Agenda and draft minutes

To approve as correct the minutes of the meeting held on 10 July

(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.)

The minutes of the meeting held on 10 July were approved as a correct record and signed by the Chairman.

To receive any declarations of interest from Members of the Committee

There were no declarations of interest.

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

The Chairman outlined the training he had recently undertaken. This included the LGA course on Local Governance and Finance and the Introduction to Audit Committee, which he recommended to all members.

A further course on Leadership Essentials for Audit Committee had been booked for January 2025.

The Chairman attended the Regional Audit Committee meeting on 23 July and would forward a copy of a presentation received to all Members in due course.

The procedure for dealing with Item 8, Appendix B on the Agenda was also confirmed.

To receive a verbal update on progress on the Annual Audit report for 2023/24 from the external auditors

The Chairman invited Hassan Rohimun, partner at Ernst & Young to provide an update on the progress of the 2023/24 External Annual Audit.

Having previously presented the audit plan to the Committee, the External Auditor confirmed they were currently undertaking procedures on the year end accounts and working with Officers to address points arising from the audit.

The Auditor highlighted key areas which were currently in progress. This included work on valuations, pensions and journal testing.

Members queried whether there were any issues arising from the work completed to date.  The External Auditor confirmed that there were no issues to bring to the attention of the Committee at this stage.

To receive an update from the Director of Resources

Members are asked to note the contents of the letter on the 2022/23 reset from the external Auditor.

The Director of Resources provided an update in relation to the Statement of Accounts 2022/23.

It was confirmed that the 2022/23 accounts would need to be resolved prior to signing off the 2023/24 accounts.

Members noted the letter from EY which outlined the programme of work required by the External Auditors, and Officers, in order to finalise the accounts.

The Director of Resources confirmed that the earlier steps in the programme of works, such as preparing accounts and the annual Governance Statement, had been completed.

A deadline had been set for the work to be completed by 13 December 2024 and the Council were required to approve accounts by the end of November.   The Audit Committee meeting scheduled for 4 December would therefore be changed to 27 November in order to approve the accounts in time and approve the disclaimed position provided to the Council by the External Auditor.

Members were reassured that all actions listed for September had been completed. The Director of Resources considered that officers, and the External Auditors, were on target to complete the required work ahead of the 27 November committee date. 

The External Auditor confirmed that the team were working on procedures in accordance with international standards on auditing in order to issue the disclaimed position.  The Financial Reporting Council (FRC) would be releasing further guidance and webinars would be organised in relation to the re-set of the local government audit market which Members may wish to attend.

The wording of the disclaimed position was still awaited and once the draft opinion was prepared it would be shared with the Director of Resources and Audit Committee.

[Cllr Belinda Walters arrived at the meeting at 5.37pm]

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.

The Chief Internal Auditor presented the Internal Audit Progress report for 2024/25 Quarter 1.

Two audit reports were finalised in quarter 1.  These were in relation to play area inspections and mobile device management with both achieving reasonable assurance.  A grant return was also completed, and no issues had been found.

The Internal Audit team had completed a position statement on property decarbonisation.  Monitoring of the project would continue, and an audit of the programme may be added to next year’s audit plan.

The introduction of food waste collection had been highlighted as a risk to the Council and would be audited in quarter 3.  

Members were referred to paragraph 4.4 of the report and an update was provided in relation to ongoing audits.

Members noted the internal audit performance indicators.  Whilst there were two amber measures the Internal Auditor considered that this was not unusual for quarter 1 and had been exacerbated by delays due to the General Election. The Internal Auditor reassured Members that there was no risk to the delivery of the internal audit plan at this point.

Members were concerned that there did not appear to be a project methodology adopted for property decarbonisation and queried whether this could impact finances given targets set by the Council to be net zero by 2030. It was requested that the Head of Property and Facilities attend the next meeting to provide an update in this regard. The Internal Auditor confirmed that, whilst a project framework was in place, a formal methodology had not been adopted at the time of the audit. 

Members also discussed paragraph 1.15 in relation to financial management of the project. It was suggested that the Committee would like to see the list of properties involved and updated cost estimates. 

Members discussed whether the risk profile of the Capitol project and office move should be increased. The Internal Auditor confirmed that project risk registers were subject to regular review, including by Internal Audit, and that the Capitol project had an extremely strong framework in place which could provide a good example to other projects.

RESOLVED

Members noted the contents of the report.

To receive the report of the Director of Resources

Members are asked to note the contents of the report.

The Director of Resources presented the Risk Management Quarterly Update.

It was reported that three new risks had been added to the risk register.  Food waste collection and the office move were large projects and warranted a place on the corporate risk register. A further risk was contained in exempt Appendix B.

It was reported that the red risks remained the same as previously reported.  The risk in relation to the General Election would be removed but reappear in early 2025 in preparation for May County Council elections.

