Agenda and minutes

Audit Committee
Friday, 26th February, 2021 10.30 am

Venue: Remote - To be held remotely via Zoom - View directions

Contact: Kate Morris  0115 876 4353

No. Item




Councillor Sajid Mohammed


Declarations of Interests




Minutes pdf icon PDF 235 KB

To confirm the minutes of the meeting held on 18 Decemer 2020


The minutes of the meeting held on 18 December 2020 were confirmed as a true record and were signed by the Chair.


Local Government Ombudsman’s Report in the Public Interest following Investigation Reference 18 018 188 pdf icon PDF 257 KB

Report of the Corporate Director for People

Additional documents:


Councillor David Mellen, Leader of the Council and Portfolio Holder for Regeneration Schools and Communication introduced the report detailing the Report of the Ombudsman following investigation Ref: 18 018 188 where the Ombudsman held against the Council regarding school transport for a special needs pupil. Nicholas Lee, Director of Education Services and Janine Walker, Head of Service SEND and Vulnerable Pupils, gave additional detail. They highlighted the following points:


(a)  Nottingham City Council fully accepts all of the recommendations made by the Local Government Ombudsman (LGO) in this case;


(b)  The LGO made a number of recommendations, including financial recompense to the parent for the financial impact of the decision to remove transport, and that an apology be issued. These have been competed;


(c)  Further recommendations were made:

·  A review of procedures show  how the service takes into account individual circumstances, that evidence is supplied to parents and carers to show rational for the decisions taken by the services

·  Ensure that second stage appeals are properly minute

·  Demonstrate that decisions are robust and defensible


(d)  These recommendations have been taken on board and steps have been taken to address each one. In its report the LGO recognised that steps had  been taken prior to its formal recommendation to improve the service in line, to prevent this occurring again and the LGO is assured by the actions taken to improve;


(e)  The Service at the time of the complaint was split into two parts. A restructure has brought the transport service into the SEND oversight which has allowed  for centralised oversight of all applications. Decisions are now subject to a monthly monitoring system to ensure consistency and any issues and risk to access to school is identified earlier than before and can be addressed;


(f)  In the 2019/20 academic year, 398 children were receiving home to school transport support. During that year there were 76 successful additional requests for travel and 23 unsuccessful requests or changes to eligibility, following annual review. A number of these 23 had become eligible for independent travel training, a programme developed to help young people travel to school independently;


(g)  Of the 23 unsuccessful requests or changes to eligibility ten went to first stage appeal, two were upheld and eight dismissed. Two of these unsuccessful appeals went on to the second stage, one was upheld and one was dismissed. The numbers are very small in terms of the wider Service;


(h)  The Service is working hard to manage demand, and the pressure that this puts on the budget. Young people capable of managing their travel with training and support are offered the travel training programme, the transport providers within the city have been very supportive of this initiative and have worked closely with the Council. This enables young people to learn an important life skill and develop a sense of independence;


(i)  High dependency support vehicles and escorts are very high cost. The Service is currently investigating the use of lease cars as a way  ...  view the full minutes text for item 67.


Treasury Management Strategy 2021/22 & Capital Strategy 2021/22

Report of the Strategic Director of Finance

Additional documents:


Clive Heaphy, Strategic Director of Finance, introduced the report on the Treasury Management Strategy 2021/22 and Capital Strategy 2021/22. He gave a presentation outlining the following points:


(a)  Treasury management is managed in line with the Code from the Charted Institute of Public Finance and Accountancy (CIPFA) as well as the Ministry of Housing, Communities and Local Government (MHLCG) and includes a number of different, but linked strategies;


(b)  The Capital Strategy sets out the framework for delivery of Capital investment and financing decisions. It is a CIPFA requirement to link the Capital Strategy to the Treasury Management Strategy. Treasury Management sets out the Councils approach to cash management, investment, borrowing and debt repayment and funding both the Capital and Revenue strategies;


(c)  The Capital Strategy supports the objectives of the Council. The strategy aims to align the ambitions of the Council with spend on assets and compliments revenue spend;


(d)  The Strategy works to increase transparency and good governance by establishing a Capital Board, chaired by the Leader, to scrutinise the programme and funding, as well as to look at individual requests for capital spend and monitoring capital programmes. The Board will also monitor borrowing and capital receipts. 100% grant funded and Health and Safety schemes will be prioritised as they do not then create revenue impact for the Council;


