Agenda and draft minutes

To receive any apologies for absence from Councillors.

Apologies for absence were received from Councillor Herrett.

Councillor Connolly was present at the meeting on a virtual basis (without entitlement to vote).

The Chair welcomed Councillor Armstong to her first meeting as representative on the Committee of the Green Party in place of Councillor J Salmon.

The Chair welcomed the two prospective Independent Members to the meeting who were attending as observers only at this stage and the Chair referred the Committee to item 9 on the agenda regarding their appointment.

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.

Formal notice had been received appointing Councillor Tarling as substitute for Councillor Herrett.

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.

There were no declarations of interest.

To confirm and sign as a correct record the minutes of the Meeting held on 07 September 2023.

The Minutes of the meeting of the Committee on 07 September 2023 were confirmed as a correct record and signed by the Chair.

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 3 clear working days before the meeting.

The deadline for the submission of a statement is midday the working day before the meeting.

The deadline for the submission of a petition is 10 working days before the meeting.

The Committee was advised of the receipt of six public questions and two public statements.

PUBLIC QUESTIONS

Public Questions from Mr Alex McKinstry

Question 1.

Studying the report for Item 12 this evening - the officer's report - we find this, among the recommendations following the failure of the Bayside Restaurant: "Detailed financial analysis should be undertaken of contractors involved in pop-up [restaurant] activities." That appears to have something in common with Paragraph 19, second bullet-point, which cites concerns around a particular contract and the related financial forecasts and financial performance. What exactly is the report author getting at here? Did one particular contractor get into difficulty and, if so, to what extent did that affect the Bayside's performance? Can we have as much detail about this as possible, given that the auditor's report is being withheld from the public and given that there is no allusion to this misfortune, as far as I can make out, in the executive summary?

Response

The recommendation that reads "Detailed financial analysis should be undertaken of contractors involved in pop-up [restaurant] activities." Is entirely separate and not linked to paragraph 19.

Paragraph 19 is in no way implying the financial health or standing of any particular contractor was a contributing factor to Bayside financial performance.

The Internal Audit investigation report covers all pop-up activities not just the Bayside restaurant pop up. The quoted recommendation suggests that a detailed financial analysis should be undertaken to fully understand the total historic aggregate expenditure with all the various contractors involved in pop-up activities. Understanding aggregate expenditure may then reveal opportunities for aggregating commissioning and tendering activities into larger packages, where possible and appropriate to do so. This may result in better value for money, provide economies of scale and allow greater competition. More efficient and cost-effective commissioning and tendering may also result. 

Paragraph19 refers to an area of concern the Chief Operations Officer required the HR independent Code of Conduct, disciplinary investigation to consider – were the Internal Audit investigation’s identified weaknesses in financial modelling and financial management of the Bayside venture a disciplinary matter requiring sanction?

For the avoidance of any doubt, and partially using Mr McKinstry’s words, ‘no contractor got into financial difficulty’ during the Bayside venture.

Question 2.

The executive summary meanwhile states, at 4.2, that procurement waivers for Bayside were signed by an officer with "a close personal relationship with the directors of the operating company", which the officer had declared. When was that declaration made, how many waivers did the officer go on to sign, and to what financial value? Can we also be told whether this conflict of interests was known about by any of the waivers' counter signatories - I take it the investigators have looked into this - and if not, how did this collision of interests eventually come to light?

Response

The officer declaration was dated 4 Feb 2022. 

The officer signed and approved two waivers linked to the company  ...  view the full minutes text for item 30.

Grant Thornton, as the Council’s appointed External Auditors, have produced a report (Appendix A) which provides an update to Audit & Governance Committee on their progress to date in delivering their responsibilities.

The report includes an update on their 2021/22 audit work. Key points of note are:

·     Financial Statements Audit 2021/22 – Grant Thornton are aiming to present a draft Audit Findings Report for 2021/22 to the November meeting of the Audit & Governance Committee and issue their opinion by the end of November 2023.

