Agenda and minutes

To confirm and sign the minutes of the previous meeting held on 4 March 2024 (attached herewith).

The minutes of the meeting held on 4 March 2024 were approved as a correct record and signed by the Chair.

An apology for absence was received from Councillor Olivia Honeyman, and it was confirmed that Councillor Paul Mellor was attending as her substitute for this meeting.

Disclosure by Councillors of personal interests in matters on the agenda, the nature of any interest and whether the Councillor regards the interest as prejudicial under the terms of the Code of Conduct.

There were no declarations of interest.

Items not on the agenda which the Chair of the meeting is of the opinion should be considered as a matter of urgency by reason of special circumstances as defined in Section 100B(4)(b) of the Local Government Act 1972.

There were no urgent items for decision.

To deal with written questions from Councillors pursuant to Council Procedure Rule 12.3 (page D9 of the Constitution).

There were no written questions from Councillors.

Report of Director of Finance and Performance

The Council’s Deputy Chief Finance Officer (DCFO) presented the report providing Members with an update on respect of the Council’s outstanding Statement of Accounts for 2019/20 and the arrangements for completion of the outstanding statement of accounts for later years, and the national context for these delays.

The DCFO, on behalf of the Chair and the Committee, welcomed Ben Sheriff (Deloitte) and Darren Wells and Trevor Greenlee (Grant Thornton) to the meeting.

It was confirmed that Officers had received the Audit Findings (ISA260) Report and audited Financial Statementsfrom Deloitte in respect of the 2019/20 accounts. This had been received too late for inclusion on this agenda, and therefore it was recommended that a special meeting of the Committee be set up shortly for this to be considered.  The DCFO and the Ben Sheriff (Deloitte) confirmed to the Chair that all queries and adjustments had been completed and it was ready to come to Committee for decision.

The DCFO advised that the work to progress the outstanding audits (2020/21 to 2023/24) was now subject to Government’s proposals to clear the national backlog of historic local government audits, known as the backstop arrangement.   The first phase of this would be that the Council would publish all unaudited statements of accounts for 2020/21, 2021/22 and 2022/23 and there would be a 30-day Public Inspection Period, and then Deloitte would issue opinions based on the work the auditor had completed by the backstop date (currently 30^th September).  These would likely be in the form of modified opinions, incorporating outstanding Value for Money (VFM) reporting for all historical years into a single output, under a reduced scope.   The audited accounts for 2023/24 were due to be completed by May 2025. The DCFO advised that the legislation required for these arrangements had not been passed prior to the General Election, and although they had previously received cross-party support, Officers awaited confirmation from the new Government as to the arrangements and the timescales and for the necessary legislation to be passed.  At this point the Council and Auditor were still working to the proposed deadlines, but these might change.

Ben Sheriff (Deloitte) confirmed that this was also his understanding of the position and set out the work that Deloitte would carry out as part of the backstop arrangements.  He highlighted that once the Council had published the unaudited accounts, if any objections are received during the public inspection period this could delay the process.  In response to a question, the DCFO confirmed that officers were working on publishing all the unaudited accounts in the next few weeks, once the 2019/20 accounts had been agreed, to provide a starting position.

It was noted that as part of the proposal to sign off outstanding accounts, it would be up to each Council to ensure it had sufficient internal processes to give assurance of the accounts, where they were not subject to a full audit.  Ben Sheriff suggested that the Audit and Governance Committee might wish to  ...  view the full minutes text for item 6.

Report of Director of Finance and Performance

The Committee considered the Annual Treasury Management report which presented details of Treasury Management activities and the prudential and treasury indicators for 2023/24, and which included the update from Quarter 4.   The Committee was required to review the Annual Report and have the opportunity to make comments to Cabinet prior to its consideration by Full Council, by the Council’s Treasury Strategy Statement and in accordance with best practice and guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA).

The Head of Financial Reporting (HFR) summarised the report.

A question was asked about the fall in the value of cash balances at the end of the year. The HFR confirmed that is partly due to the normal end of year position, with a slight increase in expenditure combined with a reduction in Council Tax / Business rates where many pay over the first 10 months.  In addition, one of the long term PWLB loans had expired, and Officers were waiting to see if the long terms rates improved, or if short term borrowing was required in the interim.

RESOLVED: That Full Council be recommended (via Cabinet):

(1) To approve the Annual Treasury Management report 2023/24; and

(2) To approve the 2023/24 Prudential and Treasury Indicators included in the report.

Report of Chief Internal Auditor

The Committee received the report which provided a summary of the activities of Internal Audit and Counter for the financial year 2023-2024 from 1 April 2024 to 31 March 2024.

Discussions included audits that are still due follow ups, conformance to audit standards, and counter fraud and related cost benefits and savings. 

