Councillor Liz Brighouse moved and Councillor John Howson seconded that Councillor Roz Smith be elected Chairman of the Committee for the 2018/19 Council Year.

Councillor Tony Ilott moved and Councillor Charles Mathew seconded that Councillor Nick Carter be elected Chairman of the Committee for the 2018/19 Council Year.

Both nominations were put to a vote.  There were 3 votes for Councillor Roz Smith and 4 votes for Councillor Nick Carter.

RESOLVED: that Councillor Nick Carter be elected Chairman of the Committee for the 2018/19 Council Year.

Councillor Nick Carter moved and Councillor Charles Mathew seconded that Councillor Tony Ilott be elected Deputy Chairman of the Committee for the 2018/19 Council Year.

RESOLVED: that Councillor Tony Ilott be elected Deputy Chairman of the Committee for the 2018/19 Council Year.

Apologies were received from Councillor Paul Buckley (Councillor John Howson substituting) and Councillor Helen Evans (Councillor Liz Brighouse substituting).

In relation to Agenda Item 12, Councillor Ian Corkin and Councillor Tony Ilott declared that they were also councillors for Cherwell District Council.

To approve the minutes of the meeting held on 25 April 2018 and to receive information arising from them.

The minutes of the meeting of 25 April 2018 were approved and signed.

The Chairman asked Officers for updates on a number of items arising from the minutes:

·         26/18: Ian Dyson responded that he did not have an update on the delay in providing a centre for placements of Looked After Children but he undertook to look into it.

·         29/18: Sarah Cox reported that there is a GDPR Audit underway now which will find if there is any issue with leavers still on the IT system.

3.15pm

Report by the Director of Finance

This report presents the Internal Audit Charter and Internal Audit Quality Assurance Programme for 2018/19. These are subject to annual review. The report also provides an update on the implementation of recommendations from the External Assessment of Internal Audit against the Public Sector Internal Audit Standards.

The Committee is RECOMMENDED to:

(a)                approve the Internal Audit Charter;

(b)                note the Quality Assurance and Improvement Programme; and

(c)                note that the recommendations from the External Assessment have been fully implemented.

Sarah Cox introduced the report.  It is a requirement of the Public Sector Internal Audit Standards to have an Internal Audit Charter and it is subject to annual approval by the Audit & Governance Committee.  An external assessment by CIPFA was very positive, identifying a small number of minor improvements.  All of their recommendations have been implemented.

Members thanked the Audit Team for their work in completing the recommended actions and asked what kind of changes have been made.  Sarah Cox gave an example where a reference to the standards should have been included.  The full list of recommendations is in Appendix 3.

RESOLVED: to

a)            approve the Internal Audit Charter;

b)           note the Quality Assurance and Improvement Programme; and

c)            note that the recommendations from the External Assessment have been fully implemented.

3.25pm

Report by the by the Director of Finance

This report presents the Counter Fraud Strategy and Plan for 2018/19.

The Committee is RECOMMENDED to comment and note the Counter Fraud Strategy and Plan for 2018/19.

Sarah Cox introduced the report.  In March when the Committee was last updated on this it looked like a partnership with Oxford City Council would soon be in place.  While that is still the long-term goal, the plan for the next year or two will be for the City Council to deliver an investigation service and receive referrals.  It is expected that this will result in more proactive investigations.

Members raised a number of issues and Officers responded as follows:

·         A more proactive approach includes greater capture of information and improved training.

·         The advantages in working with the City Council include:

o   They have the professional expertise and the issues are becoming more complex.

o   They already have links with the District Councils and the County Council’s aim is to have an overall view for Oxfordshire.

·         Resources will be added if the Council identifies that there is value in it.

·         The team has not done school audits for some time – assurance is through sampling – so the conversion of many schools to academies will not free up audit resources.

·         The service needs to be promoted as that will have a preventative effect.

