Meeting documents

Audit Committee
Tuesday, 12th December, 2006 7.00 pm

Date:
Tuesday, 12th December, 2006
Time:
7.00pm
Place:
Meeting Room A, Town Hall, Bury
 

Attendance Details

Present:
Councillor E B Briggs (in the Chair);
Councillors D Ashworth, P Ashworth, K Audin, D O’Hanlon, K Rothwell and B Vincent.

Mr K Wainwright (Co-Opted Member)
Co-opted:
No members of the public attended the meeting
Apologies for absence:
Councillors, Y Cresswell (CL) and A Matthews
Buttons
Item Description Decision
Open
AU.744 DECLARATIONS OF INTEREST
Preamble for item AU.744
 
AU.745 PUBLIC QUESTION TIME
Preamble for item AU.745
 
AU.746 Minutes of the Meeting held on Wednesday, 20th September, 2006 7.00pm
 Delegated decision:

That the minutes of the meeting held on 20 September 2006 be approved as a correct record and signed by the Chair.
AU.747 Minutes of the Meeting held on Tuesday, 26th September, 2006 6.00pm
 Delegated decision:

That the minutes of the meeting held on 26 September 2006 be approved as a correct record and signed by the Chair.
AU.748 AUDIT COMMITTEE TRAINING SESSION - FINANCIAL STRATEGY
Preamble for item AU.748
It was agreed:

That the contents of the session be noted.
AU.749 CPA USE OF RESOURCES KEY LINES OF ENQUIRY 2007
Preamble for item AU.749
It was agreed:

1. That the improvement from a score of two to three be noted.

2. That the contents of the report be noted.

AU.750 STATEMENT OF INTERNAL CONTROL - REVIEW
Preamble for item AU.750
It was agreed:

1. That the Director of Finance and E-Government be thanked for his presentation

2. That a progress report be given at the next meeting

3. That the contents of the presentation be noted
AU.751 ANNUAL EXTERNAL AUDIT REPORT
Preamble for item AU.751
It was agreed:

That the contents of the report be accepted.
AU.752 PROGRESS REPORT ON THE 2006/2007 EXTERNAL AUDIT PLAN
Preamble for item AU.752
It was agreed:

That the contents of the report be noted.
AU.753 FINANCIAL AND PERFORMANCE POSITION 2006/2007

Preamble for item AU.753
It was agreed:

That the contents of the report be noted
AU.754 ACCOUNTS 2005/2006 - ISSUES
Preamble for item AU.754
It was agreed:

That the contents of the report be noted.
AU.755 EXCLUSION OF PRESS AND PUBLIC
 Delagated decision:

That in accordance with Section 100(A)(4) of the Local Government Act 1972, the press and public be excluded from the meeting during consideration of the following item of business since it involved the likely disclosure of exempt information relating to any action taken, or to be taken in connection with the prevention, investigation and prosecution of crime.
Exempt
AU.756 RESTRUCTURE PROPOSAL - INTERNAL AUDIT
  • (Attachment: 10)A report from the Head of Strategic Finance
  • |
    (Attachment: 11)Appendix
  • |
    (Attachment: 12)Appendix
  • |
    (Attachment: 13)Appendix
 
AU.757 INTERNAL AUDIT PROGRESS REPORT
  • (Attachment: 14)A report from the Head of Audit and Risk Management
  • |
    (Attachment: 15)Appendix A
  • |
    (Attachment: 16)Appendix B
  • |
    (Attachment: 17)Appendix C
  • |
    (Attachment: 18)Appendix D
 
AU.758 INTERNAL AUDIT REPORT - MEMBERS' FEEDBACK
  • (Attachment: 19)A report from the Head of Audit and Risk Management
  
The meeting started at 7.00 pm and ended at 9.45 pm

Preamble

Preamble
ItemPreamble
AU.744There were no declarations of interest made the meeting.
AU.745There were no members of the public present to ask questions at the meeting.
AU.748Mike Owen, Director of Finance and E-Government gave the members of the Audit Committee a training session giving an overview of local government finance and answering questions on these issues surrounding this topic.
AU.749The Director of Finance and E-Government presented a report setting out details of the CPA Use of Resources assessment Key Lines of Enquiry for 2007.