The Chief Internal Auditor (CIA) advised that she would be working with finance colleagues to ensure that the internal audit plan covered the systems and controls that were necessary for the Section 151 officer to be assured on the financial systems. 

Members asked particular questions in relation to DBS checks and the Grounds Maintenance audit.  On the former, the Chief Internal Auditor confirmed during the meeting that only 1 DBS form was missing from the records, which could be due to it not yet being received for a new employee, but she would check.  On the Grounds Maintenance contract, it was noted that the Policy and Performance Advisory Committee (PPAC) had asked for a review of the service, and Members requested that the report to PPAC should take into account the concerns on the contract performance raised by the Chief Internal Auditor.

The Chair thanked the CIA for the excellent report.

RESOLVED: That the report be noted.

Report of Chief Internal Auditor

The Committee considered the report which set out the draft 2023/24 Annual Governance Statement (AGS).

The Chief Internal Auditor (CIA) summarised the report, highlighting the Governance Framework (Appendix 1), the Annual Governance Statement timetable (Appendix 2) and the Managers’ Assurance Statements (Appendix 3).

RESOLVED: That the Annual Governance Statement, as set out in Appendix 5, be approved.

(At the end of this agenda item the Committee took a 5 minute break at 11.15 am).

The Chief Executive considers that discussion of the following items is likely to disclose exempt information as defined in Schedule 12A of the Local Government Act 1972 and may therefore need to take place in private session. The exempt information reasons are shown beneath the items listed below. Furthermore, in relation to paragraph 10 of Schedule 12A, it is considered that the public interest in maintaining the exemption outweighs the public interest in disclosing the information. (The requisite notices having been given under regulation 5 of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012.)

RESOLVED – That the press and public be excluded from the meeting during the discussion of the External Audit Plan 2023/24, Appendix 3, on the basis that it had been identified as commercially sensitive and was likely to disclose exempt information as defined in paragraph 10 of Schedule 12A, Schedule 12A of the Local Government Act 1972 and that the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

As no press and public were present, the Committee discussed agenda items 10 and 12 (appendix 3) together.

Report of Director of Finance and Performance.

(This report contains an exempt appendix. Any discussion of these must take place following exclusion of the public.)

The Chair welcomed Darren Wells and Trevor Greenlee (Grant Thornton) to the meeting to present their reports which included:

·        Lewes District Council Indicative External Audit plan for 2023/24 (Appendix 1)

·        Lewes District Council Audit progress report and sector updates (Appendix 2)

·        Informing the audit risk assessment for Lewes District Council 2023/24 (Exempt Appendix 3)

They confirmed that:

·        Work had begun to establish good relationships with all their Councils via a workshop.

·        Grant Thornton had the resources in place to do its part to work to the tight timescales set out in the Audit Indicative Plan and would look to the Council to also prepare and respond swiftly to any issues that arose to stay on track, but it was recognised this would require hard work on both sides over the next couple of years.

·        It would likely be 3 to5 years before Grant Thornton would be able to issue an unqualified opinion on an audit, due to the backstop arrangements, and materiality had been set lower than normal, due to the unaudited accounts in the previous years. 

·        The audit would start in October – with an ambitious 2-month timeline planned to complete the audit by December 2024.  However, it was noted that Grant Thornton would not be able to issue an audit opinion, until the Deloitte one was issued for previous years, and this was dependent on the Government’s decision on the backstop arrangements.

·        The auditors would provide an update of progress at each Audit and Governance Committee meeting.

It was highlighted that Grant Thornton were awaiting information on one IT system and a contact for the VFM audit from the Council.   The DCFO confirmed he would provide this information, and on the former was meeting with the Head of IT this afternoon and would keep members updated.

Assurance was given by the Committee, at Grant Thornton’s request, that the management responses at Appendix 3 in relation to the absence of internal fraud or external litigation, were consistent with the Committee’s own understanding. 

The Chair thanked Darren Wells and Trevor Greenlee for attending the meeting and advised that he looked forward to building a good relationship with them as the Council’s new External Auditors.

RESOLVED:

1. To note and approve the Audit Plan for 2023/24; and

2. To confirm that management responses (‘Informing the audit risk assessment’) are consistent with the Committee’s understanding.

Report of Director of Finance and Performance and External Auditor, Grant Thornton.

Exempt information reason 3 – Information relating to the financial and business affairs of any particular person (including the authority holding that information).

This had been discussed as part of the above agenda item, as no press and public were present.

To note that the next meeting of the Audit and Governance Committee is scheduled to be held on Monday, 9 September 2024 in Room 209/210, Second Floor, Marine Workshops, Newhaven, East Sussex, BN9 0ER, commencing at 5:00pm.

To note that the next scheduled meeting of the Audit and Governance Committee would be held on Monday 9 September at 5 pm. 

However, an additional meeting to consider only the 2019/20 statement of accounts would be held on Monday 5 August at 5 pm.