Members asked questions in relation to the General Election and queried whether challenges were due to the Council’s internal processes or processes the Council were required to adhere to. The Director of Resources confirmed that the risks were increased, in part, due to the geographical area and the receipt of ballot boxes from Presiding Officers led by other authorities were not under the Council’s control.

Members discussed errors in relation to benefit subsidy, and the level of testing being undertaken. The Director of Resources outlined the reasons for some errors and confirmed that lessons were being learnt when errors were identified.

The risk to the budget was also considered. It was not yet clear whether Government funding would be a multi-year or single year settlement, or whether there could be a redistribution of funding. The Director of Resources would update the Committee once the position was confirmed. The Committee were reassured that work had been completed to identify savings and income should the settlement be worse than anticipated. 

The single person Council Tax discount was discussed and, whilst the potential removal of this discount might appear advantageous, it was possible that Central Government could use this to reduce Council funding. 

Members also considered the Council’s Local Plan submission and how this could be impacted by recent housing targets.  It was noted that the Horsham District Local Plan (Regulation 19) notice had been submitted and it was hoped that the Council’s housing target may be based on the numbers submitted at that time.  The Director of Resources would however seek further confirmation on this point.

RESOLVED that, under Section 100A of the Local Government Act 1972, the press and public be excluded from the meeting for the debate and consideration of the item, on the grounds that it involved the likely disclosure of exempt information, as defined in Part 1 of Schedule 12A of the Act, by virtue of Paragraph 3 (information relating to the financial or business affairs of any particular person (including the authority holding that information)) and, in all the circumstances of the case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

The Director of Resources outlined the risk contained in Appendix B

Members discussed the matter and agreed that this risk should be included on the risk register. 

Members returned to open session before noting the report.

RESOLVED

Members noted the contents of the report

[Cllr Joy Dennis arrived at the meeting  ...  view the full minutes text for item AAG/21

To receive a report from the Director of Resources.

Members are asked to note the contents of the report.

The Head of Finance and Performance referred Members to the report on Treasury Management Activity and Prudential Indicators, which had been circulated on 9 August 2024.

The contents of the report were considered, and it was noted that at 30 June 2024 there was no external debt.  Members queried the increase in the Council’s investments from £72m at 31 March 2024 to £79m at 30 June. The Head of Finance and Performance confirmed that £5.6m had been received in grants from the Government, including £2.2m towards the capital costs of introducing food waste collection.  A high level of other payments had been received in the first quarter, including rates and council tax.

Members requested details of the funds held by the Council for other authorities on precept. The Director of Resources confirmed that monies were transferred to preceptors within a few days of receipt.  As such the amount of monies being held in this regard fluctuated.

RESOLVED

Members noted the contents of the report.

To consider the report from the Director of Horsham District Homes Ltd

Members are asked to note the contents of the report

The Head of Finance and Performance presented the report on the Subsidiary Housing Company Accounts.

It was confirmed that Horsham District Homes Ltd and Horsham District Homes (Holdings) Ltd had their own auditors.  Auditors would meet with the Directors on 25 September to finalise the accounts which would then be approved by the Board of Directors.

The Head of Finance and Performance updated Members in relation to the performance of Horsham District Homes Ltd up to 31 March 2024. The company were working towards the development of two sites. During the year there had been general operation costs such as charges for officer time, which resulted in a loss for the year.

Horsham District Homes (Holdings) Ltd let properties developed by Horsham District Homes.  This company had been more active and received rental income from 8 affordable homes in Slinfold and Billingshurst.  An independent re-valuation of the properties showed an increase in value of £733,000, with a deferred tax liability of £183,000. This was Corporation Tax and would only fall due following any sale of the properties when the profit was realised.

During the year the company had entered into lease agreements with the Council to let 16 Local Authority Housing Fund homes for refugees. There were operational running costs for management time, maintenance and repairs, however the Head of Finance and Performance confirmed that income had exceeded costs resulting in a net profit for the year.

Members discussed the report and noted that group accounts had not been prepared. The Head of Finance and Performance confirmed that this had been considered by the auditors.  Whilst the position remained under review the Council’s position was that this was not considered significant to the operation of the Council.

Members queried the fixed asset investment of £300,000 for Horsham District Homes Ltd.  The Head of Finance and Performance confirmed that this related to the shareholding by the Council and, as no development had taken place at this point, the money had been invested with a financial institution.

The re-valuation of properties owned by Horsham District Homes (Holdings) Ltd was also considered and it was confirmed that this would take place every 5 years.  The Head of Finance and Performance also confirmed that the maintenance allowance had been reviewed by the auditors and was deemed sufficient given that properties were new builds.

Members discussed the policy in relation to the Council taking a dividend from these companies and noted that in total there would be 24 Local Authority Housing Fund properties leased through Horsham District Homes (Holdings) Ltd.

RESOLVED

Members noted the contents of the report.

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

There was no urgent business.