Agenda and minutes

There were no apologies for absence.

There were no declarations of interest at this point in the meeting.

RESOLVED

            That the minutes of the meeting held on 21 September 2015 be signed by the Chairman as a correct record.

(To receive a briefing from the Chief Executive and each of the Executive Directors in order to provide the Committee with some insight on how the potential changes and financial challenges ahead may impact on assurance arrangements)

The Audit Committee played a vital role in the Council's governance and assurance arrangements, and to help the Committee undertake this role effectively, members received a briefing from the Chief Executive and each of the Executive Directors in order to provide the Committee with some insight on how the potential changes and financial challenges ahead may impact on assurance arrangements.

Briefing by the Chief Executive, Tony McArdle

Members were advised that it was very difficult to start a discussion without talking about money, and how could the authority make the money go as far as it could whilst still meeting the objectives of the Council.  The expectation was they the authority was about half way through the level of spending reductions it would be expected to make.  £130m had already been taken out of the budget, and there may still be another £130m that would need to be taken out, possibly more if the awaited settlement was unfavourable.  There would be a need for some very difficult budget decisions.

The Council's ability to balance the budget falls into four broad areas:

·         Demand management – managing the demand for services, by being better at presenting information upfront, working with the NHS to help people to stay in their homes for longer, helping them to not have a crisis.  This would rely on partnership working, and the Council could not control that agenda, but could influence it;

·         Costs – reduction in the costs of providing services;

·         Efficiencies – reducing the inefficiencies in the way that the Council operated;

·         Income – this was what was received from government/through council tax/business rates, fees and charges, etc;

Over the last five years, the Council's income has been reduced, and there had been a need to make some cuts in services.  A lot of work had already been done in demand management so the Council could meet people's needs at an earlier stage in the process.  The authority was a substantially more efficient organisation than it used to be.  It had to become more efficient, more productive, and there had been changes in the way that staff were managed.  There was a need for better use of technology which could lead to an increased productivity in the work force.

What underlined most of this was risk, and there would be a need to take more risks.  There was a likelihood that more things would go wrong more often, but the authority should be able to manage it and the risk would be at a low level.  It was also likely that things would be done less efficiently, less effectively, less quickly as the authority would not have the resources to respond as it previously did.

The organisation could become less resilient, as there would be fewer resources behind each service, but while still doing the same level of work.  Service areas would be staffed to the lowest level of demand, and this would be reflected in the time it took for tasks to be completed.  When  ...  view the full minutes text for item 32.

(To receive an update on the Agresso Project)

The Committee received a verbal update from the Chief Information and Commissioning Officer in relation to the most up to date situation with the Agresso system.

It was reported that some signs of progress could be seen.  Shortly after the last meeting of the Audit Committee, where senior officers from Serco were present, Serco took the decision to change some of the staff at the Lincoln office.  Not everything which was outstanding had been achieved, but it was acknowledged that the changes had only taken place a short time ago, but there had been some progress.  The backlog of queries in relation to payroll was being reduced, and it was hoped that it would be cleared by the end of the calendar year.

There had been signs that October's payroll had been better than September's and fewer new issues had been reported.  It was expected to see further improvement in the coming months.

Most of the areas of concern had been related to payroll.  Where deductions had been taken from staff, this had been paid to HMRC, however, the information on who had paid what had not yet been transferred across.  Serco were putting a lot of energy into fixing the problems.  There was still some way to go to fix the issues for council staff, but the issues relating to schools were almost clear.

The system issues were making reasonable progress, but a firm date for when all issues would be resolved by had not been provided.  An updated version of the Agresso system needed to be implemented, but officers wanted to wait until the system was more stable before installing it.

The budget monitoring report was 90-95% correct, but the biggest risk from the finance point of view was that the year end was not far away, and it was a statutory deadline.  There was a high risk of the accounts not being produced on time. 

Members were provided with the opportunity to ask questions to the officers present in relation to the update provided, and some of the points raised during discussion include the following:

·         Concerns were raised regarding people who had to enter claims for tax credits as they would not be able to provide evidence of their earnings. 

