Contact: Katie Brewer
Apologies for Absence
Apologies were received from Cllr Kup, Cllr Braidwood, Cllr Pat Moore and Cllr Pugh, for whom Cllr Rattigan was a substitute.
To receive any declarations of interest. Members are advised to consider the advice contained within the Declaration of Interest advice attached to this Agenda. If a Member declares an interest, they should complete the Declaration of Interest Form.
There were no declarations of interest.
To approve the Minutes of the Governance and Audit Committee meetings held on 25 November 2020 and 10 February 2021, copies attached.
Councillor Garner proposed, Councillor Dexter seconded and members agreed the minutes as a correct record of the meetings held on 25 November 2020 and 10 February 2021.
Mr Webb, Deputy Head of the East Kent Audit Partnership, introduced the report and made the following comments:
· There were 9 new pieces of audit work undertaken in this quarter, to 31 December 2020.
· Substantial assurance was concluded in 5 areas, there were 2 areas of reasonable assurance. The last 2 pieces of work weren’t given an assurance as they were work to ensure processes are followed correctly and to test for fraudulent activity.
· Follow-up is a key part of Internal Audit. The EKAP undertook 2 follow-ups during this quarter, both showing reasonable assurance levels before and after follow up.
· Appendix 3 shows that there are no critical or high-priority recommendations outstanding at the time of follow-up.
· Appendix 4 shows a list of areas that require following up. These are areas with an initial assurance score of ‘limited’ or ‘nil’ and will remain on the list until completed.
· Appendix 5 is a balanced score-card of performance indicators for the EKAP. In addition to this, a client satisfaction questionnaire is used at the end of individual audits, and feedback is very encouraging.
In response to questions from members it was noted that:
· The areas covered in Appendix 4 would be concluded as the recommendations fall due, some will be in time to present to the next meeting of the Governance & Audit committee.
· EKHR monitor staff testing positive for Covid-19 or self-isolating but other than that there has been no change to processes as a result of the pandemic.
Councillor Garner proposed, Councillor Dexter seconded and members approved the Quarterly Internal Audit report, with the following actions noted:
· That the changes to the agreed 2020-21 internal audit plan, resulting from changes in perceived risk, detailed at point 5.0 of the attached report be approved.
Christine Parker introduced the report and made the following comments:
· The Governance & Audit Committee is required to review and assess the Internal Audit work plan for the forthcoming year.
· A considerable amount of work has gone to prepare this draft plan, covering all areas of risk management within the authority.
· The plan is concerned with looking inwards at TDC risks and more broadly considers external influences.
· Key risks are considered against the information gathered and timelines for the proposed reviews against the risks are provided.
· There is a rolling cycle of audits, shown in this report across multiple years. Members are only being asked to consult on the work plan for the following 12 months.
· The level of audit provision, averaging 400 days, compares well against the average in Kent.
During discussion it was commented that:
· Discussions take place between EKAP and Grant Thornton in order to avoid any duplication of effort in work plans.
· This plan is based on what we know now and it may be required to be flexible according to future pressures as the year unfolds.
· It has been proposed by the management team that external auditors cover some specific risks outlined. This is shown in the report and it is the role of the Governance and Audit Committee to agree that there is assurance that all risks are covered.
· Information management and data protection work is underway and hoping to be completed this year, coming into the plan at a later date.
· The Committee considered that they would like a governance and culture review begun during quarter 1. An error in the published Annex was noted, the 10 day provision against this heading should in fact be against the Cloud Computing/Digital review. It is proposed that Grant Thornton undertake the governance and culture review.
· The effects of the global pandemic on third party risk, specifically the risk of contractor non-performance, is a consideration going forward.
The report author advised that the annex in the agenda pack was an older copy of the Internal Audit Plan 2020-21 than intended, and as such was missing some information. An overview of the updates was shared with members. The correct version is attached to these minutes.
Councillor Garner proposed, Councillor Dexter seconded and members agreed that the report be approved with the amendment that:
· Progress of a Governance and Culture review, undertaken by Grant Thornton, is assessed at the next meeting of the Governance & Audit Committee.
Mr Blundell, Director of Finance, introduced the report.
During consideration of the item it was noted that:
· There has been no change to risk scores since November.
· The risk related to EKH performance and transition is no longer considered a key risk, but will continue to be monitored by officers.
· Clarification was given on the political stewardship risk; that it is purely about the issue of no overall political control in the council and the associated difficulties in decision making etc. It is not connected to member and officer relations, as they do not currently present issues.
Councillor Garner proposed, Councillor Dexter seconded and members approved the review of corporate risks.
Chris Blundell introduced the report and made the following comments:
· There are no significant changes to accounting policies from the 2019-20 report.
