Agenda and minutes

To appoint a Vice - Chairman of the Committee for the remainder of the Municipal Year.

RESOLVED:

That Cllr John Adams be appointed Vice - Chairman of the Committee.

To confirm the minutes of the meeting held on 25 October 2024  as a correct record.

RESOLVED:

That the minutes of the meeting held on 25 October 2024 be signed by the Chairman as a correct record.

To note any declarations of interest made by members in connection with an agenda item.  The nature of the interest must also be specified.

Members are asked to discuss any possible interests with Democratic Services prior to the meeting.

No declarations of interest were made in connection with any agenda item.

Apologies were received from Cllr Jacqui England.

To receive any public participation in accordance with the Council’s public participation scheme.

There was no public participation at the meeting.

To receive an update on the conclusion of the:

·       2022/23 Annual Financial Report

·       2022/23 Letter of Representation and

·       Annual Governance Statement 2022/23

The Committee received a report on the conclusion of the 2022/23 audit process and annual financial report.

The report confirmed the actions taken under the delegations agreed at the 25 October 2024 Audit Committee regarding conclusion of the 2022/23 audit process, including approval of the 2022/23 Annual Financial Report, the 2022/23 Letter of Representation and the Annual Governance Statement 2022/23. These were used to conclude and publish all matters by the 13 December 2024 deadline.

RESOLVED:

That the Committee note that the Annual Financial Report, Letter of Representation and Annual Governance Statement relating to the 2022/23 financial year were concluded and published by the 13 December 2024 backstop deadline.

To receive the External Audit Results report for 2023/24.

The Committee noted an overview of the External Auditor’s findings regarding the Council’s Annual Financial Report, Value for Money statement and the Annual Governance Statement for the year 2023/24.

The Committee was reminded that the report was prepared in the wider context of the backlog in local government audit, and the various measures taken to resolve the backlog. This meant that, as with the opinion on the 2022/23 financial statements, the 2023/24 statement also had disclaimers. The disclaimers were necessary because of balances brought forward from the previous financial year, where there was no assurance on prior year comparatives or closing balances.

The Committee noted that issuing of disclaimers was consistent with the National Audit Office guidance as part of the Reset and Recovery measures. Because of this ongoing process, the External Auditor estimated that he would not be able to give an unqualified opinion until 2026/27 at the earliest.

The External Auditor advised that a full programme of work had been undertaken in 2023/24 and that the Committee could take a large degree of assurance from the findings within the report.  

In answer to a question, it was explained there was often a discrepancy between valuations of assets by the Council and during audits, the unadjusted valuation differences were based on a judgment and so was a regular occurrence, though this issue was viewed as immaterial to the overall accounts.

The External Auditor wished to thank the Council’s Finance team for their very cooperative response.

The Council’s Strategic Director Corporate Resources & Transformation and Section 151 Officer was pleased with the work done and understood the reasons for the disclaimed opinions, but it was hoped this work would catch up fairly quickly.

RESOLVED:

That the report be noted.

To receive the Final Annual Financial Report 2023/24, including the Annual Governance Statement 2023/24.

The Committee considered a report requesting that delegated authority to be given to the S 151 Officer for the approval of the final 2023/24 Annual Financial Report including the Letter of Representation and additionally recommending that the final Annual Governance Statement 2023/24 be approved.

RESOLVED:

1)       That the Strategic Director Corporate Resources and Transformation (Section 151 Officer), in consultation with the Chairman of the Audit Committee, be given delegated authority to review and consider the 2023/24 Audit Completion Report from the Council’s External Auditor.

2)       That further to the review, the Strategic Director Corporate Resources and   Transformation (Section 151 Officer), in consultation with the Chairman of the Audit Committee, be given delegated authority to approve:

a. the Annual Financial Report for 2023/24 and

b. the 2023/24 letter of representation

3)       That the Final Annual Governance Statement 2023/24 be approved by the Chief

Executive and Leader of the Council.

To receive the Internal Audit progress report.

The Committee received the Internal Audit Progress report for 2024/25.

The Internal Auditor remained confident that a significant proportion, if not all of the plan, would be completed by the end of the financial year.

Reference was made to the limited assurance on the Council’s Risk Management arrangements which was given at the last meeting, and the ongoing measures that that had since been put in place to address this, which were detailed both in the report and in a report later on the agenda.

The Committee noted 5 proposals to remove certain audits from the plan, primarily to avoid duplication where internal or external reviews were now being undertaken. The outcomes of these would be looked at by the Internal Audit team in due course.  In answer to a related query, it was explained that officers had undertaken to do a strategic asset management review following the Mace review, and the recommendations were being actioned.  Internal Audit would then examine the outcome, most likely in 2025/26. 

A member commented that Open Space Playground Safety and Engineering seemed to reoccur quite consistently in these reports, and officers explained that the actions identified in the original audits on these items were still being resolved and issues still being addressed, but the majority of actions on both projects had been completed.

RESOLVED:

That the report be noted.

To receive an update on the implementation of Global Internal Audit Standards.

The Committee received an overview of the new Global Internal Audit Standards, to which public sector internal audit functions will have to comply from 1 April 2025.

Whilst many of the new requirements were similar to the way work was already being  undertaken, there was also a lot more prescription in the new scheme, which was summarised in the report.  Given these were global standards, there had been consultations in the UK and the final documents were awaited prior to implementation from 1 April 2025, but these had been anticipated as far as possible.

