There were no apologies for absence.

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

There were no named substitutes.

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 interest.

To approve and sign the minutes of the meeting held on 30 July 2020.

RESOLVED:

That the minutes of the meeting held on 30 July 2020 be confirmed as a correct record and signed by the chairperson.

To receive questions from members of the public.  

Deadline for receipt of questions is 5.00 pm on 21 September 2020 (3 clear working days from date of meeting).

Questions must be submitted to councillorservices@herefordshire.gov.uk. Questions sent to any other address may not be accepted.

Accepted questions and the response to them will be published as a supplement to the agenda papers prior to the meeting. Further information and guidance is available at https://www.herefordshire.gov.uk/getinvolved

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 21 September 2020 (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 recommend a governance model for Herefordshire Council.

The solicitor to the council presented the report and highlighted that this represented extensive work undertaken by the cross-party re-thinking governance working group.   The working group felt that after considering the feedback from all members and reviewing the issues, that the existing cabinet system could be improved.   It was felt that there was benefit in improving the current system rather than move to a committee system which had a five year lock in period.   The working group were also recommending that any changes were reviewed in one year’s time to ensure that the changes had achieved their purpose.

It was noted that following a decision at Council in October 2020, there would be detailed work undertaken between October and May 2021 to re-write the Constitution.

It was further noted that it had been useful to have a cross party working group.   It was hoped that the flexibility of recommendations could be taken advantage of.

The work had been and would continue to be undertaken collaboratively and members’ views taken into account. 

The solicitor to the council confirmed that if the May 2021 Council date was missed, then the next time Council would be able to vote on the matter would be at July Council.  

It was anticipated that the work involved could be split into sub-divisions which would enable individual councillors to be involved in their areas of interests.   The timing of these meetings would need to take into account the availability of councillors.  

This was an opportunity to make changes which would ensure the engagement of the public and councillors. 

A member of the committee suggested that as there were a number of newly elected councillors, it may be sensible that councillors observe more than the committee they sat on so that there was a broad understanding of how each committee worked. 

It was noted that the working group represented membership from all political groups and it had unanimously resolved to support the recommendation to the committee.

RESOLVED that

having regard to the work undertaken by the Re thinking Governance working group, a hybrid cabinet model of governance be recommended to full Council with implementation with effect from annual council in May 2021.  

To provide the committee with a progress update of the work being undertaken by the external auditor, Grant Thornton.

It was noted that due to Covid-19 the external audit timetable had been extended to 30 November.    The audit had been a slower process than normally expected but measures were now in place to progress it.

The effect of Covid-19 on the value for money opinion would be a factor for the 2020/21 audit.

The Redmond Review had been published and Grant Thornton would be presenting a report to the committee at its meeting on 14 October on the recommendations contained within the review.

Following a request from Grant Thornton, the council had amended information in a couple of areas (details contained on page 44 of the agenda pack).  It was reported that there were no common threads as to the areas which had been requested to be amended. 

Grant Thornton confirmed that they were no difficulties in obtaining the information required for the audit and there were secure file sharing processes in place. 

It was noted that there would be uncertainty over property valuations for some time but this would have very little direct impact on councils as property valuations do not drive council tax levels.   However, Grant Thornton would urge caution in connection with the valuation of commercial property.

Following a query from a member of the committee, it was confirmed that there would be 6-9 months’ notification of any potential issues in connection with a S114 judgement.  Details would come through Cabinet, Audit and Governance Committee and other committees.  It was noted that the council would have to make tough budgeting decisions due to the Covid-19 but the Chief Finance Officer was comfortable that there were sufficient reserves and that the council were engaging with stakeholder groups, including Government.    The position was being actively monitored. 

Following a query from a member of the committee, it was confirmed that there was liaison between internal and external audit.  The internal audit plan was developed on a risk basis and that a number of sources were used in developing the plan.   There would be audits where no control issues had been identified.   If this was the case, then the area would not be audited for approximately 3 years.

RESOLVED that

the progress report and sector update attached at appendix 1 was reviewed. 

The purpose of this report is to enable the committee to provide independent assurance on the adequacy of the risk management framework together with the internal control of the financial reporting and annual governance processes by considering the head of internal audit’s annual report and opinion, and the level of assurance it gives over the council’s corporate governance arrangements.

South West Audit Partnership presented the report and highlighted that:

·         The annual opinion was to support the annual governance statement. 

·         The sources used to inform the opinion were contained within the report. .

·         The senior management team were supportive of SWAP’s recommendations and that there was a good relationship with senior management. 

·         There had been a significant increase in advisory audits. 

·         There had been a decrease in partial assurance audits (10.5% down from 18% in the previous year).

·         The number of priority findings had increased.  

·         There were findings that the governance processes were not being followed in capital projects and record of officer decisions.   This was an area for improvement which the council had identified and there were revised arrangements in place.   A member of the committee commented that it was good to see that these areas were still being raised but they believed there had been an improvement.

In discussion of the item, the following points were discussed:

·         That there had been some areas of duplication and fraudulent activity with regard to the small business grants.   An update on the work in connection with counter fraud would be provided to the committee at its next meeting.   

·         An advisory audit was undertaken as there was perceived to be a weakness or risk in the service area.   This then supported the manager in their understanding of the weakness and the recommendations in place to improve the service area.

·         The annual audit opinion took into account all audits.

·         Priority 1 and 2 findings of all audits were reported to the committee.

·         Advisory audits were equally as important as substantive audits as they potentially targeted higher risk areas.

