Agenda and minutes

Corporate Governance & Audit Committee
Thursday 24 October 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

266.

Chairman's Announcements

Any apologies for absence that have been received will be noted at this point.

 

Minutes:

Apologies had been received from Mr Brown.

 

267.

Approval of Minutes

The committee is requested to approve the minutes of its ordinary meeting on 25 July 2019 (copy to follow).

Minutes:

RESOLVED

 

That the minutes of the meeting held on 25 July 2019 be approved and signed as a correct record.

 

Minute 253 - Matters Arising:  Mrs Belenger advised that the Caution Alert register monitoring was appropriate for this Committee and would be taken within the annual Health and Safety report.

 

268.

Urgent items

The chairman will announce any urgent items that due to special circumstances are to be dealt with under the Late Items agenda item.

Minutes:

There were no urgent items.

 

269.

Declarations of Interest

These are to be made by members of the Corporate Governance and Audit Committee or other Chichester District Council members present in respect of matters on the agenda for this meeting.

 

Minutes:

Dr O’Kelly declared a personal interest as a West Sussex County Council member.

 

270.

Public Question Time

The procedure for submitting public questions in writing by no later than noon 2 working days before the meetingis available here or from the Democratic Services Officer (whose contact details appear on the front page of this agenda).

Minutes:

There were no public questions.

 

271.

Annual Audit Letter 2018-2019 pdf icon PDF 2 MB

The Committee is requested to consider and note the key issues arising from the work of the Council’s external auditors on the 2018-2019 Accounts in the Annual Audit Letter from Ernst & Young LLP.

Minutes:

Mr Suter, Ernst & Young LLP, introduced the annual audit letter for the year ended 31 March 2019, drawing members’ attention to the key findings in the report.  Very little had changed in the report since members had considered the 2018-19 audit results report at the previous meeting and an unqualified value for money conclusion had been reached on 25 July 2019. 

 

Mr Suter responded to members questions as follows:

 

·      With regard to planning materiality Ernst Young LLP only reported the gross figures and gave an opinion on the totality of expenditure.  It was considered that 2% was reasonable.  However, a member felt that this percentage should be lower and it was agreed to debate the matter at the next meeting. 

·      With regard to identifying the Council’s leases, Ernst Young LLP had not undertaken any work in this area yet.  In his view the Council should in the first instance ensure they understood the implications of the new accounting standards, due to come into effect in 2021, and should identify the leases the Council had. The review should undertake review of records kept, engage with the Council’s services to identify any potential risks and capture the key information required under the new standards.  Mrs Belenger advised that the Committee would consider a report on the new accounting standards at its meeting on 26 March 2020.  The report would set out the Council’s accounting policies to be taken into account for 2019-20’s accounts and advise of those polices that would impact the Council in a future accounting period i.e. 2020-21.  A position statement would be prepared setting out the work required and how the standard may affect the Council.  Work would be undertaken to identify any leases, which could include leases across all service areas, as the Accountancy have a  protocol in place to identify what officers may need to take account of in future years statutory accounts.  

 

RESOLVED

 

That the annual audit letter ending 31 March 2019 be noted.

 

272.

Financial Strategy & Plan 2020-2021 pdf icon PDF 71 KB

The Committee is requested to consider:

·         The updated key financial principles in Appendix 1, which underpin the Council’s aim to set balanced budgets without the use of reserves, except where necessary in the short term.

·         In the short to medium term that the Council maintains a minimum level of  reserves of £6.3m for general purposes;

 

Additional documents:

Minutes:

The Committee considered the report circulated with the agenda.

 

Mrs Belenger introduced the report, which set out the financial strategy and the principles which underpinned the Council’s approach to managing its financial matters and medium financial plan.  Part of that process was to understand the risks associated with it and how the Council could control and mitigate those risks.  The Committee was also requested to consider the minimum level of reserves held by the Council.

 

The Council’s five year strategy model was being worked up at the moment by officers.  It took into account the Government’s technical consultation, which gave the Council some indication of what our financial settlement would be like for 2020-21.  The Council understood from the Autumn statement that the settlement for 2020-21 would be for one year only and broadly in line with the settlement received for 2019-2020, as the changes to the fair funding arrangements, which included the fair funding review, localisation of business rates and resetting of the baselines have all been delayed by the Government now until 2021-22.

With regard to the Council’s membership of a Business Rates Pool, it was unlikely to participate in one as it had for 2018-19 as part of the Coastal Business Rates Pool, nor the 75% Business Rates Pool Pilot with all other West Sussex authorities in 2019-20, as this one year pilot was no longer on offer by the Government after 2019-20. This was mainly due to the potential impact of a court case launched by the NHS against councils that they should be able to reduce the amount of business rates payable as they were a charitable trust.  As St Richards Hospital was located in the District  the Council was unlikely to opt into a business rates pool during 2020-2021, as it did not want to put the pool at risk due to the court case and potential appeal risk. 

 

Mrs Belenger and Mr Catlow responded to members questions. 

·         With regard to the court case launched by the NHS a decision was expected to be made March/April 2020.  It was thought that the court case may affect whether or not other council’s joined a West Sussex Business Rates Pool in 2020/21.

