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ITEM AU3

AUDIT COMMITTEE - 28 june 2006

Minutes of the Meeting commencing at 10.00 am and finishing at 1.35 pm

Present:

Voting Members:

Councillor David Wilmshurst - in the chair

Councillor Alan Bryden
Councillor Patrick Greene
Councillor Colin Lamont
Councillor Charles Mathew
Councillor Dermot Roaf
Councillor John Sanders
Councillor Craig Simmons

Non-Voting Members:

Dr G. Jones

Other Members in Attendance:

Councillor Mrs J. Heathcoat (for Agenda Items 6, 7, 8, 9, 10, 11)
Councillor John Howell (for Agenda Item 6)
Councillor Keith R. Mitchell (for Agenda Item 10)
Councillor C. H. Shouler (for Agenda Items 7, 8, 9, 11)

Officers:

Whole of meeting: G. Malcolm (Chief Executive’s Office); I. Dyson, S. Scane (Resources).

Part of meeting: P. Clark, M. King, G. Paton, S. Skivington, J. Stone (Resources).

The Committee considered the matters, reports and recommendations contained or referred to in the agenda for the meeting, together with a schedule of addenda tabled at the meeting, and decided as set out below. Except insofar as otherwise specified, the reasons for the decisions are contained in the agenda, reports and schedule, copies of which are attached to the signed Minutes.

    26/06. MINUTES

    The Minutes of the meeting of the Committee held on 26 April 2006 were approved and signed.

    Minute 24/06 – Statement on Internal Control Assurance Process: the County Solicitor confirmed that the assurance framework had been set out as a diagram to aid understanding. It was available on the Council’s Intranet under ‘Shared Information’ and in hard copy on request.

    27/06. MEMBERSHIP

    (Agenda Item 5)

    On 26 April the Chairman reported that no positive action was being taken to fill the non-voting co-opted member vacancy on the Committee. Following the re-designation of the former Best Value & Audit Committee as an Audit Committee it was unclear whether the co-option of a third representative of the business community was required/justified. The Committee had resolved to consider the matter at this meeting.

    In the light of the two current vacant co-opted member places and following the re-designation of the former Best Value & Audit Committee as an Audit Committee, the Committee considered that it did not require three representatives of the business community at this time.

    RESOLVED: (on a motion by Councillor Greene seconded by Councillor Farrow and carried nem con) to RECOMMEND Council to reduce from three to one the number of non-voting co-opted member places on the Committee.

    28/06. SAP REVITALISATION – QUARTERLY MONITORING REPORT

    (Agenda Item 6)

    The Committee considered the quarterly monitoring report (AU6) on SAP Revitalisation. The paper provided a summary of progress on the SAP Revitalisation Programme in delivering improvements to the operation and use of SAP. Mr King introduced the paper and responded to questions including the completion of the changes within the core SAP system for defined procurement areas and the current position on Project Link, the interface development for client finances in Social & Community Services. The Chart annexed to the report had been updated for e.procurement and was attached to the schedule of Addenda.

    The SAP demonstration requested for members by the Committee had been arranged following consultation with the Chairman to be held on 22 September 2006. Details would be confirmed to members in due course.

    RESOLVED: to

    1. note the progress to date and thank officers for arranging the SAP demonstration; and

    2. ask the Audit Working Group at its next meeting to discuss with the appropriate Directorate officers the position on Project Link and schools’ financial management reporting systems, prior to further consideration of the two matters at the Committee’s next scheduled meeting.

    29/06. AUDIT WORKING GROUP – 15 JUNE 2006

(Agenda Item 7)

The Committee considered a report (AU7) on the matters which had been considered by the Audit Working Group (AWG) on 15 June 2006.

