Agenda and minutes

The Head of Paid Service to seek nominations for election of Chairman for the municipal year.  On election, Chairman of Committee to take the Chair.

RESOLVED: That Councillor A.K. Jeeawon be elected Chairman of the Committee for the ensuing municipal year.

To authorise the Chairman to sign the Minutes of the meeting of the Audit and Standards Committee held on 22 March 2021 as a correct record of the proceedings.

The Chairman was authorised to sign the Minutes of the meeting of the Audit and Standards Committee held on 22 March 2021 as a correct record of the proceedings.

Apologies for absence were received from Councillor Harmer, Mrs Jan Gray, Darren Wells and Trevor Greenlee (Grant Thornton).

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.

Declarations of interest were made by Councillors in the Minutes as indicated below:

Barnes             Agenda Item 11 – Personal interest as Vice-Chairman and Company Executive Director for Alliance Homes (Rother) Ltd.

Thomas           Agenda Item 11 – Personal Interest as Company Executive Director for Alliance Homes (Rother) Ltd.

Members considered the report of the Customer Services Manager that set out the details and outcome of two complaints made to the Local Government Ombudsman since the last meeting of the Committee, covering the period 14 November 2020 to 28 May 2021. 

The complaints related to one Council service which was planning.  Both were investigated and upheld, and the Customer Services Manager confirmed that remedial measures had been put in place where fault was found. Issues around delays in communication between departments and complainants were being addressed.

For the same period, Rother received 125 non-ombudsman complaints; 76 were non-complaints (treated as department service request), 16 were a stage one complaint, eight were a stage two (responded to formally by Head of Service), 18 were reported to be currently awaiting determination/under investigation and seven were awaiting complaint triage assessment.

RESOLVED: That the report be noted.

The Committee received the report of the Monitoring Officer (MO) which set out brief details of the Code of Conduct (CoC) complaints received since the last meeting  and advised the Committee of other standards related matters that had been dealt with since the Committee’s last meeting.

Since the last meeting there had been three valid CoC complaints made against three District Councillors, all concerning the use of social media during the recent election campaign for the Bexhill Town Council.  As the CoC only applied when Members were acting in their official capacity, this often presented a significant grey area in the context of social media where the line between acting in an official or in a private capacity could be a difficult one to draw and further guidance was considered beneficial in the future. The view of one of the Council’s Independent Persons was sought and concurred with the MO’s proposed action in each case; details of each case were provided at Appendix 1 to the report. The outcome of the complaint against a District Councillor that was referred for investigation in the previous year had concluded since the last meeting and was also included at Appendix 1.  

Two non-valid complaints against three Parish Councillors had also been received, one was concerning a planning appeal, the other publication of consultation comments about a Neighbourhood Plan concerning the complainant’s business.  Both related to the Parish Councils as a whole and were not attributable to the behaviour of the individual Parish Councillors.

This meeting was the last meeting for two of the Council’s retiring Independent Persons (IPs) whose Terms of Office expired on 10 July 2021.  Mrs Susan Fellows and Mrs Jan Gray had been IPs for the Council since 2013, the maximum period allowed under the terms of the Localism Act.  Members thanked Mrs Susan Fellows and Mrs Jan Gray, on behalf of the Council, for their services to the Council and for providing invaluable support to the Monitoring Officer in the assessment of complaints made against elected Members of the authority and the Parishes and Towns across the District.

There had been no formal standards related training undertaken since the last meeting due to time constraints and other priority work.  It was hoped that a session would be put together for Members in the coming civic year using case examples from neighbouring authorities where possible.

It was noted that following the creation of a new Parish Council for Bexhill-on-Sea,  as the principle authority, RDC had become responsible for dealing with any CoC complaints against the 18 new Town Councillors in respect of their CoC. 

Following the adoption of a new CoC at the Annual Council meeting, a Member at that meeting raised the use of the word ‘should’ rather than ‘must’ within the Seven Principles of Public Life (the ‘Principles’), which were appended to the CoC as the Code had to be compatible with them.  The Council was not able to change the wording in the Principles but could ensure  ...  view the full minutes text for item AS21/6.

