Apologies were received from Councillors Roger Thistle and John Leach.

Minutes of the Meeting held on 16 June 2011.

The Minutes of the Meeting held on 16 June 2011 were approved as a correct record and signed by the Chair.

(a)   Report of Executive Head of Finance

(b)   External Auditor’s Annual Governance Report

(c)   External Auditor’s Pension Fund Governance Report

(d)   Revised Statement of Accounts 2010/11

The Committee considered the Strategic Director – Resources’ report setting out their responsibilities in relation to signing off the Statement of Accounts. 

The Statement of Accounts, as amended following the audit, was submitted together with proposed responses to the matters that had been raised by the External Auditors. 

The Audit Commission, the Council’s external auditors, had completed their audit of the financial statements and their findings were included in the Annual Governance Report that was submitted to the Committee.

Lindsey Mallors, District Auditor, Patsy Sanwo and Paul Jacklin, from the audit team, gave a short presentation on the Annual Governance Report and the Pension Fund Annual Governance Report.  They thanked the Strategic Director – Resources and his officers for the way they had worked with the audit team.  The working papers submitted for audit were of good quality and the Audit Team had had an excellent working relationship with the officers.

The Audit Commission proposed to issue an unqualified audit opinion on the financial statements and an unqualified Value For Money (VFM) conclusion.  There were no material errors, although there were a small number of non trivial errors and a number of changes made to the disclosure notes.  There were no significant weaknesses in control.  It was noted that due to the introduction of international financial reporting standards (IFRS) there were a number of additional complexities to the accounts preparation this year.

Lindsey Mallors stated that she had undertaken additional work to support her VFM conclusion this year, given the results of the Internal Audit report on the town centre. To give assurance that the issues in the Internal Report were not indicative of arrangements across the whole Council, she had selected another large capital project to look at the financial and governance overall arrangements. The Stanley Park School Project was selected due to its size, and although the project was not yet complete, she was happy to report that the issues identified in the Internal Audit report were not replicated in this project. The Chair requested that the Stanley Park School Project was revisited when it was completed.

Sutton was required to supply a letter of representation to the auditors taking responsibility for the Statement of Accounts, including any unadjusted items, and for the disclosure of all relevant information of which the Council was aware.  The draft letter was submitted to the Committee for approval and signed by the Chair and the Strategic Director of Resources.

There were no material errors in the Pension Fund Accounts.  However, there were a number of non-trivial adjustments and narrative disclosure note changes which had been made to improve clarity and ensure full compliance with reporting requirements.  These were reflected in the Pension Fund section of the Statement of Accounts and detailed in the Pension Fund Annual Governance Report.

Attention was drawn to one item in the Pension Fund Accounts, relating to the difference between the change in market value disclosed in note 5c with the value disclosed in the Fund Account.  ...  view the full minutes text for item 864.

Report of the Head of Financial Planning.

Members considered a report from the Executive Head of Finance which summarised the Council’s Treasury Management operations during the first three months of 2011/12.

The Head of Financial Planning gave highlights from the report.  The Council had invested surplus funds when available and complied with the requirements of the prudential code. The Council was now operating its newly agreed Treasury Management Strategy for 2011/12. Following the continued market turbulence Sector had recently revised its creditworthiness methodology. The report provided an update on these changes and action taken by the Council.

No new long term borrowing was undertaken during the first quarter. However since then the Council has taken advantage of the continued drop in the price of Government gilts and the related low cost of borrowing and taken on new borrowing totalling £15m.

The report also provided an update on progress made on assessing options available for the Council for raising funds for the payment to Government through HRA reform.  It was reported that Public Works Loan Board (PWLB) would be used instead of bonds to pay the Government £140m at the end of the financial year.  Officers would work on options between until December 2011 and would request the finance from PWLB by the end of March 2012.

Resolved: (i) The Committee recognised the amount of work that officers had put into this and thanked Lyndsey Gamble.

(ii) To note the treasury management activity undertaken during the first three months of the year.

Report of the Chief Internal Auditor.

The Chief Internal Auditor presented his report which summarised the recent investigation work that had been undertaken by Internal Audit.  Four investigations which were currently ongoing were reported to the Committee and further information would be provided once the investigations had been concluded.

The Chair expressed concern regarding investigation 208 which involved the Council’s use of a consultant.  It was explained that finance officers are improving the systems and processes for identifying and classifying the different types of consultants used by the Council. It was also confirmed that CMT regularly receives and reviews reports on the usage and deployment of consultants.

            Resolved: (i) To note the report.

(ii) To thank David Dobbs for his report.

Report of the Executive Head of Finance

The Committee considered a report from the Executive Head of Finance which explained that during 2010/11 the Council’s risk management arrangements had continued largely unchanged from previous years.  In the current financial year opportunities had been taken to improve the integrations between the process of reviewing key risks and wider performance management.  As the same time, in line with the principles of Smarter Services Sutton the revised process better supports more proactive risk management  Risk registers were being refreshed ensuring that they were useful to groups for their reporting.

            Resolved: To note the report.

Report of the Chief Internal Auditor.

Further to Minute 380/11 members considered a report from the Chief Internal Auditor which provided an update on the management actions that were agreed following the Internal Audit review of the Sutton Town Centre refurbishment.  The report detailed the Management Action Plan which had been developed and monitored by Internal Audit. It was confirmed that, where required, actions are in place to amend and update the Council’s constitution.

 Members also considered a report presented by the Executive Head of Policy and Customer Services, which had been presented to The Executive on 12 September 2011, which detailed proposals to improve the way the Council manages major capital programmes and projects. 

The Executive Head of Policy and Customer Services drew attention to the key lessons learnt looking across all of the  Council’s programme and project work areas and explained how areas for improvement would be addressed by the new arrangements,. In particular, the new arrangements gave more emphasis to the role of councillors in the governance of major programmes and projects. .   .  Proposals for change included the setting up of a new member steering group, and a new programme board to be chaired by the Chief Executive.  The Terms of Reference (ToR) for the Steering Group and Project Board were attached. 

Members noted the importance of ensuring there was sufficient capacity and training for staff and asked how this would be organised. 

There was a wider discussion regarding the role of scrutiny In relation to major programmes and projects.  It was reported that Scrutiny Overview Committee had requested they receive a report six months after the new arrangements had been in place.  The Committee requested that an update be forthcoming to the Audit Committee following Scrutiny Overview Committee’s six month review of the new arrangements.

Resolved: (i) To thank David Dobbs and Gill Bull for their reports and presentation.

(ii) To note the progress made by management in implementing the actions detailed in the report.

(iii) To request an update following the six month review, of the new arrangements, by the Scrutiny Overview Committee.

Lindsey Mallors described the process for the procurement of the new auditors and explained that the Audit Committee would not be involved for another three years yet.

The Chair announced that Lindsey Mallors was moving on to a new job.  On behalf of the Committee he thanked he for the very good work, thanked her candidness and wished her every success in the new position.

            Resolved: (i) To note the workplan.

(ii) To thank Lindsey Mallors and wish her success in her new job.

The next meeting of the Audit Committee will be held on Thursday 15 December 2011.

Resolved: To rearrange the December date for this committee due to a couple of members having clashes with other responsibilities.