To approve as a correct record the minutes of the meeting held on 10 March 2020.

Decision

To approve the minutes of the meeting held on 10 March 2020 as a correct record.

A report of the Council’s External Auditor’s (Mazars) is enclosed.

The Committee considered the report of the Council’s external auditors Mazars that provided an update on progress in delivering its responsibilities to the Council.

The Committee was informed that changes had been implemented since the start of the Covid19 pandemic with the introduction of remote working for both council audit staff and external audit staff. In addition the MHCLG had introduced changes to the timetable to complete the audit for 2019/20 by the end of November 2020. The audit of the draft accounts was commencing. The report also provided information on the progress of the audit and made reference to National Publications that may be of interest to the Committee relating to its governance role.

The Committee was informed on matters relating to impact of the pandemic on valuation of financial pension fund assets and uncertainty around the valuation of the Council’s Property, Plant and Equipment, particularly where that valuation is based on market conditions. It was highlighted that the Council’s valuer has reported that they did consider that there will be a material impact on the valuations for 2019/20.

From the list of National Publications in the report the Committee was informed that a report would be submitted to a future meeting to reflect the impact of the changes resulting from the new National Audit Office Code of Practice.

It was reported that the audit of accounts would be completed before the November 2020 deadline.

The Chair invited questions from the Committee.

A member referred to the impact of Covid19 on the deadline for the audit and other areas such as the value of property, plant and equipment. The Committee was informed that Covid19 had delayed the deadline for the audit and it was anticipated that there would be an impact on future valuations.

Decisions

The Committee noted the report and comments made.

The report of the Deputy Chief Executive and City Treasurer is enclosed.

The Committee considered the report of the Deputy Chief Executive and City Treasurer providing details of Treasury Management activities of the Council during 2019-20. The Deputy Chief Executive and City Treasurer introduced the report and provided an update regarding:

?        Housing Investment Fund and the transfer to the GMCA;

?        The Council’s limited borrowing activities during the year;

?        The Council’s use of internal borrowing and holding short term cash and achieving a good rate;

?        Short term borrowing in view of the current climate;

?        The Council’s submission as part of a consultation on the Public Works Loan Board (PWLB).

Thanks were given to the Treasury Management Team for its continued good work in view of the impact of the Covid19 pandemic. 

Decision

The Committee noted the report.

The report of the Deputy Chief Executive and City Treasurer is enclosed.

The report of the Deputy Chief Executive and City Treasurer was submitted 2019/20 Annual Accounts, which have been signed by the Deputy Chief Executive and City Treasurer.

The City Treasurer introduced the report and informed the meeting that the accounts were in a relatively strong financial position with a small overspend identified, strong balance sheet and reserves. Following Covid19 and the lockdown, work had been undertaken by staff remotely to produce the accounts and their work in producing the accounts in such challenging circumstances was recognised. The group accounts had been delayed and circulated prior to the meeting.

The Committee received a presentation from the Deputy City Treasurer which provided:

?        An accounts timetable which  included public inspection until 10 September and audited accounts to the  and the completion of the audit of the accounts by the end of November 2020.  

?        A Narrative Report providing details on the performance of the Council’s strategic objectives.

?        Net Revenue Budget 2019/20 – net revenue budget compared to outturn and key reasons for variations        

?        General Fund Revenue Outturn 2019/20

?        Capital Outturn 2019/20 compared to budget, details of spend for key projects and summary of how capital expenditure was funded

?        2019/20 Key Variations on the budget

?        Housing Revenue Account Outturn 2019/20

?        Capital Outturn 2019/20

?        Capital Spend and Financing 2019/20

?        Effects of COVID 19 on 2019/20 Accounts

?        Comprehensive Income and Expenditure Statement

The Chair invited questions from the Committee.

A member referred to the capital outturn and requested that this not be presented in presentations with the revised budget but instead with the original budget report to provide a more accurate picture of how the budget has performed. Officers were asked to explain the Council’s debt position, what plan there is to use the capital reserves, and the position on loans to maturity and the interest paid per year.

The City Treasurer noted the point regarding the capital outturn and revised budget and explained that changes can take place regarding budget allocations. The point was also made that the interest rates on current loans are at a fixed rate. It was reported that the long term debt book relates to loans taken from 1991 onwards, with the majority of the debt being long term, and of this c. 90% is 10 years or more until maturity. Debt of c. £6m will mature by the end of the 2021/22 financial year and the majority of the remaining debt running until 2050 onwards. The rate of interest for individual debts is set at the market rate at the time of the loan and would have been considered the best value for money at that time. 