·         The County Council plans to pay a fixed fee equivalent to 1 full time post or around £30,000.

RESOLVED: to note the Counter Fraud Strategy and Plan for 2018/19.

1.40pm

Report by the Director of Finance

The Accounts and Audit Regulations 2015 require the Director of Finance to publish the unaudited Statement of Accounts 2017/18 no later than 31 May 2018 and certify that they give a true and fair view of the County Council’s financial position and income and expenditure for the year. This was achieved on 31 May 2018 and the unaudited accounts were published on the Council’s website for public inspection. The Regulations require the Statement of Accounts to be considered by a committee of the Council by 31 July 2018 and, following that consideration, to be approved by resolution of that committee. This report presents the accounts to the Audit & Governance Committee for consideration and approval, with the findings of the audit available in Ernst & Young LLP’s audit results reports. 

The Committee is RECOMMENDED to:

(a)              Consider and approve the Statement of Accounts 2017/18 at Annex 1;

(b)              Note the Summary Accounts 2017/18 at Annex 2;

(c)              Agree that no changes are required to the Annual Governance Statement, previously approved by the Committee on 25 April 2018;

(d)              Consider and approve the Letter of Representations 2017/18 for the Oxfordshire County Council accounts at Annex 3;

(e)              Consider and approve the Letter of Representations 2017/18 for the Oxfordshire Pension Fund accounts at Annex 4;

(f)               Agree that the Director of Finance, in consultation with the Chairman of the Committee (or Deputy Chairman in his absence), can make any further changes to the Statement of Accounts 2017/18 and / or letters of representation that may arise during completion of the audit.

The report and addenda were introduced by Lorna Baxter and Hannah Doney.  The earlier deadline for completion of accounts and the change in personnel were handled very well and the accounts were ready for signing.

Members raised issues and the following responses were given by Officers and Paul King of the external auditors, EY:

·         The external auditors were happy that the difference of £7.7m between the estimated Pension Fund net asset share for the Council and the actual share was essentially a timing issue, as the actual position was known at the time when the final audit took place, but would not have been known at the time that the draft accounts were prepared.  So it was not a reflection of an error or omission on either the part of the actuary or the Council.

·         The external auditors are close to resolving the objection lodged to the 2015/16 accounts in respect of LOBO loans.  The auditors are also considering further information provided by the Council in respect of the Pension Fund climate risk objection in respect of the 2016/17 accounts.  It is not anticipated that the outcomes will have an impact on the accounts or Value for money Conclusion.

·         The external auditors would not advise on the Pension Fund investment strategy.  They would consider whether risk has been considered properly and that professional advice is taken.  The decision that the costs of valuing heritage assets would be disproportionate was taken several years ago by officers.  This mostly related to the County Museum.  Building valuations are included.

·         Regarding security bonds, such as those from S106 agreements, guarantees do not feature as assets.

·         If a school voluntarily becomes an academy it must pay any deficit balance to the Council.

·         The total of current claims relating to Municipal Mutual Insurance Plc is around £4m.  New claims this year were around £50,000.

·         It was agreed to supply information regarding the use of funds from the Thomas Gifford Charity and the value of Cogges Museum on the balance sheet after the meeting.

RESOLVED: to

a)            Consider and approve the Statement of Accounts 2017/18 at Annex 1;

b)           Note the Summary Accounts 2017/18 at Annex 2;

c)            Agree the addition to the Annual Governance Statement as described in paragraph 8 of the Addenda to the Statement of Accounts 2017/18;

d)           Consider and approve the Letter of Representations 2017/18 for the Oxfordshire County Council accounts at Annex 3;

e)            Consider and approve the Letter of Representations 2017/18 for the Oxfordshire Pension Fund accounts at Annex 4;

f)             Agree that the Director of Finance, in consultation with the Chairman of the Committee (or Deputy Chairman in his absence), can make any further changes to the Statement of Accounts 2017/18 and / or letters of representation that may arise during completion of the audit.

