Audit and Governance Committee

Audit and Governance Committee
Wednesday, 13th March 2024 at 6:00pm

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Slide 1
Cllr Liz McShane
Mrs Sue Lewis
Cllr Liz McShane

2 Declarations of Interest

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Declarations of Interest

Cllr John Wing
Cllr Liz McShane
Cllr James Butcher
Cllr Adrian Lockwood
Cllr James Butcher

3 Minutes

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Final Minutes

Cllr Liz McShane
Cllr Liz McShane

4 Quarterly Code of Conduct Complaints Update Report

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Quarterlycomplaintsreport

Mrs Amandeep Khroud
Cllr Liz McShane
Mrs Sue Lewis
Cllr Liz McShane
Cllr Liz McShane
Mrs Amandeep Khroud

5 Annual Report - Maintaining Ethical Standards

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ReportMaintainingEthicalStandards

Cllr Liz McShane
Cllr Liz McShane
Mrs Amandeep Khroud

6 Local Code of Corporate Governance

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Cllr Liz McShane
Cllr James Butcher
Mrs Amandeep Khroud
Cllr Liz McShane
Mrs Amandeep Khroud
Cllr James Butcher
Cllr Liz McShane
Cllr James Butcher
Mrs Amandeep Khroud
Cllr Liz McShane
Mrs Sue Lewis
Cllr Liz McShane

7 Quarterly Internal Audit Update Report from the Head of East Kent Audit Partnership

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Update Report - EK Audit Partnership

Mrs Sue Lewis
Lydia Morrison
Lydia Morrison
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Cllr Liz McShane
Cllr Liz McShane
Cllr David Wimble
Cllr Liz McShane
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Cllr Liz McShane
Cllr Liz McShane
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Lydia Morrison
Cllr Liz McShane
Cllr James Butcher
Mrs Amandeep Khroud
Lydia Morrison
Cllr James Butcher
Lydia Morrison
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Cllr Liz McShane
Dr Susan Priest
Cllr Liz McShane
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8 Draft Internal Audit Plan 2024/25

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Drat Audit Plan

Cllr Liz McShane
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Cllr Liz McShane
Cllr James Butcher
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Cllr James Butcher
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Cllr Liz McShane
Mr Ola Owolabi
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Cllr Liz McShane
Cllr Liz McShane
Cllr James Butcher
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Cllr James Butcher
Mr Ola Owolabi
Cllr Liz McShane
Cllr Liz McShane
Microphone C
Cllr Liz McShane
Cllr Liz McShane
Cllr James Butcher
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Cllr James Butcher
Mr Ola Owolabi
Cllr James Butcher
Lydia Morrison
Cllr James Butcher
Cllr James Butcher
Lydia Morrison
Cllr James Butcher
Cllr Liz McShane
Cllr Liz McShane
Cllr Liz McShane
Cllr Liz McShane

11 Annual Report to the Audit and Governance Committee

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Annual Report to A and G

Mrs Amandeep Khroud
Cllr Liz McShane
Cllr Liz McShane

12 Update to Corporate Risk Register

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Adrian Tofts
Cllr Liz McShane
Mr Jonathan Hicks
Cllr Liz McShane
Cllr David Wimble
Cllr Liz McShane
Cllr John Wing
Mr Jonathan Hicks
Cllr Liz McShane
Cllr Adrian Lockwood
Cllr Liz McShane
Dr Susan Priest
Cllr Liz McShane
Adrian Tofts
Cllr Liz McShane
Mrs Amandeep Khroud
Cllr Liz McShane
Cllr Liz McShane
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credit.

1 Apologies for Absence

ready to go okay.

Cllr Liz McShane - 0:00:06

good evening, everyone and welcome to the meeting of the audit and governance committee.

this meeting will be webcast to the live to the internet, for those who do not wish to be recorded or filmed, you will need to leave the Chamber for members officers and others speaking at the meeting, it is important that the microphones are used so viewers on the webcast and others in the room may here you would anyone with a mobile phone please switched to silent mode as they can be distracting.

I would like to remind Members that, although we all have strong opinions on matters under consideration, it is important to treat members officers and public speakers with respect.

and just to welcome Councillor Godfrey as well, thank you.

so can we start with one item in one place, apologies for absence,

Mrs Sue Lewis - 0:00:59

there is no apologies today, Chair excellent bless you.

2 Declarations of Interest

Cllr Liz McShane - 0:01:03

agenda item 2 declarations of interest, do we have any declarations of interest?

no.

sorry, constantly, thank you, Chair, I looked at the clouds a year

Cllr John Wing - 0:01:18

pawb gratuitous any other.

Cllr Liz McShane - 0:01:22

Councillor Lockwood,

Cllr James Butcher - 0:01:24

Cllr Adrian Lockwood - 0:01:25

same director of opportunities and declare an interest as director of opportunities, thank you.

3 Minutes

Cllr James Butcher - 0:01:32

Cllr Liz McShane - 0:01:38

sorry item 3 minutes from the last meeting, any comments questions.

I've just got one small amendment, thank you know, what Louis can we change that commend them on page 1 of the at the end of the minutes refers to chairman, can we change that to Chair please, and also item 9 last page and pitch 33 of the local corporate governance a paper thank you.

an agenda item for quarterly code of conduct complaints report.

4 Quarterly Code of Conduct Complaints Update Report

Cllr Liz McShane - 0:02:09

Mrs Amandeep Khroud - 0:02:16

thank you Chair, good evening, members and good evening officers I'd like to present agenda item 4, which is the quarterly code of conduct complaints, update, report, the recommendations on page 13 of your pack, this report details the number of complaints received during the period of the 1st of October to the 31st of December 2023. The introduction explains section 27 of the Localism Act, which requires local authorities to have

a statutory duty to promote high standards of conduct by members and obviously places a duty on us to adopt a code of conduct, or paragraph 2 of your report, and page 14 outlines a summary of the complaints received and paragraph 2.2 details, the types of complaints received and a paragraph 2.3 outlines the the consequences or what happened to reports as outlined in paragraph 2.3.

so members are kindly asked to note the content of this report, thank you, thank you any comments or questions on the report for the agenda item.

