Minutes for Regulatory and Audit Committee meeting, Nov 25 2009, 10.00AM official page

Apologies for absence were received from Mrs M Baldwin. Members noted that Mr N Hussain was substituting for Mrs Baldwin for the duration of the meeting.

To declare any personal and prejudicial interests

There were no declarations of interest.

of the meetings held on 23 September 2009 and 30 September 2009, to be confirmed as a correct record.

The Minutes of the meetings held on 23 September 2009 and on 30 September 2009 were both agreed and signed as correct records.

The following amendment was agreed to the Minutes of 23 September 2009:

·         Page 3 – second last paragraph, first bullet point should read, “…The Audit Commission proposed to seek a lower fee than the scale fee for the Pension Fund Audit for the 08/09 and 09/10 accounts…”

Ian Dyson, Chief Internal Auditor, referred to Page 9 (Minutes of the meeting held on 30 September 2009) and confirmed that a facility did exist for Adult Social Care clients to pay by direct debit.

Clive Palfreyman, Assistant Head of Finance, Managed Services

The Committee received the Report of Clive Palfreyman, Assistant Head of Finance. The Cabinet Member for Resources was also in attendance.

Clive Palfreyman said the following:

·         The public profile of Treasury Management had risen over the past year.

·         The Audit Commission had published a report in March 2009 called ‘Risk and Return.’

·         The Department for Communities and Local Government had published a report in June 2009 called ‘Local Authority Investments.’

·         Buckinghamshire County Council (BCC) lent money to other organisations (building societies, banks, other authorities). The amount of money lent fluctuated between £140m and £200m.

·         BCC also borrowed money (c. £234m) through long-term pay-back contracts, from central Government and from financial markets.

·         BCC needed cash-flow to pay suppliers and employees.

·         It was proposed that a six-monthly reporting process be established, with the Regulatory and Audit Committee looking at the annual Treasury Management Strategy each January before it went to full Council. It was also proposed that the Committee consider the annual outturn report each June. Training for members of the Regulatory and Audit Committee was offered.

·         The Treasury Management Strategy Statement for 2009/10 was shown on pages 21 onwards. A Treasury Management Principles Document was also available.

·         Pages 27 onwards showed a Cabinet Member decision to update the Treasury Management Policy which had been taken under the urgency rule, to mitigate risk to BCC.

Members then asked questions, and the questions and answers are summarised below.

Page 22 – Minimum Revenue Provision (MRP) Policy Statement. Where does the money go?

MRP is a way of fairly controlling loan management, by setting aside some income to meet loan repayments. This prevents the Public Works Loan Board (PWLB) being disadvantaged through local authorities manipulating different interest rates that the PWLB offers.

What are the criteria which BCC uses for lending money to other authorities?

The criteria are broadly based on the value of the return. The lending list has tightened over recent months, but has not impacted on our ability to lend to other local authorities.

Page 16, paragraph 7 – it is not clear how the role of the Regulatory and Audit Committee is separate from the Treasury Management monitoring role. Who does monitor Treasury Management?

There is an ongoing discussion regarding this. The Cabinet Member for Resources, the Leader and the Cabinet are all responsible for Treasury Management and will inform officers if they feel that the risk levels are too high. The responsibility of the Regulatory and Audit Committee is to seek assurance that this has happened.

The Committee is also interested in whether Cabinet is taking decisions at the right level of risk.

Cabinet is part of the process which the Committee needs to challenge.

Page 15 – The table shows three recommendations which are not met – why is this?

Recommendation one is about developing the role of the Committee. Recommendation two relates to the updated CIPFA code which has not yet been published. Recommendation three is not required at BCC as there is already adequate challenge in place.

As regards the CIPFA code, we believe that we have pre-empted the changes and that we have followed good practice.

It is clear that there is very limited choice in terms of investments which are low risk.

There is no investment without risk. We seek to mitigate the risk as far as possible, which is why we now only invest in ‘AAA’ rated countries, although the vast majority remains within the UK. A balance is sought between risk and reward. There have been a number of discussions about working with local businesses and organisations.

BCC relies on the income from Treasury Management to fill a ‘gap’ in the Medium Term Plan.

The Cabinet Member for Resources told the Committee that he had a great deal of confidence in the officers operating the investments.

Ian Dyson, Chief Auditor

The Committee received the Report of Ian Dyson, Chief Internal Auditor.

Ian Dyson told members that there were no material issues to report. The delivery of the Audit Plan by 30 April 2010 remained an achievable, but tight, target.

Aylesbury Transport Hub

The Internal Audit team had found governance issues re: the project methodology and the level of scrutiny by the Finance Service. There had not been sufficient challenge of the stated overspend figure of £0.5m, and the real overspend figure was nearer £1m.

There were potential disputes between the contractor and Jacobs, and Legal Services had not been engaged early enough in these.

All recommendations had been followed positively, and these would be followed up.

The overspend figure was not material to affect the External Audit of the Accounts.

