To receive any apologies for absence

There were no apologies for absence received.

To confirm the Minutes of the Meeting held on 15 September 2021.

The Minutes of the meeting of the Committee held on 15 September 2021 were confirmed as a correct record and signed by the Chairman.

To receive any declarations of interest

Councillor Shahid Younis declared a personal interest on the grounds that he was a Non-Executive Director of Loddon Homes.

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 the Wokingham Borough  Council Update - Audit Planning Report Year ended 31 March 2021.

The Committee considered the Wokingham Borough Council Update Audit Planning Report Year ended 31 March 2021.

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

·       Helen Thompson, EY, confirmed the completion of the audit planning, which had been largely completed at the time of the last committee, apart from value for money.

·       In terms of value for money the initial risk assessment against the three reporting criteria, had been completed.  No significant risks in relation to the Council’s proper arrangements had been identified, therefore no specific work in any particular area was required.

·       The commentary which would be provided as part of the Auditor’s Annual Report would be presented to the Committee once the audit had been completed.

·       There had been a change in the auditing standard around the auditing accounting estimates, which had increased the work required on actuarial models in particular.

·       The audit was in progress, and it was anticpated that a report would be presented at the February committee meeting.

·       Councillor Shenton questioned whether items subject to accounting estimates included investment or other properties.  Helen Thompson commented that the most prominent estimates that were included were around Property, Plan and Equipment valuations and the IAS 19 Pension Liability reported in the Financial Statements.  There were other estimates in the financial statements, but not all would be subject to the same level of complexity and judgement.

RESOLVED:  That the Wokingham Borough Council Update Audit Planning Report Year ended 31 March 2021 be noted.

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

Members were updated on the 2020/21 Statement of Accounts.

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

·       Helen Thompson commented that it would have been a challenge to have the audit completed for the committee meeting given that the 2019/20 audit had been signed off in August.  Members were informed that the areas of work were well underway.  There was work to complete across all areas of the audit, particularly the valuation of Property, Plant and Equipment investment properties and the IAS 19 Pension Liabilities, which would continue into December and January.

·       The Assistant Director Finance highlighted that whilst budget setting had commenced early it had run on into the period.  The delay in signing the previous accounts had meant a delay in beginning the accounts. 

·       Members were informed that 91% of local authorities had not met the deadline for signing their accounts.  Some had also not signed off their 2019/20 accounts.  It was hoped that the signed set of accounts would be brought to the February Committee meeting.

·       Councillor Sargeant questioned whether the Committee would review a draft set of accounts before they were signed off.  It was noted that a draft set of accounts was published on the website.  It was anticipated that the Committee would have early sight of the draft accounts.  Helen Thompson added that the accounts needed to come to the Committee in February for approval.  The Audit Results Report would help inform it.

·       Councillor Sargeant sought an update on where EY and the Council were with regards to valuation work.  Helen Thompson stated that they were better progressed at this stage of the audit.  Conversations had been had with the valuations team, the sample selected, and information provided from the Council’s valuers to the EY team or the EY Real Estate Team which was looking at a number of assets.  The Real Estate Team continued to be under pressure.

·       Councillor Gee questioned whether the valuation of property and pensions was holding up the audit.  Helen Thompson commented that the audit started in October and that there was a lot of work to complete.

·       Councillor Gee went on to state that the latest version of the accounts on the website was dated 30 July.  The Assistant Director Finance confirmed that this was the version that had been available for inspection by the public.

·       Councillor Gee went on state that the existing version of the accounts stated that adjustments still needed to be made in August 2021 for revaluation of Council dwellings and approximately 60 other assets.  Adjustments were also needed for assets held for sale, including sale of residential properties related to Elms Field redevelopment and one HRA property.  Councillor Gee questioned the nature of the adjustments, how much they were, whether they were reducing income and whether they were realised or unrealised.  The Assistant Director Finance agreed to provide this information following the meeting  ...  view the full minutes text for item 41.

To receive the Corporate Risk Register.

The Committee considered the Corporate Risk Register.

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

·       Members praised the presentational changes made to the Corporate Risk Register. 

·       Since the last report to Committee a risk around ‘Health and Social Care reforms’ had been added.