· The housing debt write-off policy is being reviewed and there may be a subsequent amendment brought to the committee in due course.
Councillor Garner proposed, Councillor Dexter seconded and the committee agreed the following:
1. That the committee agrees the policies as set out in Annex 1 of this report;
2. That the committee notes the proposed changes to the statutory audit deadlines for 2020-21.
Officers explained that items 8, 9 & 10 had been deferred from the November meeting of the Governance & Audit Committee, making the following points:
· Due to accounting issues in relation to the sale of Dreamland, that arose very late in the process, the accounts couldn’t be signed off at the meeting in November.
· At the end of 2019/2020, the sale of Dreamland was uncertain and the settlement of the Compulsory Purchase Order was ongoing.
· During the process the figure connected to the CPO fluctuated considerably, based on advice from external lawyers.
· They are now confirmed and we can finalise the accounts based on reliable figures.
· The Council issued a report on these matters, which can be viewed on the website: https://www.thanet.gov.uk/sale-of-dreamland-achieved/
Ms Ironmonger, Director - Grant Thornton, introduced the report and highlighted the following:
· Grant Thornton is intending to issue an ‘unqualified opinion’ and an ‘emphasis of matter’ paragraph. This is not a qualification, but highlights the disclosure in the accounts relating to the material uncertainty issued by property valuers in March 2020.
· Grant Thornton is not giving a value for money conclusion for 2020 at the moment. This is due to an unresolved objection to the 2018/19 accounts, which prevented the value for money conclusion being made.
· Ongoing financial sustainability was highlighted as a significant challenge that TDC needs to keep a focus on to ensure we are able to replenish reserves in the future.
· In terms of governance, Grant Thornton are going to specify the terms of reference for areas that they can look at, which don’t impact any ongoing enquiries.
· Acting promptly to bring EK Housing back in house when issues were raised has made TDC’s arrangements more robust.
During discussion the Committee was advised of the following points:
· GT’s responsibility is to review the arrangements TDC has in place to manage issues such as ongoing financial sustainability.
· TDC has very low reserves, however, year on year we are improving our position. Covid will have impacted this, but up to 2020 the balance sheet position has been edging in the right direction.
· It was clarified that the ‘unsustainable level of reserve’ mentioned is there to note that repeatedly relying on reserves is a risk and should be avoided.
· The Council’s existing Medium Term Financial Strategy sets out a policy to begin replenishing our reserves in 2022/23. Officers will consider bringing the draft medium term financial strategy to G&A in the future.
· TDC has already started replenishing the funds identified to address the financial implication of Covid and the situation isn’t as bad as first thought. This is due to a combination of action taken in-year to mitigate the effect of Covid and government support given in addition to that.
· The report on objections relating to the port of Ramsgate is nearing a conclusion, a definitive timeframe cannot be given at this stage.
· Grant Thornton will comment on the process of the Investigations and Disciplinary Sub-Committee after it has reached a conclusion.
Members noted the report.
Chris Blundell introduced the report and make the following comments:
· There are requirements of the external auditor to establish an understanding of management processes and how the Governance & Audit Committee maintains oversight of these processes.
· This is detailed in a letter addressed to the previous Chair and it is required that the response comes from the Chair of the committee, not an officer. Therefore, the committee needs to be assured that the information proposed to be submitted to the external auditor, compiled by officers in collaboration with the Chair, is sufficient.
Councillor Garner proposed, Councillor Dexter seconded and the committee agreed to note and approve the responses to the letter from Grant Thornton as set out in Annex 2.
Chris Blundell presented the statement of accounts with the following notes:
· This report was initially deferred because of the issues surrounding the sale of Dreamland.
· Therefore the council didn’t make the target deadline of 30 November 2020 and subsequently published a statement on the website to explain why.
· More than half of local authorities didn’t meet this deadline due to the pandemic.
· The Government is considering recommendations to make accounts more accessible in future.
· The comprehensive income and expenditure statement shows a 42m net cost of services (including a 19.5 million pound valuation change of Dreamland assets). However, the majority of this net expense is adjusted to non-usable reserves and does not impact on our usable reserves.
· Our net usable reserves increased by £678k to £48m.
· There was a 1 million pound increase in the general fund reserves (to 13.5 million), but it should be noted that this was pre-Covid and it is anticipated that we will need to use reserves in this year's accounts also.
· The Council’s net worth reduced from £196m to £178m. Mainly due to the reclassification of Dreamland, but there was also an increase in our pension liability.
There were no questions from members. Councillor Garner proposed, Councillor Dexter seconded and the committee agreed the following:
1. That the Committee approves the Statement of Accounts for 2019-20.
2. That the Committee notes the Letter of Representation to Grant Thornton issued by the Deputy Chief Executive and s151 Officer.