No declarations of discloseable pecuniary interest were disclosed by the Members.

To confirm the minutes of the Audit Committee held on 16^th November 2017.

The minutes from the 16^th November 2017 were agreed to be an accurate record of the meeting and were signed off by the Committee.

The Chair, in reference to page 12 stated the Members will report back on their views in relation to the Kent County Council presentation on risk at the March meeting of the Committee.

Neville Murton, Divisional Director for Finance, Procurement and Audit presented this report on behalf of KPMG.

He stated the Annual Report on “Grants and Returns 2016/17” summarised the work KPMG had done on the Council’s grant claims and returns.

This included work they had completed under the Public Sector Audit Appointment certificate arrangements as well as work completed on other grants/returns under separate engagement terms. The work completed in 2016/17 was in relation to:

·         The Council’s 2016/17 Housing Benefit Subsidy claim which had a value of £268 million

·         The Teachers’ Pensions Return (total contributions of £28.3 million) and

·         The Pooling of Housing Capital Receipts return (a value of £41.9 million)

Neville Murton referred Members to page 22 of the agenda and stated the Teacher’s Pension fund return was in regard to the rounding of figures and there was a minor discrepancy of £11,000 - Small in the grand scheme of things. The Teachers’ Pension Fund had been written to and the Auditors have agreed no further action is required.

Members of the Committee asked the following questions:

·         Could you confirm that the Teachers’ Pension fund was only to do with the rounding up of figures?

Members of the Audit Committee NOTED the report.

The Chair, Councillor Ronald informed Members that due to a scheduling issue, the Children’s Directorate would be presenting their presentation on risk at the next meeting of the Committee.

Cllr Ohid Ahmed expressed concern and said it was important to receive a report from the Directorate.

The Chair, clarified the presentation would be in relation to ‘risk’ and would be a deep dive looking at this area and was not specifically in relation to the OfSted report.

Minesh Jani, Service Head for Risk Management presented the Quarterly Internal Management report covering the period of September 2017 to December 2017.

The report set out the assurance rating for each audit finalised in the period and gave an overall assurance rating. He made reference to page 28 and the table which showed the total number of audit’s conducted and the assurance level they had achieved. He also referred Members to the table on page 29, 6.1 which showed how the internal audit service was performing against KPI indicators and the targets achieved.

88% of Priority 1 Audit recommendations had been implemented and 87% of Priority 2 recommendations had also been implemented.

Members of the Committee heard further from the Officer in the following services:

Management and Control of Corporate Purchase Cards

Neville Murton, Divisional Director for Finance, Procurement and Audit informed Committee Members a considerable amount of work had been done to decrease the use of Purchase Cards.

The complete process of how Purchase Cards are issued and to whom plus guidance on their usage had all been reviewed and processes had been tightened and cross matched with the Council’s accounting system Agresso.

This had made the whole process more robust and all existing and new Purchase Card Holders were required to sign new conditions for use. Whilst the Council was moving away from using Purchase Cards, there are areas of the Council where usage of the Purchase Cards allows them extra flexibility to purchase goods and services.

Members made the following comments:

·         Is there a limit on the number of card holders in each team and in the organisation as a whole?

·         Have staff been made aware of reclaiming VAT on purchases.

·         Members were pleased to see a reduction in the usage of Purchase Cards and the amount expended and NOTED there would be a follow up Audit in six months.

Monitoring and Delivery of Economic Benefits

Vicky Clark, Divisional Director for Growth and Economic Development stated she welcomed the internal audit report and the recommendations made therein. She said in relation to recommendation 1 and 5, the policy, procedures and processes had been reviewed and the Council was looking to ensure Social Value principles were embedded into contracts.

With regard to recommendation 2, this was an ongoing exercise. High value contracts had been scrutinised however the challenge now was to examine the low end contracts. Recommendation 3 and 4 required further work and engagement with Contract Managers.

Members made the following comments:

·         Are you confident you can move forward from the current position once the social value toolkit has been embedded into processes and procedures?

·         With regard to Economic Growth and Benefit, who has ownership of this area? Which Directorate is responsible?

·         It would be useful for future Committee meetings if information on how much each programme is delivering in terms of social value can be provided.

·         How is the work of the Economic Growth and Development team communicated to others?

Establishment Control – Follow up  ...  view the full minutes text for item 4.2

Paul Greeno, Senior Corporate and Governance Lawyer introduced his report by stating that this was the first quarterly update to the Committee since it was agreed that Whistleblowing would be reported to the Audit Committee.

He referred Members to point 3.1 which detailed the number of cases dealt with since April 2016. 41 Whistleblowing concerns had been raised of which 30 had been investigated and closed. With regard to the 30 cases, 4 were upheld, 3 were closed as further information was required and 2 were referred to other agencies. 21 cases were not upheld.

