The Public Sector Audit Senior Manager (Grant Thornton), presented the external Audit Plan for Carlisle City Council for the year ended 31 March 2022. Members’ attention was drawn to the summary provided which included the four significant risks identified and progress against prior year audit recommendations. An overview of Key Matters including CIPFA consultations and changes to accounting practices were provided, along with matters relating to the Value For Money (VFM) conclusions and Materiality. The Committee asked the following questions during discussion: - Why had the Council's materiality been set at 1.9%? The Public Sector Audit Senior Manager (Grant Thornton) explained that Materiality was usual set at 1 - 2% of an organisation's gross expenditure: a lower percentage equalling a greater likelihood of concerns. In response to a Member noting the lack of audit information in report, the Chair explained that the plan set out how the audit was to be carried out, the details of the external audit would be submitted to the Committee in due course.
RESOLVED – 1) That the External Audit Plan for 2021/22 be noted and received. 2) That the increase in the external audit fee of £2,500 be noted.
The Audit Services Manager submitted report RD.09/22 providing an overview of the work carried out by internal audit since the previous Audit Committee (17 March 2022) covering the end of the 2021/22 financial year and initial progress on the 2022/23 Internal Audit Plan. Eleven full audit reviews had been completed and were provided for consideration by Members: Property Income; Sands Centre Development; Council Tax; Recycling (Performance Information); Development Management (Complaints); Future High Street Fund; Creditors; Main Accounting System; and Procurement (Counter-Fraud). ICT Recommendations and Cyber Security were submitted as private reports. Updates were provided on the National Fraud Initiative, Revenues and Benefits, the Council's Business Continuity Plan and Building Maintenance and along with other areas that had utilised the Audit resource during the period. In considering the Internal Audit Progress (April to June), Members raised the following question and comments: - A Member commented that an audit of building maintenance would be useful as part of the Council's transition to unitary authority. The Audit Services Manager advised that the Service Manager had requested that the planned audit which was to focus on compliance with legal requirements not be carried out at the scheduled time. He noted that another risk-based audit was planned within Property Services, where the Committee to require it, the Audit Plan may be amended to include building maintenance. Where that to be the case, the Audit Services Manager indicated either a full audit or a smaller piece of work in respect of insurance would be most useful. The Chair requested that assurance be sought form the Service Manager that there was an appropriate overview of the Council's buildings and facilities. Members discussed the Council's Asset Register, the Town Clerk and Chief Executive suggested that an Officer from the Property Services deliver an informal briefing for the Committee on the Register and the Asset Disposal Plan. The Chair welcomed the proposal. The Chair observed that a number of audit recommendations remained to be implemented (Appendix B refers) and noted that the Committee had discussed the matter at its previous meeting. The Audit Services Manager acknowledged the Chair's comments, noting there were a variety of factors impacting the implementation of audit recommendations. He added that, following the publication of the report, responses had been provided in respect of Revenues and Benefits and other areas. The Head of Revenues and Benefits explained that implementation of recommendations had been delayed due to third party involvement, he went on to give an overview of the different approaches to fraud investigation between the Council and DWP.
The Audit Services Manager then outlined, in some detail, each of the above-mentioned audits in turn highlighting, in particular, the context; key points; and associated recommendations. RESOLVED - 1) That the Audit Committee: i) noted the progress against the audit plan 2021/22; ii) noted the progress against the audit plan for 2022/23; iii) note the progress made on recommendations to date outlined in Appendix B; iv) note the recent submission of responses to the outstanding recommendations by Revenues and Benefits; 2) That the Town Clerk and Chief Executive arrange an informal briefing for the Committee on the Asset Register and Asset Disposal Plan. Members considered the following individual completed audit reviews: Property Income In relation to the charging of not re-charging insurance premiums to tenants, the Chair asked: how far back in time the issue went and the level of sums involved. She further questioned, given the error was the Council's responsibility, whether it was appropriate to seek to reclaim the monies? The Head of Financial Services (Deputy S.151) responded that the audit had identified that the premiums had not been recharged to the tenants. Going forward the re-charges would be levied on the tenant via an annual invoice. The Council would not seek to reclaim the non recharged monies. RESOLVED - That the audit report - Property Income be received and that the Audit Committee were assured that any financial loss to the Council was not significant. Sands Centre Development In response to a Member noting that the Project Board had not met since March 2021, the Audit Services Manager advised that weekly meetings of the Board were being held and that latterly minuting of those meetings had been reinstated. The Audit Services Manager further advised that the would follow up on the following matters: - The provision of staff appraisals and e-learning which he hoped to report back to the next meeting of the Committee; - That the actions in relation to the audit recommendations had been met the implementation dates set out in Appendix A of the report. RESOLVED - That the audit report - Sands Centre Development be received (RD.10/22) Council Tax The Head of Revenues and Benefits set out the process for sample checks following a question from a Member. The Committee discussed the finalisation and publication of the draft Collection and Recovery Policy. The Town Clerk and Chief Executive advised that it was important to differentiate between policies which were adopted at Council and guideline documents that Officers worked to in the delivery of their duties to ensure a consistent approach to service delivery. The draft policy