Agenda and minutes

Audit and Standards Committee - Monday 22nd March 2021 6.30 pm

Venue: Remote Meeting

Contact: Louise Hollingsworth 


No. Item



To authorise the Chairman to sign the minutes of the meeting of the Audit and Standards Committee held on 7 December 2020 as a correct record of the proceedings.


The Chairman was authorised to sign the Minutes, at a later date, of the meeting of the Audit and Standards Committee held on 7 December 2020 as a correct record of the proceedings.


Apologies for Absence


An apology for absence was received from Susan Fellows – Independent Person.


Disclosure of Interests

To receive any disclosure by Members of personal and disclosable pecuniary interests in matters on the agenda, the nature of any interest and whether the Member regards the personal interest as prejudicial under the terms of the Code of Conduct.  Members are reminded of the need to repeat their declaration immediately prior to the commencement of the item in question.


There were no declarations of interest made.


Code of Conduct pdf icon PDF 140 KB

Additional documents:


Since the last meeting, the Local Government Association’s (LGA) new model Code of Conduct (CoC) had been released, following a consultation exercise to which this Council had responded.  However, it was recommended at this stage to retain the Council’s existing CoC to maintain consistency across the Districts and Boroughs and this was a view shared by the majority of Monitoring Officers across East Sussex.


Whilst the model CoC was clearer and more user-friendly this alone was not considered enough to justify a recommendation for change by neighbouring East Sussex authorities who felt that it was best at this stage to wait for a model CoC that contained changes of real substance.  It was also considered prudent to wait until the Government had responded to the Committee on Standards in Public Life’s (CSPL) review into ethical standards and recommendations which might result in further legislative change and meaningful sanctions.


A common CoC was welcome for the dual-hatted Members and this was particularly pertinent in light of the East Sussex County Council (ESCC) elections taking place in May this year and the likelihood of a number of dual-hatted Members being elected.


Should Members agree to retain the Council’s existing CoC, a number of minor differences had been identified and it was recommended to update the Council’s CoC to bring it into line with that of ESCC, which were highlighted within the report.  The Council’s position with regard to the CoC would be reviewed when the Government’s response to the CSPL’s recommendations were known.


The Committee was fully supportive of the recommendations proposed and agreed that an aligned CoC with ESCC and other local authorities would be extremely helpful, particularly for dual-hatted Members.




1)    in order to maintain consistency across the East Sussex authorities the Council’s existing Code of Conduct be retained at the current time and amended to bring it in line with East Sussex County Council’s version as set out at Appendix A; and


2)    this Council’s position and Code of Conduct be reviewed when the Government’s response to the Committee on Standards in Public Life’s recommendations is known.


Independent Person Recruitment pdf icon PDF 120 KB


At the last meeting, the Committee was advised of the need to appoint an Independent Person (IP) following the expiry of the Term of Office of two of the Council’s three IPs in July 2021.  The process to be undertaken was agreed and the Committee recommended that one appointment be made.


The Committee agreed that the Chairman of the Committee, the Chief Executive together with the Monitoring Officer comprised a panel to interview the suitable applicants and make a recommendation to the Audit and Standards Committee and then on to full Council on 17 May 2021.


At the closing date (29 January 2021), nine applications had been received and four candidates were shortlisted for interview, held on 18 February 2021.  The expectations of the role in terms of regular attendance at meetings and contributions to committee discussions on standards matters were explained to each applicant at interview.


The standard of the applicants was very good and the Panel was confident to recommend that Mr Robert Brown be appointed to serve as one of the Council’s IPs and for his name to be put forward for approval by full Council on Monday 17 May 2021.


RECOMMENDED: That Robert Brown be appointed as an Independent Person in accordance with Chapter 7, Section 28 of the Localism Act 2011, for a term of four years commencing from 10 July 2021.


Risk Management Update pdf icon PDF 212 KB

Additional documents:


Members considered the update report that covered major issues in risk management during 2020/21.  Risk referred to the uncertainty that surrounded future events and outcomes and it was essential that the Council had a strong approach to risk management, particularly with the current environment, a global pandemic and ongoing substantial financial pressures.


