Agenda and minutes

Agenda and minutes

Audit Committee - Tuesday, 22nd October, 2024 10.00 am

Venue: Council Antechamber, Level 2, Town Hall Extension

Contact: Donna Barnes  Governance and Scrutiny Support Officer

Media

Items
No. Item

25.

Minutes pdf icon PDF 94 KB

To approve as a correct record the minutes of the meeting held on 23 July 2024.

Minutes:

Decision

 

The minutes of the meeting held on 23 July 2024 were approved as a correct record.

26.

External Audit Update report pdf icon PDF 656 KB

The report of the External Auditors (Forvis Mazars) is attached.

Minutes:

The Committee considered the report of the External Auditors, Forvis Mazars which provided information about progress in delivering their responsibilities as the external auditors for Manchester City Council (the Council) for the years ending 31 March 2023 and 31 March 2024.

 

In addition to the report’s an introduction and background, key points and themes included:

 

·       An update on the financial statements audit, noting that a report would be submitted to the November meeting of the Committee on the completion of this work;

·       Providing an update on the value for money audit;

·       Information in relation to the Government measures to address the backlog in local government accounts and audit;

·       An update on the audit for the year ending 31 March 2024, noting that the aim was to complete the audit of the 2022/23 accounts to enable the Council to publish audited accounts soon after the November Audit Committee meeting; and

·       Information on the Financial Reporting Council Audit Quality Inspection and Supervision (July 2024).

 

The Committee was invited to note that a report that discussed the External Auditors’ Value for Money work in the 2022/23 audit would be submitted to the next scheduled meeting as this was close to completion. No significant risks or weaknesses had been identified. In addition, the report would also refer to further work on the consolidation of the Council’s Group Accounts in 2022/23 in view of the Council having recently submitted a further revised set. The intention was therefore for the External Auditors’ to submit an unqualified opinion on the Council’s own accounts and Group Accounts for that financial year at the Committee’s next meeting.

 

In response to questions, the Committee was advised that the increased focus and attention given to the evaluation of assets was in accordance with national CIPFA codes and standards. Associated costs were included in the overall amount allocated for the audit of accounts although this had led to greater investment in undertaking annual asset valuations to meet the level required and facilitate a clean audit. As a result, the 2021/22 accounts would be restated as a direct consequence of this work, noting that this was undertaken in relation to assets and would provide more accuracy with the accounts. It was re-emphasised that the delays in finalising the accounts were a national issue, and that the Council’s Group Accounts was particularly complex in view of them being prepared using different accounting policies standards. However positive work had been undertaken to ease those processes in consultation with CIPFA.

 

With regard to the 2023/24 accounts, the External Auditor advised that in July 2024, the new government had published measures to address the backlog in local government audits. This had altered the initially proposed ‘backstop’ dates and where a full audit was not possible by the newly implemented deadline, auditors would be required to disclaim their audit opinion, in line with guidance issued by the National Audit Office. The newly implemented deadline for the 2023/24 opinion had been brought forward to the end of February 2025,  ...  view the full minutes text for item 26.

27.

Annual Accounts Audit pdf icon PDF 142 KB

The report of the City Treasurer is attached

Minutes:

The Committee considered a report of the City Treasurer which provided an update on the progress of the audit of the Council’s final accounts and outlined the national and local context behind the delays. The report concluded that the issues outlined in its narrative posed a real threat to the reputation of local government.

 

In addition to its introduction and background, the report discussed:

 

  • The national context and reasons for the delays
  • The Local Authority’s position in respect of its 2022/23 accounts, 2023/24 accounts as well as cost implications

 

The Committee discussed the impact of the disbandment of Audit Commission in 2012 and the consequences this had presented in terms of complexity and challenge regarding the audit of Local Authority final accounts. the importance of providing input and feedback to relevant stakeholders on those consequences was acknowledged. The City Treasurer commented that Chartered Institute of Public Finance and Accountancy (CIPFA) were working with the Government to address this issue adding that he supported proposals that would enable the production of accounts in a readable and relevant format to ensure they were accessible to the lay reader. The External Auditor supported the lobbying of the Government, CIPFA and the Financial Reporting Council (FRC) on this matter.

