Agenda and draft minutes

33/22 – APOLOGIES FOR ABSENCE AND NOTIFICATION OF SUBSTITUTES: Apologies for absence had been received from Councillors Victoria Oldham and Alex Raubitschek. Notification had been received that Councillor Tom Watson was to act as substitute for Councillor Hannah Gostlow.

(5.30 pm)

Member to advise of any declarations of interest.

34/22 – DECLARATIONS OF INTEREST: No declarations of interest were made at the meeting.

(5.30 pm)

of the meeting of 9 January 2023.

35/22 – MINUTES: The Minutes of the meeting of the Committee held on 9 January 2023 were approved as a correct record.

(Two Members voted for and there was one abstention).

(5.30 pm)

To determine whether to exclude the press and public during the consideration of any exempt information items – item 8 (part).

36/22 – EXEMPT INFORMATION: Appendices 1, 2 and 4 of the item considered at Minute 40/22 were considered exempt under paragraph 3 of schedule 12A of the Local Government Act 1972 as they contained information relating to the financial or business affairs of any particular person (including the authority holding that information). It was not necessary to discuss the exempt information and the item was considered in open session.

(5.31 pm)

To consider any questions under Standing Order 27.

37/22 – PUBLIC ARRANGMENTS - QUESTIONS: There were no public questions to consider under Standing Order 27.

(5.31 pm)

The External Auditors (Mazars LLP) to submit a written report.

8/22 – EXTERNAL AUDIT PROGRESS REPORT: The Chair welcomed Ms Diane Harold, the Senior Manager of Mazars LLP, the Council’s external auditor, to present the External Audit Progress Report. Ms Harold explained that it was the intention to bring the External Audit Completion Report for 2021/22 to the meeting, however this had not been possible as the audit remained outstanding, which had previously been raised with Members as a potential risk due to the pressures of Local Government Reorganisation (LGR). The core external audit work was undertaken between December 2022 and February 2023 and good progress had been made in some areas. However, work remained outstanding relating to significant risks and other areas, including the valuation of property, plant and equipment, the valuation of pensions, the management override of controls and the accounting for Brimhams Active, which had resulted in Group accounts for the year 2021/22 for the first time.

The report set out the significant matters discussed with management in relation to the audit of the financial statements. Ms Harold highlighted the property, plant and equipment valuations in which there were a number of outstanding areas, which were partly due to the Council’s use of six different external valuers in the 2021/22 year. Another area highlighted of ongoing discussions with management was the valuation and classification of the Royal Hall, which had been classed as a non-operational heritage asset. The group financial statements for Brimhams Active was also raised as a significant risk area in which there remained areas of work to be completed and some amendments were required. Ms Harold also highlighted several walkthroughs of key information systems, which had not yet been completed.

An overview of external audit work which had been completed, and that which remained outstanding as well as any significant issues was provided at pages 8-11 of the report. Property, plant and equipment and heritage assets were two areas flagged as potential issues. Two material amendments were required in respect of a reclassification in the Comprehensive Income and Expenditure Statement as well as in the group financial statements. Ms Harold reported that the 2021/22 audit would be revisited no earlier than July 2023 at which point there would need to be greater officer capacity and commitment to respond to outstanding audit queries.

A further section of the report set out the national publications, one of which was

the National Audit Office report on the timeliness of local auditor reporting on local

government in England. A summary of the publication was detailed at page 14

of the report which highlighted the widespread issue in relation to late local government audit opinions, as reported by Public Sector Audit Appointments Ltd.

In response to a question regarding the previous year’s current liabilities balance, which was misstated by £30m, Ms Harold clarified that this was a typographical error when the previous year’s figures were inputted into the template for the accounts incorrectly.

Ms Harold thanked officers and Members for their support. In response, the Chair thanked Ms Harold  ...  view the full minutes text for item 38.

The Assistant Director – Audit Assurance (Veritau) to submit a written report.

39/22 – INTERNAL AUDIT ANNUAL REPORT: The Chair welcomed Mr Stuart Cutts, Assistant Director, Audit Assurance of Veritau to present the Internal Audit Annual Report which considered the key findings and conclusions from audit work undertaken in 2022/23 and gave an opinion on the overall adequacy and effectiveness of the Council’s arrangements for risk management and governance and on its internal controls. The Internal Audit Annual Report, which was submitted in accordance with the Standards and the Audit Charter, aimed to provide Members with good assurance for the Annual Governance Statement 2021/22. The overall opinion for the year was that, based on the audit work undertaken during 2022/23, the Council’s framework of governance, risk management and internal control was satisfactory and operating effectively in practice. Appendix 1 provided a summary of all internal audit work. Mr Cutts highlighted the third column down of the 2022/23 audits table entitled ‘debtors’ in which the reference to three priority one recommendations was a typographical error. It was summarised that the majority of audits had a significant level of assurance, whilst two audits had a good level of assurance.

RESOLVED (UNANIMOUSLY):

That    (1) the key findings and conclusions arising from the work undertaken

                 by the Audit Services Team during 2022/23 be noted, including

                 confirmation that the Council’s governance, risk management and

                 control arrangements were adequate and operated satisfactorily

                 during the year; and

 (2) the performance of Audit Services during 2022/23 be noted.

(5.42 pm – 5.46 pm)

(D)

The Assistant Director – Audit Assurance (Veritau) to submit a written report.

