Agenda and minutes

Councillor Richard Lewis declared a Personal Interest in Agenda Item 7 – Deloitte – Annual Audit Letter as he was a Member of the Pensions Committee. He remained in the room and took part in discussions on the item.

Councillor George Cooper declared a Personal Interest Agenda Item 7 – Deloitte – Annual Audit Letter as Hillingdon House Farm was in his ward. He remained in the room and took part in discussions on the item.

Councillor George Cooper declared a Personal Interest in Agenda Item 9 – Internal Audit Progress Report as his wife was a Governor of Charville Foundation Primary School. He remained in the room and took part in discussions on the item.

Agreed as an accurate record.

To confirm that all items marked Part I will be considered in public and that any items marked Part II will be considered in private.

It was agreed that Agenda Item 13 – Internal Audit Progress Report be considered in private.

To receive training on Treasury Management.

Mark Pickering and Bridget Scheuber from Arlingclose Limited, the Council’s Treasury Advisors, attended the meeting and provided Members with a training session.

The training session covered the interest rate outlook, what is Treasury Management, the roles and responsibilities of Members, managing credit risk, Hillingdon’s approach to Treasury Management and key questions for scrutiny.

Members were informed that Arlingclose had a very much “hands on” approach to Treasury Management and any material change or impact which would affect the Council, was immediately communicated to the Council.

Resolved –

1. That the training and guidance provided by Arlingclose be noted and officers be thanked for their attendance.

Members were informed that the Treasury Management Strategy was reviewed annually and would be submitted to Council on 24 February 2011 for approval.  The strategy for 2011/12 had been written with the assistance of Arlingclose, the Council’s Treasury Advisors, and the strategy had been developed to increase the range of permitted investment vehicles, to allow a greater diversity of investments, whilst maintaining a high degree of caution.

Reference was made to Balances and Reserves which were estimated at £11.4m for 2013/14, which was a substantial drop from the £17.4m for 2010/11. Members were informed that the Reserves Policy would be reported to the Committee in March 2011.

The Council’s Cumulative Net Borrowing Requirement / Investments may double over the plan period to £93.7m for 2013.

Members were provided with details of the Council’s Internal borrowing policy which involved the use of the Council’s reserves to fund borrowing for capital purposes. This strategy was actively pursued with Arlingclose.

Members scrutinised the Investment Policy and Strategy and questioned the transparency of some of the recommended investment classes and the percentage of the portfolio which could be invested in pooled funds. Members were informed that this was an early draft and that changes had been made in these areas.

Members expressed concern that they did not have sight of these proposed changes in this draft of the policy and strategy. Offices were asked to provide details of all the changes which would be made to this document at the meeting of this Committee in March 2011.

In addition Members asked that consideration be given to moving the Audit Committee meeting in March 2012 to February, to enable Members to consider the final Treasury Management Strategy Statement and Investment Strategy before it was submitted to Cabinet and Council for approval.

Resolved -    

1.        That the contents of the report be noted.

The Chairman welcomed Heather Bygrave who was the new external audit partner. Gus Miah had been unable to attend the meeting due to unforeseen circumstances.

Heather Bygrave introduced the report to Members.

The Annual Audit letter summarised the key matters which Deloitte had carried out in respect of the year ending 31 March 2010.

Members were provided with the main messages of the letter:

• The Council’s Financial Statements – an unqualified opinion was issued on 22 September 2010. 
• The Local Government Pension Scheme Annual Report – an unqualified opinion was issued on 22 September 2010.
• Value for Money Conclusion – an unqualified opinion was issued as part of the main financial statements.
• Whole of Government Accounts – an unqualified statement of assurance to the National Audit Office on the Council’s consolidation return for the purposes of the Whole of Government Accounts
• Grants Certification – no issues were identified in the grants certified to date, however, it was likely that the Housing and Council Tax Benefits grant claim, which had yet to be completed, would be qualified, however that was not unusual for this claim.
• Deloitte had highlighted 2 main issues for focus over the next year: the transition to IFRS; and external audit arrangements following the abolition of the Audit Commission.

Members were reminded that at the last meeting of this Committee it was agreed to ask the Pensions Committee to consider the recommendation from the external auditors on an issue relating to a Review of Fund Managers’ internal control reports. This had been undertaken.

The Committee congratulated the Council’s finance officers on their excellent performance as detailed in the audit by Deloitte.

Resolved –

1. That the information contained in the Deloitte Annual Audit Letter be noted.

Members were provided with the background to the transfer back to the Council and were informed that internal audit services had been provided to Hillingdon Homes by Mazars but this contract had ended in October 2010.

The Council had always continued to be accountable for strategic housing activity and Internal Audit within LBH had obtained assurance on the control environment within Hillingdon Homes by relying on Mazars’ internal audit work.

Hillingdon Housing’s Senior Management Team had agreed with Mazars to defer five audits when the housing service was transferred back to the Council. Internal Audit had requested all files produced by Mazars during their course of their audits. Members were informed that some audit files were still being sought from Mazars.

It was agreed that if these files had not been received from Mazars by February 20111, Mazars be invited to attend the next meeting of this Committee to provide an explanation.

Resolved –

1. That the information reported be noted. 

 The Head of Internal Audit and Enforcement reported that based on the work undertaken from September 2010 to 19 November 2010; there were no significant causes for concern at this time with levels of assurance. 9 audits of which two were schools, received no or limited assurance in the current report, but there were plans in place to address the weaknesses identified.

Financial Management Standard in Schools (FMSiS) – Members were informed that the implications of the decision that schools were no longer required to meet the Financial Management Standard in Schools was that the work which Internal Audit undertook was no longer required. Members were advised that it was anticipated that Internal Audit would lose around £15,000 a year in income as a result of this. Concern was expressed at the extra responsibility this now placed with School Governors and the potential lack of financial controls which may exist with some schools. The Head of Audit and Enforcement provided assurance that there would still be a high level of Audit and Finance involvement in schools and that the principles of FMSiS were the standards that internal audit had always sought from schools 

Blue Badges – The Head of Internal Audit and Enforcement updated Members on this audit and Members were informed that the objective of the audit was to ensure that the Blue Badge Scheme was administered efficiently, effectively and economically. Details of the control improvements required were reported and Members were assured that most of the recommendations had been actioned.

Discussion took place on the service which Internal Audit provided and whether management within Council service areas relied too heavily on Internal Audit for financial controls. Members considered that Heads of Services should take more responsibility for financial controls within their areas.

Home Care in House Provision – Members noted that there were a number of outstanding recommendations with this audit and it was agreed that the Director of Adult Social Care, Health and Housing be invited to the next meeting of this Committee, should these recommendations not be implemented. 

Resolved-

1. That the in year progress against the Internal Audit Plan for 2010/11 and the updated position of those audits undertaken in the previous three years be noted.  

This item was deferred to the next meeting of the Committee.

Members were provided with a progress report on the implementation of International Financial Reporting Standards. Hillingdon was on track in each key area.

Resolved-

1. That the report be noted.  

Discussion took place on this Committee’s work programme and a number of changes were agreed which would be reflected in the work programme for the next meeting of this Committee.

The report on this item was included in Part II as it contained information relating to the financial or business affairs of any particular person (including the Authority holding that information) and the public interest in withholding the information outweighed the public interest in disclosing it (exempt information under paragraph 3 of Part 1 of Schedule 12 A to the Local Government (Access to Information) Act 1985 as amended.

Resolved –

1.  That the information contained in the report be noted.