·     Value for Money 2021/22 & 2022/23 – Regular meetings have been set up with the Chief Executive, Director of Finance and Cabinet Portfolio holder responsible for finance to discuss progress against the recommendations made in their Auditor’s Annual Reports for 2021/22 and 2022/23, as well as other recent external reports and emerging issues.

The report also includes a summary of emerging national issues and developments that may be relevant to the Council.

The External Auditors, Grant Thornton, 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. The report provided an update for the Committee on their progress to date in delivering their responsibilities and included an update on their 2021/22 audit work.

It was reported that, in regard to Financial Statements Audit 2021/22, the aim was to present a draft Audit Findings Report for 2021/22 to the November meeting of the Committee and issue their opinion by the end of November 2023. Good progress was reported although Grant Thornton advised Members that they had received an indication during the morning of the meeting that the required Letter of Assurance relating to the Dorset Pension Fund may not now be received from the Pension Fund Auditors until just before Christmas. This could lead to a delay in the timetable although Grant Thornton would do everything that they could in advance to be in a position to complete the audit as soon as the Letter was received.

The nature of the delay was set out and explained and these were matters that were outside the control of the Council’s Auditors and the Committee was of the view there these matters should be addressed at a national as well as a local level. There were also specific comments about the Dedicated Schools budget and the previous Chair of the Committee informed the Committee that correspondence between him and the Chief Executive would be provided to Grant Thornton.

Grant Thornton also provided an update on the Value for Money 2021/22 and 2022/23 audits and reported that regular meetings had been set up with the Chief Executive, Director of Finance and Cabinet Portfolio holder responsible for finance to discuss progress against the recommendations made in their Auditor’s Annual Reports for 2021/22 and 2022/23, as well as other recent external reports and emerging issues.

The report also included a summary of emerging national issues and developments that may be relevant to the Council.

RESOLVED that Audit and Governance Committee notes the External Auditor’s progress to date in delivering their responsibilities and the sector update provided.

Voting: Unanimous

The report sets an economic update with a Quarter 2 performance for 2023/24 which forecasts an underspend of £730k due to the increase in interest rates, an improvement from the £665k reported in Quarter 1. The report also details the Counci’ls borrowing which stood at £258m and investments at £69m.

The Assistant Chief Financial Officer 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 Committee was reminded of the requirement under the Chartered Institute of Public Finance and Accountancy Management Code of Practice that regular monitoring of the Treasury Management function was reported to Members.

It was explained that Council was required to approve any changes to the prudential indicators based on a recommendation from the Audit and Governance Committee.

The report included a summary of the contextual economic background and a tabulation of interest rate projections provided by the Council’s Treasury Consultants. Summaries of the Council’s borrowings and investments as at 30 September 2023 were also provided.

The report also set out an economic update and a Quarter 2 performance update for 2023/24 which forecast an underspend of £730k due to the increase in interest rates, an improvement from the £665k reported in Quarter 1. The report also detailed the Council’s borrowing which stood at £258m and investments at £69m.

RESOLVED that Audit and Governance Committee notes the reported activity of the Treasury Management function for April to September 2023.

Voting: Unanimous

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

·       CR4 – Loss or disruption to IT Systems and Networks from cyber attack – The score of this risk has been updated;

·       CR14 – Continuity of Public Health arrangements for health protection – The risk has been updated and consideration will be given in the next quarter to its continuation as a Corporate Risk

·       No new risks were added;

·       No risks were removed during the quarter.

Material updates to the risks are summarised at section 8.

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 Committee received an update on the position of the Council’s Corporate Risk Register. Material updates to the risks were summarised within the report and it was particularly noted that Corporate Risk 4 (Loss or disruption to IT Systems and Networks from cyber attack) had been updated and that Corporate Risk 14 (Continuity of Public Health arrangements for health protection) had been updated and consideration would be given in the next Quarter to its continuation as a Corporate Risk. No new risks had been added nor existing risks removed during the Quarter although it was reported that ongoing review of the Corporate Risks would now begin to reflect and align with the policies of the new Council.