40/22 – INTERNAL AUDIT RECOMMENDATION REPORT: Mr Stuart Cutts, the Assistant Director, Audit Assurance of Veritau presented the Internal Audit Recommendation report, which provided an update of the current audit recommendation implementation position. Exempt Appendix 1 to the report detailed outstanding priority one recommendations and Exempt Appendix 2 summarised the internal audit recommendation movements in the period. Appendix 3 provided a summary of all outstanding internal audit recommendations and Appendix 4 outlined the recommendations not accepted by management.

Mr Cutts assured Members that the recommendations that remained outstanding would not be forgotten following LGR and explained that they would be reviewed within the audit teams to establish whether the recommendations continued to be relevant under the new authority. It was noted that some systems and process may be rendered obsolete in the future if they longer fit into the new arrangements for North Yorkshire Council (NYC).

In response to a question from Councillor Matthew Webber, Mr Cutts explained that the priority one recommendations that remained outstanding would be reviewed following LGR in order to determine any recommendations that remained significant risks and those that were no longer deemed relevant risks to the new authority due to a changeover in arrangements. Mr Cutts confirmed that Veritau had discussed next steps on this matter.

RESOLVED (UNANIMOUSLY):  

That the contents of the report and appendices are noted.

Appendix 1 – Outstanding Priority One Internal Audit Recommendations

Appendix 2 – Internal Audit Recommendation Movements in the Period

Appendix 3 – Summary of All Outstanding Internal Audit Recommendations

Appendix 4 – Internal Audit Recommendations Not Accepted By Management

(5.46 pm – 5.51 pm)

(D)

The Scrutiny, Governance and Risk Manager to submit a written report.

The report was updated following the meeting and has been replaced on this agenda with the final version.

41/22 – AUDIT AND GOVERNANCE COMMITTEE ANNUAL REPORT 2022/23: The Scrutiny, Governance and Risk Manager (SGRM) submitted a written report which presented the work undertaken by the Audit and Governance Committee in the 2022/23 municipal year. Good practice indicated that an annual report should be prepared that included how the Committee met its terms of reference, the main areas that the Committee had reviewed, any particular concerns or issues it had addressed and a review of its effectiveness.

The SGRM informed Members that the reference to the Audit Completion Report in paragraph 5.32 of the report would be removed and that following the Committee meeting, reference to the Internal Audit Annual Report would also be included. It was highlighted that good practice indicated that the Audit and Governance Committee Annual Report should go to full Council however due to LGR, there was insufficient time to do this. The SGRM explained that the report would be considered by the new unitary authority after 1 April 2023.

RESOLVED (UNANIMOUSLY):  

That the Audit and Governance Committee Annual Report 2022/23 is agreed.

    (5.51 pm – 5.54 pm)

                                 (D)

The Scrutiny, Governance and Risk Manager to submit a written report.

42/22 – ANNUAL GOVERNANCE STATEMENT 2021/22: Further to Minute 31/22, the Scrutiny, Governance and Risk Manager had submitted the Annual Governance Statement (AGS) for 2021/22. The AGS set out the Council’s governance arrangements and reviewed how the Council had complied with its Code of Corporate Governance for the 2020/21 year. The Governance Improvement Action Plan formed part of the AGS and detailed continuous improvement actions identified by the review.

The SGRM explained that the AGS had identified three significant governance issues which were outlined at paragraph 5.13 of the report which included Covid-19 and devolution and re-organisation. It was noted that the AGS was usually appended to the Statement of Accounts however as the Accounts for 2021/22 year would not be approved until later in 2023, the AGS would be considered by the Audit and Governance Committee and the approved AGS could then be considered by NYC with the Statement of Accounts.  

RESOLVED (UNANIMOUSLY):  

That the Annual Governance Statement 2021/22 is reviewed and it is agreed that:

(1)  it is properly supported by evidence;

(2)  it fairly reflects the Council’s corporate governance arrangements; and

(3) it is recommended for approval by the Leader of the Council and

     the Chief Executive and can be signed by the Chairman.

(5.54 pm – 5.55 pm)

                                 (D)

The Scrutiny, Governance and Risk Manager to submit a written report.

43/22 – DRAFT ANNUAL GOVERNANCE STATEMENT 2022/23: The Scrutiny, Governance and Risk Manager (SGRM) submitted a written report which set out the detail supporting the Council’s Draft Annual Governance Statement (AGS) for 2022/23, up to March 2023. The draft AGS was attached as an appendix to the report for the Committee to approve in principle.

The SGRM advised that the draft AGS for 2022/23 was the last AGS for Harrogate Borough Council before LGR, which had been prepared prior to 31 March 2023 in order for it to be approved through existing arrangements. It was highlighted that the draft AGS reflected the information available at the time of preparation and was not representative of the full year.It was therefore a matter for NYC to determine if further work was required prior to the consideration of the Statement of Accounts for 2022/23 when made available.The SGRM explained that two significant governance issues had been identified for consideration by NYC, which were devolution and re-organisation, as outlined at paragraph 5.13 of the report.

RESOLVED (UNANIMOUSLY):  

That the Annual Governance Statement 2022/23 is reviewed and it is agreed that:

(1)  it is properly supported by the evidence;

(2)  it fairly reflects the council’s corporate governance arrangements based on the information available;

(3)  it is recommended for approval by the Leader of the Council and the Chief Executive and can be signed by the Chairman; and

(4)  it is recommended to the new North Yorkshire Council for consideration of any further work as part of the approval of the Harrogate Borough Council Statement of Accounts 2022/23.

(5.55 pm – 5.58 pm)

                                 (D)