Apologies for absence were received from Councillors Terry Knowles and Danny Brookes.

Those present were noted as in attendance.

At this point in the meeting, Members were invited to declare any relevant interests. 

·         Councillor Jill Makinson-Sanders asked it be noted that her son worked in the Economic Growth Team on the Business Grants.

·         Councillor Paul Hibbert-Greaves asked it be noted that he was a Director of PSPS Limited.

To confirm the Minutes of the Meeting held on 17 March 2021 and the Minutes of the Special Meeting held on 27 April 2021.

The Minutes of the Meeting held on 17 March 2021 and the Minutes of the Special Meeting held on 27 April 2021 were agreed as a correct record.

Actions from the last meeting.

The actions from the Meeting held on 17 March 2021 were confirmed as in hand or completed.

Action No. 44 – Chairman’s Update from the Meeting held on 17 March 2021, page 23 of the Agenda refers.

The Section 151 Officer advised Members that the action to compile a questionnaire to evaluate skills and identify areas to design a training plan would be completed by the next Meeting.

The Chairman referred Members to the Audit and Governance training webinar held on 24 June 2021 provided by Mazars LLP.

Members expressed their thanks to Mazars and agreed that it had been a very useful and productive session.

A Member commented that he had attended training in other organisations where bite-size sessions were delivered by officers with specialisms in specific areas and considered that this was an alternative way of delivering training moving forward.

Jon Machej, Mazars LLP confirmed to Members that the slides from the webinar together with a link to the session would be provided in due course.

The Chairman advised Members that the Audit Manager, Assurance Lincolnshire would be rolling out further ‘in-house’ training in September 2021, the date to be confirmed.

To receive a report.

Lucy Pledge, Head of Audit and Risk, Assurance Lincolnshire presented Members with the Internal Audit Draft Annual Report 2020/21, pages 25 to 50 of the Agenda refer.

The report provided Members with an Annual Report and Independent Opinion for 2020/21, drawing upon the outcomes of Internal Audit work performed over the course of the year and other areas ofassurance.

It was highlighted to Members that one key aspect of a professional practice was its quality, therefore the report set out the quality assurance framework and areas of improvement and with different ways of working would make the best use of resource and improve the efficiency and effectiveness of the audit process, page 40 of the Agenda refers.

The Head of Audit and Risk explained to Members that for the twelve month period ended 31 March 2021 the Council's working practices had changed significantly as a result of the coronavirus pandemic.  Operationally, priorities had changed during the year as staff had been remote working and a number redeployed to other service areas and financially the Council had to regularly review its budgets to meet the changing needs of the organisation and its residents.

Based on thework undertakenand information from other sources of assurance, the opinion on the adequacy and effectiveness of the Council's arrangements for governance, risk management and control was as follows:

Governance – Improvement needed – Urgent management action identified on major governance issues which had a negative impact across the Council, page 29 of the Agenda refers.

The Head of Audit and Risk informed Members that Internal Audit had assessed and identified some key areas for improvement and recommended that these be included in the Annual Governance Statement which involved the Strategic Alliance and Invest East Lindsey.  It was highlighted that the Committee, Chief Executive and Section 151 Officer had asked for assurance around Invest East Lindsey and preliminary work had identified areas for improvements around governance and oversight and linked to internal control and financial management.  Members were advised that improvement actions had already been put in place by the Section 151 Officer from early feedback received on that work.  It was highlighted that as Invest East Lindsey was at its early stages there was an opportunity to put things right very quickly in terms of accountability and transparency.  Members were advised that the Section 151 Officer and the Audit Manager had put together a governance improvement plan for not only issues raised with Invest East Lindsey, but other common themes that had arisen from audit work in relation to governance and oversight and would also be supporting the Council through some advisory work to help to provide constructive challenge and to demonstrate what good governance looked like.

Members were advised that the Progress Report outlined at Item7 included details for a new Governance, Risk and Resilience Framework published by the Centre for Governance and Scrutiny and recommended that the Committee  ...  view the full minutes text for item 8.

To receive a report.

Stacey Richardson, Principal Auditor presented Members with the Internal Audit Progress Report which covered the period 1 November 2020 to 31 May 2021.

