| 145 | RECORD OF THE MEETING |
| | | The record of the meetings held on 15 April 2008 and 7 May 2008 (Joint Meeting of all Committees) were signed by the Chairman as correct. |
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| 146 | APOLOGIES FOR ABSENCE |
| | | An apology for absence was received from Councillor Jarrett. |
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| 147 | URGENT MATTERS |
| | | An urgent item had been sent to all Members of the Committee relating to allegations made as to the operation of the Council's housing maintenance contract. The Chairman had agreed to consider this matter as a matter of urgency, as Members had requested that this come forward at the earliest opportunity, and for this to be considered as the first item on the agenda. |
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| 148 | DECLARATIONS OF INTEREST |
| | | Councillor Griffiths declared a personal interest in agenda item 5B (Statement of Accounts 2007/2008) due to references to the Medway Primary Care Trust, insofar as he is a non-executive director of the Trust, and Danecourt School, as his wife is an employee at the school. |
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| 149 | OPERATION OF THE HOUSING MAINTENANCE CONTRACT |
| | Discussion: |
| | | The Monitoring Officer submitted a report concerning allegations made in relation to the contract for the provision of maintenance, repair and improvement of the council's housing properties.
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| Members were advised as to the background regarding the award of the contract and provided an explanation on the use of a schedule of rates and composite codes. It was then explained that following a complaint an investigation had been undertaken into the following areas of work: roof renewals, kitchen renewals, window replacements at St Marks House and a renewal programme for central heating boilers.
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| The Monitoring Officer explained to Members the nature of the complaint, subsequent investigation and the proposed action for each of the areas. Members considered these in detail and during their discussion expressed general concern as to accountability, cost control and contract management.
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| In relation to payments made for scaffolding costs Members raised and discussed the following points:
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| | • | The contract had been explicit in including scaffolding in the cost for roofing repairs. Erinaceous had seen the terms of the contract as part of the tender process and had been able to reflect that in the uplift they sought in the schedule of rates in their successful tender. It was questioned, given the high roofing charges and this inclusion within the contract, why the quantity surveyors who had drawn up the original contract were of the opinion that the council would lose at arbitration if an allowance were not made.
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| | • | the decision by the Assistant Director to cap the payment for roofs completed on or before 19 September 2007 at £4,500 per house, despite an agreement made the previous day via email with the contract administrator that the cap would be £3,500 per house. Members queried how this could happen in terms of the scheme of delegation and expressed concern that, due to the structural changes, senior officers were no longer employed by the Council and so unavailable for challenge and scrutiny.
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| A view was put forward that the additional payment of £35,027.56, as detailed in appendix 1, should be recovered, as they should have been ordered using the composite code. Members requested that officers explore further the recovery of this payment.
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| During the discussion on the kitchen renewal programme Members queried the assertion that the cost increase was primarily due to replacing 'like for like' rather than what had been anticipated. Without supporting documentation it was questioned whether the cost could be attributed to the kitchen supplier agreeing the specification with the tenant, together with the failure by the Council to undertake a condition survey at the outset of the works, specify each property and set a price cap. The Committee requested that the sample used for the cost analysis be extended as appropriate and that the Monitoring Officer provide Members with further information for all the refitted properties; setting out details of the type of property concerned, what the cost would have been under the composite code, what was finally invoiced and what the incremental charges entailed.
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| In relation to the additional electrical work concern was expressed that the original specification drawn up by the quantity surveyor needed to be enhanced to a standard higher than that contained in the composite code. Members asked for further information explaining the authorisation of the payment for the additional costs and detailing what the additional electrical work had entailed, as this increased cost would have been of a marginal nature. Similar information was requested for the upgraded worktops and sinks.
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| During the discussion on the renewal programme for central heating boilers Members queried officer delegated authority and requested further clarity on the process of budgeting for these works, the impact of the specification variation and further details on what had been paid.
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| In relation to the window replacement programme Members expressed specific concern that the contractor Erinaceous had obtained the three quotations for the works, instead of the council.
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| The Committee thanked the Monitoring Officer for her investigation and for responding to the challenges put forward by Members.
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| The Committee agreed to adjourn the meeting for ten minutes at the end of this item. |
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| | > Operation of the housing maintenance contract (pdf file 261.5kb) |
| | Decision: |
| | | The Audit Committee noted the comments made and agreed to the following:
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| Roofing
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| a) That the computer system is checked to ensure that it is the same version that is being used by 3C and that the contract is varied to ensure that both parties must give to the other notice if the codes or costings or any other material part of the system is upgraded in order that both systems are the same.
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| b) That all surveyors in the housing department receive training on both Locator and Academy, and that no new member of staff be allowed to order works until they have received this training.
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| c) That a process manual be put in place for the contract in order that all surveyors have a handy guide to show them how to manage the contract, and that they each have a copy of the contract available electronically.
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| d) That all work be ordered in writing or electronically, and that no verbal orders be given for work.
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| e) That the contract be formally varied to agree an amount for scaffolding as recommended by Rand Associates.
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| f) That any variations to the contract which would result in either expenditure/saving to the Council in excess of £100,000 be reported to the Business Support Overview and Scrutiny Committee.
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| g) That officers explore further the recovery of the additional payment of £35,027.56, as set out in appendix 1 to the report.
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| Kitchens
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| h) That the composite code in the contract be varied to ensure that it sets out the type of worktop and sink to be provided.
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| i) That the composite code sets out a correct up to date electrical specification to be provided.