·       The “IT Infrastructure” and “Telephony” risks had been removed following the successful mitigation of both risks.

·       A number of statutory duty risks such as Health and Safety, regulatory inspections and equalities had been amalgamated under one risk “Failure to meet Statutory Duties.”

·       In response to a request from the Committee, the Director Adult Services outlined the approach to risk taken by the Department and the Department Risk Register.  Members were advised that the Departmental Risk Register was discussed at least once a month and regularly reviewed through the departmental leadership team.  Those risks which were particularly high were considered by the Corporate Risk group and escalated.  Discussions were also had at the Corporate Leadership Team.

·       Risk 13 Health and Social Care Reform was an emerging risk.  Currently it was predominantly a financial risk to the Council.  The Director Adult Services explained that the Government had announced the intention to address the long-term future of Adult Social Care funding.  As part of this the Levy had been announced which would generate approximately £12billion a year, however only in the region of £1.8 billion of this was going to Adult Social Care.  Changes around the care cap and funding threshold would mean that the gap between what the Council was likely to receive and the additional cost to the Council, was significant, potentially £20million or higher.  One of the reasons why it was such a large risk to Wokingham Borough, was the high level of self-funders.  Currently the Council supported in the region of 1,700 to 1,800 individuals.  This could potentially rise to approximately 5,000.  Mitigating actions included conversations with the Government and the MPs around the impact.

·       Risk 6 – Failure to meet statutory duties and Risk 14 – Failure to meet statutory duties (Safeguarding Adults) were well mitigated. 

·       Risk 7 – Adult Social Care Supplier Sustainability – related to the Adult Social Care market.  This market was struggling from historic under funding and other factors such as Covid, Brexit and recruitment issues.  Capacity could be difficult to secure.

·       Councillor Shepherd-DuBey asked about the impact of any care workers having to leave their role because they were unvaccinated.  The Director of Adult Services explained that Covid vaccinations were mandatory for care workers who went into care homes.  This had impacted only small numbers and the viability of the care homes had not been impacted.  However, it added to capacity issues in addition to other factors such as under funding and recruitment issues.  The care market needed to grow.

·       Councillor Shepherd-DuBey went on to ask about the support of charities which had provided a lot of support to residents during the pandemic.  The Director Adult Services commented that in the absence of a long term funding  ...  view the full minutes text for item 42.

The Treasury Management Mid-Year Report 2021-22.

The Committee considered the Treasury Management Mid-Year Report 2021-22.

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

·       The Mid Year report was the second of the Treasury Management reports presented to the Committee and on to Council, over the year.

·       The Mid Year report was at the 30 September 2021 and gave a summary of where the Council was with its Prudential Indicators and the likely outturn at the end of the financial year in terms of level of debt, level of borrowing, and the return on investments.

·       Prudential indicators had been made clearer following previous observations made by the Committee.

·       Members were reminded that the report was no longer considered by the Executive but went direct to Council from the Audit Committee.

·       Councillor Loyes referred to the less internal funded borrowing under the Council’s Net Indebtedness and asked for further information.  The Assistant Director Finance commented that at the time of the Outturn Report borrowing had exceeded the capital financing requirement.  The Council was working to reverse the level of over borrowing to where the Council was potentially one third internally borrowing funded and two thirds external funded borrowing.  At year end the position was £190million of internal funded borrowing, by repaying elements of debt when receipts had been available to repay it and reducing the level of internal investments.

·       In response to a question from Councillor Loyes regarding the difference between the HRA figures the Assistant Director Finance explained that this related to a change in financing costs against the actual revenue stream in the HRA.  A reduction in the ratio was a good news story.

·       Councillor Gee referred to revaluation losses and losses on sale.  She questioned how much this year and the previous year had gone through the income and expenditure account, reducing income available to spend on services.  The Assistant Director Finance indicated that the Treasury report was based on the availability and returns the Council was taking from the investment strategies.  The investments, assets and the income and expenditure account were part of the Statement of Accounts.  Any money generated from investment activity over and above the cost of financing the investment activity became available for services to residents.

·       The revaluation for Carnival Pool was operational, land and buildings and not investment properties.

