Agenda and minutes

Audit and Governance Committee - Wednesday, 12th January, 2022 5.30 pm

Venue: Council Chamber - Civic Centre, St Luke's Avenue, Harrogate HG1 2AE. This meeting will be livestreamed here: (Copy and paste the link in your browser).. View directions

Contact: Harriet Clarke, Trainee Democratic Services Officer  Tel: 01423 500600 Email:

No. Item


Apologies for Absence and Notification of Substitute:



Notification had been received that Councillor Michael Harrison was to act as substitute for Councillor Alex Raubitschek and Councillor Paul Haslam was to substitute for Councillor John Ennis.

(5.30 pm)



Declarations of Interest:

Member to advise of any declarations of interest.


49/21 – DECLARATIONS OF INTEREST: No declarations of interest were made at the meeting.


(5.30 pm)



Minutes: pdf icon PDF 237 KB

of the meeting of 22 November 2021.


50/21 – MINUTES: The Minutes of the meeting of the Committee held on 22 November 2021 were approved as a correct record.


In respect of Minute 42/21 it was noted that a minor typographical error had been corrected since the publication of the Minutes. On the eighth line the date 2019/20 had been amended to read 2020/21.


(Four Members voted for the motion and there was one abstention.)


(5.31 pm)



Exempt Information:

To determine whether to exclude the press and public during the consideration of any exempt information items.


51/21 – EXEMPT INFORMATION: There was no exempt information.


(5.32 pm)



Public Arrangements - Questions:

To consider any questions under Standing Order 27.


52/21 – PUBLIC ARRANGMENTS - QUESTIONS: There were no public questions to consider under Standing Order 27.


(5.32 pm)



Decision to Opt into the National Scheme For Auditor Appointments Managed by PSAA as the 'Appointing Person': DOTX 77 KB

The Head of Finance to submit a written report.



             APPOINTMENTS MANAGED BY PSAA AS THE ‘APPOINTING PERSON’: The Head of Finance (HoF) submitted a written report which set out the proposals for appointing the external auditor to the Council for the accounts for the five-year period from 2023/24.


Under the Local Government Audit and Accountability Act 2014, the Council was required to appoint an auditor to audit its accounts for each financial year. As was agreed for the appointing period of 2018/19 to 2022/23, the Council had once again chosen to opt-in to the national auditor appointment scheme administered by Public Sector Audit Appointments (PSAA), the body currently designated by the Secretary of State as the ‘appointing person’.


The HoF explained that whilst local government re-organisation (LGR) would have taken place by the period 2023/24, PSAA had advised that existing councils should opt-in to the arrangements in the event of a delay to LGR. NYCC’s ‘continuing authority’ status meant that the new unitary authority would not need to opt-in to the national scheme for auditor appointments again.


The reasons for taking advantage of the sector-wide procurement conducted by PSAA were outlined at paragraph 3.3 of the report. As per Regulation 19 of the Local Audit, in order to opt-in to the national scheme the Council had to make a decision at a meeting of the Full Council. The opt-in period would commence on 22 September 2021 and close on 11 March 2022 and completed opt-in documents were required by PSAA by 11 March 2022. The provisions of the national opt-in scheme were detailed at paragraph 5.11 of the report.


The HoF confirmed that following LGR and the subsequent staff transfer to the new authority, part of the continuing role of the staff would be to close down the accounts of the predecessor Councils in the financial year of 2023/24.




That Council accepts Public Sector Audit Appointments’ invitation to opt into the sector-led option for the appointment of external auditors to principal local government and police bodies for five financial years from 1 April 2023.


     (5.32 pm – 5.34 pm)



Treasury Management Annual Strategy, Annual Investment Strategy, Prudential and Treasury Indicators, Annual Minimum Revenue Provision Statement 2022/23: pdf icon PDF 559 KB

The Financial Services Manager to submit a written report.


Additional documents:





              STATEMENT 2022/23: The Financial Services Manager (FSM) submitted a written report which outlined four topics related to Treasury Management which the Audit and Governance Committee were required to consider in order to comply with the Council’s financial regulations and the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice.


The Treasury Management Strategy outlined in paragraphs 6 and 7 of the report referred to the funding for capital expenditure and the position in terms of treasury investments and borrowing. The FSM explained that the strategy looked at the Capital Financing Requirement (CFR) which was the level of capital expenditure that had not been funded from Council resources. The CFR was broken down into the General Fund and the Housing Revenue Account (HRA) and included forecasts for the next three years. The overall CFR decreased however as £15m of balances were set aside to pay off the next instalment of loans taken out to fund the self-financing payments in 2012, this was to be repaid by the HRA. The FSM reported that the General Fund expenditure had significantly increased due to the internal borrowing used to fund projects at Ripon Pool, The Hydro and Knaresborough Pool. The FSM explained that for General Fund borrowing there was a requirement that part of the CFR was paid off each year, through a charge to the revenue budget known as the Minimum Revenue Provision (MRP). The MRP statement was attached at Appendix B of the report.


The Treasury Management Strategy provided details of the Council’s investments, this included £57m of cash investments and £5m in property funds. The FSM highlighted the fluctuations in the cash balance at present, which was due to funds for COVID-19 related grants being received and distributed. The underlying cash balances remained healthy which allowed for internal borrowing to take place. Overall borrowing decreased from £53m to £38m in 2021/22 due to the £15m HRA loan repayment. External borrowing was projected to continue at the same level for future years. Paragraph 7.4 of the report outlined the forecasted interest rates which would increase slowly in forthcoming years.


The Annual Investment Strategy was outlined at paragraph 8 and set out the framework within which the Council managed its investments. The FSM reported that no changes had been made from last year.