 

The Executive Member for Finance and Resources stressed the importance of the Audit Committee in holding to account the effectiveness of the Council’s systems of internal control and assurance over the Council’s corporate governance and risk management arrangements. He said he would support, in consultation with the Chair of the Committee and the City Treasurer, the lobbying of the government to improve the final reporting and format of final accounts.

 

The City Treasurer and the Committee expressed their gratitude to the Council’s Finance team for their dedication and hard work in delivering this area of activity.

 

Decisions

 

  1. To note the national and local position in relation to the annual audit of accounts.

 

  1. To recommend that Executive Member for Finance and Resources, in consultation with the Chair and the City Treasurer, write to the relevant Secretary of State to communicate the Committee’s suggestions to improve the final reporting and format of final accounts.

 

 

28.

Corporate Risk Register pdf icon PDF 73 KB

The report of the Assistant Director, Assurance and Risk is attached.

Minutes:

The Chair informed the Committee that he had agreed to defer consideration of this item of business to the November meeting.

 

Decision

 

To defer this item of business to the November meeting.

 

29.

Risk Review item: Adult Social Care Package payments and Adult Social Care Contract Governance pdf icon PDF 126 KB

The report of the Executive Director of Adult Social Services and the Assistant Director, Assurance and Risk is attached.

Minutes:

The Committee considered the report of the Executive Director Adult Social Services that provided an overview of actions taken and progress against five outstanding actions arising from Internal Audits undertaken in Adult Social Care. Four of the recommendations were more than 12 months overdue and one was in the category of 1-6 months overdue. Significant work was progressing on all of the recommendations as described in the report.

 

The Committee welcomed the format of the report, commenting that it provided a useful chronology, and this template should be used in any future reporting to the Committee

 

In response to questions, the Deputy Director of Adult Services said there was no direct correlation between the delay in implementation of the recommendations and the overspend in Adult Social Care. The Assistant Director, Assurance and Risk commented that the system improvements described in the report in relation to contract management and the speed of payment processing would in the future strengthen the overall Social Care budget management.

 

Decision

 

To note the report.

 

30.

Internal Audit Assurance (Quarter 2) pdf icon PDF 111 KB

The report of the Assistant Director, Assurance and Risk is attached.

Additional documents:

Minutes:

The Committee considered the report of the Assistant Director, Assurance and Risk that provided an update of progress on the agreed audit plan and details of assurances from the Internal Audit Service for quarter one 2024/25. The report provided details of the work of the Internal Audit Section for the second quarter of 2024/25 to the end of September 2024 and confirmed progress on the delivery of the annual audit plan; and key assurances, risks and issues arising from audit work, assessment of other sources of assurance and actions taken to address internal audit recommendations.

 

The report provided information on:

 

  • The Audit Plan progress and delivery
  • Audit Assurance, risks and issues, pertaining to the implementation of recommendations, Housing Services, Development, Revenue Budget and Schools, and;
  • An overview of Audit Standards

 

In response to questions the City Treasurer explained the technical differences between capital budget reporting and the associated overspend and underspend reporting and monitoring. He said all decisions and approvals were documented and auditable in accordance with the Council’s Constitution. The Chair commented that an extensive discussion had been held under Part B of constitutional arrangements on the subject of the Town Hall refurbishment at the recent meeting of the Resources and Governance Scrutiny Committee. The Executive Member for Finance and Resources agreed that that discussion had captured the layers of governance that provided assurance around transparency on the project and said that if the Audit Committee was minded to, a report on subject of the Town Hall refurbishment could be provided to this Committee to provide another level of assurance. In the context of the Committee’s remit, members were mindful that other sources of assurance that tracked treasury activities were reflected in its work programme. The Chair agreed to extend an invitation to the Independent Coopted Members of this committee for the next scheduled tour of the ongoing Town Hall refurbishment for the Resources and Governance Scrutiny Committee.