2.10pm

A representative from the external auditors Ernst & Young, will attend to present the following item:

Paul King introduced the audit results reports for Oxfordshire County Council and the Oxfordshire Pension Fund.  He noted that some of the issues he had wished to address had already been discussed under the previous item.  There were no issues with meeting the earlier deadline for publishing the audited statement of accounts, and thanked the Council’s finance team for their help and support in meeting the deadline, or with the change of custodian for the pension fund.

Members raised a number of issues on the report which Paul King addressed as follows:

·         The external auditors absorbed the fee for specialist valuation advice on the museum building evaluation last year but cannot do so this year.  Similarly, the issues relating to the significant risk to the Value for Money Conclusion concerning Carillion will result in extra fees.

·         The graph on page 260 is included to demonstrate that the planned use of reserves and projected savings should result in a continued reducing trajectory for borrowings.

·         The external auditors can confirm that from the information and evidence available, the Council has the discretion to charge for DIY waste.

RESOLVED: to note the reports.

2.55pm

Report by the Director of Finance

The report sets out the Treasury Management activity undertaken in the financial year 2017/18 in compliance with the CIPFA Code of Practice.  The report includes Debt and Investment activity, Prudential Indicator Outturn, Investment Strategy, and interest receivable and payable for the financial year.

The Committee is RECOMMENDED to note the report, and to RECOMMEND Council to note the Council’s Treasury Management Activity in 2017/18.

Tim Chapple introduced the report which addressed debt and investment activity.  No new borrowing was arranged during 2017/18.  Performance indicators show that Oxfordshire had a higher than average rate of return with a lower than average risk.

Officers responded to Members’ questions as follows:

·         The benchmarking club is not required for risk monitoring but the statistics are useful to know and there is no fee.

·         The Council had two loans with Northamptonshire County Council.  One has been repaid and the other is expected to be repaid on time on 7 September 2018.  The Section 114 notice does not apply to expenditure already contracted.

·         Officers meet with Arlingclose advisors twice a year and are in regular contact.  The maturity limits listed on Page 333 of the Agenda are those advised by Arlingclose.

RESOLVED: to note the report, and to RECOMMEND Council to note the Council’s Treasury Management Activity in 2017/18.

3.45pm

Report by the Director of Law & Governance

Cabinet agreed on 4 June 2018 to approve, in principle, a joint working arrangement with Cherwell District Council.  These arrangements are to be governed by a formal “s113 Agreement” which is currently being finalised.  The decision to enter into joint working arrangements, and an s113 Agreement, was also endorsed by Cherwell District Council at its meeting on 16 July.

It is intended by both authorities that the governance arrangements will include the appointment of a joint Chief Executive and statutory Head of Paid Service (agreed by this Council on 10 July and Cherwell on 16 July), together with arrangements for a partnership working group, joint committees and a process for managing potential conflicts of interest. 

This report seeks the Committee’s comments on the last of these issues – the process for managing conflicts of interest. A report on the other governance aspects will then be brought to the Committee for comment once these have been worked up in more indicative detail.

The report therefore sets out the proposed governance arrangements for managing conflicts of interest under joint working arrangements.

The Committee is RECOMMENDED:

(a)  To note and endorse the potential adoption of a conflicts of interests protocol and ethical walls policy;

(b)  To regularly monitor the operation of the protocols and policy; and

(c)  To delegate authority to the Monitoring Officer to make any further minor adjustments to these documents and make the necessary changes to the Council’s Constitution.

Nick Graham introduced the report which set out how the joint working arrangements with Cherwell District Council (CDC) will manage conflicts of interest.  The Council already has arrangements to deal with any conflicts that can arise for existing staff.  

Members welcomed the reference to the importance of “auditable correspondence” in maintaining transparency in the procedures.

