Audit and Governance Committee

Audit and Governance Committee
Tuesday, 28th January 2025 at 4:00pm

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Slide 1
Councillor Nigel Robbins

1 Apologies

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Nickie Mackenzie-Daste, Officer
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Councillor Nigel Robbins

2 Substitute Members

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3 Declarations of Interest

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4 Minutes

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Minutes , 21/11/2024 Audit and Governance Committee

5 Public Questions

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6 Member Questions

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Councillor Michael Vann
Councillor Nigel Robbins
Councillor Michael Vann
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Councillor Nigel Robbins
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7 External Auditors Annual report 2023/24

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David Stanley, Deputy CEO
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Councillor Michael Vann
Councillor Nigel Robbins
Officer
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Councillor Nigel Robbins
Councillor Patrick Coleman
Councillor Nigel Robbins
Councillor Patrick Coleman
Councillor Nigel Robbins
Councillor Patrick Coleman
David Stanley, Deputy CEO
Councillor Patrick Coleman
Councillor Nigel Robbins
Councillor Len Wilkins
Councillor Nigel Robbins
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David Stanley, Deputy CEO
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Councillor Len Wilkins
Councillor Nigel Robbins
Councillor Jeremy Theyer
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David Stanley, Deputy CEO
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Officer
Councillor Jeremy Theyer
Councillor Nigel Robbins
Councillor Patrick Coleman
Councillor Nigel Robbins
David Stanley, Deputy CEO
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Councillor Nigel Robbins
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Officer
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Councillor Nigel Robbins
Christopher Bass
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Councillor Patrick Coleman
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David Stanley, Deputy CEO
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Councillor Patrick Coleman
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Officer
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Councillor Nigel Robbins
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David Stanley, Deputy CEO
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Councillor Nigel Robbins
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8 Local Code of Corporate Governance

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Angela Claridge
Councillor Nigel Robbins
Councillor Michael Vann
Angela Claridge
Councillor Nigel Robbins
David Stanley, Deputy CEO
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Councillor Patrick Coleman
Councillor Nigel Robbins
Angela Claridge
Councillor Nigel Robbins
Angela Claridge
Councillor Nigel Robbins

9 Annual Treasury Management Strategy and Annual Non-Treasury Investment Strategy 2025/26

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David Stanley, Deputy CEO
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Councillor Nigel Robbins
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David Stanley, Deputy CEO
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David Stanley, Deputy CEO
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David Stanley, Deputy CEO
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Councillor Helene Mansilla
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David Stanley, Deputy CEO
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David Stanley, Deputy CEO
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Officer
Councillor Nigel Robbins
Officer

10 Internal Audit Progress Report

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Councillor Nigel Robbins
Councillor Jeremy Theyer
Councillor Nigel Robbins
David Stanley, Deputy CEO
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Councillor Nigel Robbins
Officer
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Councillor Len Wilkins
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Officer
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David Stanley, Deputy CEO
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Christopher Bass
Councillor Nigel Robbins
Christopher Bass
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Officer
Councillor Nigel Robbins
Councillor Helene Mansilla
Councillor Nigel Robbins
David Stanley, Deputy CEO
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Councillor Len Wilkins
Councillor Nigel Robbins
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Angela Claridge
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Councillor Nigel Robbins
Christopher Bass
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Angela Claridge
Councillor Nigel Robbins
Councillor Helene Mansilla
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Councillor Nigel Robbins
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David Stanley, Deputy CEO
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Officer
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David Stanley, Deputy CEO
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Councillor Nigel Robbins
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Disclaimer: This transcript was automatically generated, so it may contain errors. Please view the webcast to confirm whether the content is accurate.

Councillor Nigel Robbins - 0:00:36

This is the Audit and Governance Committee of the Cotswold District Council. You are

very welcome in the Chamber and also online. Let us receive some apologies first of all.

1 Apologies

We do know, yep.

We have apologies from John Cheshire and from Councillor Christopher

Nickie Mackenzie-Daste, Officer - 0:01:03

Twelves and Angela

Claridge who is our monitoring officer has apologised for her slightly late arrival.

Thank you, Nicky.

Councillor Nigel Robbins - 0:01:14

We don't have any substitute members.

2 Substitute Members

Are there any declarations of interest?

3 Declarations of Interest

We have a set of minutes here from the previous meeting.

I think we should go through them page by page.

Page 5.

4 Minutes

You remember we had a couple of observers there in addition to the members of the committee and the offices.

Page 6.

6. Please interrupt me if you have any corrections to make, either typographically or factually.

Page 6. I do note towards the end of page 7, it suggested

the committee suggested that members should be offered a brief of the complaints policy

and procedure and that a summary of how people could complain about elected

members should be included in the policy and procedure document. I'm not sure how

far that's got about the briefing. There have been a number of briefings on a

range of issues recently. I'm sure that's somewhere in the log.

308. Councillor van yes. Yes this is the proof of reading losses one two three

four five six seven eight line down in 308. Sorry. The statutory override upon

unrealized capital next word losses Oh loses yes indeed yes well spotted well

we're happy with page seven are we all right with page eight and can I just say

there's a reference here to our new auditors external auditors Bishop

We have Alex here, sitting at the back. Just raise your hand.

Thank you, Alex, from Bishop Fleming.

We'll be presenting progress on the External Auditors' Report for 2324.

Page 9. Anything else on page 9?

If not, that's fine. We accept the minutes.

Could you raise your hands, please?

Thank you very much.

5 Public Questions

In that case, I think we can move on to the next item.

You will, of course, have new documents in front of you.

One of them we can delay for a moment, which is a report on annual treasury management

strategy and investment strategy.

But we'll come to that in a moment, the auditor's draft annual report and also the other recommendations.

6 Member Questions

Are there any public questions?

Yes, just on the on the minutes

Is there any opportunity just to raise a couple of matters arising

Certainly

Councillor Michael Vann - 0:04:53

Pay some

306 members briefing you just be nice to have an update of when that's planned for

Councillor Nigel Robbins - 0:05:06

I did refer to that. I don't know myself, but I think Angela Clarich will be able to give us an update on that, hopefully when she arrives.

You've got another point?

Councillor Michael Vann - 0:05:22

On page 8, second paragraph, members should be briefed in confidence on any such issues.

Any thoughts as to when that was going to be taken forward and the parameters?

