AUDIT COMMITTEE - Meetings, agendas, and minutes

AUDIT COMMITTEE
29 th February 2012
Audit Committee
Members Present:
Employees Present:
Others Present:
Apologies
Councillor Bains
Councillor Blundell (Deputy Chair)
Councillor Chater (Chair)
Councillor T. Khan
A. Carr (Community Services Directorate)
L. Commane (Finance and Legal Services Directorate)
M. Coult (Chief Executive's Directorate)
E. Dewar (Finance and Legal Services Directorate)
P. Jennings (Finance and Legal Services Directorate)
L. Knight (Customer and Workforce Services Directorate)
S. Mangan (Finance and Legal Services Directorate)
C. Steele (Chief Executive's Directorate)
A. Walster (City Services and Development Directorate)
J. Gregory (Audit Commission)
T. Parks (Audit Commission)
Councillor Andews (Substitute for Councillor Sawdon)
Councillor Sawdon
51. Declarations of Interest
There were no declarations of interest.
52. Minutes
The minutes of the meeting held on 7 th December 2012 were signed as a true
record.
Further to Minute 45/11, the Director of Finance and Legal Services indicated
that work in respect of the Code of Recommended Practice for Local Authorities on
Data Transparency was ongoing and that the issue would be considered by the
Business Management Group the following week and that information would be
available for the Committee prior to the next meeting.
Further to Minute 47/11, the Director of Finance and Legal Services referred to
a briefing note, circulated prior to the meeting, in respect of the National Fraud
Initiative, which outlined guidance on where overpayments of benefits, care home
payments or pensions could be recovered. It was noted that with regard to where
overpayments of benefits were made due to employee error, specific criteria would
have to be met in order to be eligible to claim back any overpayment. Having
considered the briefing note, the Committee requested a further report to identify the
differences between the various categories of employee error and how these were
addressed to prevent ongoing overpayments.

Further to Minute 48/11, the Director of Community Services referred to a
briefing note, circulated prior to the meeting, in respect of overspends within Adult
Social Care and how this was being managed. It was noted that whilst Community
Services was showing a net underspend of £0.3m with Adult Social Care showing a
balanced position, there was an underlying pressure of £1.7m in respect of
Community Purchasing. The briefing note identified the management actions being
taken to address the issues and relieve the ongoing pressures. The Committee
requested a further update on the position at their first meeting in 2012/13.
53. Exclusion of Press and Public
RESOLVED that, under Section 100A(4) of the Local Government Act 1972,
the press and public be excluded from the meeting for the item of business referred
to in Minute 62 below relating to "Adults Social Care – Care Director Financial
Processes Update on the grounds that this item involves the likely disclosure of
exempt information as defined in Paragraphs 3 and 7 of Part I of Schedule 12A of
that Act.
54. Outstanding Issues and Work Programme 2011/12
The Committee noted a report of the Director of Customer and Workforce
Services, which identified those issues on which further reports had been reported or
were outstanding, and their Work Programme which was attached to the report.
In respect of item 2 (Risk Management), the Director of Finance and Legal
Services reported that a report on this matter was to be considered by the Cabinet
and that information would be submitted to the Audit Committee at their first meeting
in 2012/13.
With regard to item 4 (Benefit Prosecution and Sanction Policy) the Director of
Finance and Legal Services indicated that an update would be provided to the
Cabinet Member and that the Committee would receive information at their meeting
in April 2012 on this matter.
RESOLVED that the list of outstanding issues and work programme be
amended as detailed.
55. Certification of Claims and Returns Annual Report 2010/11
The Committee considered a report of the Audit Commission which
summarised the outcomes of certification work on the Council's 2010/11 claims and
returns.
Under Section 28 of the Audit Commission Act 1998, the Audit Commission
may, at the request of authorities, make arrangements for certifying claims and
returns because scheme terms and conditions include a certification requirement.
The report indicated that the work required varied according to the value of the claim
or return and the requirements of the Government department or grant-paying body.