Cllr Liz McShane - 0:03:37

are we all happy to receive and note the report on the show of hands?

Mrs Sue Lewis - 0:03:45

I'm sorry.

Cllr Liz McShane - 0:03:49

can the proposer please, thank you, Councillor Womble and a seconder.

considering thank you and Grimshaw hands.

SATs 5.

OK 5 4.

in to agenda item 5, we got.

Cllr Liz McShane - 0:04:14

the annual report maintaining ethical standards amid deep again, thank you.

Mrs Amandeep Khroud - 0:04:20

thank you Chair, I'd like to present agenda item 5, which is the annual report maintaining ethical standards, and this is a report Members that you receive on an annual basis in accordance with the terms of reference of this Committee.

5 Annual Report - Maintaining Ethical Standards

one of the roles of the monitoring officer who you, I am the monitoring officer for the Council, is to advance good governance and the highest standards of ethical behaviours throughout the council paragraph.

two of your report on page 18 outlines the way in which we deal with code of conduct, complaints and also the number of complaints received as part of maintaining ethical standards, obviously it's important for Members to keep up to date their register of interest and information relating to that is outlined in paragraph 3 of your report and also mentioned in there is is quite rightly the whistleblowing policy and there were no incidences of whistleblowing in 2023 24 so again members are asked to kindly receive a note this report. Thank you. Thank you on Monday.

any comments questions from the Committee.

Cllr Liz McShane - 0:05:36

could I then have a proposer, please?

Councillor Lockwood, thank you and a seconder Councillor Rumble, thank you, and we'd like to vote on this.

sat 7 4, thank you.

Cllr Liz McShane - 0:06:00

so moving to agenda item 6 local code of corporate governance again amidst poverty you, thank you, thank you Chair, this relates to agenda

Mrs Amandeep Khroud - 0:06:10

item 6 on page 21.

of your report again, the audit and governance committee is asked to approve the local code of governance for 2024 25 and the recommendations are before you on page 21.

6 Local Code of Corporate Governance

the code is derived from the guidance of CIPFA and solace and deals with delivering good governance in the Local government framework, the Code is appended and begins on page 25 of your report and recommends the seven core principles, as outlined in paragraph 2.2

further details relating to all of the seven core principles are outlined in the Code, which begins on page 25 and ends on page 33, so again Members are kindly asked to receiving note the report and to adopt the local code of corporate governance as appended to this report thank you.

Cllr Liz McShane - 0:07:16

thank you committee any questions or comments on the report or the code.

thank you, Councillor Brett.

I say, or an observation, as much as anything, I'm just looking at the

Cllr James Butcher - 0:07:28

seven principles and just wonder if we got some more work to do or thinking around be. We had the engagement around the new committee system and we did get a few members of the public, and I think they were quite critical about the way in which we'd reached out. So it does feel to me that we could do with refreshing our ways of engaging with all our communities, I think you can feel a bit of probably like a bit of a tick-box exercise. I'm not just thinking how challenging see is defining outcomes wow, when we've had the

community Safety reports, there's lots of fantastic initiatives, but it can be hard to say yes, but are we making a difference to those those outcomes, I think that's another challenge for us to be able to track how our initiatives and activities make a difference to the outcomes that we've identified certain evidence that I think that's an observation.

Mrs Amandeep Khroud - 0:08:32

can we do. Thank you, Councillor Butcher, both very good observations and I've made a note of them. I agree with what you've said and I will work with the officers to make improvements in the way that we engage with stakeholders. It's definitely, for example, something that we picked up following the public event we had, and it's something we're very alive to, so we will strive to make improvements in this. Thank you, and just on that point, can we get, obviously, to do some work on additional work on it? Can we get some updates and see where things

Cllr Liz McShane - 0:09:05

are going on? The

Mrs Amandeep Khroud - 0:09:10

yes, yes, I'm very happy for the CAMHS team to keep in touch with the with you and give you updates on how they're doing, yes, don't see why not, thank you.

we must build on that.

Cllr James Butcher - 0:09:19

Cllr Liz McShane - 0:09:20

yeah, I mean I, I guess it's then a question about how you might

Cllr James Butcher - 0:09:22

involve members in that, because clearly we spend quite a lot of our time in our communities talking to residents, so will have clearly thoughts about ways of doing that that could contribute to the conversation.

very happy to go back to the team and I think of the best way of

Mrs Amandeep Khroud - 0:09:38

engaging with members on it.

thank you

thank you, Councillor Burt, whichever there's good observations

Cllr Liz McShane - 0:09:45

committee, any questions, comments or additional observations from anyone.

you're very quiet tonight.

OK.

a proposer, please, Councillor Butcher, thank you seconder Councillor ring, thank you, but can we take a vote on this to receive and note the report and adopt the local code of corporate governance?

Mrs Sue Lewis - 0:10:14

SATS 7, sorry 6, it's 6 at our school sixth floor, thank you no

Cllr Liz McShane - 0:10:17

abstentions none against.

7 Quarterly Internal Audit Update Report from the Head of East Kent Audit Partnership

and moving on to agenda item 8, it's the draft internal audit plan of which you Lydia.

item 7.

Mrs Sue Lewis - 0:10:34

Lydia Morrison - 0:10:37

they are both relate to say.