Councillor Nigel Robbins - 0:05:49

I think that as and when, if there is an issue that's arisen that the Director of

Governance has received, then at that point the Member would be advised in confidence

about the nature of that complaint and how far it's gone. I don't think there's anything

we can do in advance really of something happening.

7 External Auditors Annual report 2023/24

Thank you, Chair.

David Stanley, Deputy CEO - 0:07:08

You have in front of you, members, two additional papers in relation to this item, a very thick

pack which is headed the external auditor's annual report, which there is a covering report,

and then on page 9 there is the Bishop Fleming audit completion report, which deals with

the findings on the audit of the Council's financial statements.

And then pages 35 of that pack onwards are the updated annual statement of accounts for

the financial year 23 -24.

Also on your desks and in front of you, you have a slightly similar sounding but different

report from Bishop Fleming.

so that's the much thinner looking report but printed in colour.

That is the auditor's annual report and that deals with the value for money conclusion.

In discussions with Bishop Fleming during the day, we thought it would be more advantageous

to members to have sight of this draft report so that when Alex is talking to you about

what the findings are and the recommendations in this report, it would be useful for you

to have sight of it.

This isn't the final version of the report.

There are some changes that need to be made to ensure it reflects the position the Council

was in with its budget for 24 -25 and particularly around some of the narrative on the public

review.

So there's some changes we've asked to be made and that's the final version that would

then be published.

But this is the version with some of those inaccuracies in that we're liaising with Bishop

Fleming on.

Rather than me talking to you about what the auditor's findings are, it is probably best

at this stage to hand over to Alex from Bishop Fleming who can talk you through both of those

reports.

Councillor Michael Vann - 0:09:06

Just before that happens, which is of course spot on, in the audit completion report, on

page 12, the key audit issues management override of controls.

Just in the middle of the page, key audit issues in the...

Yeah, that one there.

Be nice to know this afternoon,

because the risk has been highlighted, I'm going on the basis

that this is something that has happened.

Councillor Nigel Robbins - 0:10:01

I will just respond. These are the risk areas that direct the external auditors in terms

of their report. Now, it may be that those are historically areas that have been a matter

of concern, but I suspect there is something, as Alex will explain, which are generic, which

guide the approach. It doesn't mean that these are areas that have been shown to be

as a result of this audit, particularly suspect.

Am I right about that?

You are, Chair.

Officer - 0:10:31

My leave was starting point four for you.

I will do.

So can I introduce myself?

I know, Chair, you've introduced me.

So I'm Alex, I'm your what's known as a key audit partner

from Bishop Fleming.

So I'm the one that puts their name on the set of accounts

once the audit opinion is given.

So the first report that you've got in front of you

is what we call the audit completion report,

which sets out various things that we are required to bring to you as part of the auditing

standards. If I just very quickly pick up the question you asked about the specific

risks that are listed on that page. The first one, the management override of controls,

that's a presumed risk in all entities, not just in Cotswold, not just in local government,

not in public sector, it's a presumed risk because obviously there's always a possibility

that management could manipulate the accounts.

I am not saying it does happen very often,

but it could happen.

So obviously we are required to actually

do a specific look at that.

The two fraud risks that are listed there

around revenue recognition and expenditure recognition,

again often presumed risks within all entities

and they are specifically referred to in the FRC's

Financial Reporting Council's Practice Note 10,

which presumes that there could be risk around revenue

and expenditure recognition.

And basically that's because it's a bit like

management override of the controls.

If you were trying to get to a certain bottom line in

the accounts because you needed to make a certain

profit, that's often what you would look at,

sort of how you're recognising income and expenditure.

It's a bit like the old adage years ago used to be

that you put a load of invoices in the drawer and

they didn't exist and not actually account for them because actually that

helps your year -end position. So it's an obviously an area that we do tend to look at.

The other three risks that we've got this specific list listed there are very

much local government risks. Again driven by our often I'm going to be honest by

the regulator because their view is they are big in estimates within the

accounts. Obviously your property plant and equipment land and buildings is a

very significant figure, very material in the accounts. The valuation of that is not

an exact science and obviously it's an area that we need to look at on an annual basis.

Same with investment properties as well. And obviously the pension fund net liability is

again a big estimate in the accounts, so obviously it's an area that we have to focus in on.

So that's why those risks are there. They are really risks that we have identified as

the chair quite rightly said, at the planning stage,

which we then look at as part of the work that we actually do.

And later in the report, we actually go through

what we've done to address those risks

and actually what we've found to date.

Specifically, again, just picking the management override

of controls, we tend to look at what's known as the journals.

So how the council is potentially moving money

around within the set of accounts,

and we hone in on that and actually look at,

are those adjustments actually valid?

I think we later on in the report said that work has been done.

It's still subject to final review because obviously it goes through layers of review both by the manager and by myself as well.

But I'm not envisaging any particular issues.

So in terms of the report, as I say, this is a report setting out findings from our accounts audit.

It refers to the VFM work, but that's a separate report, so I'll come on to that separately if that's okay.

Just in terms of the report itself, it is a good report.

I think it is a good report, you may have different ideas of it.

I think generally what it demonstrates is that the internal controls within the Council

and the draft statement of accounts are well put together and there are no significant issues.

Yes, we have found some areas of things that you could do slightly better,

But actually, I always use the adage if I wouldn't be doing my job as an auditor if

I didn't identify some areas that could be done better for the future.

I won't go into the backstop arrangements and any huge amounts of detail.

You may be aware that 23, 24 audits for all local authorities, the opinion has to be given

by the 28th of February.

I'm hoping we don't get anywhere near that date because obviously it would be great to

be able to give an opinion on these accounts in the next week or so.

In terms of what work is left outstanding, so there is a list on page 15 of the work

that is still outstanding. The order isn't wholly completed, there are some things outstanding.

There is a list there, I think there is about seven or eight bullets there in terms of,

I have been liaising with Michelle and the finance team

so we can try and get these bottomed out ASAP.

So obviously we can then give an opinion.

Obviously once we get working papers back,

obviously we need to write them up

because that is an auditing standard.

We have got to document that well

and it has to go through the review process.

But that is where we are at the moment.

I am not envisaging any significant issues

at this stage, but I am an auditor

so I am never going to say everything is perfect.

