Agenda and minutes

There were no apologies for absence.

There were no declarations of interest.

RESOLVED

That the minutes of the meeting held on 23 July 2018 be signed by the Chairman as a correct record.

(To receive a verbal update from Fiona Thompson (Service Manager – People Management) on the Payroll Control Environment)

Consideration was given to a presentation which updated the Committee on the payroll control environment and a summary of improvements since the last update in June 2018.

The Service Manager – People provided detailed information as part of the presentation, which covered the following areas: -

·    Summary of measures to improve the control regime;

·    Checks undertaken by internal audit;

·    Overview of recent performance;

·    Trend in advances paid;

·    Incorrect / Late data – Actions Taken and Next Steps; and

·    Management of historic under / overpayments.

Members were provided with an opportunity to ask questions, where the following points were noted: -

·       The Committee was advised that the Pay Statements Project had not identified any incidences of fraud and that the errors found were as a result of input and/or system errors.  Furthermore, it was advised that as part of the assurance to the business, dedicated work was being carried out on counter fraud and as part of this data analytical work would be carried out on source data;

·       It was advised that a further update would be provided to the Committee in November 2018 on progress with the Payroll Control Environment, and this would include an update on Year 3 for Fire and Rescue and for Corporate and Schools for the 3 years. It was confirmed that milestones were built into the project and the project was currently working to a challenging timeframe of November 2018;

·       Improvements had been made to Business World On (Agresso), which had reduced the number of manual workarounds and had introduced pre-populated and simplified forms to assist with those putting data into the system.  A significant rebuild was planned, which would bring improvements to the system;

·       A specialist business support team had been put in place to assist both School Business Managers and Lincolnshire County Council managers for duration twelve months to validate data and support corporate and schools;

·       It was confirmed that significant training had been provided to schools when the system was initially implemented and training was provided to newly appointed School Business Managers.  The Committee requested that the training was reviewed to ensure it met the needs of the School Business Managers;

·       A Councillor highlighted that Serco's error rate was down to 0.31% and queried the County Council's error rate.  It was advised that for corporate payroll, excluding schools, 32% of the forms submitted were incomplete, incorrectly completed or submitted beyond the deadline.  However, those errors were not included as part of the payroll, as they were identified prior to being processed.  It was highlighted that this data was monitored on a monthly basis and the relevant directors were notified of errors within their respective areas.  It was requested that for the next meeting of the Committee, context was provided as to the 32% of incorrect or late forms, specifically the number of inaccurate or late forms submitted by the County Council and what protocols were being implemented to reduce this number.  It was also requested that the Committee received detail  ...  view the full minutes text for item 28.

(To receive a report by Lucy Pledge (Audit and Risk Manager), which invites the Committee to note the outcomes of Internal Audit's work and identify any actions that need to be taken)

The Committee considered a report which provided details of the audit work during the period 13 June 2018 to 11 September 2018; advised on the progress with the 2018/19 plan; raised any other matters that might be of relevance to the role of the Audit Committee.

It was highlighted that during the period 13 June – 11 September 2018 four audits had been completed: four to final assurance reports; and one final school audit report.  A copy of the Internal Audit Progress Report was detailed at Appendix A to the report.

Appendix 3 to Appendix A was highlighted to the Committee, which detailed the 2018/19 Audit Plan to date. 

There were currently nine audits at draft report stage; eleven 2018/19 audits in progress; page 21 of the agenda pack referred.

As detailed within the June 2018 progress report, the Committee had received two audits concerning the Capital Programme and Fuel Cards, which had both received Low Assurance.

The Operations and Financial Advice Manager was in attendance at the meeting and provided an update on actions arising from the Internal Audit Report – Capital Programme, which was detailed at Agenda Item 12. 