The purpose of the report was to provide Members with:

·         Details of the audit work completed during the period;

·         To advise on progress with the 2020/21 plan;

·         To raise any other matters that may be relevant to the Audit Committee role.

Members noted that five assurance reports had been issued since the last progress report in November 2020 as follows:

• Health and Safety – Substantial Assurance
• Key Controls testing Accountancy Services – Substantial Assurance
• Follow Up Review – Public Conveniences Income Collection – Substantial Assurance
• ICT National Cyber Security Centre 10 Steps – Limited Assurance
• ICT Asset Management – Limited Assurance

Members were referred to the Executive Summary of assurance opinions awarded, pages 54 to 57 of the Agenda refer.  The assurance definitions were provided at Appendix 1, page 63 of the Agenda refers.

The next steps for audits with limited assurance was detailed at Appendix 2, pages 64 to 72 of the Agenda refer.

Two Consultancy reports had been issued as follows:

·         Project and Programme Management

·         Aligning Governance Arrangements across the Strategic Alliance

Work in Progress was highlighted to Members as follows:

·         Development Company – Fieldwork

·         Monitoring of Magna Vitae’s Health and Safety – Draft Report - Indicative opinion was limited assurance.

·         COVID-19 Business Grants – Draft Report – Indicative opinion was high assurance.

·         New Finance System Support Consultancy – Draft Report

·         Procurement – Draft Report – Indicative opinion was low assurance.

In respect of progress on the work in progress, these audits were currently going through the closure process with management and the initial assurance opinions were yet to be finalised.  These would be presented to Committee in September 2021 in the Q1 Progress Report 2021/22.

During the Quarter 4 period two further pieces of work were undertaken as follows:

·         Combined Assurance Review.

·         Completion of the sign-off process for the COVID-19 Enforcement and Surge Grant.

Performance on Key Indicators as at 31 May 2021 was highlighted as follows:

• Percentage of revised audit plan completed – 95%
• Percentage of recommendations agreed – 100%

Members were advised that the reason for a number of key performance indicators performing below target was detailed at page 60 of the Agenda.

Other matters of interest to Committee Members were highlighted, pages 61 to 62 of the Agenda refers and the links to the full reports had been provided.

A summary of the number of outstanding agreed actions and details for all audits as at 31 May 2021 was highlighted to Members at Appendix 3, pages 71 to 76 of the Agenda refer.  Members were advised that a large number of actions outstanding was primarily due to the implementation of the finance system which went live on 1 April 2021, however since the report was completed was pleased to advise that a lot of the actions were now complete.  Those actions that remained outstanding required the system to be embedded for  ...  view the full minutes text for item 9.

To receive the Internal Audit Charter 2021.

Lucy Pledge, Head of Audit and Risk, Assurance Lincolnshire presented Members with the Internal Audit Charter 2021 to consider and sign off for approval. 

The Charter formally defined Internal Audit’s purpose, authority and responsibility and it established Internal Audit’s position within the Council and defined the scope of Internal Audit activities.  Following agreement by Committee it would be circulated within the Council.

Members were invited to put their comments or questions forward.  None were received.

The report was proposed and seconded for approval.

A recorded vote was taken as follows:

Councillor David Andrews – For

Councillor Adrian Benjamin – For

Councillor Colin Davie – For

Councillor Paul Hibbert-Greaves – For

Councillor Ros Jackson – For

Councillor Jill Makinson-Sanders – For

Following which it was,

RESOLVED:

That the Internal Audit Charter 2021 be approved.

To receive a report.

John Machej was in attendance on behalf of Mazars LLP, External Auditors, to present the Progress Report for 2020/21, pages 95 to 114 of the Agenda refer.  The report provided the Audit and Governance Committee with an update on progress made by Mazars LLP in delivering its responsibilities as East Lindsey District Council’s external auditors.

It was highlighted to Members that the audit work had taken a lot longer due to working remotely than having direct access to information and officers on site.