New areas of prescription related to reporting and consultations requirements, with the senior management team and audit committee members. Accordingly, the Internal Auditor would be writing to Committee members shortly, and the outcome of this would feed into a internal audit strategy common to all 35 partner organisations, with performance measures.

RESOLVED:

That the report be noted.

To consider the Treasury Management Strategy for 2025/26.

The Committee considered the proposed Treasury Management Strategy for 2025/26.

The Treasury Management Strategy Statement set out how the Council’s treasury service would support the capital expenditure and financing decisions taken over the three-year period from 2025/26 to 2027/28. The day-to-day treasury management function and the limitations on activity through treasury indicators were also set out in the statement.

It was noted that this was currently a period of relatively high interest rates and it was anticipated that these would be falling, though not as fast had been previously predicted.

The report showed that the Council would need to borrow externally to meet its plans for capital expenditure, and this would be agreed in consultation between the Council’s S151 Officer, Arlingclose consultants, and HCC Treasury Management, with the funds most likely sourced from the Public Works Loan Board.

In response to a query on the Strategy being for the period up to 2028 in the context of LGR, it was explained that it was appropriate to adopt the normal business as usual approach until more concrete information was available. Officers would continue to assess the need for any adaptations to the Strategy as the situation evolved, and any such requirements would be reported to this Committee. 

In answer to a query, it was explained that the level of external borrowing was primarily linked to the Council’s corporate priority to invest in provision of increased numbers of affordable homes.

RESOLVED:

That it be a recommendation to Full Council that the following be approved:

1)    The Treasury Management Strategy 2025/26 to 2027/28 including the Annual Treasury Management Investment Strategy for 2025/26 (and the remainder of 2024/25) and the Treasury Indicators contained within, as provided in

Appendix 1 be approved.

2)    That authority be delegated to the Section 151 Officer, who in turn delegates to Hampshire County Council’s Deputy Chief Executive and Director of Corporate Operations, as agreed in the Service Level Agreement, to manage all Council investments and borrowing according to the Treasury Management Strategy Statement as appropriate.

To consider the Investment Strategy for 2025/26.

The Committee received a high-level overview of how the Council managed and invested its surplus cash and its associated investment assets within the Council’s proposed investment strategy for 2025/26.

Reference was made to Table 3 and regarding the Platinum Jubilee Business Park and the apparent change in value.  It was explained that the original value was the cost price and this later figure reflected the Existing Use Value of this new facility at March 2024. Occupancy was currently at 70%, and it was hoped that this valuation figure would improve as it became fully occupied. More detailed information was provided in other reports through the year and in reports to the Resources and Transformation O&S Panel.

RESOLVED:

That it be a recommendation to the Council that the Investment Strategy 2025/26 provided in Appendix 1 be approved.

To receive an update on the Principal Risks and Risk Management Policy.

The Committee received an update on the Principal Risks and Risk Management Policy.

The Risk Management Policy (Appendix 1), and Principal Risks (Appendix 2), included within the report contained the significant risks, as identified by senior and executive council officers in consultation with the Portfolio Holders, in the Council achieving the priorities set out in the ‘For people, place, prosperity Corporate Plan 2024- 28’.

This report marked a transition from a Strategic Risk Register to a Principal Risk Register.

The Chairman commented that this format appeared to be a radical change from the strategic risk register, where he felt members had the opportunity to input regarding specific risks, and queried whether members would have the same opportunity. He also felt the Risk Event terms should be more descriptive.  In reply, it was explained that officers had found the previous document to be over detailed, yet not explicitly representative of key risks faced by NFDC, and it was felt that the new Principal Risk format gave a better high-level overview. Further detail was contained in service risk registers. It was hoped the new format gave a clearer and more meaningful view of principal risks.  Members could still input through the regular reports to the Audit Committee, and more granular information could be obtained from service leads and respective portfolio holders.

Other members referred to PR4 (HCC and Political Environment) and felt the Risk Event commentary should be updated and made more neutral in terms of the outcome of a change in leadership.  Officers had been of the view that a change of leadership of any kind could pose a risk to this Authority. As with all the risks highlighted, the commentary would be updated as more was known.

RESOLVED:

That the report be noted subject to the comments made.

To consider the Audit Committee’s Work Plan.

The Committee noted its Work Plan.

In response to a query, it was explained that the Risk Management report would be submitted to the Committee every 6 months.

It was suggested that the Payment Card Industry Data Security Standard (PCI DSS) Update be deferred from the March meeting to the June meeting, and officers would take a view on this in due course.

At the last meeting the following provisional dates were agreed for future meetings of the Audit Committee, subject to clarification of audit deadlines.

(Fridays at 10 am):

2025

30 May

25 July (Propose delete and replace with 27 June)

31 October

2026

23 January

27 March

Please note that, it has now become necessary to delete the 25 July 2025 date and it is proposed to add the date of 27 June 2025, to fit in with Audit preparation timescales.

At the last meeting, several provisional dates were agreed for future meetings of the Audit Committee, subject to officer clarification of audit deadlines. It was advised that the 30 May and 25 July dates could now be deleted and the new date of 27 June be added. Accordingly, it was:

RESOLVED:

That the Committee’s meeting dates and times for the 2025/26 municipal year be as follows:

(Fridays at 10 am):

2025

(21 March 2025 already agreed)

27 June

31 October

2026

23 January

27 March