An apology for absence was received from Cllr Brian Sangha. Cllr Peter Scollard attended as his substitute. Apologies for absence were also received from Stuart Bobby and Katey Arrowsmith.

The minutes of the meeting on the Wednesday 07 February 2017 were signed by the Chair.

No declarations of interest were made. 

The Committee were presented with a summary of the external audit findings and issues arising from Grant Claim certification work completed by Grant Thornton relating to 2015-16.

In response to a question from a Member, the Assistant Director (Corporate Services) assured the Committee that the Revenues & Benefits service carries out periodic quality data checks on claim data input and management uses this to identify any training needs for staff members to help ensure the accuracy of claims information on which benefit payments are based.

Members noted the findings and conclusions of the grant certification work undertaken relating to 2015-16.

Members were presented with a report to inform them of the planned work of the External Auditor in conducting their audit of the council’s Statement of Accounts 2016-17.

Darren Wells of Grant Thornton, the External Auditor, outlined the following points to the Committee:

• The report sets out audit work that Grant Thornton proposes to undertake in respect of the audit of the financial statements and highlights the risks to be considered by the External Auditors in carrying out this work and the preparation of a value for money conclusion for the council for 2016-17.
• Page 21 of the reports sets the materiality thresholds to be used in the planning and performing of the audit; these levels provide a fundamental basis for the preparation of the financial statements and the audit process as a whole.
• Page 22 onwards outlines the significant risks for audit consideration in reviewing the financial statements.
• In relation to Value for Money, the External Auditors have already met with Senior Management to refresh the assessment of Value for Money.  No additional work is currently planned to assess the council’s financial standing due to this and assurances from previous years’ work.
• From the initial risk assessment no significant risks have been identified but Grant Thornton will continue their review of GBC’s arrangements, including reviewing the Annual Governance Statement, before issuing the final auditor's report.

In response to a question from a Member, Darren Wells of Grant Thornton confirmed that the HRA is not considered to be any higher risk by the External Auditors, but will be subject to the same audit process as the General Fund services around looking at income recorded, expenditure, material transactions etc.  This can and will be reviewed during the course of the audit if the audit findings indicate the need to review this.

Members were informed that the findings of the Value for Money review would be relayed to Members during the course of the audit (July/August).  Members would be formally informed of the Value for Money Assessment in the Audit Findings report presented to the committee in September.

Based on the current risk assessment it is considered by the External Auditors that there are no significant risks surrounding value for money, but this is a live assessment and will continue to be updated and refreshed.

Members noted the Audit Plan 2016-17.

Members considered a report to seek endorsement of the Accounting Policies to be used in formulating the Financial Statements for the authority for the financial year 2016-17 and to advise them on the activity taken to prepare the Council for the earlier closedown requirements that will be effective from the 2017-18 financial year (i.e. for the accounts prepared for the year ended 31 March 2018).

The Principal Accountant (General Fund) advised the following points:

• The report informs Members of the annual review and update of the Accounting Policies used in preparing the annual Statement of Accounts.  Whilst not a statutory requirement, it is good practice for the Accounting Policies to be endorsed by Members prior to beginning the preparation of the Annual Statement of Accounts.
• Paragraph 2.2 on page 36 sets out the updates made to four Accounting Policies which Members are asked to endorse, subject to further change :

-       Accruals Limit (Accounting Policy 1.2)

-       Intangible Assets (Accounting Policy 1.8)

-       Fair Value Measurement (Accounting Policy 1.29)

-       Post-employment benefits (Accounting Policy 1.23)

• There have been no major changes for the council to consider in the CIPFA Code (the basis on which the Statement of Accounts will be prepared).  The council has, however, chosen to review its accrual threshold and increase this from £500 to £750 per individual transaction when considering accruals which is intended to streamline year-end processes.
• Changes to other Accounting Policies have been made based on recommendations made by the External Auditor intended to provide greater clarification on application of the policies.

·         The Principal Accountant (General Fund) confirmed that Members would be provided with training on financial statements for this year and requested that Members consider whether there anything in particular that should be a part of that training.

The Assistant Director (Corporate Services) went on to remind Members of the requirements for the earlier closedown of accounts effective from the 2017-18 financial year. The Accounts and Audit (England) Regulations 2015 specify the requirement to accelerate this process so that draft annual statement of accounts are produced by 31st May and audited, approved and published by 31st July following the end of the financial year.Paragraph 3.5 of the report sets out the areas of focus for officers in increasing efficiency of processes to produce the annual statement of accounts.

The Assistant Director (Corporate Services) confirmed the intention to use the 2016-17 accounts closedown as a dry run for 2017-18 with the aim being to have a draft statement of accounts prepared by 19 May, allowing time for quality assurance processes to take place between this point and 31 May. 

