Agenda and minutes

To receive any apologies for absence.

Apologies for absence were received from Claire Storey (Chairman), Councillor Guy Cosnahan and Councillor Mohammed Raja.  In the absence of the Chairman, the meeting was chaired by the Vice-Chairman, Councillor Stephen Oades. 

Apologies from Joanne Brown, Partner at Grant Thornton, Kevin Foster, Strategic Director – Corporate Resources, and Stephen Fitzgerald, Strategic Director for Finance (S151 Officer), were also received. 

The Council’s new Interim Director of Legal and Democratic Services (Monitoring Officer), Suki Binjal, the Deputy S151 Officer, Brendan Bradley who would be commencing employment in the coming weeks, and the Principal Financial Advisor, Yusuf Erol, were introduced to the Committee.  Mike Stevens, Yusuf Erol and Brendan Bradley were attending the meeting at the request of Stephen Fitzgerald.

Additionally, Sam Lowe from Forvis Mazars was welcomed who had recently taken over the role of Internal Audit Manager for Woking from Kirk Harrison. 

The Chairman also welcomed Puneet Jasuja and Annie Ren who were being appointed as the Council’s two new Independent Co-Opted Members and were attending the meeting as observers.

To approve the minutes of the meeting of the Audit and Governance Committee held on 29 July 2024 as published.

The Chairman advised that the last meeting of the Committee had dealt with the Council’s financial statements for 2019/20, 2020/21 and 2021/22 and Councillor Greentree read a statement on behalf of the Members of the Audit and Governance Committee, as set out below.

“The Financial Statements for the years 2019/2020, 2020/2021 and 2021/2022 were reviewed and noted by the Governance and Audit Committee on 29/07/2024.  A number of questions and concerns were raised at that meeting regarding our confidence in the accounts as presented and in particular the covering statement made by the then Section 151 Officer to the accounts for 2019/2020.

We now know a number of the statements in the 2019/2020 accounts cannot be validated.

Ø   Paragraph 142 of the Commissioners’ Report of May 2023 noted the challenge to the Minimum Revenue Provision.  Subsequently, the Capitalisation Directive included 360 million for MRP adjustment for previous years

Ø   The Housing Revenue Account and General Fund are to be restated as per the presentation to the Executive on 12^th September 2024.

Ø   Section 4.12 of the 2019/2020 accounts states that:

‘The Prudential Code enables a Local Authority to borrow to such an extent as the Authority considers appropriate within a range of indicators that sets itself. It is therefore possible to invest to the level that is affordable, prudent and sustainable taking into account the level of income including Council Tax and Housing Rents.’

Ø   In Section 10.1 it is claimed:

‘The Council’s overall financial performance in 2019/20 was good’

We now know the debt was unaffordable and the financial performance was not good.  Subsequent events have proven the borrowing was neither prudent nor sustainable and some of that borrowing was for revenue purposes and contravened PWLB regulations.  There are similar issues with the financial statements pertaining to the 2 subsequent years, 2020/2021 and 2021/2022.  Any publication of these accounts must give equal prominence to these considered opinions as is given to those of the S151 Officer.”

Councillor Rice stated that it had come to light at the Resources and Finance Scrutiny Committee on 10 September 2024 that officers had sought KC opinion of the Housing Account and whether the accounting had been unlawful.  Whilst the situation had been mentioned in the explanatory notes of the accounts considered at the meeting of the Audit and Governance Committee on 29 July, Councillor Rice asked the extent to which officers had been aware of the situation.  It was agreed that the question be passed to Stephen Fitzgerald, the Council’s Section 151 Officer.

RESOLVED

That the minutes of the Committee held on 29 July 2024 be approved and signed as a true and correct record, which should be read in tandem, subject to the above statement from Members of the Committee regarding the Statements of Accounts received at the meeting.

(i)         To receive declarations of interest from Members and Officers in respect of any item to be considered at the meeting.

(ii)        In accordance with the Officer Employment Procedure Rules, the Strategic Director - Corporate Resources, Kevin Foster declares a disclosable personal interest (non-pecuniary) in any items concerning the companies of which he is a Council-appointed director.  The companies are listed in the attached schedule.  The interests are such that Mr Foster may advise on those items.

There were no Declarations of Interest.

To consider any business that the Chairman rules may be dealt with under Section 100B(4) of the Local Government Act 1972.

Councillor Rice stated that the quorum of the Committee should be set at a higher level than two Members to provide effective internal control and asked for it to be noted as an action point.  In addition, he stated that not all the matters raised in the previous substantive meeting on 20 June 2024 had been dealt with and asked for a follow-up to be undertaken by the responsible officers as soon as possible and a table created with the actions listed to enhance the effectiveness of the Committee.

Reporting Person – Steve Bladen (BDO)

The Chairman stated to Steve Bladen that again he was coming to the meeting without having set a report, which was not in line with expectations and that all other parties had submitted reports prior to the meeting.  Steve Bladen stated he had agreed that a verbal report would suffice with Stephen Fitzgerald. Cllr Rice pointed out that this should be a decision for the members, not the Section 151 officer.

Steve Bladen stated that certainty from the backstop date legislation had been received with the date of 13 December 2024 having been set for all external audits up to and including 2022/23 to be completed, with further backstop dates for future years.  BDO were expecting to issue disclaimed audit opinions for the outstanding years under its remit and would require the Council to first finalise the accounts and make them available for public inspection, as well as ensuring there were no outstanding legal matters.  The Value for Money work was also to be completed and would include governance arrangements and financial sustainability which would be set out in the annual report. 

Following questions, Steve Bladen advised BDO had not yet responded to the member of public who had submitted an objection but would do so before issuing the opinions.  Noting the 2019/20 accounts were due to be received by Full Council shortly, Steve Bladen added that BDO had reported its view to the Committee on the accounts previously.