 

In response to a question regarding data sharing, particularly in regard to children and young people, the Assistant Director, Assurance and Risk said that there was series of arrangements in respect of this activity. He added that a report that described the functions of the Council’s Senior Information Risk Owner (SIRO) could be included on the Committee’s work programme that would explore this activity further. Members welcomed this proposal.

 

Decision

 

1.         To note the report.

 

2.         To note that a report which describes the functions of the Council’s Senior Information Risk Owner (SIRO) in respect of data sharing with specific reference to children and young people would be included on the Committee’s future work programme.

 

31.

Outstanding Audit Recommendations (Quarter 2) pdf icon PDF 78 KB

The report of the Assistant Director, Assurance and Risk is attached.

Additional documents:

Minutes:

The Committee considered the report of the Assistant Director, Assurance & Risk that described that in accordance with Public Sector Internal Audit Standards, the Assistant Director, Assurance & Risk must “establish and maintain a system to monitor the disposition of results communicated to management; and a follow-up process to monitor and ensure that management actions have been effectively implemented or that senior management has accepted the risk of not taking action”.  For Manchester City Council this system included reporting to directors and their management teams, Strategic Management Team, Executive Members and Audit Committee. 

 

In addition to an introduction and background, the report discussed:

 

  • The current implementation position including recommendations that were made over 12 months ago, 6-12 months ago and 1-6 months ago,

 

In response to questions regarding the delays to the implementation of the Avro Hollows Tenants Management Organisation (AHTMO) recommendations, the Assistant Director, Assurance & Risk said that he shared the Committee’s frustrations and that it was the responsibility of the TMO to implement these and this was largely outside of the control of the Council. He said that an Improvement Plan to address a series of issues had been agreed and he and the Director of Housing continued to meet with the Board to challenge them on the delivery of this plan within the next six months. He described the challenges the Board had faced and commented that ultimately the Council were responsible for the housing stock and the residents. He also gave emphasis to a specific report from the Assistant Director (Strategic Housing) that provided an update on the barriers to implementation of outstanding audit recommendations was scheduled for consideration at the November meeting. He said that appropriate consideration, in consultation with the Chair, would be given, should any information need to be considered confidentially. Members commented that the governance arrangements for TMOs may need to be reviewed to ensure they remained fit for purpose and were in the best interests of the tenants and their ultimate safety.  The Assistant Director Audit and Risk agreed to keep all relevant ward Councillors informed of such developments.

 

In view of a number of other recommendations having been highlighted as over 12 months overdue, there was discussion about the agreed protocol to request the attendance of the appropriate senior officers to explain the barriers to implementation. After careful consideration, the Committee resolved to request the attendance of the relevant senior officer with responsibility for the Review of Fire Risk Assessment Processes at the next scheduled update. With regard to the recommendation on Social Value banked hours, it was resolved that Members would receive either a briefing note or an update on the utilisation of those hours at the next scheduled update.

 

Decision

 

1.     To note the report.

 

2.     To agree to request the attendance of the relevant senior officer with responsibility for the Review of Fire Risk Assessment Processes at the next scheduled update to explain the barriers to implementation of the audit Committee’s recommendation.

 

3.     To request that an update be  ...  view the full minutes text for item 31.

32.

Work Programme pdf icon PDF 113 KB

The report of the Governance and Scrutiny Support Unit is attached.

Minutes:

The Committee considered a report of the Governance and Scrutiny Support Unit which set out its future Work Programme for the remainder of 2024/25 municipal year.

 

The Chair requested that Members consider any subject areas that they would like included in the December training session and to relay these to him at the earliest opportunity.

 

Decision

 

To note the report and approve the work programme, subject to the amendments made in the previous agenda items.