Lydia Morrison - 0:10:40

speech says he hasn't got, it saw item 7, sorry about that.

quarterly internal audit update report from the Head of East Kent audit partnership, so it's Christine, thank you, thank you Chair good

Microphone A - 0:11:03

evening members, if I could take you please, to page 39 of the agenda pack, this shows the four audits completed since we last met the assurance level.

the number of critical, high medium and low risks recoup recommendations that we've raised within those reports, each audit at the conclusion has a completed action plan, agreed with the responsible officer and the number of recommendations roughly because the number of bullets in the Executive Summary is shown for each of these reviews.

that follow on pages 40 to 43 in due course, of course, we will be conducting a progress report against each of those actions and that will be reported to the Committee in due course.

a very important aspect of our work is the follow up, of course we don't just take management word for it when next confirmed that these actions have been implemented, we independently test that and report that to you.

and on page 44 of the document pack, the two progress reports that have been undertaken in the period are detailed for you there.

any critical or high priority recommendations that are outstanding at the time of follow up are listed on Appendix 1 to the report.

each of the three listed this time around do have a revised implementation date, and I think you can see the sort of long-term nature of of these ones in terms of

and the and the new due dates for these to be implemented, it is at this point, though we are escalating as you know, it can all do partnership undertakes one follow up, and therefore we are escalating this to the Committee, they will of course be tracked by the year end and appear if they were to be still outstanding at that point in our annual report.

appendix 2 going through the report lists the audits previously undertaken that have resulted are either limited or partially limited assurance, indicating when those progress reports or scheduled to be undertaken again, so that the Committee knows they haven't gone out of view, we haven't forgotten about them, it's just when the due dates of those recommendations for and then the read through moving through the annexes.

2 December, which was the end of quarter 3, the plan was 66% against a target of 75% we ha, I'm I'm unable to give exact figures because unfortunately, the that's our system is unavailable to us through the VPN but to the end of February sorry, it's the end of June January I can update

that we are 88% complete against the plan, so we haven't got any concerns, we have had a vacancy within the team, we're waiting to see the impact of that, but members can accept expect to see how it nineties by the end of March in terms of plan completion.

I'm happy to take any questions on the report, thank you

thank you, Christine, any questions.

Cllr Liz McShane - 0:14:04

Cllr Liz McShane - 0:14:10

until the window, just a quick one, really on page 39 to point for

Cllr David Wimble - 0:14:13

housing, anti-social behaviour is a standard kind of number 5 high or medium to low, compared to previous looking at the other, the others that will seem very low at 5.00 high seems a bit high.

thank you Chair.

Cllr Liz McShane - 0:14:33

Microphone A - 0:14:37

thank you for the question, of course, when we are commenced an audit, we looked at detailed or matrix are expected controls on what we expect to find, and then we'll go through the process and test those controls the where we do identified control weaknesses it could be because there's a system change of process changes or something so you can never really predict as you go into an audit what you're going to point and something you've looked at 3.00 years ago or even two years ago with substantial assurance may come out limited if you really can't tell until you actually do the testing.

the bullet points for that one are on page 43, there's four listed the scope for improvement there.

they will largely coherent correlate to those risks and you can see that management have agreed to undertake those actions.

if it is a difficult,

process to draw a straight line, even if he said if we compared this audit to one of the others of the same topic we've undertaken at 1.00 of the other partner sites, you might find they might have six high, but there could be completely different things so I hate to say it but it does depend.

thank you

thank you.

Cllr Liz McShane - 0:15:43

Cllr Liz McShane - 0:15:47

I'd like to ask a question on Appendix 1, just on the fraud summary of critical.

recommendations.

the original proposed completion date for the fraud report was September 23, another new one is September 24, can you just tell us why it's taken a year younger?

Microphone A - 0:16:07

if I could, I inclined to management with anybody who would like to respond in terms of.

the changes in the internal workings and and the processes.

it's page 46.

Lydia Morrison - 0:16:39

thank you for flaring with me when I read it again.

we did have a Officer that was leading on the risk management who left the Authority back in March of last year, it has taken us a little while to pull together the chief officers, grouped under the governance board that is now pick that up and work has transferred across to the policy team to manage the risk.

the risk was done, as you know, they are reporting today to you on that, I don't think it sees a, it's just an extension due to circumstances rather than anything that I would be concerned about thank you for that.

any other comments or questions Councillor Butcher, and also who does

Cllr Liz McShane - 0:17:20

Cllr James Butcher - 0:17:23

questions for but just the workings of the corporate governance board and how that relates to this committee, I don't think I'm unclear.

that work is relatively new, I think, isn't it the corporate governance support, so I just wanted to understand the work of the corporate governance board and how that relates to us, thank you.

I might have to do a double act on this with bleeding.

Mrs Amandeep Khroud - 0:17:45

so Lydia came up with the suggestion of creating a corporate governance board and for good reason, so it's a board of officers and the it has its own terms of reference, but the main purpose of the group is to pick up.

and deal with the governance issues across the Council and across the various teams and sitting round the table are chief officers who are leading their teams and are responsible for the work within their teams so far it's proved to be very, very effective, we meet on a regular basis but it is an officer group.

and it's early days, but it's a good group, it's a very good group and we're hoping that you know any risk management issues which sometimes can be cross, cutting between different teams can be picked up just to keep possession and certificate, everybody's will be picked up by all officers and dealt with so so that's the brief summary I don't know that if you put anything else to add,

Lydia Morrison - 0:18:50

if it is that it is a group that's led by chief officers, it's very much an operational group, but it does look across the broad range of governance, not just risk, and it is, as M and D PA said, that key group of people where necessary the chief executive joins or any of the other directors will join and it meets monthly or more often if required, they coordinated the work on the budget, they will coordinate the work along the risk, they will be working with our internal auditors around the management actions to make sure that there is no requirement for delays or if there's blockage as to a core team will be put together to make sure that happens. So it is around the full governance of the organisation and that I believe it's working well. It's it's still very much a baby in its infancy, but is maturing very quickly

