Agenda and minutes

To receive any apologies for absence from Councillors.

Apologies were received from Cllr V Slade.

To receive information on any changes in the membership of the Committee.

Note – When a member of a Committee is unable to attend a meeting of a Committee or Sub-Committee, the relevant Political Group Leader (or their nominated representative) may, by notice to the Monitoring Officer (or their nominated representative) prior to the meeting, appoint a substitute member from within the same Political Group. The contact details on the front of this agenda should be used for notifications.

Notification was received that Cllr T Trent was substituting for Cllr V Slade for this meeting.

Councillors are requested to declare any interests on items included in this agenda. Please refer to the workflow on the preceding page for guidance.

Declarations received will be reported at the meeting.

In respect of the agenda item on Carters Quay, the Chair declared for transparency that his daughter rented a house at Carters Quay, he acted as a guarantor to the tenancy and visited the site from time to time.

In respect of the agenda item on BCP FuturePlaces Limited, Cllr M Tarling referred to a previous declaration he had made at an overview and scrutiny meeting, in that prior to becoming a BCP councillor he had been interviewed by FuturePlaces for a role in the organisation.

To confirm and sign as a correct record the minutes of the Meeting held on 27 February 2025.

The minutes of the meeting held on 27 February 2025 were confirmed as an accurate record for the Chair to sign.

To receive any public questions, statements or petitions submitted in accordance with the Constitution. Further information on the requirements for submitting these is available to view at the following link:-

https://democracy.bcpcouncil.gov.uk/ieListMeetings.aspx?CommitteeID=151&Info=1&bcr=1

The deadline for the submission of public questions is midday on Friday 14 March 2025 [midday 3 clear working days before the meeting].

The deadline for the submission of a statement is midday on Wednesday 19 March 2025 [midday the working day before the meeting].

The deadline for the submission of a petition is Thursday 6 March 2025 [10 working days before the meeting].

The following public issues were received:

Public Questions, Agenda Item 6 – Review of BCP FuturePlaces Limited

Question 1 – Mr Alex McKinstry

On 10 March 2022, this Committee heard some assurances regarding FuturePlaces' governance. The company was said to be governed by "a suite of legal documents", including a commissioning contract with the Council (which was never actually finalised); a resources agreement (also never finalised); and a shareholder's agreement (which was finalised, but was breached in several respects). Additionally, the company was said to have been "allocated a senior auditor", and audits of the company "built into" the Council's internal audit workplan (https://www.youtube.com/live/SaC1LlZBROg?si=hxzr0d-oU_eNyWHo&t=1h8m9s). How frequently were these internal audits carried out; what concerns were identified - were the above governance shortcomings known about, for instance? - and if concerns were identified, with whom were they raised, and what remedial actions were attempted? Can we also be told whether the internal audit reports survive, as they could greatly aid an investigation?

Response:

Internal Audit completed two assignments during BCP FuturePlaces' operational period of just over two years, both assignments concentrating on governance-related matters. Firstly, Internal Audit facilitated a 2022/23/24 review of governance arrangements for Council companies including BCP FuturePlaces, evaluating client-side and entity-side controls against best practice guidance issued by Local Partnerships, an in-house public sector consultancy jointly owned by the LGA, HM Treasury and Welsh Government.

Issues were raised with relevant officers and the work was reported to the Audit & Governance Committee as part of the Chief Internal Auditor’s annual report of 27th July 2023. The resulting Internal Audit Briefing Note was incorporated into the Corporate Director of Resources’ report to Audit & Governance Committee of 11th January 2024, agenda item 8. The Council’s decision to close the company in September 2023 meant that specific actions that may have been relevant to BCP FuturePlaces were superseded. By way of other resulting remedial actions, the Monitoring Officer’s report to Cabinet on 2nd October 2024 set-out a detailed governance framework for Council-owned companies to take account of lessons learned following the closure of BCP FuturePlaces, including establishment of a Shareholder Advisory Board and a Shareholder Operations Board and provision of Guidance for Councillors and Officers appointed to Outside Bodies. Secondly, Internal Audit coordinated the gathering of assurance work and evidence base for the production of the Annual Governance Statement (AGS) for 2022/23 and 2023/24. This work culminated in BCP FuturePlaces governance arrangements featuring as a significant governance issue in the 2022/23 AGS.  An action plan was reported and agreed by the A&G Committee on 27th July 2023, agenda item 16.  The action plan was implemented during 2023.

