Agenda, decisions and minutes

To approve the minutes of the meeting held on Wednesday, 8 July 2015 (AG3) and to receive information arising from them.

The Minutes of the Meeting held on 8 July 2015 were approved and signed.

Matters arising

42/15

Councillor Smith wished it to be made clear that ‘in future’ the Committee be consulted prior to any/all changes to governance arrangements within the Committee’s remit.

1:10

The Accounts and Audit Regulations 2011 require the Statement of Accounts 2014/15 to be considered by a committee of the Council by 30 September 2015 and, following that consideration, to be approved by a resolution of that committee.The regulations also require that, following approval, the Statement of Accounts is signed and dated by the chairman of the committee approving the accounts. The Chief Finance Officer must re-certify the Statement of Accounts before the committee approves it.

The Statement of Accounts presented for the Audit & Governance Committee’s approval reflects minor amendments made following the audit of the accounts. Ernst & Young LLP’s annual governance reports set out that no audit issues have been identified as yet during the course of the audit of the main accounts or the Pension Fund accounts. Small changes to some of the disclosure notes have been agreed with the auditors, however these are not significant enough to be reported in their annual governance reports.   There are no changes to the main financial statements.

Given the minor nature of the changes that have been made to the accounts, the final version has not been included with the agenda papers. Members should refer to the draft version presented to the Audit & Governance Committee on 8 July 2015 available on the council's website.   The changes that have been made are set out in the report (AG5).

RECOMMENDATION

The Committee is RECOMMENDED to:

(i)                Consider and approve the Statement of Accounts for 2014/15 presented to the Committee on 8 July 2015 with the minor amendments as set out;

(ii)              Consider and approve the Annual Governance Statement presented to the Committee on 8 July 2015 with the minor amendments as set out;

(iii)             Consider and approve the Letter of Representation 2014/15 for the Oxfordshire County Council accounts;

(iv)             Consider and approve the Letter of Representation 2014/15 for the Oxfordshire Pension Fund accounts.

The Committee had before them the Final #statement of Accounts 2014/15.

Stephanie Skivington, Corporate Finance Manager, introduced the report which set out a number of minor amendments made following the audit of accounts. She pointed out that there were no changes made to the main financial statement, but that the minor changes were set out in the notes and addenda.

Councillor Tanner enquired why the figures in Annex 1 on Page 17 relating to Children and Education Services (CES) for 2013/14 had been amended, since this seemed to be historic. Ms Skivington explained these amendments had been made since the headings for CES had changed for 2014/15 and consequently the figures had to be amended.

Dr Jones queried why the Committee was requested to approve the letters of representation as he suggested that this was the role of Officers of the Council and also questioned whether the Committee could have any meaningful input into the matter.

Maria Grindley, Audit Director, Ernst & Young, explained that in her experience this was what happened across the board and that, in approving the letters of representation, the Committee was effectively telling the external auditors that, in all areas that the external auditors are not able to obtain all the information that they require, there was nothing else that the Committee knows of which it should flag. The Chairman of the Committee was also required to sign the letters.

With regards to Note 28 on Page 22, Councillor Hallchurch queried why £58.5 million was listed as Cash and whether that amount was earning interest. In response, Lorna Baxter, Chief Finance Officer, explained that there was always a need for funds to be held that are readily available should payments be required. She added that the allocation of the cash reserve was determined by the Pension Fund Committee on an annual basis and that, as a percentage, this had not changed. She also explained that the amount listed as Cash was held as deposits in banks and as such would be earning interest.

Mrs Baxter pointed out that the recommendations to the report would need to be amended to give delegated authority to the Chief Finance Officer to make any changes necessary as a result of the finalisation of the Audit and to the accounts themselves.

RESOLVED:  to agree the recommendations subject to giving delegated authority to the Chief Finance Officer to make any changes necessary as a result of the finalisation of the Audit and to the accounts themselves.

1:50

Each year, the Local Government Ombudsman (LGO) issues an Annual Review Report about each council in relation to the complaints made to the Ombudsman about that Council in the previous financial year. My report (AG7) to this Committee therefore informs members about the LGO’s Annual Review Report for Oxfordshire County Council for the year 2014/15. 

