Agenda and draft minutes

Corporate Governance & Audit Committee
Thursday 10 January 2019 9.30 am

Venue: Committee Room 2, East Pallant House. View directions

Contact: Democratic Services on 01243 534685  Email:  democraticservices@chichester.gov.uk

Items
No. Item

222.

Chairman's Announcements

Any apologies for absence will be noted at this point.

 

Minutes:

(Please note that due to traffic problems the meeting did not start until 9.37am).

 

Apologies had been received from Mr Martin.

 

223.

Approval of Minutes pdf icon PDF 104 KB

To approve the minutes of the Corporate Governance and Audit Committee meeting held on 16 October 2018.

Minutes:

RESOLVED

 

That the minutes of the meeting held on 16 October 2018 were agreed and signed as a correct record.

 

224.

Urgent items

The Chairman will announce any urgent items that due to special circumstances are to be dealt with under the agenda item below relating to late items.

Minutes:

There were no urgent items.

 

225.

Declarations of Interest

Members and officers are reminded to make any declarations of disclosable pecuniary, personal and/or prejudicial interests they may have in respect of matters on the agenda for this meeting.

Minutes:

There were no declarations of interest.

 

226.

Public Question Time

The procedure for submitting public questions in writing no later than 12:00 on 9 January 2019 is available upon request from Democratic Services (the contact details for which appear on the front page of this agenda).

Minutes:

There were no public questions.

 

227.

2018-19 Treasury Management half-year report pdf icon PDF 139 KB

The committee is requested to consider the 2018-19 mid-year review of treasury management activity and performance and provide comments to the Cabinet as necessary.

Minutes:

Mr Catlow introduced the item. He explained that a half-year report is required by both the Committee and the Cabinet. He drew attention to table three outlining the position of external pooled funds and confirmed his recommendation for a 2019/20 review of the those funds. He clarified that the Local Authority Property Fund had recovered costs but due to wider economic factors the fair value currently remained below cost value.

 

Mr Catlow responded to members questions. He confirmed the property fund capital loss was just below 1% and M&G shows a current capital loss of 4.4% and he also clarified a total current capital loss of £430,000 for all pooled funds. In response to members concerns about ensuring the right investments are made with the right group of people. He confirmed that due diligence applies and the fund managers were subject to interview regarding their choice of funds to ensure the most appropriate match is made. He then clarified that the reserve is designed to cover against any potential losses so the mechanisms are in place to allow movement of funds if required. With regard to Brexit he explained the preparations for funds located outside of the UK which includes the option to move funds to banks and other local authorities with local authorities viewed as lower risk in the present market.

 

Mr Catlow confirmed that he felt comfortable that appropriate, sensible processes had been followed in choosing the council’s current investments. He added that now is an appropriate time to carry out a review of the investments currently held.

 

Following a request Mr Catlow agreed to introduce a column to table three of section 5.5 of the report to provide detail of the total investment income is also shown.

 

After further discussion members concluded that they wished the Cabinet to agree a review of the current pooled fund investments discussed.

 

RECOMMENDATION TO THE CABINET

 

That the Cabinet considers the Treasury Management activity and performance for 2018-2019 to date and agrees that a review of the associated investments be carried out.

 

228.

Draft Treasury Management and Capital Strategies 2019-20 pdf icon PDF 65 KB

The Committee is requested to consider and recommend to the Cabinet and the Council for approval the Treasury Management Policy Statement, the Treasury Management Strategy Statement, the Investment Strategy and relevant Indicators for 2019-20 and the Council’s Capital Strategy for 2019-20 -2022-23.

Additional documents:

Minutes:

Mr Catlow introduced the item. He explained that the council’s Treasury Strategy incorporates the council’s risk appetite statement and wider investment strategy with both covering treasury and non-treasury investments. He confirmed that CIPFA have added a requirement to prepare a Capital Strategy to summarise the detail contained in other reports including the capital and project programme and the five year financial strategy. The document is therefore intended to provide a concise, accessible view of the authorities approach to capital investment and treasury management with a focus on risk management. 

 

Mr Catlow explained that the Cabinet is expected to consider the report on 5 February 2019 prior to approval being sought from Full Council for the final contents of the strategy before the beginning of the new financial year. He highlighted the glossary provided at appendix five which explains some of the financial terminology. He explained that CIPFA and MHCLG’s focus for the revised guidance had been to expand the purview of the treasury and investment strategies to cover a broader range of non-treasury investments (largely commercial and service based investments and loans) as well as promoting a greater emphasis on risk management and governance arrangements for wider non-treasury investments.

