GOVERNANCE COMMITTEE
30 JUNE 2015
Present :-
Councillor Liddy, Councillor Arnold, Councillor Elliot, Councillor
Havis, Councillor Hayes, Councillor P. Higgins, Councillor
Locker, Councillor Maclean
Substitutes :-
Councillor Lissimore for Councillor Elliot
Councillor Hazell for Councillor Maclean
3. Urgent Item – Appointment of High Steward
Councillor Liddy introduced the report by the Monitoring Officer for the Appointment of
High Steward. The report recommended that Sir Bob Russell be chosen as the High
Steward of Colchester, and that a special meeting of the Council be convened to pass
the appropriate resolution.
Councillor Liddy stated that Sir Bob Russell has accepted the proposal of becoming the
High Steward, and that a recommendation would need to be approved at 15 July
Council meeting to ensure a special meeting could be convened without additional cost.
Councillor Willets, with the Chairman’s permission, then addressed the committee
regarding the reference in the report to consulting all group leaders. He stated that the
Conservative Group had not given consent due to existing concerns regarding whether
those in the position of High Steward are able to hold an elected office.
Councillor Arnold stated that there was a significant amount of concern in the
Conservative group that the office of High Steward should be a non-political role.
Councillor Arnold submitted an amendment to the recommendation in the report to state
that in view of the non-political nature of the office of High Steward, the appointment
shall cease immediately in the event that the holder gains elected political office either
within or on behalf of any part of the Borough of Colchester.
Councillors discussed whether there were existing restrictions on the post of High
Steward, and whether if the post holder gains election to an authority this would
automatically end the arrangement. In addition Councillors discussed previous
examples of High Steward and whether the amendment was a reflection on this
particular appointment, considering that it has not been in place in the past. Councillor
also questioned the length of the appointment and whether it was for a period of five
years.
Councillors also commented on whether the Municipal Corporations Act 1835 was still in
place regarding the High Steward advising the directing the Mayor, or whether it had
been superseded by newer legislation.
Councillors voted on the amendment to the recommendation submitted by Councillor
Arnold:
‘that in view of the non-political nature of the office of High Steward, the appointment
shall cease immediately in the event that the holder gains elected political office either
within or on behalf of any part of the Borough of Colchester’
FOR: Councillor Arnold, Councillor Locker, Councillor Lissimore, Councillor Hazell
AGAINST: Councillor Liddy, Councillor Hayes, Councillor P.Higgins, Councillor Havis
As the vote was a tie, the Chairman used his casting vote to vote against the
amendment.
Councillors then voted on the original recommendation in the report:
FOR: Councillor Liddy, Councillor Hayes, Councillor P.Higgins, Councillor Havis
AGAINST: Councillor Arnold, Councillor Locker, Councillor Lissimore, Councillor Hazell
As the vote was a tie, the Chairman used his casting vote to vote for the original
recommendation in the report.
RESOLVED to RECOMMEND to Council that Sir Bob Russell be chosen as High
Steward of the Borough of Colchester and a special meeting of the Council be convened
on a date to be determined to pass an appropriate resolution.
4. Work Programme 2015-16
Councillor Liddy introduced the Work Programme for 2015-2016. Councillor Liddy
highlighted the need for a briefing in advance of the Statement of Accounts being
agreed on 8 September 2015, and to ensure those Councillors who attend the briefing
will be those who attend the Committee.
Councillor Liddy also highlighted the remit of the Governance Committee, in ensuring
the Council operates in a robust nature, in assessing risk for the Council, approving the
annual governance statements and audit reports.
RESOLVED that the Work Programme 2015-16.
5. Draft Annual Statement of Accounts 2014/15
Steve Heath introduced the Draft Annual Statement of Accounts report which requests
the Governance Committee to consider the information regarding the pre-audit
statement of accounts 2014/15 and considers the proposal for a separate internal
briefing session for the Committee.
Steve Heath stated that the Department for Communities and Local Government had
consulted on moving the deadline for certifying draft accounts from 30 June to 31 May,
and for approving and publishing the audited accounts from 30 September to 31 July.
Whilst this is not a requirement until the 2017/18 accounts, Colchester Borough Council
officers have been working to move the deadline earlier in the year as part of the
transition. This has led to the draft accounts being certified and published online by 2
June 2015.
The final accounts audit will commence on 13 July; the external auditor will report to the
Governance Committee on 8 September to ensure Member approval is secured prior to
the statutory deadline on 30 September. As part of this process, an internal briefing for
Governance Committee members is scheduled to take place in advance of this date.
The published statement will then be reported to the Governance Committee meeting on
13 October 2015.
Councillor Willets
Councillor Willets attended the meeting to speak on the Statement of Accounts that had
been published on the website. Councillor Willets thanked the hard work of the officers
in providing a very good presentation of the accounts. Councillor Willets questioned
movement of reserves, and the increase in the General Fund total compared to the
earmarked reserves total, between the end of March 2014 and the end of March 2015.
In response to Councillor Willets, Steve Heath stated that the figures presented in the
Statement of Accounts are accurate; further details on the specifics can be provided as
part of the briefing that will be set up for the Governance Committee. The increase
presented in the accounts included both usable and unusable reserves . Unusable
reserves include a number of adjustments that reflect the difference between the
requirements of proper accounting practices and the statutory arrangements for the
setting of Council Tax and Housing Rents.
RESOLVED that:
a) The report relating to the pre-audit Statement of Account for 2014/15 be noted.
b) The Governance Committee hold a separate internal briefing session for the
Committee prior to 8 September meeting.