In previous years, the Ombudsman issued more detailed Annual Reports with a commentary on each authority's performance. Following changes to the LGO’s investigations procedures, this is no longer the case.

However, these figures, in comparison with other information published separately by the Ombudsman for all authorities, demonstrate that the Council’s system of control as expressed through the Council’s engagement with the Ombudsman is working well. 

RECOMMENDATION

The Committee is RECOMMENDED to note and comment upon this report and on the Local Government Ombudsman’s Annual Review of Oxfordshire County Council for 2014/15.

The Committee considered the report on the Local Government Ombudsman’s Annual Review (AG7).

Glenn Watson, Principal Governance Officer, in introducing the report, explained that each year the Local Government Ombudsman (LGO) issued an Annual Review Report about each Council in relation to the complaints made to the Ombudsman about that Council in the previous financial year. The report to the Committee informed members about the LGO’s Annual Review Report for Oxfordshire County Council for the year 2014/15. 

Mr Watson explained that in previous years the Ombudsman issued more detailed Annual Reports with a commentary on each authority's performance. However, following changes to the LGO’s investigations procedures, this was no longer the case.

Mr Watson also added that the information in the report should come with a warning in that that information did not reflect the information held by the Local Authority with regards to the number of complaints upheld and that the LGO were currently not likely to correct their figures.

With reference to Paragraphs 8 and 9, Mr Watson pointed out that the subject areas for which Oxfordshire County Council had attracted the most referrals to the LGO reflected national trends.

Mr Watson then drew attention to Paragraph 13 of the report which gave a summary of the complaints upheld by the LGO. He explained that, contrary to the LGO’s report which stated that of the 17 complaints investigated by the LGO 7 complaints were not upheld and 9 were upheld, in fact 9 complaints were not upheld and 7 were upheld. He also informed the Committee that, generally speaking, the action or remedy required of the Local Authority in those cases that were upheld was not substantial.

To put this into a broader context, Mr Watson explained that during 2014/15 the Council had received 131 complaints relating to Adult Social Care, 104 relating to Children and Education Services and 282 Corporate Complaints. The relatively small number of complaints that reach the LGO demonstrated the robustness of the Council’s own complaints procedure. However, he added that lessons will continue to be learned and that complacency would not become an issue.

Peter Clark, County Solicitor and Monitoring Officer, added that he agreed that the Council had a robust system in place in order to handle complaints and pointed out that there were no common themes of mistakes being repeated in the report.

Dr Geoff Jones pointed out that more than half of the complaints received by the LGO regarding Oxfordshire County Council were referred back to the Council and should not be regarded as signed off as the Council would still have had to investigate those complaints.

A number of Members expressed their concern that, although they had confidence in the Council’s complaints procedure, the fact that the figures in the LGO’s report were inaccurate meant that the Council should use caution when assessing its own performance against them.

The Committee noted that it would be the last meeting for Peter Clark as Monitoring Officer.  The Chairman and members paid  ...  view the full minutes text for item 56/15

1:30

Report to follow.

Maria Grindley, Audit Director, Ernst & Young, introduced the external auditor’s Annual Results reports for the year ending March 2014. She highlighted that there was still outstanding work to be completed before the Annual Results could be signed off, but that this was likely to be completed during the week following the Committee meeting. She added that a notice would be circulated to the Committee once this was completed.

Ms Grindley drew attention to Pages 20-21 of the addenda which highlighted significant value for money risks. She added that additional work with regards to assessing value for money risks had been carried out in response to the County Council’s decisions on the position of the Chief Executive.

Councillor Lovatt questioned whether the recommendation at the bottom of Page 21 of the addenda with regards to the Council’s decision to join the Integrated Business Centre (IBC) partnership with Hampshire County Council, indicated that the external auditor had major reservations about the decision.

Ms Grindley explained that it was not for the external auditors to provide an opinion on whether the decision to join the IBC was a good one or not. Rather, the recommendation reflected the concerns that Ernst & Young had regarding the lack of market testing that was carried out by the Council before the decision was made to join the IBC.

