The Chairman welcomed Councillor B. Hunt, the newly appointed Vice-Chair, to the meeting. 

There were no apologies for absence received. 

To receive any details of Members nominated to attend the meeting in place of a Member of the Committee.

None. 

To receive any declarations of interest by Members in respect of items on the Agenda.

GUIDANCE ON DECLARING PERSONAL AND PREJUDICIAL INTERESTS AT MEETINGS

The Council’s Members’ Code of Conduct requires Councillors to declare against an Agenda item(s) the nature of an interest and whether the interest is personal or prejudicial.  Councillors have to decide first whether or not they have a personal interest in the matter under discussion.  They will then have to decide whether that personal interest is also prejudicial.

A personal interest is an interest that affects the Councillor more than most other people in the area.  People in the area include those who live, work or have property in the area of the Council.  Councillors will also have a personal interest if their partner, relative or a close friend, or an organisation that they or the member works for, is affected more than other people in the area.  If they do have a personal interest, they must declare it but can stay and take part and vote in the meeting. 

Whether an interest is prejudicial is a matter of judgement for each Councillor.  What Councillors have to do is ask themselves whether a member of the public – if he or she knew all the facts – would think that the Councillor’s interest was so important that their decision would be affected by it.  If a Councillor has a prejudicial interest then they must declare what that interest is and leave the meeting room.

There were no declarations of interest made. 

To approve and sign the Minutes of the meeting held on 25^th January 2008.

RESOLVED:   that the minutes of the meeting held on 25^th January 2008, be approved as a correct record and signed by the Chairman.  

To receive the Audit Commission’s Use of Resources report 2008 to the Committee (Appendix 1 to this report). The external auditor will present the report to the Committee.

To receive a progress report and action plan in respect of the improvement opportunities identified in the Use of Resources report 2008 from the Corporate Management Board (Appendix 2 to this report).

[Note: The Committee agreed to consider this Agenda Item (5), and Agenda Item 6 (Annual Audit and Inspection Letter 2008) together, in view of the strong link between subject matters.]

The Chairman welcomed Ms Liz Cave and Mr Terry Tobin, both External Auditors from the Audit Commission, to the meeting.  They presented the Audit Commission’s report on the Council’s use of resources during 2006/07.  The report was a routine assessment of how the Council had managed and used its resources over a twelve-month period, and it had focussed on the importance of strategic financial management, sound governance, and effective financial reporting arrangements.  In addition to assessment, the report had also provided a comprehensive list of improvement opportunities, detailing who would be responsible for each improvement, and by when. 

Mr Tobin drew the Committee’s attention to the following in particular:

• The Audit Commission had assessed the Council’s use of resources in terms of financial reporting, financial management, financial standing, internal control and value for money. 

• He said that the drop in overall rating from Level Three to Level Two was largely due to the findings of the Crookall report, which had impacted on the assessment of internal control and value for money.  The other three areas of assessment had retained their ratings from the previous year, and he said that good progress had been made. 

• Overall, the audit process had been quicker and easier, and he had noted a marked improvement in the availability of information.  The Council had produced a good summary of its accounts, and now had a robust medium term financial plan with strong links to other areas.  Debt collection had also improved, and there was a much clearer picture of the Council’s resources. 

• He noted that the influence of the Council’s internal audit section, and of the Audit and Corporate Governance Committee, was increasing, and he described this as positive.  Areas requiring improvement were: the review of revenue and capital, option appraisal (costs and benefits) in ICT and Herefordshire Connects, procurement, and assessment of value for money.  He added that the Council’s action plan in respect of the use of resources was full and thorough, and would greatly assist in making improvements. 

During the ensuing discussion, the following principal points were made:

• Councillor Toon highlighted what she felt were insufficient controls over disposals and acquisitions of Council property.  She said that there was a need for improvements in fixed asset management, particularly in relation to schools which was a major area because of the sheer number of buildings involved.  The Audit Services Manager said that he would review the asset register in respect of the issues mentioned. 

• Councillor Toon felt that there might still be some areas where Prince2 methodology was not being applied to procurement projects as a measure to improve internal control, as suggested in the Use of Resources report.  She acknowledged that this requirement would form part of the Constitution, and stressed that all projects should be carefully monitored to ensure compliance, and to  ...  view the full minutes text for item 71.

To receive the Audit Commission’s Annual Audit and Inspection Letter 2008 (Appendix 1 to this report). The external auditor will present the report to the Committee.

