Agenda and draft minutes

To receive any apologies for absence

There were no apologies.

To approve as a correct record the minutes of the meeting held on 29 November 2023.

It was moved by Councillor Williamson and seconded by Councillor Nicholls that the minutes of the meeting of the Audit and Governance Committee held on 29 November 2023 be confirmed as a correct record and signed by the Chairman.

After being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that the minutes of the meeting of the Audit and Governance Committee held on 29 November 2023 be confirmed as correct records and signed by the Chairman.

The Chairman welcomed all to the meeting and reminded Members to use the microphones.

To receive any declarations of interest.

There were no declarations of interest.

The Council’s external auditors introduced themselves and presented the 2023/24 External Audit Planning Report. The External Audit referred to the unusual situation in that the previous 2022/23 audit report was unfinished. He referred to the challenges faced by previous auditors in completing audits.

Members were advised that the External Auditor would do as much as they possibly could regarding the 2023/24 audit before the close of the financial year. Members were advised that the aim was to pick up any outstanding issues from the 2023/24 audit years to minimise the delays and then to complete future audits in a timely manner and within statutory deadlines.

The external auditors detailed the key aspects of the external audit plan and said that in the context of the accounts, the figure of £72,500 was the triviality threshold below which errors or disagreements would not be reported.

The External Auditor referred to the challenge posed by the unknowns following the backlog. He referred to challenges in getting assurances regarding opening balances and the lack of previous assurances.

The External Audit referred to the significant risks of material misstatement and said that this was standard from council to council or auditor to auditor. He summarised these mandated risks and set out the work required to prove that these risks had not materialised.

Members were advised that gaps in assurance from prior years was a significant risk and there might be additional risks that would be reported to the Audit and Governance Committee.

The External Auditor referred to the inherent risks of East Herts changing its financial system and additional work would be undertaken to ensure that data was transferred accurately to the new system. He said that assurances would also be needed that new systems to close the accounts were materially accurate.

The External Auditor said that normal testing would be carried out in respect of income and expenditure and additional testing was not required as the risk of fraud in revenue recognition and expenditure could be rebutted as the risk was very low. Members were advised of risks faced by councils in terms of incorrect capitalisation of revenue and capital additions and the work that would be carried out to ensure that classification of those items of spend was materially correct.

Members were advised that the minimum revenue provision was another risk for councils facing medium- and long-term financial challenges. The External Auditor said that this matter would be assessed along with the work in respect of the value for money arrangements.

Members were advised that detailed field work in respect of a number of non-significant risks would continue in the spring and this work would also cover the longer-term financial resilience, the commercial and other aspects of the council’s capital schemes and the impact of current financial constraints.

The External Auditor explained that up to date value for money assessments would need to be produced by the previous auditor and these would need to be considered. He said that the overarching materiality  ...  view the full minutes text for item 305.

The Executive Member for Financial Sustainability submitted a report that set out the revised Medium Term Financial Plan (MTFP). The report also included savings proposals to be put to Members of the Executive.

The Executive Member for Financial Sustainability said that Appendix A was the latest version of the MTFP and the figures were the best estimates when it was published. He said that the current format showed the net budget position for each year at the bottom of the report.

Members were advised that the net budget position for 2024/25 was zero meaning than that the budget was balanced. The Executive Member said that there was an opportunity to consider other ways of allocating funds providing that the budget remained balanced. He drew the attention of Members to the figure of £4,739,000 under capital expenditure charged to a revenue account, and this figure included £3m for Hertford Theatre and included just over £1.5m from the new funding relating to the collection of food waste from 2025.

The Executive Member said that most of the service cost increases in 2024/25 reflected general inflation. He said that the effect of borrowing at the minimum revenue provision on corporate budgets as well as the interest payable on loans. He also mentioned that the cost of servicing had risen by almost £2.5m compared to the budget from 2022/23 and this was only marginally offset by the increase in investment income.

The Executive Member said that the effect of interest rate changes was not going to have a major influence on the council’s financial position. He referred Members to the total savings of £1.2m that had been incorporated into the budget and these savings effects almost entirely cancelled the effects of inflation on the net costs of services.

The Executive Member said that the council had been fortunate to receive an overall increase in funding from government which included the £1.5m of new burdens funding for the food waste collection and the purchase of new containers.

The Executive Member said that the extra money from government for this year should be adequate to cover the increase in debt serving costs and had enabled the setting for balanced budget for 2024/25. He summarised the financial pressures the council would face beyond 2024/25. He referred in particular to the cost of servicing debt, the costs associated with the new refuse contract and the lower level of new homes bonus in 2024/25. He referred Members to the proposals set out in the appendices and said that it was recommended that council tax be increased by 2.99%, the maximum allowed without a referendum.

Councillor Williamson referred to the MTFP in appendix A and asked if there could be more of a breakdown of figures in respect of the net cost of services. He said that were some very significant movements in the figures.

Councillor Williamson asked if the Executive Member could come back to the matter of the transforming East Herts section as it was not clear how  ...  view the full minutes text for item 306.

The Executive Member for Financial Sustainability submitted a report that contained the Council’s Mid-Year Treasury Management Review for 2023/24.