It was noted that the total value of the claims and returns certified was
£304,873,000, with 3 returns amended due to errors and 2 returns where the Auditor
issued a qualification letter because there was disagreement or uncertainty over the
content of the claim or return or scheme of terms and conditions had not been
complied with.
The report stated that the Council's overall arrangements for preparation of
claims and returns were good and that generally claims were submitted on time,
independently checked before being sent to the Auditor and were supported by good
working papers. It was acknowledged that the main area for improvement continued
to be Housing and Council Tax Benefit Claims.
In respect of progress on previous recommendations, it was noted that the
recommendations for New Deal for Communities had not been implemented.
However, with effect from 1 st April 2011, the NDC no longer existed and no further
procurement had taken place and it was therefore proposed that no further specific
action be planned in response to this recommendation.
RESOLVED that, the Certification of Claims and Returns Annual Report
2010/11 be noted.
56. Audit Plan 2011/12
The Committee considered a report of the Audit Commission which set out the
work they proposed to undertake for the audit of financial statements, whole of
Government Accounts, and Value for Money for 2011/12. The plan was based on
the Audit Commission's risk-based approach to audit planning and would comply
with statutory requirements under the Audit Commission Act 1998 and the Code of
Audit Practice for local government bodies.
The report indicated that an audit of the accounting statements would be
carried out in accordance with International Standards of Auditing (UK and Ireland)
issued by the Auditing Practices Board (APB) and that the Auditor would give an
opinion on whether the accounts gave a true and fair view.
The Committee noted that the material risks identified related to:
Equal Pay
New Social Care Financial System
Disclosure of Related party Transactions
Heritage Assets
Academy Schools
In addition, the report outlined the audits proposed in relation to the group
accounts produced by the Council in respect of four companies, namely North
Coventry Holdings, Coventry North Regeneration, Coventry Solihull Waste Disposal
Company and Arena Coventry Limited, along with the fee payable for the audit.
In particular, the Auditor confirmed that in respect of his IT risk assessment,
weaknesses had been identified and that a separate report in relation to these

weaknesses was being prepared and would be submitted to the next meeting of the
Committee.
RESOLVED that the 2011/12 Audit Plan be noted.
57. Internal Audit Plan 2011-12 – Quarter Three Progress Report
Further to Minute 36/11, the Committee considered a report of the Director of
Finance and Legal Services which provided an update on the Council's Internal Audit
Service activity for the period April to December 2011, against the agreed Internal
Audit Plan for 2011/12.
The Committee had approved the Council's Internal Audit Plan for 2011-12 at
its meeting on the 19th April 2011 (minute 65/10 refers). The report now submitted
was the third quarterly monitoring report for 2011-12, which was presented in order
for the Committee to discharge its responsibility, as reflected in its term of reference
'to consider summaries of specific internal audit reports as requested' and 'to
consider reports dealing with the management and performance of internal audit'.
The Committee noted that the key target facing the Internal Audit Service in
2011-12 was to complete 90% of its work plan by the 31st March 2012. The report
provided analysis of progress against planned work for the period April to December
2011 and it was further noted that, in this period, the Service had completed 65% of
the agreed Audit Plan against the planned target of 68%.
The report also provided a summary of the performance of Internal Audit for
2011-12 to date against five key performance indicators (KPIs) with comparative
figures for 2010-11. Across the indicators, the Service was generally consistent with
targets set. It was noted that Management would continue to focus on these areas
as part of an ongoing focus of efficiency within the Service, whilst ensuring this did
not impact on the quality of work produced.
In addition, the report outlined those audits that were still either ongoing, at
draft report stage, or had been completed during the period. The level of audit
assurance provided was also highlighted for the audits completed. Those audits
which received limited assurance or were viewed as a key corporate audit by the
Director of Finance and Legal Services, were further detailed within appendix 1,
which summarised the issues identified and the actions to be taken.
In considering the report, the Committee noted that an armchair audit had been
instigated in respect of assessing purchases in excess of £500 within the Children,
Learning and Young People's Directorate, with the view of establishing how the
public would perceive such purchases in the current economic climate and whether
the purchases were essential. The number of questionable purchases identified was
relatively small and whilst the findings were specific to the Children, Learning and
Young People's Directorate, it was believe that the issues were applicable to all
areas of the Council. The results of the review had been considered by the Business
Management Group and actions agreed in response to the findings. The Committee
requested that a summary of the findings, along with the response from managers,
be forwarded to them.