Mr Greeno also referred Members to point 3.2 and the lessons learnt from cases investigated. In particular he drew attention to the use of card purchases and the review spoken about earlier in the meeting.

Members of the Committee asked the following questions:

·         It is positive to see the level of whistleblowing reported. How do you keep individuals who have reported an incident updated with the progress of the investigation?

·         What level of interaction takes place between Whistleblowing and the Corporate Anti-Fraud team?

·         How is the success of whistleblowing outcomes reported back to staff?

The Audit Committee NOTED the whistleblowing update and the investigation monitoring information contained in Appendix 1 of the report.

Tony Qayum, Corporate Anti–Fraud Manager presented his report outlining the work of his team and the investigations they had undertaken. In particular he referred Members to the table at 4.1 and stated the ‘Fraud Proven’ target of Social Housing would increase to 50 and the team who easily achieve this target. He referred to 5.1.4 of the report and said the team had met with Departmental Leadership Teams and had undertaken Anti-fraud roadshows to raise awareness and improve engagement with Directorates.

Members of the Committee had no questions for Mr Qayum.

The Audit Committee NOTED the contents of the report.

Minesh Jani, Head of Risk Management presented his report on the Corporate Risk Register. He referred Members on the table on page 95 of the agenda which showed the number of corporate risks by Directorate for quarter 3, 2017/18.

In addition he referred Members to the table on page 96 which showed the associated risks in relation to corporate priorities.

He stated the Corporate Risk Register required a refresh and work was underway to consult with Directorate Leadership Teams to identify risks as well as raise awareness through Risk workshops with staff.

Members of the Committee asked the following questions:

·         The Risks identified in appendix 1, page 99 are 6 months old. When will the Register be updated to show current risks?

·         What is the timeframe to introduce the concept of Officers/Managers owning the Risk and updating the corporate register?

Zena Cooke, Corporate Director for Resources suggested that the committee may wish to keep Risk Management as a standing item on the agenda, as a discursive item while the Risk Register was updated.

Members of the Committee AGREED with this suggestion.

Members of the Committee NOTED

1.    The corporate risks and recommended changes and updates as necessary;

2.    Requested risk owner(s) requiring further scrutiny provide a detailed update on the treatment and mitigation of the risk including impact on the corporate objectives at its next meeting; and

3.    Determined if risks on the corporate risk register are a significant threat to the achievement of corporate objectives or the performance of activities to satisfy core statutory objectives.

Neville Murton, Divisional Director for Finance, Procurement and Audit introduced the report stating the report detailed the Council’s legal obligation under the Local Government Act 2003 to have regard to both the CIPFA Code and the CLG Guidance.

He made reference to the Capital programme and said this would be updated before it goes to Full Council in February. Mr Murton stated the Council had not borrowed externally and was working with its Treasury Management Consultants – Arlingclose to ensure the Council’s capital expenditure is realistic and achievable.

Mr Murton continued stating there would be a further report coming back to the Committee which outlined in detail the proposals for investment and the products it would invest in.

Members of the Committee made the following observation:

·         That the heading on the table on page 129 did not correspond with the headings on the table page 144, and requested this be corrected.

The Audit Committee NOTED the recommendations listed on page 124 of the agenda to recommend Full Council to:

1. Adopt the following policy and strategies:

a)    The Minimum Revenue Provision Policy Statement set out in section 2 at Annex A attached to this report;

b)    The Treasury Management Strategy Statement set out in sections 5 & 6 at annex A attached to this report;

c)    The Annual Investment Strategy set out in section 7 at annex A attached to the report, which officers involved in treasury management, must then follow;

2. Approve the prudential and treasury management indicators as set out in appendix 1 of annex A attached to this report.

3. Delegate authority to Corporate Director, Resources

• To amend prudential and treasury indicators, once capital expenditure forecast is firmed up.

·         Use alternative forms of investment, such as pooled funds should the appropriate opportunity arise to use them, and should it be prudent and of advantage to the Council to do so.

Neville Murton, Divisional Director for Finance, Procurement and Audit presented this report which detailed the accounting policies which would be implemented during the financial year 2017-18 and reflected in the published Statement of Accounts for that period.

Mr Murton referred Members to Appendix A which included the draft accounting policies for 2017-18 and which summaried the main content of the policies and recent changes made to it. Mr Murton said the draft accounting policies had remained largely unchanged and the report was for Members to note.

The Audit Committee NOTED the recommendation to

1.    Approve the accounting policies and comment upon the draft.

Minesh Jani Head of Risk Management informed Members the Annual Internal Audit Plan for 2017-18 had been updated and asked members to note the changes.

The Audit Committee NOTED the changes to the Internal Audit Plan 2017-18.

No other urgent business was discussed.

The Chair reminded members that the next meeting of the Audit Committee was scheduled for Thursday, 29^th March 2018 at 7:00 p.m.