2020/21 was dominated with the impact of the COVID-19 pandemic in terms of the Council’s operations and finances supporting the community and business.  At the September meeting, several risks were identified, two of which required further work, namely sustainably meeting a long-term crisis e.g. expand the Council’s business continuity plans and supply chains and contractor resilience e.g. to provide on-going long-term financial support.  Despite the national lockdowns, the Council was able to maintain services however this might not be achievable once restrictions were lifted.  It was not known whether further Government funding would be forthcoming to support the Council.


The Corporate Risk Register (CRR) had been updated to reflect the most recent review by the Corporate Management Team (CMT).  At present the CRR indicated the likelihood of a further pandemic remaining at its highest level.  With the advances in medical science and the measures undertaken by the Council to ensure full home working, it was felt that the impact on service delivery going forward had been mitigated to a significant extent.  Further risks added to the CRR were failure to comply with legislation and delivery of the Corporate Plan.


The Council maintained a Risk Management Policy (RMP) as detailed at Appendix B to the report which set out the responsibilities of Members, CMT and Heads of Service.  This was backed up by the Risk Management Framework which was underpinned by service and project based risk registers.  The RMP had been updated to reflect the current officer structure of the Council.  It was suggested that between June 2021 and September 2022, the Audit and Standards Committee reviewed each service risk register, as ongoing financial pressures on the Council increased risks which would have to be actively managed by both officers and Members.


RECOMMENDED: That the amended Risk Management Policy at Appendix B to the report be adopted.




RESOLVED: That the:


1)    Council’s Corporate Risk Register at Appendix A to the report be noted; and


2)    Heads of Service be invited to future meetings to review their service risk registers as follows:


·         June 2021 – Environmental Services, Licensing and Community Safety

·         September 2021 – Acquisitions, Transformation and Regeneration

·         December 2021 – Neighbourhood Services

·         March 2022 – Resources and Corporate Core

·         September 2022 – Strategy and Planning




Audit Independent Person Recruitment pdf icon PDF 118 KB


In June 2020, at the recommendation of the Committee, it was agreed that an Audit Independent Person (AIP) be appointed to the Audit and Standards Committee (A&SC).  The AIP would be a non-elected member of the public with some experience in audit, a non-voting member of the Committee and present in an advisory / consultative manner only.


Members agreed that the Chairman of the A&SC, the Assistant Director Resources together with the Audit Manager comprised a panel to interview the suitable applicants and make a recommendation to the A&SC and then on to full Council on 17 May 2021.


At the closing date (29 January 2021), three applications had been received and two candidates were interviewed on 18 February 2021, via MS Teams.  The expectations of the role in terms of regular attendance at meetings and contributions to committee discussions were explained to each applicant at interview.


The calibre of the applicants was high and the Panel was confident to recommend that Mr Patrick Farmer be appointed to serve for an initial period of two years with the option of extending this for a further two years as the Council’s AIP and for his name to be put forward for approval by full Council on Monday 17 May 2021.


RECOMMENDED: That Patrick Farmer be appointed as the Council’s Audit Independent Person, for an initial term of two years (extendable for a further two years) with effect from 18 May 2021.


Report of the External Auditors, Grant Thornton - Audit Progress Report and Sector Update pdf icon PDF 831 KB


Darren Wells / Trevor Greenlee from Grant Thornton led Members through the report of the External Auditor on the progress in delivering their responsibilities to the Council, in addition to a summary of emerging national issues and developments relevant to the Council.


The following points were highlighted for Members’ attention:


·         since the last meeting two further Council properties had been valued incorrectly which were considered material and therefore adjustments had been made to the 2019/20 accounts;

·         work on the Council’s 2019/20 housing benefit subsidy claim was completed in January 2021 which amounted to £18.6m; there were no outcomes and no claim amendments were required;

·         it was confirmed that detailed planning for the 2020/21 audit would commence after completion of 2019/20 financial statements;

·         the pandemic would impact on the timing of Grant Thornton’s work for the 2020/21 audit, with some detailed work being performed at year end rather than as part of interim audit procedures;

·         Grant Thornton would be delivering technical workshops for local government accounts departments; an invitation had been extended to the Council’s finance team; and

·         on 1 April 2020, the National Audit Office introduced a new Code of Practice with a revised approach to the audit of Value for Money.  There were three major changes namely new criteria, increased extensive reporting and replacement of the qualified / unqualified approach to conclusions.


