Agenda and draft minutes

To approve as a correct record the Minutes of the meeting of this Committee held on 19 November 2024.

RESOLVED: That the Minutes of the meeting held on 19 November 2024 were approved as a true and correct record and signed by the Chairman.

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 Committee Forward Plan (Agenda Item 4).

Members noted that the Constitution update that was due to come to the meeting was being worked on by the Constitution Review Task Group. The Forward Plan would be updated to reflect the new targeted Committee date for that report and include the addition of an Extraordinary Governance Committee if it was considered necessary.

The Committee noted that a date in the ‘Draft Financial Statement 2024/25 and Going Concern Assessment’ scheduled for the meeting on 18 November 2025, should be updated from 2023/24 to 2024/2025.

Satisfied with the plan subject to the above amendments, the Governance Committee agreed that it could be noted.

Purpose: This report provides Members with the draft Auditor’s Annual Report and Year-End Report to the Governance Committee, both documents prepared by KPMG following their external review of the Council’s 2023/2024 Draft Statement of Accounts. 

The Committee considered a report (Agenda Item 5) concerning the Audit Findings for West Berkshire Council - Financial Year Ended 31 March 2024.

The Senior Financial Controller (Interim) introduced the report and highlighted that the recommendation presented to the Committee was to delegate the signing of the 2023/24 Statement of Accounts to the Service Director (Finance, Property and Procurement) (S151 Officer), in consultation with the Chairman of the Governance Committee. He also confirmed that the deadline for their approval was by the end of February 2025.

The representative from KPMG, Jonathan Brown, discussed both of their reports before the Committee; the annual auditors report, which was intended for publication on the Council’s website, and the audit findings report, which was discussed by Members of the Committee. He informed Members that work had been done on the 2023/24 Statements but that, as per the Backstop on local government accounts agreed by Central Government, these Accounts would contain a disclaimer of opinion. However, he assured the Committee that KPMG were still on track to get the Council back to having unqualified opinions.

The Council’s payroll system and investment property valuations were identified as the two large outstanding areas left for the audit. The representative from KPMG noted that the reasons for the delay included the Council changing payroll systems and that the Council had procured a new valuer who was taking time responding to KPMG’s questions. Both the representative from KPMG and the Section S151 Officer emphasised that the Council’s central finance team and KPMG had been working very positively together, and that, as no further delays were expected, the audit was on track for completion by the Backstop date.

In terms of Value for Money, the representative from KPMG indicated that their final reporting on this highlighted the precarious financial position of the Council given the low levels of reserves – something that had been previously identified.

A question was raised about the wording of the audit findings executive summary, and if the language used may indicate that the Council was at fault for needing the Backstop and a disclaimer of opinion. Members noted that at the Governance Committee meeting on 19 November 2024, the Letters of Representation for 2021/22 and 2022/23 were signed off with the agreement that the no-fault nature of the Backstop be included, as well as indicating in the 2022/23 letter that the previous external auditor had not commenced any work on that audit. In response to the question about wording, the Section S151 Officer indicated that they would work on the final phrasing before it was published, but that the wording before the Committee would be the standard wording used by KPMG for Backstopped audits. The Chairman agreed that that they should look to apply similar wording as was used in the approved Letters of Representation in order to ensure the public better understood the reasons behind the disclaimed audit. 

Members asked about the projected £2.5-£3m revenue increase as a result of five hundred houses being  ...  view the full minutes text for item 4.

Purpose: To update the Committee on the status of Internal Audit work as at the end of Quarter Two 2024/25.

The Committee considered a report (Agenda Item 6) concerning the Internal Audit Update Report - Quarter Two 2024/25.

The Audit Manager introduced the report and highlighted that there were no significant areas of concern from work done in the period. This work included two corporate audits which were given limited assurance, for Birchwood Care Home and Child Care Lawyers, and two follow-up audits which were given an unsatisfactory progress rating, for Accounts Receivable and Business Continuity. As the number of all audits on a less than satisfactory rating was low, the Audit Manager had no concern about having two less than satisfactory audits in the same reporting period.

Members discussed the report and inquired into whether the Governance Committee could support the work of the Internal Audit Team. In response, the Audit Manager highlighted that the Committee could request further follow-up audits if they were unsatisfied with their current progress or request that the Service Directors provide them with a timeline about actions they planned to take. 

A Member queried whether the work done by the Internal Audit Team and that done by the External Auditors were both indicating concerns with financial processes. The Audit Manager highlighted that KPMG were not flagging concerns with financial processes and were overall satisfied that proper financial processes had been followed and there had been no management override of financial controls. In addition, the Internal Audit was only commenting on one area of financial process, that being Accounts Receivable. 

The main area that the Internal Audit had picked up in their audit of Accounts Receivable was about the progress made into the automation of the debt recovery process. The Audit Manager indicated that another follow-up audit of this area would not be likely until they had made a change to their IT system, as otherwise the result would likely be the same.

The Service Director for Community Services provided a progress update to the Committee on the follow-up audit for Business Continuity. She highlighted that every service now had a plan, with work being done on priority services depending on the situation, and that they planned to run a Business Continuity exercise to test preparedness. 

Members requested that a written update for both of the two unsatisfactory follow-up audits be produced, including a timetable for proposed actions, and presented to the next meeting of the Committee.

Overall, as the Committee was satisfied with the report, they agreed to note the Internal Audit Update Report - Quarter Two 2024/25.