(e)  The Prudential Code dictates that capital investment must be prudent and affordable, and this is the context in which the Council is funding Capital. Projects will be prioritised to align with Council ambition and the long term financial implications of each project will be assessed;


(f)  Good practice dictates that that all schemes have robust business cases and that whole life costing of each scheme is considered, including the revenue impacts;


(g)  One of the criticisms from the Non-Statutory Review by MHCLG was that the Council’s overall level of external debt was too high. Current external debt currently costs £56million to service. This is 27% of the Council Budget. This is higher than national comparators and the Capital Strategy aims is to contain and reduce the external debt;


(h)  New regulations introduced nationally state that Local Authorities can no longer borrow in order to generate a yield. This means that it is not possible to pursue new invest property opportunities. Investment must be linked to service needs;


(i)  The Capital Board will be considering assets that are not being fully utilised where, if they were sold, the receipt could be used to fund capital spend without resorting to borrowing. All capital schemes will be started when Capital receipt has been received, rather than the current practice of starting schemes in anticipation of capital receipt;


(j)  The Capital working group are invited to look at the controls in place around the Capital programme, projects, schemes and variances;


(k)  The Council is has created a Voluntary Debt Reduction Policy. The recommendations from the Non-Statutory review suggested that the Government should consider putting legislation in place to bar Nottingham City Council  ...  view the full minutes text for item 68.


Treasury Management 2020/21 Half Yearly Update pdf icon PDF 325 KB

Strategic Director of Finance

Additional documents:


Clive Heaphy, Strategic Director of Finance summarised the Treasury Management Half yearly update indicating that there had been no long-term borrowing undertaken to September 2020, the average interest rate had increased slightly, and no further debt scheduling undertake, and the average return on investment has outperformed the LIBID rate.


Resolved to note the treasury management actions taken in the first half of 2020/21


Review of Accounting Policies 2020/21 pdf icon PDF 222 KB

Additional documents:


Sue Risdall, Team Leader for Technical Accounting, introduced the annual report on the Review of Accounting Policies for 2020/21. She informed the committee that the policies had been fully reviewed  and contained no significant changes from 2019/20.


Following questions from Committee members the following additional information was highlighted:


(a)  Movements between reserves are shown as part of the Balance Sheet and as a note to the accounts. They are reviewed on a monthly basis and as part of standard monitoring;


(b)  Finance Colleagues are in discussion with CIPFA to deliver training on accounts to Committee members with the aim to ensure that the training is delivered as close to the time that the final accounts will come to committee for discussion.


Resolved to:

(1)  Agree the Statement of Accounting Policies for inclusion in the  2020/21 annual accounts; and


(2)  Agree the proposals where International Financial Reporting Standards allow a degree of choice.



Audit Committee Terms of Reference pdf icon PDF 357 KB

Report of the Strategic Director of Finance

Additional documents:


Shail Shah, Head of Audit and Risk presented the report on the refreshed Terms of Reference for Audit Committee. He highlighted the following points:


(a)  The Terms of Reference (TOR) required review as part of recommendations made by the Report in the Public interest. Following an internal review CIPFA were also consulted were satisfied that the proposed TOR are appropriate and commented that they are more extensive than comparative authorities;


(b)  One change to highlight is the end of Audit committee oversight of Partnership Governance Framework. This work is conducted elsewhere within the council and is duplicated by Audit Committee. This does not preclude Audit Committee from looking at the risks associated with this workstream.


Resolved to

(1)  Recommend to Council that it approves the adoption of a revised Terms of Reference for the Audit Committee and amends the Constitution accordingly


(2)  Note the outcome of the review by CIPFA; and


(3)  Note the end of Audit Committee oversight of the Partnership Governance Framework, including annual Health Checks and the Register of Significant Partnerships and the associated workstream.


Action Log and Work Programme pdf icon PDF 451 KB


In a change to the published agenda the Chair took agenda item 4, Action log and Work Programme, at this point.


Shail Shah, Head of Audit and risk confirmed to the committee that the Work Programme was due to be updated. The Chair asked that feedback from the working groups be added as an agenda item and that work from the working groups be added to the Action Log.



