No apologies were received.

To receive details of any councillor nominated to attend the meeting in place of a member of the committee.

There were no substitutes.

To receive declarations of interest in respect of items on the agenda.

No declarations of interest were made.

To approve and sign the minutes of the meeting held on Tuesday 12 December 2023. 

RESOLVED:

That the minutes of the meeting held on 12 December 2023 be confirmed as a correct record and signed by the chairman.

To receive any questions from members of the public.

No questions had been received from members of the public.

To receive any questions from councillors.

No questions had been received from councillors.

To enable the committee to be assured that high standards of conduct continue to be promoted and maintained. To provide an overview of how the arrangements for dealing with complaints are working together.

The Head of Legal Services (HLS) introduced the report the following points were highlighted:

1.     The number of code of conduct (COC) complaints had been reducing since 2021 but the first 6 months of 2023 had generated 29 complaints, being almost the same number of complaints as the previous year. However it was explained that figures had been skewed by a set of complaints received relating to one parish council

2.     60% of complaints had been registered by residents with 34% of complaints having been registered by parish and town councillors. This was deemed disappointing as this scheme is meant to be in place primarily for members of the public. 

3.     80% of complaints related to parish and town councils which was unsurprising given the large numbers of parish councils Herefordshire comprises. It was noted almost 50% of all complaints related to a single parish council.

4.     70% of all complaints included disrespect and 20% of the complaints related to a failure to disclose an interest. It was highlighted that it did not mean all these complaints had been upheld but advice to members was to be mindful about how they perform their role and to disclose any interest even if it did not amount to a DPI or NRI.

5.     There had been 2 breaches of the COC relating to Councillors at Bartestree with Lugwardine Parish council during the period. Since the report was published the monitoring officer had received an update from the council who could confirm they had noted the monitoring officer’s recommendations and they now considered the matter as being closed.

6.     Members attention was drawn to ”Appendix 1 Historic Complaints per Parish Council” were it was noted 62% of all complaints related to just 6 parish and town councils with only 2 having had complaints in this year.

7.     Key Performance Indicators were currently in an early form as there had not been any dates captured before the current administrative year. Currently there are two captured indicators, time for initial assessment which was noted had reduced from an average of 61 days in March 2023 to 15 days in October 2023 and time for independent person response which currently on average is 1.7 days which is considered to be exceptional. It was noted that further data collection such as information in relation to the outcomes of recommendations provided to councils and the type of the complaint such as a planning or finance matter would be provided in the future. 

8.     A review of the code of conduct process was currently underway.

9.     A new governance paralegal was starting who would be a dedicated resource for COC.

In response to committee questions, it was noted:

        I.         The HLS agreed there is a high bar in relation to discussions had between members themselves and is considerably lower for any conversations with officers and members of the public. The courts had constantly disappointed with their judgments on what councillors can say amongst themselves as part of political discourse  ...  view the full minutes text for item 72.

To report the progress of external audit in delivering its responsibilities to the council.

The Director of Grant Thornton (DGT) introduced the audit progress report and sector update setting out the position against both the 2023 and 2024 audits. The following points were highlighted:

1.     Members were reminded of Grant Thornton’s (GT) responsibilities to give an opinion on the council’s financial statements and issue a value for money judgment and conclusion.

2.     GT signed off the councils 2023 draft accounts issuing an unqualified opinion in October 2023 which was one of the earlier sign offs in the country.

3.     The value for money work (agenda item 9) has now concluded and enables the DGT to issue a certificate confirming completion of the audit for 2023.

4.     The DGT explained that due to rotation requirements he would be rotating off the Herefordshire audit with effect from 2023/24 and a new external auditor would be liaising with the committee from March.

5.     Given the timely completion of prior year audits, GT will look to prioritise the 2023/24 Herefordshire Council audit.

6.     The following deadlines were highlighted: Herefordshire’s finance team have until the end of May 2024 to produce the draft accounts and GT have until the end of September 2024 to sign them off. 

