Apologies for absence were received from Councillor Peter Jinman.  

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

Cllr John Hardwick attended the meeting as a substitute member for Cllr Peter Jinman.

To receive declarations of interests in respect of Schedule 1, Schedule 2 or Other Interests from members of the committee in respect of items on the agenda.

There were no declarations of interests. 

To approve and sign the minutes of the meeting held on 30 July 2019.

RESOLVED:

That the minutes of the meeting held on 30 July 2019 be confirmed as a correct record and signed by the chairman.

To receive questions from members of the public.  

Deadline for receipt of questions is 5.00 pm on 18 September 2019 (3 clear working days from date of meeting).

Accepted questions and answers will be published as a supplement prior to the meeting. 

Questions received and responses given are attached as appendix 1 to the minutes.

To receive any questions from councillors.  

Deadline for receipt of questions is 5.00 pm on 18 September 2019 (3 clear working days from date of meeting).

Accepted questions and answers will be published as a supplement prior to the meeting. 

There were no questions 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 with views from the latest standards panel sampling review.

The monitoring officer presented the report and welcomed two independent persons who were in attendance, Jake Bharier and Gerry Hodson, to answer any queries which the committee may have. 

During the discussion on the report, the following points were made:

·         The overall number of complaints had reduced in the year

·         Code of conduct training had been well received and there were future training sessions in place.  

·         The standards panel had given assurances of the process in place.

·         There had been no appeals received in the period covered by the report.

·         The Committee on Standards Life had produced best practice recommendations and Herefordshire had already implemented most of these.  

·         There were further recommendations to amend the arrangements for dealing with code of conduct complaints attached to the report.

·         Herefordshire was no different to any other council as the issues were the same.

·         The mechanism for supporting members subject to complaints would be discussed with the independent persons. 

·         The monitoring officer had a delegation from council in respect of certain types of dispensation.    The main reason why dispensations were granted was when ward members lived in the ward they represented and needed to represent their ward residents’ views.  

·         Any challenges to a dispensation granted by the monitoring officer would be heard by the audit and governance committee.

·         The government had not yet responded to the recommendations outlined in the committee for standards in public lives report. 

RESOLVED

That

(a)       the recommendations from the standards panel advising this committee, following their annual sampling exercise, are approved; and

(b)       the committee endorse the recommended changes to the standards complaints process proposed by the monitoring officer in consideration of the review by the committee on standards in public life, set out in appendices 1 and 2.

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.

The head of internal audit presented the report and highlighted the following: 

·         Six audits had been completed since the last update.

·         Two audits were at draft stage

·         Six audits were in progress.

·         One audit had been deferred to a later date at the request of the client.

·         A special investigation in quarter 1 had been completed. 

·         There were no high corporate risks identified in the audits. 

Three audits had priority 2 findings and details of these, together with timescales, were contained on pages 65 to 77 of the agenda pack. 

Contract management audit

The contract management audit was partial and had three priority 2 findings.  Three contracts had been audited.   Two were well managed but there had been findings in respect of the mainstream passenger transport contract. 

Following a query from a member of the committee, it was confirmed 2 officers asked do not use the contracts management tool kit and use localised arrangements to contract manage.  The assistant director confirmed that the contract procedure rules form part of the constitution that all directorates follow and the toolkit was available to officers to use but needed updating.    The resourcing of the commercial team was being looked at and the target date for updating the toolkit and other actions was 30 April 2020. 

The head of transport and access services confirmed that a compliance officer had been recruited and this has provided dedicated resource for developing contract management processes, monitoring and documentation.  The monitoring programme has been developed to monitor over 40 transport providers delivering over 200 passenger transport contracts.  

It was noted that onsite contract compliance checks would take place without advance notice and that the programme will be target where there are concerns relating to specific providers following an intelligence led approach. 

South Wye Transport Package (SWTP) Phase 1 – Governance

The internal audit in respect of the SWTP had looked at the procurement of the Southern Link Road (SLR) which had four priority 2 findings.     The findings had been in connection with the procurement process and the recording and documentation of the actions of officers during the process.  

A member of the committee noted that in the audit plan for 2018/19 there was an audit in connection with the effectiveness of major projects which had been reasonable and there had been no priority 2 recommendations and sought clarification of the interlinkage of the two audits given the findings in the SLR phase 1 audit.  The head of internal audit confirmed that there were interlinkages and that the audit into the effectiveness of major projects had had a wider scope and the SLR phase 1 audit had looked at one particular area.    There had been priority 3 recommendations in the effectiveness of major projects which were not reported to the committee.   

A member of the committee noted that in the Blue School House follow up report, recommendation 7 had been marked as in progress and recommendation 8 had been marked as complete.    The head of internal audit reported that  ...  view the full minutes text for item 389.

To update the committee on the conclusion of the external audit work for 2018/19.