The Committee was advised that in response to the recommendations as outlined in the Internal Audit:

-      A working group had been established to progress the recommendations on a Capital Reporting project;

-      Any capital schemes that resulted in expenditure greater than £1m were now coded differently within the system to assist with improved monitoring;

-      When major capital schemes were of high risk or high expenditure, a dedicated finance representative was allocated to the relevant project boards;

-      A Capital Strategy was being developed, which would provide a framework for decision-making for future capital expenditure;

-      The reporting of overspend had been formalised so that it was clear when and where the overspend should be reported;

-      Financial training had already been delivered during 2018, which had covered capital and future training sessions would be held during October 2018 covering capital;

-      Work was being undertaken on the procedures and processing of Target Change forms.  This work was expected to be completed by October 2018;

-      The controls that had been put in place had ensured that there was an increase in transparency with the Council's capital programme.  However further work could be undertaken to improve the transparency and that an increase in scrutiny on the approval of capital and accountability was cited as an example.

The Committee was provided with an opportunity to ask questions, where the following points were noted: -

·       Although good progress had been made with the recommendations, the Committee was advised that this had not been initially possible, owing to the focus on the annual closure of accounts.  Following the closure of accounts significant progress had been made with the recommendations and it was advised this would continue;

·       The planned increase in capital expenditure for IMT at the County Council was discussed and it was advised that Finance Service teams were awaiting  ...  view the full minutes text for item 29.

(To receive a report from Mark Surridge (Mazars), which provides the Committee with a brief introduction to the Council's newly appointed External auditors, Mazars)

The Committee considered a report which provided a brief introduction to the Council's newly appointed external auditors, Mazars.

Mark Surridge and Mike Norman were in attendance at the meeting and provided Members with a brief introduction.

The Committee was reminded that following a tender process conducted by the Public Sector Audit Appointments in 2017, Mazars had been appointed to provide external audit services to 18% of English local authorities, including Lincolnshire County Council.  The contact had commenced on 1 April 2018, for duration of five years.

Mazars prided itself with a high standard of audit services and this was demonstrated by Mazars' achieving an overall rating for audit quality as green.

It was advised that Mark Surridge would be the key contact for the Management and the Audit Committee.  He would have overall responsibility for delivering high quality audit and would regularly attend meetings of the Audit Committee. 

It was also advised that Mike Norman would be responsible for the work performed on-site and would be a regular contact through the audit year.

The County Finance Officer advised that the County Council had received had completed and returned an extensive questionnaire to Mazars, providing relevant information for their commencement of external auditor for the Council.

RESOLVED

That the introduction from Mazars be noted.

(To receive a report by Rachel Abbott (Audit Team Leader), which provides the Committee with an update as to the progress made with the refresh of the Strategic risk register and an update on risk management generally)

Consideration was given to a report which provided the Committee with an update as to the progress made with the refresh of the Strategic Risk Register and an update on risk management generally.

The Committee was advised that following consideration of the update risk management report at the meeting of the Committee in March 2018, the risks contained within the strategic risk register and the new risks that had been added would be presented to Corporate Management Board for agreement. An updated risk management strategy was detailed at Appendix A to the report.

It was hoped that final agreement would be sought from Corporate Management Board in December 2018 and reported back to the Audit Committee in January 2019 with a completed strategic risk register. 

Pages 39 and 40 of the report detailed the risks contained within the current risk register, their risk rating and assurance level.

It was highlighted that in April 2018 the Risk Management Team of Lincolnshire County Council had won a Public Finance Innovation Awards in the category of Innovation in Risk Management.  The Committee congratulated the Team for achieving this award.

Members were provided with an opportunity to ask questions, where the following points were noted: -

·       It was important for the County Council to not become complacent with cyber security;

·       It was confirmed that the risks contained within the risk register were currently under review and the Committee would receive an update at its meeting on 28 January 2019.  It was confirmed that officers from the Team met with the risk owners on a quarterly basis to review progress.  The Committee could request the owner of a risk that was of interest to attend a future meeting of the Committee;

·       It was highlighted that Corporate Management Board, as the accountable risk owners, would be in attendance on 28 January 2018, as the Committee was due to consider an item on Combined Assurance Status Reports;

·       The development and introduction of controls could see a shift in assurance levels;

·       It was suggested that the risk owners for the risk areas: Recruitment and retention of staff in high risk areas and Contracting – Significant Contracts should be invited to attend future meetings of the Committee to allow the Committee to examine both areas in further detail, as both risk areas had amber risk ratings with Limited Assurance.