·         As part of the budget process specific service reviews would take place to look at the different ways of delivering Council services and high cost high spend areas in comparison to other local authorities, and looking to see if there were any other income opportunities to identify ways of closing the Council’s potential funding gap.

·         The objective of future Government funding and the Fair Funding review was set out.  In previous consultations the Government had looked at different income streams, such as car park income for Councils. Potentially this type of income could have been taken into account when deciding each council’s settlement.  However, there had been no further updates in the latest consultation received as whether or not the Government would target this type of income in the future.  Updates were expected in  ...  view the full minutes text for item 272.

273.

2018-2019 Treasury Management Half Yearly Update pdf icon PDF 209 KB

The Committee is requested to consider the 2018-2019 out-turn position of the treasury management activity and performance and provide comments to the Cabinet as necessary.

Minutes:

Mr Catlow presented this mid-year review of treasury management activity and performance.  He advised members that guidance from Cipfa was still awaited in relation to indicators for proportionality of commercial investments. 

 

Mr Catlow advised that following comments made previously by members he had separated the columns of table 2 on page 38 to make them clearer.  Members requested that columns showing cumulative income in pounds and the average annual return. 

 

During the discussion officers answered the following questions from members:

 

·      In light of the climate emergency declared by the Council what is the Council doing to ensure its funds were invested as ethically as possible, in particular the pooled funds?: Within the Council’s Management Strategy this was not a factor currently taken into account.  Officers had discussed this issue when considering the pooled funds.  It was suggested that this was a matter for consideration by members when the Committee considered the Council’s annual Treasury Management Strategy at its meeting on 23 January 2020.

·      With regard to the proportionality of commercial income has the Council yet taken a view on whether it would generate this income on an opportunity basis or by setting targets for the year?:  Clarification was needed to determine what did constitute commercial activity and discussions were currently taking place on this subject at the moment. 

·      What are the parameters of viability which officers judge investments?     There was a limit on the maximum amount of money that the Council was allowed put into a single fund.  The Council employed a Treasury Advisor to undertake due diligence to assess and monitor a selection of pooled funds and the Council only invests in those recommended by the Advisor.   

 

RESOLVED

 

That the 2019-2020 treasury management mid-year progress report be noted.

 

274.

Audit Reports, Progress Report - 2019-2020 Audit Plan pdf icon PDF 84 KB

The committee is requested to note performance against 2019-2020 audit plan progress report.

Additional documents:

Minutes:

Mr James introduced this item.  Mr Mildred was in attendance to answer questions relating to the Building Security follow-up, which had one recommendation still in progress.  Mr Mildred explained that he was disappointed by the audit results and outlined the steps taken that had resulted in a new process being put in place concerning the deactivation of leavers ID passes.  Mr James advised that a review of the new process would be carried out during January 2020.

 

RESOLVED

 

That progress against the 2019/20 Audit Plan be noted.

 

275.

S106 Annual Exceptions Report pdf icon PDF 78 KB

The Committee is requested to note the contents of this report concerning section 106 agreements nearing their expenditure date (as set out in Appendix 1) and to raise any concerns.

Additional documents:

Minutes:

Mr Davies presented the report and was joined by Mrs Dower.  Mr Davies explained that the report outlined those contributions which required additional monitoring as they were due to reach their target date within the next two years or were now overdue.  The West Sussex County Council data relating to the Section 106 contributions, not available at the Committee’s meeting on 25 July 2019 due to issues with the migration of the County Council’s data to a new system, was now attached.  He asked members to email him by Friday 1 November 2019 if they had any questions on the County Council data.  He referred to the recently amended Community Infrastructure Levy regulations that required the Council to produce an Infrastructure Funding Statement to be published on a new government website, as well as the introduction of Section 106 monitoring fees as a planning obligation.  As a result of these new regulations there may be changes to the formatting of future reports but the content would be broadly the same.   

 

During the discussion officers responded to members’ questions as follows:

 

·      Mr Davies undertook to identify the contributions located in the South Downs National Park (SDNP) in future reports. He pointed out that the Council only monitored the Section 106 agreements for those planning applications where the decisions were taken by the District Council’s Development Management Team and not called in by the SDNP Authority.   He undertook to speak to the SDNP Authority’s own Monitoring officer to ask if details of their contributions could be provided so that a list of all contributions within the SDNP could be provided to the Committee in future.

·      With regard to the contributions received, Mrs Belenger explained that these formed part of the Council’s funds but were not part of the Council’s £14m general fund reserve.

·      Mr Davies responded to a question concerning public art contributions and whether there was flexibility to use the funds for other purposes than those originally stated to ensure funds were used for what was most needed.  He explained that flexibility would depend on the requirements of the legal agreement and some were more restrictive than others.  The Council tried to make agreements as flexible as possible, whilst developers wanted them to be as restrictive as possible.  He updated members on the latest position concerning the public art contribution for Land at Southfields Close and advised that Donnington Parish Council had identified a project to place parish information boards along the canal.  Mrs Dower added that funding for public art was wider than providing just art installations and there were opportunities to be creative with, for example, the use of fencing shaped into something creative.