·         It was very important that the Committee understood that the Chief Executive and Corporate Management Board were spending time working with senior Serco officers, and have been considering what the right options were to resolve the issues that had been experienced;

·         There had been reasonable performance since the new staff took over;

·         It was noted that 100 other authorities were using Agresso, so it was queried why so many issues were being experienced;

·         It was noted that a lessons learned report would not be produced until all problems had been resolved;

·         The implementation was a significant part of the problem, and some of the staff that transferred to Serco had not had as much training as required;

·         There were some systems issues, but it was not  ...  view the full minutes text for item 33.

(To receive a report which provides an update on the Council's fraud investigation activities and information on progress made against our Counter Fraud Work Plan 2015/16)

Consideration was given to a report which provided an update on the Council's fraud investigation activities and information on progress made against our counter fraud work plan 2015/16.

It was reported that good progress had been made against the work plan for 2015/16.  Officers were currently involved in ongoing work in a number of key fraud pro-active areas and had carried out extensive work on fraud awareness with various stakeholders.

Members were advised that six fraud referrals had been received since April 2015, and there were currently four live cases, and two which were now concluded.  Members were guided through the report and some of the points highlighted included the following:

·         Significant progress on 2 of the 3 areas carried forward from the 2014/15 Counter Fraud Work Plan;

·         The Lincolnshire Counter Fraud Partnership had been fully operational since May 2015;

·         The Lincolnshire Counter Fraud Partnership was leading on awareness and promotional work across the county, which would include 'pop up' displays in reception areas and implementing a flexible fraud e-learning module for council employees;

·         At the time of writing of the report, £18.5K had been recovered through data matching reports as part of the National Fraud Initiative 2014/15;

The Committee was provided with the opportunity to ask questions to the officers present in relation to information contained within the report and some of the points raised during discussion included the following:

·         It was queried whether the Council would have to carry out more work to pursue cases of fraud through the criminal justice system if police numbers were reduced.  Members were informed that this was a possibility;

·         There were arrangements in place for the authority to recover any costs incurred through prosecutions, as well as compensation arrangements;

·         It was commented that the Counter Fraud activity had made a difference, and activity through the whistle blowing campaign had increased;

·         Work that had been carried out with Adult Care around financial abuse had been successful;

·         It was suggested whether a training session on Counter Fraud could be held for the Committee.

RESOLVED

            That the outcomes of the Council's counter fraud work be noted.

(To receive a report which provides an update on how the Council's biggest risks are being managed as well as reporting on the progress made in assisting the Council to adapt and change the way it 'thinks' about risk)

Consideration was given to a report which provided an update on how the Council's biggest risks were being managed as well as reporting on the progress made in assisting the Council to adapt and change the way it 'thinks' about risk.

The key risks were highlighted to the Committee, and it was reported that a full refresh of the strategic risk register would be carried out in 2016.

RESOLVED

            That the current status of the strategic risks facing the Council be noted.

(To receive a report which provides the Committee with the proposed scope for undertaking the external assessment as required by the Public Sector Internal Audit Standards as part of Internal Audit's Quality Assurance and Improvement Programme)

It was reported that internal audit within the public sector in the UK was governed by the Public Sector Internal Audit Standards (PSIAS) which had been in place since April 2013.  The Standards required a periodic self-assessment and an external assessment at least once every 5 years as part of Internal Audit's Quality Assurance and Improvement Programme.

The report provided the Committee with the proposed scope for undertaking the external assessment.  It was reported that the deadline for the external assessment was March 2018, but the County Council had decided to undertake this assessment earlier, and it had gone through the procurement team.  Members were advised that all potential suppliers had previously carried out this type of work.

RESOLVED

1.    That the proposal to undertake a full external assessment of the Council's Internal Audit Function in 2016 be endorsed;

2.    That the Chairman of the Audit Committee and the County Finance Officer be approved as project sponsors.

(To receive a report which provides an opportunity for the Committee to consider its Terms of Reference)

(Councillor W S Webb left the meeting at 12.55pm)

Consideration was given to a report which presented the Audit Committee's Terms of Reference for review as this is seen as best practice.  Members were advised that the Terms of Reference had been reviewed and updated to reflect good practice guidance as outlined CIPFA's Practical Guidance for Audit Committees which provided local authorities with suggested terms of reference.