External Audit Update

Verbal update from Grant Thornton, External Auditors


John Gregory, External Auditor – Grant Thornton, gave a verbal update to the Committee on the External Audit process. The update included information on the 18/19 final accounts and value for money findings, the progress with 19/20 and the 20/21 accounts and audit. He highlighted the following points:


(a)  The 18/19 Value for Money opinion will be complete in time for the next Committee meeting (March 2021). Delay on the 18/19 accounts has been compounded as a result of the Covid 19 pandemic and to allow the completion of the Report in the Public Interest and the Non-Statutory Review to be completed and recommendations issued. A certified conclusion will be issued in time for the March 2021 Committee; 


(b)  For the 18/19 accounts there are three items currently outstanding

·  there is a small issue regarding the valuation of Nottingham City Homes held assets, their external Auditor had not raised this as an issue and so work is being carried out by Grant Thornton to be satisfied that it is not a material issue. 

·  Work to ensure that assets held by Nottingham City Council that have not been revalued are still held with appropriate values, this has been identified as a non material understatement.

·  A slight change in the narrative report since the draft accounts have been issued;


(c)  The 19/20 draft accounts were produced and published in August 2020. Work on them continues, however there has been a knock on effect from the delay to the 18/19 accounts. Work on routine evidenced asset values and substantive testing of some transactions remains outstanding. There is also the question on how assurance for Robin Hood Energy accounts will be gained as there is no completed external audit for that company at present. The MacIntyre Hudson audit report is awaited;


(d)  Work on the 20/21 accounts has started, with many live issues still in progressincluding

·  Budget position

·  Financial plan

·  Capitalisation directive

The aim is to significantly catch up to the standard timetable this year.


In response to questions and comments from committee members the following further information was highlighted:


(e)  The City Council has a fairly complex group structure with a number of different external auditors for the various companies contained within the group. There is a degree of reliance on these auditors although there is a great deal of communication and review of their findings and files by Grant Thornton. As the Authority’s external auditors Grant Thornton will issue instructions around risk and request assurance from the external auditors for group companies;


The Committee thanked John Gregory for his update and noted its content.



Internal Audit Progress Report Q1-Q3 2020/21 pdf icon PDF 299 KB

Report of the Strategic Director of Finance

Additional documents:


Shail Shah, Head of Audit and Risk introduced the Internal Audit Progress Report for Q1-3 2020/21. He informed the Committee that the report outlines the work that has taken place so far, that the audit plan for 2020/21 is on target and gives some brief detail of the peer review process looking forward.


In response to questions and comments from the Committee the following further information was given:


(a)  Staff reallocations to prioritise Business rate fraud detection in relation to Covid 19 grants has meant hat staff previous working on fraud detection has meant that that revenue stream has been impacted. However those staff will be returning to that work and recovery of income will start again shortly and a piece of work to look at how the team is resources is underway;


(b)  There has not been much improvement in terms of the Traffic Capital Projects since it came before the committee last time. A follow up is planned, and the exact timescale will be notified to committee members.


Resolved to:

(1)  Note the performance of Internal Audit during the period and the effect of Covid 19; and


(2)  Note the proposed approach to the Public Sector Audit Standards compliance review i.e a Core Cities peer review


Exclusion of the Public

To consider excluding the public from the meeting during consideration of the remaining item(s) in accordance with Section 100A(4) of the Local Government Act 1972 on the basis that, having regard to all the circumstances, the public interest in maintaining the exemption outweighs the public interest in disclosing the information. 




The Committee decided to exclude the public from the meeting during consideration of this/ the remaining agenda item(s) in accordance with Section 100A(4) of the Local Government Act 1972 on the basis that, having regard to all the circumstances, the public interest in maintaining the exemption outweighed the public interest in disclosing the information, as defined in Paragraph(s) 3 of Part 1 of Schedule 12A to the Act


Treasury Management Strategy 2021/22 & Capital Strategy 21/22 - Exempt appendix

Report of the Strategic Director of Finance


Exempt under paragraph 3 Information relating to the financial or business affairs of any particular person (including the authority holding that information). It is not in the public interest to disclose this information because it contains commercially sensitive information that may be used by competitors and harm future negotiations

Additional documents:


The Committee discussed the content of the exempt appendix as detailed within the exempt minutes, and noted its content.


Control Environment and key risks for City Council controlled companies

Presentation by the Strategic Advisor on Companies 


Exempt under paragraph 3 Information relating to the financial or business affairs of any particular person (including the authority holding that information). It is not in the public interest to disclose this information because it contains commercially sensitive information that may impact on future trading.



The Committee received a presentation by Ian Edward, Strategic Advisor on Companies, and discussed the content as detailed within the exempt minutes. They noted the presentation content.