It was explained that the Use of Resources CPA assessment forms a key part of the authority’s overall CPA rating. The Key Lines Of Enquiry (KLOEs), provide helpful guidance on good practice in the area of financial management.

It was reported that the KLOEs were split into five separate but inter-related areas and contained a number of criteria against which auditor judgements were made. Each KLOE was assessed on a score of 1 to 4 and all mandatory criteria at each level must be met before the score could be increased.

It was also explained that judgements were made by the external auditors, (in Bury MBC’ case - KPMG), which are then subject moderation and confirmation by the Audit Commission.

A copy of the KLOEs for 2007 was appended to the report and it was explained that the five main areas that the KLOEs were split into were:-

1.Financial reporting
2.Financial management.
3.Financial standing.
4.Internal control.
5.Value for money

The scores from the 2006 assessment had been released by the Audit Commission and Bury’s scores were as follows:-

(out of 4)
Financial reporting 3
Financial management 3
Financial standing 2
Internal control 2
Value for money 3

OVERALL SCORE 3

It was explained that the score of three had shown that bury was ‘performing well’ and had improved from a previous score of two.

AU.750The Director of Finance and E-Government gave a presentation reviewing Bury’s Statement on Internal Control (SIC).

It was explained that Bury MBC were responsible for ensuring that its business was conducted in accordance with the law and proper standards, and that public
money was safeguarded and properly accounted for, and used economically, efficiently and effectively. The Authority also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way its functions are exercised.

The Authority is also responsible for ensuring that there is a sound system of internal control which facilitates the effective exercise of its functions and which includes arrangements for the management of risk.

The director of Finance and E-Government explained that the Audit Committee would receive the checklist earlier in future years in order that it could be approved. The current SIC was based on findings from Internal Audit and reports produced by them and the External Auditors.

The key issues to be met within the current SIC were reported as:-

- Embed risk management
- Complete risk management
- Strengthen arrangements around the monitoring of Children’s Services budget
- General improvement of financial monitoring
- Strengthen the controls for new business systems
- Review of Council Constitution
- Development of long term financial strategy
- Address outstanding issues in the use of resources action plan
- Improve bank reconciliation process
AU.751KPMG submitted a report summarising their work for the 2005/2006 year. The report included KPMG’s finding in relation to their:

- Audit of accounts
- Audit of data quality; and
- Work on the Authority’s Use of Resources

It was explained that the Audit of Accounts had highlighted two key issues, the Audit of Data Quality had highlighted two key issues as had the Use of Resources.

It was reported that KPMG had issued an unqualified opinion on the accounts on 29 September 2006. The Audit of Data Quality had found that the Authority had sound arrangements in place for data quality. The Use of Resources Judgement had been an overall score of 3 out of 4.
AU.752Rashpal Khangura from KPMG presented a report setting out the progress made on the 2006/2007 external audit programme.
AU.753The Director of Finance and E-Government submitted a report to up date the Committee on the authority’s financial and performance position in line with the Committee’s Statement of Purpose to ‘provide independent scrutiny of the authority’s financial and non-financial performance to the extent that it affects the authority’s exposure to risk and weakens the control environment’.

The report summarised the financial and performance information as at the end of September 2006 and provided an up date of the financial position to reflect the position at 31 October 2006.

It was explained that there had been three significant improvements to the budget monitoring process during the year which were explained as:-

- Star Chambers
- Risk Management Techniques
- Links to performance information

The Financial Position and Performance Position were also included within the report.
AU.754The Director of Finance and E-Government presented a report answering some questions and issues that had been raised relating to the closure of the 2005/06 Accounts.

The report addressed four key issues. An explanation of KPMG’s concerns around the accounting treatment of LOBOs, progress on reconciliations, the management response to the ISA 260 report and an explanation for the need for a special meeting of the Committee at short notice.