Agenda and draft minutes

To approve as a correct record the Minutes of the meeting of this Committee held on 26 November 2018.

The Minutes of the meeting held on 26 November 2018 were approved as a true and correct record and signed by the Chairman subject to the correction of a feww minor typographical errors and the inclusion of Councillor Graham Bridgman on the list of attendees.

To remind Members of the need to record the existence and nature of any personal, disclosable pecuniary or other registrable interests in items on the agenda, in accordance with the Members’ Code of Conduct.

There were no declarations of interest received.

Purpose: To consider the Forward Plan for the next 12 months.

The Committee considered the Governance and Ethics Committee Forward Plan (Agenda Item 4).

RESOLVED that the Governance and Ethics Committee Forward Plan be noted.

Purpose: To provide an update on local and national issues relating to ethical standards and to bring to the attention of Members any complaints or other problems within West Berkshire.

The Committee considered a report (Agenda Item 5) which provided an update on local and national issues relating to ethical standards and any complaints or other problems within West Berkshire.

Sarah Clarke noted that the report concluded that although there was a relatively high number of complaints (22), they were limited to related matters in a very small number of parishes. Twenty of the complaints pertained to parish councillors, one to a co-optee and one to a district councillor. It was noted that only two matters were referred for investigation, no further action was taken on fourteen of the complaints, three were withdrawn, informal resolution was required in two cases and one was still being dealt with. It was the opinion of the Monitoring Officer that standards of conduct at all levels across the district remained high, which was to be commended.

As part of the learning from the complaints received the Council had amended its Social media Protocol for Members and some changes had also been made to the Member Development Programme.

Ms Clarke also noted that the Committee on Standards in Public Life had published their report on ethical standards in local government on the 30^th January 2019. It was heartening to see that they were recommending that the ability to suspend councillors be reintroduced as a sanction. This would however require legislative changes. Officers were suggesting that after the May 2019 elections a small group be formed to look at the implications of the report to see what changes should be made to the Council’s protocols prior to a discussion at a Governance and Ethics Committee meeting. It was however noted that some of the changes would be dependent on legislative changes.

The number of gifts and hospitality declarations by officers was broadly similar to the previous year. The number of declarations by Members had increased slightly. The Monitoring Officer was however concerned that there was still a degree of under reporting and that there was a lack of consistency in declarations across the Council.

Councillor Jeff Brooks noted that there had been an increase in the number of complaints and he queried if this was an indication of a systematic problem. Sarah Clarke stated that the complaints were limited to a very small number of matters and a few parishes. In 77% of cases the matter was either withdrawn or no further action was taken on the complaint. It should also be noted that only two complaints were investigated. She was therefore reassured that conduct at all levels across the district remained high and she commended all councillors for this.

The Committee welcomed the possibility of being able to apply a suspension as a sanction where breaches of the Code of Conduct occurred.  They agreed that since the introduction of the Local Government Act in 2011 the sanctions available to them had been largely ‘toothless’ and that if the legislation was passed it would be useful to have this sanction available to them.

The  ...  view the full minutes text for item 30.

Purpose: To update the Committee on the outcome of Internal Audit work carried out during quarter three of 2018-19.

The Committee considered a report (Agenda Item 6) which set out the outcome of Internal Audit work carried out during Quarter Three of 2018/19.

Julie Gilhespey explained that the Public Sector Internal Audit Standards (PSIAS), as adapted by CIPFA's "Local Government Application Note", required the Audit Manager to provide periodic updates to Senior Officers and Members on performance against the Audit Plan. As stated in the Council’s approved Internal Audit Charter quarterly updates were required to be presented to the Governance and Ethics Committee. The periodic reports aimed to provide a progress update against the work in the Audit Plan together with highlighting any emerging significant issues/risks that were of concern. Appendix C set out which audits had been completed and work in progress was included in Appendix D.

The report concluded that no significant/fundamental weaknesses had been identified in the Council’s internal control framework through the work carried out by Internal Audit during the third quarter of 2018/19. All the follow up audits were also satisfactory.

As reported for quarters one and two progress against the plan had been slow due to a senior auditor post becoming vacant, and also because there had been a number of unplanned audits/projects that the Audit Manager had been heavily involved in.

Councillor Quentin Webb commented that the report was good news and the Committee thanked officers for their endeavours.

RESOLVED that the report be noted.

Purpose: To provide Members with a copy of the external audit plan from Grant Thornton for the Financial Year ending 31^st March 2019 which sets out an overview of the scope and timing of the annual statutory audit of the Council’s financial statements and value for money arrangements.

The Committee considered a report (Agenda Item 7) which included a copy of the External Audit Plan from Grant Thornton for the Financial Year ending 31^st March 2019. The plan gave an overview of the scope and timing of the annual statutory audit of the Council’s financial statements and value for money arrangements.

