Agenda for Audit Committee on Tuesday, 4th November, 2008, 4.00pm

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Agenda, decisions and minutes

Venue: Committee Room 1, Hove Town Hall. View directions

Contact: Penny Jennings, Senior Democratic Services Officer 

No. Item


Procedural Business

    (a)  Declaration of Substitutes - Where Councillors are unable to attend a meeting, a substitute Member from the same Political Group may attend, speak and vote in their place for that meeting.


    (b)  Declarations of Interest by all Members present of any personal interests in matters on the agenda, the nature of any interest and whether the Members regard the interest as prejudicial under the terms of the Code of Conduct.


    (c)  Exclusion of Press and Public - To consider whether, in view of the nature of the business to be transacted, or the nature of the proceedings, the press and public should be excluded from the meeting when any of the following items are under consideration.


    NOTE:  Any item appearing in Part 2 of the Agenda states in its heading the category under which the information disclosed in the report is exempt from disclosure and therefore not available to the public.


    A list and description of the exempt categories is available for public inspection at Brighton and Hove Town Halls.


    36A.   Declarations of Substitutes


    36.1    Councillors Drake,  Mrs A Norman and Mrs  C Theobald attended  in  substitution  for  Councillors Lainchbury,  Smith  and G Theobald respectively.   


    36B.   Declarations of Interest


    36.2    There were none.


    36C.   Exclusion of Press and Public


    36.3    The  Committee  considered  whether the  press  and  public should  be  excluded  from  the  meeting  during  consideration  of  any  items contained  in  the  agenda, having  regard to  the  nature  of  the  business to  be  transacted  and  the  nature  of  the  proceedings and the  likelihood  as  to  whether,  if members  of  the  press  and public  were  present,  there  would  be  disclosure  to  them  of  confidential or  exempt  information  as defined  in  Schedule 12A,  part  5,  Section 100A(4) or  100 (1) of  the  Local  Government  Acct  1972 (as  amended).


    36.4    RESOLVED – That the press and public be  excluded  from the  meeting  during  consideration of  Items 48,  Non-public minutes  of  the previous  meeting and 49 relative  to  “Risk  and opportunity  Management” Corporate  Risk  Management  Action Plans  2008/09 -   both Exempt under paragraph 3.     


Minutes of the Previous Meeting pdf icon PDF 96 KB

    Minutes of the meeting held on 30 September 2008 (copy attached).


    37.1    RESOLVED -  That the  minutes  of  the  meeting  held  on  30  September  2008 be  approved  and signed by  The  Chairman  as  a  correct  record .




              Role and Responsibilities of the Audit Committee


    37.2    The Chairman explained that following the discussions which  had  taken place  at  the  previous meeting  of the  Committee advice  had been  sought  from  The  Director of Strategy  and  Governance  and the  Head of  Law .  Copies  of  that  advice  had  been  forwarded  to  all  Members  of  the  Committee  including  those  who  had  been  absent  from  the  meeting  and those  Members who  had  attended  as  substitutes. 




Public Questions

    (The closing date for receipt of public questions is 12 noon on 27 October 2008).


    No public questions received by date of publication.


    38.1       There were none. 



Written Questions from Councillors

    No written questions received by date of publication.


    39.1       There were none. 




    (The closing date for receipt of deputations is 12 noon on 27 October 2008).


    No deputations received by date of publication.


    40.1       There  were  none.




    No petitions received by date of publication.



    41.1       There were none.



Letters from Councillors

    No letters have been received.



    42.1       There were none.



Audit Commission Update Report

    - Oral Report by representative(s) on behalf of the Audit Commission.


    Contact Officer: Grahame Brown (Audit Commission)

    Wards Affected:  All   



    RESOLVED - That  the  content  of  the  report  be  noted .


    43.1    The Representative from the Audit Commission who was present explained that following the previous meeting of  the  Committee  there  had  been contact between  Council Officers  and Commission staff which was  important  in  developing  a progress report  format which would  meet  the  needs  of  the  Council. The Commission was amending the  audit  and  inspection  Plan  2008/ 09 in  the  light  of  changing  circumstances at the  Council notably  the  decision to  defer the  planned  housing  inspection.  It  was anticipated  that both  the  progress  report  and  plan would  be  brought to  the  committee’s  next  scheduled  meeting  which  was  to  take  place  on  16 December.   


    43.2    In answer to questions it was explained that in the interim until the updated figures were available the authority’s value for money assessments were being used. Preparation of  these  reports represented a  significant  piece of  work for  both  officers of  the  Council  and  audit Commission  staff who  sought to  ensure  that scoring mechanisms used  were  consistent with  those  used  by  local  authorities  countrywide. A review of ethical governance was also in the progress and was significantly advanced. Some additional  work  on  services  was  due  to  start in  early  2009.