On the next page we use a RAG rating in terms of how the audit and the accounts process

has gone. Again, largely green, I think it has gone well. I think it's fair to say that

like a lot of local authorities, finance teams have competing priorities. Obviously they

are trying to get budgets ready, trying to get other out -of -the -house reports, do the

account and obviously finance teams tend to be very stretched and that reflects really

in the readiness for audit. There were some delays in getting some working papers back,

predominantly around the VFM actually. I know one of the things I am trying to push for

next year, not just here but other local authorities, is to try and bring some of that VFM work

forward so that it is not all back -ended and we are not agreeing reports as we are at the

last minute. That is where we are at. We will also have a debrief after the dust has settled

after the accounts. We will sit down with the finance team. We don't claim to be perfect.

This is our first year as your excellent auditors but also the first year of Bishop Fleming

doing local government audits as well. Whilst some of us have done local government audit

for a long time.

I have been your audit manager in a different life

many years ago.

So some of us have got quite a lot of experience,

but actually Bishop Fleming we are still learning.

So I think the things we can do better

and I think we can discuss with the finance team

things they can potentially do better.

So we are working towards a common goal.

Over the pages then what we have done is set out,

as I mentioned earlier, what work we have done against each of the risks that was in

the audit plan that came to you earlier last year. I wasn't necessarily going to propose

to go through that in any detail because I think it is fair to say there are no significant

issues in that. The amendments that we have set out are on page 23 of the papers. Again,

not many audit adjustments, mainly around presentation. We have one unadjusted item

in there, an unadjusted error. The reason for that is because you are part of Gloucestershire

pension fund and we look to the pension fund's auditor to provide assurance to us on the

accounting for that pension fund. In their ISA260 audit completion report, back to the

they identified an unadjusted misstatement and this 90 ,000 that you have got in here

is your share of that unadjusted misstatement. It is not material, which is why we have put

it as an unadjusted item. Obviously it is for you as those trials with governments to

determine that you are happy for that not to be adjusted for. I think this is the same

as across the rest of the Gloucestershire.

So it is not unusual to cotswold and it is not unusual to have an unadjusted item.

But it is reflected in your letter of representation which is at the bottom of our report if you

like.

Because obviously we have to get you to sign that off.

The management letter points and internal control system items are just anything that

come up in previous years, we followed up with any recommendations we have made for

improvements going forward. So there is nothing significant really to bring to your attention.

The other matters, there are other matters under the auditing standard we are required

to bring to your attention. As part of the work that we do under the National Audit Office

Code, we have to look at things like your annual government statement, the narrative

report, whether we need to think about producing a public interest report, any statutory recommendations,

et cetera. I am pleased to say there is nothing that we need to bring to your attention that

is of concern. We also talk about going concern, we are required to think about going concern,

but again under the FRC's practice note 10, if the services of the council are continuing,

which is usually the case, we deem you to be a going concern.

Obviously, anything we found on the VFM work as well

has helped support the work we do around going concern.

Moving over the page, we talk about the whole of government

accounts work.

So that work is work in progress.

We don't actually have to do an awful lot of work

around the whole of government accounts return.

But that gets submitted.

When I give the opinion, I will submit that to the NEO.

And then I also talk about the audit certificate.

So the audit certificate is at the end of the audit.

And that's when I effectively say,

all the work under the NEO code is actually done.

Unfortunately, I'm not able at this stage

to actually issue that once I've given my opinion.

And that is because we've been asked by the NEO not to do that.

Because there's a potential they may come back and ask

us to do additional work, members may be aware that the 22 -23 WGA work was actually qualified

by the NEO, mainly because it was so many audits I think that were actually disclaimed

so they couldn't really place any assurance on it.

The bit that most people get quite excited about is the audit fees, so I won't skip over

There we have set out the scale fee set by the PSAA.

Some additional work we had to do under revisions to the auditing standard 315 which we set

out in our audit plan which is predominantly to do with internal controls and particularly

the IT systems that support those internal controls.

That's additional work.

We have set that out there.

We have put what we think is quite a small amount in around the delays of the audit,

because there was a bit of toing and froing in terms of asking for working papers, not

getting them, having to delay the audits, and that obviously just creates additional

work for us, so we have put an amount in for that.

Obviously these fees all go to PSAA for their approval before obviously we can actually

invoice you anyway.

The rest of the audit completion report is the letter of rep,

which I always describe as being the bit

where you sign away your lives

because you tell us we have every bit of information

we could possibly have to actually do the audit.

That is something that I think you may sign at a later date,

but I bring that to your attention.

At the back of there, it mentions the unadjusted misstatement

just to demonstrate that you are aware of that.

And that was really all I was going to say on this particular report, Chair.

Councillor Nigel Robbins - 0:23:23

Thank you very much, Alex. I think when it comes to delegation of signing the representation

letters for the audit and for the statements, we'll need to ask your approval, members.

But for the moment, are there any questions to throw at Alex?

Councillor Coleman.

Thank you, Chair.

Councillor Patrick Coleman - 0:23:48

I have a feeling that our previous auditors were with us for something over 12 years.

I might be a little wrong, but I can never remember a different name on the papers than the outgoing team.

And I'd just like to start by saying I found this easy to read,

I was encouraged by the way it was written and even more encouraged by the presentation.

Thank you very much.

One of my favourite subjects is pension funds.

I find the older you get, the more interesting your pension gets.

Our 90 ,000 undervaluation of our assets, I think I'm not reading it right,

is part of the County Council pension fund, which obviously is far bigger, 3 million.

So the first question is, is that 3 million also not significant in the same way that

our 90 ,000 isn't significant?

Do you want to respond to that?

Councillor Nigel Robbins - 0:24:42

Alex, you've seen the fuller picture.

Councillor Patrick Coleman - 0:24:44

Well I have seen the full picture but I've also in a previous life, not that long ago,

I was the auditor of the pension fund, Gloucestershire pension fund and yes 3 million is a mere trifle

in terms of materiality.

Their materiality level is significantly higher.

It's not material in its context.

So then associated with that, just

to make absolutely certain, our pension fund is in,

it's a phrase we have to use, we're not in deficit.

Isn't that correct?

The point of the last valuation that was undertaken in 2022,

the pension fund was not fully funded.

I don't have the exact figures, but it was somewhere around about 90 % funded.