Members were led through the report of the External Auditor by the Finance Manager on the progress in delivering Grant Thornton’s 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:

•           work on the 2019/20 audit was still ongoing due to the awaited valuation of assets from the District Valuer.  Initial planning for the 2020/21 audit commenced in March 2021 with work due to commence in August 2021;

•           there were no changes to the accounting treatment for grants as required by the CIPFA Code of Practice on Local Authority Accounting.  However, the extent of additional funding to support the cost of services to offset other income losses along with grant packages to be paid out to support local business, had changed;

•           the financial position of local government remained a cause for concern, with many authorities relying on reserves to balance 2020/21 year-end budgets. Many were setting budgets for 2021/22 with limited confidence and which were balanced through cuts to service budgets and the use of reserves;

•           the ‘Good Practice in Annual Reporting’ guide issued in February 2021 by the National Audit Office highlighted the importance of transparent annual reporting to enable stakeholders to understand the impact of the COVID-19 pandemic on an organisation’s strategy, plans and operational and financial performance; and

•           the CIPFA Resilience Index was a comparative analytical tool which would be used to support good financial management, providing a common understanding within a council of their financial position.

RESOLVED: That the report be noted.

The Council was required to ensure that it had reliable and effective internal control systems in place. The adequacy of these systems was tested by both Internal and External Audit.

In the year up to 31 March 2021, Internal Audit had operated in accordance with the Public Sector Internal Audit Standards (hereafter referred to as ‘the Standards’). It was a requirement of the Standards that Internal Audit reported to the Audit and Standards Committee on audit matters and any emerging issues, not only in relation to audit but risk management and corporate governance. In line with the Standards, the Audit Manager was expected to present an annual report on the performance of the Internal Audit Service and to provide an overall opinion on the Council’s control environment.

Ordinarily, a risk-based plan was established and agreed prior to the start of the financial year. However, the audit planning process in 2020/21 was disrupted by the coronavirus outbreak and the work plan originally proposed had to be abandoned.  A new approach was approved by the Committee in June 2020 which included replacing the 2020/21 Audit Plan with quarterly work plans and the implementation of a number of shorter, more focused reviews concentrating on the business-critical issues.

Six audit reviews were completed in the final quarter of 2020/21. All provided good or substantial assurance on the overall governance arrangements and an overview of the findings arising from these audits was given in Appendix A to the report.  Appendix B  to the report provided a summary of all audit reports completed in 2020/21, the level of compliance and assurance rating for each review, and the overall performance of the Internal Audit Team against the plan.

The summary showed 90% of the 2020/21 Audit Plan was completed and only two planned audits (Payroll and CIL Income COVID Risks) were still outstanding at the end of the financial year. Both of these were completed in April 2021.

On face value, both Internal Audit’s performance and level of assurance obtained from its work would appear to show an improvement on the previous year. However, no audit reports were issued in the first quarter of 2020/21 due to the impact of the pandemic, and Internal Audit’s approach had to be modified in order for it to be able to continue to function. This meant that fewer controls were examined than would normally be the case, and the results could not readily be compared with the performance in previous years.

Appendix C to the report showed a summary of the current position with the progress made on implementing the audit recommendations reported at previous meetings.  The situation regarding the old year recommendations was starting to improve and progress continued to be made in respect of most of the remaining cases although the number of long outstanding (i.e. pre-April 2019) recommendations (5) was unchanged since the last quarter. The Chief Executive was being kept informed about the progress on all old year recommendations and was working with the relevant Heads  ...  view the full minutes text for item AS21/8.

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:

•           Since the Quarter 3 report to Members, the Council had slightly diversified its investment portfolio in order to spread risk and earn a small amount interest income. It continued to hold investments of £14.054m in Call accounts and now also held £5.0m in an interest earning call account and £3.0m in a 31-day Notice account. All these investments were with the major financial UK institutions. The Council continued to hold £8.0m in Property Funds.

•           The Council held £32.047m of treasury investments as at 31 March 2021. There was £11.869m of borrowing and the Capital Financing Requirement (CFR) was £18.168m at 31 March 2021.