RESOLVED that:-
(1) The performance at quarter three against the Internal Audit Plan for
2011-12, the key audit reviews, the focus of improvements identified
and the timescales for implementation for each review be noted.
(2) In respect of the armchair audits, detail of the summary of findings,
along with responses from managers, be forwarded to the members
of the Committee.
58. 2011/2012 Period 8 Revenue, Capital Monitoring and Treasury
Management Report (to November 2011)
The Committee considered a report of the Director of Finance and Legal
Services, which provided an update on the period 8 revenue and capital forecast
outturn position for 2011/12, based upon spending and income after 8 months of the
financial year. The report also reviewed the Council's 2011/12 Prudential Indicators
and its treasury management activity during the year, including borrowing, lending
and investments. The overall forecast was that the Council would achieve balanced
revenue and capital programmes within 2011/12.
The Committee noted that the Cabinet had considered the report at their
meeting on 14 th February 2012 (their minute112/11 refers).
The Cabinet approved the City Council's revenue budget of £277.1m, on the
15th February 2011 and a directorate capital programme of £68.3m. The report was
the third quarterly monitoring report for 2011/12, which was presented in accordance
with the Council's Constitution, budget and policy framework and financial
procedures.
The report identified a forecast balanced position on the revenue budget.
Appendix 1 of the report provided a summary of the year-end forecast variation by
Directorate.
The report also indicated that the biggest single budgetary challenge was the
over-spend on Children's placements – which at quarter 3 was forecast at £6.4m. A
major Fundamental Service Review (FSR) was in progress to bring this spending in
line with budget. Recognising that this would take time, a short term cost cutting
exercise had taken place within Children, Learning and Young People (CLYP) that
had identified measures totalling £4.5m and had helped to achieve an underspend
on the CLYP bottom line of £0.1m. The Committee noted that they had received an
update on this FSR at their last meeting (minute 48/11 refers).
With regard to the projected deficit in respect of Car Parking Fees (£0.9m), the
Chair indicated that, whilst the Committee had previously requested that the Director
of City Services and Development attend the meeting to explain steps being taken to
address this shortfall, he had been assured that Policy decisions had recently been
taken by the appropriate Cabinet Member to address the issues that the Committee

had previously been concerned about and that he no longer felt it necessary to
require the attendance of the Director in relation to this matter.
The capital programme for 2011/12 also showed a balanced position, with
Table 2 providing an update taking account of the approved/technical changes, net
over/under spending and net expenditure rescheduled into future years.
In addition, the report reflected concerns over the Council's longer term
prospects in relation to funding capital expenditure and the need to get temporary
borrowing under control as capital receipts remained elusive. As a result, there was
a recommendation to make a revenue contribution of £1m towards funding the
Capital Programme to help reduce the medium- term borrowing requirement for
capital spending.
Under the CIPFA Prudential Code for Capital Finance, authorise were free to
borrow, subject to them being able to afford the revenue costs. The framework
required that authorities set and monitor against a number of Prudential Indicators
relating to capital, treasury management and revenue issues. These indicators were
designed to ensure that borrowing entered into for capital purposes was affordable,
sustainable and prudent. The purpose of the indicators was to support decision
making and financial management, rather than illustrate comparative performance.
In considering the report, the Director of Finance and Legal Services also
referred to information circulated in advance of the meeting in relation to the
Council's Investment Strategy and Policy, an extract from the 2012/13 Budget
Report, and tabled a list of the current temporary investments and the lending list. In
respect of the temporary investments, the Committee were advised that, at this time
of the financial year, totals would appear to be larger than usual due to end of year
accounts becoming due for payment.
RESOLVED that the 2011/2012 Period 8 Revenue, Capital Monitoring and
Treasury Management Report (to November 2011) be noted.
59. Transformation Programme – Savings from Corporate Transport and
Commercial Waste Reviews
Further to Minute 49/11, the Committee considered a briefing note of the
Director of City Services and Development, which provided an update on the risks to
the delivery of financial savings from the Corporate Transport and Commercial
Waste reviews.
The Corporate Transport review considered how best the Council's transport
fleet (excluding passenger transport) should be organised and managed and how to
develop a single transport unit to co-ordinate transport needs and create
opportunities for vehicle pooling. The objective of implementing an integrated
transport unit for the whole Council was to deliver ongoing savings, initially valued at
£0.3m, and then increased to £0.4m per year.
The Committee noted that £208,800 had been saved during 2011/12 from
transport activities across the Council and that they were directly attributable to the