The indications are the next triennial valuation, which is barely a few weeks away, that will

take place on 31st March 2025, that that position will have improved.

And it's not uncommon for those pension funds to improve across the country.

And we may be in a position where the pension fund is over 100 % funded.

But clearly for the period of time that the audit is looking at, it relates to the valuation

of assets and liabilities flowing from the period 2022 through to 2025.

But an annual update is provided by the actuary as to the fair value of those investments.

But in terms of the funding position of the pension fund for that triennial period, it

wasn't fully funded.

I just might make one little comment on page 20.

Thank you very much for that answer.

Yes, in a way it's always encouraging to see something that's been a pain and caused our

predecessors pain in funding to come, possibly for sad reasons.

Perhaps people aren't living as long as they used to, or their expected growth in life

expectancy hasn't happened.

But the second point on page 23 of a misclassification and disclosure change says that, is this right?

We were including in our calculations from the council side, future lease income from

a retail unit we hold somewhere in the West Midlands, I think, to a company which closed

down some years ago now.

How did that happen?

How do we have in our figures a future lease from a firm that

well -known nationally closed down in a rush?

It was one of our investments, I think.

Yes, precisely.

Councillor Nigel Robbins - 0:27:27

Councillor Patrick Coleman - 0:27:27

In terms of the valuation of the investment properties,

David Stanley, Deputy CEO - 0:27:33

the surveyors will look at the value of the leases.

And what appears to have happened here

is that arriving at the valuation of the investment

property they did anticipate that income would be continuing when clearly Wilco's

or Wilkinson's had gone out of business and that store might have still been

trading at the time they took the valuation but would have been in

receivership so it was an error in the accounts and that's been adjusted. Thank

Councillor Patrick Coleman - 0:28:04

you very much as we can be grateful that we're not in that part of the West

Midlands because our two empty banks and so our ancestor are both being re -let

and even the huge challenge of the house of Fraser's restoration that building as

the long table has been virtually completed but it's it's rough up north

as they used to say.

Councillor Nigel Robbins - 0:28:29

Councillor Len Wilkins - 0:28:32

Yes Councillor Wilkins please. Thank you chair just going back to Wilco's I

declaring administration to try and sell off their previous

stock.

But the point I wanted to make was I've only just received

these documents.

I would like to look to them.

I totally understand, and I'm not

making any blame for anybody.

But could we make a note in the minutes

that the committee only received this today on the basis

that it's two years' time or two weeks' time, somebody says,

why didn't you spot that?

It's simple.

I didn't get a chance to read it.

I think that's perfectly reasonable to include that in the minutes.

Councillor Nigel Robbins - 0:29:14

I think we should make that point, yes.

David Stanley, Deputy CEO - 0:29:24

Just in terms to reassure members, I think we received draft copies of the audit completion report

and the auditor's annual report.

At the beginning of last week, we were collectively both as a council and external auditors working

towards presenting you with the final accounts and the auditors' opinion and to sign those

off at this meeting.

When it became evident that that wasn't the case, there was a little bit more toing and

froing backwards and forwards between myself, Michelle and Alex and Bishop Fleming to ensure

that what we were presenting to you was as accurate it could be in terms of reflecting

the position.

I do apologize for the lateness of that report and other reports, and I did, I think, on

the submission of the annual Treasury Management Strategy and Capital Strategy reports, email

all members of the committee outlining why those reports relate, but also saying that

wasn't a good excuse.

and we will review myself and Michelle, I suppose, the way in which we have supported

this committee with those key documents, because clearly your role as members doing that scrutiny

is dependent on us giving you that information, those papers, in a timely manner, and we haven't

delivered that to you. So I'm more than happy for that to be reflected in the minutes.

Councillor Len Wilkins - 0:30:46

Thank you, Chair, and I'd just like protecting my back.

Councillor Nigel Robbins - 0:30:53

Councillor Thayer, you had your hand up.

Yeah, thank you.

Councillor Jeremy Theyer - 0:30:57

I'm just doing a bit of maths.

Yeah, we've, on the report, it says delays in the audit and it's cost us two and a half thousand plus that, so that's three grand.

Why?

I know it's two in and throw in and I know what it's like. People never talk to you when

you want them to. But it's still, we were a bit late the last time and it's sort of

going on a bit.

If I may, Chair, this is probably one for Bishop Fleming to answer,

David Stanley, Deputy CEO - 0:31:37

but I'll try and

as a council meant that the resources that Bishop Fleming had lined up to do work could

not be deployed, so they had to redeploy resources at additional cost. So if we had been more

responsive to that, we wouldn't have received this additional fee. But Alex may want to,

from Bishop Fleming's point of view, come in and give you that version of what's happened.

Officer - 0:32:12

I think what David has said is fair.

So, obviously, like all entities, we are resolved strapped as well,

and auditors are scheduled in to do jobs.

So if a job doesn't start when we're expecting it to start,

when we've agreed for it to start, we have to then negotiate,

go back and sort of reshuffle, and all of that takes time.

And that's what's happened in this particular case.

So I think as part of the debrief, going forward,

We'll just make sure that when we put dates and diaries that we both try to stick to them as far as possible

I appreciate that that's not always

Perfect and things are going to happen

But if we can try and make sure that it does work better for all of us going forward

Councillor Jeremy Theyer - 0:32:56

Thank you, I wasn't really it wasn't your I'm not blaming you it was more

Let down as a council really

But it's just, yeah, don't do it again.

Can we not incur costs?

I do it all the time at work and it's just, yeah, that's how you lose a lot of money.

Sorry.

It's an extra burden on the council of taxpayer and that's who you're

Councillor Nigel Robbins - 0:33:22

speaking for.

Councillor Patrick Coleman - 0:33:28

Just towards the end, I hope, there's a discussion.

The deadline of this year, I think, is February 28th for the stage of it.

Is there a corresponding deadline next year been set?

And is it moving slightly backwards through the calendar?

And associated with that, since we've got such a helpful new auditor,

and we're helping them out with these much higher fees,

which of course are set nationally,

is there any sign of an improvement, this is a question, Jim,

in the recruitment and retention of staff to do the audits of local authorities and the rest of the public sector,

which is even bigger than we are, because that was one of the underlying problems,

not the only one by any means, that led to the crisis which is now well past its peak in local authority auditing.

