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 20 July 2023.

Councillor Cross noted a small typo on the second page of the minutes, where Councillor Bond discussed Community Infrastructure Levy. It was stated that there was ‘£9 plus mentioned as developers contributions’, this was agreed to be corrected to say ‘£9 million plus’.

AGREED UNANIMOUSLY: That the minutes of the meeting held on 20^th July 2023 were approved as a true and accurate record.

To note the audited signed accounts for the financial year 2020/21, approve the audited Statement of Accounts and approve the management responses to the matters raised in the External Auditors’ report.

Andrew Vallance, Deputy Director of Finance, outlined the report with the Committee being asked to approve the audited statement of accounts for 2020/21. The accounts were originally published in June 2021 which was within the required timescales. However, delays in the 2019/20 audit which had been caused by objections meant that these accounts were not signed off until March 2023 and had a knock-on effect on the 2020/21 accounts. Some significant changes were made to the 2020/21 accounts. The account presentation had been amended since the draft accounts were published, as some discrepancies had been discovered. There had been significant changes to property valuations particularly the impact of indexation of valuation movements. A national issue was identified on valuing infrastructure assets, specifically roads, which caused delays. A couple of items still needed to be completed including a review of indexation arising from the audit and final internal reviews by the external auditors.

Raman Singla, Chief Accountant, felt that a lot of lessons had been learned from the 2020/21 audit and steps had been taken to improve the process for future years. One code would be used for one item in the accounts, checks made to ensure that transactions were reported and training had been provided for staff on the new reporting arrangements. It was hoped that improvements to the process would lead to a better set of accounts for 2021/22 and 2022/23.

Jonathan Gooding, Deloitte, took the Committee through the accounts in detail. The audit highlighted the areas of focus on audit risk areas, with the audit being substantially complete. A number of issues had been identified including the quality of original financial statements, availability of information and reviewing the 22 objections which had been received but were not accepted. Final procedures outstanding on the accounts were around finalising and quality reviews. In 2019/20, there had been three areas identified as weaknesses in relation to value for money. On financial planning, there had been significant improvements and a number of arrangements had been implemented, therefore this was not considered to be a significant risk in 2020/21. The other two areas related to preparation of the financial statements and governance arrangements. Financial reporting was still regarded as a weakness and a recommendation had been made by Deloitte. Some actions arising from governance arrangements from various reviews which had taken place had not been implemented by March 2021, although it was noted that progress had been made in subsequent years.

Jonathan Gooding continued that a number of material and immaterial adjustments had been identified, some of which remained unadjusted. A number of control weaknesses were also identified, with some being significant. On significant audit risks, the valuation of property assets was deemed significant as a small change in assumption could have a big impact on the value of the property on the balance. Tests had been carried out on the design and implementation of controls by property specialists, an overstatement of £7.2 million had been noted. Another significant audit risk was capital  ...  view the full minutes text for item 19.

To note the second progress report on the internal audit plan for 2023/24 as presented by the Council’s internal auditors, South West Audit Partnership (SWAP).

Lisa Fryer, South West Audit Partnership (SWAP), outlined the progress report which covered the period up to November. The report gave the Committee an update on how internal audit were delivering on the agreed plan and any changes to the plan. SWAP had started work on over half of the plan while seven audits had now been finalised. There were two changes to the plan since the last Committee update, with the two audits deferred to next year’s plan. Work had started on auditing the strategic risks and it was hoped that most would be covered. The internal audit plan for 24/25 would be set at the next Committee in February 2024 and it was expected that audits would be included which were based around strategic risks. Monitoring showed that on audits given limited assurance there had been some progress towards implementation of actions suggested. A number of follow ups were scheduled in Q4 of the internal audit plan.

The Committee had been given summaries of the limited assurance audits in the report. Lisa Fryer commented on the health and safety premises risks as a high corporate risk had been reported which was due to an absence of service level agreements where premises were shared. An action plan had been agreed to ensure that roles and responsibilities along with safety policies were produced, this would apply to all lease and partnership arrangements. A follow up piece of work had been undertaken on delegated decision making, good progress had been made in this area. All finalised audits were available via Microsoft Teams.

Councillor Wilson felt that the summary of the audits could contain some more detail.

Lisa Fryer said that the most significant findings were reported in the summary, to add in all of the findings would increase the length of reports considerably. The full report was available on Microsoft Teams.

Councillor Wilson highlighted the children’s early intervention review and the finding that Achieving for Children did not hold the data necessary to monitor the effectiveness of the strategy.

Lisa Fryer said that as part of the audit a survey was undertaken with schools and the feedback had been positive. However, the objective of the audit was to see whether aims were being achieved and this could not be measured.

Kevin McDaniel, Executive Director of Adult Social Care and Health, said that the early intervention system could be measured on a case by case basis on the outcomes with the specific family, in an ‘outcome STAR model’. The question asked in the audit was around whether early intervention had stopped families needing care services later on and this was something which could not currently be measured.

The Chair asked about governance of property leases and whether that was an issue with the RBWM Property Company and the length of time making decisions.

Lisa Fryer said that the Property Company had put forward the audit, one of the concerns they had was around the delegation arrangements in place slowed things down and  ...  view the full minutes text for item 20.

To consider the report informing Members on the delivery of the treasury management strategy approved by Council on 22 February 2022 and confirm the treasury outturn position as of 31 March 2023 including:

·       a review of the Council’s borrowing strategy in 2022/23;

·       a review of the Council’s financial investment portfolio for 2022/23 as of 31 March 2023; and

·       a review of compliance with the Council’s Treasury and Prudential limits for 2022/23.