In response to questions, it was agreed that risk relating to ‘SEND’ funding would be discussed with the risk lead and further update included within the next report to the Committee. Similarly, further detail would also be provided under the Corporate Risk 13 heading (Failure to deliver the transformation programme) with particular focus on the effect of mitigations introduced.

In response to comments about the apparent lack of movement within each risk, the Committee was reminded that, as the report only set out high level Corporate Risks, more minor changes were unlikely to be reflected in the overall risk score. Whilst accepting this, there was agreement that an indication of ‘direction of travel’ would be useful for the Committee and this could be included within future reports. The Portfolio Holder for Finance, also present at the meeting, underlined the importance of Member involvement in risk management at this level and confirmed his commitment to the process.

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

Voting: Unanimous

Although not a legislative requirement, best practice and a ‘2022 position statement’ by the Chartered Institute of Public Finance & Accountancy (CIPFA) endorsed by the Department for Levelling Up, Housing and Communities recommend that audit committees in local government should include at least two co-opted independent members.

Previous BCP Council Audit & Governance (A&G) Committee and Council meetings agreed the in-principle decision to recruit two co-opted independent members to the BCP Council A&G Committee.

A number of local decisions were agreed which enabled a suitable recruitment process, through open advertisement, to the BCP Council A&G Committee.

The recommendations in this report endorse then approve the decisions made by the selection and recruitment panel, which was Councillors Andrews, Herrett and Chapmanlaw respectively.

Full Council need to approve the appointment of co-opted members to a BCP Council committee.

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.

The report explained that, although not a legislative requirement, best practice and a ‘2022 position statement’ by the Chartered Institute of Public Finance & Accountancy (CIPFA) endorsed by the Department for Levelling Up, Housing and Communities recommended that audit committees in local government should include at least two co-opted independent members.

Members were reminded that at the previous Committee and subsequently at Council there had been agreement in-principle to recruit two co-opted independent members to the BCP Council Audit and Governance Committee. The recruitment proposes in the format as agreed had subsequently taken place and the recommendations made by the appointed selection and recruitment Panel of Councillors Andrews, Herrett and Chapmanlaw were set out in the report. Final appointment would need formally to be made by the full Council.

The Chair of the Committee had already welcomed the two prospective Independent Members to the meeting emphasising their attendance only as observers at that stage. Although members of the Committee were supportive of the proposal, an undertaking was given that, in order to ensure that Members were familiar with the details and experience of the individuals proposed, the background information and summary Curriculum Vitae in each case would, with their agreement, be provided to Members before voting on the appointments at Council.

RESOLVED that Audit and Governance Committee endorse the decisions made by theselection and recruiting Panel to appoint two co-optedindependent members to the BCP Council Audit and Governance Committee.

RECOMMENDED that full Council approve the appointment of two co-opted independent members to the Audit and Governance Committee for a period which will end on 31 March 2026 and that Samantha Acton and Lindy Jansen van Vuuren be appointed accordingly.

Voting: For - 7; Against - 0; Abstain - 1

This report details progress made on the delivery of Health & Safety and Fire Safety governance arrangements for BCP Council and highlights:

·      Implementation of the Governance framework continues to be embedded and is working effectively.

·      Reporting to the Health and Safety and Fire Safety Board continues on a quarterly basis and has generally good attendance.

·      Some operational service issues have arisen, including HSE improvement notices, these have been successfully resolved.

The Corporate H&S Team is currently one FTE advisor short of full establishment.

The Health and Safety 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 report detailed progress made on the delivery of Health and Safety and Fire Safety governance arrangements for BCP Council. Health and Safety and Fire Safety Board meetings were reported to be taking place Quarterly with good attendance by Service Directors or their representatives. The Committee was also advised that the established BCP Council Health and Safety and Fire Safety Governance framework, which detailed the applicable governance arrangements, continued to be embedded and was working effectively.