Councillor Nigel Robbins - 0:34:23

If I may, Chair, in page 55 of last meeting's report,

David Stanley, Deputy CEO - 0:34:26

report, which I did publish in the report, the statutory deadlines up to 2028. Next year

they move forward by one day, 27 February 2026. In the following year it is 31 January

2027. For the audit year after that it moves significantly to 30 November 2027. For 27

deadline or the backstop date will be shifting forward backwards depending on

your perspective so that will mean that as a council we need to be ready for

that and work closely with Bishop Fleming to ensure that where they're

lining up resource we're able to support that by being responsive and not having

any other distractions such as setting a budget or other things like that and in

In terms of the backlog, there were close to, I think,

at its peak, if not just over, 1 ,000 public sector audit

opinions that were outstanding.

That's been coming down, and that's why the backstop date

is being imposed to ensure that audits prior to 2324

can be closed off, whether that's with a clean opinion

or with a limited opinion, or in fact, no opinion,

as may be the case.

You can trace some of that back to some of the challenges in the sector for external audit firms being able to recruit and retain suitably qualified local audit staff to complete that audit.

And note from the conversation on the fee,

the fee did increase under the new PSAA contract by 151 percent.

So the scale fee at around 131 ,000 is significantly

above the same scale fee that was paid to Grant Thornton

when they were our appointed auditors.

So that's part of the recovery that government has put in place

to ensure that there isn't further delays

in public sector audit.

And you don't have that position where over a thousand

to public sector audit opinions are outstanding, which to the average resident probably doesn't

mean an awful lot, but it does suggest that the sector itself isn't able to give assurances

to taxpayers that there's value for money being delivered or the accounts represent

a true and fair picture of the actual expenditure and income that took place in that financial

year.

Councillor Nigel Robbins - 0:36:58

I think we should give Alex an opportunity to respond. Did the offer of these additional

carrots make a difference? Are they making a difference in terms of recruitment and retention?

Officer - 0:37:08

So I suppose there's one thing to say, that the fee that you have in front of you is the

fee that we bill you for, it's not actually the fee that we get. So a proportion of that

goes to the PSAA. So despite the fact that the fee looks quite significantly bigger this

year. I would like to say I had a massive pay rise but I didn't. Going back to what

David is saying, I think it is almost a perfect storm, isn't it? We recognise and I think

it is well recognised there are real crunch points within the finance teams and local

authorities. The accounts continue to get more and more complicated. This morning I

was at the Sitfor workshop where they were talking about the introduction of IFRS 16

which will bring with it another load of complications

and additional work to actually do to address that.

The accounts never get shorter, they always get longer each year.

And I think you are absolutely right,

the audit firms are struggling to resource the actual audits,

and particularly when the amount of work

that we have to do year on year is increased

because of the demands of the regulator.

I think there is also a question there about how, when a local authority has got a disjointed

opinion, how they get out of that, because that's not an easy thing, at least you don't

have to worry about that thankfully, so at least you have had clean opinions for however

many years, so I think that's a real positive.

I would love to say that as Bishop Flemming has recruited, but I'm going to be honest,

A lot of us have come from other audit firms, so there is a danger we're just moving the

deck chairs round.

I go on national calls with other audit firms and I quite often see people I used to work

with at the Audit Commission at Grant Thornton.

So whilst we continue to bring people through, bring graduates through and school leavers

into the sector, I think it's fair to say that local authority accounts are complicated,

They're a hard audit and people don't always necessarily enjoy doing them, so trying to

keep them is a real issue and obviously something that we're really keen to do because we want

to work with good colleagues.

I don't think we've got there yet.

I think it might take a while.

One of my jobs tomorrow is to actually respond to the local audit reform consultation document

that came out, which I think came out just before Christmas.

And you may be aware of it.

You may have seen it.

And whilst it's not talking about going back to the days

of the audit commission, it sort of is a little bit.

And whether that will actually help, I don't know.

But it may make life a little bit easier for all concerned.

We shall see.

And how quickly that will happen with everything else that's

going in local government as well.

So I'd love to say it's all sorted out, Chair, but I think it's fair to say we haven't got there yet.

Thank you for your candid comments, Alex. Are there any other comments or questions, please?

Councillor Nigel Robbins - 0:40:21

Yes, we've got Chris over here. Thank you, Chris.

Christopher Bass - 0:40:26

Just a couple of points. I think the first thing is it's important to recognise the finance team,

the amount of work that goes into preparing the statement of accounts in any year,

but particularly in a year where you change auditors.

I think there was some reference to 12 years over there,

so you get used to a certain auditor.

You understand some of the people that get involved,

the way they request to see information,

and the process that you're going through.

So it's a particularly tough job in a change of auditors,

so recognition to the finance team.

And just following up on the point made

by one of my fellow committee members

about the don't do it again

when it comes to the delay of information,

I completely understand the intent and why you'd say that.

I might add, though, that it's probably appropriate

for the committee to inquire if the finance team are appropriately resourced.

Because without making that inquiry we're going to risk burnout and disengagement and

then we'll be in an even worse place.

Thank you for that Chris.

Councillor Colman.

Councillor Nigel Robbins - 0:41:22

Councillor Patrick Coleman - 0:41:23

Chair, I'm sure I recall correctly on that very last point that Grant Thornton almost

used the same phrase every year about their concern that they were flagging up that we

We didn't have adequate resources and we needed to recruit more people to our finance department.

Yeah, thanks mate. You're not captain, we are.

Councillor Nigel Robbins - 0:41:44

That's absolutely true. Of course, there's no question about the competence of the staff we've got.

It was simply about numbers.

I'd just like to say thank you to the finance team.

Councillor Jeremy Theyer - 0:41:56

I wasn't really having a go at all.

It was just, yeah, I just don't like wasting money.

I'm sorry, it's the farmer in me, I'm just tight.

It's just my life.

David.

Thank you, Chair.

Councillor Nigel Robbins - 0:42:16

Just in terms of is the finance team adequately resourced,

David Stanley, Deputy CEO - 0:42:18

I'd always say it could do with more resource.

There's a balance there that I need to strike between the cost

of that extra resource and the actual ability to find suitably qualified finance staff that

might want to do that particular role.

It is a very niche role supporting the set of financial statements.

Michelle is an ex -auditor, so knows her way around the financial statements and speaks

the same language as external auditors.

