Agenda and draft minutes

Audit Committee - Tuesday 24 January 2023 6.00 pm

Venue: The Telford Room, Addenbrooke House, Ironmasters Way, Telford, TF3 4NT

Contact: Jayne Clarke  01952 383205

Items
No. Item

AU58

Declarations of Interest

Minutes:

None.

AU59

Minutes of the Previous Meeting pdf icon PDF 227 KB

To confirm the minutes of the previous meeting.

Minutes:

RESOLVED – that the minutes of the meeting held on 23 November 2022 be confirmed and signed by the Chair.

AU60

2022/23 Treasury Management Update and 2023/24 Treasury Management Strategy pdf icon PDF 199 KB

To receive the report on the 2022/23 Treasury Management Update and 2023/24 Treasury Management Strategy. 

Additional documents:

Minutes:

The Finance Manager advised Members that the Treasury Management Update and Strategy were legally required to be presented the Audit Committee under the Local Government Act 2003, CIPFA Code of Practice on Treasury Management, (the Code), and the CIPFA Prudential Code for Capital Finance in Local Authorities, (the Prudential Code). Following this meeting the report would also be presented to Cabinet and Full Council.

 

Members heard that the strategy for 2022/23 remained consistent with that outlined in the 2022/23 Treasury Strategy, which was agreed for approval at Full Council on 3 March 2022 and by the Audit Committee on 25 January 2022. The Strategy was a continuation of that used in recent years which had provided considerable benefits to the Council. The Finance Manager noted that the latest financial monitoring projections indicated a benefit of £3.9m from treasury management during 2022/23 which supported the provision of front line services, opportunities for borrowing when appropriate and the Council’s overall financial position. Based on the recommendation of the Link Group, the Committee heard that the figures set out in the report had allowed for changes to interest rates, in order to create robustness.

 

The Finance Manager informed the Committee that the Council was expected to need to borrow an additional £125.8m in 2023/24, based on the existing capital programme plans which adopted a flexible approach to borrowing. Members were asked to note that considerations were given to affordability, maturity profile of existing external financing, interest rates and refinancing risk as well as borrowing source, which was usually expected to be other Local Authorities or the Public Works Loan Board, but also included Municipal Investment Loans, the LGA Municipal Bonds Agency, European Investment Bank or commercial sources, and any new opportunities which arose.

 

The Committee heard that the strategy for any investments was to minimise investments in order to reduce counter-party risk, and to reduce net interest costs as longer-term borrowing rates tended to be greater than the council were able to earn on new investments. The strategy sought to lengthen investment periods, where cash flow permitted, to achieve higher interest rates within acceptable risk parameters.

 

During the discussion Members noted that a distinction between capital expenditures would be useful so that it could be established assets which will appreciate over time and industrial assets which depreciate over time. The Director: Finance & Human Resources agreed that this distinction was to be included in future reports.

 

RESOLVED - that:

 

a.    recommend to Full Council that the treasury management activities to 31st December 2022 as set out in Appendix A be noted;

b.    the Treasury Strategy 2023/24, including the Annual Investment Strategy, the Minimum Revenue Provision Statement, Treasury Management Prudential Indicators be approved; and

c.    the 2022/23 Treasury Management Update Report be approved.

AU61

2021/22 Statement of Accounts pdf icon PDF 315 KB

To receive the 2021/22 Statement of Accounts.

(The Appendix to the report is to follow.)

 

Additional documents:

Minutes:

The Committee heard an update on the Council's accounts. The Finance Manager noted that at the time of the meeting Grant Thornton were still finalising their audit work and delegated authority was therefore sought to make any final changes required prior to publication. 

 

Members were informed that changes made to the accounts were outlined in section four of the report and included infrastructure assets, accounting treatment of investment property revaluations, pension liability and group accounts revaluations. All changes listed in the report had been discussed and agreed with Grant Thornton and had not impacted on the General Fund Balance position.

 

The Finance Manager updated Members on a change to the recommendations outlined in the report. In addition to delegated authority for final changes to be made to the Statement of Accounts prior to publication, delegated authority was given for the chair to sign the letter of representations. 

 

RESOLVED - that:

 

a.    the 2021/22 Statement of outlined in  Appendix A be approved;

b.    delegated authority be granted to the Director: Finance & Human Resources, following consultation with the Chair, to make any final changes required to the Statement of Accounts prior to publication.

c.    delegated authority be granted for the Chair to sign the letter of representations.

 

AU62

Audit Findings Report (AFR) 2021/22

To receive the report of the External Auditors in respect of Audit Findings 2021/22.

Minutes:

Grant Thornton, External Auditors, presented a verbal update on the Audit Findings Report 2021/22.

 

The External Auditors advised that the Audit Findings Report had not been completed due to ongoing resourcing issues; however it would be circulated once available after the meeting.

 

Members heard that the Council had moved to a new category due its size. As a result, the External Auditors had to re-examine materiality and re-programme the numbers based on the new cap. Regardless, the benchmark set remained the correct one and so there were no changes required to the overall strategy.

 

One area of consideration had been whether an investment property was held through capital appreciation or income. The External Auditors assured Members that this was simply a matter of classification and would not affect the overall valuations.

 

The External Auditors explained to the Committee that no governance issues with the pension fund or pension liability had been found. Members heard that the report would detail a £19 million difference in the overall fund and that the Council's adjustments were minimal.

 

The External Auditors updated Members of the Committee on the work that had been completed at the time of the meeting. There had been no risks to report from their assessment of the management override journals, Nuplace, fraud in income and expenditure or cash equivalents. A review had been undertaken of the valuation process of buildings and other land and the decision had been made to appoint their own expert to test the assumptions surrounding that. The indexing indicated that there would be roughly a four million difference, which was within margin.