RESOLVED

(1)  That the content of the report be noted.

(2)  That the risk owners for the risk areas: Recruitment and retention of staff in high risk areas and Contracting – Significant Contracts be invited to attend future meetings of the Committee.

(To receive a report by Lucy Pledge (Audit and Risk Manager), which provides the Committee with information on the core assurance activities currently scheduled for the 2018/19 work plan)

Consideration was given to a report which provided the Committee with information on the core assurance activities currently scheduled for the 2018/19 work plan.

As agreed in Minute 32, the risk owners for the risk areas: Recruitment and retention of staff in high risk areas and Contracting – Significant Contracts be invited to attend future meetings of the Committee.

The Committee was advised that a Local Government Association Peer Review was scheduled for March 2019. 

The Committee was reminded that a meeting of the Audit Committee Forum was scheduled for 16 October 2018 at the North Kesteven District Council offices in Sleaford.  Members were requested to notify the Audit and Risk Manager of their availability for the meeting. 

It was highlighted that agreement had been given by the meeting of County Council on 14 September 2018 to a second added member to be added to the Committee membership.  The recruitment process had commenced.

RESOLVED

That the Work Plan, as set out in the report, and additional comments made be approved. 

(To receive a briefing from Dianne Downs (Team Leader – Counter Fraud and Investigations)

Consideration was given to a presentation which raised awareness of fraud; outlined the role of the Committee in ensuring that Counter Fraud arrangements were effective; and

Detailed information was provided as part of the presentation, which covered the following areas: -

·    Overview;

·    Why fraud matters;

·    Why fraud cannot be ignored;

·    Fraud risks;

·    Examples of fraud;

·    The Committee's role in ensuring effective Counter Fraud arrangements;

·    Counter-fraud best practice;

·    Fraud responsibilities;

·    Lincolnshire Counter Fraud Partnership; and

·    Useful resources and publications.

It was advised that Councillor A P Maughan had volunteered to become a Champion for Counter Fraud.

Members were provided with an opportunity to ask questions of the officers in relation to the information contained within the presentation and some of the points raised during discussion included the following: -

·       Lincolnshire County Council took a zero-tolerance approach to fraud and would report all instances of fraud.  It was highlighted that publishing incidences of fraud can act as a deterrent;

·       A member suggested that the local NHS should form part of the Lincolnshire Counter Fraud Partnership.  In response, it was advised that the partnerships had been initially introduced and funded by the Department for Communities and Local Government for local authorities.  Officers agreed to consider this suggestion further;

·       It was agreed that the guide: A Councillor's workbook on bribery and fraud prevention be circulated to the Committee electronically, alongside a copy of the slides;

·       A slide of fraud risks outlined that local government fraud equated to £7.8 billion.  It was noted that this was an estimated cost to local authorities based on the Annual Fraud Indicator 2017.  It was suggested that the figures for the types of fraud committed in Lincolnshire be provided at a future meeting of the Committee;

·       The importance of publishing the Council's counter fraud arrangements were discussed; and

·       A counter fraud progress report would be provided to the Committee in November 2018.

RESOLVED

That the content of the presentation on fraud awareness be noted.

RESOLVED

That in accordance with section 100(A) (4) of the Local Government Act 1972, the public and press be excluded from the meeting for the consideration of the following item on the grounds that if they were present there could be a disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972, as amended.

(To receive an exempt report by Matt Drury (Principal Investigator), which provides information on the Fraud Risk Register)

Consideration was given to an exempt report which provided information on the annual update of Lincolnshire County Council's Fraud Risk Register.

A number of questions from members were responded to by officers.

RESOLVED

That the recommendation, as detailed in the exempt report, be approved.

A copy of the Internal Audit Report – Fuel Cards was circulated with the agenda pack for information.

A copy of the Internal Audit Report – Capital Programme was circulated with the agenda pack for information.