A member referred to Notional Accounting Adjustments and asked officers to explain what this related to and the re-measurement  of pensions referred to in the accounts . It was reported that Note 12 in the accounts provided an explanation of the adjustments which included such items as depreciation. The re-measurement  of the pension figure is a notional adjustments and is based on actuarial assumptions  ...  view the full minutes text for item 15.

The report of the Deputy Chief Executive andCity Treasurer and the Head of Audit and Risk Management is enclosed.

The report of the Deputy Chief Executive and City Treasurer / Head of Audit and Risk

Management was submitted. The Committee was advised that the Audit Plan had been developed to be represented with a greater level of assurance over plans to address gaps in staffing resources. It was reported the impact of Covid19 on the work of the Council had resulted in Internal Audit standing down the planned audit activity in order to minimise impact on services and personnel involved in the response. Work had then focussed on audit resource on advice and guidance for the management of urgent changes required to systems and processes and to help deliver new services required as part of the crisis response. Work postponed included actions to progress the service restructure, as management were required to focus fully on the response to the crisis. Other matters arising from the impact of Covid19 related to the procurement of PPE and the logistics of ensuring distribution and work on business rates and grants to help support businesses in Manchester. Other audit work has focused on cores services such as Adults and Children'’ Service and the impact on the Council’s budget position and reductions over the next year.

The Deputy Chief Executive and City Treasurer acknowledged the work of officers in the Internal Audit and Risk Management Team and the additional time spent in supporting the Council’s work in addressing the impact of Covid19. Reference was made to the Council’s budget and the current process of budget scenarios and budget planning in view of the uncertainty of the future budget position. 

The Chair invited questions from the Committee.

A member referred to the government’s furlough scheme and asked what potential there was for fraud to be committed on support provided by the Council and how this would be identified and addressed. Reference was also made to re-instating safeguards in view of the pace of changes made at the start of Covid19 to ensure that staff are protected in particular through the use of IT systems.

It was reported that changes had been introduced to the process with additional controls put in place to identify fraud and audit officers were involved in consultation during the introduction of the support scheme. This included national reporting on patterns of fraud with monthly reporting to central government. In addition checks are made on spending decisions. Regular updates are also made to the Senior Management Team to highlight the risk of fraud across services. It was reported that safeguards are still in place and reference was made to the IT packages in place such as Microsoft 365 and additional cyber security measures.

A member referred to staffing levels and resources within the Internal Audit Team and the recruitment to the current structure to ensure audit work continues. Reference was also made to the passing of skills/knowledge to other non-audit staff regarding PPE in the event of a further outbreak to allow audit staff to focus on audit work. Officers were asked  ...  view the full minutes text for item 16.

The report of the Head of Audit and Risk Management is enclosed.

The Committee considered the report of the Head of Audit and Risk Management which provided the Head of Audit and Risk Management’s annual assurance opinion and report on the Council’s system of governance, risk management and internal control. The annual opinion of the Head of Audit and Risk Management’s with a summary outturn of the work of the Internal Audit Section for the 12 months April 2019 to March 2020. Quarterly updates on progress, including assurance opinions and executive summaries of reports, have been provided to Audit Committee during the year.

The audit opinion focused on the year to March 2020 however, the events of the evident last six weeks of the year indicate that that there would be likely significant implications for the UK in relation to the Coronavirus (Covid19) outbreak.

The Head of Audit and Risk Management provided a moderateassurance that the Council’s governance, risk and control framework is generally sound and operated reasonably consistently in the year.

The Chair invited questions for the Committee.

Reference was made to paragraph 2.28 of the report and the Head of Risk Management was that in view of the number of limited and no assurance opinions listed on the table, what level of assurance would be given to Adult Services.

The Committee was advised that reporting on a directorate basis Adult Services could have a limited assurance on the basis of the audits carried out. It should be noted however, that the department had been open on the areas of concern identified and there had been a lot of subsequent work carried out to address these through new processes and procedures and through the resetting of the improvement plan work as the service moves forward through the past three months during the Covid outbreak.

A member referred to Adult Services and sought assurance that reports listed on the Audit Plan scheduled for the year would be completed and not lost during the year.

It was reported that officers would continue to follow up on all limited assurance opinions with work already taking place to address risk. This would be addressed in the Audit Monitoring Report.

A member referred to Executive Summaries and when members of the Committee would receive them. It was reported that the outstanding summaries would be circulated in time for the September meeting of the Committee as part of the Quarterly Assurance Update report.

A member referred to the way in which Adult Services had reacted to the Covid crisis and made the point that the process of planning by central government during this time could have been better. The reaction of the NHS and Local Authority to the crisis had been commendable and it would be difficult to reflect the individual efforts of staff within an audit opinion. It was therefore important to consider how much of a reactive service the Council should be.

It was noted that the response by the services for adult services and adult social care to the challenges of Covid19 on  ...  view the full minutes text for item 17.