Agenda and minutes

To receive any apologies for absence

There were no apologies for absence. 

Councillor Maher attended the meeting virtually.

To confirm the Minutes of the Meeting held on 27 July 2022.

The Minutes of the meeting of the Committee held on 27 July 2022 were confirmed as a correct record and signed by the Chair.

The Chair welcome Mike Drake, Independent Audit Committee member, to his first meeting of the Committee.

Councillor Gee commented that she had requested that the Committee receive a more detailed explanation as to how the assets were accounted for, and an estimate of the amount taken out of the cost when accumulated depreciation.  She commented that the estimate had still not been provided. 

Councillor Harper indicated that with regards to the historic data relating to complaints that he had requested at the meeting, the further information provided had covered that previous two years and largely focused on early resolution against Stage 1 complaints.  He wished to see data regarding overall complaints from a longer period.

To receive any declarations of interest

There were no declarations of interest submitted.

To answer any public questions

A period of 30 minutes will be allowed for members of the public to ask questions submitted under notice.

The Council welcomes questions from members of the public about the work of this committee.

Subject to meeting certain timescales, questions can relate to general issues concerned with the work of the Committee or an item which is on the Agenda for this meeting.  For full details of the procedure for submitting questions please contact the Democratic Services Section on the numbers given below or go to www.wokingham.gov.uk/publicquestions

There were no Public questions.

To answer any member questions

There were no Member questions.

To receive an update on the 2020/21 Statement of Accounts.

Graham Cadle, Assistant Director Finance and Helen Thompson, Ernst & Young, updated the Committee on the 2020/21 Statement of Accounts.

During the discussion of this item, the following points were made:

·       The audit had substantially finished and a draft report of the 2020/21 accounts had been produced earlier in the year.  At that points issues relating to infrastructure assets and pensions had been outstanding.

·       The issue relating to pensions had an impact on all the Berkshire local authorities.  It had been hoped that it would have been signed off by September, which had not happened.  The infrastructure assets issue was a national issue and also remained outstanding. 

·       The latest anticipated timescale for the resolution of the pensions issue was now November. 

·       Helen Thompson indicated that Officers had been told that the 2021 accounts for the Pension Fund would be considered at the Royal Borough of Windsor and Maidenhead Council Audit Committee the previous week.  However, it appeared that only the 2019/20 accounts had been considered.  An update had been sought from Deloitte but had not yet been received.

·       Helen Thompson referred to the estimate that Councillor Gee had requested at the previous meeting, and clarified that to get to even an estimate would require a significant amount of officer time, which was felt not to be a good use of resources when the decision relating to how infrastructure assets would be made, was still outstanding.

·       Councillor Kaiser questioned if it was likely that the Pension Fund would ask for additional money from the Council.  The Assistant Director Finance commented that this was unlikely.  Helen Thompson added that the issue was not with the Pension Fund itself.  The delays had been caused with RBWM’s accounts.  There had been a number of objections relating to the 2019/20 accounts which had required resolution, which had significantly held up the auditors.  The caveat on the letter that Ernst & Young required to sign off Wokingham’s accounts was, that until Deloitte had completed the audit on the 2021/22 RBWM accounts, they did not have sufficient assurance that there were not any potential issues that might impact the Pension Fund.

·       Councillor Harper questioned how likely it was that the November target date would be reached.  The Assistant Director Finance commented that this was the best estimate to date.  Officers and Ernst & Young were doing all they could to progress the issue.  Councillor Harper questioned whether the Chief Executive could write to RBWM Council to encourage a quicker resolution.  Susan Parsonage, Chief Executive, indicated that she would work with Graham Ebers, Section 151 Officer, on this.

·       Councillor Gee commented that the Council was in a period between year end and when the accounts were signed, and there were post balance sheet events to consider.  With the recent extreme reactions to the financial markets, particularly the gilt market, Councillor Gee stated that the Bank of England was seeking to reassure the market so that defined benefit pension schemes did not become insolvent.  She questioned the likelihood of the Pension Fund  ...  view the full minutes text for item 29.

To receive the Wokingham Borough Council Audit Committee - Audit progress update - Infrastructure Assets.

The Committee considered an update on the infrastructure assets issue.