To receive a response from the Chief Executive on each of the action points in paragraph 9 of the Annual Audit and Inspection letter (Appendix 2 to this report).

[Note: The Committee agreed to consider this Agenda Item (6), and Agenda Item 5 (Use of Resources Report 2008) together, in view of the strong link between subject matters.]

Ms Liz Cave and Mr Terry Tobin presented the Audit Commission’s Annual Audit and Inspection Letter which had examined the Council’s overall current performance and had allocated an overall Star Rating of 2, indicating that it was “improving adequately”.  This assessment had taken the form of a report, and had focussed on the Council’s culture, finances, value for money, grant claims, and various initiatives such as the proposed joint working with the Primary Care Trust, and the Herefordshire Connects Programme.  In addition, the report had also examined the independent investigation of financial and contractual arrangements in the Council’s Information and Communications Technology (ICT) Department, conducted by Mr Ian Crookall, and what actions the Council was taking to address the issues in the report (hereafter referred to as “the Crookall Report”). 

Ms Cave and Mr Tobin highlighted the following points in particular:

• The Council’s Overall Performance: Significant factors contributing to the Council’s drop in overall Star Rating from Three to Two included the issues addressed in the Crookall Report, and a housing score of One.  Ms Cave explained that the housing score was anomalous, because in reality there had been a significant reduction in the number of families in temporary accommodation for long periods, but the impact of this had been to worsen some of the performance indicators in the short term, which had had a detrimental effect on the Star Rating.  She added that the Council was improving overall, although not as quickly as some local authorities in a similar position.  There were still some concerns in respect of improvements in children’s and adults’ services, which were being addressed.  There had been significant improvements in the Council’s performance indicators, well above average compared to other authorities, and some excellent and detailed plans were now being produced.  Although Ms Cave acknowledged the improvements, she warned against producing numerous individual performance plans, because she said that this would make issues too complicated.  Overall, the Council needed to be clearer on where its strengths and weaknesses lay. 

• The Crookall Report: The Audit Commission was satisfied that Mr Crookall’s report and the preceding external investigation had been thorough, independent and open.  Because of this, and because it was clear that the Council had taken the report seriously, there was no requirement for the Audit Commission to conduct a separate investigation.  Ms Cave said that the emphasis must now be on implementing the Crookall Report’s recommendations as promptly as possible, and on the Council’s forward direction.  She would therefore assess progress from the present day onwards.  She would look in particular at the Council’s procurement strategy. 

• The Development of the Herefordshire Public Service Trust: Ms Cave reported that, during August and September 2007, the Audit Commission had assessed joint working between the Council and the Primary Care Trust, in the lead-up to the creation of a  ...  view the full minutes text for item 72.

To review the Council’s Financial and Contractual Procedural Rules (to follow).

The Head of Legal and Democratic Services presented a joint report from himself and the Director of Resources, on proposed revisions to Appendices 3, 4 and 5 to the Council’s Constitution.  The Appendices related to the Council’s procedure rules for its budget and policy framework, finances, and contracts.  The review had been extensive, and had incorporated the best elements of the constitutions from the four upper tier local authorities which had achieved the very best use of resources assessments in 2007. 

The review of the Constitution was a direct response to the discovery of irregularities in financial governance in the Information and Communications Technology Department, and to subsequent reports by the Director of Resources on the issues involved, and an independent review by the former Chief Executive of Buckinghamshire County Council, Mr Ian Crookall. 

The revised elements of the Constitution clearly depicted where responsibilities lay, and what the distinctions were between members and officers’ roles.  In addition to this Committee, the revisions had been considered by the Standards Committee, the Constitutional Review Working Group, Cabinet, and the Strategic Monitoring Committee.  Over the course of the review, it had become apparent that a complete review of the remainder of the Constitution, and of the Scheme of Delegation to Officers, was necessary to ensure that they reflected the changes to Appendices 3, 4 and 5, and it was anticipated that this would be completed in time for the Council meeting in May 2008. 

The Head of Legal and Democratic Services reported that training on the application of the revised procedures would be arranged for officers. 

Councillors RH Smith and ACR Chappell expressed concern that the revisions had been considered by numerous other committees and working groups, and they felt that this had made the procedure overly-complicated and difficult to track.  He suggested that the procedure for making changes to the Constitution should be reviewed and simplified.  The Head of Legal and Democratic Services said that this would be revisited as part of the review of the Constitution as a whole. 