Lesley Flannigan explained that Grant Thornton would also be assessing the Council’s arrangements to secure value for money with particular emphasis on Financial Resilience and had requested a Going Concern assessment from the Council agreed by the s151 Officer (Head of Finance and Property). The Going Concern Assessment would be produced by the Council post completion of the draft 2018/19 Financial Statements.

Barrie Morris (Grant Thornton) stated that the key issues that they would take into account were set out on page 66 of the paperwork. These included:

·         Local Government funding continued to be stretched with increasing cost pressures and demand from residents.

·         There continues to be increased pressure on the Council in demand led areas and specifically in adult social care.

·         Implications of Brexit.

·         Arrangements around the joint venture with Sovereign.

·         The Court ruling on Newbury Development.

·         The Council’s Property Investment portfolio.

Significant risks (where there was a higher risk of material misstatement)  to Councils were identified as fraudulent transactions and management over-ride of controls. Other significant risks included valuation of property, plant and equipment valuation of pension fund net liability. More detail around these risks and what Grant Thornton proposed to do when looking into them was set out on pages 67 and 68 of the paperwork.

In terms of materiality, the changes that would be deemed to be significant to stakeholders, Grant Thornton would set the figure at £5m which equated to 1.5% of the Council’s prior year gross expenditure for the year. This was higher than the figure used by the previous auditors KPMG who used a figure of £3.6m. This was a reflection of the fact that the Council’s finances were well controlled and previous concerns had not materialised. Errors below £250k would be deemed to be trivial . Any errors over £250k would be reported to Members. Grant Thornton designed its procedures to detect errors in specific accounts at a lower level of precision which they determined to be £20,000 for Senior officer remuneration. These standards were industry wide and in line with their competitors.

Councillor Anthony Pick noted that in terms of assets on the balance sheet these figures were based on a judgement on future events and he queried if this was based on cautious or optimistic forecasting.  Mr Morris explained that a range of data was used, including disposal data, to ensure that net book value was as accurate as it could be,

The chairman thanked Mr Morris for taking the time to come along to the meeting and present his report. Andy walker stated that to date he was very pleased with the working relationship with the new auditors.

RESOLVED that the report be noted.

Purpose: To set out the proposed Internal Audit work for the three year period covering 2019/2020 to 2021/2022.

The Committee considered a report (Agenda Item 8) which set out the proposed Internal Audit work for the three year period covering 2019/20 to 2021/22.

The report set out the proposed work programme for Internal Audit over the next three years. In order for an informed decision to be made regarding the work programme this report set out the role of Internal Audit together with supporting information as to how the plan was compiled.

Julie Gilhespey explained that she was required to review the Internal Audit Charter annually. She had drawn on some of the recommendations from the external review of internal audit during this process. The most significant change was clarifying that the Audit Manager should have direct access to both the Chair of the Governance and Ethics Committee as well as the Chief Executive. This was standard practice which needed to be adopted.

The Audit Manager had also made some changes to the Reporting Protocol. Firstly she had removed the requirement for consultation with the Portfolio Holder, this stage never resulted in any changes to the draft report and extended the consultation period by a month. The second change was the removal of the requirement to include Head of Service comments/progress update in the Audit Plan update reports. It was felt that including comments at this stage was not adding anything to the update report. She reassured the Committee that the Portfolio Holder would still receive the final report as per current practice.

Councillor Jeff Brooks noted that the programme was very long. He drew attention to the audit of IR35 (Audit No. 5) which was listed as high risk and stated that unless the Council was utilising a large number of limited company contractors he was not sure why this was the case. Julie Gilhespey accepted Councillor Brooks’s comments but stated that this was a new process which had recently been introduced and it had been agreed that the area should be audited once the process had been imbedded. She stated that as this included schools the number affected might be higher than expected by Members. Councillor Brooks felt that there were other areas that should be deemed more important.

He asked if the Audit Manager was confident that there were sufficient resources available to cover all the audits. Ms Gilhespey stated that Appendix E highlighted than in 2019/20 there were 693 planned audit days and only 672 staff days available. Councillor Brooks stated that the programme should be looked at carefully to ensure that all the audits were necessary. The Audit Manager explained that the audits were programmed on a cyclical basis and high risk areas were scheduled to be audited every five years. This could be extended but would increase this risk level in these areas. The Chairman suggested that if members had concerns about specific audits they should send these to the Audit Manager outside of the meeting.

Councillor Keith Chopping noted that the audit team had been reduced from nine to four employees  ...  view the full minutes text for item 33.

Purpose: To bring to the attention of the Governance and Ethics Committee a failure by a parish councillor to adhere to the agreed outcome of an assessment of a complaint.

Moira Fraser presented a report (Agenda Item 9) which drew attention to the Governance and Ethics Committee of a failure by a Parish Councillor to adhere to the agreed outcome of an assessment of a complaint.

After a lengthy discussion the Committee RESOLVED that  the content of the report be noted and that no further action be taken on the complaint NPC15/18.