The following specific matters were drawn to the Committee’s attention:-

Project Management

The Group:

    • was pleased to note that the Project Management Guidelines had been re-designated as the Council’s Project Management Framework, and that it was now explicit they were mandatory for all projects. However, the Group expressed concerns at how compliance could be monitored within the existing management arrangements;

- was also concerned to note that only one Directorate had been able to provide Ms. Simpson with a list of all projects they were running;

    • agreed that a deadline of 31 July 2006 should be set for Directorates to submit lists of projects that had been assessed against a clear project definition criteria. Ms Simpson was asked to co-ordinate this, and to report to the September meeting of the AWG. The Group also requested that where information provided by the Directorates was considered by Ms. Simpson to be incomplete, or inconsistent, the relevant Business Manager also attend the September AWG meeting.

Statement on Internal Control (SIC)

The Group considered the statement was fair and gave a balanced reflection on the state of internal control.

Risk Registers

- Risk Management Annual Report: the Group congratulated Mrs. Kaluza on the first Risk Management Annual Report and agreed that significant improvements had been made in identifying and escalating risks, with the challenge now to integrate this into managements planning processes.

- Revised Risk Escalation and Reporting Process: the Group agreed the proposed changes to the assessment criteria and reporting arrangements for the escalation of risk. The Group also concurred with the report in defining the role of the AWG as not to challenge individual risks, but to consider whether the process used had been consistently applied and was effective.

- Strategic Risk Register and Significant Service Risks: the Group noted the progress through the revision of the risk registers and welcomed the first report on the escalated risks, but expressed concern at the lack of consistency across service risk registers. The risks registers were to be updated applying the revised assessment criteria at the end of June, and the Group had asked Mr. Jackson and Mrs Kaluza to undertake a quality review of them to improve the consistency. They had been asked to report back to the AWG in six months.

Internal Audit Services

The Group:

- welcomed the report and was pleased to note the opinion that in general the internal control environment continued to improve.;

- accepted the changes to the Audit Plan;

- discussed the questionnaire and agreed that it was good but felt that it was too soon to issue such a document. The Group considered more value would be achieved in getting independent feedback on the performance of the new Internal Audit Team, and therefore it would be more appropriate for a questionnaire to be circulated around December 2006.

Annual Report by Chairman of the Audit Working Group

The Group felt that this was a good report; no amendments were requested.

At the Committee’s suggestion officers undertook to include in future reports the names/designations of officers and members attending AWG meetings.

RESOLVED: to adopt the report.

    30/06. AUDIT WORKING GROUP: REVIEW OF ACTIVITIES 2005/06

    (Agenda Item 8)

    The Committee considered a review by Dr Jones of the activities of the Audit Working Group in 2005/06 (AU8). Dr Jones introduced the paper, gave an overview of the Group’s activities during 2005/06 and highlighted key areas including the improved internal control environment and strengthened risk management.

    In relation to paragraph 17 of the report officers reminded members of the training and development opportunities on audit matters which had been arranged and held for Committee members. Member development was considered further at Minute 34/06 – Work Programme - below.

    RESOLVED: to receive and welcomed the report and thank Dr Jones, members of the Group and supporting officers for their work during the year.

    31/06. INTERNAL AUDIT SERVICES – DRAFT ANNUAL REPORT 2005/06

    (Agenda Item 9)

    The Committee considered the Internal Audit Annual Report 2005/06 (AU9) including the Head of Internal Audit Opinion on the System of Internal Control and a summary of the internal audit activity and performance during the year.

    Mr Dyson introduced the paper and commented on its draft format pending finalisation of a small number of reports, the development of the in-house Internal Audit Team and the reduction in reliance on contracted-in services. The Annual Report would not be brought back for Committee consideration unless there were material changes.

    RESOLVED: to

    1. note the Annual Report 2005/06; and

    2. thank Mr Dyson and colleagues for their work.

    32/06. STATEMENT ON INTERNAL CONTROL 2005/06

    (Agenda Item 10)

    The Accounts and Audit Regulations 2003 required the Council to conduct a review at least once a year on the effectiveness of its system of internal control and produce a statement on its effectiveness as part of the Council’s Statement of Accounts.

