Apologies for absence were received from Councillor Stef Bristow and Councillor Danny Brookes. 

It was noted that in accordance with Regulation 13 of the Local Government (Committees and Political Groups) Regulations 1990, notice had been given that Councillor Alex Hall had been appointed to the Committee in place of Councillor Sam Kemp for this Meeting only.

At this point in the meeting, Members were invited to declare any relevant interests.  None were received.

To confirm the Minutes of the Meeting held on 24 January 2024.

The Minutes of the Meeting held on 24 January 2024 were agreed as a correct record.

The Chairman informed Members that a five-point action plan had been produced following the self-assessment undertaken by the Committee on 24^th January 2024, Appendix A1 to the Actions at page 33 of the Agenda refers.  The Chairman further advised that she had attended CIPFA audit training which had been very informative.

Actions from the last meeting.

Members were referred to the Action Sheet, pages 31 to 34 of the Agenda refer.

Members noted that the actions from the Meeting held on 24 January 2024 and 22 November 2023 were confirmed as completed or in hand as follows:

No comments were received.

To receive a report from the External Audit Manager, Mazars LLP.

Mark Surridge, External Audit Manager from Mazars LLP provided Members with an update on the External Audit Progress Report as at 27 March 2024.

The report provided updates on the status of the 2021/22 and 2022/23 Audits, pages 35 to 42 of the Agenda refer.

The External Audit Manager informed Members that there had been no significant changes since the previous update and that the compilation of the group accounts remained outstanding.  It was further advised that two areas had prevented closure of the audit which was related to non-compliance with the Companies Act requirements on maintaining accounting records and on the asset valuation methods that had been used for Kingfisher Caravan Park. 

Members were invited to put their comments and questions forward.

·         A Member queried whether Andy Fisher, Assistant Director – Fund Assets was able to provide an update.  In response, the Assistant Director – Fund Assets advised Members that the Council was working with PSPS colleagues to ensure that further information had been provided on the breakdown of assets to assist with the valuation. 

It was further advised that the Council was required to maintain one format of accounts as a Public Authority and that a separate set needed to be maintained for Invest East Lindsey as a Company, and that challenges existed where the conversion of the different accounting practices was required for the Council to align with the International Financial Reporting Standards (IFRS).

·         A Member queried the reason it had proven difficult for the Council to source valuers to undertake asset valuations of caravans.  In response, the Assistant Director – Fund Assets advised Members that the evaluation had been undertaken through the Royal Institution of Chartered Surveyors (RICS) formal evaluation standards known as ‘The Red Book’ which was generally applicable to brick-built assets.  It was further advised that the Council had experienced challenges in sourcing a RICS valuer that was able to undertake the valuation in the required format.

·         The Chairman queried whether the contract was being put out to tender or further attempts were being made to hire a valuer.  In response, Nicole Hayes - Senior Finance Business Partner (PSPS) advised Members that the Council was working closely with Mazars and with Invest East Lindsey to determine the best approach to reach a solution and sign off the 2021/22 accounts.

·         A Member queried whether other Councils were in a similar position and whether benchmarking had been undertaken.  In response, Sam Knowles - Chief Finance Officer (PSPS) advised Members that communication with other Local Authorities with caravan parks and a similar asset base had occurred and that it had not yet been possible to obtain comparatives due to differences in how the assets were held in the accounting records.  The Chief Finance Officer (PSPS) confirmed that further comparatives were being sought.

·         A Member queried if a timeline was available for the closure of the 2021/22 Accounts.  In response, the External Audit Manager, Mazars LLP confirmed the backstop date was for September 2024 and it was  ...  view the full minutes text for item 67.

To receive an update from KPMG, External Auditors.

The Chairman welcomed James Boyle a representative from KPMG to provide Members with an update.

Members were informed that his role as Audit Director for KPMG was to sign off the Council’s 2023-24 statements.  An update was provided that risk assessment work was in progress related to the financial statements and that this had not been completed within the indicative timeline of the end of March 2024.   It was stated that KPMG was sympathetic and understanding of the Council’s competing and conflicting priorities arising from the need to close down historical audits in chronological order before full attention could be placed on the 2023/24 audit. 

The KPMG representative informed Members that KPMG had been flexible and had introduced a revised completion date for the risk assessment work and that it was hopeful that the external audit plan for 2023/24 would be prepared by the end of April 2024.  It was further advised that the draft audit plan was subject to the completion of the local government reset consultation which would finalise information on the backstop for the 2021/22 accounts.  It was confirmed that the 2021/22 and 2022/23 accounts had significant work that was outstanding in relation to the value for money risk assessment. 

