2008/9 Accounts and Audit Committee – Annual Report to Council

TRAFFORD COUNCIL

Report to:Accounts and Audit Committee

Date:30September 2009

Report for:Information

Report of:2008/09 Accounts & Audit Committee Chairman and Vice- Chairman

Report Title

Accounts and Audit Committee Annual Report to Council 2008/09.

Purpose of the Report

To provide theproposed 2008/09 Annual Report of the Accounts and Audit Committee to be submitted to Council on 21stOctober 2009

Recommendations

The Accounts and Audit Committee are asked to note the report.

Contact person for access to background papers and further information

Name:Kathryn Griffiths – Head of Assurance and Improvement

or

Mark Foster – Audit and Assurance Manager

Extension:1231

Background Papers:

2008/9 Accounts and Audit Committee minutes

Accounts and Audit Committee Terms of Reference

Accounts & Audit Committee

Annual Report

To Council

2008-2009

CONTENTS

FOREWORD BY CHAIRMAN & VICE CHAIRMAN OF THE ACCOUNTS & AUDIT COMMITTEE………………………………………………………….. Page 3

INTRODUCTION

Role of the Committee…………………………………………………Page 4

Purpose of the Report…………………………………………………..Page 4

Membership of the Committee…………………………………………Page 4

ACCOUNTS & AUDIT COMMITTEE – SUMMARY OF ASSURANCES TO COUNCIL…………………………………………………………………………….. Page 5

2008/09 – THE WORK OF THE ACCOUNTS & AUDIT COMMITTEE

Approach to Planning……………………………………………………Page5

Internal Audit……………………………………………………………..Page6

External Audit…………………………………………………………….Page8

Risk Management………………………………………………………..Page9

Corporate Governance and the Annual Governance Statement…..Page10

Anti Fraud & Corruption Arrangements………………………………..Page 11

Accounts…………………………………………………………………..Page 12

DEVELOPMENT OF THE ACCOUNTS & AUDIT COMMITTEE

Review of the A&AC……………………………………………………Page 13

Training and Awareness Raising………………………………………Page 13

FOREWORD BY THE CHAIRMAN AND VICE CHAIRMAN OF THE ACCOUNTS & AUDIT COMMITTEE

The Council's Accounts & Audit Committee has been operating since the start of the 2005-06 municipal year. The fact that Trafford Council was one of the first Local Authority's to introduce such a committee shows this council's commitment toopen, democratic accountability.

We believe that the committee is central to the provision of effective corporate governance. It is independent of the Executive and has a key role in providing both challenge across the organization, and independent assurance to the Council, and the public, on how well the Council is being managed. This is what corporate governance is about after all.

By effectively fulfilling its role the committee should helptoensure public confidence in the objectivity and fairness of financial and other reporting as well as helping to deliver improved services and striving for ever better value for money.

Continuous improvement has been a focus for this Committee. This has been in supporting the ongoing improvement of the Council as a whole but also in being proactive in continually improving the way the committee operates and in developing the skillsand knowledge of its members.

INTRODUCTION

Role of the Committee

The role of the Accounts and Audit Committee is to:

  • provide independent assurance on the adequacy of the risk management framework and the associated control environment,
  • undertake independent scrutiny of the Authority’s financial and non financial performance to the extent that if affects the Authority’s exposure to risk and weakens the control environment, and
  • oversee the financial reporting process.

Assurance is gathered by the Committee largely from the work of Internal Audit, the Audit Commission, and the Finance Directorate. This is supplemented by assurance from other sources where this is considered appropriate, for example direct from the Council’s managers or other external inspection agencies.

Purpose of the Report

The purpose of this report to Council is to:

  • Summarise the work undertaken by the Accounts & Audit Committee during 2008/09 and the impact it has had
  • Provide assurance to the Council on the fulfilment of the Committee’s responsibilities.

Membership of the Committee

The Accounts & Audit Committee’s terms of reference state that its membership shall comprise seven members, be politically balanced and shall not include any members of the Executive.