During the discussion of this item, the following points were made:

·       Helen Thompson indicated that the report detailed the accounting requirements under the CIPFA code, an overview of the position at Wokingham, options to move forward and possible implications of doing so, and an example of how the audit report might look if the limitation of scope route was undertaken.

·       Councillor Gee stated that when an asset was not fully depreciated and had a positive net book value at the year end, but had been replaced or decommissioned, the error would also impact the balance sheet where asset values would be overstated.  However, this would not affect the reported overall financial position of the Council.  She questioned how the Council’s overall financial position was not affected.  Helen Thompson stated that it was not because all the entries were reversed out via the Movement in Reserve Statement.  It did impact the gross book value and gross accumulated depreciation and worked its way through and reversed back out.  Only in very limited circumstances would it make a difference to reported income and expenditure.

·       In response to a question from Councillor Gee, the Assistant Director Finance clarified that information sent showed different accounting entries.  It was difficult to calculate the value of an asset such as a road.  Working to a ‘real’ value would require a significant amount of resources.

·       Councillor Smith noted that two Councils audited by Ernst & Young had taken Option 2 (The Council accepts a modification of the audit opinion and includes appropriate disclosure at Note 24 of the 2020/21 Statement of Accounts (and elsewhere as required).  He questioned how many Councils had taken Option 1 (The Council waits until CIPFA has updated its proposed adaption to the Code of Practice; or for DLUHC to prepare a statutory instrument) or had not yet made a decision.  Helen Thompson indicated that those who had accepted the second option had done so in relation to a 2019 audit and the other for a 2021 audit.  The others were in discussion.  Whilst many had at first lent towards the limitation of scope route in order to close their accounts, the November deadline for the accounts and the indication from CIPFA as to when information may be available, meant that many were now preferring to wait. 

·       Since the report had been written, the timescale for a potential statutory instrument, had slipped.

·       There was no guarantee that a solution from CIPFA would fully resolve the issue.

·       Councillor Davies requested a summary of where the assets were stated in the accounts.

·       In response to a question from Councillor Maher, the Assistant Director Finance confirmed that the Council was being constantly updated and CIPFA had listened to local authorities’ concerns.

·       Mike Drake questioned whether the profit loss on the disposable of fixed assets went below the surplus or deficit for the year through reserves.  Helen Thompson confirmed this was the case except for assets held for sale  ...  view the full minutes text for item 30.

To consider the Corporate Risk Register Review.

Andrew Moulton, Assistant Director Governance, and the Chief Executive presented the Corporate Risk Register.

During the discussion of this item, the following points were made:

·       An additional risk had been added – Risk 18: Elections Act 2022 implementation, due to the forthcoming voter identification requirement.  Guidance was awaited on its implementation.  It was hoped that this would be a short-term risk.

·       The risk regarding financial resilience had been escalated further due to the Council’s current financial position. 

·       The implementation of the Public Protection Partnership project had been successfully implemented so the relating risk had been removed from the Corporate Risk Register and de-escalated to the departmental risk register.

·       The assessment around risk relating to the corporate governance risk had been reduced due to work carried out following the LGA Peer Challenge.  This included the appointment of the independent Audit Committee member.

·       The Chief Executive referred to increased risks around financial sustainability.  She referred to the inflationary challenge which had a big impact on utilities, construction costs, and contract costs.  Following the pandemic there had been an increase in the number and complexity of Adult Social Care and Children’s Services cases.  Cost and demand had increased.  Drivers around increasing costs included an increase in population at an above average rate, with differing needs.  The Chief Executive referred to the large incoming community from Hong Kong, refugees from Ukraine and unaccompanied child asylum seekers.

·       It was noted that the Overview and Scrutiny Management Committee would be receiving a report on the Council’s financial position.  At present a shortfall of £4million was anticipated for 2023/24.  However, the Local Government Settlement was due in December 2022, which could have a further impact.

·       Members were informed that the forthcoming Adult Social Care reforms would have a big financial impact.  Additional staff would be required in order for the Council to meet the requirements under these reforms.

·       With regards to SEND provision, discussions were being had with the Department for Education regarding types of provision within the Borough, and earlier support.  Changes to the community and movement within the Borough had increased budget pressure.