City Services and Development Directorate's budget position. In addition, a further
annual saving of £120k had been produced in Children Learning and Young People
and Community Services Directorate's from the passenger transport operation. The
report indicated that, unfortunately, transport savings within the 2011/12 financial
year had not increased since December 2011. It was anticipated that the staggered
replacement of the Council's refuse fleet would drive significant additional savings
during 2012/13. This work, combined with the centralisation of the fleet, should allow
the stretched savings target of £0.4m to be achieved during 2012/13.
The review of the Commercial Waste service determined it should remain inhouse
and it's operational performance improved in order to drive efficiency and
increase income generation. The review proposed a number of key changes to the
existing service model in order to improve operational performance and deliver
savings of £0.4m.
The report indicated that the savings were being delivered from a combination
of spending reductions and increases in income. The spending reductions included
the reallocation of recycling rounds, the removal of reversing assistants on skip
vehicles and a reduction in avoidable vehicle damage. It was expected that
additional net income of £110k would be delivered in 2011/12 against a target of
£210k. It was noted that as Commercial Waste traded within a competitive market,
there continued to be significant risk that income would fluctuate as the demand from
customers changed. However, the Committee further noted that since December
2011, Commercial Waste had been successful in winning a number of contracts,
including an extension to its contract with Warwick University as the sole supplier of
waste services for the entire University, including their Wellsbourne Campus.
Having considered the briefing note, the Committee requested that a further
update be provided as part of the annual report on all Fundamental Service Reviews.
RESOLVED that the financial savings being forecast for the Corporate
Transport and Commercial Waste reviews be noted and that a further updated
be provided as part of the annual report on all Fundamental Service Reviews.
60. Citivision
The Director of Finance and Legal Services referred to a briefing note,
circulated in advance of the meeting, which identified concerns raised by members
of the Audit Committee regarding Coventry residents in some areas, particularly in
Wainbody Ward, not receiving the Council's publication, Citivision.
The Committee noted that whilst the responsibility for the production of
Citivision was with the Council's Communications Team, the distribution of the
publication had recently been changed. It had previously been delivered as an insert
in the Coventry Observer, a free newspaper within the City, but there were concerns
that the Citivision magazine may have been overlooked. Therefore, the Council had
successfully tendered a contract for the magazine to be delivered separately. The
contract value was £16,000 per annum and required the delivery of approximately
124,000 copies of the magazine within a two week period, for times a year.

The briefing note identified how the performance of the contractor was
monitored and indicated that, following the change to the way the magazine was
delivered, a regular survey of 500 residents found that those who could recall having
seen Citivision increased from 50% to 60-65%.
However, due to concerns raised by residents and elected members about
areas of the City not receiving the publication, the Communications Team were
having ongoing discussions to understand the specific issues in relation to those
wards and to gain assurances as to the checks and balances that were in place to
ensure that all residents received a copy of the magazine.
The Committee indicated that they also wished to be assured that all residents
were receiving the magazine and requested that a further update be provided once
the Communications Team had completed their discussions with the company
concerned.
RESOLVED, that the Committee note the actions being taken to oversee
the distribution of Citivision and request that a further update be provided
once the Communications Team had completed their discussions with the
distribution company.
(Note: This matter was considered as urgent public business, the reasons for
urgency being the need to advise the Committee, at the earliest opportunity, of the
actions being taken to address their concerns in respect of the Citivision publication
not reaching all residents.)
61. Heatline
The Chair advised the Committee of a request he had received from Jane
Green, on behalf of Coventry Friends of the Earth, asking that the Audit Committee
review the recent decision of Council and request more time to consider the Heatline
proposals.
The Chair indicated that he had advised Ms Green that this was not within the
remit of the Committee and that the decision of the Council on this matter was
therefore valid (their minutes 117/11 and 120/11 refer).
The Committee noted the request of Friends of the Earth and indicated that
they would take no further action in this regard. However, given the complexities of
the project, the Committee requested that they be provided with a copy of the Risk
Register in respect of Heatline, so that they could be assured that all risks were
being appropriately managed.
RESOLVED that:
(1) The Committee note the request from Friends of the Earth to review
the Heatline decision.

(2) The Committee be provided with a copy of the Risk Register in
respect of the Heatline project so that they can be assured that all
risks are being appropriately managed.
(Note: This matter was considered as urgent public business, the reasons for
urgency being the need to advise the Committee, at the earliest opportunity, of the
request from Friends of the Earth.)
62. Adults Social Care – Care Director Financial Processes Update
The Committee considered a joint report of the Director of Community Services
and the Director of Finance and Legal Services, which provided details of the
difficulties being experienced in Adults Social Care following the implementation of
the finance module of the Care Director system. The report also outlined the actions
being taken to address the issues identified and get the Care Director fully
implemented.
The Committee indicated that they would wish to receive regular updates on
the position in relation to Care Director and indicated that from the first meeting of
the 2012/13 municipal year, Care Director should become a standard item on their
agendas.
RESOLVED that the Committee note the system process issues and the
potential risks identified within the report and that a further report be
submitted to their first meeting in 2012/13.
Meeting closed at 12.00 noon.