The prudential and treasury indicators were set out at Appendix B of the report, which related to the various areas covered in the Treasury Management Strategy, including the forecasts for capital expenditure, borrowing and debt levels. Paragraph 10 of the report detailed the revised CIPFA Treasury Management and Prudential Codes. As formal adoption of these codes was not required until the 2023/24 financial year, they had not been incorporated into the strategy.


The FSM advised that once the capital budget was finalisedthe report would be updated prior to it going for Cabinet approval on the 2 February 2022 and Council  ...  view the full minutes text for item 54.


External Audit Progress Update:

The External Auditors (Mazars LLP) to provide a verbal update.


55/21 – EXTERNAL AUDIT PROGRESS UPDATE: The Chair welcomed Diane Harold, the Senior Manager and Mark Kirkham a Partner of Mazars LLP, the Council’s external auditor, to provide a verbal update on the external audit for 2020/2021. Further to Minute 42/21, Ms Harold reported that significant progress had not been made on the external audit, the completion of which had been delayed from late-January to late-March 2022 due to multiple outstanding queries. There was a subsequent risk of potential further slippage if the external audit was not completed by the end of March 2022. Ms Harold highlighted that discussions had taken place with the Council’s Head of Finance in order to monitor the external audit progress.


Two emerging high priority recommendations which were likely to be included in the External Audit Completion report were referenced, the first of which was in respect of valuations of property plant and equipment and the second concerned arrangements for the preparation and audit of the accounts. It was also reported that the Annual Governance Statement for 2020/2021 had not yet been received.


During questions from Members, Ms Harold explained that the net effect of potential further slippage was a delay in the approval of the accounts for the year 2020/21 and the possible associated impact on the completion of the accounts for 2021/22. In response to another question Ms Harold informed the Committee that the continued communication and cooperation between Mazars and the Council was essential in order for the pressure areas to be understood and the subsequent prioritisation of resources in respect of the external audit.


(5.45 pm – 5.53 pm)





Audit Services December Monitoring Report 2021/22: pdf icon PDF 174 KB

The Audit Services and Fraud Manager to submit a written report.



56/21 – AUDIT SERVICES DECEMBER MONITORING REPORT 2021/22: The Audit Services and Fraud Manager (ASFM) submitted a written report which provided a summary of internal audit activity for the period from 1 April 2021 to mid-December 2021 and highlighted any incidence of significant control failings or weaknesses. Paragraphs 5.2 and 5.3 of the report gave a breakdown of the current position.


The ASFM highlighted the key points of the report which were detailed at paragraph 5.4. The car park income credit card payments audit was currently on hold due to an ongoing service reviewing process. The Committee was asked to note that the 6 months of the audit plan dedicated to the supporting COVID-19 business support grant payment work had over-spilled into the second half of the audit plan due to ongoing pressures from the pandemic. The ASFM reported that the audits to be completed as a priority would be analysed on a risk basis.


The Committee requested a progress update on the car park income credit card payments 2019/20 audit which had been on hold for some time due to the service reviewing process.




That the contents of the report are noted.


(5.53 pm – 6.00 pm)




Internal Audit Charter: pdf icon PDF 140 KB

The Audit Services and Fraud Manager to submit a written report.

Additional documents:


57/21 – INTERNAL ANNUAL AUDIT CHARTER: The Audit Services and Fraud Manager (ASFM) submitted a written report which sought to update and refresh the Council’s Internal Audit Charter as per the requirements of the Public Sector Internal Audit Standards (PSIAS).


The ASFM explained that the Internal Audit Charter had not been reviewed since the mandatory requirement for the Council to produce one was introduced in 2013 and that the new refreshed version had been updated in line with the PSIAS and guidance from the Institute of Internal Auditors.


The Internal Audit Charter defined internal audit’s purpose, authority and responsibility. The charter established internal audit’s position within the organisation, including the nature of the Chief Audit Executive (Audit Services and Fraud Manager’s) functional reporting relationship with the Audit and Governance Committee; authorised access to records, personnel and physical properties relevant to the performance of engagements; and overall defined the scope of internal audit’s activities. The Internal Audit Charter provided a framework for the conduct of the service and required approval by the Council’s Management Board, which was received on 20 December 2021 and the Audit and Governance Committee.




That the Internal Audit Charter for the Shared Internal Audit Service be endorsed and the contents approved.


(6.00 pm – 6.02 pm)





External Public Sector Internal Audit Standards (PSIAS) Compliance Review - Action Plan Update: pdf icon PDF 230 KB

The Audit Services and Fraud Manager to submit a written report.

Additional documents:


58/21 – EXTERNAL PSIAS COMPLIANCE REVIEW – ACTION PLAN UPDATE:The Audit Services and Fraud Manager (ASFM) submitted a written report the purpose of which was to provide an update outlining progress made on the Action Plan related to the external review of compliance with Public Sector Internal Audit Standards (PSIAS).


Further to Minutes 12/21 and 21/21, the results of the external PSIAS compliance review had been noted by the Committee on 29 April 2021, with the subsequent Action Plan noted and approved with the commitment to regularly update Members on progress against the Action Plan. Attached at appendix 1 of the report was the updated PSIAS external review Action Plan which was undertaken by the Council’s external auditors, Mazars who had previously identified an area of non-compliance with the standards related to the lack of a formal QAIP (Quality Audit Improvement Programme). Also identified was a small number of recommendations related to Best Practice which was included in the updated Action Plan. The QAIP had since been prepared and was attached at Appendix 2 of the report for noting and approval.


The ASFM confirmed that recommendations detailed in the Action Plan that would not be completed due to LGR would be fed into the wider audit services framework for the new authority and that discussions regarding a handover had already emerged.




That the contents of the report are noted.


    (6.02 pm – 6.08 pm)