The External Auditor explained that they had reviewed four key areas and referred Members to the diagram detailed at page 100 of the Agenda as follows:

·         Planning (Jan to Feb 2021) – Detailed planning work was now complete and culminated with the production of the Audit Strategy Memorandum

·         Interim Visit (April 2021) – The interim visit took place in line with the planned dates.  This did not identify any significant matters that required reporting at that stage.

·         Fieldwork (June to July 2021) – The detailed fieldwork on the Council’s financial statements commenced on 14 June 2021 but was yet to receive a copy of the draft financial statements.  The visit was scheduled to last approximately 3 weeks and the findings would be reported to Audit and Governance Committee in the Audit Completion Report at a later date.

·         Completion (September 2021) – It was anticipated that the audit would be completed by September 2021 in line with MHCLG’s revised timetable.

Members were invited to put their comments and questions forward.

A Member referred to the report that stated that 32% of respondents had stated that their organisation had been a victim of Distributed Denial of Service (DDOS) hacking attack in the last twelve months, a 5% increase from the previous year and queried how the Council compared to this, page 104 of the Agenda refers.  The Head of ICT and Digital, PSPS Limited informed Members that ICT had received no DDOS attacks although had seen an increase in the number of cyber incidents, however it was prudent to recognise that there had been a shift across the landscape on the number of cyber incidents.  During the COVID-19 period tracking was undertaken on a daily basis on the number of attacks that were coming in compared to the national average.  This was comparable to the national average whereby during lockdown the numbers decreased whilst coming out of lockdown the numbers started to increase.  Members were advised that ICT was back to pre-COVID-19 figures in terms of the national average and also in terms of the Council’s specific landscape position.  Members were assured that this was an area high on ICT’s visibility and was continually reviewing the horizon working closely with National Cyber Security Centre (NCSC) colleagues and East Midlands WARP (Warning, Advice and Reporting Point) to keep a close eye on what was happening.  Members were informed that recent media reports had highlighted an increase in cyber incidents that had started to impact councils at a lower level across  ...  view the full minutes text for item 11.

To receive a report.

Ellie Stacey, Deputy Head of Financial Services, PSPS Limited presented Members with the unaudited 2020/21 Financial Statements and draft Annual Governance Statement 2020/21, pages 115 to 224 of the Agenda refer and invited the Committee to comment, challenge and/or highlight any key areas where they required further information prior to the deadline on 1 August 2021.  Any necessary amendments following the audit would be made by the Section 151 Officer prior to the formal approval of the unaudited accounts for publishing.

Further to the publication of the Agenda, a cash flow statement document was circulated to Members on 25 June 2021 for consideration.  A copy of this is attached at Appendix A to the Minutes.

Members were advised that due to the Coronavirus Pandemic, financial regulations had been amended for 2020/21 regarding extending publication dates for the financial statements, detailed at Paragraph 1.1, page 116 of the Agenda refers.

Members noted that the audit was in progress with Mazars LLP which commenced on 14 June 2021.  The Finance Team was working closely with them to provide all the information that they needed and to answer any queries.

Members were advised that with regards to the Narrative Report on page 121 of the Agenda referred this related to East Lindsey’s 2020/21 position only; where information was provided on the unaudited financial statements this reflected East Lindsey’s 63% share of PSPS Limited’s accounts in addition to the East Lindsey position.

The Deputy Head of Financial Services outlined key information contained within the report following which Members were invited to put their comments and questions forward.

·         A Member referred to the government revenue support grants that the Council had received to pay to businesses and queried the amount received to date, whether there was any amount not paid out to businesses in terms of recovery and if so, how much the Council was still holding.  Peter Davy, Strategic Finance Manager (East Lindsey) informed Members that as at 31 March 2021, there were significant sums outstanding of grant money that had not been paid over which comprised of four to five different type of grant streams depending on the type and size of the business.  With regards to the current position, information would be requested from the Economic Development Team who administered the grants and Members would be provided with an up to date position.  The Section 151 Officer advised Members that in terms of government support for businesses, the grants had been advertised extensively by various means and was unable to suggest another way to alert those businesses to come forward who had not already claimed a grant.

A Member commented that Lincolnshire County Council (LCC) had recently used £10m of its own resources to support small businesses, including those in East Lindsey and highlighted that there was still a demand for this.  In his role as a County Councillor, the Member informed the Committee that he had offered to share this data with the Leader of East Lindsey District Council for more  ...  view the full minutes text for item 12.