In response to committee questions, it was noted:

               I.         An explanation of the differences between internal and external audit was provided.

              II.         The DGT explained that the external auditors work is predominantly retrospective and is conducted at the end of the financial year to which they are required to confirm based on testing that the accounts reflect accurately the income, expenditure and the transactions of the council. The DGT highlighted that Herefordshire has a good record as a council for producing complete, accurate and timely accounts.

            III.         With regards to a question raised around the national delays in the production of external audit reports it was explained that the quantum of work external auditors needed to do to discharge their role had increased exponentially over the last five years and necessitated firms including GT to recruit more individuals which had proved very challenging and inevitably resulted in a delay across a large number of councils in their accounts being signed off. To clear the backlog of historical accounts and ‘reset’ the system, the government had introduced a “backstop date” of 30 September 2024 by which point auditors would issue a disclaimer saying that the work was incomplete and would move on to 2023/24 audits.

Resolved:

That:

a)    The committee reviewed the external auditor’s report, noted the progress in 2022/23 and considered the emerging national issues.

To present to the Audit and Governance Committee the External Auditor’s Annual Report 2022/23 for information and discussion.

(Papers to follow).

The External Auditors Annual Report 2022/23 was published as a supplement to the agenda.

The Head of Strategic Finance (HSF) introduced the report which presents the external auditors review of the council’s value for money arrangements and closes the 2022/23 audit. The key points included:

1.     The HSF issued her thanks to the Director of Grant Thornton (DGT) and his team for the timely conclusion of the 2022/23 audit.

2.     In terms of financial sustainability, a detailed review of the council’s savings proposals for the 2023/24 budget and the work that is involved in setting that budget had taken place.

3.     In terms of the outcome of the report for financial sustainability and governance criteria, there had been no significant weaknesses identified in respect of the council’s economy, efficiency and effectiveness.

4.     It was highlighted that in use of resources external audit had identified a continuing significant weakness in respect of improvement in children's services.

5.     Attention was drawn to appendix B which gave explanation on the different types of recommendations, the following were highlighted by the DGT.

·          there were no “statutory” recommendations identified for Herefordshire;

·         1 key recommendation which was the continuing significant weakness in respect of improvement in children's services. This was an improvement from the prior year to which three had been identified.

·         A small number of improvement recommendations had been identified that were not significant. 

6.     The Value for Money Manager (VFMM) highlighted an error on page 39 in relation to the Audit Governance Committee being unsuccessful in its attempts to appoint an independent person on to the committee. The VFMM confirmed that this was not the case and had been confused with a previous recommendation for the standards panel.

In response to committee questions, it was noted:

I.       The VFMM accepted that a lot of children's services are commissioned from other bodies but the council still retains the statutory responsibility and it is the auditor’s responsibility to report on to the council. It was his view that highlighting the council’s challenges specifically within the report was not appropriate and he did not want it to become political. It was explained that these reports are fed back to the national audit office (NAO) and back to government so pressure can be exerted appropriately on government ministers or other organisations. 

II.       The DGT recognised the challenges the council faced and that certain external providers were commissioned to provide support for children with higher needs but highlighted that other councils were doing a number of different things such as providing and running facilities themselves and were achieving a quality efficient service in Ofsted’s view and that there were things within this councils control that could be put in place to be able to demonstrate to Ofsted that arrangements are satisfactory.

III.       The Director of Resources and Assurance (DRA) confirmed the two council representatives for the Hoople board are directors of Hoople limited and are not directors of Balfour Beatty, they are company directors and have all  ...  view the full minutes text for item 74.

This report is to provide an overview on all counter fraud activity across the Council’s services throughout the previous calendar year and represent an up-to-date account of the work undertaken, including progress and outcomes aligned with our strategy and core objectives.

The Counter Fraud Manager (CFM) presented the report, the purpose of which was to provide an overview on all counter fraud activity across the council’s services throughout the previous calendar year and represent an up-to-date account of the work undertaken, including progress and outcomes aligned with the council’s strategy and core objectives.

