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					    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008


Present:

Councillor Blackburn (in the Chair)

Councillors

G Bell        Green          Heap          Taylor

N Best        Haskett        Mrs Ridyard

In attendance:

Councillor Callow, Leader of the Council
Mr J Kearsley, Executive Director Business Services
Mr S Dunstan, Mr S Thompson, Mr T Rayner, and Mrs L Latham, Business Services
Directorate
Mrs M Rawding, Children’s Services Directorate
Mrs J Burrows and Mr R Lee, KPMG
Mr N Jack and Mr P Jefferson, Blackpool Coastal Housing Limited

1. DECLARATIONS OF INTEREST

Councillor Green declared a personal interest in respect of Agenda Item 8 - Income and
Debt Strategy. The nature of the interest being that he was a payee of National Non
Domestic Rates.

Councillors Bell, Blackburn, Haskett and Mrs Ridyard declared a personal interest in
respect of Agenda Item 10 - Outstanding School Balances. The nature of the interest
being that they were LEA appointed School Governors.

2. MINUTES OF THE MEETING HELD ON 11TH NOVEMBER 2008

The Committee agreed that the minutes of the meeting held on 11th November 2008 be
signed by the Chairman as a correct record.

3. DECISIONS TAKEN BY THE EXECUTIVE AND LEADER OF THE COUNCIL

The Committee considered the Executive decisions that had been taken since the
Committee meeting on 11th November 2008.

The Leader of the Council clarified that the housing benefit overpayment accounting
adjustment had been made to suspend the amount owing whilst the payee had been
imprisoned. The repayments would commence again when the payee was released.

The Committee agreed that the decisions be noted.

Background Papers: None
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008




4. FORWARD PLAN

The Committee considered the proposed key decisions within the Forward Plan which
fell within the remit of the Leader of the Council.

The Committee agreed to note the proposed key decisions included within the Forward
Plan.

Background Papers: None

5. FINANCIAL PERFORMANCE MONITORING AS AT QUARTER 2 2008/09

The Committee gave consideration to the standard financial performance monitoring
report as at quarter 2, the period April - September 2008.

Mr S Thompson, Chief Financial Officer, reported that progress to date against the
Council’s revenue budget was on target and that some directorates had made significant
reductions on the forecasted budgetary overspends. The main concern was for the
Authority was the predicted shortfall of approximately £1,000,000 in the financing of the
Concessionary Fares Scheme.

The Committee expressed concern at the outstanding balances across the Area Panel
and Ward Budgets. It was identified that some Wards still had significant figures of
money which had not been spent. The amount which could be carried forward was a
maximum of two years full budget. The Member Services Working Group was
reported as playing an active role in monitoring the budgets and work was undertaken by
Democratic Services to support the process.

The Leader of the Council noted that additional funds had been designated to the Area
Panel and Ward Budgets for the financial year 2007-2008 for clean-up activities.

A question was raised regarding the potential for schemes which took a long time from
inception to completion such as alley-gates to be funded from future years budgets. The
Committee was informed that this issue was currently being investigated by the
Executive Director of Culture and Communities.

The Committee agreed to note the report.

Background Papers: None

6. HALF YEARLY TREASURY MANAGEMENT REPORT

The Committee gave consideration to the Council’s Treasury Management Six Month
Progress Report.

Mr S Thompson, Chief Financial Officer, reported that the Authority had undertaken a
risk based approach to strategic borrowing at a time when the financial climate had been
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008

competitive, resulting in net gains for the Authority. The base rate had decreased since
the beginning of the 2008/09 financial year to 2%, with the potential for further
decreases.

The Council had managed surplus funds prudently as set out within the Treasury Policy
Statement and had restricited temporary investments to an authorised list of institutions,
withdrawing from some markets where significant risk had been identified. The Treasury
Management activities were monitored regularly by a designated Panel.

A favourable forecast outturn for Treasury Management in 2008/09, had been identified
in the month 6 financial monitoring report as £1,522,000.

Mr Thompson confirmed that the Authority had not been affected by the recent Icelandic
Bank collapse.

The Committee agreed to note the report.

Background Papers: None

7. CORPORATE RISK UPDATE - PAY PROJECT

Mr J Kearsley, Executive Director Business Services, outlined the current position
regarding the Pay Review.

The Committee was informed that the pay review had initially arisen from the Single
Status Agreement between the Local Government Employers and the Trade Unions
which required all local authorities to review their pay and reward policy to ensure equal
pay for equal value.