·       Minimum revenue provision for investment properties was currently running at 10% over 15 years.  If an extraordinary reduction in the value of the properties was seen the Council would need to make a voluntary revenue provision through the accounts to ensure that any devaluation on the properties was covered.

·       Minimum revenue provision was discussed in detail.

·       Councillor Shepherd-DuBey commented that capital expenditure for forthcoming years had been reprofiled and questioned how this had been achieved.  She was informed that this was part of capital monitoring.  When the Council monitored its capital expenditure programme for the year and set its capital budgets going forwards for the next few years, the amount spent on capital impacted on the amount needed  ...  view the full minutes text for item 43.

To receive a report regarding the procurement of external audit.

The Committee considered a report regarding the procurement of external audit.

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

·       Under the Local Government Audit & Accountability Act 2014, the Council was required to have appointed an external auditor to audit the accounts.  The Council had previously opted into the ‘appointing person’ national auditor appointment arrangements established by Public Sector Audit Appointments (PSAA) for the period covering the accounts for 2018/19 to 2022/23. 

·       The Assistant Director Governance highlighted the possible options.  Officers recommended that PSAA be used, which was the approach used by most Councils.

·       Councillor Shenton asked whether there was a requirement to rotate auditors and was informed that PSAA had a requirement that engagement leads were rotated every 5 years (with a possibility of extension for 2 years).  There was some rotation at firm level.

RESOLVED:  That it be recommended to Council that external audit be procured using the Sector Led Body, the PSAA, by indicating an option to ‘opt in.’

To consider 2021/22 Internal Audit and Investigation Work Programme Update to 31 October 2021.

The Committee considered the 2021/22 Internal Audit and Investigation Work Programme update to 31 October 2021. 

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

·       Since the last report the Team had been undertaking a number of audits of key corporate risks, including the Council’s Corporate Governance arrangements.  This audit helped to demonstrate the new added value approach to undertaking audits.  A toolkit had been developed for the ongoing monitoring of the Council’s Corporate Governance arrangements against its Local Code of Corporate Governance.  The aim was to assist in the further embedding of corporate governance across the Council.  This work would also inform the preparation of the Annual Governance Statement and the associated action plan. 

·       The Corporate Governance audit had also helped to inform the Peer Review.

·       Work had commenced with regards to a Climate Emergency audit.  A joint piece of work under a co-sourced arrangement was being undertaken, which would help to enhance the audit product where more technical expertise was required.  Scoping had been undertaken with Price Waterhouse Coopers and the audit would begin in December.

·       Two pieces of work were being scoped around Equality and Diversity.

·       A high-level review around the Public Protection Partnership had been agreed and was planned for early Quarter 4.

·       Appendix A detailed the status of the audits from the 2021/22 Audit Plan.  No audits completed to date had received a category 3 or 4 audit opinion.

·       Councillor Gee questioned how likely it was that all audits were achieved by March.  The Lead Specialist, Audit and Investigation commented that some factors may cause delays.  Any delays would be reported back to the Committee.  There was usually some carry forward into the next year.

·       Councillor Gee emphasised that the Climate Emergency audit had been requested by the Audit Committee in addition to Overview and Scrutiny.  The Assistant Director Governance clarified Overview and Scrutiny had recommended a carbon audit. 

·       Councillor Gee asked that the key for the audit opinion be included in future reports.

·       Councillor Shepherd-DuBey questioned whether how calls were put through from customer services to other departments, was monitored.  She was informed that there was nothing in the current audit plan, but concerns could be picked up for future audit work.

RESOLVED:  That the progress of audit and investigation activity against the 2021/22 Work Programme as at 31 October 2021 (attached as Appendix A) be noted.

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:

·       Helen Thompson indicated that the 2020-21 Annual Audit Letter should be renamed Auditor’s Annual Report.  It was hoped that a draft would be available for the meeting.  It was possible that the report would need to be taken to the following meeting.

·       It was likely that the Outline Audit Plan would need to be deferred to June.

·       The 2022/23 Internal Audit and Investigation Plan, Strategy and Internal Audit Charter would be presented at the next meeting.

·       The Committee thanked the Assistant Director Finance for his hard work over the years and wished him well in his new role outside of the Council.

RESOLVED:  That the forward programme be noted.