Agenda and minutes

The following apologies and temporary appointments were received:

Councillor Stewart Lilly substituted on behalf of Councillor Caroline Newton and Councillor Lawrie Stratford sent his apologies.

To approve the minutes of the meeting held on 20 November 2013 (AG3) and to receive information arising from them.

The Minutes of the meeting held 20 November 2014 were approved and signed, subject to the following amendments:

Minute 51/13 – add the following text to the resolution “ and welcome the new Audit Manager, Mr Alan Witty to the Committee;

Minute 53/13 -1^st paragraph, fifth line, substitute the text ‘it’s’ with ‘its’.

2.10pm

Report by Lorna Baxter, Chief Finance Officer (or relevant officer) (AG5).

Treasury management is the management of the council’s cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities and the pursuit of optimum performance consistent with those risks.

The Local Government Act 2003 requires the Council to set out its treasury strategy for borrowing and to prepare an Annual Investment Strategy.  The Annual Investment Strategy sets out the Council’s policies for managing its investments and for giving priority to the security and liquidity of those investments.

The Council is also required to ‘have regard to’ the Prudential Code and to set Prudential Indicators for the next three years to ensure that the Council’s capital investment plans are affordable, prudent and sustainable.

The Audit & Governance Committee is responsible for scrutiny of the Treasury Management strategy and policies in advance of the report being approved by Cabinet then Council. 

The draft Treasury Management Strategy Statement and Annual Investment Strategy for 2014/15 are set out in within the report.

When the report is considered by Cabinet on 28 January 2014 it will be RECOMMENDED to recommend to Council to:

(a)         approve the Prudential Indicators for 2014/15, 2015/16 and 2016/17 as set out in Annex 1;

(b)        approve the Minimum Revenue Provision Policy for 2014/15 as set out in Annex 2;

(c)         approve the Treasury Management Strategy Statement & Annual Investment Strategy 2014/15;

(d)        continue to delegate the authority to withdraw or advance additional funds to/from external fund managers to the TMST;

(e)         approve the continued delegation of changes required to the Annual Treasury Management Strategy Statement & Annual Investment Strategy to the Chief Finance Officer in consultation with the Leader of the Council and Cabinet Member for Finance;

(f)           approve the Draft Treasury Management Policy Statement as set out at Annex 5.

The Committee considered the report to the Cabinet on 28 January 2014 (AG5) by the Chief finance Officer on the Treasury Management Strategy and the Annual Management Strategy for 2014/15.

Mr Ley introduced the report and responded to members’ questions and comments.  The report complied with the technical requirement of the CIPFA Treasury Management Code of Practice. He reported that the Council was required to approve Prudential Indicators for 2014/15, 2015/16 and 2016/17 and that draft Prudential Indicators were set out at Annex 1.  These were currently incomplete as they wre dependent on updates to the Capital Programme but wouldl be included in the Treasury Management Strategy Statement as an annex to the Service and Resource Planning Report to be approved by Council on 18 February 2014.

The strategy for financing prudential borrowing during 2014/15 was to use temporary internal balances.  External debt would continue to be repaid upon maturity and would not be refinanced unless the economic outlook or the capital programme spend forecasts change.

The Annual Investment Strategy for 2014/15 was based on an average base rate of 0.50% and assumed an average return of 0.80%, 0.30% above base rate.  The average cash balance for 2014/15 was forecast to be £300m, including externally managed funds.  The list of proposed specified and non-specified investment instruments were set out in full in Appendices C and D respectively.  The maximum maturity and duration limits for counterparties were currently determined by matrices based on Fitch credit ratings.  The matrices proposed for 2014/15 and the full rationale for determining the credit worthiness of existing and potential counterparties was set out in paragraphs 7.10 to 7.23 to the report.

The Council also intended to continue to place funds in pooled funds with the external fund managers.  Further details were given in section 8 to the report.

The Council would continue to prioritise the security and liquidity of capital.  The Council would aim to achieve investment returns that were commensurate with these priorities.  To achieve this, the Treasury Management Strategy Team (TMST) would aim to maintain a balanced portfolio between longer term deposits with high credit quality counterparties and investments in liquid instruments and shorter term deposits with Money Market Funds (MMFs), high credit quality banks and local authorities.

He further reported that the Council would continue to benchmark the performance of the Treasury Management function through membership of the CIPFA benchmarking club and the benchmarking undertaken by the Council’s Treasury advisor Arlingclose.  In-house performance would also continue to be benchmarked against 3 month London Interbank Bid Rate (LIBID).

The Committee sought some explanation of the financial language containe within the report.  In response, officers undertook to provide members of the Committee with some explanation of the financial terminology contained within the report.

