Agenda and draft minutes

Venue: Conference Room, Parkside, Chart Way, Horsham

Contact: Email: CommitteeServices@horsham.gov.uk  Direct Line: 01403 215465

Items
No. Item

AAG/4

Minutes pdf icon PDF 110 KB

To approve as correct the minutes of the meeting held on 27 March & 8 May 2024

(Note: If any Member wishes to propose an amendment to the minutes they should submit this in writing to committeeservices@horsham.gov.uk at least 24 hours before the meeting.  Where applicable, the audio recording of the meeting will be checked to ensure the accuracy of the proposed amendment.)

Additional documents:

Minutes:

The minutes of the meeting held on 27 March were approved as a correct record and signed by the Chairman.

AAG/5

Declarations of Members' Interests

To receive any declarations of interest from Members of the Committee

Minutes:

Councillor Dennis declared an interest as a Councillor for West Sussex County Council and a panel member for West Sussex County Council Pension Panel.  Councillor Dennis was also Audit Chair of the Committee for Transport for the South East.

 

Paul King declared an interest as a non-executive Director and Chair of the Audit and Risk Management Committee for NHS Sussex Integrated Care Board.  He was an Ombudsman with the Financial Ombudsman Service and previously worked for EY in their Government and Public Service team.  Whilst Horsham District Council was a client, he had not completed work related to the Council for many years.

 

AAG/6

Announcements

To receive any announcements from the Chairman of the Committee or the Chief Executive

Minutes:

It was announced that Paul King had joined the Audit Committee and would be a non-voting Member.

 

AAG/7

External Audit - Audit Plan 2023/24 pdf icon PDF 6 MB

To receive the Audit Plan for 2023/24 from the external auditors.

 

Members are asked to note the contents of the Audit Plan.

Minutes:

The Chairman invited Hassan Rohimun, partner at Ernst & Young to introduce the external Audit Plan for 2023/24.

 

The external auditor referred Members to the overview of the audit strategy and context for the 2023/2024 audit. The Department for Levelling-up, Housing and Communities (DLUHC) and Financial Reporting Council (FRC) had set out three phases towards re-setting the local audit market.  Ministerial announcements and legislation to enact the re-set had been expected in May, however the General Election had impacted the timetable and caused uncertainty. This could impact the backstop dates provisionally set by DLUHC.  In the absence of further guidance, the previously communicated strategy would continue.

 

It was confirmed that the auditors would progress the audit of the Council for 2023/24 financial reports in the meantime.  A disclaimer would be published for the 2022/23 accounts setting out the context for the 2023/24 audit.

 

The risks for the upcoming audit were summarised. There was no change in the risk assessment from the previous year.

 

The auditor outlined the materiality levels which would be used to undertake the audit. The report also set out the auditor’s responsibilities, in terms of scope of the audit, and responsibilities for value for money work.

 

Members’ attention was drawn to the timeline for work and the summarised independence considerations.  It was confirmed there were no issues the auditors were aware of which would impact their independence.

 

Following the presentation Members discussed the significant increase in fees for the Auditor’s services.  It was confirmed that the Council had looked for an auditor outside of the Public Sector Audit Appointments Ltd (PSAA) but were unsuccessful.  The Council therefore procured audit services through PSAA and fees were set by them.

 

The impact of IFR16 on balance sheets was also considered.  The Auditor confirmed that, whilst under the reset provisions it was proposed that the 2022/23 audit would be disclaimed, previous work in relation to lease arrangements would be reviewed and the new requirements reflected in terms of reporting under IFR16 as part of this year’s audit.

 

Members also asked for confirmation that the timetable could be met.  The Auditor confirmed that his team would be starting work this week on the year end audit and undertaking annual interim work.  However, an opinion on 2023/24 could not be provided until the 2022/23 audit had been concluded and the whole sector was awaiting guidance in relation to re-set arrangements. The Director of Resources agreed that completion was dependent on how the external team dealt with the 2022/23 audit but was confident that work was in hand and hoped the timetable would be met.

 

In relation to opening balances for the 2023/24 audit Members questioned how these could be tested.  The Auditor confirmed that this issue had been raised with DLUHC and FRC.  Further guidance was awaited and would be shared with the Committee once it was available.

 

RESOLVED

 

Members noted the contents of the report.