Weekly meetings were currently being held with the Trade Unions, with a view to
negotiating the key elements required to implement the national agreement. A pay line
had been created across the whole organisation and the majority of individual job roles
had been allocated to this. Proposals had been submitted to the Trade Unions regarding
the appeals process and market supplements.

He explained that the Pay Review continued to be clouded by litigation between no win,
no fee solicitors, Trade Unions and Local Authorities. Blackpool was working with AGMA
Authorities to ensure, as far as possible, a consistent approach was adopted.

The Council’s intention remained to implement the pay review provisions during 2009/10
and it was hoped to advise individual employees of their new salaries during the early
part of the year. As part of this a detailed communication plan was being developed to
ensure that employees were appropriately advised and supported by the Council and
their union.

Concern was expressed by the Committee at the potential impact of the Pay Review on
staff recruitment, retention and morale.
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008

It was clarified that the financial implications of the pay review had been taken into
account within the medium term financial strategy approved by the Executive as part of
the budget process.

The Committee agreed to note the update.

Background Papers: None

8. INCOME AND DEBT STRATEGY

Mr T Rayner, Business Services Directorate provided the Committee with a half-yearly
progress report relating to the implementation of the Corporate Income and Debt
Recovery Strategy 2007 - 2010. He reported progress against the Strategy’s key themes
and milestones.

The Corporate Debt Recovery Unit had been established in January 2008 and provided
extensive staff training in relation to Council core recovery systems and the Experian
software.

An application to register a new Credit Union for Blackpool and the surrounding areas
had been submitted to the Financial Services Authority and was supported by a
partnership of Public and Private sector employers. The outcome of the application was
anticipated prior to the end of 2008, with the launch expected during the early part of
2009.

Following a review of the cashiering function in the Customer First Centre, arrangements
were being put in place for automated cashiering machines to be installed prior to the
end of 2008. Members of the public would be able to make cash and debit card
payments through a self-service approach. It was clarified that there would always be
the option to make payments over the counter to an individual, although staff would be
offering support to encourage use of the machines.

In response to questioning it was clarified that the Council had formal arrangements in
place with an external company for the collection of debt. Concern was expressed that
members of the public had encountered difficulties contacting the company regarding
payment of arrears and this had caused unnecessary stress for the individuals involved.
Mr J Kearsley, Executive Director Business Services, clarified that all Council appointed
bailiffs had to adhear to a Code of Conduct.

The Committee agreed:

1. To note the report.

2. To review the Code of Conduct for bailiffs at a future meeting.

Background Papers: None
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008

9. ACCOUNTS PAYABLE ANALYTICS HIGHLIGHTS SUMMARY

Mr R Lee, KPMG addressed the Committee regarding the Accounts Payable Analytics
Highlights Summary report. He explained that the report was in response to the alleged
material fraud discovered in Targeted Services in June 2008.

The work which had been undertaken by the KMPG Forensics Team centered around a
series of exception reports containing transactions from the creditor payments system
which were considered unusual in nature. This also provided statistical information which
could be used to indicate areas within the system where inefficient practices were
present or controls being circumvented.

The results of the forensics testing had been presented to the Authority as a series of
recommendations and a Management Response would be forthcoming following the
completion of the Insurers Final Report.

The Committee agreed to note the report.

Background Papers: None

10. REPORT ON OUTSTANDING SCHOOL BALANCES

The Committee received a report from Mrs M Rawding, Children’s Services Directorate
on the outstanding level of individual school’s balances as at 31st March 2008.

She informed the Committee that schools were advised that resources allocated to them
should be spent in the year to which they relate for the benefit of the pupils within a
school. However, the Department for Children, Schools and Families recognised that
schools may use revenue reserves to support capital projects and needed to budget for
possible but unplanned incidents. For this purpose, Primary and Secondary schools may
be expected to hold up to 8% and secondary schools 5% of their annual budget.

The overall uncommitted reserves held by Blackpool schools as at 31st March 2008
totalled £6,082,154.

The Schools Forum, at its meeting on 4th June 2008 considered the overall level of
school balances and following this, a panel of Forum members met in October 2008 with
individual school’s Headteachers and Governors with excessive balances to consider
the reasons behind the high reserves. She reported that the Schools Forum was
satisfied that the schools all had spending plans in line with school development plans
and that the excessive balances would be reduced.

Of the schools in deficit, it was noted that the overspends were decreasing year on year
with advisory support from the Local Authority.

The Committee was informed that the grants received by schools between January and
March were incorporated into the schools budget and shown as a cash figure and not
adjusted, as in the case of Local Authority accrual accounting methods.
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008

The Committee agreed to note the report.

