Agenda and minutes

Audit and Risk Management Committee - Monday, 4th July, 2022 4.00 pm

Venue: Council Chamber, Fenland Hall, County Road, March

Contact: Jo Goodrum  Member Services and Governance Officer

No. Item


Appointment of Chairman for the Municipal Year


It was proposed by Councillor Purser, seconded by Councillor Mrs French and resolved that Councillor Miss Kim French be elected as the Chairman of the Audit and Risk Management Committee for the Municipal Year 2022-2023.



Appointment of Vice Chairman for the Municipal Year


It was proposed by Councillor Mrs French, seconded by Councillor Purser and resolved that Councillor Mrs Davis be elected as the Vice Chairman of the Audit and Risk Management Committee for the Municipal Year 2022-2023.



Previous Minutes. pdf icon PDF 185 KB

To confirm and sign the minutes of 14 March 2022.


The minutes of 14 March 2022 were approved and signed as a true and accurate record. Councillor Miss French pointed out to members that with regard to minute number ARMC 48/21, Kathy Woodward, the Internal Audit Manager, had circulated some information to all committee members.


Treasury Management Annual Review 2021-2022 pdf icon PDF 347 KB

To consider the overall financial and operational performance of the Council’s treasury management activity for 2021/22.



Members considered the Treasury Management Annual Review 2021/22 report presented by Neil Krajewski, Deputy Chief Accountant.


Neil Krajewski explained that the Audit Risk and Management Committee is responsible for the review and scrutiny of the Council’s treasury management arrangements and the report before members looks back on how those arrangements have worked in practice through the year and provide members with some key information for their understanding and comments. He highlighted that the report will also be presented to Cabinet and Full Council on 11 July 2022 and he explained that the amount of interest that the Council earned on its external investments during the year was just over £52,000 which was in excess of the estimate that officers had predicted when preparing the revised budget by just over £12,000.


Neil Krajewski explained that there are two main factors behind that and one of them is the fact that the Council found itself in a position where it had slightly higher cash balances than would normally be expected and this was largely as a result of Government grants received which would be in excess of what officers would have anticipated or where delays had occurred in spending the money to deliver some of the projects that were ongoing at the end of the financial year. He added that it is important for members to be aware that at previous meetings officers have indicated that the Council was able to invest in property funds and remain compliant with its Treasury Management Policy. Following discussions with external treasury advisors  two property funds had been identified as suitable investments following a robust assessment process. A total of £4,000,000 was invested into two property funds at the end of March 2022.


Neil Krajewski explained that he is now receiving reports from those fund managers and information will be presented to the committee during the 2022 -2023 financial year regarding the performance of those funds. He added that the funds are long term investments for the Council which are intended to achieve an enhanced return on top of what the Council would have been able to achieve, had the money been invested with banks, building societies and other local authorities. He pointed out that there are likely to be periods of volatility associated with these types of investment but the initial signs that officers have received appear to be positive.


Neil Krajewski pointed out that the report contains a lot of detailed information which explains the relationship between the Council’s investments and borrowing needs and he explained that there is currently a focus on the outlook of the economy and various sections of the report are being superseded by updated information all of the time. He drew members attention to the forecasts on Page 14 which provide detail on the Council’s treasury advisors view of the future with regards to interest rates which is constantly being updated and the current forecast interest rates are typically 1 to 1.5% above those  referred to in the forecast  ...  view the full minutes text for item ARMC4/22


Internal Audit Outturn and Quality Assurance Review 2021-22 pdf icon PDF 333 KB

To provide the Audit and Risk Management Committee with an overview of the work undertaken by Internal Audit during 2021/22;


To provide the Audit Managers annual opinion on the system of internal control;


To consider the effectiveness of Internal Audit.


Members considered the Internal Audit Outturn and Quality Assurance Review 2021/22 report presented by Kathy Woodward, Internal Audit Manager.


Kathy Woodward highlighted Section 5 of the report to members which shows the detail of the outturn of the Internal Audit function. She added that throughout the year regular updates have been presented to the committee on the progress of the function and explained that all of the completed audits are shown in the report, which contain more detail than has previously been provided to enable members to have more of an overview and provide additional assurance that the committee have been looking for.


Kathy Woodward stated that in addition to the planned audits undertaken the report shows other sources of assurance which has been considered and will look to further support the level of assurance that can be provided on the Council’s risk and control activities. She explained that the report highlights the progress made on recommendations throughout the year over a two-year period covering 2020/21 and 2021/22 and the appendix shows a small number of overdue recommendations which are being reported to the Management Team on a quarterly basis and they are being addressed accordingly.


Kathy Woodward highlighted to members the Audit Manager’s annual audit opinion which feeds into the Annual Governance statement which forms part of the Council’s statutory financial statements. She confirmed to the committee her audit opinion which is that there is adequate assurance to the adequacy and effectiveness of the internal controls, the risk management and governance arrangements of the Council.


Kathy Woodward pointed out to members the effectiveness of the Internal Audit function and highlighted the Chartered Institute of Public Finance and Accountancy (CIPFA) checklist confirms that the internal audit conforms to all of the areas within the checklist. She advised members that this year the Council will be scrutinized through the external quality assessment which takes place on a five yearly cycle and the Audit Team will be audited by an external body.