6. Audit Plan and Annual Audit & Certification Fees
Steve Heath introduced the Audit Plan and Annual Audit & Certification Fees report,
which requests the Governance Committee to consider and note the Audit Plan for the
year ending 31 March 2015 and the indicative audit and certification fees for 2015/16.
Steve Heath stated that the report includes the proposed work by the external auditors,
and the financial statement risks. The risks included within the report for Colchester
Borough Council are common to all Local Authorities. This includes the risk of
management override to perpetrate fraud, the incorrect classification of revenue spend
as capital and the risk associated with Non-Domestic Rates valuations.
As part of the Audit Plan, Ernst and Young have announced that they will undertake
direct testing of income and expenditure on Colchester Borough Homes as this is
considered to be a more efficient audit approach than instructing and reviewing the work
of their auditor. In addition there is a new Audit Manager in Francesca Palmer who has
replaced Gary Belcher.
With regard to the audit fees, these have further decreased by 25% following a further
tendering of contracts.
Councillor Liddy thanked the hard work of officers, and commented that it was pleasing
to see the audit fees reducing.
RESOLVED that:
a) The contents of the Audit Plan for year end 31 March 2015 be noted
b) The indicative audit and certification fees for 2015/16 be noted.
7. Year End Internal Audit Assurance report 2014/15
Hayley McGrath introduced the Year End Internal Audit Assurance report for 2014/15.
The report requested that the Governance Committee review and comment on the
internal audit activity for the period between 1 October 2014 and 31 March 2015, as well
as the performance of internal audit.
Hayley McGrath stated that the internal audits are conducted by Mazars under contract,
managed by Colchester Borough Council. As part of this management there is an audit
plan reviewing services on a rotating basis; key financial systems are audited annually,
with other items audited on a risk scored basis.
During this financial year there have been no limited assurance audits, with the two
previously limited audits in Corporate Debt and Fuel Usage now being reviewed as
substantial. As shown in the report, the substantial audits have no priority one
recommendations with only priority two or three recommendations. In terms of the
provision of audit days at Colchester Borough Council, a request was made in relation to
Contract Management to move 40 days to ensure that the service is being audited at the
most effective time.
With regard to the outstanding recommendations, Colchester Borough Council has a
good monitoring system in place, with deadlines associated with the recommendations
made. These are reviewed on a periodical basis, and there have been no issues during
this year.
The report also includes performance details on the performance of Mazars and for this
year all key performance indicators have been met.
The following issues were raised by Councillors:
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Councillor Hazell – Asked for more details on the difference between a Full and
Substantial audit.
Councillor Locker – How does Colchester Borough Council perform in comparison to
other Councils?
Councillor Liddy – What scope is there for further increasing the audit rating from
substantial to full?
Hayley McGrath and Alan Woodhead provided the following responses:
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A Full audit is where there are no recommendations, or one minor recommendation,
which is difficult to achieve. This is when the service is operating without any control
issues.
Alan Woodhead stated that Colchester Borough Council is a better position than
many other Local Authorities, with management at the Council taking the internal
audit process very seriously, which can be seen in the improvement in audit results.
Mazars works very closely with management to provide audits on those areas of
concern.
There is the possibility of improvement to achieve a Full assurance rating, however
this is extremely difficult. A substantial assurance rating means the service has a
very good system of control and that everything expected to be done has been
completed. A full assurance would reflect a very high standard where nothing extra
could be done.
Councillors thanked the hard work of officers across the organisation, as all audits are
substantial or higher and without any priority one recommendations.
RESOLVED that the Audit Plan and Annual Audit Certification Fees be noted.
8. Review of the Governance Framework and Draft Annual Governance
Statement
Hayley McGrath introduced the Review of the Governance Framework and Draft Annual
Governance Statement which requests the committee to review the Council’s
compliance with the six principles of good governance including the review of
effectiveness of the internal control arrangements. The report also requests approval of
the Annual Governance statement for 2014/15.
Hayley McGrath stated that the Council is required to produce an Annual Governance
Statement which is included in the Statement of Accounts and signed by the Chief
Executive and the Leader of the Council once agreed by the Governance Committee.
The review of the Governance Framework involves looking at the internal audit reports,
governance issues, committee reports, local press stories regarding Colchester Borough
Council and any issues or complaints received. In addition Hayley McGrath conducts
meetings with every member of the senior management team, which provides an honest
input into the review and how the organisation is governed. There is also a Head of
Internal Audit report which feeds into the process, providing an overall assurance rating
for the organisation.
As part of the statement, key areas where elements could be improved are identified.
Due to the improvement within internal audit there are no recommendations from audits
that require significant concern. The issues highlighted, where controls could be
improved are the Health and Safety arrangements within the organisation, the
management of supplier relationships and resilience within services to ensure reliance is
not placed on individual expert officers. Hayley McGrath stated that these issues have
been discussed with senior management and actions plans agreed.
Councillor Higgins questioned the how significant issues would be presented within the
report. Hayley McGrath stated that if there were significant concerns they would be
highlighted within the report as key issues, and would have been included within
individual audit reports, and the Head of Internal Audit Report.
Councillor Havis stated that as Chair of the Trading Board she was pleased to see the
management of supplier relationships on the list, seeking to embed proactive
relationships in the organisation.
RESOLVED that:
a) The Council’s compliance with the six principles of good governance including
the review of the effectiveness of the internal control arrangements be noted.
b) The Annual Governance statement for 2014/15 be approved.