was a guideline document, therefore the Town Clerk and Chief Executive was of the view that it did not require to be published. RESOLVED - That the audit report - Council Tax be received (RD.11/22) Recycling Performance With regards to paragraph 5.3.4 of the report, a Member sought assurance that the Council was in receipt of the most update information regarding the CWR handling charges. The Audit Services Manager confirmed that the Council did have up to date information and noted that that any future policy review would need to be based on evidence. RESOLVED - That audit report - Recycling Performance be received (RD.21/22) Development Management (Complaints) A Member asked if it was anticipated that the level of complaints would reduce going forward. The Head of Legal and Democratic Services responded that the increased level of complaints being attributed to the restrictions of the pandemic had been anecdotally observed. Often complaints arose when there was dissatisfaction with a decision of the Development Control Committee. RESOLVED - That audit report - Development Management (Complaints) be received (RD.13/22) Future High Street Fund A Member sought assurance that the risk register for the project was reviewed on a regular basis. The Audit Services Manager responded that the Risk Registers were reviewed on a quarterly basis. Furthermore, the Project Management Officer were found to be regularly using the Framework, but that activity would benefit from better documenting. The Town Clerk and Chief Executive added that he considered such a two-phase approach an appropriate form of risk management. Due to increased workloads associated with Local Government Reorganisation, it was possible that the more strategic review work was not happening as frequently, however, he anticipated that use of the risk register would be included in day to day work. RESOLVED - That audit report - Future High Street be received (RD.14/22) and that a clear focus on risk be maintained. Creditors The Chair invited the Head of Financial Services (Deputy S.151) to comment on the high graded recommendation in the report: 6 - Oversight of bank detail changes to verify the robustness of checks carried out. . The Head of Financial Services (Deputy S.151) advised that system reports were used as the basis of verification work and sample checks were carried out. The system and the independent verification thereon was considered to be working well. Furthermore, progress was being made in relation to each of the audit recommendations. RESOLVED - That audit report - Creditors be received (RD.15/22) Main Accounting System Members welcomed the report. RESOLVED - That audit report - Main Accounting System be received (RD.16/22) Procurement (Counter-Fraud) A Member commented that it was good practice to include created and review dates on the front cover of policy documents. The Town Clerk and Chief Executive undertook to look into the matter. The Chair commented that it would be useful for the process to be embedded prior to unitary authority. RESOLVED - That the audit report - Procurement (Counter-Fraud) be received (RD.17/22).
The Designated Head of Internal Audit submitted report RD.22/22, the purpose of which was to give his opinion on the effectiveness of the Council’s arrangements for risk management, governance and internal control in accordance with the requirements of the Public Sector Internal Audit Standards (PSIAS). The Designated Head of Internal Audit’s opinion based on the completed audit work, was that Carlisle City Council’s overall framework of governance, risk and internal control was reasonable and audit testing had confirmed that controls were generally working effectively in practice, although there were specific control concerns in relation to ICT services and general concerns about Council resources. In his dual role as Head of Financial Services and Designated Head of Internal Audit, he could further confirm that his independence and that of Internal Audit had not been in any way diminished by that working arrangement (the External Quality Assessment 2018 and annual self-assessment confirmed that suitable arrangements were in place to maintain audit independence).
The Chair commented that, in relation to managers' capacity to implement audit findings being affected by Local Government Reorganisation, it was important that the Senior Management Team assisted in the creation of an appropriate balance. She further noted that it had been some time since the Committee had undergone an effectiveness self-assessment and suggested that consideration be given to one being undertaken in the future. At the invitation of the Chair the Audit Services Manager explained the process and increased benefits of carrying out post audit satisfaction conversations as opposed to the circulation satisfaction surveys. The Head of Financial Services endorsed the approach adding that the conversation model added more value to the process, Members also indicated their support for the method. RESOLVED - 1) That the Audit Committee noted:
(i) The progress achieved in 2021/22 in delivering the Audit Plan and the outcomes of completed audit reviews as set out in Appendix A of RD.22/22; (ii) The Designated Head of Internal Audit's opinion of reasonable assurance on the Council's overall systems of governance, risk management and internal control for the year ended 31 March 2022; (iii) The designated Head of Internal Audit's declaration of Internal Audit's independence as required by the mandatory PSIAS; (iv) The Designated Head of Internal Audit's declaration of conformance with the mandatory PSIAS; (v) the performance of the Internal Audit service as shown at Appendix B of RD.22/22. 2) Supported the post audit conversation with managers as a method of continuous improvement.
The Head of Financial Services submitted the Annual Report on Treasury Management (RD.05/22), as required under both the Financial Procedure Rules and CIPFA Code of Practice on Treasury Management. The Executive and the People Panel had considered the matter on 25 May 2 and 9 June 2022 respectively and the decisions were set out in Minutes EX.72/22 and PEP.07/22.
Members welcomed the level of return realised by the Council's investments, particularly the property fund and thanked Officers for their hard work. RESOLVED - That the Treasury Management Outturn Report 2021/22 (RD.05/22) be noted.
Conservative - Mrs Finlayson, Lishman, Mrs Mitchell, Collier (sub) McKerrell, (sub), Shepherd (sub)
Labour – Birks, Patrick, Alcroft (sub), Dr Tickner (sub)
Enquiries, requests for reports, background papers etc to: democraticservices@carlisle.gov.uk