Lorna Baxter, Chief Finance Officer, added that this was a lesson to be learned, but emphasised that the decision of the Council was to join a partnership to provide back office functions, rather than outsource those functions completely. However, she accepted that the Council could have done more to tease out what other authorities may have been able to offer.

Dr Jones added that the report read as though it was advocating that those back office functions should be privatised within the next 5 years and that the Council would be criticised were that not to happen.

With regards to Page 20 of the addenda, Councillor Hards queried whether it was possible to give an overall view of risks associated with securing financial resilience since certain risks can be imposed upon the Council from outside of the organisation.

Ms Grindley answered that, as external auditors, Ernst & Young would require assurance that the Council was taking into account everything that it was aware of and being realistic with its medium term financial planning. Ernst & Young would comment on how well the Council assessed the likelihood and impact of such external risks.

Ms Grindley informed the Committee that, as it was a necessity of her role as an external auditor with Ernst & Young to rotate between organisations following a period of time, this would be her last meeting with the Committee and that, as of the next meeting of the Committee, Mr Mick West would attend as a representative of Ernst & Young. Ms Grindley took the opportunity to say thank you to the Committee.

RESOLVED:  to note the report and to thank Maria Grindley, Ernst & Young, for her work  ...  view the full minutes text for item 57/15

2:10

This report (AG8) presents the Internal Audit progress report for 2015/16.

RECOMMENDATION

The committee is RECOMMENDED to approve the Q3 Internal Audit Plan.

The Committee had before them a report (AG8) which provided an update on the Internal Audit Service including; resources, completed and planned audits, and an update on counter-fraud activity.

Ian Dyson, Chief Internal Auditor, in introducing the report, explained that the proposed restructuring of the current resources of the Internal Audit Service had been completed and that consequently three distinct teams had been created with the following responsibilities; to protect the role and independence of the Internal Audit function; to provide a strategy and resource for the management of Counter-Fraud; and to create capacity to manage the corporate responsibility for Risk-Management and a new Business Assurance function.

Mr Dyson explained that a recruitment process was still underway within the team and that the team has also commissioned Zurich, the Council’s insurers, to provide 100 days of assurance assistance.

Mr Dyson also told the Committee that conversations with Oxford City Council were at an advanced stage in respect of counter-fraud support within the Customer Service Centre and with regards to Blue Badges.

With reference to Paragraph 13 on Page 51, Councillor Bartholomew queried the severity of the case of counter-fraud that had been passed to the Police and questioned at what stage the investigation was at. In response, Mr Dyson explained that the case had been discussed at the meeting of the Audit Working Group and that, while the financial element of the case was below £10,000, there were other significant implications. Mr Dyson added that he was hesitant to go into detail about the case as it was a current open investigation. Councillor Bartholomew stated that he was satisfied that the Audit Working Group was looking into the case.

Mr Dyson explained that the Audit of the disposal of ICT equipment was highlighted as ‘Red’ due to concerns over possible losses of data. He told the Committee that a Senior Manager had been requested to attend the next meeting of the Audit Working Group in order to address these concerns.

Mr Dyson added that a number of counter-fraud investigations were on-going and that details of these investigations would be reported to the October meeting of the Audit Working Group.

With regards to the National Fraud Initiative (NFI), Mr Dyson explained that the matches of the 2014/15 exercise had been released and that a process to allocate reviews of over 6000 ‘priority one’ matches was under way. He added that this was not an unusual amount of matches to be returned.

Looking forward, Mr Dyson explained that he anticipated that matters arising from the recent implementation of IBC processes, specifically relating to the file upload system for payments, will need to be examined by the Internal Auditors. He added that flexibility had been left within the team’s workload to look at such matters.

Councillor Smith stated that her concern regarding the issue of payments through the IBC was that the Council did not have a policy in place to address and rectify the problems that late payments on the part of  ...  view the full minutes text for item 58/15

2:30

The Regulation of Investigatory Powers Act 2000 ('the Act') regulates the use of covert activities by Local Authorities. It creates the statutory framework by which covert surveillance activities may be lawfully undertaken. Special authorisation arrangements need to be put in place whenever a Local Authority considers commencing covert surveillance or considers obtaining information by the use of informants or officers acting in an undercover capacity.