Grant Thornton presented the report.

It was noted that an unqualified value for money audit opinion had now been issued following further work performed on significant risks.  Details of this work was detailed on pages 110 to 112 of the agenda pack. 

It was noted that the second significant risk had been in relation to the South Link Road procurement project relating to the procurement of a contractor.   The contract in respect of this procurement had not been awarded.  Grant Thornton were recommending that there was a review of the governance processes for capital projects.

Grant Thornton explained that for the value for money opinion, they looked at all the circumstances that could have arisen had the procurement process had concluded.   As the contract had not been let, there was no loss to the council.  This was the reason why the value for money was unqualified. 

Following a query from a member of the committee, the chief executive explained outcomes of the peer review are available to councillors and members of the public.  The chief executive agreed to prepare a summary of how peer reviews work and how council engages them.

Following a query from a member of the committee, it was explained that Hoople was a contractor to the council and the services it carries out on the council’s behalf.   The work is carries out on behalf of the council is audited as part of the internal audit plan and the committee can seek assurance from the internal audits.

Hoople is majority owned by the council.    The organisation has its own board and a council office sites on the board.   A concern was raised that the committee are less able to give an assurance on the financial probity or risks within Hoople as it did not review the accounts.  It was noted that this was a challenge, but group accounts are now included within the statement of accounts.   This sets out more clearly the relationship with Hoople and how that relationship works.    It was noted that when the annual governance statement was presented to the committee for review, they could consider whether that provided any assurance with regard to Hoople.      It was noted that Hoople was a Teckal company which can benefit from other work which are commissioned by the council without going through a tendering process.   This enables Hoople to provide services to other companies which Hoople does do.  

It was noted that an update on tracking of external audit recommendations would be presented to the meeting of the committee to be held on 19 November 2019.  

Grant Thornton confirmed that they were still not in a position to issue a completion certificate for the 2016/17 accounts.    Progress was being made on the confidential outstanding matters. 

RESOLVED

That the report be noted.  

For the committee to note the proposed additional external audit fee charge for work completed during the external audit of the 2018/19 statement of accounts and reaching a value for money conclusion.

The chief finance officer presented the report.

It was noted that the external audit fees were nationally set fixed rates.

RESOLVED

That the additional external audit fee be noted.

To provide further assurance on the adequacy of the arrangements in regards of the risk framework on the measures the Council is taking as the accountable body for public money supporting the New Model in Technoligy & Engineering (NMiTE) and the milestone payments from the Department of Education (DfE). 

The chief finance officer presented the report.

The following points were raised as part of the discussion of the item: 

·         The Department for Education (DfE) had confirmed that they had received the internal audit report from SWAP and that they were satisfied with the contents.   

·         The DfE had confirmed that the council had discharged its duties in respect of acting as an accountable body.

·         The email from the DfE  indicating that they were satisfied that all the arrangements were in place and that they will not be recalling any of funding would be all the confirmation received by the council.  

The committee agreed that this item would be listed as an agenda item in November as there was continuing public interest and a reputational risk for the council. 

RESOLVED

That

(a)       The report be noted; and

(b)       A further report be brought back to the meeting of the committee to be held on 19 November 2019.

The chief finance officer presented the reported and noted that the committee’s function was to comment on the assurance provided in connection with the loan agreement.   The operation of the waste contract would be considered that other parts of the council. 

The council had lent money to the enterprise and the report outlines the detail of the loan.      The current status of the loan was satisfactory and this was a good outcome.    If there were any issues with the loan, it would be reported to the committee as quickly as possible. 

The loan arrangement ended in 2023 and there would options available to the council for any future arrangements which included a third party buys out the loan, an extension with the current provider or brought in house.  

It was noted that appendix 3 (ratio calculation) did not provide an indication of that it meant.   It was requested that an explanation be built into next year’s report or that it is removed.

With regard to the Fitchner report (appendix 4) it was noted that there were defects had not been resolved and the chief finance officer stated that it would be looked into and an update would be circulated to committee members.

It was noted that in the accounts it had been indicated that there was interest from the loan of £600k which had not been accrued.   It was confirmed that payments had been received in line with the loan agreement but had not been accounted for in the accounts. 

It was noted that the risks A and F were the same risks as the previous year and the chief finance officer confirmed that he would check the risks between A and F and update the committee.   It was further confirmed that the risk register was jointly produced and monitored with Worcestershire County Council.  

It was noted that when any financing arrangement came back to committee, they would require professional advice.    The chief finance officer confirmed that professional advisers would be engaged to advise the council and the committee. 

RESOLVED

That the report be noted.

To provide an update on the work programme for the committee for 2019/20.

The committee’s updated work programme was presented.   It was noted that a report on NmiTE would be added to the agenda for the November meeting.

RESOLVED

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