All Internal audit reports are retained for a period of 6 years.   

Question 2 – Mr Alex McKinstry

As stated in Appendix 1 (portfolio-holder decision record, May 2022): the FuturePlaces finances were restructured in 2022, and an £8,000,000 loan allocated to the company. At the Place Overview and Scrutiny Committee, 16 June 2022, an officer  ...  view the full minutes text for item 84.

Following the Committee’s debate on 28 November 2024, and 27 January 2025, the purpose of this report is to provide an overview of BCP FuturePlaces Limited from its inception to the most recent decision making relating to shareholder governance in so far as it relates to BCP Council.

The Chair invited the Chief Financial Officer to clarify a point made in a public statement that ‘FuturePlaces lost more than £5million in just 2 years’. He referred to the Cabinet report of February 2024 on Budget Monitoring 2023-24 at Quarter Three. This advised that FuturePlaces was projected to repay £2.38m of the £4.75m outstanding debt principle, with £2.37m of debt remaining to be written off against the £4m provision detailed in the report.

The Monitoring Officer (MO) presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book. To assist in scoping its investigation into BCP FuturePlaces Limited, the Committee had requested an independent and objective overview of the company. The report provided information relating to the chronology of the Council’s decision making and approach to shareholder governance in relation to FuturePlaces, the governance documents which had been published and the agenda and minutes of FuturePlaces Board meetings. The report set out options available to the Committee and highlighted factors to be considered when agreeing a way forward.

It was noted in the report that a business case and Cabinet approval would be needed to fund certain options as there was no allocated budget. The Chair invited the Portfolio Holder for Finance to comment on the likelihood of funding being approved. The Portfolio Holder referred to the history of FuturePlaces and acknowledged the concerns raised. He highlighted one or two areas where further work could be done to ensure mistakes were not repeated and certain allegations dealt with. However, he could not support the funding of a costly external investigation into an issue which was now so political and where most information was already publicly known. Instead, he suggested that an internal working party of independent persons/non-aligned members be established within existing resources supported by Internal Audit.

The Chair invited the Independent Persons (IPs) to comment on this suggestion. They raised a concern about personal indemnity and pointed out that fraud was the responsibility of the Council as a whole to investigate. They reminded members that the Committee should be acting apolitically. Their active involvement in an investigation may conflict with their role in providing oversight. The Monitoring Officer advised that there was no open investigation of fraud in relation to FuturePlaces according to Dorset Police. It was noted that the IPs were covered by the Council’s indemnity insurance when undertaking approved council business. The Portfolio Holder confirmed that he had contacted the IPs with his suggestion in advance of the meeting but had then left them to discuss it in private.

Some members did not feel it would be appropriate for an investigation into FuturePlaces to be conducted internally. They referred to the role of the Committee in ensuring effective governance and financial accountability.

It was moved and seconded: “That the Audit and Governance Committee proposes an independent investigation. This would involve identifying and appointing an independent person to  ...  view the full minutes text for item 85.

The Audit and Governance Committee meeting on 27 February 2025, requested an update on the ongoing work on the Carters Quay development as part of the Corporate Risk Register. This report provides an update in response to that request.

Please note: Should the Committee wish to discuss the detail of the exempt Appendix 2 the Committee will be asked to consider the following resolution in relation to that discussion:-

"That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for the following item of business on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph 3 in Part I of Schedule 12A of the Act and that the public interest in withholding the information outweighs such interest in disclosing the information."

The Chair explained that that the purpose of this item was to respond to the Committee’s request to provide an update on the current situation, noting that the Committee had already agreed to an investigation into the Council’s governance and processes around regeneration projects with a focus on Carters Quay.