Limited Assurances

Paragraph 4.1 showed three audits which had received limited assurance. These were in regard to imprest accounts of very low risk, with an overall issue regarding the management of imprest accounts. This was being looked at.

The Internal Audit team actively re-audit all limited assurance areas.  Page 42 showed a revised programme of follow-up audits, and the results of these would be brought to the Regulatory and Audit Committee. These follow-up audits would all be completed within the current financial year.

The Internal Audit team also made high and medium priority recommendations and would report to the Committee on whether these had been implemented. For 2009/10, the Performance Plus system would be used for reporting back to Directors and to the Committee.

For 2008/9, a spreadsheet version was available.

The proposed reporting process had been sent to Heads of Service and to COMT for consultation. The Chief Executive had no concerns over the process. It would be taken to Extended Management Team on 16 December 2009.

A member referred to page 40 and asked for the current status of The Mandeville School. Ian Dyson said that there were historical issues regarding the controls. The school was audited annually, and the last audit had found reasonable controls, which was a large step forward. However governance corrections still needed to be made to meet FMSIS criteria.

A member referred to page 39 and asked about the assurances described for FMSIS audits. Ian Dyson said that the criteria were the same as for normal audits, and the three levels were met, partly met and not met.

A member asked if FMSIS was an accurate reflection of the work of a governing body. Ian Dyson said that it was an excellent process, and looked at the information provided to governors, the training given, and the minutes of governor meetings (to ensure there had been sufficient challenge). A statement of internal control was issued annually. By the end of March 2010, all schools would have been through FMSIS once. The focus next year would be to look at the effectiveness of governors in scrutinising the financial management in the school (which would include the statement of internal control).

The governing body of a school was accountable for the management of the accounts. If governors did not feel they were sufficiently trained then this should be flagged up.

Mick West (Audit Commission) noted that follow-up of recommendations could also be extended to recommendations from external audit.

Maureen Simmons, Audit Manager

Maureen Simmons, Audit Manager, gave a presentation about the process of an Internal Audit assignment. The presentation would be continued at the next meeting. A copy of the presentation would be sent to members (attached).

Terry Carter, Assisting Head of Service, Trading Standards

The Committee received the Report of Terry Carter, Assistant Head of Trading Standards.

Terry Carter told the Committee the following:

·         Enforcement activities for 2010/11 were listed on page 45, and included enforcement of new pictorial health warnings on new cigarette packs. From 1 October 2009, any non-pictorial packs were likely to be counterfeit or smuggled into the country from non-EU states.

·         Approximately 30 test purchases would be made.

·         If a retailer sold illegally in a test purchase, they would automatically be re-tested later in the year, and would be included in the monitoring records.

Members then asked questions, and the questions and answers are summarised below.

What is the penalty to a retailer who is found to be selling cigarettes to under-age persons?

A fine of up to £5000 is issued for an offence. Three offences can mean a removal of the shop’s licence. Fixed penalty notices are also possible, with an option of training instead of the notice. For small shops this is a deterrent. Publicity is a bigger deterrent for larger retailers.

You mentioned smuggling of cigarettes. Is this widespread?

Yes there is a massive market in cigarette smuggling. In some premises, the smuggled goods are sold under the counter. Buckinghamshire does not have a larger problem with this than other areas.

How many complaints about retailers do you receive?

Last year there were 22 complaints (concerning 19 premises), which was about the normal level, although there could be up to 30 a year. We respond to the complaint by test purchasing the retailer concerned.

Is the work you do on cigarette sales linked to work on alcohol sales?

The projects may be joined but test purchasing of the two products are carried out separately.

Is proxy-buying an issue?

Proxy-buying is less of an issue with cigarette sales than with alcohol sales. With cigarettes, proxy supply is an issue. Statistics show that a much higher number of young people under the age of 18 have tried cigarettes than have purchased cigarettes.

Richard Schmidt, Assistant Head of Finance (Planning and Reporting)

The Committee received the Report of Richard Schmidt, Assistant Head of Finance. Mark Hemming, Accountant (Reporting without VAT), was also in attendance.

Richard Schmidt told members that the Report was an update on the progress of implementing International Financial Reporting Standards (IFRS). Progress was as expected, and work was continuing steadily. A firmer version of the Code of Practice was due to be published imminently.

The Finance Team was working to deflect any effect on the taxpayer.

IFRS had been introduced for public sector authorities so that accounting across the world could be comparable (public and private company accounts).

Component accounting would be required, which may mean that land was separated from buildings in the accounts. This was dependent on Property Services having their records in order, and new software was being purchased to assist with this.  Advice was also being awaited from the National Institute of Surveyors.

The full value of resources allocated for the implementation of IFRS had not been needed, and an underspend of £20 000 was predicted. It was proposed that this underspend be set aside in case it was needed in the future.

When the first set of accounts was brought to the Regulatory and Audit Committee under the new format, training would be provided for members on the changes in format under IFRS (perhaps in conjunction with members from Oxfordshire County Council).

