Agenda for Audit Committee on Friday, 28th April, 2017, 11.00 am

Agenda and minutes

Venue: LH 2.17 - Loxley House, Station Street, Nottingham, NG2 3NG. View directions

Contact: Kate Morris  Email: kate.morris2@nottinghamcity.gov.uk

Items
No. Item

55.

APOLOGIES FOR ABSENCE

Minutes:

Councillor Malcolm Wood  -  Personal

Councillor Steve Young  -  Personal

56.

DECLARATIONS OF INTERESTS

Minutes:

None.

57.

MINUTES pdf icon PDF 243 KB

To confirm the minutes of the meeting held on 24 February 2017

Minutes:

The minutes of the meeting held on 24 February 2017 were confirmed as a correct record and signed by the Chair.

 

58.

CORPORATE RISKS FOR FURTHER SCRUTINY

Presentation by Head of Corporate Finance

Minutes:

Theresa Channell, Head of Strategic Finance gave a presentation on Corporate Risks for further scrutiny that focused on funding. She highlighted the following points:

 

(a)  Changes in funding of services from national taxation to local taxation, reliance on funding from Council and Business Tax is a risk that  is classed as red, or severe, if it occurred as it would impact on the Council’s ability to provide services in an effective way adversely affecting the citizens of Nottingham;

 

(b)  in 2018/19 there will be a budget gap of £12million rising to £18million in 2019/20. The Council has committed to delivering £24million savings in 2017/18 and has made over £204million in savings since 2010;

 

(c)  savings have been made through partnership work with organisations such as the NHS to jointly deliver services to citizens whilst saving funds. This partnership work has allowed the Council to continue to provide services as outlined in the Council Plan and are key to reducing funding gaps;

 

(d)  43% of Council funds are spent on Children and Adult services and these services are more likely to feel the impact of reduction in funding;

 

(e)  to deliver further saving the Council aims to continue its success in commercialisation opportunities alongside reducing demand for services by focusing on early intervention;

 

(f)  the Council will also work on modernising and redesigning the services and identifying and addressing inefficiencies to offer the same outcomes but through a different model;

 

(g)  the budget strategy aims to deliver savings but also to protect frontline services and minimise the impact of changes on vulnerable citizens;

 

(h)  there has been a significant reduction in funding from central government through the Revenue Support Grant (RSG) since 2011/12. As a result of this Council tax has been increased go towards covering the shortfall;

 

(i)  council tax levels can be influenced by the number of new homes being built and what band they fall within, however there is very little movement of this figure in Nottingham due to the high number of lower band properties;

 

(j)  alongside RSG there is an additional top up payment made to the Council when funding does not match needs. This top up has been fixed through a 4 year settlement with Central Government  up to 2019/20;

 

(k)  changes to business rates mean that 100% retention is expected in 2019/20;

 

(l)  beyond 2019/20 it is uncertain how funding will look;

 

(m)projected income from Council Tax in 2017/18 is £100.947million, increased are capped at 1.99% + 3% adult social care precept in 2017/18. Any increase beyond this figure would require a local referendum;

 

(n)  the assumed collection rate of Council Tax is 96.4% and there are systems in place to collect outstanding Council Tax and recover debts;

 

(o)  Nottingham City has a relatively low tax base, 63,368 Band D equivalents, due to high numbers of student exemptions (10,947 in October 2016), 91.9% of the 135,201 dwellings fall into the lower bands;

 

(p)  Business Rates income is projected to be £67.987million in 2017/18  ...  view the full minutes text for item 58.

59.

HOUSING BENEFIT SUBSIDY CLAIM QUALIFICATIONS 2015/16 pdf icon PDF 218 KB

Report of the Corporate Director for Strategy and the Strategic Director of Finance

Minutes:

John Maddison, Team Leader – Subsidy and Information presented the report of Ian Roper Commercial Finance Team leader for Contract Management on Housing Benefit Subsidy Claim Qualification 2015/16, highlighting the following;

 

(a)  the audit report from KPMG bought to the last meeting of the Audit Committee highlighted a high error rate, 19%, in the housing subsidy claims;

 

(b)  this was not expected and the teams responsible believed that there would be an error rate reduction;

 

(c)  the errors themselves were generally small errors and have not cost the council large amounts of money, most errors resulted in small overpayment which can be claimed back either through current benefits or through invoice;

 