RESOLVED

1.    That the new terms of reference attached at Appendix C of the report be considered;

2.    That the new terms of reference be recommended to the Council for approval.

(To receive a report which presents the opinion of the Council's External Auditor following the 2014/15 external audit of Lincolnshire County Council and the Pension Fund)

Consideration was given to a report which presented the opinion of the Council's External Auditor following the 2014/15 external audit of Lincolnshire County Council and the Pension Fund. 

Members were advised that the Council's External Auditor had issued an Annual Audit letter which summarised the findings from the 2014/15 external audit and had issued an unqualified opinion on Lincolnshire County Council's financial statements and on the pension fund annual report on 29 September 2015.

In considering the Annual Audit Letter 2014/15, members commented that they were pleased that a good sized paragraph had been included regarding the issues experience during implementation of the Agresso system, and that the comments were very measured.

RESOLVED

            That the contents of the report be noted.

(To receive a report which provides an opportunity to consider an update from the KPMG, the County Council's External Auditors, on the 2015/16 Audit deliverables)

Consideration was given to a report from KPMG, the County Council's External Auditors, which gave an update on the 2015/16 Audit deliverables.

It was reported that the focus was the same as the focus for 2014/15, and the External Auditors would continue to work with officers, and would be reported back to the Committee as and when required.

Members were advised that the current contract would be extended to cover 2017/18, and it was expected that further guidance would be made available.

It was noted that this would not need to be considered by the Pensions Board.

RESOLVED

            That the progress report be noted.

(To receive a report which provides a detailed update on the status of all overdue high risk agreed actions from previous audits)

Consideration was given to a report which provided a detailed update on the status of all overdue high risk agreed actions from previous audits.

It was reported that 10 of the 27 recommendations had been actioned within the agreed timescales.  For the remainder, details of delays and revised action plan were recorded.  Members were advised that the report went through each outstanding action in detail, and provided revised completion dates.

It was commented that Agresso was not the problem, but the way it had been implemented.  It was the implementation of the system which had caused problems.  Members were advised that the County Council was the biggest client Agresso had had that wanted to use most functionality of the system.

It was noted that it was important to stay up to date on the issues with adult social care.

RESOLVED

            That the status of the listed findings be noted, and that the Committee receive a detailed update in the future on progress made with some or all of the actions.

(To receive a report which provides the Committee with information on the core assurance activities currently scheduled for the 2015/16 work plan)

Consideration was given to a report which provided the Committee with information on the core assurance activities currently scheduled for the 2015/16 work plan.

Members were provided with the opportunity to comment on the current work plan, and some of the points raised during discussion included the following:

·         It was noted that one of the issues with the risks was that the authority did not know what funding would be received in the coming years. 

·         It was thought that the Committee should keep a watching brief on the Agresso situation;

·         The pace of change and volume of change required would be a risk;

·         There were concerns regarding the appraisal system, and it was commented that if it was working well staff should be identifying their training needs;

·         Some risks would always be risks, and they would just need to be managed;

The Monitoring Officer referred to a matter of principle which had been raised by a particular Freedom of Information (FOI) Act enquiry.  The writer had requested details about risk registers held by the Council.  The request was resisted on a number of legal grounds allowed by the Act.  The main argument was that officers were able to be open and transparent with councillors about risks that could make the Council vulnerable to exploitation.  Should there be public disclosure of such risks, it was likely that officers would be more reluctant to bring these to attention.  Furthermore, the Council had a lot of risk registers, some of which were public, some of which were for management purposes only.  Seeking these out and possibly redacting them for an FOI request would require a lot of staff time.  The Monitoring Officer asked the advice of the Committee.  There was broad support for the stance taken and members expressed concern that disclosure of these registers could cause a situation where officers were reluctant to provide information to councillors that could be detrimental to the interests of the Council and the public purse.

RESOLVED

1.    That the Audit Committee's Work Plan be noted;

2.    That the outstanding actions designed to improve the effectiveness of the Committee be noted.