Councillor Hart referred to the table on page 41, long term investments. She asked why the value of long terms investments had reduced from £19.5m to £18.9m over a 6- month period.

The Head of Strategic Finance and Property said that this related to long term property funds which were taken out 10 years ago and the value of property had fallen therefore the value of the units within the funds had fallen. He talked about the rules contained in the prudential code. Members received the report.

RESOLVED – that Members examine and comment on the Mid-Year Treasury Management Review and Prudential Indicators for 2023/24.

The Executive Member for Financial Sustainability submitted a report in respect of the Capital Strategy and Minimum Revenue Provision (MRP) policy and Treasury Management Strategy for 2024/25.

The Executive Member said that the due to cost of servicing existing and planned debt, the authority was not able to afford any new capital projects. He said that capital assets were being reviewed and the council was exploring ways to sell assets that could be sold to reduce the overall level of debt.

Members were advised that a cross party asset Member reference group had been set up to consider these options. The Executive Member invited Members to endorse the Treasury Management Strategy for 2024/25 or suggest improvements. Members received the report.

RESOLVED – that the Capital Strategy and Minimum Revenue Provision Policy and the Treasury Management Strategy for 2024/25 be noted and observations be made to the Executive.

The Executive Member for Financial Sustainability introduced the report which provided details of the forecast outturn position against budgets set in March 2023, including the quarter two forecast to year end.

The Executive Member explained that a forecast overspend of £491,000 was not uncommon at this stage in the financial year and this figure would be significantly lower by the end of the financial year. He said there were specific issues outlined in Appendix B that caused some of the overspends.

Members were advised that the most significant issue was the forecast overspend of £371,000 in Planning and Building Control. The Executive Member said that this was due to low numbers of planning applications and staffing issues. The revised capital budget was set out in Appendix C and the age debt report was set out in Appendix D.

Councillor Deering said that this quarter 2 forecast report was very late to come through as a report. The Head of Strategic Finance and Property referred to the reporting cycle and said that the report had not been ready for the previous meeting. He said that the reports would come through more quickly going forward.

Councillor Nicholls asked if the level of debt at £1.69m reflected cost-of-living increases. The Executive Member said that a lot of this debt was quite old, and his understanding was that a lot was uncollectable.

N Sharman, Independent Person, asked if the irrecoverable debt impacted on the council’s cash flow assumptions going forward into the MTFP. The Executive Member said the provision on the debt was already at £1.9m and a lot of that debt had already been written off and the council was not expecting to collect it.

N Sharman asked if the forecast deficit meant that the deficit had to come out of reserves. The Executive Member said that it would the position tighter in respect of reserves and would make the council less resilient in terms of external financial shocks. Members received the report.

RESOLVED – that (A) the net revenue budget forecast overspend of £491k be noted; and

B)    the capital programme forecast outturn of £33.950m be noted.

The Chairman introduced the report which was the second update for 2023/24. Members received the report.

RESOLVED – that the Internal Audit Progress Report and the Status of Critical and High Priority Recommendations, be noted.

The Chairman introduced the report. N Sharman, Independent Person, said that he had noted that the numbers of days in the plan for strategic support had gone up. He said that he would have asked the SIAS Officers why it had gone up and whether this had impacted on less actual days of delivered audit work.

Councillor Woollcombe asked who Members should send their questions to. The Head of Strategic Finance and Property said that questions should be sent to the Democratic Services Officer, and he would co-ordinate them. Officers would then make sure that SIAS or SAFS answered them.

Councillor Nicholls proposed and Councillor Hart seconded, a motion that the proposed East Herts Council Internal Audit Plan for 2024/25, be approved.

After being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that the proposed East Herts Council Internal Audit Plan for 2024/25, be approved.

The Chairman introduced the report. There were no comments or questions and Members were referred to the recommendation.

RESOLVED – that the work of the Council and the Shared Anti-Fraud Service (SAFS) be noted in respect of delivering the 2023/24 Anti-Fraud Plan.

The Chairman introduced the report. There were no comments or questions and Members were referred to the recommendation.

Councillor Nicholls proposed and Councillor Hart seconded, a motion that the Anti-Fraud Plan for 2024/25 be approved. After being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that the 2024/25 Anti-Fraud Plan be approved.

The Head of Strategic Finance and Property introduced the report. He said that the Shared Anti-Fraud Service (SAFS) would be giving a presentation on the Shared Anti-Fraud Service at the next meeting.

Members were advised that the leisure contractor would present the leisure annual report at the next meeting. This would include a report on further year at Grange Paddocks and on the opening of the Hartham Leisure Centre.

The Head of Strategic Finance and Property said that there would also be the annual assurance statement internal audit annual report and the strategic risk register provision outturn 2023/24. He referred to the data protection update and future training in respect of the statement of accounts and treasury management.

It was moved by Councillor Williamson and seconded by Councillor Woollcombe that the recommendations, as detailed, be approved.  After being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that the work programme as detailed in the report, be approved.

To consider such other business as, in the opinion of the Chairman of the meeting, is of sufficient urgency to warrant consideration and is not likely to involve the disclosure of exempt information.

There was no urgent business.