RESOLVED:

The Committee AGREED to forward the report to the Cabinet, noting that the Prudential Indicators for 2014/15 were not available in time for the Audit & Governance Committee to comment.

2.30pm

This report presents the Internal Audit progress report for 2013/14 and Quarter 4 Plan for the approval of the Audit & Governance Committee (AG6).

The Committee had before them the Internal Audit Progress report, together with the Plan for quarter 4 2013/14 (AG6) for approval.

Mr Dyson introduced the 2013/14 update against Quarter 4 Internal Audit Plan which was summarised in Annex 1 to the report.  He also reported on the appointment of a new Senior Auditor, Tessa Clayton who commenced employment at the end of November 2013 and that due to unplanned pressure on internal audit resources had suspended their proactive counter-fraud reviews and the Health & Safety Governance Audit until next year to allow for previously outsourced audits scheduled for Quarter 4 to come back in-house.

The Committee were pleased to note that the issue of theft from one of the Council’s establishments had been dealt with and the money returned and that processes around cash handling had been reviewed and changed to ensure that this did not occur again.

In response to a request from a member of the Committee, Mr Dyson undertook to investigate how the Stewardship Fund was being operated.

RESOLVED: to note the report and approve the Quarter 4 Plan.

2.50pm

Report by Peter Clark, County Solicitor & Monitoring Officer and David Illingworth, Senior Financial Adviser (AG7).

The Council needs to have a good system of Governance - so that how we consider and take decisions is clear to everyone.  The paper sets out the progress on improving our governance arrangements.  It also updates one key document that is part of our governance system.

The Committee is RECOMMENDED to approve the Corporate Governance Assurance Framework.

The Committee had before them a report (AG7) which set out progress on improving the Council’s governance arrangements and sought approval to the Corporate Governance Assurance Framework.

Mr Clark introduced the report and responded to members’ questions and comments.  In relation to the Annual Governance Statement, he reported that in the main, good progress had been made against the targets set out in Annex 1 to the report, although two areas remained of concern around data security and date quality.

The Corporate Governance Working Group would be focusing on data security at its next meeting and work continued around improving Data Quality.

In relation to Annex 2, Dr Geoff Jones reported that in relation to paragraph 7.7.2 of Annex 2, the Chairman of the Audit Group no longer provided an independent assessment of the effectiveness of the assurance process.

RESOLVED:  to approve the Corporate Governance Assurance Framework, subject to a box showing the ‘Scrutiny Committee Function’ being added to the flowchart at Annex 2 to the report and the removal of paragraph 7.7.2 from Annex 2 of the report.

3.10pm

Report by Peter Clark, County Solicitor and Monitoring Officer, presented by Glenn Watson, Principal Governance Officer (AG8).

The Committee had before them a report (AG8) which set out the Monitoring Officer Group’s findings in relation to the Department of Communities and Local Government non-statutory guidance on members’ “personal interests”.

Mr Clark in introducing the report, reminded members that it was important to note that the absence of a requirement within the Oxfordshire Code to declare non-pecuniary interests did not mean that Members were precluded from registering and declaring such interests.

RESOLVED (by 7 votes to 0, with 1 Abstention) in light of the Monitoring Officer Group’s review, to make no changes to the current Oxfordshire Members’ Code of Conduct at this time.

Agreed by 7 votes to 0, with 1 Abstention.

3.30pm

The Monitoring Officer will undertake a survey of the extended CCMT about the Internal Audit Service.  This will be used to inform the annual report prepared by the Monitoring Officer on the effectiveness of the system of Internal Audit that in turn contributes to the Annual Governance Statement process.

In addition the Monitoring Officer will also be seeking evidence that the Internal Audit Service conforms to the proper practice standards for Internal Audit introduced in April 2013, the Public Sector Internal Audit Standards.  The Chief Internal Auditor will initially undertake a self-assessment against those standards, and will present the findings and improvement plan for review by the Monitoring Officer.  The Monitoring Officer will provide a report on his findings to the April meeting.

Verbal update to Committee by Ian Dyson, Chief Internal Auditor.

The Committee had before them an update regarding the review of the process for reporting on the effectiveness of the system of internal audit, including a survey of the extended CCMT to be undertaken by the Monitoring Officer, a self assessment by the Chief Internal Auditor, followed by a presentation of his findings for review by the Monitoring Officer.  The Monitoring officer will the present his findings to the April Meeting.

The Committee noted the update.

3.50pm

To review / update the Committee’s Work Programme (Co-ordinated by Committee officer in consultation with relevant directorate officers) (AG10)

RESOLVED:  the Committee noted the Committee’s work programme, subject to adding an item on Business Strategies to 26 February Meeting.

Note:  Mrs Baxter informed the Committee that she would be unable to attend the meeting set down for April.