Archived decisions

AT A MEETING of the AUDIT COMMITTEE of the COUNTY COUNCIL held at The Castle, Winchester on 23 September 2009.

PRESENT:

p Councillor K. Evans (Chairman)

10 APOLOGIES FOR ABSENCE

Apologies for absence were received from Councillors B. Tennent and C. Thomas.

11 DECLARATIONS OF INTEREST

All Members who believed they had a personal or prejudicial interest in any matter to be considered at the meeting were asked to declare that interest and, having regard to the circumstances described in paragraphs 9, 10, 11 and 12 of the County Council's Code of Conduct, consider whether to leave the meeting whilst the matter is discussed, save for exercising any right to speak in accordance with paragraph 12 of the Code.

Councillor F Allgood declared a personal, non-prejudicial interest in item 8 (Pension Fund accounts) as a member of the HCC Pension Fund Panel.

12 MINUTES OF - 25 JUNE 2009

The Minutes of the meeting held on 25 June 2009 were agreed, subject to the following clarifications.

(i) Minute 4 - Chairman's Announcements
(re: Audit Commission Progress Report)

It was noted that the Audit Commission's Progress Report had originally stated that their reports on "Community Safety Partnership Working" and "Health Inequalities" were to be considered by the former Governance Committee in June 2009. It was also noted that most of the Governance Committee's functions had now transferred to the Audit Committee. The two Audit Commission reports referred to above had, however, not been submitted to the Audit Committee as a result of their being considered by other relevant bodies.

(NB: "Community Safety Partnership Working" had been considered by the County Strategy Group for Crime and Disorder and then the County Council's Safe and Health People Select Committee and the "Health Inequalities" report was due for consideration by the Health and Well-Being Partnership Board on 14^th October 2009).


(ii) Minute 6 (paragraph 3) - Draft Statement of Accounts 2008/09
Amend paragraph 3, line 2 : `any potential Hampshire County Council losses' to read `any potential Pension Fund losses'.


(iii) Minute 6 (paragraph 3) - Draft Statement of Accounts 2008/09
Amend Paragraph 3, line 4: to read `and Members also expressed their concern relating to the level of school balances'.

13 CHAIRMAN'S ANNOUNCEMENTS

The Chairman welcomed Mrs Judy Venables to the meeting as an observer. Mrs. Venables is an Independent Member of the Hampshire Police Authority.

14 MANAGING THE RISK OF FRAUD

The Committee considered the report of the County Treasurer (Item 5 in the Minute Book).

The Chief Internal Auditor advised Members that he was intending to submit a review of the County Council's current anti-fraud and corruption strategy and related policies to the next meeting of the Audit Committee. He therefore asked the Committee to identify priorities and/or any particular concerns that they felt would inform the preparation of that report.

Members asked questions and made observations on a number of topics in relation to Self Assessment Appendix A, including:-

The need for officers to declare any personal or prejudicial interests if involved in decision making processes that they had control or influence over.

The extent to which County Council officers might be offered hospitality as an inducement to influence decisions.

Members' belief that it would helpful for relevant senior audit managers to be required to obtain a Certificate in Investigative Practice (CCIP) as a pre-condition of their employment.

Members' wish for their to be a zero tolerance culture of fraud and corruption within Hampshire County Council and for this to be achieved through a process of continuous awareness raising.

The extent to which it might be appropriate for the County Council to consider seeking payment from participating organisations in strategic partnerships that the County Council was member of where County Council Auditors performed audit functions and duties.

The extent to which staff using the County Council's `whistleblowing' policies were offered support and protection.

The need to emphasise that sanctions other than those available through the appropriate civil or criminal legal process could be pursued in respect of `minor' fraud, for example dismissal or other disciplinary action.

That the County Council's policies towards recovery applied to outside agencies as well as its own staff.

The Monitoring Officer advised that there were protective arrangements built into the County Council's whistleblowing policy to protect the identity of officers who reported matters using the policy. The Monitoring Officer and Chief Internal Auditor thanked Members for their observations and agreed to report back on entries in the register of hospitality received by County Council officers at a future meeting.

RESOLVED that :

(i) the Committee endorses the view that the current approach being taken to counter fraud and corruption is effective;


(ii) the observations made by the Committee referred to above be taken into account in the forthcoming update of the County Council's anti-fraud, anti-corruption strategy.

15 IMPLEMENTING INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Committee considered the report of the County Treasurer (Item 6 in the Minute Book).

The Assistant County Treasurer advised the Committee that International Financial Reporting Standards (IFRS) were being adopted across the public sector and that Hampshire County Council would be expected to comply with the IFRS obligations. A Code of Practice, based on IFRS, would come into effect in 2010/11.

The Assistant County Treasurer and Chief Internal Auditor highlighted some of the key issues that the County Council would need to be aware of. They pointed out there would be a short term, real financial cost implication to the adoption of IFRS plus a longer term workload implication, particularly while officers became familiar with the IFRS standards.

A further progress report would be submitted to the Audit Committee at the end of the financial year to assess the implications of IFRS implementation.

RESOLVED:

That the implications of implementing International Financial Reporting Standards (IFRS) be noted and that a further progress report be submitted at the end of 2009/10.