Members asked questions, made comments and received responses as follows:

·         Councillor Yeulett asked whether there was a need for something to be added within the Council’s risk plans to highlight the volatile economic situation currently in place? Kathy Woodward stated that risk management is considered by the committee on a quarterly basis and the volatility and economic climate is something that has always been captured when reviewing the overall risk management arrangements for the Council.

·         Councillor Wicks asked whether there is a specific risk which identifies and considers those residents who maybe less fortunate than others when dealing with any regular payments they make to the Council, and he asked what mitigation factors are in place to address that type of situation? Kathy Woodward explained that there are various debt management policies in place and the Council works with other partner agencies as well particularly when dealing with those vulnerable customers that the Council has. Neil Krajewski added that it is only responsible and right to point out that the  ...  view the full minutes text for item ARMC5/22


Audit and Risk Management Committee Annual Report 2021-2022 pdf icon PDF 255 KB

To report to Full Council the commitment and effectiveness of the Audit and Risk Management Committee’s work from April 2021 to March 2022.



Members considered the Audit and Risk Management Annual Report 2021/22 presented by Kathy Woodward, Internal Audit Manager.


Kathy Woodward explained that this report evaluates the effectiveness of the Audit and Risk Management Committee for assessment at Full Council and outlined the contents of the report. She highlighted to members that CIPFA are currently undertaking a review process of Audit Committee governance and she anticipates that within the next few months they will be issuing new guidance on the role of committees.


Kathy Woodward referred members to the CIPFA checklist, and she explained to members that this assesses the conformance of various standards and added that the partially compliant areas were of little concern and outlined that the sub-committee created under the Audit and Risk Committee meant that they were only partially compliant with Section 11. She added that in Section 23 it refers to whether the committee has evaluated whether and how it is adding value to the organisation and she explained that she is waiting for the new guidance to be published as, in her opinion, it will provide better tools to be able to assess the value that the committee adds.


Kathy Woodward explained that whilst the committee does add value, at present there is no way of recording that value and that is something that she would like to see to be put in place.


Members asked questions, made comments and received responses as follows:

·       Councillor Wicks stated that with regards to value of the committee, one of the highlights that he has noted from the report are the risks or actions that are needed because of a gap in documentation that is already in place, and he asked how that value can be monitored by identifying extra risks or procedures that are not in place? Kathy Woodward explained that the introduction of the action plan as part of the work programme was designed to be a means to try and capture some of those areas where the committee feels that extra work needs to be addressed and, in her opinion, that is the first of the areas where details can be captured and then identify the value which is added. She expressed the view that a conscious effort needs to be made to fill the action plan out so that when specific questions are raised the detail is completed and can be reviewed.


Members approved the Annual Report for 2021/22 to be forwarded to Full Council.


Independent Member appointment to Audit Committee pdf icon PDF 169 KB

The purpose of this report is to seek Members views on the appointment of an Independent Member to the Audit and Risk Management Committee



Kathy Woodward, Internal Audit Manager, presented the report to members.


Kathy Woodward explained that this report has arisen from the action plan where the committee stated that they wanted to review whether or not to appoint independent members to its committee and within the report it details the view of CIPFA including their guidance for local authority audit committees and its advice is that there should be independent members, albeit not a legal requirement, as it provides additional strength to the committee. She highlighted to members the section of the report relating to national context and made reference to various Government reports including a report by Sir  Tony Redmond which had featured an independent review into the oversight of local audits that highlighted a number of areas not solely with external auditors but the governance arrangements within councils themselves and the various improvements that could be made, including the recommendation of the appointment of at least one independent member, suitably qualified to the audit committee.


Kathy Woodward explained that as a result of that report the Department for Levelling Up for Housing and Communities have issued a formal response with four specific measures and the second measure states that they intend to provide funding of £45 million over the course of the next spending review period to support local bodies with the cost of strengthening their financial reporting and new burdens related to the appointment of independent members and other ‘Redmond’ recommendations and for CIPFA to publish further guidance on audit committees, with its guidance emphasising the role that Audit Committees should have in ensuring that accounts are prepared to the highest of standards alongside making broader changes of making appointments of independent members. She advised the committee that there appears to be a steer from CIPFA, the Government and the regulatory bodies to appoint independent members to Audit Committees.


Kathy Woodward made reference to guidance that was issued on 31 May which stated that although it is not currently mandatory, it is going to become mandatory although there is no current timescale which has been provided. She outlined the benefits and pitfalls of having independent members, with the benefits including the additional knowledge and expertise that they bring to the committee, and they reinforce the political neutrality, independence of the committee and they also maintain continuity where membership is affected by the electoral cycle and the pitfalls being an over reliance on independent members by other committee members, lack of organisational knowledge, poor context amongst independent members and the additional effort by officers, staff and independent members to establish that working relationship.


Members asked questions, made comments and received responses as follows:

·         Councillor Mrs French asked for clarity over the £45 million of funding that had been referred to and she asked how many Local Authorities that funding would be for? Kathy Woodward explained that there are 323 District Councils. Neil Krajewski explained that the funding has been allocated already and it is principally linked to where external audit  ...  view the full minutes text for item ARMC7/22


Audit and Risk Management Committee work programme pdf icon PDF 167 KB

For information.


Councillor Miss French presented the Audit and Risk Management Committee Work Programme 2022/23 for information.


Members noted the work programme.


Items of Topical Interest.


There were no items of topical interest for discussion.