In response to questions about Chairing of the Board it was explained that although this had usually been undertaken by the Chief Executive, the Chief Operations Officer was now increasingly involved and the issue of Chair was being reviewed. A Member was of the view that, whilst supporting the report overall, he would be unlikely to support any change to Chairmanship of the Board on the basis that, in his view, this important corporate leadership role should be undertaken by the Chief Executive. The Head of Audit and Management Assurance provided confirmation that, even if not Chairing the Board, the Chief Executive was always in attendance at it’s meetings.

The Committee received updates on Heath and Safety and Fire Safety operational issues including information about a number of Health and Safety Executive Improvement Notices that had been issued and successfully resolved.

It was noted that a Health and Safety Advisor vacancy continued to impact on the speed of delivery of some objectives, particularly the proactive audit programme, and would continue to do so over the remaining part of the year.

RESOLVED that Audit and Governance Committee notes

a)    the continued progress in implementing the Health and Safety and Fire Safety governance arrangements and the operational updates;

b)    that Health and Safety and Fire Safety ongoing governance arrangements updates continue to be reported annually to the Audit and Governance Committee.

Voting: For - 7; Against - 0; Abstain - 1

Emergency planning and business continuity are statutory duties for BCP Council. Activity over the reporting period has been about continuing to build capability and put plans in place in line with higher risks, local and national learning, and nationally-driven priorities and workstreams such as planning for a national power outage. This report sets out the activities undertaken to achieve this and also highlights the challenges arising.

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 ‘F' to these Minutes in the Minute Book.

The Committee was reminded that emergency planning and business continuity were statutory duties for BCP Council and activity over the reporting period has been about continuing to build capability and put plans in place in line with higher risks, local and national learning, and nationally-driven priorities and workstreams such as planning for a national power outage.

The report set out the key emergency planning development activities undertaken and also provided an update on Business Continuity.

Members were advised that the outcome of the Internal Audit periodic review of corporate emergency planning and business continuity arrangements had provided a ‘Reasonable’ assurance opinion and that the issues raised were being addressed albeit within the context of reduction in available resources.

In response to a specific question about alignment with national resilience standards regarding business continuity strategy and level of compliance with resilience governance frameworks it was agreed that a full response be provided in writing to the Committee following the meeting.

RESOLVED that the Audit and Governance Committee notes

a)     the emergency planning and business continuity activity that has taken place during the monitoring period;

b)    the ongoing issues with delivering the business continuity management programme;

c)     the current issues within the Emergency Planning Team regarding resource and the impact this will have on service delivery;

d)    the current resilience position locally and nationally and the implications of this.

Voting: Unanimous

This report details progress made on delivery of the 2023/24 Audit Plan for the period July to September (inclusive) 2023. The report highlights that:

·       4 audit assignments have been finalised, including 1 ‘Partial’, 2 ‘Reasonable’ and 1 ‘Consultancy’ audit opinions;

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

·       £12.7M of grant expenditure has been certified, as required by the issuing Government department, as meeting grant conditions;

·       Internal Audit issued a report on seafront pop-up activity, incorporating ‘Bayside’ restaurant making 18 recommendations. The Director of Commercial Operations has led on implementing recommendations and has finalised other investigatory work. 

·       For a breach of Financial Regulation, previously reported to this Committee, an investigation has concluded and the Director of Commercial Operations has taken action in line with the disciplinary policy and procedures; 

·       Three apprentices have been successfully recruited, however, the resignation of an auditor means that there will be further impact on the delivery of the audit plan;

6 ‘High’ priority auditrecommendations have not been implemented by the original target date.  Explanations from respective Directors appear reasonable and revised target dates have been agreed.

[NOTE: Should the Committee wish to discuss the detail within the Confidential Appendix of this report, the meeting will be required to move into Confidential (Exempt) Session]

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.

The report detailed progress made on delivery of the 2023/24 Audit Plan for the period July to September (inclusive) 2023 and brought the attention of the Committee to a schedule of key audits.

