| 295 | RECORD OF THE MEETING |
| | | The record of the meeting held on 25 June 2009 was signed by the Chairman as correct. |
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| 296 | APOLOGIES FOR ABSENCE |
| | | An apology for absence was received from Councillor Reckless. |
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| 297 | URGENT MATTERS |
| | It was reported that the Chairman had agreed to accept agenda item 5A (2008/2009 External Auditors report) as an urgent item, as the Accounts and Audit Regulations 2003 (as amended) required that the report was considered before 30 September.
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| The Chairman advised the Committee that agenda item 5B (Whistleblowing Policy and Report on instances since 1 April 2008) had been withdrawn. The Committee expressed its disappointment that this item had not been ready for submission to this meeting, as requested by the Committee in June. |
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| 298 | DECLARATIONS OF INTEREST |
| | | Councillor Griffiths declared a personal interest in any reference to the Medway Primary Care Trust, insofar as he is a non-executive director of the Trust.
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| Councillor Jarrett declared a personal and prejudicial interest in case during the consideration of any of the reports before the Committee, reference was made to Medway Tunnel, as he is a member of Rochester Bridge Trust. It is noted that there was no discussion on this matter. |
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| 299 | 2008/2009 EXTERNAL AUDIT REPORT |
| | Discussion: |
| | | This report presented the external auditor's report for 2008/2009 and adjusted financial statements, reflecting the issues raised, were attached.
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| The Chief Finance Officer introduced the report and highlighted to Members that the reduction in the value of fixed assets held by the council, following a review by the council's internal valuers, was a consequence of the economic downturn and that these adjustments had no overall impact on the revenue balances or available reserves of the council. It was also clarified that the revaluation of the housing stock reflected the market value in existing use (i.e. with tenant) but that this figure would not be the same as any potential future transfer of stock may realise were that ever to take place.
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| Stuart Frith, from the Council's external auditors (PKF), provided an overview of the external auditor's report. It was noted that the key financial systems were deemed to be adequate with no significant control weaknesses identified and that it was anticipated, as some minor work on the accounts was ongoing, that an unqualified audit opinion would be issued on the statement of accounts by 30 September 2009. It was also reported that management arrangements to ensure the quality of reported performance information had been found to be adequate and that it was anticipated that there would be an unqualified value for money conclusion. Other issues highlighted by the auditor included:
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| | • | the revaluation of the council's fixed assets
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| | • | the required adjustments to the council's financial statements
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| | • | the auditor's recommendations relating to the fixed asset register and Housing Revenue Account balances as contained within the action plan attached to the auditor's report
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| | • | the reliance placed on internal audit's work in relation to accounting and internal control systems
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| | • | the finding that the Annual Governance Statement was consistent with the evidence provided in the review of effectiveness and the auditor's knowledge of the Council.
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| Members debated the external auditor's report, making comment and asked officers various questions. This included clarification on changes to the accounting policy for including asset valuations in the balance sheet and an explanation that the delay in reinstating two assets within the fixed assets register was one of functionality. Given the review of land and property values, Members also discussed the appropriateness of the council's capital receipt target of £4million per annum.
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| Robert Grant (PKF) then gave the Committee a detailed presentation on the key features of the new Use of Resources Assessment, which sets out how well the Council was managing and using resources to deliver value for money and better and sustainable outcomes for local people. It was noted that this formed part of a wider organisational assessment on how the council managed its performance by the Audit Commission and also informed the Comprehensive Performance Assessment.
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| Members were advised that the council was performing well in its use of resources, with an overall score of 3 out of 4. Details of the judgements produced by considering specified key lines of enquiry (KLOE), with illustrations, for the following three themes were then explained:
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| | (1) | Managing finances - focusing on sound and strategic financial management
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| | (2) | Governing the business - focusing on strategic commissioning and good governance
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| | (3) | Managing resources - focusing on the effective management of natural resources, assets and people.
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| Members asked various questions concerning the information provided in the presentation. The following points were discussed:
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| | • | Integrated financial planning - the integration and availability of service and performance information within the budget setting process from the point of view of all Members and the role of the star chamber process.