The Director, Investment and Development, presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'B' to these Minutes in the Minute Book. The report provided information about the acquisition and development of Carter’s Quay. Details of the governance process followed and the pre contract due diligence were set out in paragraphs 6 to 11 of the report. The status of the development scheme up until the present time was set out in paragraphs 13 to 16. A chronology of events was attached at appendix 1 and exempt information in relation to financial dealings was attached at appendix 2. Members were advised the appointed administrators had yet to conclude the matter despite ongoing engagement. The Council had now appointed and retained specialist insolvency legal providers to resolve the situation and secure the land. An update would be provided to Cabinet at the appropriate time to set out the options available if a negotiated settlement could not be reached.

The Director responded to questions and comments from Members. She confirmed that the Council did have a charge over the land, meaning that the site could not be sold without the charge being removed. Members discussed when the investigation report previously requested by the Committee could be expected and sought assurance that this would not be delayed. Due to the circumstances of the case, it was noted that it would not be appropriate to undertake an investigation while the Council was still in negotiation and the matter not yet concluded.  It was however suggested that an update report could be provided to the next meeting. The Committee was asked to note that in terms of timeframes the Council was wholly dependent on the administrators. Members welcomed the appointment of external specialist legal advice and the instruction to act robustly and expressed support for this approach.

Cllr S Bartlett, Chair of the Overview and Scrutiny Board which had referred this matter to the Committee, reiterated the importance of the Committee reviewing previous events and was assured that Members had already agreed to include this as an item on the Forward Plan.

RESOLVED:

a)    That having considered the assurances provided in the report the Committee accepts the commercial sensitivities of the negotiations underway and the need to reach a resolution, noting that a report will be taken to Cabinet;

b)    That a further update report be provided to the Committee at its next meeting on 29 May 2025.

Voting: For 8, Against – 0, Abstain – 1

This report updates councillors on the position of the Council’s Corporate Risk Register. The main updates are as follows:

·       All Corporate Risks were reviewed during the quarter.

·       CR02 – We may fail to achieve appropriate outcomes and quality of service for children and young people including potential inadequate safeguarding. The update on this risk references the fact that Children’s Social Care has had an Ofsted full ILACS inspection and has been rated Good.

·       CR24 – We may fail to adequately address concerns around community safety and environmental impacts. The environmental impact elements of this risk have been separated.

·       CR27 – We may fail to adequately address concerns around environmental impacts. This is a new risk added during the quarter.

Material updates for this quarter are outlined in sections 10.

The Risk and Insurance Manager presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'C' to these Minutes in the Minute Book.

The report provided an update on the position of the Council’s Corporate Risk Register. All corporate risks were reviewed during Quarter 4. The Risk and Insurance Manager provided a summary of the changes in risk as set out in paragraphs 11 to 13 of the report with full details contained in Appendix 4. The report also updated on the development of a process for risk engagement with Cabinet and the progression of a new Risk Management Policy, a draft copy of which was included at Appendix 5 for information purposes.

The Risk and Insurance Manager was asked if the title of Risk CR27 could be amended to reflect the specific focus of the risk which was issues relating to cliff stability. Members also noted that the position in relation to the scoring of Risk CR02 could not be reviewed until an inspection of the SEND service had taken place. The Chief Executive reported that the latest indication was that this inspection would take place this year, hopefully in late Spring.

RESOLVED that Members of the Audit and Governance Committee note the update provided in this report relating to corporate risks.

Voting: Nem. Con.

This report details progress made on delivery of the 2024/25 Audit Plan for 4^th quarter.

NOTE – due to Committee dates, only January and February are included in the report. March 2025 will be included in the Q1 2025/26 progress report to Audit & Governance Committee in July.

The report highlights that:

·       4 audit assignments have been finalised, including 3 ‘Reasonable’ audit opinions and 1 ‘Follow Up’;

·       30 audit assignments arein progress, including 7 at draft report stage;

·       Progress against the audit plan is on track and will be materially delivered to support the Chief Internal Auditor’s annual audit opinion;

·       There are no outstanding recommendations which require escalating to this Committee.

