local authorities. The property valuation and expenditure was taken from Deloitte’s understanding of the authority but they had not seen any evidence of fraud. Property valuations were a significant risk but this was very common. Deloitte was in the process of determining their judgement and valuation of property.

Andrew Vallance added that the accounts were summarised on the RBWM website.

Councillor L Jones commented on their being a requirement for councils to provide value for money. She asked what would be looked at as part of the audit to determine if the council was getting value for money.

Jonathan Gooding explained that previous audit guidance required a risk assessment to be performed. Certain documents needed to be reviewed to see if there were any significant risks identified in these areas. The arrangements in place were documented, which formed part of the risk assessment. The primary base of reporting on the accounts was the annual report, which would include more extensive detail and commentary.  ...  view the full minutes text for item 39.

To note and approve the annual Treasury Outturn Report 2020/21.

Andrew Vallance introduced the report. He explained that there had been slightly less borrowing across the year due to cash balances which was the result of Covid-19 funding from central government. This has been distributed to businesses as business rate grants which had helped to improve cash flow. 70% of borrowing remained short as short money was extremely cheap at the moment. The council was constantly reviewing its borrowing portfolio and at some point officers would look to borrow for 5-10 years at slightly higher rates in order to lock in low rates. Therefore, if it was beneficial the council would move some of its short term borrowing to medium term borrowing. In terms of investment, rates had been low at near 0% which meant that investment income had been low. Andrew Vallance reported that there had been one breach of the counterparty limit for eight days, with £8 million invested in a money market fund where the counterparty limit was actually £5 million. However, money market funds were low risk investments.

Andrew Hill had noted that in the mandatory consultation box at the end of the report, 10 out of the 12 officers listed had not been sent the report. He asked what the point of the consultation was if officers did not review the report.

Andrew Vallance explained that it depended on each report which specific officers the report was sent to for consideration. The consultation box was under review and would be updated for all reports in due course.

Andrew Hill asked about the counterparty limit breach and whether the additional £4 million which had been invested had come from a reserve.

Andrew Vallance said that the money should have been invested somewhere else, either in a different money market fund or another bank account.

Andrew Hill said that in the report it was mentioned that RBWM held a £100 million sum that was a pure investment. He asked what the investment risk was attached to this amount, was it a low risk asset performing the yield or a poor performing high risk asset. If so, was RBWM going to consider disposing the assets as suggested by CIPFA.

Andrew Vallance confirmed it was not an investment in any particular asset, it was just the cash flow consequence of normal business. RBWM did not borrow to invest in terms of yield purposes and it did things in accordance with CIPFA guidance.

Councillor Bond asked about Arlingclose and that a duration of 35 days had been mentioned. He asked if that meant that money could only be locked up in these institutions for 35 days.

Andrew Vallance said that this was an error in the report and should actually say 365 days.

On the counterparty limit being reached, Councillor L Jones asked if Andrew Vallance could confirm whether procedures or the process had been changed as a result, to ensure that it did not happen again.

Andrew Vallance explained that the incident had occurred due to a  ...  view the full minutes text for item 40.

To consider the Annual Governance Statement 2020/21.

Emma Duncan, Monitoring Officer and Deputy Director of Law & Strategy, explained that governance was a joint enterprise with all officers to ensure that good standards were upheld. The officer governance group met regularly and consisted of statutory officers, the head of paid service, the chief executive, the section 151 officer, the monitoring officer, the head of finance, the head of law and the head of governance. The group considered governance issues and how to improve the council’s governance framework. The Annual Governance Statement (AGS) for 2020/21 had been delivered with regard to the CIPFA ‘delivering good governance’ framework. The Centre for Public Scrutiny risk and resilience framework had also provided useful insight when producing the AGS.

The AGS set out how the local authority would look to do things, with values and behaviour being a key focus. The council wanted to build on this and the statement had been a significant piece of work. New procedures had been put in place so that Democratic Services were able to record delegated decisions made by officers. The statutory officers consultation section on reports would be reviewed as part of the process.

A significant piece of work this year had been the development of the corporate plan. This would ensure that decisions were taken that were in line with the council’s aims and objectives. Members would be able to see more of this during the rest of year and track delivery. Capacity to consult with communities had been improved so that they formed a part of the decision-making process. Virtual meetings had allowed more people to engage and participate in council meetings, while statutory rights like freedom of information had been maintained effectively.

Overview and scrutiny had been identified as an area for governance improvement, to ensure that the scrutiny function was able to add value to the council. This would involve a cultural shift with both officers and Members to ensure that scrutiny was effective. Looking at the action plan in the AGS, work had been themed around the key areas. The action plan would be kept under review by the Audit and Governance Committee.

Andrew Hill thanked Emma Duncan for her comprehensive explanation of the AGS. He felt that the council had been listening to residents more, particularly with the library consultation. On overview and scrutiny, Andrew Hill asked how it would be decided which decisions came to Full Council and which were considered by Cabinet. Andrew Hill believed that decisions that went to Cabinet did not seem to go through the scrutiny process and therefore arrived at Cabinet with little or no input from other Members. He also asked if there would be greater transparency on the public contracts that the council entered into, particularly with the RBWM Property Company.

Emma Duncan explained that executive functions came under Cabinet. Scrutiny had a number of roles but should not look to scrutinise everything. There was the call in system but policy development was an important function which was not used  ...  view the full minutes text for item 41.

To consider the Committee’s work programme for the remainder of the municipal year.

Andrew Vallance said it was hoped that the Committee would be able to consider the final 2019/20 accounts and a significant update on the 2020/21 accounts at the September meeting.

Councillor Sharpe suggested that it would be useful for the Committee to consider business controls within the council, this could be added for the February 2022 meeting.

Adele Taylor, Executive Director of Resources, explained that the item suggested by Councillor Sharpe was covered by the update reports from internal audit. The next update from the internal audit team was planned to be in October 2021. If there were any specific areas of business control the Committee wanted to look at, this could be added to the work programme.

The Chairman asked if this could be brought forward to the September meeting.

Adele Taylor said that this could be discussed with the internal audit team.