To receive a report.

Sean Howsam, Treasury and Investment Manager, PSPS Limited provided Members with the Annual Treasury Management Review for 2020/21 which included a review of activities and the actual prudential and treasury indicators for 2020/21, pages 229 to 248 of the Agenda refer.  The Council was required by regulations under the Local Government Act 2003 to produce an annual treasury management review of activities and the actual prudential and treasury indicators for 2020/21.  The report met the requirements of both the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities.

The key areas were highlighted as follows:

• The council’s capital expenditure and financing 2020/21. 
• The council’s overall borrowing need;
• The treasury position as at 31 March 2021;
• The strategy for 2020/21;
• Borrowing Outturn;
• Investment Outturn for 2020/21;
• The Economy and Interest Rates.

The Treasury and Investment Manager highlighted amendments to two figures detailed at Paragraph 7 – Investment Outturn for 2020/21, page 239 of the Agenda refers as follows.

‘that the Council was achieving an average rate return of 0.43%, not 0.473%’.

‘that the balances held in property funds achieved estimated net average

returns of 3.35%, not 3.53%.

N.B.  George Krawiec, Independent Co-Opted Member left the Meeting at 1.00pm.

Members were invited to put their comments and questions forward.

·         A Member highlighted that the property funds were mainly benchmarked against the GRESB Sustainability Standard and considered that it would be a useful piece of information to include in the report.

·         A Member referred to Paragraph 8 – The Economy and Interest Rates, page 243 of the Agenda refers.  The comment provided by Link Group on Deglobalisation was highlighted and the weakened supply lines was considered very relevant to the Council’s investments and planned major capital projects in terms of the anticipated costs of building supplies.

·         A Member referred to the 2020/21 Capital Programme and Outturn table detailed at page 247 of the Agenda refers.  It was queried in relation to a comment made during the financial statements and project management whether it would sit better if the schemes were grouped by which part of the Council it was managed by.  The Section 151 Officer confirmed that going forward he would ensure that the schemes were grouped by directorate.

There were no further questions or comments received.

The report was proposed and seconded for approval.

A recorded vote was taken as follows:

Councillor David Andrews – For

Councillor Adrian Benjamin – For

Councillor Paul Hibbert-Greaves – For

Councillor Ros Jackson – For

Councillor Jill Makinson-Sanders – For

Following which it was,

RESOLVED:

That the Annual Treasury Management Review 2020/21 be approved.

To receive a report.

John Medler, Interim Assistant Director – Organisation and Corporate Services presented Members with the Risk Management Position Statement Quarter 4 – 2020/21, pages 1 to 24 of the Supplementary Agenda refer.

Members were advised that the report provided an overview of the risk management arrangements in the authority including details of the Council’s Strategic Risk Register (SRR) detailed at Appendix 1.

Members were advised that the SRR had been reviewed by the strategic leadership team and highlighted a couple of risks that the leadership team considered to no longer be strategic risks to the organisation.  In terms of wider risk work it was confirmed that with regards to the new project management methodology, risks had been incorporated into both the project briefs, initiation documentation and reporting template so that risks to projects should be identified when briefs came forward and would be monitored through that new methodology.

Members were advised that for the next period he would be looking across the Strategic Alliance and its approaches to risks and looking at current strategies to see where processes might be aligned across the Alliance going forward.

Members were invited to put their comments and questions forward.

·         A Member commented that all of the retired risks in relation to the Strategic Alliance may need to be revived if the Council approved the decision for South Holland District Council (SHDC) to join the Alliance.  It was considered that the risks around the existing Alliance should not be removed as a lot of evidence from the staff survey referred to it being too early to tell.  The Interim Assistant Director – Organisation and Corporate Services responded that decisions for SHDC to join the Alliance would be taken over the coming weeks and if the decision was taken to expand the Alliance the risks would go back on the register.  A Member considered that the Strategic Alliance was a large risk to the Council in particular to capacity.  The Section 151 Officer responded that he was certain that this would come back as a risk.