Accounts & Audit Committee Membership
2008/9 / 2009/10
Cllr Alan Mitchell (Chairman)
Cllr Bernard Sharp (Vice Chairman)
Cllr Barry Brotherton
Cllr Michael Cordingley
Cllr Patrick Myers
Cllr Keith Summerfield
Cllr Dylan Butt / Cllr Dylan Butt (Chairman)
Cllr Bernard Sharp (Vice Chairman)
Cllr Barry Brotherton
Cllr Mike Cordingley
Cllr Patrick Myers
Cllr Keith Summerfield
Cllr James Wibberley

ACCOUNTS & AUDIT COMMITTEE – SUMMARY OF ASSURANCES TO COUNCIL

The Committee derives its independent assurance from the work of Internal and External Audit, the Finance Directorate, Council managers and external inspection agencies.

During the year all these sources of assurance reported to the Committee on a regular basis across a wide spectrum of the work of the Council encompassing all the themes identified in the Committee’s Terms of Reference. The Committee has therefore effectively fulfilled its responsibilities during 2008-09.

The Committee can provide the Council with assurance that its arrangements for:

  • Internal and External Audit
  • Risk management
  • Corporate Governance and Internal Control
  • Anti fraud and corruption
  • The production of the Statement of Accounts

are operating effectively.

The governance framework, and within that the internal control environment, of the council has continued to improve during 2008/9. This is reflected in the Audit Commission Annual Audit and Inspection letter. This states that Trafford Council is improving well and remains a three-star Council under the Comprehensive Performance Assessment (CPA) methodology.

There are, of course, always areas for ongoing improvement and focused management action. These have been highlighted to the committee in the reports it has received in particular through the Annual Governance Statement. These areas included community engagement, procurement, records management, the development of workforce planning and arrangements to support organisational change; and partnership governance. The Committee has sought assurance that improvement actions are being taken in all these areas.

2008/09 – THE WORK OF THE ACCOUNTS & AUDIT COMMITTEE

Approach to planning

The members of the committee produce an annual work programme to ensure that they cover all areas of their responsibility as determined in the Committee’s Terms of Reference:

  • Internal Audit
  • External Audit
  • Risk Management
  • Corporate Governance
  • Internal Control Arrangements and the Annual Governance Statement (AGS)
  • Anti – Fraud & Corruption Arrangements
  • Approval and audit of the Annual Statement of Accounts.

Internal Audit

Role of the Committee in relation to Internal Audit:

  • Review and approve (but not direct) the terms of reference for Internal Audit, an Internal Audit Strategy and internal audit resourcing.
  • Review and approve (but not direct) the annual Internal Audit work programme. Consider the proposed and actual audit coverage and whether this provides adequate assurance on the organisation’s main business risks.Review the performance of Internal Audit.
  • Receive summary internal audit reports and seek assurance on the adequacy of management response to internal audit advice, recommendations and actions plans.
  • Review arrangements for cooperation between Internal Audit, external Audit and other review bodies and ensure that there are effective relationships which actively promote the value of the audit process
  • Receive the annual internal audit report and opinion.

Work Completed / Outcome/ Impact
June 2008
The Annual Internal Audit Report was submitted, providing an opinion on the standard of internal controls during 2007-08 and a summary of work undertaken during the period. / The Committee considered this in conjunction with the Annual Governance Statement. Assurance was obtained on the adequacy of the council’s control environment and an overall improvement in governance arrangements was noted. Internal Audit
was thanked for its contribution to this.
September 2008
A report was presented showing the scope and objectives of the fundamental review of internal audit which was in progress.
The progress of internal audit work conducted by the Audit and Assurance Service is reported to the Committee on a quarterly basis. This includes the results of individual reviews, responses to audit reports, progress in implementing the annual audit plan and performance of the Audit and Assurance Service. Update reports were presented in September 2008, November 2008 and February 2009. / The Committee was kept informed of developments within the Audit and Assurance Service
The Committee maintained an effective overview of the control environment and also obtained assurance that internal audit coverage and performance was satisfactory.
November 2008
Initial findings from the fundamental review of internal audit were presented. / The Committee was provided with details of themes emerging from the review and the vision for Internal Audit in Trafford.

Internal Audit (cont.)