·       Councillor Kaiser commented that there was starting to be a need for the Council to look at its assets such as Dinton Country Park and California Country Park, and assess how much income they generated against the investment put in to it.  The Chief Executive agreed that it was important for the Council to understand its return on investments.

·       The Chief Executive indicated that the Council had introduced a Change Programme which covered factors such as assets and contracts.  It would be good to hear Members views and ideas as part of the Overview and Scrutiny process.

·       Councillor Harper queried the way the impact of each risk was measured.  The Assistant Director Governance indicated that the criteria used to assess likelihood and impact was detailed in the Risk Management Policy and Guidance.

·       Councillor Smith questioned the rating of the risk around cyber security.  The Assistant Director Governance explained that risk appetite was  ...  view the full minutes text for item 31.

To receive the 2022/23 Internal Audit and Investigation Plan - Quarter 1 Progress Update (to 30 June 2022) and In-Year Review of 2022/23 Internal Audit and Investigation Plan (September 2022)

The Committee considered the 2022/23 Internal Audit and Investigation Plan – Quarter 1 Progress Update (to 30June 2022) and In Year Review of 2022/23 Internal Audit and Investigation Plan (September 2022).

During the discussion of this item, the following points were made:

·       The Debtors audit had received a Category 3 level of assurance.

·       The report detailed the follow up action being under taken by the Internal Audit team

·       The format of the report would be improved for future meetings, to provide more detail, particularly around any High recommendations.

·       The Committee was asked to approve an in year change to the Internal Audit Plan.  It was proposed that some audits move to the next financial year, and that for others assurance was provided via another mechanism.  The Assistant Director Governance took the Committee through the proposed changes. 

Ø  Treasury management – proposed deferral.  Internal Audit had recently looked at Treasury Management.

Ø  Corporate governance.

Ø  Climate emergency – an audit had been conducted.  It was suggested that the more detailed audit be deferred.

Ø  High Needs Block – assurance via Safety Valve work and inspections.

Ø  Public Health – proposed that audit be deferred.

Ø  Asylum seeking children – assurance provided via other means.

Ø  Risk management – audit proposed to be deferred as assurance provided via other means following the Local Government Association Peer Challenge.

·       The proposed changes to the Plan would generate a modest saving.

·       Councillor Davies was of the view that the reasons for the proposed amendments to the Plan were comprehensive.

·       It was confirmed that the full-time post vacancy would not be filled at that time.

·       In response to a Member question, the Assistant Director Governance explained the following up of actions following an audit.

·       Councillor Maher queried when the consultancy/management requests for internal audit work that had been requested in Quarter 2, had been agreed.  The Assistant Director Governance explained that within the Internal Audit Plan there had been provision for management to request ad hoc pieces of Internal Audit work. 

·       Councillor Maher queried whether the Internal Audit team carried out value for money audits.  He was informed that value for money was considered as part of the scope of every audit.  The Assistant Director Governance confirmed that this was not quantified but he would discuss with the Head of Internal Audit and Investigations, how this could be done in the future.

·       Councillor Smith questioned whether a higher work load was necessary if some items could be deferred.  The Assistant Director Governance commented that the Internal Audit Plan needed to be considered over a longer period than a year.  Given the short period of time and one off nature of the request, he was satisfied with the proposal to amend the Plan. 

·       Councillor Smith questioned whether deferring the external assessment of the Internal Audit team to quarter 4 would be too late.  The Assistant Director Governance commented that a high rating had been received following the previous assessment, and that each year the team also undertook  ...  view the full minutes text for item 32.

To consider the forward programme for the remainder of the municipal year.

The Committee considered the forward programme for the remainder of the municipal year.

During the discussion of this item, the following points were made:

·       The Committee’s November meeting had a heavy agenda.  The Chair suggested that Members send detailed questions in advance to expedite the meeting.  Councillor Gee questioned whether the agenda could be provided earlier.  The Assistant Director Governance indicated that this was unlikely due to the long clearance process that reports had, but agreed to look into the matter.

·       Councillor Gee questioned whether an extraordinary meeting was required.

·       The Committee briefly discussed dates for training.

RESOLVED:  That the forward programme be noted.