Codes of Practice issued under the Act provide guidance to authorities on the use of the Act. The Code of Practice relating to covert surveillance specifies that elected members should review the authority's use of the Act and set the policy at least once a year. They should also consider internal reports on the use of the Act periodically.

This paper (AG9) provides an overview of the use of activities falling within the scope of the Regulation of Investigatory Powers Act 2000 by Oxfordshire County Council in the period from April 2014 to March 2015. The report also provides an overview of the authority's Policy and the full policy is provided as an annex for committee members to review.

RECOMMENDATION

The Committee is RECOMMENDED to consider and note the periodic and annual use of RIPA by Oxfordshire County Council.

The Committee had before them a report (AG9) which provided an overview of the use of activities falling with the Regulation of Investigatory Powers Act 2000 by Oxfordshire County Council in the period from April 2014 to March 2015.

Kate Davies, Team Leader, Trading Standards, introduced the report and explained that the Regulation of Investigatory Powers Act 2000 (‘the ACT’) regulated the use of covert activities by Local Authorities. It created the statutory framework by which covert surveillance activities may be lawfully undertaken. She added that the Act was in place to ensure that Authorities comply with the Human Rights Act.

Ms Davies explained that the use of covert surveillance under the Act was subject to the approval of a Magistrate who must take into account the necessity of the action to be taken, the proportionality of the action and the potential for collateral intrusion into the privacy of others not related to the investigation before granting approval.

The Committee heard that during 2014/15 the Council authorised covert surveillance on 4 occasions, three of which were related to investigations carried out by Trading Standards and one relating to an internal investigation. Ms Davies also informed the Committee that the Council had collected subscriber details on 22 occasions but that these all related to the same case.

Members took the opportunity to congratulate the Trading Standards department on its work.

Dr Jones pointed out that the Policy attached to the report stated that the Committee would receive a quarterly report on the use of the Act, but that, although the Committee had delegated that function to the Audit Working Group (AWG), as Chairman of that group he had never received such a report.

Ian Dyson, Chief Internal Auditor, answered that if there were any actions to report, they should be reported to the Chairman of the AWG and if it is deemed necessary they should then be put on the agenda for the AWG. However, since there was often little to report, it was likely that this had lapsed.

Peter Clark, County Solicitor and Monitoring Officer, stated that this needed to be reinstated and added that, since the Monitoring Officer would authorise requests for a Magistrate’s approval for use of the Act, the Monitoring Officer should report to the Chairman of the AWG after each instance.

Councillor Bartholomew enquired why the use of routine test purchases was not reported. Ms Davies explained that intelligence regarding underage sales had to be responded to as appropriate and that this may include a visit to the trader or a report to the Police. She added that the Code of Practice only enabled the use of covert surveillance after overt action had failed. However, she added that this guidance had recently been amended to enable Authorities to consider the use of covert actions at an earlier stage and that the Council was planning to carry out underage test purchases in the near future.

Mr Clark concluded that the use of covert surveillance needed to be  ...  view the full minutes text for item 59/15

2:50

As a result of the current Chief Executive leaving the Council at the end of September 2015, the Committee at its last meeting asked for assurance that the Council’s corporate governance arrangements would continue to be fully managed.

This followed the Council’s intention to appoint Mr Peter Clark as the Head of Paid Service and, consequently, to appoint Mr Nick Graham as the Council’s Monitoring Officer with effect from the cessation of the current Chief Executive’s employment with the Council.

This report (AG10) sets out the planned arrangements to give appropriate assurance to the Committee as to how the corporate governance framework is to be maintained and the management arrangements that will be put in place going forward.

RECOMMENDATION

The Committee is RECOMMENDED to comment on and note the limited amendments to senior officer responsibilities for governance outlined in paragraph 10 of this report.

The Committee had before them a report (AG10) which was submitted in response to the Committee’s request at its last meeting for assurance that the Council’s corporate governance arrangements would continue to be fully managed. This was in response to the impending departure of the current Chief Executive at the end of September 2015, the Council’s intention to appoint Mr Peter Clark as the Head of Paid Service and, consequently, to appoint Mr Nick Graham as the Council’s Monitoring Officer.