Cllr James Butcher - 0:19:44

and since I just in terms of work at how things come onto your agenda, I'm interested now and then where there are recommendations coming from internal audit, they automatically get looked at by so in any any recommendation that we're seeing here, that group would have looked at that one.

they will be looking at it, yes, if it's an inappropriate form for it

Lydia Morrison - 0:20:02

to look at if there is, if it's something that's very specific to a service, it may go directly there, but generally, recommendations from A and G will be going to and be looked at by the corporate governance board, but definitely all the recommendations from internal and external auditors anything to do with risk as well fraud complaints, everything because that's related to corporate governance, good corporate governance, did you want

Microphone A - 0:20:43

thank you Chair, yes, it's quite usual, as will probably cover in the next item, where we set the plan in March for the following 12 months, there may well be adjustments, so you'll see that at the bottom of the table,

there would be a little bit longer required to finalise some of those audits that came overwintered into the year and obviously there may sometimes well be reactive or responsive assurance work that we've undertaken which will affect the plan, so anything that is deferred from this year will be reassessed into the rest as to whether it is carried into the next year's plan so hopefully we can track those when we come to the next item.

but yes, in terms of where we've spent them, there will be some overspends on some of the projects there will be time taken away from what we planned is always our best guess when we set out at the beginning of April where we're headed,

so it seems to be expected, but we would cover in the annual report if, if there were any issues around that, if we were being, obviously if it affected our independence, if we were being blocked from undertaking work, so there was no there's no red flags here, thank you.

Cllr Liz McShane - 0:21:48

you just wiped across social media.

Dr Susan Priest - 0:21:55

I always just wanted to come in on the earlier item, really just to talk about the value that I've had, and hopefully the some assurance for the committee about the internal governance board, apart from all the

the substance that I think I'm a deeper Lydia of reviewed for you, one of the critical and I think by added value roles for me, is that I know that governance is having a high priority. It's having a, it's got is an opportunity where it was regularly discussed, so in terms of just the culture of the organisation and the profile given to it. As Members will know, a couple of years ago we had some significant improvements to be made and this piece of the new piece of the machinery, as you say, is new, but it gives. Hopefully, the committee some reassurance that at an officer Chief Officer level, there is a group of senior colleagues that I know meets regularly and they have time and opportunity away from delivering their own individual services to elevate themselves, back up, to give each other a bit of constructive challenge and a bit of a peer learning, but also where there's the sort of compound interest or overlapping interests so that that for me at the moment, it seems to be quite a big part of the emerging value of that board. It means that we can report back from here to them,

it means that, as this was Lydia said about, some of the actions can be discussed there, and you know there are some teams that have made really significant strides in terms of their approach to governance over the last 18 months in particular, and you know that that and those successes until we to give the team the credit there has been a big journey for some teams is worthy of sharing across the organisation as well so that it's got that.

theme 2 as well in terms of continuous learning, so I'm very, very pleased with earliest early steps proving to be very useful groupings.

I just add that chair, it's good to hear, thank you any other

Cllr Liz McShane - 0:24:02

questions comments, no, in that case can I have a proposer place.

Councillor Ingham gave a seconder Councillor Berkshire, so we all were happy to accept the report and note the results of the work at 6.00 4.

moving on to Item 8, so it is Lydia and that was Christine.

sorry.

sorry, assign as fine so as to meet its draft internal audit plan 24 25 Over to you, thank you.

8 Draft Internal Audit Plan 2024/25

Microphone A - 0:24:40

thank you, as the committee knows, one of the most important things that it undertakes is to sign off the annual governance statement, as we've already considered this evening, so this will be the beginning of next year's annual government statement in a large way as one of the large contributions to the assurances that the Committee receives is of course the work of internal audit is not the only issue only source of assurance, but it's one of the key sources of assurance so,

at paragraph 1, setting out the purpose of the report, I think it's very clear to this committee that it it's.

it is why we are presenting the item this evening, so paragraph 2 goes on to set out how the plan has been derived the process and the steps that have been taken to get it thus far, we consider the council's corporate risks the Council's corporate plans along with identifying known issues, we talked to all the heads of service or we got a new legislation coming in in your area, no system are we losing key experienced staff or other changes unknown.

so we can evaluate all these risks and we also consider a national and even global issues and how they may translate and impact the authority, and to that end, on page 59, you can see that we've included the top five risks from this year's risk and focus report, which is a a culmination of work undertaken by the Institute of internal auditors annually.

and last year in previous years we've we've actually included the top 10, but we've crystallise this this year in terms of the top five, as they haven't been a huge amount of movement, I think you know, for example, the climate change risk is a forever risk now, so is it? The top risk has clearly meeting our climate change responsibilities is is a challenge for all organisations

without a doubt, cyber security is still number one, so we've looked at all of these issues. We've spoken with heads of service, we've presented the draft plan to corporate leadership team and of course it can't go without saying. This is a statutory responsibility of the statutory 1 5 1 Officer and it is their their plan, ultimately at the end of the day, so that without sort of further do I think the plan itself is set out for you on pages 63 3 to 70. I would just like to remind the Committee. Whilst it does show a cycle of four years, we're only seeking this evening to agree the next 12 months. The following years. Are there indicative really to show that we can achieve a reasonable coverage over a cycling or rolling cycle? That said, at the end of the report, at the end of the table, there is a list of all of those audits that have fallen outside of that cycle, but again, Members may take comfort from the assurance levels of those reviews. I'm happy to take any questions and check I have just checked the three deferred from this year are proposed for 24 25. Thank you, thank you, and just before I ask the committee for questions.