 

Mr Catlow then clarified that he had prepared the strategy to capture the proposals discussed at the member workshop prior to Christmas with the most significant changes outlined in appendix one including:

 

·       Proportionality

·       Treasury investment limits

·       Operational and authorised boundaries for debts

 

Mr Catlow and Mrs Belenger responded to members questions. Mr Catlow confirmed that the guidance provided to officers is not very clear on what can be classified as commercial property. With regard to the request for a graph detailing the value of commercial assets across a number of years Mr Catlow explained that he would need to refer to the Estates team. With regard to assessing whether appropriate investment judgements are being made Mrs Belenger explained that as part of balancing the budget investment opportunities are considered in line with the council’s investment protocol. With regard to the reason for increasing pool funds from £20 million to £35 million Mr Catlow explained that it allows for possibility of increased investment rather than the necessity. With reference to page 17 of the agenda pack he clarified that it should read £30 million limit not £10 million limit. Mrs Belenger explained that the £1 million to be invested in unrated banks includes building societies.

 

Mr Catlow also confirmed that the council is debt free and there are no current plans to change that status. He explained that if the council is required to loan money it is on a short term basis for operational purposes such as payment of a precept where funding is late. He also confirmed that the framework for treasury management is delegated to the Section 151 Officer with members given the opportunity to consider the allowed limits. Mrs Belenger added that the reason for the Section 151 Officer to take out a loan for the council would  ...  view the full minutes text for item 228.

229.

Budget Review Task and Finish Group feedback

Mrs Tull and Mrs Belenger will provide an oral report on the outcomes from this review.

Minutes:

Mrs Tull introduced the item. She explained that the Budget Task and Finish Group (TFG) had met in December to discuss the budget variations as they stood at that time. The following areas were covered:

 

·       Services

·       Pay settlements

·       Pay protection funding

·       Residents services

·       Grants to parish council’s

·       Growth services (including the leisure contract)

·       Housing

 

Mrs Belenger added that the papers set out the high level base budget for 2018/19 and the variations to build the 2019/20 budgets due to service pressures and new service items. She explained that the financial settlement from the government had now been received a week later than anticipated but the result had confirmed that the council will have a balanced revenue budget. She explained that the budget will be taken to the Cabinet meeting in February.

 

There were no questions.

 

RESOLVED

 

That the oral report from the Budget Task and Finish Group 2018 be noted.

 

230.

Audit Follow Up, Positions Statements and Progress Report Audit Plan pdf icon PDF 66 KB

The Committee is requested to consider the Audit Follow Up and note the Position Statements and progress against the Audit Plan.

Additional documents:

Minutes:

Mr James introduced Louise Northcott the new senior auditor. He then outlined the item and explained that since the 2016 car parks audit new machines had been introduced which have back office function which impacts the reconciliation process. The audit team will therefore follow up the new system as part of the 2019/20 audit plan.  

 

Mr James then explained that following the initial General Data Protection Regulations (GDPR) the council has made good progress in meeting the requirements of the regulations. The audit team regularly liaise with the Monitoring Officer to ensure both parties are content with the implementation methods. Mr Bennett (Monitoring Officer) confirmed that he found the monthly discussions most helpful.

 

Mr James then outlined the plans for the Business Continuity position statement audit. Following the restructure and subsequent creation of the Divisional Manager posts it was felt that time would be required to allow these changes to bed in prior to undertaking the audit review of the council’s Business Continuity Plan.  The audit team will therefore follow up with the Divisional Managers as part of the 2019/20 audit plan. Mr James indicated that there were robust processes in place following discussion with the Corporate Health and Safety Manager. 

 

Mr James concluded by explaining that as the audit team is now fully staffed he hoped the 2018/19 audit plan could be successfully completed but would keep the Committee informed of any adjustments required.

 

RESOLVED

 

That the Audit Reports, Follow Ups, Position Statement and progress against the audit plan be noted.

 

231.

Constitutional Amendment pdf icon PDF 68 KB

The Committee is requested to note the amendments to the Constitution made by the Monitoring Officer in the period May 2013 to January 2019.

Additional documents:

Minutes:

Mr Bennett introduced the item. He clarified that section 5.1 of the report should read ‘anti’ not ‘antic’ and page 90 of the agenda pack should be disregarded. He explained that the report details small consequential changes made by the Monitoring Officer such as job titles and changes to statutes. The Constitution TFG had agreed with the scope to apply the delegated authority to the Monitoring Officer subject to an annual update report to the Committee.

 

There were no questions.

 

RESOLVED

 

That the amendments to the Constitution made by the Monitoring Officer in the period May 2013 to January 2019 be noted.

 

232.

Late items

Consideration of any late items as follows:

 

a)    Items added to the agenda papers and made available for public inspection.

b)    Items which the Chairman has agreed should be taken as matters of urgency by reason of special circumstances reported at the meeting.

Minutes:

There were no late items.