That's not the case in every authority.

I think part of what I've committed to the committee to do is sit down with

Michelle and I've had this conversation with the chief executive is to understand

what is the resource that a council finance team needs to support the

day -to -day activities the council needs to be undertaken so setting a budget

report into you on the progress of that budget but also being able to resource

and respond appropriately to the external auditors at the agreed time.

We're a very small finance team.

There's Michelle, there's Hazel, and there's a couple

of others.

That is it.

If all our services were run in -house, so I'm ignoring

public and I'm ignoring Yubico, you would probably

be looking at a finance team of around 17 to 20 to run

your financial reporting, your budget setting, your

technical aspects around capital accounting and your

financial statements, plus those individuals that support Treasury management accounts

payable, accounts receivable.

So we do have more resource, but it's not necessarily in the right place at the right

time.

What we need to think about is in order to, I'll pick on the comment about not spending

two and a half thousand again, we could end up spending 40, 50, 60 ,000 employing an extra

person.

But another way to do it might be to make better use of interim or agency staff at defined

periods of time to help us with that.

The challenge you've always got bringing interim agency members of staff on is you can't bring

them in on the Monday and expect them to respond in a particular way.

There's a lead -in period.

So we'll keep it under review because I think those timescales are going to get far more

challenging, and particularly as we go through the coming,

let's say, two years, possibly three,

we have a small issue around evolution to deal with.

That is going to consume significant amounts of time

in finance, because we're also mindful that as accounts we

won't exist in two, maybe three years' time.

That is going to pose its own challenges on the finance team

along with the rest of the organization.

So it's something that I will revisit and will report back to you as a committee to make sure that

We're putting that in front of you to give you that reassurance that either it is now adequate or it's still adequate

Thank You David

Councillor Nigel Robbins - 0:45:22

Are there any further comments or questions yes Councillor Wilkins, so just just my

Councillor Len Wilkins - 0:45:26

Information is a free one five international standards of auditing

Where does that £12 ,000 go? Is that part of the auditor's fee or does it go to...

It goes to...

It's page 27, 11995, ISA 315.

So that is a new accounting standard and because of that there's some additional work that the external auditors need to do to prepare for that introduction of that new accounting standard.

So it's part of the charge that's made by Bishop Fleming.

Thank you.

Councillor Nigel Robbins - 0:46:02

As you recall, about two years ago they introduced increasingly onerous requirements in terms

of assessing value for money.

It was beefed up quite a bit, which we endow quite a lot of extra work that I think is

partly reflected in the overall increase.

Councillor Nigel Robbins - 0:46:24

Are we currently including the narrative report in this item?

Or is that coming up? Sorry, narrative report, governance.

Is it called the annual governance statement?

The next item?

Anyway, the bit that's headed narrative report.

That's what I was going to go on to, which is page 45.

Yes indeed that's the introduction to the statement of accounts.

Councillor Patrick Coleman - 0:46:52

So we haven't got there yet.

We have. So sorry on page 45 we were listing our improved indicators or our noteworthy or good stuff and the reverse is on the other side of the coin and some on the next page.

but I'm just a bit confused it said 9 % of official land charges searches were

completed within 10 days 90 % target and I wondered if that should be a 90

something percent and it makes it improved or noteworthy rather than 9 %

Michelle?

Councillor Nigel Robbins - 0:47:28

Yeah, I think you're right there, Councillor Carmony.

I think I've missed off a digit, I hope.

But yeah, luckily there's still time to correct it, so I'll make sure that's corrected in the final version that gets published.

Yes, I think we want to look at the other report now.

Thank you, Chair.

So the other report that you've got on front of me, and apologies that it has come to you

late, it's the very pretty coloured one that I printed out for you, hopefully.

Officer - 0:48:23

This report is a draft report and it is deliberately a draft report

because I can't actually finalise this report until I have given my opinion.

The idea of the auditor's annual report,

and I take David's comment about the report sound very similar,

they do and apologies for that,

that is just unfortunately the terminology,

partly by the NAA and partly by the firm.

So this is a draft report which I can't finalise until I have actually given my opinion.

The idea of the annual report is what it says.

It replaces, I suppose, what used to be the auditors' annual audit letter

that you used to get at the end of the audit,

setting out all the findings from the work that they've actually done.

The report largely focuses on the value for money aspects that we look at.

So I'll mainly concentrate on those, if you like.

In terms of the report that you've got,

If we go straight to the page that is headed up, exec summary, the three areas that we

are required to look at under the NEO code are financial sustainability, governance and

improving economy efficiency and effectiveness. That is no different to what Grant Thornton

would have looked at in the previous year or so. We look at those particular areas and

particular aspects that we will ask to look at by the NEO. What we actually do is we ask

officers to do a self -assessment against various questions underpin those three areas with

the evidence to support what they are actually saying. If they say we have a financial plan,

where is it, can I look at it, what are the assumptions in there, they do it reasonably.

reasonable. As a result of that we then produce the narrative, the VFM commentary as it is

called, the narrative in the report. The report is also a draft because as David mentioned

there are a couple of errors in there that we need to correct before we finalise it.

I thought it was useful for you to have a look at it, because it is a public report

as opposed to the other report which I appreciate will be in the council papers

so anybody can actually look at them.

The idea is this report goes on your website

so Jo Public can look at it if they so choose.

I appreciate probably not many people do, but it is there available.

So as I said in the exact summary,

we've highlighted in there our RAG rating against the three areas that we look at.

Again, I think this is a good report.

I don't think there is anything particularly that has come out from the work that we have

done that suggests that you have got significant issues.

That is not to undermine the work that you are doing around, and I appreciate you have

got financial pressures, as has all local authorities, and the limited numbers of staff

potentially.

We would all like more staff to do the work.

But actually from the work that we have done we don't consider there are any significant

risks or weaknesses in our terminology that we need to bring to your attention.

We use a rag rating, you may argue that it's, I know we have some challenge about whether

it's too blunt a rag rating, but effectively what we have said is where there are no significant

weaknesses and it is bad if you get a significant weakness,

it usually means there is something quite wrong,

you are about to fall off a cliff financially

or something like that.

But actually we haven't identified any in any of those,

but we have made some recommendations for improvement

going forward and those are reflected as I say

in that RAG rating.

