Meeting documents
Audit Panel
Tuesday, 26th May, 2015
Present:
Councillor Ricci (Chair)
Councillors Bailey, Fairfoull, J Fitzpatrick, Miah and Peet
Apologies for Absence:
Councillors P Buckley and Welsh
1. Declarations Of Interest
There were no declarations of interest to report at this meeting.
2. Minutes
The Minutes of the proceedings of the meeting of the Audit Panel held on 17 February 2015 having been circulated, were signed as a correct record.
3. Review Of Internal Audit 2014/15
Consideration was given to a report of the Assistant Executive Director of Finance, which reviewed the effectiveness of internal audit and measured practices and performance of Internal Audit with the standards set out in the Public Sector Internal Audit Standards.
Information was given with regard to the background to the review, the requirements of the Public Sector Internal Audit Standards and the process that had been adopted.
It was explained that the Code of Ethics set out the definitions in principles (called standards) which established how a professional internal audit service should operate. It provided a framework for measurement, management and monitoring the function.
The standards and an assessment against each of the standards and a comparison of the results for 2014 compared to the position as at March 2015 were detailed.
The report concluded that, against each of the standards, Internal Audit had achieved all the requirements of the Public Sector Internal Audit Standards and that the Internal Audit Service contributed to the overall control environment of the Council. The outcome of the review, together with the positive comments received from the External Auditors and also from Senior Management Teams/Executive Members, demonstrated that the Council had an adequate and effective system of internal audit.
Members added their congratulations to the Internal Audit Team.
Resolved
That the content of the report be noted.
4. Risk Management And Audit Services – Annual Report 2014/15
The Head of Risk Management and Audit Services submitted a report, which summarised the work performed by the Service Unit and provided assurances as to the adequacy of the Council’s system of internal control.
Reference was made to the major achievements of the Service Unit for 2014/15 which were detailed in the report.
It was explained that the report presented to the Audit Panel in June 2014 provided a listing of the work planned for 2014/15. The plan, as reported during the year, was revised on a regular basis to ensure that it was aligned to changes in service priorities, risks, directorate structures and resources available. Successful delivery of the plan could be measured in two ways:
- Actual productive audit days delivered against the plan; and
- Percentage of planned audits completed.
The full year position of the audit plan by Directorate/Service Area was detailed, which displayed the plan realigned for service changes, actual days as at 31 March 2015 and the percentage completed. The days delivered against the plan in total were 1,762 compared to the revised plan of 1,767, which represented 99.7%.
The year-end Plan detailed the realignment of the plan, taking into account the management restructure which became effective in November 2014.
The second measure focused on the planned audits and calculated the actual rate of completion per audit and then consolidated the individual outcomes into one single percentage figure. The figure for 2014/15 was 92% compared to 93% in 2013/14. Whilst the indicator was above the target of 90%, it showed a reduction from last year and the volatility of the indicator. This was because a large number of audits were still in progress at the end of March 2015 resulting in the dip in performance.
With regard to anti-fraud work, reference was made to the nineteen cases of suspected fraud and irregularity which were reported to Internal Audit for full investigation, (this was an amended figure from that shown in the report of seventeen). All cases had been investigated using a standard protocol and procedure.
The report further detailed the following:
- Risk Management and Insurance;
- Performance indicators; and
- Audit opinion based on results of 2014/15 activity.
The report concluded that the overall audit opinion on the control environment for 2014/15 based upon the audit work undertaken was strong and effective. It was accepted that the gross risk for the council had increased (due to reduced capacity, whilst still having to deliver a significant change programme to meet financial challenges). It was reported that controls were in place to mitigate such risks and where improvements had been highlighted, managers had agreed to implement the suggested recommendations. This would aid the management of risk and support the overall control environment.
Resolved
That the report, the overall audit opinion on the control environment and the performance of the Service Unit for 2014/15 be noted.
5. Annual Governance Report 2014/15
The Assistant Executive Director of Finance submitted a report, which sought Members’ views on the following:
- The Draft Annual Review against the Code of Corporate Governance for 2014/15; and
- The Draft Annual Governance Statement for 2014/15.
The report explained the framework around Corporate Governance requirements and detailed the Six Core (and supporting) Principles which were adopted and approved by the Audit Panel in May 2013.
It was further reported that a review had been completed assessing the Council’s position against the approved Code of Corporate Governance in order to demonstrate compliance, ongoing developments/improvement and to prepare for the compilation of this year’s Annual Governance Statement and Statement of Assurance, which were required by the Accounts and Audit Regulations 2011. The draft annual review for 2014/15 was appended to the report.
The Draft Annual Governance Statement for 2014/15 was also appended to the report for comment.
Resolved
- That the draft report on the Annual Review against the Code of Corporate Governance for 2014/15 be approved;
- That the draft Annual Governance Statement for 2014/15 be approved; and
- That delegated authority be granted to the Assistant Executive Director – Finance to make further amendments to the Annual Governance Statement upon receipt of further feedback.
6. Risk Management And Audit Services Work Plan For 2015/16
Consideration was given to a report of the Head of Risk Management and Audit Services, which presented the planned work for the Risk Management and Audit Service for 2015/16. The report set out in detail the work of Internal Audit and sought approval for the Annual Audit Plan for 2015/16, which was appended to the report.