 

Members thanked the External Auditors for their comprehensive verbal report.

 

RESOLVED - that the verbal report be noted.

 

 

AU63

Telford and Wrekin Council Becoming Carbon Neutral and Plastic Free Update pdf icon PDF 281 KB

To receive the update report on Telford and Wrekin Council becoming Carbon Neutral and Plastic Free.

Additional documents:

Minutes:

The Team Leader: Climate Change & Sustainability informed Members that tackling climate change was one of five priorities set out in the current Council Plan and that in July 2019 the Council declared a climate change emergency, making a commitment to reduce its carbon emissions to net zero by 2030. To support this the Council had allocated £4,000,000 of capital funding into the programme of work.

 

Members heard the reporting on carbon neutrality and becoming plastic free had previously been reported separately, however, since 2021/22 they had been reported jointly as one delivery plan. The Team Leader: Climate Change & Sustainability explained to Members that the cost of living and fuel poverty crisis was also having an impact on the implementation of the delivery plan.

 

The Committee were informed that whilst the Council had continued to monitor emissions, it had not been possible to monitor commuting emissions so it had been removed from the data to ensure consistency. In other areas the Council was on track in its efforts to reduce emissions. The Team Leader: Climate Change and Sustainability updated Members on the areas where the Council had implemented renewable energy across the Borough, including sports centres and the Southwater Way properties. Members heard that Cabinet had also recently assigned funding for solar panels to be introduced on Council buildings, starting with Granville House.

 

During the discussion Members welcomed the report and the Council's investment to combat Climate Change and assist residents.

 

RESOLVED - that the update on Telford and Wrekin Council becoming carbon neutral and plastic free be noted.

 

AU64

Update on the PSAA – External Audit Appointment Process pdf icon PDF 265 KB

To receive the update report on the PSAA – External Audit Appointment Process.

Minutes:

Members heard that at the Audit Committee meeting dated 28 September 2021 it was agreed that the Council would follow the Public Sector Audit Appointments procurement process (PSAA) and delegate authority to the Director: Finance and Human Resources to take any appropriate action needed to appoint an External Auditor.

 

The Audit & Governance Lead Manager explained that following a statutory consultation process, auditor appointments for opted-in bodies were completed on 31 December 2022 for audit years from 2023/24. The PSAA proposed that KPMG were appointed as Telford & Wrekin Council external auditors.

 

During the discussion Members expressed their gratitude to Grant Thornton, the Council's current external auditors for their hard work and for their continued work.

 

RESLOVED - that:

 

a.   The Committee note the contents of the Update on the PSAA - External Audit Appointment Process report; and

b.   The Committee recommends the appointment of KPMG as the Councils External Auditors.

 

AU65

Internal Audit Activity and Update to Internal Audit Charter 2023/2024 pdf icon PDF 242 KB

To receive the update report on Internal Audit Activity and the Internal Audit Charter 2023/2024.

Additional documents:

Minutes:

The Principal Auditor provided the Committee with an update on the progress made against the 2022/23 Internal Audit Plan and information on the recent work of Internal Audit.

 

Members heard that there had been six audit reports produced in this time–period; each time there had been improvements in the grading when follow-ups had been completed. There were an additional 14 audits underway, this had not changed since the last report to the Committee.

 

During the discussion Members requested that areas of higher financial risk be identified in a more clear way for the lay person. The Audit & Governance Lead Manager noted that level of risk was indicated in the report and if there were any areas of greater concern financially, they would be disclosed to the Committee.

 

The Principal Auditor advised Members that the Terms of Reference required the Audit Committee to approve the Internal Audit Charter on an annual basis. Members noted that no changes had been made to the Charter since it was last approved.

 

RESOLVED - that:

 

a.    the information contained in the report be noted by the Committee; and

b.    the Internal Audit Charter 2023/24 be approved by the Committee

 

AU66

Update on the AGS Action Plan for 21/22 pdf icon PDF 401 KB

To receive an update on the AGS Action Plan for 2021/22.

Minutes:

The Audit & Governance Lead Manager provided Members with an update on the actions identified on the Annual Governance Status Action Plan. The Committee were assured that each of the actions listed in the plan had been implemented in full or were being implemented on an ongoing basis.

RESOLVED - that the Committee noted the update on the AGS Action plan for 2021/22

 

AU67

Strategic Risk Register Update pdf icon PDF 728 KB

To receive an update on the Strategic Risk Register.

Minutes:

The Audit & Governance Lead Manager updated the Committee on the status of the strategic risks outlined in the risk register. Members were informed that the risks remained stable, and there had been no additions or new admissions since the Committee was last provided with an update.

Members heard that some descriptions of risks had been updated. The Audit & Governance Lead Manager highlighted the eighth risk listed in the report: 'the inability to respond to impact of climate emergency on severe weather events including heat, cold and flood', which had been expanded to include areas beyond flooding as was previously listed.

The Audit & Governance Lead Manager informed Members that there had also been additional updates to the mitigation and management of the figures and controls of the risks on the register.

RESOLVED - that the Committee noted the Strategic Risk Register Update.

 

AU68

Exclusion of the Press and Public

It is recommended that the press and public be excluded from themeeting for the remaining item of business on the grounds that it may involve the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972.

Minutes:

RESOLVED - that the press and public be excluded from the meeting for the remaining item of business on the grounds that it may involve the likely disclosure of exempt information as defined in paragraph 1 of Part 1 of Schedule 12A of the Local Government Act 1972.

AU69

Cases Update

To receive a verbal update from the Audit & Governance Lead Manager.

Minutes:

The Audit & Governance Lead Manager advised Members that there was no update due to be presented at this meeting but this item would remain a standing item for future updated when needed.