RESOLVED: That the report be noted.


ICT Continuity Plan Presentation


The IT Manager delivered a presentation on the Council’s ICT Continuity Plan and the following salient points were noted:


·         Member and Staff Support: Efficiencies were made by implementing and bolstering existing technologies including self-help.  Training was fundamental to drive down costs and free-up existing resources.

·         Security was ICT’s primary focus and the following initiatives were key, namely cyber essentials plus, completion of regular penetration tests, Microsoft active directory migration maintained in-line with industry standards, logging, policies aligned with Government and industry best working practices and architecture.

·         Dynamic IT: The following activities had been established to ensure technology consolidation, so that staff could access IT from anywhere (zero trust networking) and resilience.  Work had been carried out on the server room migration, network expansion, firewall redesign, cloud strategy and integrated telephony.

·         Server Room Migration: Cost saving drivers were consolidating into one physical room with an eventual move offsite in readiness for Town Hall renovation, uninterruptible renewable and generator power supply, air conditioning and fire suppression.

·         Future investment would consist of underpinning future infrastructure changes required to adapt to the significant changes in working practice post COVID, business grade internet connectivity for homeworkers was being considered, and allow the Council to realise Cloud Strategy.

·         In order to keep the Council in-line with current industry standards, it had been necessary to complete the following activities regarding redesigning the firewall e.g. consolidation of firewalls, saving renewal costs, removal of walled garden and complexity, simplifying and cost savings.

·         Benefits of moving to a Cloud Strategy were money savings, working smarter and collaborating across the Council and with customers, providing better robust user experience as vendors continually fixed issues and improved their products, as well as offering real time monitoring, access to marketplace security tools, avoiding inflexible network specification, as well as being locked into long-term contracts.

·         Benefits of using an integrated telephony system included reduced costs, better contact centre integration which would fully utilise Microsoft Teams licencing with telephone lines.

·         Strongly recognised the need for usable and useful policy documentation and the Council’s insurance company was assisting with the completion of outstanding policies which were scheduled to be completed in September 2021.


Members had the opportunity to ask questions and the following was noted:


·         Concern was aired regarding irregular broadband connectivity issues, particularly within the rural areas of the District.  Members were reassured that if viable the introduction of business grade broadband would assist with alleviating connectivity issues, however this could not be completely guaranteed.

·         It was clarified that the Council was already using the Cloud platforms e.g. email (hybrid approach) etc.  Four back-up systems across the Council; all systems and data would be recoverable either from the Cloud (includes Cloud back-up on and off site) or physical off-line back-ups.

·         Reassurance was given that the computer network was secure and robust measures had been implemented to protect the organisation from cyber threats / attacks.

·         As a result of the COVID-19 pandemic, significant changes had been implemented within IT namely the ability for staff to work  ...  view the full minutes text for item AS20/49.


Internal Audit Report to 31 December 2020 pdf icon PDF 376 KB


The Audit Manager led Members through the internal audit report to 31 December 2020 that gave details of audit matters and any emerging issues, not only in relation to audit but risk management and corporate governance.


Four audits were completed in Quarter 3 (Joint Waste Contract – Central Admin (Part 2), Main Accounting, Treasury Management and Creditors, all of which had been given good or substantial assurance on the overall governance arrangements.  Other activity during the quarter included co-ordination of the National Fraud Initiative data uploads, review of U4BW/ERP user access, counter fraud work / whistleblowing referrals, assisting with Business Support Grants and providing audit advice.


Appendix B to the report summarised the current position regarding the implementation of audit recommendations and showed that progress remained slow.  A total of 13 old recommendations, including five long-standing recommendations, still required implementation.  The Chief Executive, in conjunction with the Heads of Service would be actively monitoring progress to ensure these matters were resolved.


The Audit Manager advised that few recommendations were made in the first six months of 2020/21.  This reflected the fact that of the seven audits issued, most were limited in scope because of the COVID-19 pandemic.  All current year recommendations made up to 30 September 2020 had already been implemented.