The following key points were highlighted:

1.     During 2023, there had been a significant increase in the number of referrals being made to the counter fraud service which provided assurance to the committee that effective reporting avenues were in place and that Individuals felt confident to use them to report allegations of suspected fraud.

2.     There had been a two-fold increase in the number of fraud alerts that were raised internally to council services and a threefold increase in the number of cases that were investigated to completion during 2023. This had been achieved through collaboration and effective partnership with internal services and external agencies.

In response to committee questions, it was noted

      I.         The CFM in relation to the cyber fraud graph confirmed that different ways of presenting the data such as monthly would be explored with the security team.

     II.         The CFM explained that it would be speculative on why there may be an uplift in cyber related incidents, but the committee could take assurance that none of the incidents targeting the council or Hoople Ltd were successful during 2023, demonstrating the robust controls in place to prevent cyber-attacks.

   III.         The CFM highlighted in 2023 the counter fraud service (CFS) undertook and led an extensive fraud risk assessment, during which the CFM met with directors, managers and operational workers across service areas within the council. This risk assessment ensured that services proactively acknowledged and took ownership of their fraud risks. The corporate performance team had since integrated all fraud risks into the council’s risk registers and the CFS has worked closely with SWAP internal audit to ensure that fraud risks are considered during the assessment of any relevant new audit.

   IV.         The CFM suggested that the visual metrics could be looked at and revamped to include deterrence but assured members that deterrence is included as part of the risk assessment and is included as part of the overall control metric. Examples of deterrence were given such as; publishing successful prosecutions/ outcomes, raising awareness and statements and declarations integrated into procedures and policy application forms.

    V.         The CFM explained that referral rates were similar to those seen in previous years. It was highlighted that the public referral hotline and digital reporting form had been introduced in November 2022 and it would seem the visibility and reporting platform had correlated with the increase of referrals.

   VI.         The reporting avenues for internal and external users were explored.

 VII.         The CFM informed the committee that resources would need to be reviewed internally if the trend of increased referrals were to continue.

VIII.         In relation to the successful prosecution in December 2023, the CFM highlighted how collaboration and joint working is  ...  view the full minutes text for item 75.

To review and approve the proposed updates to the Contract Procedure Rules, the Financial Procedure Rules and the Financial Procedure Rules Guidance Notes.  To ensure council financial and contract procedure rules are up-to-date and provide clarity of roles, accountabilities and process in order to ensure transparency about how public resources are used and controlled to mitigate the potential for fraud and ensure compliance with relevant legislation.

The Head of Strategic Finance (HSF) introduced the report, the purpose of which was to inform the committee of the update to the finance and contract procedure rules (CPR). The CPR had been updated to reflect new thresholds, and to be compliant with current legislation and regulations. The finance procedures had been updated to incorporate additional evidence requirements for journal transaction postings in year and to provide clarity around roles and responsibilities for the delivery of projects across the council.

In response to committee questions, it was noted:

      I.         The HSF explained that the CPR provides the framework by which the council test on if value for money has been achieved. External auditors also provide their assessment of that activity in the year.

     II.         The Commercial Services Manager (CSM) confirmed that it was not always the cheapest price that would be awarded a contract but it would be based on quality as well the most economically advantageous response. CIFAS checks are conducted on suppliers as well other checks as part of the standard procurement process.

   III.         The CSM explained under the CPR for low and medium value contracts, a minimum of four suppliers can be invited to tender to which officers are encouraged to invite at least two local businesses that are interested and capable to provide those services. When the opportunity arises contracts could be divided which encourages smaller local business to bid for contracts. 

   IV.         The CSM explained the use of social value included within procurements potentially encourages larger contractors to employ local people or use local supply chains.

    V.         In terms of advertising, all information can be found on Hereford Council’s Website to which businesses are encouraged to sign up to a portal which will keep them informed of relevant opportunities as they arise and enable them to bid for a tender. If suppliers are having difficulties registering there is a dedicated member of the commercial services team who is on hand to take calls and emails. Suppliers are also invited and encouraged to attend “Meet the buyer events”.