Background Papers: None

11. FINANCIAL AND RISK ISSUES - BLACKPOOL COASTAL HOUSING LIMITED

Mr P Jefferson, Chief Executive, Blackpool Coastal Housing (BCH), presented the
Committee with a report outlining the financial relationship between the Council
and BCH and how the relationship was managed.

The Council was reported to pay BCH a management fee to oversee the Council’s
housing stock and provide a number of housing related services. In addition to this a
number of Council services were purchased by BCH from the Council.

It was noted that a comprehensive programme of meetings throughout the year
and detailed reporting systems ensured that the management agreement was effectively
monitored and that performance of BCH was at the agreed standard. In conjunction with
this, a series of performance reports were provided to the Housing Client Manager and
the Chief Financial Officer.

Mr N Jack, Blackpool Coastal Housing, outlined the financial adjustment higlighted by
KPMG in the Statement of Accounts 2007/08 which related to the method of valuing
council dwellings for local government accounting purposes. He acknowledged that such
issues would be avoided in future by continued close working relationships
between BCH and the Council in significant advance of the collation of the Final
Statement of Accounts.

The Committee was informed that the contract between the Council and BCH was for a
period of 14 years, with a break-point format at 7 years.

The Committee agreed to note the report.

Background Papers: None

12. ANNUAL GOVERNANCE STATEMENT - HALF YEAR PROGRESS

The Committee considered the update report on the progress made against the areas
for improvement identified in the Council’s Annual Governance Statement.

Mr S Dunstan, Chief Internal Auditor reported that the Annual Governance
Statement had been approved by the Committee on 11th November 2008. Business
continuity planning was still a priority across the Council and all services would be
required to complete a plan to prioritise service delivery in the event of major disruption.
The Committee would receive a further update regarding progress in March 2009.

Members’ views were requested regarding the elements of the Annual Governance
Statement relating to Member Involvement and Communication of Vision. He reported
that Members had been heavily involved in the development of the Sustainable
Community Strategy during 2008 and would be further involved throughout the
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008

implementation and monitoring process. It was noted that participation of Members in
the development of key Council plans and strategies was a crucial part of their role.

The Committee agreed:

1. To note the update report.

2. That both the issues relating to Member Involvement and Communication of Vision
should remain on the Annual Governance Statement.

Background Papers: None

13. AUDIT EFFECTIVENESS REVIEW FINAL REPORT

Mrs L Latham presented the Committee with a brief summary of the main findings of the
Audit Effectiveness Review.

It was noted that the recommendations related to key aspects of Committee training and
a proposed schedule of training dates had been prepared.

The range of topics had been selected to cover all aspects of the work undertaken by
the Committee including treasury management, the work of internal audit and corporate
risk.

The Committee agreed:

1. To approve the Audit Effectiveness Final Report.

2. To approve the proposed schedule of Committee training sessions for 2009.

Background Papers: None

14. COMMITTEE WORKPLAN

The Committee considered the Work Programme for the remainder of the 2008
Municipal Year.

Mrs L Latham reported that the next topic for review on the Work Programme was
Consultants, Engagement and Use.

Volunteers were sought from the Committee to form a Working Group.

The Committee agreed:

1. To note the Workplan.

2. That a review of Consultants, Engagement and Use would commence in early 2009.

Background Papers: None
    MINUTES OF AUDIT COMMITTEE MEETING - 16TH DECEMBER 2008

15. EXCLUSION OF THE PUBLIC

The Committee agreed that under Section 100 (A) of the Local Government 1972, the
public be excluded from the meeting during consideration of the following item, Item 15 -
Targeted Services Alleged Fraud on the grounds that it would involve the likely
discussion of exempt information as defined in paragraphs 1 and 7 of Part 1 of
Schedule 12A of the Act.

16. TARGETED SERVICES ALLEGED FRAUD

The Committee received a verbal presentation regarding the alleged fraud within the
Targeted Services Division of the Children’s Services Directorate.

Members were informed of the circumstances regarding the alleged fraud and the
subsequent action undertaken to improve internal controls as highlighted in the
amended Annual Governance Statement reported to the Audit Committee on 11th
November 2008.

The Committee agreed to note the report.

Background Papers: None

17. DATE OF NEXT MEETING

The Committee noted the date of the next meeting as Tuesday 10th February 2009, at
5pm in Committee Room A, Blackpool Town Hall.




Chairman

(The meeting ended at 6:59 pm)

Any queries regarding these minutes, please contact:
Laura Latham,Senior Democratic Services Adviser
Tel: 01253 477123
E-mail: laura.latham@blackpool.gov.uk

				
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