RESOLVED:That the Internal Audit report to 31 December 2020 be noted.


Internal Audit Plan 2021/22 pdf icon PDF 479 KB


Consideration was given to the report of the Audit Manager on the Internal Audit Plan for 2021/22 (IAP).  The Standards required that the Audit Manager communicated the IAP and resource requirements, including significant interim changes, to senior management and the Audit and Standards Committee (A&SC) for review and approval.


The IAP set out the work programme for Internal Audit activity for 2021/22 andwas attached at Appendix C to the report.  Also attached at Appendices A and B respectively was the assurance map and assessment methodology, the results of which were used to inform the preparation of the IAP, with at least one audit planned in each of the medium risk areas.  The IAP represented the third year of operation of a three-year Strategic Audit Plan approved in March 2019.  Due to the COVID-19 pandemic there was a backlog of audits to be completed.  At present there were insufficient resources to complete all internal audit work within the coming year therefore they would be rescheduled to take place in 2022/23 and beyond. Members would be kept abreast of developments.


The IAP had been compiled by the Audit Manager in accordance with the Internal Audit Charter 2020 and was supported by the Corporate Management Team (CMT).  The IAP allowed for 534 days of audit work on 23 separate audit reviews / consultancy activities.  A significant portion of the Plan was devoted to Governance Audit work, owing to the importance of the assurance these audits provided.


The resources of the Strategic Audit Plan (2020/21) were shown in Appendix D to the report, which demonstrated that it would be possible to meet the total resource requirement of the amended plan with existing staff resources.


Progress against the IAP would be monitored by the Audit Manager and reported to the A&SC once a quarter. The content of the IAP would also be kept under review by the Audit Manager in liaison with the CMT, and adjusted if required, to ensure that it continued to reflect the Council’s needs and priorities.


The IAP needed to provide sufficient coverage to meet the Council’s statutory duty. The three-year Strategic Audit Plan and annual IAP aimed to meet this requirement by optimising the effectiveness of Internal Audit so as to contribute to the achievement of sound governance.  Despite being modified in light of the COVID-19 pandemic, the IAP still provided good coverage of a broad range of activities.


RESOLVED:  That the Internal Audit Plan for 2021/22 be approved.


Review of Internal Audit 2020/21 pdf icon PDF 342 KB


The Public Sector Internal Audit Standards (PSIAS) required the Council to conduct periodic self-assessments of the effectiveness of Internal Audit.  The Council’s Audit Manager considered it beneficial for this review to be carried out annually and for Members to review the findings prior to 31 March of the financial year to which it related, as approval ahead of the preparation of the Annual Governance Statement allowed documentation to place reliance on the effectiveness of Internal Audit.


The Public Sector Internal Audit Standards (the Standards) aimed to achieve consistent industry standards for Internal Audit and included a Quality Assurance and Improvement Programme which stipulated the need for both internal and external assessments.


The Audit Manager carried out an annual self-assessment review of the Internal Audit function using a comprehensive checklist; the results of the review for 2020/21 had been summarised and were appended to the report for Members’ consideration.  Members were able to see a full copy of the compliance report on request. It was noted that no areas of material non-compliance with the Standards had been found.


Members were reminded that an external peer review had been completed in 2017/18 and the results were reported to the Audit and Standards Committee on 26 June 2017.  No significant issues were found and the Assessment Team concluded that the Council’s internal audit service conformed to the PSIAS and general good practice for the profession.


The results of the assessment and peer review demonstrated that the Council’s Internal Audit Service continued to achieve a good level of compliance with the Standards and none of the areas of partial compliance were significant in nature.


RESOLVED: That the Review of Internal Audit 2020/21 be approved.


Treasury Management Update pdf icon PDF 157 KB


Cabinet had approved the Council’s 2020/21 Investment Strategy on 10 February 2020; this required regular reports to be presented to the Audit and Standards Committee on the Council’s treasury management activities. Investment activity was also reported to Members through the monthly Members’ Bulletin.  The report had been prepared in compliance with the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management. 


The report provided an update on a number of areas as follows:


·         The Council continued to hold investments in call accounts with major financial UK institutions and also held investments totalling £8m in Property Funds (PF).