The KPMG representative concluded that the relationships with management had improved, and that the introduction of weekly catch-up meetings had assisted with greater collaboration.  The current aim was to get the audits back on track and return to a normal reporting time timetable.  

No comments or questions were received.  The Chairman thanked the representative from KPMG for attending and providing an update.

To receive a report from the Treasury and Investment Manager (PSPS).

Sean Howsam, Treasury and Investment Manager (PSPS) presented Members with the 2023/24 Quarter 3 update on the Council’s Treasury Management Strategy Statement and Annual Investment Strategy for the period ending 31 December 2023, pages 43 to 72 of the Agenda refer.

The following areas were highlighted to Members:

•     An economic update for the first three quarters of the 2023/24 financial year

•     The outlook for the remainder of the financial year along with interest rate forecasts

•     A review of the Treasury Management Strategy Statement and Annual Investment Strategy

•      A review of the Council’s investment portfolio and borrowing strategy for 2023/24

•      Debt rescheduling and compliance with Treasury and Prudential indicators

Members were invited to put their comments and questions forward.

·         A Member acknowledged the comprehensive report provided by the Treasury and Investment Manager and commented that greater understanding had been aided by the Treasury Management Training undertaken by Committee Members on the 25^th March 2024.

·         In reference to the Invest East Lindsey loans that were due to mature by the end of the month, a Member requested clarification on the potential impacts, page 62 of the Agenda refers.   In response, the Treasury and Investment Manager (PSPS) advised Members that the loans maturing at the end of the current financial year were expected to be repaid and should this not occur, a revised loan repayment date would be negotiated. 

·         In reference to the £20m debt rescheduling where the Council had borrowed £10m in order to repay the PWLB loan early, a Member queried whether a cashflow issue had occurred, page 66 of the Agenda refers.  In response, the Treasury and Investment Manager (PSPS) explained that there had been a temporary issue with short term cashflow as the Council did not want to miss the opportunity to take advantage of favourable rates which were subject to change on a twice daily basis and swift action had been necessary to benefit from early repayment. 

·         In relation to the Council’s external debt limit of £38m, a Member queried the basis of the figure, page 69 of the Agenda refers.  In response, the Treasury and Investment Manager (PSPS) informed Members that the Council had an operational boundary of £38m for 2023/24 and that the projection in the Treasury Strategy for 2024/25 had been reduced as the Council was not expected to require that level of borrowing due to repayment of the PWLB loan. It was further advised that any future borrowing requirements could be reviewed and that the authorised limit for external debt could not be exceeded without Council approval. 

·         A Member commented that the assumption for interest rates to decrease by the end of the year was optimistic and queried whether the Council should be exercising caution, page 53 of the Agenda refers.  In response, the Treasury and Investment Manager (PSPS) assured Members that regular updates and forecasts on interest rates and inflation were received from the Council’s external treasury advisors and that prudent measures were taken to monitor investments  ...  view the full minutes text for item 69.

To receive a report from the Group Manager – Insights and Transformation.

Suzanne Rolfe, Group Manager - Insights and Transformation presented Members with the Q3 Risk Management Report to provide Members with an overview of Risk Management within the authority, pages 73 to 94 of the Agenda refer.

Members were advised that the strategic flood risk assessment was currently being updated in relation to the risk to Lincolnshire’s flood defences and that the risk scores were being reviewed following this update.  It was further advised that a new risk had been identified in relation to the Council’s net zero target and that further monitoring was necessary to ensure corporate ambitions could succeed.

The Group Manager - Insights and Transformation further advised Members that Internal Audit colleagues had assisted with work on fraud risk which was being fed into the Quarter 4 risk reporting and that priorities in the sub regional strategy were also being examined in relation to risk.  It was concluded that the wording in the risk registers was being improved and that a significant amount of change was expected for the Q4 report.

Members were invited to put their comments and questions forward.

·         A Member expressed support for the inclusion of flood risk and queried whether the risks in relation to the increase in children living in poverty in East Lindsey had been incorporated in the risk register.  In response, The Group Manager - Insights and Transformation advised Members that specific risks would be reviewed at the risk workshops to ensure that the latest information was available, page 76 of the Agenda refers.

·         In reference to Risks 12 and 13 in relation to technology infrastructure failure and cyber incident, the Chairman queried whether learning from the cyberattack against Gloucester City Council had been embedded in ELDC’s risk register and commented that 25 risks was a large number when some risks overlapped each other, page 74 of Agenda refers.  In response, the Group Manager - Insights and Transformation informed Members that more information would be obtained from IT colleagues on the Gloucester City Council incident and that the latest information and lessons learned were reviewed quarterly.  It was further advised that the workshops would examine the rationale of maintaining 25 risks and it would be frequently reviewed when there were opportunities for risks to be improved or combined.

