No apologies for absence were received. 

The minutes of the meeting on the Wednesday 16 November 2016 were signed by the Chair.

No declarations of interest were made. 

The Principal Accountant (Housing & Exchequer) presented Members with a report to consider the Treasury Management Strategy, the Annual Investment Strategy and the Minimum Revenue Provision Policy.

The Principal Accountant (Housing & Exchequer) summarised the report to Members of the Committee:

·         The document provides estimates of the council’s Capital Prudential indicators, Debt portfolio and Treasury indicators for the forthcoming years to 2019-20

• Capita Asset Services Treasury Solutions are GBC’s appointed treasury advisors and have provided the summary of the economic climate provided on Page 17 of the report
• The Council is currently maintaining an under-borrowed position. This means that the Capital Financing Requirement has not been fully funded with loan debt, as cash supporting the Council’s reserves, balances and cash flow has been used as a temporary measure
• GBC’s external debt for the end of this financial year is estimated to be just over £101 million, formed mainly of the loans taken out under HRA self-financing.

Appendix seven and eight of the report include two graphs that show the current cashflow forecast for the council, taking into account changes reflected through the Medium term Financial Plan and capital expenditure and funding forecasts.  This includes the plotting of significant events that will impact on the cashflow situation.  The second graph compares the current cashflow forecast with that presented to the committee in November 2016.

The Principal Accountant (Housing & Exchequer) introduced Dan Willson from Capita to the Committee and advised that he would be able to respond to Members on any questions they may have and provide clarification on the potential downgrading of the UK Sovereignty Rating.

Dan Willson explained to Members the workings of the ratings agencies, why the UK Sovereignty Rating could downgrade and the effects of it, highlighting the following key points:

• At the moment the Council only uses approved counterparties from countries with a minimum sovereign rating of AAA as determined by two of three reliable rating agencies (Fitch, Moody’s or Standards and Poor) overlaid with counterparty specific information. This practice will remain in place during 2017/18

• If the UK Sovereignty Rating should fall further than AA- then under the current strategy no funds would be able to be placed in institutions within in the UK, hence the recommendation to Members by officers that the UK should be exempt from the sovereign rating scheme. This is on the basis that the knowledge and understanding is greater for the banks and building societies within the UK as opposed to those who are domiciled outside of the UK
• The rating does not mean failure; the UK is doing well relative to other countries and two of the main reasons for a change in the rating is due to the uncertainty of Brexit, what trade deals could amount from it and the fact that the UK has a very large amount of debt, however export markets are still working successfully

Resolved that:

The Finance and Audit Committee recommends to Full Council that:

1.         The Treasury Management Strategy for 2017/18 be agreed.

2.         The  ...  view the full minutes text for item 99.

The Head of Audit & Counter Fraud Shared Service (Chief Audit Executive) provided Members with an update on the work, outputs and performance of the Audit &

Counter Fraud Team for the period 1 November 2016 to 13 January 2017.

The Head of Audit & Counter Fraud Shared Service (Chief Audit Executive) explained that:

·         This is the last of the quarterly reports for the current financial year; an annual report will be presented to the committee in June.

·         The report shows positive progress has been made with the agreed work plan and all assurance ratings are amber or higher.

·         This report provides more details of recommendations made and agreed following Members request for this.

Following several questions and comments from Members the Head of Audit & Counter Fraud Shared Service (Chief Audit Executive) explained that:

• There is a job description for all service managers within GBC; the officer in question, referenced on page 53, had a Job Description though it was not fully reflective of their current role which had changed due to a restructure. A recommendation to revise this was agreed during the audit.
• The Licensing Team’s Manager is currently working to digitise the function; this results in changes in processes which can impact on controls. The team have already implemented the reconciliation of income since the audit.
• With regard to the ‘Transformation –change & project management’ on page 54, this review has not yet started but should be completed by the end of the financial year.
• The complaints audit has resulted in a clearer definition of what is a corporate complaint and the processes have been made more efficient in handling, storing and logging complaints received. 
• All taxi drivers are DBS checked and all GBC drivers tested had a valid clearance; the audit found that there were some delays in seeking renewals but recommendations to address this were agreed.
• The outstanding high priority recommendations set out on Page 61 are being monitored through quarterly reports to Management Team. The Director (Corporate Services) explained that updates were being provided to Management Team by the Assistant Director (Planning) and that he would ask her to provide Members more information on this outside of the meeting.