Andrew Vallance said that the report included a review of the council’s borrowing strategy for 2022/23, a review of the financial investment portfolio and a review of the council’s compliance with treasury limits. Borrowing and investments were high and this was because the council had borrowed in advance to lock in lower interest rates. The result meant the current in-year overspend was not due to interest rates but this would impact next year’s budget. RBWM had complied in full with the CIPFA code of practice. The main purpose of investments was that they were secure, liquid and yield was the final element.

AGREED UNANIMOUSLY: That the Audit and Governance Committee noted the report and approved the Treasury Management Outturn 2022/23 report.

To update members on the delivery of the Treasury Management Strategy and allow for any changes to be made depending on market conditions including:

·       a review of the Council’s borrowing strategy in 2023/24;

·       a review of the Council’s financial investment portfolio for 2023/24 as at 30 September 2023;

·       a review of compliance with the Council’s Treasury and Prudential limits for the first 6 months of 2023/24; and

·       an economic update for the financial year.

Andrew Vallance provided the Committee with an update on the treasury management mid year position. The council was within the limits of the CIPFA code of practice, while gross borrowing was lowering and a natural position was achieved. Net borrowing was going down and this was because of cash flow; a number of grants and council tax were received at the start of the financial year. The total borrowed at the start of the financial year was £232 million, it was expected that this would increase back up to around £200 million by the end of the financial year. Interest rates had been high but had now stabilised. The Committee would normally see a draft treasury management strategy but due to the council’s current financial position, a new treasury management strategy would be considered by Cabinet in February as part of the 2024/25 budget.

Councillor Sharpe said that the balance in the previous treasury management report was £163 million, but the current report stated £153 million so there seemed to be a drop of £10 million. He asked what the exception was on this by the end of the financial year.

Andrew Vallance responded by explaining that the drop was because of cash flow and capital expenditure. It was anticipated that borrowing would be around £200 million by the end of the financial year.

Elizabeth Griffiths added that there were large capital movements throughout the year and this was similar for most local councils. Borrowing was needed when cash flow levels dropped, capital expenditure was under review to identify areas where spending could be reduced.

The Chair said that around £100 million of borrowing was still needed and there was uncertainty about what the rate would be.

Elizabeth Griffiths said a lot of debt was short term borrowing and this had allowed the council to take advantage of the interest rates available. However, with a reliance on short term loans meant the council were open to shifts and uncertainty. It was forecast that there would be a big increase in borrowing costs and this would have an effect on the constrained budget.

The Chair asked for a timeline for the approval of the updated treasury management strategy.

Andrew Vallance said that the strategy would be considered with the budget and put forward at Full Council in February 2024. It formed a central part of the budget process.

Elizabeth Griffiths added that everything was interlinked and strategies were being developed to deal with the situation. It was hoped that the Committee would be able to review it.

Councillor Wilson considered the ten year project with the level of debt and borrowing. He asked for the process behind how this forecast had been produced.

Elizabeth Griffiths said that the liability benchmark was required and this was driven by estimates of working capital. There were some plans to bring in capital receipts but capital expenditure was difficult to predict.

AGREED UNANIMOUSLY: That the Audit and Governance Committee noted and approved the Treasury Management  ...  view the full minutes text for item 22.

To consider the six monthly update on Risk Management.

Steve Mappley, Insurance and Risk Manager, highlighted the six monthly update risk management report. A new Quarterly Assurance Report had been introduced which contained greater detail on risk information and this gave a further opportunity for discussion at Cabinet. The report contained the key strategic risks to the council in summary and detailed formats. Three new risks had been added on elections, migration and the social care market.

Councillor Sharpe was concerned about risks around technology and infrastructure. Users in the organisation could be at risk of cybercrime, he asked if there was training in place to ensure that staff were aware of the risks.

Steve Mappley said that there was mandatory induction and refresher training undertaken by staff at the council.

Councillor Sharpe asked if this included Councillors too.

Mark Beeley said that Councillors had online training modules through the iHasco programme. One of these modules was based around cyber security awareness.

Councillor Wilson questioned whether the cost of living risk should be higher, as there was increased levels of debt, community tension and crime.

Kevin McDaniel said it was hard to judge, information was triangulated from different groups through the Community Safety Partnership and cost of living group. The data did not seem to suggest that there was an increase in crime. The council ran a Household Support Fund and those who needed it were encouraged to get in touch.

The Chair asked about the migration and movement of people in local hotels risk and the demand on support services.

Kevin McDaniel said that the Home Office had been working to reduce the backlog of cases, however a number of asylum seekers had been placed in hotels across the country with two of these hotels being located in the borough. Many applications were being changed to refugees and given notice to leave the hotels but this was now seven days instead of the original 28 days. This meant that there had been an increase in the number of refugees coming to the council for help with housing. There were a couple of hundred asylum seekers staying in the borough and this could grow, which was why it had been added to the risk register.

The Chair asked why there were no critical risks from children’s services.

Steve Mappley said that children’s services was often regarded as an operational risk rather than strategic.

Kevin McDaniel said that the council was currently in the inspection window for Ofsted and SEND services which could take attention away from the day to day work.

AGREED UNANIMOUSLY: That the Audit and Governance Committee noted the report.

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

The Chair asked when the 2021/22 accounts would be ready to be signed off by the Committee.

Jonathan Gooding said that there was a lot of uncertainty and he hoped to have a better idea of timescales in the next few weeks. He hoped that certain elements of the 2021/22 audit would be completed by March 2024.

Councillor Wilson asked if the Committee considered the budget.

Mark Beeley confirmed that the budget went through the scrutiny process and would be considered by the Corporate Overview and Scrutiny Panel.

Councillor Wilson asked for an update on the current status of the 2021/22 accounts.

Raman Singla said that the draft 2021/22 accounts had been submitted on time but there were a number of changes which needed to be made.