The Council Tax Single Person Discount pilot undertaken by Internal Audit has now been completed, resulting in a total yield of £672,733. This project is now being undertaken as ‘business as usual’ by the Income Maximisation and Compliance Team, who have achieved an addition council tax yield of £71,352 for the first three months.

The Head of Audit and Management Assurance presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'D' to these Minutes in the Minute Book.

Progress on delivering the 2024/25 Audit Plan was going well and remained on track in terms of the Chief Internal Auditor’s annual audit opinion. Recruitment was underway to replace one audit manager post. It was noted that only updates for January and February were included in the report, with March to be carried over to the next Quarter 1 2025/2 report in July. The report provided details of four audit assignments which had been finalised and 30 auditassignments which werein progress, including seven at draft report stage. There were no outstanding recommendations which required escalating to the Committee. The report also provided a response to the queries raised by members on the partial internal audit reports issued in Quarter 3. It was noted that the Council Tax Single Person Discount project had now moved to the Income Maximisation and Compliance Team which had achieved an additional yield of £71,352 in the first three months. The Committee would be kept updated on these figures.

The Head of Audit and Management Assurance was asked why a substantial assurance audit opinion was not sought when only a reasonable assurance was given without any recommendations. He explained that this would depend on the scope, however the amount of additional resources required to seek a substantial assurance when a reasonable assurance was acceptable was not cost beneficial. He was also asked why some audits were still at the scoping stage in February and why the completion date had been extended to May? He explained that where an audit crossed into the next financial year it was treated as an ‘in year’ audit with the final report aimed for completion by the end of May. The number of audits outstanding was typical for this stage of the financial year with shorter audits dealt with in the last quarter. Quarterly reports to the committee provided members with regular updates.

The Audit Manager responded to a question about why the ‘Partnerships and Strategy - KAF overview’ audit had been removed from audit plan. She advised that the service director no longer existed and staff had been moved to another service area which was already under review. This had not been referenced in the report as it was not universally known at the time of writing.

RESOLVED that Audit & Governance Committee note progress made andissues arising onthe deliveryof the2024/25 InternalAudit Plan.

Voting: Nem. Con.

To comply with the new Global Internal Audit Standards (GIAS), the Application Note for the Global Internal Audit Standards in the UK Public Sector and CIPFA’s Code of Practice for the Governance of Internal Audit in UK Local Government, this report introduces the new Internal Audit Charter for BCP Council. The Internal Audit Charter has been completely revised in light of the new requirements and contains other key documents, such as the Internal Audit Strategy and the Quality Assurance & Improvement Programme.

This report also provides an overview of the GIAS, which comes into effect from 1 April 2025 and the action plan in place to ensure full conformance with the standards.

The Audit Manager presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'E' to these Minutes in the Minute Book.

The new Internal Audit Charter for BCP Council had been completely revised in light of the new Global internal Audit Standards (GIAS) and other requirements which would come into effect from 1 April 2025. The Audit Manager drew attention to the new GIAS structure diagram at paragraph 4 of the report, setting out the domains, principles and standards. The Council had undertaken a self assessment to prepare for the new GIAS. The action plan at Appendix 1 of the report set out the steps required to meet full conformance. The Internal Audit Charter was attached at Appendix 2. The Audit Manager referred to the key components of the Charter including the Purpose and Mandate for Internal Audit, the Internal Audit Strategy and an updated Quality Assurance and Improvement Program. Members were asked to note a change in performance target 1A to reflect the need for a more dynamic and responsive annual audit plan. The Charter also set out the role and responsibilities of the Audit and Governance Committee and the Chief Internal Auditor (CIA) and other staff including measures to manage independence and conflicts of interest.

The Head of Audit and Management Assurance responded to a question about whether the requirement for the CIA to report their declarations of interest to the Committee should be as and when rather than annually (paragraph 7.7, Principle 2 of the charter). He explained that as CIA he made a base declaration which was then his responsibility to keep updated and every time this changed it was reported to the Chair and Vice Chair. He agreed to amend paragraph 7.7 to reflect this practice.

