Agenda and draft minutes

Paul Whitham, Lay Member

Members to declare any personal or prejudicial interests in any business identified to be considered at this meeting. 

No declarations of personal or prejudicial interest had been raised.

Notice of items, which in the opinion of the Chair should be considered at the meeting as a matter of urgency pursuant to Section 100B(4) of the Local Government Act 1972.

No urgent matters had been raised.

To receive the minutes of the Corporate Governance Committee meeting held on 11^th July 2012 (copy enclosed).

9.35am – 9.40am

The minutes of the Corporate Governance Committee held on 11 July 2012 were submitted.

RESOLVED that the minutes of the meeting held on 11 July 2012 be received and approved as a correct record.

To appoint a representative and named substitute on the Corporate Equality Group.

9.40am – 9.50am

The Head of Legal and Democratic Services provided a brief overview of the responsibilities of the Corporate Equality Group which met on a quarterly basis together with membership details.  Nominations for a representative and named substitute from this committee were sought to sit on that Group.

After consideration it was –

RESOLVED that Councillor Martyn Holland be appointed the committee’s representative on the Corporate Equality Group and Councillor Stuart Davies be appointed as substitute member.

To consider a report by the Head of Internal Audit (copy enclosed) which provides an update on the latest progress of the Internal Audit Service in terms of its service delivery, assurance provision, reviews completed, performance and effectiveness in driving improvement.

9.50am – 10.05am

The Head of Internal Audit Services (H:IAS) submitted a report (previously circulated) updating members on the latest progress of the Internal Audit Service in terms of service delivery, assurance provision, reviews completed, performance and effectiveness in driving improvement.

The H:IAS highlighted particular areas of the report as follows –

• progress in delivering the Internal Audit Strategy for 2012/13
• recent internal audit reports issued in respect of Ysgol Dinas Bran, Llangollen and Welsh Government – Adult Community Learning Provision 2011 – 12
• management response to issues raised by Internal Audit, and
• Internal Audit performance and key measures.

Members noted the good progress made against the Internal Audit Strategy and the need to revise the Strategy as appropriate in order to reflect the Council’s changing priorities.  The committee was also pleased to note the two positive audit reports received since their last meeting showing a high assurance rating.  The H:IAS advised of a number of audit reports which were close to completion which would be circulated to committee members shortly.  In terms of management’s response to issues raised by Internal Audit there were currently no actions outstanding or exceeding the three month deadline and the system was working well.  Finally reference was made to the key measures which were currently on target for completion.

During consideration of the report the H:IAS clarified particular issues in response to members’ questions thereon, particularly regarding the status and remit of various audit assignments.  The committee also discussed a number of specific issues with the H:IAS as follows –

• members considered the six high risks in the Corporate Risk Register and the H:IAS reported upon progress of work in those individual areas.  He reminded members that the Register would be updated on a regular basis and Internal Audit would assess whether the risks were being robustly managed and addressed.  The following two risks were discussed in more detail –

-          the risk that strategic ICT infrastructure did not enable improvement and support change – the Wales Audit Office had undertaken some work on the ICT Strategy which would reduce the amount of work required from Internal Audit Services

-          the risk that the time and effort invested in collaboration was disproportionate to the benefits realised – members highlighted the importance of this piece of work and concerns that some initial areas of collaborative working had ceased, and the need to ensure that collaboration was relevant and appropriate.  The H:IAS explained that Internal Audit work was usually planned three months in advance with no start date allocated for this audit as yet.  He was aware that some services had undertaken self assessments on collaborative working which could be utilised.  It was explained that the earlier collaborative projects had been initiated without the robust processes which had since been introduced under the Partnership Framework.  New projects required a business case and assessment by the Collaboration Board.  The Wales Audit Office Representative (AV) added that it was important to ensure clarity and mapping of processes for partnership arrangements and how they were managed

• with regard to Home to School Transport (a collaboration service between Denbighshire and Conwy) the H:IAS explained that Internal Audit had been asked to look at the service with Conwy’s Audit Team because of financial issues identified in Conwy.  He assured the committee that Denbighshire’s Home to School Transport service was good and that any problems identified had been in Conwy’s area.  In response to questions the H:IAS confirmed that any financial difficulties experienced by Conwy would not impact on Denbighshire and that the final audit report would be publicly  ...  view the full minutes text for item 6.