·      With regard concern raised regarding progress of play provision at the Amphitheatre, Mr Davies undertook to find out the latest position from the Spending Officer and provide a response to the Committee.

·      Mr Davies explained that the Tucan crossing provided as part of the Graylingwell development was not included in the report as it was  ...  view the full minutes text for item 275.

276.

Complaints, Freedom of Information Requests and Data Protection Analysis pdf icon PDF 75 KB

The Committee is requested to consider:

·         The revised complaints scheme – Appendix 1

·         A policy for the management of unreasonable complainant behaviour to support the revised complaints scheme and to follow best practice as per Local Government Ombudsman – Appendix 2

·         Making recommendations as to future monitoring arrangements to identify improvement where appropriate.

·         A call recording policy to support the complaints scheme and to comply with the GDPR – Appendix 3.

Additional documents:

Minutes:

Mrs Delahunty introduced this item.  The freedom of information process had been improved so that the reminder system now showed key dates.  The number of General Data Protection Regulations (GDPR) requests, which took a great deal of officer time to collate, had increased considerably and was expected to continue to do so. The case management system had been configured to enable it to process the requests in the same way as freedom of information requests.

 

Mrs Delahunty, Mr Bennett and Mrs Belenger responded to members questions. With regard to concerns expressed by members of the high number of freedom of information request and the cost implications of providing responses, trends had been identified and the information placed on the Council’s website, which saved officer time.  An automated email directed the requestor to the relevant web page.  Approximately 50% of the work carried out was dealt with in the automated case management system.  Officers tried to find the shortest route possible to enable them to answer requests as effectively and efficiently as possible.  For example, if a request was received concerning details of a number of services’ financial information, in some instances the finance team would be able coordinate a response on behalf of other services.    

 

Members expressed concern about the high number of freedom of information requests received each year and felt there was some abuse of the system, especially concerning press enquiries and those from commercial organisations trying to obtain sales information.  Following discussions the origin of the request should be recorded in future. Mrs Delahunty undertook to add a field to the system to record whether the type of request was personal, media or commercial.  Mr Bennett advised that information would not be 100% accurate as those making the request may not provide that information and in any case it was the intention of the Government when freedom of information requests were received that access to the Council’s information would be increased for everyone including commercial organisations. 

 

The Committee was pleased to hear about the number of compliments received and the examples given.  There was concern about the level of GDPR requests received and the time they took to deal with, which was a risk going forward and felt that thought should be given to how this resource is managed.

 

RESOLVED

 

That the 2018-19 Annual Report on Complaints, Freedom of Information Requests and Data Protection analysis be noted.

 

277.

Budget Review Task and Finish Group Terms of Reference pdf icon PDF 46 KB

The Committee is requested to note the terms of reference and scoping outline plan for the Budget Review Task and Finish Group and agree membership of the Group.

Minutes:

Mrs Belenger presented the Terms of Reference and the scoping of this proposed review.

 

RESOLVED

 

1)  That the terms of reference for the budget Task and Finish Group be approved; and

2)  That Mr Dignum, Mr Johnson and Dr O’Kelly be appointed to the Budget Task and Finish Group 2019.

 

278.

Strategic Risk Update pdf icon PDF 77 KB

The Committee is requested to note:

·         The current strategic risk register and the internal controls in place, plus any associated action plans to manage those risks, and raises any issues or concerns

·         Bother the high scoring programme board and organisational risks, and the mitigation actions in place, and raises any issues or concerns.

 

*Note Exempt category Paragraph 4 (Information relating to the financial or business affairs of any particular person (including the authority holding that information)

Additional documents:

Minutes:

Mrs Belenger outlined the report and reminded the Committee of the exempt element of the report at Appendix 1(b) on pages 177 to 179.

 

During the discussion concern was raised by members that some of the risk numbers shown at paragraph 5.3, including CRR-Local Plan, CRR 170 - Changing use of the High Street and CRR 165 - Brexit should be higher.  Mrs Belenger explained that the risk map related to the Risk Matrix scoring and the internal controls in place and what the Council was doing to mitigate the risk and whether internal controls were in place or there was further work required. 

Mrs Belenger explained the matrix and guidance in place that set out how risks should be measured  

 

A correction was made to the previous risk score ‘9’ for CRR-Local Plan, which should read’6’. 

 

A member queried whether the Climate Emergency would become a strategic risk due to adverse weather becoming more common.  Mrs Belenger explained that this could be a potential new risk for the Strategic Risk Group to consider as part of their next review.

 

In response to a members question concerning the use of risk registers, Mrs Belenger explained that an element of the risk management allowance was about undertaking a wider understanding about risk and risk appetite, including taking into account the concerns that members had.  It was noted that the Council had gone through a political change following this year’s District election and a wider discussion with members on their risk appetite was something that would take place in the future and which would help pick up some of the concerns members had.

 

RESOLVED

 

1)    That the current strategic risk register and the internal controls in place, plus any associated action plans to manage those risks, be noted; and

2)    That the high scoring organisational risks, and the mitigation actions in place, and raises any issues or concerns and notes there are no high scoring Programme Board risks.