Councillor Ian Corkin and Councillor Tony Ilott, who are both also members of Cherwell District Council, welcomed the report.  Their experience of joint working arrangements with South Northamptonshire Council (SNC) was a positive one and they emphasised the importance of a clear Section 113 agreement.

Councillor John Howson noted that the arrangements would need to include references to ‘dual hat’ councillors as that did not arise in the CDC/SNC arrangement.

Nick Graham responded to Members’ questions as follows:

·         He felt that it was better to present this document first rather than bring all documents to the next meeting and possibly overload the agenda.  The next step – the Section 113 agreement – is being drafted.

·         He emphasised the wording that the Councils “will endeavour to” avoid adopting contradictory policies.  It does not say “must”.

·         This arrangement is different from that with Hampshire which has no shared teams.

·         The process will be overseen by the Monitoring Officer and the Committee will receive regular updates as specified in recommendation b).

Members discussed the wording of recommendation c) and agreed amendments to make it clear that changes to the Constitution will only be made following the endorsement by the Committee of the Section 113 agreement.

RESOLVED: to

(a)             To note and endorse the potential adoption of a conflicts of interests protocol and ethical walls policy;

(b)             To regularly monitor the operation of the protocols and policy; and

(c)             To delegate authority to the Monitoring Officer to make any further adjustments to these documents and bring them back to the next meeting of the Committee with the S113 agreement for endorsement and make the necessary changes to the Council’s Constitution thereafter.

Report by the Director of Law & Governance

On 10 July 2018, Full Council agreed to appoint Yvonne Rees as Joint Chief Executive and Head of Paid Service of Oxfordshire County Council. This arose from the decision by Cabinet to enter into partnership arrangements with Cherwell District Council.  It was agreed by Council that the appointment should commence on 1 October 2018 and it was also decided that the employment of the current Chief Executive and Head of Paid Service, Peter Clark, should cease on 30 September. 

Peter Clark had been appointed to the statutory role of County Returning Officer in 2015 by this Committee. Under the Council’s Constitution, this Committee has the delegated decision making to appoint the County Returning Officer.

As a consequence of the decision to appoint Yvonne Rees and to terminate the employment of Peter Clark, the Audit & Governance Committee, under its delegated powers, must make an appointment to the statutory role of County Returning Officer so that there is no discontinuity after 30 September. 

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.  This report therefore asks the Committee to make an appointment to this role, with effect from 1 October 2018.

This report proposes that Yvonne Rees be appointed County Returning Officer given her significant experience as a Returning Officer and Electoral Registration Officer with her current and previous authorities.

The Committee is RECOMMENDED to appoint Yvonne Rees, in her capacity as Joint Chief Executive and Head of Paid Service, to the role of County Returning Officer as from 1 October 2018.

Nick Graham introduced the report.  The current Chief Executive, Peter Clark, has been the Council’s Returning Officer since 2015.  As he is leaving with effect from the 30 September 2018, it is necessary to appoint a replacement and it is this Committee’s delegated decision to make the appointment.  The new Joint Chief Executive, Yvonne Rees, has considerable experience in this area and it is proposed to appoint her as Returning Officer from 1 October 2018.

RESOLVED: to appoint Yvonne Rees, in her capacity as Joint Chief Executive and Head of Paid Service, to the role of County Returning Officer as from 1 October 2018.

4.15pm

Report by the Director of Human Resources

This report provides an update on the findings of the Review of the DBS* data held against employee records on SAP; the root causes of the omissions and errors; the actions being put in place to correct the data on SAP; and the controls being put in place to monitor DBS compliance and data quality going forward.

*DBS – Disclosure and Barring Service

The Committee is RECOMMENDED to support the actions being taken to resolve the discrepancies in our recording system and the actions being taken to ensure rechecks are consistently carried out every three years. 

Steve Munn introduced the report which updated the Committee on progress on resolving the IT issue relating to DBS checks since the last report in April.  He emphasised as stated in paragraph 7.1 of the report that no employees have been recruited without having the required DBS check at point of recruitment.