    43.3    RESOLVED - That the content of the report be noted.


Treasury Management pdf icon PDF 99 KB

    - Report of the Director of Finance and Resources (copy attached). 


    Contact Officer: Peter Sargent                             Tel:  29 - 1241

    Wards Affected: All      


    RESOLVED - That the framework within which investment risk is managed be noted.


    44.1    The  Committee  considered  a  report  of  the  Director  of  Finance  and Resources relative  to treasury  management  including details regarding  how  increased  investment risk  resulting  from  the  current  turmoil   in  the  financial markers  was managed within the  Council’s  treasury  management policy. The purpose of the report was to advise the Committee on key aspects of treasury management, in particular how investment parameters were determined and how investment companies were selected (for copy see minute book).


    44.2   The report was supplemented by a presentation on which members had the opportunity to ask questions.  Copies  of  the  presentation  were  subsequently  made available  to  Committee  members and for  public  deposit.


    44.3    In answer to questions raised by Councillor Alford relative to  funds  lodged with  the  Icelandic  Bank  (which  had  formed  the  subject  of a  question to  the last meeting  of  full  Council), it  was  explained  that criteria  used  within  Brighton  &  Hove  the  authority  were  tighter  than  those  used some  authorities and  in consequence  no  investments had been  made  there   had been  curtailed  some time  previously. To put the  matter  into  perspective  about  3/4  of  local authorities had ceased  investing with  the  Icelandic banks prior  to  the  current difficulties  in the  financial  marketplace.


    44.4    Councillor  Oxley  noted that the  Council’s  investments were  currently  reviewed  monthly and  this  appeared  to  mirror  what was  going  on across  the  money  markets  as  a  whole. Councillor Kitcat requested amplification from officers’ regarding the pros and cons of using different models.  Councillor  Watkins  stated that given the  current  parlous  state  of   some  of the  financial institutions  this  was  a  matter  which would  benefit from  constant  review .     


    44.5   RESOLVED - That the framework within which investment risk is managed be noted.


Audit and Assurance Services Progress Report pdf icon PDF 109 KB

    - Report of the Director of Finance and Resources (copy attached).


    Contact Officer:  Ian Withers                              Tel:  29 – 1323

    Wards Affected:  All


    RESOLVED -   that The  contents  of  the  report  be  noted,  in  particular  the  status  of  internal  audit  work  since  September  2008.


    45.1    The  Committee  considered  a  report  of  the  director  of  Finance  and Resources  detailing  the  outcome of  internal  audit  work  completed  since  the  previous  meeting  of the  Committee and setting  out  the  position  regarding  the  delivery  of  the  Internal  Audit  Plan  for  2008  /  09 (for  copy  see  minute  book).


    45.2    It  was  explained  that the  Accounts  and Audit Regulations  2006  required every local authority  to  maintain  an  adequate  and effective  system of  internal  audit.  Audit and  Assurance  Services carried  out  the  work  to  satisfy  this  legislative  requirement  and  part  of  its responsibilities  lay  in  reporting on the  outcome  to  the  Committee. 


    45.3    n response  to  questions of Councillor Kitcat relative  to  measures to  seek  to  maximise  rental  income   (with  particular reference  to  the  Council’s  seafront  properties)   it  was  explained  that this work  was cried out  on  the  Council’s  behalf  by  “Cluttons”  and that they   had to  meet  the  Council’s  value  for  money requirements and was  encompassed  within  the  Council’s overall  Asset Management Plan.


    45.4    Councillor  Alford raised issues  regarding the  security  of  the  “public”  realm  within the  Council’s  buildings . It  was  explained that robust  measures  were  in  place  in  this  respect  information in respect  of  this  issue  could  be  considered (if members  so  wished)  at a  future  meeting. Such information would be exempt from disclosure to the public.      


    45.5    RESOLVED -   That The  contents  of  the  report  be  noted,  in  particular  the  status  of  internal  audit  work  since  September  2008.


Review of Effectiveness of Internal Audit pdf icon PDF 75 KB

    - Report of the Director of Finance and Resources (copy attached).


    Contact Officer: Ian Withers                              Tel: 29 - 1323  

    Wards Affected:  All


    RESOLVED - (1) that the Committee approve the process using:


    • Self  assessment against  the  CIPFA Code of  Practice  for  Internal  Audit in  Local  Government  (2006);
    • A  peer  review with  the  London Boroughs of Bromley and  Bexley;
    • Use  of  performance data  and  comparison  with  the  results  of  the  IPF  Benchmarking  Exercise  2008;
    • External  Audit  Review  ;  and  
    • An  internal  Audit  Customer  Satisfaction  Survey;


    (2) That two Members  of  the  Committee (names to be agreed), participate  in  the  task  group  for  the  review  ;  and


    (3) That the Committee receives a report to its February meeting providing sufficient evidence and opinion to base the review upon.  This to include details of any improvement actions required.   