Glenn Watson, Principal Governance Officer, in introducing the report, explained that the changes in the coverage of responsibilities were set out in the table on Pages 81 – 82 of the agenda. He added that the Head of Paid Service was not legally permitted to fulfil the role of Monitoring Officer. As such, Mr Nick Graham, the current Deputy Monitoring Officer, would fulfil that role. Mr Watson assured the Committee that he did not believe that there was a reduction in the Council’s robust governance arrangements and that, in some areas, this had been strengthened.

Councillor Tanner expressed his concern that there appeared to be no timeframe set with regards to the Senior Management Review that would be taking place following the departure of the Chief Executive and that this could lead to a period of uncertainty. Mr Clark assured the Committee that the County Council Management Team (CCMT) would be working closely together with Members to discuss the shape of the Council and its management structure and that this would commence shortly. However he added that it would not be easy to give a timeframe but hoped that a review would have been carried out before Christmas and a structure proposed within the following two months.

Dr Jones stated that his concern was that he had not got a sense of whether the CCMT was working performing well or not. Mr Clark responded that the paper was not presented in order to give details on the performance of the Council. He explained that the Performance Scrutiny Committee continually assessed the performance of the Council and that, as far as he was aware, the Council was performing at the same level that it had been in the previous 12 months. Mr Clark added that as a consequence of the Chief Executive leaving the Council, there was a need to take stock and produce working arrangements as to how the Council will move forward. As far as performance was concerned, Mr Clark stated that the same structures were in place.

Councillor Hannaby explained that she was anxious that Councillors and politicians were not involved with the proposed governance arrangements and Senior Management Review.

Mr Clark reiterated that as Head of Paid Service, his role would not be that of the Chief Executive. He stated that he was there to lead the CCMT through the uncertain times and ensure that the Council remains held together. He added that taking on the role of Head of Paid Service was not a back door  ...  view the full minutes text for item 60/15

3:10

(AG11)

As a result of the current Chief Executive leaving the Council at the end of September 2015, it is a legal requirement for the Council to appoint a new County Returning Officer.

The Council is required to appoint a County Returning Officer under Section 35(1) of the Representation of the People Act 1983.  The Returning Officer is responsible for the arrangement of elections to the County Council. 

Under the Council’s Constitution, the Audit & Governance Committee retains delegated responsibility for appointing the Council’s Returning Officer and it is for the Committee to appoint a suitably qualified person to fulfil the role.

RECOMMENDATION

The Committee is RECOMMENDED to appoint Mr Peter Clark, the current Chief Legal Officer, as the County Returning Officer for the Council, with effect from the cessation of the current Chief Executive’s employment with the Council.

(Peter Clark, Chief Legal Officer and Head of Law and Culture, left the room for the duration of this item)

Glenn Watson, Principal Governance Officer, in introducing the report, explained that, as a result of the current Chief Executive leaving the Council at the end of September 2015, it is a legal requirement for the Council to appoint a new County Returning Officer. The Council is required to appoint a County Returning Officer under Section 35(1) of the Representation of the People Act 1983.  The Returning Officer is responsible for the arrangement of elections to the County Council. 

Mr Watson told the Committee that under the Council’s Constitution, the Audit & Governance Committee retained delegated responsibility for appointing the Council’s Returning Officer and that it was for the Committee to appoint a suitably qualified person to fulfil the role. Mr Watson explained that the responsibilities of the post were set out in Paragraph 4 of the report.

Mr Watson added that Mr Peter Clark, having also served as Deputy Returning Officer, had significant legal and managerial experience of overseeing the Council’s elections and that on the basis of his experience the Committee was recommended to appoint Mr Clark as the County Returning Officer.

Councillor Smith enquired who was responsible for appointing the Deputy Returning Officer. Mr Watson explained that it is the Returning Officer who made that appointment.

Councillor Lovatt asked to whom the Returning Officer was directly responsible. Mr Watson explained that as the Returning Officer was personally responsible for election matters, the Returning Officer was responsible to the Electoral Commission.

A number of Members stated that, while they were happy for Mr Clark to be appointed to the role, they were concerned that the recommendation to the report did not make clear that the appointment was on an interim basis until the review into the senior management structure of the Council was concluded.