·         In reference to Risk 22 - Retention of staff, a Member queried if the headline should be amended to additionally reflect risks in relation to staff recruitment and whether the risk level had recently increased.  The Group Manager - Insights and Transformation confirmed that the risk level had not increased since the last quarter and acknowledged that the detail for Risk 22 was more focused on recruitment rather than staff retention.  It was further advised that the headlines for risks would be improved to provide a better reflection on the scope of the risks.

There were no further comments or questions received. 

Following which it was,

RESOLVED

That the Risk Management Report be noted.

To receive a report from the Internal Audit Manager.

Matt Waller, Internal Audit Manager, Assurance Lincolnshire presented Members with the Internal Audit Progress report, pages 95 to 178 of the Agenda refer.  The report provided the Audit and Governance Committee with a written status report summarising internal audit activity as follows:

·         Purpose of the Report and the Performance Dashboard

·         Update on Internal Audit Activity and Analysis of ‘live’ audit reviews

·         Overdue medium/low priority actions

·         No assurance – Procurement Cards Review Final Report

·         Limited Assurance – Payroll Reconciliation Report

The Chairman informed Members that the report was being presented to the Committee in three sections and requested clarification on the definition of P-cards for the benefit of Members.  In response, the Internal Audit Manager explained to Members that P-Cards were purchase cards that were provided to staff members to be used to obtain items and services of small and varying amounts in value.

No assurance – Procurement Cards Review Final Report:

The Internal Audit Manager provided Members with background information on the issues that had been identified in relation to the procurement card process which had been raised by colleagues. This had led to an investigation in agreement with Managers who had been proactive to instigate the audit report, pages 117 to 150 of the Agenda refer.  It was further advised that an action plan had been produced and that measures had been implemented for non-compliance of use, monitoring of expenditure, ensuring that receipts and VAT receipts were correctly used, to ensure the central recording of records, in addition to manager approval and training for all members of staff. 

The Chairman invited the Section 151 Officer and the Assistant Directors from high spend service areas to comment.

·         James Gilbert, Assistant Director – Corporate thanked the Chairman for being invited to the Committee and reassured Members that the recent transition to an online system for recording receipts had created a more robust process for the use and management of P-Cards.  The Assistant Director – Corporate further advised that a management response had been felt necessary and that all staff that were issued with cards had undertaken training which had raised awareness and greater understanding of compliance.  Members were further assured that deadlines for the audit action plan had been completed and that the first month of using the new system was providing a good indication that the process for procurement cards had been significantly strengthened.    

·         The Chairman referenced there was 52 P-Cards in use for ELDC and queried if the Council had 52 members of staff that were fully trained, page 120 of the Agenda refers.  In response, the Assistant Director – Corporate reassured Members that a robust system was now in place and confirmed that 52 members of staff were fully trained and that Managers who reviewed and authorised expenditure had also undertaken training.

·         Emily Spicer, Assistant Director – Wellbeing and Community Leadership advised Members that P-Cards played an important role in her team which currently held 18 cards and that uses of the cards included managing homelessness and  ...  view the full minutes text for item 71.

To receive a report from the Internal Audit Manager.

The Internal Audit Manager presented Members with the Internal Audit Report - Section 106 Agreements Follow Up Audit, pages 179 to 194 of the Agenda refer.  The report provided the Audit and Governance Committee with a background on S106 Agreements and outlined the Council’s responsibilities to ensure that legal obligations were met and assured that measures and controls were in place to effectively manage risk.

Members were invited to put their comments and questions forward.

·         A Member queried if there was a single S106 Officer across the Partnership.  In response, the Section 151 Officer advised that an update would be provided to Members to confirm the Officer responsible for ELDC and reminded the Committee that the annual S106 report noted in the Action Sheet was in the process of being published.

·         A Member commented on a site in Louth which had paid S106 monies to the Council and queried the Council’s awareness of where that money had been utilised.  In response, the Section 151 Officer clarified that the Council acted as an intermediary for S106 funds and distributed them only where it was relevant to the District Council’s duties.  It was further advised that the Council did not have any visibility of the utilisation of the funds as it was the responsibility of the organisations who receive the funds to deploy it in accordance with the original arrangements of the S106 agreement.

·         In reference to the RAG ratings for monitoring and reporting on S106 agreements, the Chairman queried the items where no recommendations had been attached, page 183 of the Agenda refers.  In response, the Internal Audit Manager advised Members that the RAG ratings were closely related to the overall recommendations which combined all three risks.

·         A Member queried whether the S106 audit report was being presented to the Planning Policy or the Planning Committee to raise awareness.  In response, the Section 151 Officer confirmed that the audit report was not being presented to those committees as audit reports were primarily made available to the Audit and Governance Committee.