Mick West (Audit Commission) said that IFRS was a huge risk for local authorities, and would have an impact on the presentation of accounts and on the use of resources. There was also a recognition that although the work load for local authorities was large, it was not easy to explain to members of the public what the benefit was to them.

If implementation of IFRS was not successful this could affect the assessment by the Audit Commission.  Some transactions would inevitably have an impact on the income and expenditure accounts.

Sue Gill (Audit Commission) noted that a review of leases had been included in the 08/09 accounts, and that this would help with the new requirements.

A member asked if the changes were ‘one-off.’ Richard Schmidt said that it was a stand-alone project, which would take a number of years to fully implement.

Dave Simons, Corporate Risk and Insurance Manager

Sue Imbriano, Strategic Director for Children and Young People

The Chairman welcomed Sue Imbriano, Strategic Director for Children and Young People, and David Simons, Corporate Risk and Insurance Manager, to the meeting.

The Strategic Director gave a presentation on Risk Management in Safeguarding, and made the following points:

·         The Children and Young People’s Trust was a multi-agency partnership with collective responsibility for promoting the well-being of children and young people.

·         The Buckinghamshire Safeguarding Children Board (BSCB) had an independent Chairman. The Strategic Director was accountable for the effective working of the BSCB.

·         The BCSB had been established by legislation and was the successor to the former Area Child Protection Committee. The BCSB covered all aspects of safeguarding, including safety issues and road collisions. The BCSB was seen as the key statutory mechanism for agreeing how safeguarding policies and activities were undertaken across the County. The effectiveness of the BCSB would be monitored formally by three-year rolling Ofsted inspections.

·         BSCB had nine sub-committees. These included an e-safety committee (which looked into cyber-bullying) and a child death review committee (led by a senior GP, this looked into the death of any child, including those with life-limiting conditions, to identify trends).

·         BSCB had a dedicated training manager.

·         Within the Children and Young People’s Portfolio, risk assessment was part of the daily work. This included management review of sample case files on a regular basis and review by Independent Reviewing Officers (who sat outside the Safeguarding Division).

·         External audits were carried out - an example was that of child protection plans for children under the age of five.

·         Any high risk cases or issues were reported directly to the Strategic Director (and onwards, as appropriate). The Strategic Director also held meetings with front-line staff.

·         The balance of the workload of the Strategic Director had changed, with an increase in the safeguarding work, due to the level of risk involved.

A member asked if sanctions could be applied to other organisations. The Strategic Director said that sanctions could not be applied to Health organisations or the Police. The ultimate sanction lay with the inspectorates.

If the BSCB Independent Chairman had any concerns, he could write to Ofsted. The Strategic Director also said that she raised concerns with colleagues in organisations outside the County Council.

A member asked where the responsibility for risk lay. The Strategic Director said the responsibility was three-fold, and lay with herself, the lead member and the Chief Executive.

A member asked about allegations against workers/teachers, and asked what action was taken if numerous allegations were made but were all unproven. The Strategic Director said that this was a very complex and emotive area. Trends were monitored and linked to ‘soft’ information from other organisations.

Responsibility for allegations against a headteacher lay with a school’s governing body.

A protocol for sharing information between organisations had been set up by the Children and Young People’s Trust Board.

Ian Dyson, Chief Internal Auditor, said that the Regulatory and Audit Committee would receive assurance from Ofsted regarding the effectiveness of the BSCB.

The Strategic Director said that BCSB would also have to report to the Children and Young People’s Trust Board annually.

Ofsted inspected every three years, and inspections were now focused on safeguarding and looked after children. The new annual unannounced inspection had been carried out in Buckinghamshire, and no areas had been identified for further action. However this was an area where things could change. Ofsted now provided an online profile for each local authority of contact, assessment and referral.

A member asked what percentage of Children and Young people staff were agency staff, and whether there was a higher risk with agency staff. The Strategic Director said that she would circulate the most recent figure for agency staff.

Comprehensive induction, training and supervision of agency staff was carried out to mitigate the risk. Recruitment of permanent staff was a national problem.

Buckinghamshire County Council (BCC) was carrying out a range of initiatives to address the issue of recruitment. These were:

·         “Degrees of understanding” (sponsoring study to become social workers).

·         Part-time route to social work through the Open University.

·         Graduate Social Work Scheme (5 places).

·         Return to work programme (12 places).

·         Visiting universities and career fairs.

·         Weekly meetings with Hays Recruitment. Hays was about to embark on a national advertising campaign for BCC.

·         Analysis of pay and conditions with reference to neighbouring authorities.

Ian Dyson said that the recruitment issue was largely outside the control of BCC, and that what was important was how the risk this caused was mitigated.

A member said that there should be management of allegations against teachers, to reduce allegations being used as a way of bullying teachers. The member said that this could make people unwilling to training for or apply for social worker and teaching posts.

The Chairman thanked the Strategic Director for attending the meeting and said that the Committee was very supportive of the Safeguarding work.

14 January 2009, 10am, Mezzanine Room 2, County Hall, Aylesbury

14 January 2009, 10am, Mezzanine Room 2, County Hall, Aylesbury