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| j) That Council surveyors visit each property to agree the specification with the tenant. If kitchens of a higher value than the benchmark kitchen are to be installed, then a written variation will be sent to 3C and will be authorised by the Contract Administrator.
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| k) If any additional work is to be carried out to a kitchen, then 3C will obtain a written instruction from the Council for the work and no verbal instructions are to be relied on.
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| l) That when the capital programme is drawn up, regard is had to the existing kitchens and the degree to which variations to each kitchen will be necessary and that the amount of kitchens to be completed will be set accordingly.
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| m) That Members of the Committee be provided with further information analysing the kitchen invoices received and including details as to the additional electrical work and the upgraded worktops and sinks.
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| Boilers
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| n) That only the Contract Administrator be authorised to agree any variation to the overall contract specification.
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| o) That the specification for boilers be considered to see whether it is the most suitable, and if so that a variation to the composite code be agreed in order that accurate financial forecasting can take place.
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| p) That Members of the Committee be provided with further budgetary information on the boiler renewal programme.
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| Windows
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| q) That all capital works i.e. those over £30,000 be priced under the schedule of rates, prior to any quotations being obtained, to ensure that there can be an accurate comparison.
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| r) That if quotations are obtained, then these must be procured by the Council and not 3C.
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| s) That all surveyors who procure capital works are trained in this area in order that they understand how to obtain value for money.
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| t) That a system of auditing/spot checking of capital works is put in place, to ensure that documentation is being kept on files.
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| u) That only the most economically advantageous tenders are accepted for capital works. |
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| 150 | ANNUAL AUDIT AND INSPECTION LETTER 2006/2007 |
| | Discussion: |
| | | Paul Chambers, the Relationship Manager for the Audit Commission, introduced a report that presented the 2006/2007 Audit and Inspection Letter. The letter provided a summary of the Audit Commission's findings and conclusions in relation to work undertaken at the Council in 2006/2007.
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| The letter analysed the Council's activities over a number of areas. This included the council's direction of travel report, evidence of the council improving outcomes and financial management and value for money.
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| The key issues raised in the Audit Letter and specific action for the Council to address areas for improvement were set out.
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| Members were advised that the Cabinet had considered this report on 3 June 2008 and that the Cabinet had recommended to the Audit Committee the audit and inspection letter for acceptance. |
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| | > Annual audit and inspection letter (pdf file 296.1kb) |
| | Decision: |
| | | The Audit Committee accepted the annual audit and inspection letter. |
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| 151 | STATEMENT OF ACCOUNTS 2007/2008 |
| | Discussion: |
| | | The Chief Finance Officer presented the Council's draft statement of accounts for 2007/2008, which were required under the Accounts and Audit Regulations 2003. The Cabinet on 24 June 2008 had recommended the draft Statement of Accounts to the Committee for approval.
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| The draft statement of accounts had been circulated separately from the agenda and officers tabled at the meeting a revised page 14 of the accounts (concerning statement of accounting policies 14 - 16).
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| The Chief Finance Officer detailed the contents of the accounts and responded to Member questions.
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| During the discussion on this item Members felt there was a need for more training as to the contents of the statement of accounts and the Chief Finance Officer undertook to report to the Business Support Overview and Scrutiny Committee on progress with the council's prudential borrowing. Councillor Juby requested a briefing note on the shortfall in revenues across all Leisure Centres and Members were advised that a report of the external auditor's work on pooled budgets would be submitted to the Committee shortly. |
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| | > Statement of accounts 2007-2008 (pdf file 105.3kb) |
| | > Statement of accounts 2007-2008 - Appendix 1 (pdf file 769.0kb) |
| | > Statement of Accounts (revised page tabled at meeting) (pdf file 58.5kb) |
| | Decision: |
| | | The Audit Committee approved the draft statement of accounts for 2007/2008, subject to the inclusion of the revised page tabled at the meeting. |
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| 152 | ANNUAL AUDIT AND INSPECTION PLAN 2008/2009 |
| | Discussion: |
| | | Robert Grant, from the Council's external auditors (PKF), introduced the annual audit and inspection plan for 2008/2009.
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| The plan sets out the work that the auditor and Comprehensive Area Assessment Lead propose to undertake for the 2008/2009 financial year. This was based on the Audit Commission's risk-based approach to planning and the requirements of the Comprehensive Performance Assessment. It also reflected audit and inspection work specified by the Audit Commission for 2008/2009. The key audit risk areas were highlighted and an explanation given as to the proposed audit and inspection fee. |
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| | > Annual audit and inspection plan 2008-2009 (pdf file 419.9kb) |
| | Decision: |
| | | The Audit Committee accepted the annual audit and inspection plan for 2008/09. |
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| 153 | ANNUAL REVIEW OF TERMS OF REFERENCE |
| | Discussion: |
| | | The Audit Services Manager introduced a report on a review of the terms of reference for the Committee. He explained that it was good practice for the Committee to annually review the terms of reference to see whether any amendments were needed.
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| Members were advised that the new CIPFA/SOLACE governance framework required the production of an annual governance statement, which would replace the statement of internal control. A change to the terms of reference for the committee was therefore necessary to reflect this change. This would need to be referred to Council for approval. |
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| | > Annual review of terms of reference (pdf file 221.2kb) |
| | Decision: |
| | | The Audit Committee confirmed that the current terms of reference meets its current and expected future needs, subject to the replacement of the "Statement of Internal Control" with "Annual Governance Statement". |
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