The Head of Risk Management and Audit Services explained that the Plan was reviewed and revised each year to take into account service and legislative changes, which could result in large shifts in priorities and culminated in the production of the Annual Audit Plan.
It was reported that Audits were prioritised based on an assessment of risk and allocated a risk score of High, Medium/High, Medium, Low/Medium or Low and the factors taken into account were outlined.
The Annual Plan for 2015/16 was appended to the report and provided a summary of the key audits to be undertaken in each Directorate, including those planned for the Greater Manchester Pension Fund. The total days required to deliver the plan were 1,937 days and had been matched to available resources. It was further reported that the Plan would be kept under constant review and regular meetings would be held with the Senior Management Team to ensure that it truly reflected the key risks for the Council going forward as it changed in shape and size to meet the financial challenges placed upon it.
With regard to the Public Sector Internal Audit Standards (PSIAS), it was reported that from 1 April 2013, the CIPFA Code of Practice for Internal Audit in the UK 2006 had been replaced by the Public Sector Internal Audit Standards (PSIAS). A self-assessment against the standards had been completed to inform the Review of Internal Audit (Minute 3 refers), and the service was fully compliant with the requirements. An external assessment must be conducted at least once every five years as part of the PSIAS and this would be co-ordinated by the AGMA Chief Internal Auditors Group.
A self-assessment against the CIPFA Statement for the Head of Internal Audit had also been completed as part of the Review of Internal Audit and the Annual Governance Statement assurance work and the Head of Risk Management and Audit Services met all the requirements.
In order to comply with the Public Sector Internal Audit Standards, it was necessary for the Audit Panel to approve the Internal Audit Strategy and the Internal Audit Charter, both of which were also appended to the report.
The report further detailed the following:
- Proactive fraud work/irregularity investigations;
- Risk management and insurance;
- National Anti-Fraud Network Data and Intelligence Services;
- Performance Monitoring; and
- Member Training.
Resolved
- That the Internal Audit Annual Plan for 2015/16, as appended to the report be approved;
- That the planned work of the Risk Management and Insurance Team and National Anti-Fraud Network Team be noted; and
- That the Internal Audit Strategy and Internal Audit Charter for 2014/15, as appended to the report, be approved.
7. Accounting For Policies And Estimates For The 2014/15 Accounts
Consideration was given to a report of the Assistant Executive Director, Finance, which sought to bring certain items to the attention of the Panel in advance of the closure of the accounts for 2014/15, as follows:
- Accounting policies to be used;
- Critical judgements made in applying the accounting policies; and
- Assumptions made about the future and other major sources of estimated uncertainty within the accounts,
The accounting policies, as based on the requirements of the International Financial Reporting Standards (IFRS) were used to produce the financial statement for 2014/15 and were also appended to the report.
There were no major changes to the IFRS that would influence the Council’s accounting policies for 2014/15, however there were some minor amendments and these were detailed.
Judgements to be used in preparing the accounts were detailed and discussed and particular reference made to the level of Council reserves and the level of financial risk being faced by the Council. It was explained that reserves provided a way for the council to ensure that any financial shocks could be absorbed without immediately impacting on frontline service delivery.
The amended Statement of Accounting Policies (effective for the accounts for 2014/15 and future years) was appended to the report.
Resolved
- That the amended Statement of Accounting Policies, as appended to the report, be agreed; and
- That the critical judgements and major sources of estimated uncertainties included within the Statement of Accounts and the impact of alternative estimation bases being used, be noted.
8. GMPF Statement Of Accounts 2014/2015 Governance Arrangements
The Assistant Executive Director of Finance presented a report informing Members of the governance arrangements for approval of the accounts for Greater Manchester Pension Fund as part of the accounts of Tameside as administering authority. The report also sought Members approval of the key assumptions for estimates to be used in the accounts.
It was explained that the key decision making body for the Fund was the Management Panel, which approved the Pension Fund accounts and received audit reports. The key decision making bodies for the Council were: the Audit Panel, which received accounting policy reports for both the Fund and the Council and the Overview (Audit) Panel, which received the report of the external auditor following the audit of the accounts. TMBC retained overall responsibility for the accounts of both and the follow-up on the audit reports received for both, but in practice delegated the responsibility for the Fund to the Fund.
The provisional timetable for approval of the accounts and audit reports by these bodies for 2015/16 was outlined in the report.
With regard to key changes for GMPF accounts for the current year, the partial adoption of CIPFA’s guidance on accounting for management costs in the LGPS were explained. The aim of the guidance was to improve transparency in the reporting of investment costs by improved disclosure of transaction costs and costs of pooled investment vehicles. The intention for GMPF was to phase in the implementation over two years.
Resolved
- That the governance arrangements for the approval of the accounts for Greater Manchester Pension Fund as part of the accounts of Tameside MBC as administering authority, be noted; and
- The assumptions for estimates to be used in the GMPF Statement of Accounts 2014/15 be approved.
9. Urgent Items
The Chair reported that there were no urgent items for consideration at this meeting.