•           The total income from investments was £324,000 which was £16,000 lower than the previous forecast.  The largest investment returns were from property funds averaging between 3.64%  and 4.14%, however their market values fluctuated considerably during the pandemic.

•           As at 31 March 2021, the Council held £14.1m in its General Account (GA) which included Government funding for individuals and businesses in response to the pandemic; the unspent balance was £7.465m and would be returned to the Ministry of Housing Communities and Local Government in June.  GA funds would also need to be kept available for other large payments such as Council Tax and Business Rates payments.

•           As at 31 March 2021, the Council had borrowed £11,869,117.

•           Since the Quarter 3 report, Net Financing Costs as a proportion of the Net Revenue Stream had reduced slightly from 0.84% to 0.82%.

•           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 in 2020/21, however negotiations were continuing with several parties and acquisitions expected in 2021/22.  The budget for rental income from all investment properties was £1,919,840; the draft actual outturn for 2020/21 was £1,860,620, which was £59,220 below budget due to factors such as void periods.  Tenants were being pursued for rent arrears and there were minimal write-offs in 2020/21 as a result of the pandemic. However, economic conditions were still difficult and further rent write-offs could not be ruled out. After allowing for borrowing costs the expected return on Property Investment Strategy (PIS) properties was 2.82%.

•           The continued success of the vaccination rollout programme continued to have a positive bearing on the markets and economic forecasts had been  ...  view the full minutes text for item AS21/9.

The Accounts and Audit Regulations required the Council to review, at least annually, its governance arrangements and, following this review, to agree an Annual Governance Statement (AGS). It was also a requirement for the Council to demonstrate awareness of where weaknesses existed within the governance arrangements and to develop and implement appropriate improvement plans.

The AGS appended to the report at Appendix A comprised an assessment of governance arrangements and internal controls across the whole organisation against the Council’s Code of Corporate Governance and whether these were supported by robust assurance processes.  The review included:

•           the robustness of the Council’s risk management, performance management, financial management, legal and regulatory, IT and human resources processes and having the evidence to support that these were in place;

•           the governance arrangements in place for the management of partnerships;

•           the work and effectiveness of the internal audit function; and

•           assurances from those managing the business (i.e. Heads of Service) that the processes within their areas were robust and complied with.

The outcome of the review was set out in the Statement under the heading of Significant Governance Issues.

There were no outstanding issues from previous years and the work carried out by Internal Audit in 2020/21 did not highlight any significant concerns regarding the internal control environment.

Other issues and areas of emerging risk that might impact on the Council included Local Government Funding Review and Business Rate Retention Scheme reset , achieving a balanced budget, emerging new Corporate Plan, joint working, loss of staff and recruitment, property investment, U4BW ERP Implementation Project, major projects, trading with European Union and Northern Ireland, pandemic, climate change emergency and joint waste collection and street cleaning contract.

Members requested and it was agreed that, under the section in the Statement on emerging risks, the Emerging new Corporate Plan item be amended to include the Council’s aim to be customer centric, and that in the Major Projects item, more detail be given on the role and responsibilities of the Directors of Alliance Homes (Rother) Ltd.

Members noted that the six-monthly review of the corporate risk register would be reported to the September meeting of the Committee, along with the first service risk registers.  The relevant Heads of Service would be present to answer any Member questions.  Each major project also had its own risk register managed by officers, but if Members wished to consider an individual project’s register, it could be brought before the Committee.

The report demonstrated the robust approach the Council took to ensure good governance. The issues highlighted through inspection, both internal and external, provided assurance that the controls and procedures in place provided Members with a high degree of assurance.  The report highlighted the areas where improvement was required and the risks to the Council and its partners resulting from the poor economic climate and the associated impact on funding in the public sector.

RESOLVED: That:

1)         the Annual Governance Statement, as amended, be approved; and

2)         the Statement  ...  view the full minutes text for item AS21/10.

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.

A Risk Management report from Environmental Health was added to the September meeting.

It was noted that the new Independent Person (Standards), Mr Robert Brown, would commence his appointment on 10 July 2021, but there were no Standards Matters on the Work Programme until December. (His appointment is when the two IPs cease).

RESOLVED: That the Work Programme, attached at Appendix A as amended, be approved.