(d)  in terms of qualification value, the figure has fallen from £1.215million in 2013/14 to £807,000 in 2015/16 and the financial; accuracy level this increased from 99.17% in 2013/14 to 99.4% in 2015/16 which are not inconsistent with the findings of audits of other large unitary authorities, as acknowledged by KPMG in their report;

 

(e)  an action plan has been drawn up to tackle the mistakes that are commonly being made which includes the following:

·  Case studies and help sheets for all error types

·  1 hour weekly training sessions in team meetings to work through error examples and exercises with teams

·  Desk-Aides for identified themes

·  Business case being prepared to provide resource for quality checking to allow in year quality checks for known areas of risk, pre-submission of the HB subsidy claim.

 

Following questions and comments from the Committee the following additional points were made:

 

(f)  the new software installed enables automatic updates from both HMRC and from DWP direct into the Council system which reduced error rate, with these links it means that 65-70% of all updates to details are made automatically within a couple of days of the changes being made;

 

(g)  Universal Credit takes people out of the subsidy claim and so caseload is dipping slightly. Further roll out of Universal credit will impact on caseload further, but at present as recipients are limited to new claimants who are single the impact is not much.

 

RESOLVED TO:

 

(1)  note the key findings from the KPMG audit of Grants and Returns report specific to the Housing Benefit Subsidy Claim 2015/16 and the Councils response;

 

(2)  invite Ian Roper back to a future meeting to update the Committee on progress made in error reduction;

 

(3)  thank John Maddison for his attendance and for presenting the report on Housing Benefit Subsidy Claim Qualification;

60.

INTERNAL AUDIT REPORT SELECTED FOR EXAMINATION pdf icon PDF 231 KB

Report of the Director of Strategic Finance

 

Additional documents:

Minutes:

Shail Shah, Head of Audit and Risk, presented a report on an Internal Audit Report selected for Examination. He informed the committee that the Equality Impact Assessment (EIA) action plan had been updated and that a lot of work had been done. There is still plenty of work let to do but most work has been started and is progressing in the right direction

 

Following questions and comments from the committee the following information was highlighted:

 

(a)  The issue of EIA keeps cropping up in various scrutiny meetings and it is good to see that it is becoming part of the culture of  Nottingham City Council;

 

(b)  The Committee agreed that the service had responded  proportionately but would like further reassurance that the work continues to move at a satisfactory pace and in the right direction;

 

RESOLVED TO:

 

(1)  Note the updated position with regards to the Internal Audit report on Equality Impact Assessments;

 

(2)  Invite Imogeen Denton to a future meeting to update the committee on further progress;

61.

INTERNAL AUDIT ANNUAL WORK PLAN 2017/2018 pdf icon PDF 152 KB

Report of the Director of Strategic Finance

Additional documents:

Minutes:

Shail Shah, Head of Audit and Risk, introduced a report on Internal Audit Annual Work Plan 2017/2018. He highlighted the following points:

 

(a)  The plan presented to the committee is the summary plan. The detailed plan will return to the committee every quarter for review.

 

(b)  Organisational independence of internal audit is satisfactory as is the scope and current resources;

 

 

RESOLVED to:

 

(1)  approve the internal Audit Plan for 2017/2018;

 

(2)  note the head of Internal Audit’s opinion  regarding the organisational independence of Internal Audit;

 

(3)  note the Head of Internal Audit’s opinion regarding whether there are inappropriate scope or resource limitations;

62.

AUDIT COMMITTEE TERMS OF REFERENCE AND ANNUAL WORK PROGRAMME pdf icon PDF 251 KB

Report of the Director of Strategic Finance

Minutes:

Shail Shah, Head of Audit and Risk, introduced a report on the Audit Committee Terms of Reference and Annual Work Programme. He highlighted the following points:

 

(a)  the terms of reference and the work plan do not differ significantly from last year. There has been the addition of Public Sector Internal Audit Standards (PSIAS) duties as set out in Appendix 3;

 

(b)  Internal Audit has recently been peer reviewed feed-back has been positive. At present only the draft report is available but indications are that the second highest level has been achieved by Nottingham City Council;  

 

RESOLVED to:

 

(1)  note the role and functions of the Audit Committee including the additional elements prescribed by the PSIAS and the benefits arising from its existence;

 

(2)  endorse the outline work programme as set out in Appendix 1 including the Assurance Plan and the terms of reference at Appendices 2 and 3;