Work Completed / Outcome/ Impact
Details of work undertaken by the Audit and Assurance Service in respect of council partnerships were shared with the Committee, both in respect of mapping the partnerships and the effectiveness of governance arrangements of the council’s significant partnerships.
April 2009
A report was submitted incorporating the 2009/10 annual internal audit plan
The Committee was provided with findings from the annual review of the effectiveness of the council’s system of internal audit. / The Committee was provided with assurance regarding the progress made in developing partnership governance arrangements and acknowledged positive comments from the Audit Commission regarding the good practice and the commitment shown by the council.
Assurance that internal audit coverage for the coming year was satisfactory, that key business risks are considered and adequate internal audit resources were available.
Based on self assessments undertaken of Internal Audit and the Accounts and Audit Committee against Chartered Institute for Public Finance and Accountancy (CIPFA) best practice, it was concluded that Trafford Council operates an effective system of internal audit.

External Audit

The role of the Committee in relation to external audit, provided by the Audit Commission is to :

  • Review and consider proposed and actual Audit Commission coverage and its adequacy and consider the reports of the Audit Commission and inspection agencies
  • To receive updates from the Audit Commission on findings and opinions and assurance as to the adequacy of management’s response to Audit Commission advice, recommendations and action plans
  • To review arrangements made for co-operation between the Audit Commission, Internal Audit and other review bodies.

Work Completed / Outcome/ Impact
June 2008
The Audit and Inspection Plan for 2008/09 was presented setting out the proposed audit and inspection work for the year ahead
The Audit Commission updated the Committee at each meeting through the year (June, September, November 2008 and, February, April 2009on their progress against planned work. / The Committee noted that the reduction in the fee for audit and inspection work reflected an acknowledgement of the improvements made by the council under the Comprehensive Performance Assessment framework.
The Committee was able to monitor progress in respect of Audit Commission work.
September 2008
The Audit Commission submitted the Annual Governance Report for the council summarising the findings from the 2007/8 audit. It includes the audit of the council’s financial statements for 2007/8 and the value for money conclusion. / An unqualified opinion on the financial statements was expected per the draft report presented. An unqualified conclusion was also expected in relation to arrangements for securing economy, efficiency and effectiveness in the use of resources.
February 2009
The Audit Commission presented a report showing the key findings and conclusions relating to the Use of Resources assessment. / The report concluded that the Council’s performance demonstrated that it was performing well and consistently above minimum standards.
April 2009
The Audit Commission’s Annual Audit and Inspection Letter was presented, providing their assessment of the Council over the last year as measured through the Comprehensive Performance Assessment (CPA) framework. / A key message from the report was that Trafford Council was improving well and remained a three-star council under the CPA methodology. A summary of recommended actions was also presented including the need to work with partners to prepare for the Comprehensive Area Assessment (CAA )and the new broader use of resources assessment.

Risk Management

The role of the Committee in relation to risk management:

  • Review the adequacy of arrangements for identifying and managing the organisation’s business risks – including the Council’s risk management policy and strategy and their implementation.
  • Review the robustness of the strategic risk register and the adequacy of associated risk management arrangements.
  • Receive and consider regular reports on the risk environment and associated management action.

Work Completed / Outcome/ Impact
The Committee received various updates on risk management during the year. / The Committee was able to question officers regarding the information provided relating to both the risk management process in general and also specific risks highlighted.
November 2008
The Committee received an update on corporate risk management arrangements in place at Trafford
The 2008-11 Strategic Risk Register Monitoring Report was presented. / The Committee received assurance on the management of key risks faced by the council.
February 2009
An update on progress against the action plan in the Authority’s Risk Management Strategy was presented and Members were also provided with a copy of the recently updated risk management policy. / The Committee gained assurance that good progress had been made in developing risk management processes across the council.