The Assistant Director (Corporate Services) explained that, due to the accelerated timetable for the close of accounts driven by Regulations, it will no longer be possible to present a draft version of the Statement of Accounts to Members in July.  Instead, Members will be presented with the final audited Statement of Accounts and the External Auditors Findings Report towards the end of July, rather  ...  view the full minutes text for item 108.

The Committee was provided with an update on progress against the Audit & Counter Fraud Strategy 2016-2020 made by the team during 2016-17 to date.

The Audit and Counter Fraud Shared Service Manager advised that it is a year into the shared service and the aims that were originally set out are still to be considered correct and the team is functioning well around them; the team were consulted and are satisfied with the way the shared service is running.

Referencing paragraph 2.3 concern was raised over the wording of ‘good progress made on the objectives’; does this mean that any of the objectives set were not fully reached?

The Audit and Counter Fraud Shared Service Manager advised that he would take the feedback to the Head of the Audit and Counter Fraud Shared Service, but relayed to Members that it is a five year, and therefore longer term strategy with members of the team undertaking professional qualifications to become multi-disciplinary.  The strategy is an ongoing venture.

Members noted the progress made by the Audit & Counter Fraud Team towards delivering its strategic objectives during the 2016-17 year to date.

The Audit and Counter Fraud Shared Service Manager sought approval from Members for the Audit & Counter Fraud Shared Service Quality Assurance & Improvement Programme 2017-18.

The Audit and Counter Fraud Shared Service Manager advised that  it is required that the Chief Audit Executive must develop and maintain a quality assurance and improvement programme that covers all aspects of the internal audit activity. The QAIP has been reviewed and meets all requirements so will continue to be in place for the upcoming financial year.

Concern was raised over why the inclusion of a five year check on the counter fraud service was not in the report as this had been flagged up as an area for attention in the previous year’s report.

The Audit and Counter Fraud Shared Service Manager assured Members he would take that question back to the Head of Audit and Counter Fraud Shared Services and provide feedback on plans to assess counter fraud service arrangements.

Resolved that:

1. Members approved the revised Audit & Counter Fraud Shared Service Quality Assurance & Improvement Programme 2017-18.

The Audit & Counter Fraud Charter was presented to Members for approval.

The Audit and Counter Fraud Shared Service Manager advised that a robust self-assessment was carried out to determine the level of compliance with the national standards in preparation for an external assessment later on in the year. A paper copy of the Audit & Counter Fraud Charter was handed out that highlighted the changes made the Charter as a result of this review, highlighted in grey.   

The question was put to the Audit and Counter Fraud Shared Service Manager if a new Charter would have to be created or if the service would need to have two separate Charters if Medway Council do not agree to sign the Charter alongside Gravesham.

The Audit and Counter Fraud Shared Service Manager assured Members he would take that question back to the Head of Audit and Counter Fraud Shared Services and circulate the information to them but did advise that as this is a shared service, he would expect there to only be one charter for the team.

Resolved that:

1. Members approved the Charter presented at Appendix 2 of the report.

The Audit & Counter Fraud Plan for Gravesham 2017-18 was presented to Members for approval.

The Audit and Counter Fraud Shared Service Manager advised that the plan has been prepared in line with the requirements of the Standards and is based on a risk assessment to ensure the team’s resources are directed to the highest areas of risk.

The Plan will be brought back in three updates reports to the Finance & Audit Committee over the course of the year but the Plan will be reviewed and updated if any risks are perceived to of changed.

The Audit and Counter Fraud Shared Service Manager advised that the plan is fluid and can be reviewed at a later date but he would relay the following questions back to the Head of Audit and Counter Fraud Shared Service for later circulation to Members: 

• How are day allocations calculated?  Why are ten resource days allocated to review which could be carried out in a shorter period of time
• Why are fifteen resource days being allocated to the Contact Centre Operations activity in the fourth quarter when GBC Members are already reviewing this

It was pointed out by a Member and acknowledged by the Committee that it would be helpful if any further changes made on the allocation of the resource days are highlighted on the plan. This could be achieved by reflecting planned days, any amendments to planned days and actual days in update/annual reports.

Following comments and questions from Members the Assistant Director (Corporate Services) and the Manager of Audit and Counter Fraud Shared Service explained that:

• The audit planning and review arrangements in place make sure that Gravesham’s requirements are met by the shared service.
• The resource days do not simply encompass the actual auditing, it also covers the broader process including drafting reports, talking to managers, researching and conversing with the Chair of F&A Committee etc
• The Shared Service has a split number of days set aside an annual check on itself 
• Roughly there is a 60/40 split of resources for the Shared Service with the larger amount belonging to Medway Council due to their increased requirements.

The Chair added that in the previous years some programmed audit work has not fully met, but were pushed into the following years which shows there is flexibility to the timetable of completion if needed.

The Committee agreed it would be helpful if a presentation/paper could be produced to explain the audit process in detail to understand the workings of it.

Resolved that:

·         Members approved the Audit & Counter Fraud Plan for Gravesham 2017-18 presented at Appendix 2.