Cllr Liz McShane - 0:27:31

item R you're in charge agenda item 2.4.

to be inefficient, insufficient audit resources that are commonplace thing, or is it just current situation circumstances in page 59, sorry,

thank you sorry, the intonation there is, we don't audit everything

Microphone A - 0:27:50

every year.

we probably have an army of auditors wouldn't be so yeah, so it is quite normal for us to have what if the job continues, we have an audit universe and within that those entities and of Éluard profile by risk as to which older entities would be looking at in any given year so yeah I think we tried to set it out saying Well if we were trying to cover everything in four years what would it look like that that's the kind of our approach. Thank thank you for clarifying that.

any questions from the Committee.

Cllr Liz McShane - 0:28:21

Councillor Butcher

Cllr James Butcher - 0:28:28

just to have points of clarity on those five top identified risks under the climate change, one that sentence keeping a strategic entrepreneurial attitude will be key to avoid being Martin compliance, could you just pick that Christine?

thank you, it's a direct lift from the risk and focus report said, I

Microphone A - 0:28:46

think, when they have interviewed Chief executives from a number of global international companies, they've crystallise into this wonderful sentence in terms of

inventing new ways of achieving these initiatives, rethinking what we've always done, challenging budgets, challenging approaches challenging procurement, challenging supply chains. I think that that's behind this symptoms, because clearly we are being challenged on me to do things differently, to be greener in the way that we deliver services, so it's a certainly a risk we we've had to look at this. Do we include climate change risk as part of every review that we undertake because they won't affect everyone review that we undertake, but clearly certain services that we are looking at or do we do separate reviews of climate change that we've kind of tried to cut it both ways at the moment in terms of how we approach our work, but certainly I think in terms of

blue-sky thinking in some of the things that were asked today, which is worth noting that risk, thank you.

interests to have a point of clarity, was any party risk and what that

Cllr James Butcher - 0:30:00

means yeah, I think in terms of third parties in terms of supply

Microphone A - 0:30:04

chains, so we might be may entering into a contract with a who may be being supplied by B, C and D and if those those breakdown, how I think one of the examples that one of the waste seminars as if we can't buy spark plugs for our refuse very freighters and we can't get just-in-time ordering working and we can't get or refuse collected so it starts to make you realise how quickly supply chains with global issues.

around the world, affecting goods arriving in this country, thank you.

any other comments or observations.

Cllr Liz McShane - 0:30:39

no, okay, can I have a proposer, please, thank you, Councillor Rumble and a seconder.

Councillor Lockwood, thank you, and are we happy to note the report?

so all in favour, yes.

thank you,

so we come on to item number 9.

statements statement of accounts for 22 23.

Lydia, thank you.

9 22/23 Audit Findings Report

Mr Ola Owolabi - 0:31:18

it's just a quick introduction. The report relates to students of account for 22 23. We shall be prepared in accordance with relevant accounting code. We've been going through officers and mojitos in terms of audits in the accounts for the last few months, the audit itself is substantially complete and the auditors has indicated that an unqualified audit opinion would be issued on the accounts subject to the successful completion of few. I will say few as fundament I wish they are still working on, so the intention is that most of those matters will be completed within the next few days, if not a few weeks, and for a few weeks, with more few days, we are nearly there with them

I will now use this opportunity to call on Sofia who will present the audit findings and I can come back with, I can take questions after thank you.

thank you.

Microphone C - 0:32:13

so in the supplementary pack you'll find there are reports to support agenda item 9.

and the Audit findings report here, it gives her a position statement of where the audit is.

as I said, we are substantially through the testing of the 20 to 23.

financial statements audit, but we are behind where we had planned to be at this stage, so I would have hoped to be able to sign quite shortly after today's meeting, but we are going to have to delay that slightly. What's happening now is that we are substantially through the work, but the work is now going through a review process of Jonty who, as this year's audit manager and myself so Oleh and his team are aware that coming out of our review, there could be additional queries, or also additional findings that we have subsequent to those that are in today's report. I have spoken to the committee before about the wider sector issues around local government audit and although we are delayed, we are still in a good position in that we, the 22 23 audit for the the Council, has not been backstopped

the plan will now be to complete the audit for all the work by the end of the month at the latest, but, as Honor says, it will be the next few days and weeks.

and then, following the additional meeting for audit and governance committee that is being held in April, I will then be in a position to order issued the audit opinion, so taking you through the report on page 9 of the supplementary papers you'll see where we were at the time of drafting the report for Committee, it's the list of the outstanding errors at that time and it moves on a daily hourly basis.

so in terms of what you have in front of you that what's with the Council, the first bullet point is cleared, and we, as the Audit team, are now reviewing the samples that we've been able to collect, and in relation to the last bullet point of what's with the Council we still have the two creditor items in the two grant income items that we're working through working through with the Council and then with the audit team we have been able to clear a number of the areas in bullet points two three and four, so that's really positive and shows good progress.

I will then draw your attention to the bottom of page 12 of the pack, it sets out the timeline of the 22 23 order, so recognising that, as the Audit Team, we were only able to start the order in October, but also flags that the work that we had planned to do straight after we finished our planning procedures was delayed slightly because of the draft financial statements not balancing.

so we weren't able to substantially start the Council work until January.

and then also we have had delays during the last couple of per couple of months in relation to the mapping of the trial balance to the financial statements.

and around obtaining listings that we need to be in a certain way for the weight that we slept are odd examples, so you will note in Appendices A B and C on pages 33 and 34 we've got current year and prior year recommendations that relate to these issues. What I would want, what I want to say to the committee is we really give our thanks to Oleh and the finance team, I think especially Jonathan who've worked really hard and worked really closely with us to get to where we are now on. The audit

and then the other thing is in terms of specific findings at this stage Appendix D, which is on pages 35 to 37.

on 37 we have shown the presentation and disclosure corrections, I do believe there will be a few more corrections to add to this appendices, but when I come back in April, I'll have an updated Audit findings report for you a final version and it will show all the additions or changes that we've made to the report between now and then I'll pause there for any questions.

thank you any comments, questions from the Committee.