To consider the committee’s forward work programme (copy enclosed).

10.05am – 10.15am

A report by the Head of Legal and Democratic Services (H:L&DS) was submitted (previously circulated) outlining the committee’s forward work programme.

The H:L&DS advised that the Annual Report on ‘Your Voice’ would not be available for the committee’s next meeting on 26 September and had subsequently been scheduled for 14 November.  The Head of Internal Audit Services reminded members that the audit report on Home to School Transport needed to be scheduled for 26 September.  The Wales Audit Office Representative (AV) indicated that there would be future reports forthcoming from the Wales Audit Office and he would arrange for their inclusion within the committee’s work programme as appropriate.

Members agreed to the amendments and wished to retain the flexibility of their work programme to allow for the inclusion of any urgent or emerging issues requiring the committee’s attention.  Consequently it was –

RESOLVED that, subject to the amendments and agreements referred to above, the forward work programme be approved.

At this juncture (10.05 a.m.) the committee adjourned for a refreshment break.

To consider a report by the Lead Member for Finance and Assets (copy enclosed) to note the Annual Treasury Management Report 2011/12 regarding the Council’s investment and borrowing activity during 2011/12 together with the details of the economic climate and compliance with Prudential Indicators.  Also to note the Treasury Management Update Report of the activities during 2012/13.

10.30am – 12.00pm

Councillor Julian Thompson-Hill, Lead Member for Finance and Assets introduced the report (previously circulated) and provided some background information on the Council’s treasury management functions and the role and responsibility of the Corporate Governance Committee in that regard.  In view of the scale and complexity of treasury management, regular updates and training would be provided for the committee to aid members’ understanding and enable effective scrutiny of those functions.

The Head of Finance and Assets (H:F&A) drew members’ attention to a timetable of reports and training for the committee (paragraph 2.2.1 of the report) together with reporting arrangements to Council and Cabinet.  In guiding members’ through the report, the H:F&A explained each of the issues in detail to aid the committee’s understanding of the complexities involved within treasury management activities and provide a working knowledge of those particular functions.  The main report included individual reports on the following areas –

Paper on Borrowing (Appendix 1) –

The H:F&A referred to the timeliness of this paper given that members would be discussing financing of the Corporate Plan after Full Council the following week.  In considering the Council’s aspirations for capital investment for future years it was important that members had an understanding of borrowing.  The H:F&A explained why and how the Council borrowed and provided details of the strategy adopted.

The presentation on borrowing covered –

• background to the legal situation in terms of borrowing
• borrowing only permitted for capital purposes to build new assets or to improve/repair existing assets
• capital expenditure could be financed by grants, contributions and capital receipts but any shortfall had to be met by borrowing
• the different types of borrowing (Internal/External) and the elements and proportions of each type together with the level of borrowing over the last five years
• the current level of debt and details of the various individual loans varying in length from 1 to 50 years together with the basis of those loans (Maturity/Equal Instalment of Principal/Annuity) and the maturity profile of that debt together with details of interest rates payable
• details of the elements of the Capital Financing Budget (approximately £12m) set aside to cover the cost of borrowing
• the principles on which the treasury management strategy was based to ensure that the Council did not borrow more than was needed and could afford to pay back the debt which included setting prudential indicators to determine borrowing limits and to measure affordability, and
• the source of the Council’s current debt with loans linked to future revenue streams and reference to interest rates for loans and their calculations.

Members took the opportunity to ask questions and discuss a number of issues with the H:F&A arising from his presentation to which he responded as follows –

-          in comparison with other local authorities the Council’s borrowing proportion was somewhere in the middle, but had been distorted somewhat by the money spent on housing stock as detailed in the Housing Revenue Account

-          the Council’s credit limit was set by Full Council

-          confirmed the intention to include revenue implications in costing the Corporate Plan

-          elaborated upon the Private Finance Initiative which had been used previously by local authorities as a means of funding schemes which was no longer in favour

-          reported upon the Council’s reserves and balances advising that approximately £7.2m was available in general balances with over £20m in reserves which had been set aside for specific purposes.

Members also noted that the vast majority of the Council’s debt had been taken out by predecessor authorities in the 1980s and 1990s  ...  view the full minutes text for item 8.