The Audit Manager was asked how the performance target for completing 90% of the audit plan was managed, when the audit plan was meant to run from April to March. She explained that the target had been changed to include the completion of the (whole of) the final revised annual audit plan and included dates by which the audits should be completed. This reflected the move away from a static annual plan a number of years ago to a more dynamic plan which was updated through the year in response to risks and changing priorities. It was noted that audits did not always fall neatly into one side or the other of the financial year and there had never been a situation where all audits were completed by 31 March.

RESOLVED that the Audit & Governance Committee approves the Internal Audit Charter having considered the following:

•       The mandate which :

o      includes appropriate authority, role and responsibilities of the internal audit function

o      provides expected scope and types of internal audit services

o      ensures the independence and effective performance of internal audit

•       Content of the Internal Audit Strategy

•       Change to performance target 1A of the Quality  ...  view the full minutes text for item 89.

To comply with the Global Internal Audit Standards (GIAS), and the Application Note / CIPFA’s Code of Practice for the Governance of Internal Audit in UK Local Government, this report outlines the BCP Assurance Framework and the Internal Audit Plan for 2025/26.

The BCP Assurance Framework has been updated to indicate ‘Member Oversight’ of the assurance functions through the various committee meetings.

The final Internal Audit Plan for 2025/26 has been produced. Completion of the plan will enable the Head of Audit & Management Assurance to provide an annual conclusion on the Councils’ governance, risk management and control arrangements.

The allocated budget resource for 2025/26 is considered adequate to deliver the Internal Audit Charter and Audit Plan for 2025/26.

The Audit Manager presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'F' to these Minutes in the Minute Book.

The report outlined the BCP Assurance Framework and the Internal Audit Plan for 2025/26. In response to the Committee’s request, the Assurance Framework had been updated to indicate ‘Member Oversight’ of the assurance functions through various committee meetings, including audit and governance and overview and scrutiny. The final Internal Audit Plan for 2025/26 was unchanged from that presented to the 27 January meeting. Core audit & assurance work showing all planned work across each individual service area was detailed further at Appendix B. Appendix C provided a further breakdown of the audits planned to be carried out in Quarter 1. Appendix D provided an updated anti-fraud and corruption work plan detailing activity to prevent, detect and investigate fraud and corruption in the forthcoming year.

One of the Committee’s Independent Persons raised a series of detailed questions around the content of the Internal Audit Plan 2025/26 with reference to supplementary professional guidance. She recommended that the Committee reconsider the matter once these questions had been resolved. In view of the number and complexity of the points raised the Committee agreed to defer consideration of the Internal Audit Plan and Internal Audit service budget for 2025/26 until the next meeting to allow the Head of Audit and Management Assurance and his team sufficient opportunity to consider these issues further before responding. It was suggested that an informal discussion on MS Teams prior to the next meeting may be useful, to include the Head of Audit and Management Assurance, the Vice Chair and the Independent Person, with other committee members invited.

RESOLVED that:

•       the updated BCP Assurance Framework be agreed

•       consideration of the remaining issues in the report, namely the Internal Audit Plan 2025/26 including the detailed breakdown of quarter 1 audits, and the 2025/26 budget for the Internal Audit service, be deferred until the next meeting on 29 May 2025.

Voting: Unanimous

This report sets out the indicative list of reports to be considered by the Audit & Governance Committee for the 2025/26 municipal year in order to enable it to fulfil its terms of reference.

The Head of Audit and Management Assurance presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'G' to these Minutes in the Minute Book. Appendix A of the report set out the indicative list of reports to be considered for the 2025/26 municipal year to enable the Audit and Governance Committee to fulfil its terms of reference.

The Head of Audit and Management Assurance agreed to email committee members after the meeting and invite them to suggest any ‘deep dive’ items for inclusion on the agenda for non-core meetings over the next twelve months.

The Committee was assured that the Forward Plan would be kept updated with the timescales for the investigations currently listed as ‘committee date to be determined’. As discussed earlier on the agenda, an update to the report received on Carters Quay had been requested for 29 May 2025 and the report back on FuturePlaces had been requested in six months.