·         The number of advisory audits was closely monitored.  

·         As the financial year progressed, there will be changes to the internal audit plan due to a request to look at a particular area.   At this stage, there would be a discussion about whether it would be undertaken as an opinion or advisory audit.

·         An opinion audit could change into an advisory audit.  SWAP would prefer to provide an opinion, but they would not wish to discourage officers from approaching them to undertake audits where they thought there may be weaknesses.   An audit opinion gave the committee better assurance and understanding of what was going on irrespective of whether an officer had highlighted concerns.   Advisory audits did not provide an opinion as to the level of assurance.

·         The members expenses audit was briefly discussed and SWAP confirmed that there had been a number of findings which had been reported to the committee.   It was agreed that a copy of the report would be circulated to committee members.

·         The HomePoint award of system contract was discussed.   This was an allocation system which displayed available social housing operated by the various housing association trusts operating within Herefordshire.   The committee were grateful for the audit raising points which required more scrutiny in the decision making process.  

·         SWAP did try to highlight where there had been similar recommendations from past audits.  ...  view the full minutes text for item 9.

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 be assured that the level and range of activity within the proposed revised annual internal audit plan is sufficient to provide assurance over the council’s corporate governance arrangements and provides appropriate coverage of key business activities, associated risks and risk management processes.

SWAP presented the report and highlighted:

·        Three audits had been completed; 2 were at report stage and that 9 were in progress.

·        An additional audit in connection with commissioning and value for money – BBLP had also been completed.

Procurement Cards

Following a query from a member of the committee, the corporate finance manager confirmed that an email reminder had been sent out to 130 people who possessed a procurement card as this was the most appropriate way to undertake the action.   A sharepoint site had now been set up for procurement card holders to upload receipts.    There were other controls in place which included testing by the team.   Spend had always been monitored but receipts had not been checked. 

If there was a failure to follow the appropriate processes, the advice from internal audit had been to monitor the situation for 3 months and if there were persistent offenders then the appropriate HR process should be followed.  It was also noted that the relevant line manager would be notified at an early stage.  It was noted that the maximum per month that could be spent was £15k with a single item maximum of £5k.  Any extraordinary spend would also be highlighted.

It was confirmed that managers are trained and do understand their financial responsibility.  

Commissioning and Value for Money – BBLP

The number of recommendations and findings in connection with the commissioning and value for value – BBLP audit did not necessarily correlate with the findings of the external consultant report which had been presented to Cabinet on 24 September 2020.   SWAP confirmed that they had seen the draft external consultant’s report.  It was noted that there were links between the two reports and that Cabinet would be monitoring the improvement plan in six months’ time.    SWAP indicated that there could be a request at some point from the Chief Finance Officer as to the progress on the implementation of the external consultant’s recommendations. 

As it was approaching the 3 hour time limit on public meetings, it was agreed that meeting would continue to 1.45 pm but that the Energy from Waste item and the work programme would be deferred to the meeting due to be held on 14 October 2020.

Following a query from a member of the committee, it was explained that due to Covid-19 there had been delay with regard to the decision in connection with the contract extension.   However, it was confirmed that this decision would be completed in an appropriate fashion by the November 2020 deadline.   The chief finance officer reminded the committee, that Cabinet had considered a performance report in connection with BBLP. 

In response to a query from a member of the committee, it was agreed that the chairperson and solicitor to the council would consider requesting that the General Scrutiny Committee scrutinise the council’s preparedness for Brexit as it was a risk to the council.   It was noted that the critical details were still awaited from government. 

Revised internal audit plan  ...  view the full minutes text for item 10.

To provide assurance to the audit and governance committee on the current status of the energy from waste loan arrangement to enable the committee to fulfil its delegated functions.

This item was deferred to the meeting due to be held on 14 October 2020. 

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 solicitor to the council presented the report and introduced the two independent persons for standards, Claire Jenkins and Jake Bharier, who were available to answer questions.  

The following points were highlighted:

·        Support from independent persons to councillors subject to complaints was now available.

·        A review of the arrangements would be taking place with the independent persons for standards.

·        There had been an increase in allegations of a failure to declare an interest.

·        Other course of action had been used in clusters of complaints in parish councils.

·        The standards panel had reviewed 28 complaints and that there was a good level of assurance in the complaints process.

Following a query from a member of the committee, the solicitor to the council confirmed that if a parish council goes inquorate, then as a principal authority, Herefordshire Council, would need to step in.

It was also confirmed that if there were complaints about the monitoring officer, then the corporate complaints process could be used.   If there were complaints about the process used to determine complaints, then the complainant or subject member could appeal and if it met the criteria a standards panel would be convened to hear the appeal.

It was explained that there were regular IP conferences which provided an opportunity to ensure that best practice was being used and to demonstrate that there was a shared learning experience and that there was continuous improvement.   

The independent persons were thanked for their time.

It was agreed that the parish councils would be consulted on the arrangements for dealing with code of conduct complaints.

RESOLVED that:

(a)   the recommendations from the standards panel advising this committee (appendix 1), following their annual sampling exercise, are considered and are adopted as appropriate into the action tracker

(b)   summary of the Nolan principles could be included in the agenda papers for Herefordshire Council committee agendas and to encourage parish council to adopt the same approach.

(c)   The parish councils be consulted on the arrangements for dealing with code of conduct complaints.

To provide an update on the work programme for the committee.

This item was deferred to the meeting due to be held on 14 October 2020.