So, but as I say, if you take nothing away I would say

this is a good report and obviously I deal with

a lot of other local authorities and fire and police and actually I think this compares very well.

So I suppose it reiterates what we've said earlier about the finance team and the other members of the team across the council.

I wasn't necessarily going to go through this in any huge amounts of detail.

I'm hoping that when you read it, there's nothing in there

that's of surprise because there shouldn't be. This is your council, you're those charged with governance.

you should be aware of there's a financial issue.

But as I say, I don't think there's anything in there

that should give you major cause for concern.

At the back of the report, we've made one recommendation,

I think it is, around public health,

and I think we're going to amend it in light of something

that David wants to add.

But it was more to keep that on the agenda,

because obviously that is quite a significant change of direction

for the council as it is with your counterparts as well across Gloucestershire and West Oxfordshire

as well. But obviously it's one that we wanted to keep on the agenda really just so that

we make sure that we follow it up next year but also you're aware of that and I'm sure

you are already aware of it. We've also reiterated some of the prior year issues that were raised

by Grant Thornton as well and just given an update on any recommendations they made previously.

And that shows pretty much all I was going to say on this report. As I say, I do appreciate

it. It is draft, so obviously people did want to come back, there's no errors and they're

happy to do so. And it will be finalised once I've given my opinion.

Thank you, Alex.

Does anybody have any comments?

Councillor Nigel Robbins - 0:54:03

I must say I find the recommendations easy to read and they certainly accord with my

experience insofar as I've read them of the some of the major issues that might give cause

for concern.

Are there any other comments or questions, please?

So let's just have a recap really on what needs to happen now.

You're going to complete the work and issue this in final form.

There's going to be a little bit further work on the other report.

You've got until officially until the 28th of February to complete that work.

That's a month from now.

There are two management letters that need to be signed.

One on page 31, I think it is, of the audit papers, and the other one on page 153 for

the financial statements.

I can't see any need in reissuing the reports in their entirety.

Would it be sensible to issue the amendments, additions in some form that we can see them?

We have now more time to read these papers if we choose to do so, and I hope people will.

Would that be a sensible solution to issue amendments so that we can put those alongside

the reports we have already had rather than re -issue the whole thing?

I see one or two people nodding.

David Stanley, Deputy CEO - 0:55:56

Thank you, Chair. Just in terms of the timescale, clearly we want to avoid being as close to

that backstop date as possible. From what you've heard from Bishop Fleming and from

officers, I don't think we're far away from being able to achieve the completion of the

audit and it wouldn't be unreasonable to give members of this committee an update as to

whether anything material has changed between the presentation and the conversation, the

tonight and what comes through is the final versions of those reports before the delegation is

Exercised by the chair and myself to sign those

Clearly I can't give you a date that that might be achieved by but I think we're probably a couple of weeks away from that

Need to be done, but we can circulate that

And be happy to take feedback that members have on the drafts

you've had in front of you tonight and that we can then feed into that process

and I think that's that's not an unreasonable position given the lateness

that you've had these reports tonight and that you do need time to to read

through and understand and prod and probe us as officers a little bit

Councillor Nigel Robbins - 0:57:10

further. Thank you David. I would like some support from members really if you

could show your support for the idea, the proposal that I'm making, that you delegate

the signing of the representation letters that I mentioned to myself in the absence

of any future meeting. Is that the wish of the members?

Yes, and we have recommendations also.

Thank you very much for that.

So that's basically item two.

We've noted, we can note the report.

We've already done that.

And you're basically supporting recommendations two and three

on the front page of the supplement. Is that satisfactory? Is that clear, Nikki?

Yes, good, thank you very much. Okay, in that case I think we're in a position now

8 Local Code of Corporate Governance

now that you've come. Next item. Hop foot. Thank you, Chair. The local code of corporate governance and this is

presumably important because it advises and underpins our annual

governance statement. Over to you.

Angela Claridge - 0:58:42

It does exactly that. Good afternoon committee. I am presenting this

report on behalf of my colleague, Cheryl Sloan, who cannot be with us.

This is an annual report. This evening or this afternoon you will be

asked to review and adopt, although obviously there will be the

opportunity for comments, the latest version. Back in 2016, CIPFA, our professional accountancy

body and SOLACE, the society of local authorities chief executives, put together a document

called the governance framework. In that, they recommended that all local authorities

have what is called a local code of governance. That is what is in front of you today. We

have had one for a number of years. In that, we should meet what they call the seven principles

principles of good governance. To help you know which the seven are, they are set out

in paragraph 3 .3 of the covering report. In addition, if you look at the annex, it is

A to G. They are the principles. Essentially, our governance arrangements are to ensure

that we do things in the right way, we do them for the right people, we are timely,

inclusive, open, honest and accountable. We put things in the public interest. But governance

can incorporate a number of things, systems, processes, culture, the values of the organisation

and its responsibility for all of us, both members, co -operative members and officers.

So essentially seeking your endorsement, Chair, for the latest version of our annual local

code of corporate governance.

Councillor Nigel Robbins - 1:00:19

Thank you, Alex and Jenna. Yes, I throw it open to comments and questions again.

Councillor Michael Vann - 1:00:35

How do we compare with other Gloucestershire districts? The reason I ask this is that

It would be unfortunate, to say the least, if there were others who had rather lower standards than ours.

Angela Claridge - 1:01:03

In terms of how do we compare, Councillor, that is a $64 million question. I suppose

the key point for you as a committee with governance as part of the responsibility is

that you are satisfied that we are doing everything we can. Of course, we always learn, as I said,

This document was put together by Sitfa, which is David and others, a professional body.

We're always learning from the professional bodies, professional associations, and we

do learn from others, but have we done a sort of forensic examination of how ours compares

to the other authorities in Gloucestershire?

I couldn't answer that one unless my colleague David has a better idea.

David?

Thank you, Chair.

Councillor Nigel Robbins - 1:01:45

David Stanley, Deputy CEO - 1:01:49

just in my take on the local code of corporate governance it sets out the

principles stands as behavior that we expect the council as an organization to

operate the annual governance statement that is then presented to members which

forms part the statement of an annual statement of accounts provides members

with the assessment of how compliant the organization is,

how it's demonstrating that it's meeting the principles

that those, the local code of corporate governance

is based on.

What you will get from that annual governance statement

is any significant governance issues that are raised.