AAG/8

Accounting Policies 2024/25 pdf icon PDF 130 KB

To receive a report on the Accounting Policies 2024/25.

 

Members are asked to vote on the recommendations in the report.

Additional documents:

Minutes:

The Head of Finance and Performance reported on changes to accounting policies introduced on 1 April 2024.

 

Members were referred to the paper which detailed the transition to adopting International Financial Reporting Standard 16 (IFR16) and how this would impact the Statement of Accounts.

 

Since publication of the report one error had been identified in relation to a lease at Parkside.

 

Subject to external audit, the amended figures confirmed that the Council had right-of-use assets of £509,000, rather than £630,000, which would be financed through non-current lease liabilities of £305,000, current lease liabilities of £148,000 and finance costs of £56,000.

 

It was confirmed that there were no other changes to accounting policies.

 

The Group Accountant (Technical) confirmed that the wording of the policy was in line with the code issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and recommended by the Council’s Treasury and Capital Finance Advisors.  It was also clarified that the inclusion of right-of-use assets on the balance sheet would make it explicit where the Council have assets which are leased.

 

Members queried how the balance sheet would be impacted when the lease on the Council offices ends. It was confirmed that at the end of the lease, the liabilities and assets would balance.  Appropriate calculations would then be made to account for the lease on the new building.

 

RESOLVED

 

Members noted the contents of the report.

 

AAG/9

Internal Audit - Annual Report and Opinion pdf icon PDF 142 KB

To consider the report of the Chief Internal Auditor

 

Members are asked to note the report and to consider if any further action is required in response to issues raised, and to identify potential items for inclusion in the internal audit plan.

Additional documents:

Minutes:

The Chief Internal Auditor presented the Annual Report and Opinion in relation to the accuracy of the Council’s governance arrangements, risk systems and overall control environment for 2023/24. The report also provided an update on the performance of Orbis’ internal audit against its key indicators.

 

The Auditor was pleased to report an overall opinion of reasonable assurance for Horsham District Council for the financial year 2023/24.

 

From the audits completed, no partial or minimal assurances were issued.  Four audits had substantial assurance and sixteen audits received reasonable assurance. It was confirmed that 94% of the audit plan had been delivered, which was above target.

 

The Auditor was also pleased to report that Orbis Internal Audit Partnership, used by other local Councils, would be implementing cultural compliance audits using the model used in Horsham, which reflected positively on the Council and how open they had been with their internal controls.

 

The Chief Internal Auditor highlighted the 6 audit reports that were completed in Quarter 4. The results were summarised, and it was noted that these audit areas received reasonable assurance.

 

Members discussed the current layout of the report and the difference between reasonable and substantial assurance levels, particularly in relation to the accounts receivable and accounts payable audit.  The Auditor clarified the scales of assurance used and confirmed that reasonable assurance was considered a positive outcome.

 

The Auditor confirmed that any audits given partial or minimal assurance were automatically followed up within 12 months.  Whilst there were none at present, follow up assessments had recently been completed of previous partial assurance audits and these had now achieved reasonable assurance or higher. All high and medium priority actions were tracked.

 

Members also queried the assurance process in relation to actions set by the audit team.  The Chief Internal Auditor confirmed that every action had regular reminders set for both the responsible Manager and the auditor.  There was a key performance indicator (KPI) for the implementation of management actions and the current KPI for implementation for Horsham District Council was 100% against a target of 95%. Low priority actions were not monitored. 

 

It was also confirmed that the Internal Audit plan had been agreed in March, but it was accepted the Committee Membership had subsequently changed.  The Chief Internal Auditor agreed the plan would be shared with the committee. 

 

RESOLVED

 

Members noted the content of the report.

 

AAG/10

Internal Audit review of Revenues and Benefits 2023/24 pdf icon PDF 128 KB

To receive a report from the Director of Resources.

 

Members are asked to note the contents of the report.

Minutes:

The Director of Resources introduced the report stating that Milton Keynes’ internal auditors had provided good or satisfactory assurance in relation to audits on Council Tax, Housing Benefit and Business Rates control environments and compliances.

 

These services are managed by Milton Keynes as a partnership arrangement.  Whilst there may be some human, inputting errors, the audit shows that the systems are working well.  When unintentional mistakes occur, management work to correct and improve processes and, due to the nature of the Council’s working arrangement with Milton Keynes, there would be no financial reimbursement as a result.