   VI.         The CSM explained that pre-qualifying questions are asked as part of the tender response to ensure the capability and competency of a supplier and are proportionate and relevant to the procurement and the value of the contract.

 VII.         The HSF informed the committee that payments were fairly standard but highlighted from 1^st April it was hoped a new scheme through oxygen finance which enables payments to go through “on day one” with a small discount in services for the Council would be fully introduced for small businesses. Local suppliers would be contacted shortly.

VIII.         The CSM confirmed there were no resource issues within the team currently, but if this did become a problem they would potentially seek to appoint an external advisor to support.

Resolved

That the committee reviewed and approved the following updates as technical changes to the constitution:

a) The Contract Procedure Rules at Appendix 1;

b) Financial Procedure Rules at Appendix 2

c)  ...  view the full minutes text for item 76.

To update members on the progress of internal audit work and to bring to their attention any key internal control issues arising from work recently completed. To enable the committee to monitor performance of the internal audit team against the approved plan. 

To assure the committee that action is being taken on risk related issues identified by internal audit.

The Director of Continuous Improvement (DCI) South West Audit Partnership (SWAP) presented the report on internal audit activity for quarter 3 2023/24, with attention drawn to the following:

·       The indicative opinion was of reasonable assurance, with a sound system of governance, risk management and control in place.

·       89% of the opinion related work found the control environment to be either substantial or reasonable assurance.

·       There were no significant corporate risks to be reported, but there was an assignment with a “Limited Assurance”- audit opinion on ICT back-ups.

·       Feedback from officers in terms of the areas that have been audited remains strong. The DCI confirmed data was based on 11 responses which represented a response rate of around 75%. It was noted that the request from a previous meeting to include responses figures had not yet, but would be implemented for the next report. 

·       A follow up of the registration services audit would be planned for Quarter 4.  

·       Swap were facilitating an “Audit Committee Webinar” on Thursday 1st February at 3:30pm to which committee members were welcome to attend.

In response to committee questions, it was noted:

       i.         In relation to the “corporate priority” chart on Page 139 it was clarified that there was a joint responsibility in improving those ratings. SWAP would speak to officers about the coverage and the program of internal audit work and hopefully agree a balance and proportionate internal audit plan that provides reasonable coverage across all areas. Members could comment and if they believe that coverage should be reallocated they could provide that feedback and SWAP would have discussions with officers to realign the audit plan if possible. It was clarified that the first column represents of how many audits SWAP have done in that area and the second column represents the outcomes of those audits within that area.

     ii.         With regards to the deferment of the “Proactive Fraud Work Tax Evasion” the Head of Strategic Finance (HSF) confirmed this was due to the HMRC undertaking a routine compliance check which the findings would be presented to SWAP and avoided a duplication of efforts.

    iii.         In relation to the “follow up of the Public Realm/ BBLP Related Audits” the DCI confirmed this was still in progress. It was clarified by the Principal Auditor that this was a follow up of all the internal audit actions that SWAP had made relating to BBLP and the public realm and was to ensure the council had done what they outlined they were going to do.

    iv.         The Director of Resources and Assurance (DRA) would provide a response on the bus service improvements grant with the approaching deadline of 31 March 2024.

     v.         The DCI would provide a written response on the separation between the ICT Backup and Disaster recovery items.

    vi.         It was highlighted that the “6 Special/ Advisory” figure in the assurance opinions table on page 138 did not relate to a specified piece of work and was suggested could be an error and would be  ...  view the full minutes text for item 77.

To consider the work programme for the committee.

The committee’s updated work programme was presented, showing amendments which included the Approach to Strategic Risk Management Update report being moved to the work plan for March and the Head of Strategic Finance confirmed the External Auditor's Draft Plan (including indicative fee) would need moving from the meeting in March to June.

It was highlighted that the meeting scheduled for 4 June had now been moved to 11 June to accommodate the Draft Annual Governance Statement and 2023/24 Draft Statement of accounts.

RESOLVED

That subject to the amendment noted, the updated work programme be agreed.

Tuesday 26 March 2024.

Tuesday 26 March 2024.