16 AUDIT COMMISSION ANNUAL GOVERNANCE REPORT - COUNTY COUNCIL ACCOUNTS

The Monitoring Officer advised that this matter had been included on the agenda to ensure that the Audit Committee had an opportunity to consider the Audit Commission's report before the statutory deadline of 30 September 2009. The Chairman, in accordance with Section 100B(4)(b) of the Local Government Act 1972, was of the opinion that this report should be considered at the meeting as a matter of urgency for this reason.

The Chairman introduced Kate Handy and Alistair Rankine from the Audit Commission. He then invited the Audit Commission representatives to present the Commission's draft annual Governance report for 2008/09 (Item 7 in the Minute Book). This provided a summary of the work carried out by the Commission during its audit of the County Council's 2008/09 accounts.

The Committee welcomed the news that the Audit Commission proposed to issue an unqualified opinion on the County Council's accounts and an audit certificate for both 2007/08 and 2008/09. (The County Council's 2007/08 audit had only recently been able to be closed following the recent withdrawal of an objection to them).

The Committee was pleased to note that the Audit Commission planned to issue an unqualified `value for money' conclusion. This reflected the Audit Commission's assessment that the Council had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March 2009.

Members noted with pleasure the fact that the Audit Commission's assessment of the County Council's use of resources was that, in all significant respects, the County Council's use of resources scores would all be above the minimum level requirement.

The Audit Commission's representatives noted that the County Council had made three "prior period" adjustments which, in the view of the Audit Commission, did not meet the requirements of the relevant accounting standard, but which officers considered assisted in the interpretation of the statements. An additional disclosure would be required within the letter of representation to confirm the basis of the approach adopted.

The Committee noted with pleasure that key messages contained within the Audit Commission's report were that the County Council's governance and financial arrangements were robust and of a high quality.

RESOLVED:

(i) That the financial statements be approved, having noted the matters outlined in pages 6 - 9 inclusive of the Audit Commission report;


(ii) That the adjustments to the financial statements set out in the report be noted (Appendix 2);


(iii) The value for money conclusion as outlined in appendix 4 be noted;


(iv) That the letter of representation on behalf of the Council, subject to inclusion of an additional comment reflecting the Audit Commission's view over prior period adjustments, be approved.

17 AUDIT COMMISSION ANNUAL GOVERNANCE REPORT - PENSION FUND ACCOUNTS

The Monitoring Officer advised that this matter had been included on the agenda (item 8 in the Minute Book) to ensure that the Audit Committee had an opportunity to consider the Audit Commission's report before the statutory deadline of 30 September 2009. The Chairman, in accordance with Section 100B(4)(b) of the Local Government Act 1972, was of the opinion that the matter should be considered at the meeting as a matter of urgency for this reason.

Councillor F. Allgood declared a personal, non-prejudicial interest by virtue of his appointment as a Member of Hampshire County Council's Pension Fund Panel.

Kate Handy and Alistair Rankine presented the Commission's draft annual governance report in respect of the Hampshire County Council pension fund audit for 2008/09. Key messages contained within the report were outlined in Table 1 (pages 7-8).





RESOLVED:

(i) That the financial statements be approved having noted the matters outlined on page 6 of the Audit Commission report;


(ii) The adjustments of the Pension Fund accounts set out in Appendix 2 be noted;


(iii) The letter of representation on behalf of the Council be approved.

18 FRAMEWORK FOR THE EXTERNAL AUDIT REPORTS TO THE AUDIT COMMITTEE

The Monitoring Officer advised that this matter had been included on the agenda to ensure that the Audit Committee had an opportunity to consider the Audit Commission's report before the statutory deadline of 30 September 2009. The Chairman, in accordance with Section 100B(4)(b) of the Local Government Act 1972, was of the opinion that the matter should be considered at the meeting as a matter of urgency for this reason.

The Committee considered the report of the Chief Executive and County Treasurer (Item 9 in the Minute Book).

The Chairman indicated that following the first meeting of the Audit Committee in June, he and the Vice Chairman had met informally with the Audit Commission representatives. The Chairman and Vice Chairman had formed the view that the Audit Committee would neither have the time nor, on occasions, the ability to consider every audit, inspection or performance report that was submitted to the County Council. As such, a framework establishing the nature of the reports that Audit Committee would receive (strategic, rather than operational) and the time frame and context within which those reports were to be submitted was likely to be helpful.

The Committee welcomed the broad thrust of the report, but sought minor amendments to Sections 1.4 and 1.5 respectively, requesting the deletion of "where appropriate" from Section 1.4 (line 7), the deletion of "may" from Section 1.5 (line 6) and the deletion of "any" in Section 1.5 (line 7).

Members noted that, in future, they would be receiving a quarterly report that would identify all audit (internal or external), inspection or performance reports submitted to the County Council with a brief notation indicating the status of each report and if it was planned to bring the report to the Audit Committee and when. This would ensure that the Audit Committee was not obliged to consider every report in detail but were aware of reports received/generated.

RESOLVED :

That the Committee agrees the proposed framework for receiving reports from external audit, subject to the clarifications agreed at the meeting and that this be communicated to the external auditor.

5mm28909