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| | • | Contract management across the council
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| | • | Stakeholder Engagement - the varying effectiveness of neighbourhood workshops in communities to establish views of local people about services
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| | • | Financial governance and leadership - the impact of reporting strategic housing inspection performance, which was reflected in the governance score
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| | • | Making efficiencies - the special educational needs reconfiguration illustration and the potential for further sustainable savings
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| | • | Financial reporting and forecasting - the information available when resources are moved to achieve financial balance and support changing priorities
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| | • | Ensuring assets are fit for purpose and provide value for money - clarification was sought on the statement that the council had reduced its maintenance backlog
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| | • | Areas that could be developed further, such as performance management, risk management and the council's gateway procurement process.
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| The Committee agreed to adjourn the meeting for five minutes during the discussion of this item. |
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| | > External Audit Report and Appendix 2 (pdf file 154.1kb) |
| | > External Audit Report - Appendix 1 (pdf file 437.8kb) |
| | > Medway UoR feedback (pdf file 8.3Mb) |
| | Decision: |
| | | The Audit Committee agreed:
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| | (i) | to note the issues raised and judgements made by PKF, as presented in Appendix 1 to the report, and the proposed response as set out at Appendix A to the PKF report and summarised in the body of the report.
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| | (ii) | to note the changes to asset valuation policy outlined in paragraph 4.2.4 of the report.
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| | (iii) | the changes to the Statement of Accounts as set in paragraph 4.8 of the report and reflected in the amended sections of the Statement of Accounts set out at Appendix 2 to the report.
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| | (iv) | the Management Representations Letter, attached at Appendix B of the PKF report.
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| | (v) | to note the comments made during the discussion on the External Auditors report and the Use of Resources presentation. |
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| 300 | OUTCOMES OF AUDIT ACTIVITY |
| | Discussion: |
| | | The Audit Services Manager gave a brief introduction on the outcome of completed internal audit activity. It was noted that for 2009/2010 the audit definitions had been revised to improve managers' understanding of them and that the audit report format had also been revised so to direct managers more clearly to the key risk areas and a clearer priority ranking system for audit recommendations had been introduced.
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Officers responded to Members' questions on a number of audits. This included confirmation, in relation to the free school meals audit, that the audit had included a recommendation for the Home to School Transport management to liaise with the Revenue and Benefits section to promote take-up. In relation to the audit on the Highways Maintenance contract, Members were advised that the audit was based on information from October 2008 and had taken place within a few months of the contract
being let. Details were provided as to how the contract was managed and it was noted that all the recommendations arising from the audit had been implemented.
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| During the discussion of the item the Committee requested that the Foster Care capacity planning audit was referred to the Children and Adults Overview and Scrutiny Committee. |
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| | > Outcomes of Audit Activity (pdf file 127.7kb) |
| | Decision: |
| | | The Audit Committee agreed:
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| | (i) | to note the outcome of Internal Audit's work.
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| | (ii) | to refer the findings from the Foster Care Capacity Planning audit to the Children and Adults Overview and Scrutiny Committee for information. |
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| 301 | INTERNAL AUDIT WORK PROGRAMME |
| | Discussion: |
| | | Members were given a brief overview of the 2009/2010 internal audit work programme and the Audit Services Manager advised Members of the recent successful appointment of two auditors.
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| It was noted that the internal work programme was derived from a number of sources including the Council's risk identification process, internal audit's view of risk and requests from Members and officers. |
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| | > Internal Audit work programme (pdf file 112.0kb) |
| | Decision: |
| | | The Audit Committee noted the progress in delivering the 2009/10 programme and that all key assurance work would be completed to support the needs of the annual governance statement and external audit. |
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| 302 | OUTCOMES OF HOUSING BENEFIT COUNTER FRAUD INVESTIGATIONS |
| | Discussion: |
| | | The Audit Services Manager advised Members of progress in investigating allegations of housing and council tax benefit fraud during the quarter ending 30 June 2009 and responded to Members' questions.
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| It was noted that since the last report to the Committee there had been six successful and no unsuccessful prosecutions. Seven cautions and five administrative penalties had also been issued. Details of these cases were set out in an appendix to the report. |
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| | > Outcomes of Housing Benefit Counter Fraud investigations (pdf file 96.0kb) |
| | Decision: |
| | | The Audit Committee noted progress in investigating benefit fraud in accordance with the approved sanction policy. |
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| 303 | IRREGULARITY REPORT |
| | Discussion: |
| | | This report and supporting exempt appendix set out details of an irregularity investigation and explained the actions taken to deal with the situation. |
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| | > Irregularity Report (pdf file 62.5kb) |
| | Decision: |
| | | The Committee noted the outcome of the irregularity investigation and the actions taken. |
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