·         A Member referred to CORP017 ‘Technology Infrastructure Failure’ and CORP018 ‘Cyber Incident’, page 20 of the Supplementary Agenda refers and queried whether the emphasis would be for a separate risk for hardware and software.  The Interim Assistant Director – Organisation and Corporate Services responded that he understood that this was in relation to hardware and servers but would seek clarification on the detail from Jackie Wright, Head of ICT and Digital, PSPS Limited in relation to CORP017.

A Member commented that in relation to CORP018 he was uncomfortable with some of the mitigations, for example taking advantage of developing safety tools and techniques and would be more content to see some targets in the SRR.  It was acknowledged that PSPS Limited was going to put in a new service delivery model and a new event management tool but it would be useful to get an idea of when this risk could be mitigated with timescales and this could also be  ...  view the full minutes text for item 14.

To receive a report.

The Section 151 Officer presented Members with the Council’s Inspection in relation to the use of Regulation of Investigatory Powers (RIPA) Act 2000, pages 249 to 254 of the Agenda refer.  The Regulation of Investigatory Powers (RIPA) Act 2000 governed public authorities’ use of directed covert surveillance and of ‘covert human intelligence sources’.

The purpose of the report was to provide the Committee with a summary of the recent inspection by the Investigatory Powers Commissioner (IPCO) who reviewed the Council’s Policy and Procedures on the RIPA Policy and its use and to provide assurance and information about advice given by the Inspector during the inspection.

Members were advised that the Council had not authorised any applications since the last inspection.

Following which it was,

RESOLVED:

That the Council's Inspection in relation to the use of the Regulation of Investigatory Powers Act 2000 (RIPA) Report be noted.

To receive a verbal update.

The Section 151 Officer confirmed that there were no updates from the Monitoring Officer.

To consider the draft Audit and Governance Committee’s Work Programme 2021/22.

The Section 151 Officer presented Members with the Draft Audit and Governance Committee Work Programme 2021/22.

Members were advised that if they wished to put forward any items to be added to the programme to let him know.  The items discussed earlier in the meeting would be picked up as future audits and did not need to be included on the programme.

Following which it was,

RESOLVED:

That the Draft Audit and Governance Committee Work Programme 2021/22 be noted.

To receive an update on the Panel’s work and to appoint a new Member to the Panel.

John Medler, Interim Assistant Director – Organisation and Corporate Services presented Members with the Constitution Working Party Report, pages 1 to 4 of Supplementary Agenda 2 refer.

Members were advised that the Constitution Working Party worked with the Monitoring Officer to assist with reviewing and monitoring the Council’s Constitution.  The Working Party met as required to review the Council’s Constitution to ensure it remained fit for purpose and reported any proposed changes to the Audit & Governance Committee (with a view to an appropriate report being made by the Audit & Governance Committee to the Council on any changes proposed).

This report set out that there was a requirement for the Audit and Governance Committee to appoint one of its Members to the Constitution Working Party.  It also highlighted a recent benchmarking exercise undertaken by the Constitution Working Party and recommended that the Audit and Governance Committee recommended to Council that Council Procedure Rule 12.1 be amended to reduce the notice period for submission of motions on notice.

Councillor Jill Makinson-Sanders put herself forward to be appointed to the Constitution Working Panel.  It was proposed and seconded that this be accepted.

It was proposed and seconded that Council Procedure Rule 12.1 be amended to reduce the notice period for submission of motions on notice.

A recorded vote was taken as follows:

Councillor David Andrews – For

Councillor Adrian Benjamin – For

Councillor Paul Hibbert-Greaves – For

Councillor Ros Jackson – For

Councillor Jill Makinson-Sanders – For

Following which it was,

RESOLVED:

1.   That Councillor Jill Makinson-Sanders be appointed to the Constitution Working Party in line with its terms of reference.

2.   That it be recommended to Council that Council Procedure Rule 12.1 in the Council’s Constitution be amended to reduce the notice period for submission of motions on notice from 14 to 9 working days. 

The programmed date for the next Meeting of this Committee will be Wednesday 15 September 2021.

The date of the next Meeting was confirmed as Wednesday 15 September 2021.