AUDIT COMMITTEE – 18 NOVEMBER 2009

AUDIT COMMITTEE – 18 NOVEMBER 2009

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AUDIT COMMITTEE – 18 NOVEMBER 2009AUDIT COMMITTEE18 NOVEMBER 2009Present: Mr J L Bayliss (Independent Chairman), Councillors D Cornock, I Hedley a nd ARebeiroOfficers: Catherine Halford – Governance Services Manager Sam Gilbert - Head of Financial Operations Liz Welton – Corporate Procurement ManagerSteve Sparkes – Head of Internal Audit Services Deborah Merry – Head of Democratic Services Jim Harte – Strategic Director for Transport, Highways and the Envir onment(attended for item 12)Emma Hart – Democratic Services OfficerAlyson Thomson – Audit CommissionPhil Jones – Engagement Lead, Audit Commission1. DECLARATIONS OF INTERESTSThere were no declarations of interests.2. QUESTIONS AND DEPUTATIONSNo questions or deputations were received.3. MINUTESRESOLVEDstThat the minutes of the meeting held o n Se2p1tember 200 9be approved as a correct record.4. REVIEW OF THE COUNCIL’S CORPORATE RISK MANAGEMENT APPROACHThe Governance Services Manager updated the Committee as to the actio ns anddevelopments in the review of the Corporate Risk Management approach since the meetingston 21 September 2009. She stated that the project was currently meeting predictedtimescales and she advised Members of the emerging proposals.The Committee was invited to comment on the existing and proposed Measures of Likelihoodand Impact contained within the report. The Committee was advised that some typ es of riskswere reclassified in order better focus attention on the ...