Cllr Liz McShane - 0:36:19

Cllr Liz McShane - 0:36:25

Councillor Butcher, yes, a few references to know what the difference

Cllr James Butcher - 0:36:27

you just mentioned isn't a compartment with the wording but amount, mapping and so on, so I guess from our point of view, it's understanding whether those are a kind of one-off issue that you encounters that we won't be encountering in subsequent years.

could we have your feeling that so intended those two areas and those

Microphone C - 0:36:46

recommit related recommendations? We did have issues with the creditor and debtor listings. In the prior years we raised recommendation around that I don't think those those issues were completely bottomed out, which is has led to the issues that we're having this year. The discussions that I've had with the owner and his team are that we, the team, now knows what needs to be done in these areas and are going to be rolling forward, what they have been able to do to resolve the issues in advance of our starting next year's accounts audit. So there is a plan in place to make sure that these issues don't cause us operational problems in the audit next year.

because there's then an earlier deadline, isn't them?

Cllr James Butcher - 0:37:32

for the accounts to be done, as I understand it, Thursday September this year is, I can't remember of whom, but there's something like memories now, I think.

minute.

Mr Ola Owolabi - 0:37:47

to do that is to do with backstop, so all the as funding account up to 22 23 needs to be completed by September 2024, but we are not in the position we intend to complete everything by April 2024.

any other questions or comments.

Cllr Liz McShane - 0:38:06

no.

OK, can I have a proposer, please, Councillor wing, thank you and a seconder.

Councillor Lockwood, right, thank you very much, and so are we happy to note Grant Thornton's final audit findings of the 22 23 statement of accounts and to note the annual report and value for money and 3, the formal external auditor a letter of representation can I take a show of hands, thank you.

at 6.00

Cllr Liz McShane - 0:38:49

so, moving on to Item number 10, the external Auditor's annual audit report.

10 22/23 Auditor's Annual Report

Microphone C - 0:38:54

thank you Chair, so the Auditor's annual report covers the value for money work we've carried out over the Council's arrangements for securing economy, efficiency and effectiveness in its use of resources for 22 23, it picks up from the 21 22 report that we issued in March last year,

and what you can see in the exact summary, so that's page 55 of the pack is an improvement in the direction of travel, no risks of significant weakness were identified for 22 23, and we deemed there to be good progress on the key recommendation that we made last year around contract management and we do pick that that area up in improvement recommendation 4 within the report.

a summary of each of the findings for each of the areas of focus is on page 56.

and you'll see that in total, we have raised seven improvement recommendations this year.

and then just to end, I think, pages 80 to 82, we have the follow up of the key recommendation and nine improvement recommendations that we made in last year's report and, where relevant, we've linked them to current year improvement recommendations and I'll stop there for any questions.

thank you, Sophia, for any questions from the Committee.

Cllr Liz McShane - 0:40:08

Councillor Butcher

Cllr Liz McShane - 0:40:13

Cllr James Butcher - 0:40:35

it's all a question that relates to the session we just had, so this is page 62, I think it is about the

borrowing as a as a percentage of long term assets, and it says it's 15%.

and I guess what we were hearing upstairs was about prudence and so on, so how do we know if that's a prudent level? I know it's indicated that it's lower than some of our neighbours, but how do we judge whether it's prudent so that, within the work that we do, as we've just flagged, whether your average or an outlier, higher or lower, that's what we'd do it in the course of this work, I think it's then four, because we haven't flagged that you are an outlier, we haven't then gone on to do any further work and make any further comments, so I think it's for the council to look at and analyze the level of borrowing and analyze it. Knowing the Council's situation, because borrowing levels at any Council can could be a certain level, but each council has its own reasons for borrowing

and the sometimes it's not that easy to compare one to the other without knowing the detail of the underlying borrowing,

former tenant of Surrey, I still think I'm I'm not clear then, so I guess we're not an outlier, but it is that is that sufficient reassurance that that's prudent not being an outline.

Microphone C - 0:42:09

and if, if you were an outlier, then it would lead us to look into it more, to understand why you were an outlier, I think.

if you have concerns over the underlying detail of where what the Council is borrowing for, or if it's, if you feel at higher or different, compared to compare to peer similar peers, then that's an action for management to do further assessment and on and analysis.

the next thing was about this is improvement recommendation 3.

Cllr James Butcher - 0:42:43

and it seems like the recommendation is to in two parts, this is to do with savings and well I couldn't quite see how the management comments address the second part of your recommendation, so it sounds the second part the Council should refine existing arrangements for monitoring savings plans to ensure those saving plans are delivered and I couldn't quite see how the management comment address that second part of your recommendation, so I don't know who that's a question to any.