Purpose: the report presents the Council’s Risk Management Strategy for the future. It is important that the Council has an overarching strategy for how it manages risk; risk can never be eradicated, but it is important that the Council is clear on how it proposes to manage different risks. This report proposes a changed risk management matrix to a ‘5x5’ matrix as well as a new Risk Appetite.

Members asked about the public Strategic Risk Register Q2 2024/25 report (Item 9) as this was not available at that time in the agenda pack. The Monitoring Officer confirmed that there had been issues uploading this report to the website and that it would be provided to the public as soon as possible. It was confirmed that Members had access to the full report, including the Part II details, which would be discussed under Item 11.

The Committee considered a report (Agenda Item 7) concerning the Risk Management Strategy for the years 2024-2027.

The Monitoring Officer and Interim Executive Director (Resources) introduced the report and highlighted that the Strategy was approved by the Council’s Executive on 12 December 2024. Having an approved Risk Management Strategy was essential for the Council’s Risk Management Framework as it ensured that the Council was taking risk informed decisions.

The key changes on the previous Strategy were the adoption of a five-by-five matrix, in line with industry standards, which would present a broader variation of how risks were managed. In addition, the risk appetite had been updated and now varied between flexible to open. Training sessions would be set up to help inform Officers about this change to the Council’s risk appetite. The Monitoring Officer highlighted these training sessions were necessary as she believed that Officer’s views of risk appetite were often different than the actual corporate risk appetite.

The Committee noted that the new Strategy would help inform the risks that would be brought to them through the regular risk register update items, starting from quarter four 2024/25.

Members inquired into the difference between Officers views about risk appetite and the actual appetite of the Council and the Monitoring Office indicated that, through her experience, there was a belief that the Council was more risk averse than was defined in the Strategy. This Risk Management Strategy 2024-2027, and the training, would clarify exactly where risk was accepted and where it should be mitigated or avoided.

On a question about if the Council believed that risks could be managed, rather than avoided, the Monitoring Officer indicated that the Council considered the impacts of all the risks on the Register and those with the greatest potential impact would look to be avoided wherever possible. Members were assured that the risk register was a live and flexible document, reported to the Committee every quarter, and that the Council had five options to approach risk which were set out in the report as the five T’s – treatment, transfer, tolerate, terminate, or take the opportunity. The Monitoring Officer confirmed that these options could be made clearer to Members and Officers.

Overall, as the Committee was satisfied with the report, they agreed to note the Risk Management Strategy.

Purpose: This report has been written in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management (revised 2021). Treasury Management underpins all aspects of financial management within the Council which enables the delivery of the priorities and objectives. One of the primary requirements of the Code is receipt by the full Council of a mid-year review report, measuring performance against the adopted annual Investment & Borrowing Strategy (I&B). This report satisfies the mid-year reporting requirement.

The Committee considered a report (Agenda Item 8) concerning the Financial Year 2024/25 Mid Term Treasury Report.

The Senior Financial Controller (Interim) introduced the report and highlighted that the report presented work done by the Council as well as Link, the Councils treasury specialist, which confirmed that the Council was in full compliance with their indicators up to the half year point.

On a question about actual interest rates, and if they were moving, the Senior Financial Controller (Interim) indicated that they were moving, but that an update position could be provided on that in Quarter 3 of 2024/25. However, when looking at the forecast for the full year, they were forecasting an overspend, but he assured the Committee that those costs were monitored on an ongoing basis. 

On a point of clarification about the Capital Financing Requirement (CFR), the Section 151 Officer highlighted that the Council’s CFR should not be outstripped by borrowing. However, the High Needs Block (HNB) was running a significant deficit and was draining the Council’s working capital resulting in the need for external borrowing. As a result of this, the demands of the HNB could drive loan needs higher than the CFR. 

Overall, as the Committee was satisfied with the report, they agreed to note the Mid Term Treasury Report.

Purpose: To highlight the corporate risks (as at the end of September 2024) that need to be considered and to outline the actions that were being taken to mitigate those risks.

The Committee considered a report (Agenda Item 9) concerning the Strategic Risk Register for Q2 of 2024/25.

The Performance, Research and Consultation Manager introduced the report and highlighted that the goal was to highlight the work done in accordance with the Risk Management Strategy – as this was for 2024/25, not the Strategy discussed as Item 7 on the agenda. She noted that they had added one risk since the last update and that they were currently managing 21 risks, the same number as since Q1 2024/25.

As the Committee wanted to discuss the exempt report, they agreed to proceed into Part II.

RECOMMENDATION: That members of the press and public be excluded from the meeting during consideration of the following items as it is likely that there would be disclosure of exempt information of the description contained in the paragraphs of Schedule 12A of the Local Government Act 1972 specified in brackets in the heading of each item. Section 10 of Part 10 of the Constitution.

RESOLVED that members of the press and public be excluded from the meeting for the under-mentioned item of business on the grounds that it involves the likely disclosure of exempt information as contained in Paragraphs 3, 5, and 6 of Part 1 of Schedule 12A of the Local Government Act 1972, as amended by the Local Government (Access to Information)(Variation) Order 2006. Section 10, Part 10 of the Constitution also refers.

Purpose: To highlight the corporate risks (as at the end of September 2024) that need to be considered and to outline the actions that were being taken to mitigate those risks.

The Committee considered the exempt report (Agenda Item 11) concerning the Strategic Risk Register for Q2 of 2024/25.

The Committee discussed the risks on the risk register, new risks, and the movement of risks on the Risk Matrix.

Overall, as the Committee was satisfied with the report, they agreed to note the Strategic Risk Register Q2 2024/25.