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AUDIT COMMITTEE – 18 NOVEMBER 2009
AUDIT COMMITTEE
18 NOVEMBER 2009
Present:
Mr J L Bayliss (Independent Chairman), Councillors D Cornock, I Hedley and A
Rebeiro
Officers:
Catherine Halford – Governance Services Manager
Sam Gilbert - Head of Financial Operations
Liz Welton – Corporate Procurement Manager
Steve Sparkes – Head of Internal Audit Services
Deborah Merry – Head of Democratic Services
Jim Harte – Strategic Director for Transport, Highways and the Environment
(attended for item 12)
Emma Hart – Democratic Services Officer
Alyson Thomson – Audit Commission
Phil Jones – Engagement Lead, Audit Commission
1. DECLARATIONS OF INTERESTS
There were no declarations of interests.
2. QUESTIONS AND DEPUTATIONS
No questions or deputations were received.
3. MINUTES
RESOLVED
That the minutes of the meeting held on 21
st
September 2009
be approved as a correct record.
4. REVIEW OF THE COUNCIL’S CORPORATE RISK MANAGEMENT APPROACH
The Governance Services Manager updated the Committee as to the actions and
developments in the review of the Corporate Risk Management approach since the meeting
on 21
st
September 2009. She stated that the project was currently meeting predicted
timescales and she advised Members of the emerging proposals.
The Committee was invited to comment on the existing and proposed Measures of Likelihood
and Impact contained within the report. The Committee was advised that some types of risks
were reclassified in order better focus attention on the most serious risks.
Members suggested that the proposed financial threshold of £250,000 for a red risk was
relatively low and it was suggested that this figure should be raised gradually. The
Governance Services Manager confirmed that the Director of Business Support had indicated
he would support a threshold of £250,000.
Members also commented that some of the phrases used in the proposed Measures of
Likelihood and Impact could be subjective and open to individual interpretation.
The Governance Service Manager then invited the Committee’s views on the existing and
proposed Terms of Reference of the Risk Management Support Group and, in particular, on
the reporting arrangements to the Audit Committee.
RESOLVED
i) That the report be noted and the Proposed Measures of
Likelihood and Impact and the Proposed Terms of Reference
for the Corporate Risk Group be accepted; and
ii) That the Corporate Risk Group regularly reports to the Audit
Committee.
5. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) PROGRESS UPDATE
The Head of Financial Operations updated the Committee as to the actions and
developments since the meeting on 21
st
September 2009. She confirmed the current officer
support arrangements for the project and it was noted that external resources would be
needed to support the existing internal team.
A reserve previously earmarked for external audit fees had provisionally been identified as a
source of funding for the external support costs, subject to Resources Cabinet Member
approval.
RESOLVED
That the report be noted and an update statement be provided
for the Meeting held on 6
th
January 2010.
6. TREASURY MANAGEMENT HALF YEARLY MONITORING REPORT 2009/10
The Head of Financial Operations referred to the current world-wide crisis in the financial
markets and explained that the Council’s current strategy in relation to financial management
was to repay debt rather than investing. She reported on future plans for borrowing and debt
rescheduling and confirmed that opportunities for debt restructuring or repayment were
constantly monitored. She stated that the cash flow had been scaled back to a point that at
the end of the year the Council may have to borrow funds for a short period of time.
The Head of Financial Operations explained the security benchmarking risk analysis which
summarised the Council’s exposure to credit risk based on default rates. She also reported
on investment activity in 2009 -10 and expected future activity. She then referred to the
impact of the failure of the Icelandic banking system on local authority investments in 2008/09
and updated members on the latest Local Authority Accounting Panel (LAAP) advice on
estimating the impairments to be recognised in relation to deposits in Icelandic banks.
In response to Members’ questions, the Head of Financial Operations confirmed that
Treasury Management activity was delegated to the Director of Business Support, within the
parameters of the Treasury Management Strategy set by Members.
RESOLVED
That the report be noted.
7. FINANCIAL REGULATIONS
The Head of Financial Operations reported that the Financial Regulations had been fully
revised in 2007 taking account of CIPFA guidance and best practice in high performing
Councils. She reported that a further review had now been carried out and she explained key
changes that had been made to take account of organisational and operational changes since
the 2007 review.
It was noted that a future revision to the Financial Regulations would be needed when the
current project on Payment Card Requirements was completed.
RESOLVED
That the report and the Revised Financial Regulations be noted
8. ACTION PLAN ON THE STATEMENT OF ACCOUNTS 2008 – 09
The Head of Financial Operations presented the Action Plan arising from the 2008-09
Statement of Accounts.
Members commented on previous concerns over asset management, which were addressed
in the Action Plan.
RESOLVED
The report and action plan be noted
.
9. ACTION PLAN ON USE OF RESOURCES
The Head of Financial Operations reported that in response to the Annual Governance Report
for 2008-09 an action plan had been devised and this was presented to the Committee.
Phil Jones from the Audit Commission stated that it was good to see a plan in place so
quickly and that it would be reviewed in next year’s audit.
RESOLVED
That the report and action plan be noted.
10. REVISED RULES FOR CONTRACT AND THE CONTRACTS REGISTER
The Corporate Procurement Manager updated Members on actions that had taken place
since the last meeting of the Committee.
She advised that the draft revised Rules for Contracts were currently the subject of
consultation; however she confirmed that the revised Rules clarified that the relevant Director
was always responsible for managing and operating contracts, while the Corporate
Procurement Manager was responsible for producing guidance and advice on contract
management. The current guidance in the Compliant Procurement process document was to
be enhanced to provide additional support for those responsible for managing contracts.
It was noted that post-tender negotiation had been removed from the revised document. The
Corporate Procurement Manager stated that the EU had been very clear about when
negotiation could take place. It was clarified that it was the role of the professional
procurement officers to take part in post-tender negotiation as the controls had been
tightened.
The Corporate Procurement Manager referred to the arrangements in place at Coventry City
Council to involve Members in the procurement process at an early stage, and advised that
this might also be a suitable model for Solihull Council.
She then referred to the Central Register of Contracts and confirmed that it did not contain
every contract that the Council was involved in but only included those that the Corporate
Procurement Service had been involved with. She explained why some contracts were
excluded and the action taken by the Procurement Service to track the annual spend on
contracts not included in the register.
The Corporate Procurement Manager advised that a review of contract management across
the Council was to be undertaken, which would report to the Operational Leadership Team
and reinforce the introduction of the new Rules for Contracts.
The Corporate Procurement Manager updated the Committee on the progress of the shared
procurement service with Coventry City Council. She reported that a Joint Savings Plan had
been agreed and work had started on the priority categories. Sharing of contract methods
and information had also been discussed where joint contracts were not entered into.
The Committee was informed that Coventry City Council had an e-tendering system in place
and work was underway to identify the best solution for both authorities. It was noted that
Solihull MBC would be seeking a system with a suitable contract management module and
therefore this would need to be considered before an e-tendering system could be
implemented in Solihull MBC.
The Corporate Procurement Manager stated that the Central Buying Consortium could
provide a national benchmark for future contracts.
It was noted that the Rules for Contracts provided guidance on the stages up to placing a
contract however the guidance on the control and management of a contract once let (the
‘Compliant Procurement process’ document) was in need of revision.
RESOLVED
That the report be noted and a copy of the Compliant
Procurement process document be supplied to the Committee
for the meeting on 6
th
January 2010.
11. HEAD OF INTERNAL AUDIT SERVICES’ MONITORING REPORT
The Head of Internal Audit Services updated the Committee as to the progress made against
the 2009 – 10 audit plan. He set out details of completed and ongoing reviews and their
current status. It was noted that the planned work was progressing well.
RESOLVED
That the monitoring report be noted
EXCLUSION OF PUBLIC AND PRESS
RESOLVED:
That, in pursuance of Section 100A(4) of the Local Government
Act 1972, the Press and the Public be now excluded from the
meeting for remainder of the business to be transacted, on the
grounds that there would be disclosure to them of exempt
information in terms of paragraph 3 of Part 1 of Schedule 12A to
the said Act.