Mr Ola Owolabi - 0:43:30

thank you, sir, thank you, Councillor Butcher again what I needed to state as well is that the recommendation in front of you is looking at where we are in 22 23.

since 2002 or after 2023, we have improved most of those monitoring significantly. We have improved the reports in terms of going to Members every quarter, we have improved the budget setting significantly, because if you look at this year, for 24 25, we actually introduce the priority based budget, which actually used a lot of assumptions in terms of looking at all those services that you talk about, that we need to account for within the budget all those parameters, all those factors that is to be, considers all those sensitivity, analysis that needs to be looked into within the MTFS, so the Council has moved a move us significantly compared to where we are in 2023, which include address in Warsaw to savings requirement. Thank you

Cllr James Butcher - 0:44:36

I guess I still don't quite understand, because we we've agreed lots of savings in the conference, yet how do we know, or how do you tell us yes, when we plan to make those savings and in fact we have or we haven't because it didn't work out?

we will be reporting on the target savings from last year, as

Lydia Morrison - 0:44:53

throughout 10 for 22 23, and then for 23 24 that will be part of this year's outturn as well, we have a record of the savings that we have put in place for this year, most of them have actually been removed from the budget, so there's no monitoring to be done there out, but those that remained, which are I think there is only one that continues to be made which is the vacancy saving target and that will be monitored on a quarterly basis as to whether that's been achieved.

or not, the base budget has been reset and does not include a significant amount of efficiency, savings or discretionary savings for this year

Cllr James Butcher - 0:45:41

and this is about contract waivers, sorry, we're gonna do that and I'm addressing this question too, and it says contract waivers are included as a standing agenda item for audit and governance and cabinet.

I haven't been able to spot them on our agenda or Cabinet agenda and

Cllr James Butcher - 0:45:58

there will be coming forward as part of the budget monitoring reports

Lydia Morrison - 0:46:01

that come to the Angie at nil quarterly basis going forward, it was an ambition last year, unfortunately, but we are, we are preparing a report that will be coming through,

thank you.

Cllr James Butcher - 0:46:17

Cllr Liz McShane - 0:46:18

any other questions I've got one.

improvement recommendation, 2 just on the last bit of text, where it says management comments, new corporate plan will be developed during the summer of 24, just wanted to know if that's looks good non track.

can I have a proposer place?

Cllr Liz McShane - 0:46:40

for this

and a seconder anybody, Councillor Godfrey.

Cllr Liz McShane - 0:46:47

thank you, Councillor, Godfrey, to second, and so is the committee happy to receive to note to receive the annual auditors report.

6 4, thank you.

Cllr Liz McShane - 0:47:06

ITEM 11 annual report to the audit and governance committee.

Matthew Sat.

11 Annual Report to the Audit and Governance Committee

Mrs Amandeep Khroud - 0:47:15

thank you Chair, I'd like to present agenda item 11, which is the annual report of the audit and governance committee this report summarises the achievements of the audit and governance committee against the terms of reference for the period 1st of April 2023 to the 31st of March. The recommendation is before you on page 71 of the report, the terms of reference of the audit part of this committee as set out in paragraph 1.2

and the summary of the work that's been undertaken by the audit and governance committee is set out in paragraph 2.8 of your report, which is on page 73, moving on to page 74, the terms of reference for the governance.

parts of this committee is set out in paragraph 3.1 of your report, members are kindly asked to note the contents of this report, thank you.

thank you any comments or questions on this item.

Cllr Liz McShane - 0:48:22

no.

can ever propose or please, Councillor Rumble, thank you very much seconder.

Councillor Wayne, thank you as the committee happy to receive the report at 6.00 for thank you.

moving on to agenda item 12

Cllr Liz McShane - 0:48:49

update to Corporate Risk Register, can I just say it was really helpful to have their kind of summary.

12 Update to Corporate Risk Register

the summary overview is like a dashboard is really helpful to kind of see everything in one Committees probably find that helpful as well, perhaps you could kind of focus on the kind of laser in on things that kind of priorities I'm just saying maybe I don't know if there's other agenda items that could follow that weren't necessarily irrelevant, it would be really helpful, I think and maybe just easier to digest but thank you so who's gonna do this as it Jonas Adrian thank you.

yes, thank you Chair, so.

Adrian Tofts - 0:49:28

this is a report that the Committee will be hopefully familiar with we, we took it last to Committee in December last year.

we circulate the risk register to a chief officers, corporate governance board and Directors, and ask for updates.

and what you have here are the updates on the previous version from December

there have been some new risks identified so within housing, the use of temporary accommodation for homelessness.

there has been changes to election procedures which are reflected as a new risk, and also the change to governance, as well has been highlighted, it's presented in the Excel spreadsheet.

as we've said, in section 3 of the of the report, we recognise it's getting quite text-based and unwieldy now and is perhaps not that easy to to access or understand so.

a new new team has been created within the Council for a governance, performance and risk and

headed up by my colleague Jonathan Hicks, who's here tonight and his ideas are too.

2 2 of how to improve the the presentation are included in Appendix 1 as a stat chart 2, and it's the first first draft for comments, so for the committee to see and how you feel that works really, but.

so over the coming year or so, Jonathan will be working on this and looking at how it can be approved, how it can be improved, so to check that we're capturing the right high level, risks that affect the organisation and to to improve the presentation but but also we we've got these Kent audit partnership looking at how we

report and

manage risk, and so hopefully we will get some useful recommendations that will.

come forward and will be brought to this committee in due course, thank you Chair.

just on the

Cllr Liz McShane - 0:52:00

the Overview, the dashboard and page, can you give us a kind of just a quick explanation of how the scoring works, or maybe just just explain to the committee members?

Mr Jonathan Hicks - 0:52:13

the different traffic light kind of system, but thank you because thank you check good evening members, yes, this is, as Adrian pointed out, it's a kind of first first stab at having a look at how we can present this, I think the important thing to note is this is represents exactly the same data that exists in the risk register.

simply tried to make it yes, it's clear in a kind of school board, fashion listing the the risks and the scoring there as the overall score, so you'll note that in the risk register we look at.

assessing risk by likelihood and severity, but there is an overall score.

and I think, looking at how we scored things previously compared to how we currently score them at a target where we want to be.

in an overview is quite useful, I certainly found it useful and I was looking at it, and so if you look at the the the top.

risk there see one, you can see that we previously recorded that as a risk score of 12 overall, and the current risk score of 9, now, what sort of the RAG, the red, amber green system we use for kind of performance reporting are adopted here to show you that well we want a target score of 4.

we will need to be looking at what actions we can take that might lessen the likelihood of that risk and reduce that risk down, but you can also see with the direction of travel that the risk level has decreased since the last time we reported him, so at a glance you should be able to see which ones are the the higher risks.

with the colour coding as well, which ones were currently on target for and whether the direction of travel is increasing or decreasing.