Steve Munn, Fiona Percival and Jenny Lewis of Hampshire County Council responded to points raised by Members as follows:

·         The training and guidance for managers includes the importance of checking employment history, including any gaps.

·         The current policy of reviewing DBS checks every three years is being reviewed.

·         Taxi drivers employed on school runs are checked by our transport service and must have a badge.

·         The error was sporadic but the software bug has been fixed.  Currently the check is manual but it is intended to automate it in the long-term.

·         Employees are contractually obliged to disclose convictions.  We are recommending that managers ask about this annually in a one-to-one.

RESOLVED: to support the actions being taken to resolve the discrepancies in our recording system and the actions being taken to ensure rechecks are consistently carried out every three years. 

out every three years. 

4.30pm

Report by the Director, Capital, Investment & Delivery

Report updating on the ongoing work being undertaken.

The Committee is recommended to:

(a)   consider and comment on progress in implementation of the Recovery Plan;

(b)   note that there are likely to be substantial rectification costs relating to a range of legacy issues, which will be more fully quantified following completion of the assessments and audits now underway;

(c)   note that these costs will be considered within the council’s annual budget cycle and processes for 2019/2020.

Frank Dick introduced the report, giving apologies on behalf of Alexandra Bailey who was on annual leave.  He summarised the four phases of the Recovery Plan and outlined the progress currently on phase 3 – the assessment of the legacy issues.  It is expected that the assessment will cost £1.7m and that can be managed from current resources.  The overall cost to the Council of Carillion’s collapse is still uncertain but will probably be spread over a five-year programme.

Members noted that concerns had been raised up to five years ago and that an argument was made at the start that there should have been a break clause in the contract.

Officers responded to Members’ questions as follows:

·         OCC is working with the Local Government Association to organise a conference of councils affected on 2 October in London.  The meeting will consider collective action.

·         Lessons learned include more robust contract management with clear KPIs and retaining an in-house client function.

·         Our finance department is keeping a close eye on other big providers.

·         An implementation plan will be drawn up and can be shared with Members.

·         Project managers will have the responsibility of communicating with schools affected.

·         Surveys will be checked by an in-house team.

RESOLVED: to

a)            consider and comment on progress in implementation of the Recovery Plan;

b)           note that there are likely to be substantial rectification costs relating to a range of legacy issues, which will be more fully quantified following completion of the assessments and audits now underway;

c)            note that these costs will be considered within the council’s annual budget cycle and processes for 2019/2020.

5.00pm

This report presents the matters considered by the Audit Working Group Meeting of 27 June 2018.

The Committee is recommended to note the report.

Sarah Cox introduced the report and the discussion focussed on the Mental Health Update which still has a red report.  Work is continuing on the return of responsibility for over 65s to OCC’s locality teams.  The issue will be discussed again by the Audit Working Group at its meeting on 5 December 2018.

The discussion has focussed on management of the contract.  The Performance Scrutiny Committee could monitor the outcomes.  It was agreed that the work of both Committees should be coordinated through the meeting of Scrutiny Chairs.

RESOLVED: to note the report.

5.10pm

To review the Committee’s Work Programme.

The Committee made the following changes to the Work Programme:

12 September 2018

Add “Update on the Financial Management Action Plan”.

Add “Joint Working Arrangements with Cherwell”.

Defer “Governance of the Housing and Growth Deal” to 14 November 2018.

14 November 2018

Add “Update on Carillion Recovery Plan”

It was agreed to move the start time of the extra meeting on 6 September to 3pm in order to avoid a clash with a political group meeting.

It was agreed to move the start time of the meeting on 12 September to 1.30pm due to the long agenda expected.  The private briefing which is scheduled to precede that meeting will now be held between Noon and 1pm.

The Chairman stated that he would review the schedule of meetings with Officers given the number of items that need to be scheduled.