 

RESOLVED

 

Members noted the contents of the report.

 

 

AAG/11

Annual Governance Statement pdf icon PDF 91 KB

To receive the Annual Governance Statement.

 

Members are asked to vote on the recommendations in the report.

Additional documents:

Minutes:

The Head of Finance and Performance presented the report in relation to the annual review of the Council’s governance, risk management and internal control processes for 2023/24. 

 

Members were referred to the minor governance issues identified.  These had been investigated and remedial action had been taken where needed.  Appendices set out action plans for 2023/24 and 2024/25.

 

Members raised concerns about data breaches by third parties and the potential for ransomware attacks.  The Director of Resources confirmed that this issue was included on the risk register.  Whilst third-party breaches had not impacted the Council’s data during 2023/24, it was accepted there could still be potential for an attack and preventative controls had been put in place.

 

RESOLVED

 

To approve The Annual Governance Statement for 2023/24

 

REASON

 

As part of good governance, it is important that the Annual Governance Statement is approved by the Audit Committee

 

AAG/12

Risk Management - Quarterly Update pdf icon PDF 103 KB

To receive the report of the Director of Resources

 

Members are asked to note the contents of the report.

Additional documents:

Minutes:

The Director of Resources advised that the Risk Management – Quarterly Report set out the risks as of 31 March 2024. 

 

Nine items were considered medium risks and five were high risks.  Four of the high risks would be seen at every update.  These were the housing benefit subsidy loss, lower levels of income and higher expenditure, lower government grant funding and the Local Plan, as it goes through stages towards approval.  The fifth high risk was related to the General Election, which would be removed following its successful completion. The County Council elections would be added prior to May 2025. 

 

Members discussed the current formatting of the risk matrix and the impact of any changes imposed by a new Government.  The Director of Resources confirmed that reviews of the risk register take place quarterly.  Further information in relation to the funding settlement for 2025/26 was awaited, along with information in relation to possible multi-year settlements.

 

It was confirmed that the risk on the Local Plan would remain on the risk register until approved by the Planning Inspector.

 

The Director of Resources also confirmed that due diligence would be completed prior to the award of any building contract for the Capitol Theatre upgrade project.

 

Members discussed the pressures on the budget. The Director of Resources confirmed that pressures felt in 2023/24 would continue to impact 2024/25.  Whilst some expenses, such as fuel, would reduce, there were likely to be noticeable pockets of expenditure which would increase. This would impact the 2025/26 budget.

 

RESOLVED

 

Members noted the contents of the report.

 

AAG/13

Treasury Management Activity & Prudential Indicators pdf icon PDF 241 KB

To consider the report of the Director of Resources.

 

Members are asked to note the contents of the report.

Minutes:

The Group Accountant (Technical) introduced the report.  This set out the treasury activity and prudential indicators for 2023/24. 

 

It was confirmed that the Council had been mostly within, or alongside the indicators set.  Whilst capital spending had increased, over budget, in relation to the Local Authority Housing Fund, this had been covered by Government grants and by using the Council’s own resources.  No notional debt was produced as a result.

 

The Group Accountant (Technical) confirmed that in terms of treasury the Council was within limits set and the yield had been higher than expected due to interest rates which were higher than budgeted. Property income had been slightly below what was anticipated.  Pooled funds were close to their original capital values which was encouraging.  Whilst property values had gone down slightly the values still held up and there had been reasonable returns in terms of the property portfolio.

 

All other treasury activity was as expected and within the estimates set.

 

Members queried whether the potential for lower interest rates, and associated lack of return, had been factored into the budget.  Officers confirmed that the Council’s advisors had provided interest rate projections and a reduced interest rate had been factored into this year’s budget.

 

Members also considered the arrangements in relation to the sale of Swan Walk and whether accounts for Horsham Homes should be brought to the Committee.  The Head of Finance and Performance confirmed that the accounts would be considered by the Audit Committee in September.

 

RESOLVED

 

Members noted the contents of the report.

 

 

AAG/14

Urgent Business

Items not on the agenda which the Chairman of the meeting is of the opinion should be considered as urgent because of the special circumstances

Minutes:

There was no urgent business.