Agenda and draft minutes

To confirm the minutes of 12 February 2024.

The minutes of the meeting held on the 12 February 2024 were confirmed and signed as an accurate record.

To receive a verbal update from the External Auditors.

Members received a verbal update from Mark Hodgson from Ernst&Young (EY) with regards to the Local Audit Market Position and Government proposals.

Members asked questions, made comments and received responses as follows:

·         Councillor Booth thanked Mark Hodgson for the update and hopes that the deadlines that he has referred to can be met, asking what assurances can be given in that regard. Mark Hodgson stated that he is very confident that his team will be able to adhere to the deadlines as he is now fully resourced with staff and the risks detailed in the plan are the ones that his team are working on. He made the point that over the last few years there have been some left field items that have come through at the last minute which did cause auditors problems. Mark Hodgson stated that at the present time and with the plan going forwards he is confident but added that clearly there is an element on having draft sets of accounts to audit and working papers to do but he stressed that his team are back on track for a normal audit year.

Members noted the Local Audit Market Position and Government Proposals report.

To review the provisional external audit plan.

Mark Hodgson for Ernst&Young (EY) presented the Provisional Audit Plan for 2023/24 report to members.

Members asked questions, made comments and received responses as follows:

·         Councillor Christy asked for further detail with regards to the planning materiality figure of 2% and he asked how that figure is derived or why that particular number is chosen. Mark Hodgson explained that there is a global audit methodology which EY use and they have a range from which they can select and within the public sector the range goes from 0.5% through to 2%. He added that 2% is at the higher end where consideration is given as to what stakeholder’s requirements are in terms of assurance at that level that would gain sufficient assurance. Mark Hodgson stated that when considering the £1.4m which is associated to the Council and when referring to stakeholders that means Council taxpayers, Central Government and any other body who has an interest in the Council’s set of accounts. He explained that gross expenditure is deemed to be on the basis upon which is more appropriate for the public sector as the Council is a service providing organisation. Mark Hodgson explained that salaries are included as they are a major cost and, therefore, it is an expenditure basis as opposed to an asset basis and when considering the two together that is how the figure of 2% gross expenditure is reached.

·         Councillor Booth stated that when reviewing the risks that have been identified, members have raised concerns previously with regards to Fenland Future Ltd (FFL) which has been set up and he stated that he is aware that there have been investments undertaken in order to provide returns to the Council, questioning why that has not been listed as a risk. He stated that as it is a new area and, in his view, it would fall under the umbrella of the investment activity, and he asked Mark Hodgson for his view. Councillor Booth added that the committee have mentioned previously that they would like to have assurances that FFL is operating as it should. Mark Hodgson explained that with regards to the operation of FFL, in his view, that would fall under the value for money arrangements which was covered in the work undertaken for 21/22 and as a result EY were comfortable with the overall arrangements. He stated that this is a provisional audit plan due to the fact that information can be submitted to EY at any point in time and at the point when discussions took place there were significant transactions expected prior to the year end which would necessitate the group accounts needing to be prepared and when you consolidate FFL into the Council’s discussions earlier he has now been led to believe that there is the possibility that group accounts may be required which will be dependent on any transactions between now and 31 March 2024. Mark Hodgson added that the risk profile can be revisited before the audit once a  ...  view the full minutes text for item ARMC36/23

To consider and approve the Anti-Money Laundering Policy. 

David Thacker, Interim Audit Manager, presented the Anti-Money Laundering Policy to the committee.

Members asked questions, made comments and received responses as follows:

·         Councillor Booth stated that it is a worthwhile policy and is one that should be in place, and it is a subject matter he is aware of due to working previously within a financial environment. He added that one of the aspects which does not appear to have been mentioned was with regards to the Joint Money Laundering Steering Group who provide guidance predominantly for financial institutions, however, it may prove useful to refer to it. Councillor Booth made the point that with regards to staff training, one of the associated offences with money laundering is tipping off and the offence carries a five year prison sentence and, therefore, when undertaking staff training, there needs to be assurances that the level of training is adequate as staff need to be clear and have an understanding of what their obligations are under the legislation. David Thacker stated that work will be undertaken to adapt the training for staff accordingly and he added that he does agree with the issue of tipping off. Councillor Booth made the point that the point that he was making that it maybe colleagues not working in a financial role where the issue may arise. David Thacker stated that the training session will be rolled out to all staff, and it is likely to be made a mandatory training session.

Members agreed to APPROVE the Anti-Money Laundering Policy.

To approve the internal audit plan and resources for the forthcoming year. 

David Thacker presented the Risk Based Internal Audit Plan 2024/25.

Members asked questions, made comments and received responses as follows:

·         Councillor Christy stated that there does not appear to be any audits which focus on ICT security and given recent cyber attacks which have been reported he asked David Thacker for his view. David Thacker stated that cyber security appears on the list for the current audit year, and he is just about to finalise a report on cyber security with the Head of ICT and an update will be provided to the committee at the meeting in July. Councillor Christy asked whether an audit on cyber security can be undertaken more frequently, and David Thacker stated that it is something that he can follow up and he added that it was question of resources, however, he needs to ascertain from the Corporate Management Team whether cyber security should be included as a key fundamental annual audit. David Thacker added that being aware of the training is a key aspect and to ensure that all staff undertake annual cyber training because users are the most vulnerable to cyber-attacks. He explained to the committee that the work of audit is adaptable and if an issue arises it can be added onto the programme of audits and, if necessary, it can be audited annually.

·         Councillor Booth explained that with regards to the reactive work that can be undertaken there are only 20 days for contingency which are shown in the audit plan which, in his view, does not appear to be sufficient time and effectively only enough time for one extra audit. He made the point that members have previously recommended that more contingency time should be factored into the audit plan, but he interprets from the report that the audits shown need to be undertaken to provide the levels of assurance that are needed at the current time. David Thacker explained that it is necessary to ensure that a good breadth of coverage is included which is based on factors which include the alignment to the Council plan. He made the point that the role of audit is where value can be added and he explained that he has changed the number of days per audit to ensure that auditors have enough time to conduct a comprehensive risk-focused audit. David Thacker made the point that best practice from internal audit planning comes down to not setting a rigid 12 month plan as things can change and, therefore, it is a flexible plan and it can be reviewed again in 6 months. David Thacker explained that the plan before committee has been agreed by the Corporate Management Team as a good coverage, but flexibility is key.

·         Councillor Booth stated that he has always said that the plan should be adaptive and not set in stone so that it can be amended as necessary. He asked whether the contract monitoring of highways has been considered as he has raised concerns previously with regards  ...  view the full minutes text for item ARMC38/23

To note the progress made against the actions identified in the Annual Governance Statement for 2022/23.

David Thacker presented the Annual Governance Statement Update for 2022/23.

The committee agreed to note the progress made against the actions identified in the Annual Governance Statement  for 2022/23.

For information purposes.

Members considered the Audit and Risk Management Committee Workplan.

Mark Saunders stated that there will be the requirement to incorporate the various tasks which will be undertaken for the External Audit Report and the Statement of Accounts which will incorporated in the workplan once it is agreed with Ernst&Young. 

Members noted the workplan and for it to be updated as appropriate.

There were no items of topical interest.