RESOLVED

That the update be received.

Reporting Persons – Joanne Brown / Paul Jacklin (Grant Thornton)

Paul Jacklin of Grant Thornton advised that the Value for Money Governance Review had now completed the statutory consultation period and was currently proceeding through the legal process and was expected to be published at the end of November. 

The Council’s finance team had been working on the 2023/24 financial statements for which the legislation had set a backstop date of 28 February 2025, and it was anticipated that the Grant Thornton audit could begin on receipt of the statements, which was expected to be November, with the testing of balances and transactions.  It was noted that where disclaimed opinions had been given, it could take at least a couple of years before unqualified opinions were provided.  An audit and finance report would be received at the meeting of the Committee on 20 February, which would set out the work completed on the accounts, and the level of assurance which could be carried forward to the 2024/25 financial year.  Information on the value for money work undertaken would also be included.

Councillor Greentree stated that the reference on page 10 of the report to the Code of Practice on Good Governance for Statutory Officers (Solace Guidance) was excellent and stated that it should be made available to members through the Committee’s reference area on Teams.

RESOLVED

That the update be received.

Reporting Persons – Graeme Clarke / Sam Lowe (Mazars)

Sam Lowe of Forvis Mazars introduced the progress report which set out the work taken place since the previous update, which included the finalisation of the remaining four audit reports in the 2023/24 Plan:  Income Management & System Reconciliations, Application Lifecycle Management, Accounts Receivable (Debtors) and Accounts Payable (Creditors).  Progress was also being made against the 2024/25 Plan with a quarter of the audits at draft report stage and planning taking place for the remainder.

Councillor Rice noted that the majority of actions for the Housing Rent Collection audit were classed as medium or high priority and it was stated that follow-up work was taking place.  In relation to the level of medium or high priority actions for the Accounts Receivable and Accounts Payable audits, Councillor Rice raised the issue of compliance with existing procedures.  Graeme Clarke of Forvis Mazars stated that the Internal Audit Plan for 2023-24 had been altered during the year to place more emphasis on the financial systems of the Council, and that weak control environments in local authorities could heighten a risk of fraud, of which no evidence had been found in the audits undertaken.

Following a question by Councillor Rice, Sam Lowe advised that the tracker of live actions would be included in future progress reports for the Committee either in Part 1 or Part 2 if containing confidential matters, or could be circulated to Committee members by email.

RESOLVED

That the report be received, and progress against the Internal Audit Plan be noted.

Reporting Persons – Graeme Clarke / Sam Lowe (Mazars)

The Committee received the Internal Audit Annual Report 2023-24 which had been amended since being approved at the meeting on 20 June 2024 following the four outstanding Internal Audit reports being finalised.  None of the opinions of the reports or the overall opinion on the control environment had been changed, the latter remaining as ‘Limited’.

Following a question by Councillor Greentree it was stated that a post-meeting note would be circulated by Forvis Mazars to set out the overall opinions from prior years, noting the 2022-23 opinion was classed as ‘Unsatisfactory’, which could also be included in future reports as part of Section 4 which contained the benchmarking of audit assurance opinions undertaken.

RESOLVED

the final Internal Audit Annual Report 2023-24 be received and the annual assurance opinion of the Head of Internal Audit over the control environment be noted.

Reporting Person – Chairman

The Chairman introduced the report and it was noted that seven complaints had been received under the Members Code of Conduct, none of which had been deemed to be potentially in breach of the Code and therefore warranting external investigation, with two cases relating to the use of social media.

RESOLVED

That  (i)      the report detailing the complaints, submitted under the Members’ Code of Conduct, received by the Monitoring Officer between 1 August 2023 and 31 July 2024 be noted; and

          (ii)     no areas of concern be indentified for further consideration by the Monitoring Officer.

Reporting Person – Louise Strongitharm

Louise Strongitharm, Strategic Director – Communities, introduced the report which set out the findings of the Local Government and Social Care Ombudsman and the Housing Ombudsman.  The Local Government and Social Care Ombudsman held four investigations with zero determinations against the Council.  The Housing Ombusman only provided an annual report on landlord performance if there had been five or more determinations.  No report had been received yet by the Council and so the report contained the Council’s own records between July 2023 and August 2024, during which time four findings had been made which were stated to include anti-social behaviour, maladministration and service failures. 

Much work had taken place since February 2024 on complaint handling following the recruitment of a new Resident Engagement Team Leader.  The Housing Ombudsman Code had become mandatory on 1 April 2024 and was more stringent than the Local Government and Social Care Code, and the Council had been required to submit a self-assessment to the regulator which this year showed compliance with the new Code.  The Communities and Housing Scrutiny Committee would be having a detailed look at housing complaints, both internally investigated and by the Ombudsman at its meeting in January 2025.

RESOLVED

That the position regarding complaints to the Local Government and Social Care Ombudsman and the Housing Ombudsman be noted.

Reporting Person – Chairman

The Committee noted the items to be received at the next meeting and made no changes to the Work Programme.

Councillor Rice expressed concern over the Strategic Director – Corporate Resources and the Section 151 Officer being on leave for the scheduled meeting of the Committee.  The Chairman asked whether consideration could be given to a quorum of senior officers to be present.  Suki Binjal stated that it was important that members felt their questions had been fully answered, noting that the officers on leave had arranged representatives from the finance team to be present, and that the quorum of Members was agreed by Full Council which would need to approve any changes to the Council’s Constitution.  Any comments regarding attendance of officers should be raised by committee members with statutory officers: the Chief Executive / Head of Paid Service, the Section 151 Officer and the Monitoring Officer.  Officers would consider the issue raised regarding quorum of Members for the Committee.

RESOLVED

That the Work Programme be received.