Mr Watson added that it was for the Audit and Governance Committee to appoint and reappoint to the post as it felt fit. However, Members stated that they were keen for the recommendation to reflect that the appointment to the post should reflect the outcome of the review into the senior management structure of the Council.

RESOLVED:  to appoint Mr Peter Clark, the current Chief Legal Officer, as the interim County Returning Officer for the Council, with effect from the cessation of the current Chief Executive’s employment with the Council until the conclusion of the Senior Management Review.

3:30

The Chief Finance Officer will provide the Committee with a verbal update on the status of the On Boarding Project in respect of the Partnership arrangement with Hampshire County Council for the provision of HR and Finance Services.

RECOMMENDATION

The committee is RECOMMENDED to receive the presentation.

Lorna Baxter, Chief Finance Officer, gave an update to the Committee on the implementation of the Partnership arrangement with Hampshire County Council for the provision of HR and Finance Services through the Integrated Business Centre (IBC).

Mrs Baxter told the Committee that the implementation of IBC services was a significant business change and that, during the first two weeks after the go-live date, more than 17,000 users had signed in to the system, 2,000 invoices had been added and 4,000 travel expenses had been claimed through the system.

Mrs Baxter added that adopting the new processes had been particularly challenging for schools since there was only a short opportunity for schools to process their payroll following the end of the summer holidays. Despite this, Mrs Baxter stated that she stood by the decision to delay the go-live date and added that a significant amount of support was being provided for schools. This included 15 help sessions in June with a further 70 arranged to provide one to one support.

Mrs Baxter explained that there were still issues that needed to be resolved but that her view remained that it would take around 6 months for the new system to completely bed in. She added that the processes provided by the IBC were functioning as they should. However issues arose when processes at Oxfordshire County Council were not followed correctly.

Councillor Hards stated that issues involving payments for schools were of a critical concern and queried where schools should turn for advice. Mrs Baxter stated that the Council was working closely with schools to provide a significant amount of information on where to direct issues.

Councillor Hards added that when issues are raised with the IBC, as far as the user could tell, nobody was dealing with them. Mrs Baxter stated that it had been fed beck to Hampshire County Council that customer service and times were not as expected.

The Committee received the presentation.

3:50

Report by the Chief Internal Auditor (AG13).

The report summarises the matters arising at the most recent meeting of the Audit Working Group (AWG).

RECOMMENDATION

The Committee is RECOMMENDED to note the report.

Ian Dyson, Chief Internal Auditor, introduced the report on the September meeting of the Audit Working Group (AWG). He informed the Committee that no material issues had arisen from the item on the Oxfordshire Fire and Rescue Service Risk Register.

With reference to the Internal Audit Update, Mr Dyson explained that one Priority One Action had not been met and that the Senior Manager had been requested to attend the next meeting in order that the AWG understand the reasons why the Action had not yet been met and to determine whether the delays were appropriate to the level of risk.

Councillor Smith thanked Mr Dyson and Dr Jones, Chairman of the AWG, for the in-depth meeting and stated that she was pleased to note that Deputy Directors would attend the meeting to answer probing questions.

Members expressed their concern that the audit of the disposal of ICT equipment had resulted in a Red opinion. They expressed doubts as to whether the Council knew where all of the equipment is and stressed the importance of such matters to the Council’s reputation.

Mr Dyson explained that it was difficult to get absolute assurance as to the location of all ICT equipment, but stressed that there were restrictions on email accounts, on the content of emails and on who and what could be accessed on the ICT Network. He added that the ICT policy ensured that there was personal responsibility over the use of ICT equipment.

Councillor Hallchurch added that the only way of ensuring that all ICT equipment was disposed of safely was to destroy the Hard Drive of the devices.

The Committee AGREED to note the report.

4:00

To review the Committee’s Work Programme (AG14).

The Committee had before them the Committee’s Work Programme for 2015.

The Committee AGREED the Work Programme for 2015, subject to the following additions:

18 November 2015

·                     Special meeting of the Audit Working Group – 1:00 – 2:00 pm, for a private session with the External Auditor.

·                     SCS LEAN and IT system update.