Members also expressed concern over:

·         The need for further clarity of the respective responsibilities of Directors and Cabinet Members, which would be defined in the proposed review of the Scheme of Delegation.

·         The wider issue of the change to the deadline for deposit of formal questions to Council by Councillors.  It was felt that this might not allow Members enough time to submit questions, particularly where reports were being submitted late and sent out “to follow”.  The Committee was assured that the issue of late reports was being addressed. 

·         Councillor AM Toon reminded the Committee that she had requested a review of Appendix 7 of the Constitution, via Council.  The Chief Executive said that he would look into this and deal with it separately. 

In conclusion, Members did not wish to hold up approval of the revised appendices at this stage, and therefore approved the recommendations on the understanding that the points made above would be dealt with as part of the  ...  view the full minutes text for item 73.

To present to the Audit and Corporate Governance Committee the updated assurance framework for comment before it is presented to Cabinet for comment and approval.

The Chief Internal Auditor presented his report in respect of the Annual Governance Statement 2007/08, which had been updated for approval at Cabinet. 

Members highlighted some errors in the report which required amendment, and the Chief Internal Auditor said that he would ensure the statement was corrected. 

RESOLVED:   that it be recommended to Cabinet that the draft framework for the Annual Governance Statement 2007/08 be approved, subject to the following amendments:

·         Paragraph 7, Page 84 of the agenda, the date should be changed to 25^th instead of 26^th on all future versions of the report;

·         Appendix 1, Point 3.2 should be revised to read: “Ensure that standards of conduct and personal behaviour expected of members and staff, of work between members and staff and between the authority, its partners and the Community, are defined and communicated through codes of conduct and protocols; and

·         Appendix 1, Point 4.3.1 should include the additional wording: “Officers’ Code of Conduct”. 

To provide the Audit and Corporate Governance Committee with a updated interim Assurance Report for 2007/08 that:

a)                  provides an update on progress with the significant internal control issues identified in the Assurance Report for 2006/07;

b)                  identifies the significant internal control issues identified to date in 2007/08.

The Chief Internal Auditor informed the Committee of progress made with updating the Interim Assurance Report for 2007/08.  He drew particular attention to the progress made with significant internal control issues identified in the previous report, and to any issues that had arisen to date. 

Members noted Paragraph 6(c) on Page 109 of the agenda, which summarised the work that the Audit Section had undertaken with members of staff following the unsatisfactory audit opinion in 2006/07 on financial management and procurement systems in ICT.  The current audit opinion was satisfactory.  The Audit Commission was fully aware of the present position, and was pleased with progress made. 

The Chief Internal Auditor highlighted staffing shortages within his department, which coupled with the exceptional additional work generated by the irregularities in the ICT department, had made undertaking the usual audit programme timetable extremely difficult.  The Audit Commission had allowed some changes to the timetable as a result, and he envisaged that, as issues were resolved, he would be able to produce a more rigorous programme for the forthcoming year. 

In response to a question from Councillor Toon, the Chief Internal Auditor said that not all ICT systems, for example, those in schools, were included within the corporate ICT framework, and that work was being done to resolve these issues. 

Members referred to the Special Investigation Audit into the ICT Department, on Page 114 of the agenda, and asked that the results of the investigation be reported to the Committee at its next meeting.

RESOLVED:   that the report be noted, and a report on the Audit Department’s Special Investigation into the Information and Communications Technology Department be considered at the Committee’s meeting on 4^th April, 2008, with the public and press being excluded from the meeting under Schedule 12A of the Local Government Act 1972, as appropriate. 

To present to the Audit and Corporate Governance Committee suggested training topics for consideration and approval.

The Chief Internal Auditor presented his report on proposed training for Members, which would provide them with the necessary skills to review the Council’s financial governance arrangements.  Suggested topics included Prince2, Risk Management, and Financial Awareness. 

Members agreed that external trainers would be enlisted to deliver training on Prince2. 

In addition, Members asked for training on Central Government Funding Streams, both in terms of practical application, and the terminology used. 

RESOLVED:   that the proposed members training programme be approved, and the Director of Resources be authorised to liaise with Members’ Services on delivery of the programme, subject to the following:

·         The training in respect of Prince2 be delivered by external trainers; and

·         An additional training session be arranged in respect of Central Government Funding Streams.