In particular, the report included the final investigation report relating to ‘Commercial Operations – Seafront : Review of Pop-Up / Temporary Activities Incorporating Bayside Restaurant’. The Committee was informed that the full report contained confidential exempt information and had therefore been provided separately to Councillors. A Briefing note had also been issued to Members ahead of the meeting. The Chair of the Committee was of the view, however, that, as far as possible within those constraints of confidentiality, the matters should be addressed in public. It was explained that the report contained eighteen recommendations, although found no evidence of fraud, and included explanation of actions already taken following issue of the report.

Members of the Committee expressed the view that the level of redaction within the report, though necessary for confidentiality, restricted the ability of Members to fully understand the report. It was suggested that this would be improved by allocating a reference to each person mentioned without actually including the names of particular individuals. Other Members were of the view that, since issue of the report with the agenda for the meeting, there had been insufficient time for them to give the report sufficient consideration prior to discussion and to prepare the detailed level of questioning that the public would expect. There was a contrary view from other Members of the Committee that sufficient time had been allowed.

There was also identified benefit in the Independent Person members of the Committee, whose appointment had not yet been confirmed by full Council, being involved in this discussion.

The Committee acknowledged the diligent work that had been undertaking by the Audit Team in production of the report.

It was proposed by Councillor Chapmanlaw, seconded by Councillor Armstrong and

RESOLVED that further consideration of the entirety of the report from the Head of Audit and Management Assurance entitled ‘Internal Audit - 2nd Quarter, 2023/24, Audit Plan Update’ and as set out in the agenda be deferred until the next meeting of the Audit and Governance Committee on 30 November 2023.

Voting: For – 5; Against 1; Abstain 2. 

This report details counter fraud work carried out by Internal Audit to provide assurance on the Council’s response to combating fraud and corruption. 

Internal Audit have investigated all allegations of suspected fraud or financial irregularity in a proportionate manner. 

Six formal whistleblowing referrals for the Council were received and investigated by Internal Audit during 2022/23.

[NOTE: Should the Committee wish to discuss the detail within the Confidential Appendix of this report, the meeting will be required to move into Confidential (Exempt) Session]

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 'H' to these Minutes in the Minute Book.

The report detailed counter fraud work carried out by Internal Audit to provide assurance on the Council’s response to combating fraud and corruption. Internal Audit had investigated all allegations of suspected fraud or financial irregularity in a proportionate manner and it was confirmed that this included allegations of fraud from internal and external sources. Details of ‘whistleblowing’ referrals during the period were also listed.

It was reported that six formal whistleblowing referrals for the Council had been received and investigated by Internal Audit during 2022/23 and the particular fraud area involved and the outcome and recommendation in each case was set out.

In response to a question relating to investigation of allegations concerning the rental of office space by ‘FuturePlaces’, it was noted that this subject was likely to be within the scope of the next annual report to the Committee.

RESOLVED that the Audit and Governance Committee notes

a)     the counter fraud work and investigations carried out by Internal Audit during 2022/23; 

b)     the whistleblowing referrals received during 2022/23. 

Voting: Unanimous

This report sets out the list of reports to be considered by the Audit & Governance Committee for the 2023/24 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 'I' to these Minutes in the Minute Book.

The report set out the list of reports to be considered by the Audit and Governance Committee for the 2023/24 municipal year in order to enable it to fulfil its terms of reference.

There were number of items identified particularly under the heading of ‘External Audit Reports’ which, as Members had heard earlier in the meeting, may be subject to change dependent upon timetable factors and issues outside the control of the Auditors.

The Committee was reminded of the opportunity that was available for Members of the Committee, and Independent members once formally appointed, to request subjects for consideration in further depth at the scheduled ‘extra’ meetings of the Committee. Members were invited to submit such requests to the Chair of the Committee in the first instance.

The Committee also noted the availability on-line of recordings of the induction training sessions which had taken place after the elections in May.

RESOLVED that Audit and Governance Committee approves the Forward Plan set out at Appendix A.

Voting: Unanimous