·         The Council held £41.272m of treasury investments as at 31 December 2020. There was £11.869m of borrowing and the Capital Financing Requirement (CFR) was estimated to be £22.944m by 31 March 2021.

·         The total income from investments was forecast at £340,000 which was £38,000 higher than the previous forecast.  The largest investment returns were from property funds averaging between 3.86% and 4.20%.  Market values had been adversely impacted by the COVID-19 pandemic however current values identified a modest recovery of £75,236 since the Quarter 2 report; the future overall economic situation remained uncertain.

·         As at 31 December 2020, the Council held £33.3m in its General Account (GA) which included Government funding for individuals and businesses in response to the pandemic; it was anticipated that any unspent funding would have to be returned.  GA funds would also need to be kept available for other large payments such as Council Tax and Business Rates payments.  In December 2020, £10m of £33.3m had been transferred to other counter parties in various interest yielding call-accounts with interest rates ranging from between 0.05 to 0.12% (small investment return, reduced the risk of holding all money with one organisation).

·         In 2020/21, the Capital Programme included new borrowing of £7.316m.

·         As at 31 December 2020, the Council had borrowed £11,869,117.

·         Due to the increase in forecast interest income and grants received, net financing costs as a proportion of the net revenue stream had reduced from 3.57% to 0.84%.

·         The Council continued to maintain an under-borrowed position, which meant the CFR was not fully funded by loan debt but managed by using reserves and balances.  As returns remained low, this was a prudent strategy that also minimised the counterparty risk associated with placing investments.

·         The Council had not made any further property purchases within the reported period, however negotiations were continuing with several parties and acquisitions were anticipated over the next few months.  The budget for rental income from all investment properties was £1,919,840; the latest estimated outturn for 2020/21 was £1,794,840 a shortfall of £125,000.  This equated to a 6.49% gross return and after allowing for borrowing costs the expected return on the Council’s Property Investment Strategy (PIS) properties was 2.70%.  Retaining and investing in property, in the long-term would generate income to support the Council’s financial position and strengthen regeneration of the district.

·         Success of the vaccination roll-out programme had buoyed the markets and  ...  view the full minutes text for item AS20/53.


Accounting Policies 2020/21 pdf icon PDF 423 KB


Members received the report of the Finance Manager which presented the accounting policies that would be used in the preparation of 2020/21 Statement of Accounts and summarised the changes from 2019/20 introduced as a result of amendments to the Code of Practice (CoP) on Local Authority Accounting 2020/21 or as part of the Council’s annual review process. The report also explained the requirement to include notes on the critical judgements used in the production of the Statement of Accounts which had been presented alongside the accounting policies in line with best practice. The Council’s External Auditors, Grant Thornton UK LLP had been consulted.


The Council’s accounting policies were the specific principles, conventions, rules and practices that were applied in the production and presentation of the annual Statement of Accounts.  These policies had to be disclosed as a note to the annual accounts; a copy of the policies was attached at Appendix A to the report.


The CoP on Local Authority Accounting for 2020/21 had been reviewed which resulted in no significant changes compared to the previous year.  However some minor wording and presentation amendments had been made to the Council’s policies to align them with disclosure requirements.  In addition, the section on interests in companies had been updated to reflect the Council’s interest in Alliance Homes (Rother) Limited.


In line with the International Financial Reporting Standards and the CoP, judgements that management had made in the process of applying the Council’s accounting policies that had the most significant effect on the amounts recognised in the financial statements, were shown at Appendix B to the report.


RESOLVED:That the Council’s proposed accounting policies be approved and adopted in completing the 2020/21 Statement of Accounts and the critical judgements be noted.


Work Programme pdf icon PDF 211 KB


Consideration was given to the Work Programme which contained details of the reports to be considered by the Audit and Standards Committee for the 2021/22 municipal year.


Two provisional additional dates had been added to the Work Programme for November 2021 and January 2022 to present the Annual Governance Report 2020/21 and Statement of Accounts 2020/21 in case Grant Thornton was unable to meet agreed deadlines.


RESOLVED: That the Work Programme, attached at Appendix B, be approved.