    The Committee considered a report (AU10) which reviewed the process for the production of the Statement on Internal Control and presented the Statement for 2005/06 for the Committee’s approval.

    The Solicitor to the Council amended paragraph 2 of his covering report by the deletion of ‘2004/05’ and substitution of ‘2005/06’. He reported that on 21 June 2006 the Cabinet had endorsed the process of internal control undertaken during 2005/06 as evidenced by the Statement on Internal Control 2005/06. Councillor Mitchell confirmed that he was satisfied that the actions would enhance the Council’s internal controls and corporate governance status and had signed the Statement.

    No amendments were necessary in the light of Committee consideration.

    RESOLVED: to approve the Statement on Internal Control 2005/06 for inclusion in the annual Statement of Accounts.

    33/06. STATEMENT OF ACCOUNTS 2005/06

    (Agenda Item 11)

    The Committee considered a report (AU11) which presented the Statement of Accounts 2005/06. The Accounts and Audit Regulations 2003 required the Statement of Accounts for the year ending 31 March 2006 to be formally approved by a committee of the Council within three months of the end of the financial year. The Regulations also required that, following approval, the Statement of Accounts should be signed and dated by the Chairman of the Committee. An overview of the financial position of the Council at 31 March 2006 was contained in the Foreword by the Head of Finance & Procurement.

    Ms Stone introduced the report and the Statement of Accounts 2005/06 which had been completed by the earlier deadline of 30 June 2006. Councillor Shouler and the Head of Finance & Procurement paid tribute to the officers who had contributed to this achievement.

    Ms Scane drew members’ attention to the Summary of Accounts which had been circulated for information and to the success of the Oxfordshire Pension Fund which for 2004/05 was the top performing pension fund in the country; for 2005/06 performance of the investment assets was being finalised.

    Members raised a range of questions around specific aspects of the accounts. Councillor Shouler provided updated information regarding the Cabinet’s consideration of carry forwards and virements. He confirmed that the surplus on the On Street Parking Account was transferred to the Council’s reserves after allowing for funding the removal of charges at the Council's Park and Ride sites and commented on the capitalisation of structural maintenance to maximise the use of capital resources.

    The Committee’s agreed amendments to the Statement of Accounts are detailed at (a) below.

    RESOLVED: to

    1. approve the Statement of Accounts for 2005/06 (signed by the Chairman) for submission to the Auditors subject:

      2. on page 4, paragraph 4, third sentence to the deletion of ‘are’ and substitution of ‘were’;

      on page 37 to the addition of related parties’ first names; and

      to ‘Vale of White Horse’ being corrected throughout;

    2. thank and congratulated the financial accounting staff, in particular Sue Scane, Hilary Cameron, Stephanie Skivington and Jo Stone for their outstanding work on completion of the Final Accounts, Statement of Accounts and Summary of Accounts 2005/06 by the earlier deadline (30 June 2006).

    34/06. AUDIT COMMITTEE WORK PROGRAMME 2006

(Agenda Item 12)

The Committee reviewed its Work Programme (AU12).

RESOLVED: to:

    1. approve variations to the Committee’s Work Programme as follows:-

      2. Add to 26 July 2006:

      Topic: Compliance with the CIPFA Guidance on Audit Committees in Local Government.

      Contact: Ian Dyson, Resources

      Add to 22 September 2006:

      Topic: Risk Management:

      - a general report on the process and progress with implementing the Strategy;

      - Escalation process – for approval.

      Contact: Director for Resources (p)/Evelyn Kaluza, Risk Manager

      Defer from 18 October 2005 to 10 January 2006:

      Topic: Statement on Internal Control Process: Review.

      Contact: Peter Clark, County Solicitor/

      Georgina Paton, Corporate & Professional Standards Manager.

    2. hold informal briefings on specific audit related matters prior to the commencement of scheduled Audit Committee meetings from 26 July 2006 and provisionally at 10.30 a.m. in order to enable members to develop and fulfil their audit role.

in the Chair

Date of signing 2006

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