    46.1    The  Committee  considered  a report  of  the Director  of  Finance  and Resources providing details of  the  background,  process and method  by  which the  Audit  Committee  could  comply  with  its  requirement in  considering  the  outcome of  the  annual  review  of  the  effectiveness  of  internal  audit (for copy  see  minute  book).


    46.2    In  answer  to  questions  of  Councillor  Watkins  relative  to  the  potential  cost implications of carrying  out  an  external  review  it  was explained that as a peer  review  by comparable authorities  was envisaged, which would be  reciprocated no  additional costs  were  envisaged.  The Audit Commission had confirmed that they considered such an approach to   be acceptable.  A peer review provided a useful tool for reviewing effectiveness.    


    46.3   RESOLVED –


              (1)   That the Committee approve the process using:


                      Self assessment against the CIPFA Code of practice for Internal Audit in Local Government (2006); 


                      A peer review with The London Boroughs of Bexley and Bromley; 


                      Use of performance data and comparison with the results of the IPF Benchmarking Exercise 2008; 


                      External Audit Review; and an Internal Audit “Customer Satisfaction Survey;”


              (2)   That two Members  of  the  Committee (names to be agreed), participate  in  the  task  group  for  the  review  ;  and


              (3)   That the Committee receives a report to its February meeting providing sufficient evidence and opinion to base the review upon.  This to include details of any improvement actions required.  



Risk and Opportunity Management (ROM) : Update

    - Oral  report  on  behalf  of  the Director  of  Strategy  and  Governance .


    Contact Officer:  Jackie Algar                             Tel:  29 - 1273

    Wards Affected: All  


    RESOLVED - That the content of the report be noted.


    47.1    The Council’s Risk and Opportunity Manager gave an oral update relative to the Risk and opportunity Management (ROM) update. She explained that TMT  were due  to update  the  existing  risk  register  on  12  November and that any  changes would  be  reported  to  the  meeting of the  Committee scheduled  to take  place  on 16  December  2008.The  Business  Continuity  Manager  had  escalated  a  risk  re.  security  to  the  banking  system  in  August  208  via  his  manager,  to  the Risk Manager and  to  the  Director of  Finance and Resources which  demonstrated  risk  escalation in  action.


    47.2    In  respect  of the British  Standard for  Risk  Management (BS31 100) the  final  copy  was  still  awaited.  When available,   the ROM Strategy would be reviewed against it.  Risk  workshops with  project  leads  of  the  Sussex  Improvement Partnership  had  taken  place  or  were  in  the  process  of  being  arranged and  an E –learning package for  (ROM)  was  in  the  development  stage  with   the in house  team.


    47.3    Audit  and  Assurance’s  report  had  been finalised -  the  report  gave  “substantial  assurance over  the  risk  management processes  within the  authority. Some opportunities for developing the processes further remain. Use  of  Resources  results  were  expected  in December  and  those pertaining to  Risk  Management  and Internal  Control  would be  reported  to  the  Committee  along  with  the  overall use  of  resources to  the  Audit  Committee along  with  the  overall score  at  the  earliest  possible  date.  The  annual  ROM  programme  would  be  checked  to  ensure  it  addressed  any  improvement  points .ROM  training  had  carried  out  with  project  managers  and joint  working  was in  progress.  In  addition  the  Risk  and Opportunity  Manager  had  been  invited  to  give  a  presentation at  the  next  Member Development  Group  on  how  risks  and  opportunities  should  be  addressed in  reports for  decision  makers . 


    47.4       RESOLVED - That the content of the report be noted.


Part Two Summary


Non-Public Minutes of the meeting held on 30 September 2008


Corporate Risk Management Action Plans Focus

    - Oral report on behalf of the Director of Strategy and Governance.


    Members  are requested to  bring  their copies of  the  Corporate  Action  Plans  Circulated  for  the  meeting  on 30 September  2008  with  them  to  this  meeting .   


    Contact Officer:  Jackie Algar                                              Tel:  29- 1273

    Wards Affected: All


    49.1    The Committee considered  the  four  areas  of  risk  which were currently  identified  as  representing  the  most  significant  potential risks  and the  procedures  and structures  in  place to  manage them 


    49.2       It  was  agreed  that this  would  be  a  standing  item  on  future  agendas.



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