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Internal Audit Report - Section 106 Agreements Follow Up Audit be noted.

To receive a report from the Internal Audit Manager.

The Internal Audit Manager presented Members with the Internal Audit Plan 2024/25, pages 195 to 204 of the Agenda refer.  The report provided the Audit and Governance Committee with information on:

·         The Internal Audit Team

·         Conformance with internal audit Standards

·         Conflicts of Interest

·         Developing the internal audit plan

·         Internal Audit Plan 2024/25

·         Audit Sponsor Information

Members were invited to put their comments and questions forward.

·         A Member sought clarification on the timeline that information was being presented to the Committee.  The Internal Audit Manager advised Members that scheduling of bringing reports to meetings was dependent on whether the Agenda was full and assurance was provided that information was presented to the Committee as soon as possible following the work being completed.

·         Referring to the ICT Audit review statement with the scope to provide assurance over key ICT services security and coverage, it was queried whether PSPS Limited (PS2) was responsible and were undertaking the same processes as the Council, page 202 of the Agenda refers.  The Internal Audit Manager confirmed that ICT was PS2’s area of expertise and that the processes had remained the same as these audits were Council audits.

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Internal Audit Plan 2024/25 be noted.

To receive a report from the Deputy Chief Executive (Corporate Development) & Section 151 Officer.

Nicole Hayes, Senior Finance Business Partner (PSPS) presented a report on the Financial Statements and Accounting Policies.  The purpose of the report was to review and approve the Accounting Policies for inclusion in the Financial Statements for 2023/24, pages 205 to 224 of the Agenda refer.

The Senior Finance Business Partner (PSPS) advised Members that unless there were any major changes to accounting rules and regulations, accounting policies did not change significantly and that the policies were prepared in line with CIPFA’s Code of Practice.  The report presented the proposed accounting policies to be adopted for the 2023/24 financial year.

Members were invited to put forward their comments and questions:

No comments or questions were received.

Following which it was,

RESOLVED:

That following review by the Audit and Governance Committee, the Accounting Policies for 2023/24 at Appendix A be approved.

To receive an update from the Head of Procurement and Contracts (PSPS).

Martin Gibb, Head of Procurement and Contracts (PSPS) presented Members with the Procurement Exemptions Register, pages 225 to 228 of the Agenda refer and the following information was highlighted:

·         Exemptions Register from September 2023 to February 2024 

·         15 exemptions had been signed off and were detailed in the report

·         ELDC had been successful in receiving National Portfolio Organisation (NPO) status from Arts Council England and were receiving £2m in funding over a three-year period between 2023 and 2026

Members were invited to put their comments and questions forward.

·         A Member queried the statement that “ELDC are the lead authority for the NPO and the total value of £2m funding will be spent roughly equally between the SELCP authorities”.  A concern was raised that East Lindsey ratepayers were paying 46% towards running costs and it was unclear what value residents were obtaining, page 255 of the Agenda refers.  In response, the Section 151 Officer clarified that bids for grant funding were not a chargeable cost between the three authorities and that only when funding was bid for in equal cost would that be realised.  It was further confirmed that ELDC was acting as the host authority in this instance and on occasions other authorities were acting as specialist hubs for receiving grants.

The Section 151 Officer further advised that consideration needed to be given to how procurement was undertaken including the use of specialists and consultant services when grants were accepted.

·         A Member commented that teams were being left short staffed when their services were required elsewhere and that obtaining external staff was costly.  In response, the Section 151 Officer advised Members that a process existed where PS2 could be requested to upsize their staffing levels which would put the mechanisms in place to accommodate the grant.

·         A Member further queried how skilled external staff were being sourced to meet requirements.  In response, the Section 151 Officer advised that more support was needed for home grown talent and that a new training programme within PS2 has been requested to attract Graduate or A-Level students who may wish to have a career in local government finance. 

No further comments or questions were received.

The Chairman thanked the Head of Procurement and Contracts (PSPS) for attending.

Following which it was,

RESOLVED:

That the Procurement Exemptions Register be noted.

N.B. The Head of Procurement and Contracts (PSPS) left the meeting at 12.04pm

To consider the Work Programme 2023/24.

Members were presented with the Audit & Governance Committee Work Programme 2023/24 and noted the items that had been presented to Committee during the municipal year, together with the items that were proposed to be carried over to the following year, pages 229 to 232 of the Agenda refer.

Following which it was,

RESOLVED:

That the Work Programme 2023/24 be noted.

The Chairman reminded Members of the possibility of an extraordinary meeting in April 2024 and confirmed that the programmed date for the next Meeting of this Committee was to be confirmed at the AGM.