Corporate Governance and the Annual Governance Statement

The role of the Committee in relation to the above is to:

  • Conduct a critical review of the proposed Annual Governance Statement, the procedures followed in its completion and supporting evidence to provide assurance to the Leader of the Council and the Chief Executive of its meaningfulness and robustness.
  • Review effectiveness of internal control across the organisation and the adequacy of action taken to address any weaknesses or control failures
  • Receive and consider an annual report evaluating the adequacy of application of the Council’s corporate governance code
  • Review and consider the adequacy of the corporate governance strategy and improvement action plan and its organisational benefits, develop corporate governance arrangements across the Council and ensure effective governance in the future
  • Receive periodic update on improvements actions taken as defined in strategy documents and associated action plans

Work Completed / Outcome/ Impact
June 2008
A report of the Committee’s review of the 2007/08 Annual Governance Statement was presented. / The Committee noted that the Members were satisfied with the robustness of the process followed in generating the Statement and were satisfied that the statement itself is robust.
November 2008
The revised Trafford Council Corporate Governance Code was presented and the Committee was invited to comment on the content. / A revised Corporate Governance Code is in place in line with national good practice, to be approved by the Executive.
February 2009
A report setting out a proposed action plan to ensure compliance with the production of an Annual Governance Statement for 2008-09 was presented.
Presentations were received from a number of senior officers on issues relating to improvement actions highlighted in the 2007/8 Annual Governance Statement. These were updates on developments relating to:
- Business continuity arrangements;
- ICT disaster recovery arrangements;
- Human Resource Issues; and
- Records Management (covered at the April 2009 meeting). / Procedures and responsibilities of members and officers in the process for producing and approving the Annual Governance Statement for 2008/9 were agreed.
Assurance that the organisation is taking action to strengthen systems and procedures in a number of areas highlighted for improvement in the previous year’s Annual Governance Statement.
April 2009
Performance against the action plan and timetable for the 2008/9 Annual Governance Statement was reported. / Ongoing assurance on the robustness of the process for producing the 2008/9 Annual Governance Statement.

Anti Fraud & Corruption Arrangements

The role of the Committee is to:

  • Review and ensure the adequacy of the organisation’s Anti Fraud & Corruption policy and strategy and the effectiveness of their application throughout the authority
  • Review and ensure that adequate arrangements are established and operating to deal with situations of suspected or actual fraud and corruption

Work Completed / Outcome/ Impact
September 2008
A report was presented detailing the results of a self assessment of the Council’s actions to counter fraud and corruption which was based on the CIPFA good practice document ‘Managing the Risk of Fraud’.
The Benefit Fraud Investigation Team 2007-08 Annual Report was presented outlining the Council’s responsibilities towards tacking benefit fraud and detailing the team’s performance during the period and plans for the year ahead. / Assurance was obtained on the adequacy of the council’s anti-fraud and corruption arrangements and ongoing developments.
February 2009
A report was submitted updating the Committee on actions underway and planned, which supported the Council’s Anti Fraud and Corruption Strategy.
This included details of referred cases being investigated; work undertaken in supporting the National Fraud Initiative and plans for further promoting good practice.

Accounts

The role of the Committee is to:

  • Approve the Council’s Annual Statement of Accounts including subsequent amendments
  • Consider the Audit Commission’s report on the audit of the Council’s annual financial statements
  • Be responsible for any matters arising from the audit of the Council’s accounts.

Work Completed / Outcome/ Impact
June 2008
The draft Annual Statement of Accounts for 2007-08 was presented along with the Annual Governance Statement and copies of the 2007-08 Revenue Budget Outturn and Capital Investment Programme Outturn reports. / It was agreed that the accounts be approved and signed by the Chairman of the Committee on behalf of the Council and that copies of the Statement of Accounts be placed on deposit to the public and submitted to the External Auditor.
The Director of Finance and his team were thanked for the collation and production of the accounts and for the quality of information provided.
September 2008
A report was submitted outlining amendments to the 2008 accounts. / The updated, amended and audited accounts were approved and signed by the Chairman.
November 2008
A report was submitted outlining the impact of the current economic climate on the Council’s Treasury Management Strategy and revisions to this strategy. It was also reported that the main impact on the Medium Term Financial Plan would be the level of capital receipts and its bearing on the Capital Investment Programme. Interest rates and their effect on investments were being monitored. / Assurance that action is being taken to mitigate risks associated with the economic climate.

DEVELOPMENT OF THE ACCOUNTS & AUDIT COMMITTEE