The Chair praised the content in the report but asked that colour coding be included where assurance ratings are given to enable Members to see more easily where issues are.

Members noted the outputs and performance of the Audit & Counter Fraud Plan for

Gravesham for the period 1 November 2016 to 13 January 2017 as detailed in the attached update report.

The Assistant Director (Corporate Services) presented Members with a report informing them of the outcomes from Gravesham Borough Council’s annual risk identification and analysis exercise and presented a draft copy of the Corporate Risk Register for 2017-2018. The report also confirmed that there are no material changes required to the Corporate Risk Management Strategy.

The Assistant Director (Corporate Services) advised that the Risk Management Strategy had had required no changes to be made to it and so the previous financial year’s strategy would continue to be used.

The Assistant Director (Corporate Services) explained that Members input from the previous Committee meeting had been accounted for and the three risks/issues that were raised were shown in Appendix Two:

• Employee Issues/Relations
• Universal Credit
• UK leaving the European Union

In total, nine potential strategic risks had been identified for assessment, of which six were considered to be above the Council’s risk tolerance threshold and therefore form the draft Corporate Risk Register; the final Risk Register will be presented at the next meeting of Cabinet on 27 February 2017, ready to then be adopted at Full Council. 

Addressing a Member’s concern, the Assistant Director (Corporate Services) stated that there is a small degree of volatility in the risks within the register at the moment due to the economy and other issues; the assessment of each risk identified considers the inherent risk level, makes an assessment of the controls in place to mitigate or manage that risk to return the residual risk score for each risk at this time.  Universal Credit remains low risk (green) as the latest information suggests that the likely impact on the Council over the next year is low.

Members also suggested that reference should be made to how the council intends to manage risks to staff welfare that may be caused by service delivery expectations not keeping in line with decisions taken to reduce funding and resources available to deliver certain council activity.  The Assistant Director (Corporate Services) indicated that the Management Action in relation to the risk of organisational capacity would be reviewed to include reference to management of sickness levels and monitoring of reasons for absence.

A Member raised issue with 2.4 (Active Role in the Gravesham Area Board) of Risk 2 as the Control Narrative and Control Update wording was not up to standard; more detail and up to date information is required.

The Assistant Director (Corporate Services) reassured Members that this would be taken into account in formulating the Required Management Action for that risk within the Corporate Risk register on page 104 of the report t; the wording for the Management Action will be reviewed and amended before it is taken to the next Cabinet meeting.

A Member questioned the residual risk assessment of the Waste & Recycling Project given the controls identified to manage the risk.  The Assistant Director (Corporate Services) advised that this risk evaluation was carried out by the Waste Services team; they will be informed of the point raised by Members and  ...  view the full minutes text for item 101.

The Assistant Director (Corporate Services) presented Members with information on actual performance against the approved Revenue and Capital budgets for 2016/17, including known variances agreed or identified through budgetary control activity.

The Principal Accountant (General Fund) advised that it is the third budget report of the financial year for the period April to December 2016 and directed Members attention to Page 114 of the report which, as requested at the previous Finance & Audit meeting, was a detailed one page executive summary that explained and highlighted all the main points from the report regarding: 

• General Fund (Revenue)
• General Fund (Capital)
• HRA (Revenue)
• Housing Capital

The Principal Accountant (General Fund) and the Principal Accountant (Housing & Exchequer) elaborated further on their respective fields outlined in the executive summary.

Key points from the report were outlined to Members as follows:

·         a projected underspend of £430,000 on the General Fund (Revenue)

·         A reduction in investment income of £283,000 due in part to planned investment in property funds not taking place until a few months into the financial year

·         Savings made on staffing costs

·         a  reduction in reserves of £500,000 from £6.8m to £6.3m at year end

·         Capital spend of £9.9m (of the £16.1m allocated to the General Fund Capital budget)

·         An  increased contribution to reserves from the HRA of £500,000

·         A net reduction in HRA reserves of £1m

·         Capital spend of £5m (of the £12.2m allocated to the Housing Capital Programme)

·         the carried forward items from 2015-16 to 2016-17 that had been approved by the Section 151 Officer

·         The performance of the Council’s own investments

Members noted the information contained within the report.