I am happy to take any questions, thank you any questions, please, 0 please, Councillor Rumble.

Cllr Liz McShane - 0:54:14

no question, moreover, thank you because it's very easy to understand

Cllr David Wimble - 0:54:19

somebody who doesn't read through pages and pages of reports to see whether we're on track what needs improving and what doesn't.

here very much in favour of it.

I think that's the unanimous.

any other comments or questions, Councillor Wing.

Cllr Liz McShane - 0:54:35

Cllr John Wing - 0:54:38

yeah, sorry that there is lots of with varying greens, perhaps amber might be used, one going down getting nearer to target it just might make a bit clearer because when you go through Oasis wedding Green, so it highlights a lot of red meat, it makes it a very bare. Perhaps you can use it Amber for one which is heading in the right direction but not quite reached yeah I forgot what I mean.

Mr Jonathan Hicks - 0:55:03

thank you for the question, yeah, I think open to that, this is the first draft so as we look at reviewing their the risk register and the presentation, I hope to get the community involved in making those decisions on presentation.

Councillor Lockwood,

Cllr Liz McShane - 0:55:21

thank you, Chair, I just like to have my thanks for this dashboard is

Cllr Adrian Lockwood - 0:55:24

just really really helpful, thank you, but just the obviously the two highest increases in risk are Princes Parade and the levelling-up fund.

bid, so I suppose my question is why, when we see this really helpful dashboard, why do we start losing sleep over these sort of higher risk issues, how do we, how do we question, how, obviously, for other forums where we we we scrutinise levelling up money and and Prince's parade, but how does that relate to this committee if someone could answer them?

we would like to answer that question.

Cllr Liz McShane - 0:56:08

I'm happy to comment well and thank you thank you, Jonathan, for a

Dr Susan Priest - 0:56:10

significantly altered our approach, we've had some really good feedback and will develop it further, so thank you for that.

there's an opportunity to be college members for you to then ask us about the movements and ask us about the you know whether the matrix feels about right in the grid.

the colleagues here have worked extensively with colleagues across the organisation and with the Corporate Team to.

prepare these papers, so it is an opportunity, so I'll offer, if you would like me, to offer a view.

as I'll start with Princess Parade, which is really around, you know, there is still in some some uncertainty about the the final end state Princess Parade, clearly, Members are aware we are going to consultation, so there's a level of unknown, there's also the associated link to finances what finances are written off and when and in what manner subject to the project concluding or get into a future as Members will be aware we've spent significant funds over the years and some of those funds actually may well be appropriate funds to have spent in terms of that site.

so we're hoping that we can mitigate any financial losses to the Council and that work remains ongoing, which is why it's on this risk register and while at the some of the narrative is as as it is is here, in terms of levelling up,

being polite, it's government funding with a hard-earned date to it, and it's a complicated, large scale development project regeneration project, and so we felt that it's appropriate for it to be on the Corporate Risk Register one because

the loss of potential funds. Should we not make the timeline and or should there be significant cost inflation from when we did of initial estimates is worthy of us just keeping an eye on, so hopefully that talks to those two sort of elevated risks that that we have before you and the only other one I would make reference to which I know we've touched on before, which is a cyber risk which of course is the highest and in view of you know, activity that I am aware of elsewhere and the

attempts to compromise our systems, it will remain, it will be met, remain at a high risk, I believe, for some quite considerable time.

hopefully, that's helpful

I've just got December's.

Cllr Liz McShane - 0:58:43

metrics in front of me and I'm just wondering why some of them have changed just be useful to know, for example, the carbon neutral ambitions.

that's gone from extreme to high risk.

yeah

Adrian Tofts - 0:59:01

as part of this sort of reiteration, we've we've sort of compared risk against each other through the corporate governance board, and we adjusted somewhere, we felt, perhaps they weren't scored so.

accurately before, so that the climate change risk, we felt that the the likelihood of not reaching net 0 by 2035 for both this Council as an organisation and the district still remained high.

but

in terms of the impact we felt it was more an impact on kind of reputational areas, rather than say a financial or legal, so that's that's why that one shifted so yeah,

thank you any any additional questions, comments from the Committee.

Cllr Liz McShane - 0:59:54

no, can I just ask just on risk?

c. 19 change of governance would it be possible just to have that as a standard item on the agenda just to monitor monitor it, as we are going forward, I think, would be useful.

Mrs Amandeep Khroud - 1:00:17

just so that I'm catching, are you thinking of free audit and governance committee with a standing item so you'd like an update for every audit, I think so yes, OK, yes, I am very happy to provide a verbal update and for members obviously I will produce a paper because that will be,

probably not necessary, and you do get a regular update reports, as you know, yes, happy to add that I can work with committee services, thank you.

Cllr Liz McShane - 1:00:49

and more solid, no questions, no additional questions for this item, then can I have a proposer, please, thank you, Councillor Godfrey, and a seconder, thank you, Councillor Womble, and are we happy to note the report of a show of hands place?

to receive and note the report, thank you that 6 4.

and thank you for coming to the last items potentially.

we do need to look at an item such a glossary, I thought it was OK.

that closed the meeting, thank you, everyone for attending on your

Cllr Liz McShane - 1:01:28

questions and once again, thank you for the new dashboard and hopefully we will see more of them where possible.

Audit and Governance Committee - Wednesday 13 March 2024, 6:00pm - Feedback Tab - Folkestone & Hythe webcasting