I've always taken the view that I would want officers

to be open and honest about what they would consider

to be significant governance issues.

So in a way, my view has always been I would want

to see some areas that could be improved, some areas that we need

to bring to your attention.

An annual governance statement that says everything is wonderful

to me isn't achieving the objectives of the local code

of corporate governance.

So in terms of how we compare to other similar districts

across Gostejev, I'd be looking

at the annual governance statement,

the annual governance statement action plan

and using that to query whether or not, let's say,

Councilor A has said they've got an issue over here,

what does our annual governance statement say?

And does that tie up with what you as a member

are picking up anecdotally or evidencing?

And that's how I'd look at it,

rather than looking at the actual code and the principles.

And those principles, as Angela said,

have been set out by SITF and SOLIS, so most local authorities will have a version that's

pretty similar to that.

It's what comes out in the annual governance statement, the action plan, that I would be

suggesting that members take more attention or pay more attention to and then look across

the other districts to see what issues are being highlighted there, and that's something

that then feeds into the wider planning for internal audit and can be picked up as part

of the annual governance action plan.

Thank you, David.

Chair, I've got a specific question.

Councillor Nigel Robbins - 1:04:10

Councillor Michael Vann - 1:04:11

On the executive summary, page 31, one, two,

an ultimate line, what's the partnership?

Page 31, one, two, an ultimate line,

work completed by the partnership.

I have. I am ahead of myself. I have got to shut up.

Councillor Nigel Robbins - 1:04:53

Thank you, Councillor. You nearly caught me out there.

And me.

I must say, if you want a quick look at the seven principles, the coloured diagram on

page 17 sets it all out there in that particular sort of maelstrom.

Councillor Coleman.

Yes, thank you, Chair.

Councillor Patrick Coleman - 1:05:20

Yes, governance is everywhere in today's meeting.

We have the annual governance statement,

but we also have the local code of corporate governance

coming up.

The annual governance statement in the past

has been subject to, in its preparation and draft,

quite substantial member input.

But this one's finished with now because it's for 23 -24,

so we can't amend this one.

However, when we come to looking at 2425's draft statement, if we haven't already done

it, we might think about calling the area of outstanding natural beauty its official

name now, Cotswold National Landscape.

Don't have to, it's not very important.

We might think about quantifying just how successful in terms of projects and money

raised Space Hive has been or Crowdfund Potswold I should say through Space Hive

because it's mentioned but without being quantified in this particular statement.

But yeah it's a kind of a historical document today as I understand it we

can't amend it because it's for 23 24 and 25.

Councillor Nigel Robbins - 1:06:35

Yeah the AGS will still come before this committee before the end of the year.

Councillor Patrick Coleman - 1:06:38

So in the updated statement of accounts 2324 is the annual

governance statement for 2324.

What we have got in the local code of corporate governance is

essentially the template of the principles that will be used to

develop the annual governance statement when the financial

year ends on the 31st of March this year.

If you looked at page 127 of that additional PAC,

you've got standard A, behaving with integrity,

demonstrating strong commitment to ethical values

and respecting the rule of law, is pretty much the

principle that's on page 20 of the orange fronted PAC.

So the principles are staying broadly the same.

There's not much change that's there.

And I suppose as members, you'd want to understand

And are there any changes that need to be reflected because of the transition of services

from public to the council?

Does that influence our local code of corporate governance?

But particularly when we do the annual governance statement at the end of March, the way that's

evidenced will change.

When you look at page 127, we've said these are all the things that show that we've demonstrated

that we're behaving with integrity.

there will be a different set of evidence that's provided because we can't really claim

that we've appointed two independent members to audit and governance committee two years

on the trot.

We did it once.

We might say we've maintained having two independent members on the committee.

So the nature of the evidence that supports those principles, and I suppose as a committee

you're being asked to agree, does the local code of corporate governance as drafted for

2425, are you content with that?

its assessment will follow in the annual government statement which this committee will get ample

opportunity in July to have a review of.

Councillor Nigel Robbins - 1:08:41

Thank you, David.

Can we go to the vote?

We're happy to.

We do need to adopt this code for our own purposes.

So if I could, in the event of there being no vote,

No further comments. Sorry?

Are we on the Code of Corporate Governance?

We are, yes.

I did have a point, I'm so sorry, Chair.

We haven't finished, if you want to make a further comment or question.

I think I test everybody's patience, but I'm sorry.

Councillor Patrick Coleman - 1:09:13

It's just that as I read it, there are no wording alterations in this year's compared with last year's when it comes to the Code of Corporate Governance.

And that's not necessarily a criticism.

It is perhaps, maybe we could have a little look at the next one in the light of the upcoming

internal audit report into members' allowances, which gives us one of the lowest ratings of

any internal audit opinion.

And I don't want to prejudge any discussion we are going to have on that agenda item when

we get to it.

But it just seemed to me that that rating from internal audit on members' allowances

didn't fit very well with our Code of Corporate Governance.

That's all at this stage.

Councillor Nigel Robbins - 1:10:04

Such a thing might well be a breach or a variation or a distortion, but it wouldn't affect the

Code.

The Code is there to judge the performance of things like members' allowances or the

other.

So you need to challenge the Code pretty rigorously to find that it wasn't in some way allowing

you to rule that out as being unacceptable, if you see what I mean.

But I'm interested in your point.

And I think when it comes to the annual governance statement, there might well be a remedy.

Angela Claridge - 1:10:47

Just to come in, Chair, if I may, I suppose the key thing is that you as a committee are

seeing audit reports with a range of outcomes.

So that is part of our governance,

so that you're cited on them.

You have a chance to comment and make recommendations.

Thank you.

Councillor Nigel Robbins - 1:11:07

Are we in a position, if so, raise your hand

to adopt this code of corporate governance

for Cotswold District Council?

I would also do that.

So I think we're unanimous on this particular one.

Thank you indeed.

Do you want to use this opportunity for just commenting

on the code of conduct members?

Well, I wasn't thinking so much of that.

There was a little question in the minutes, if you remember.

I've shuffled it away somewhere.

About member briefing.

There we are.

Member briefing on the new process for complaints and procedure

It's a sub sorry, thank you, there's something in the pipeline there is something in the pipeline

Angela Claridge - 1:12:02

So you might you you've all been aware that we've updated the branding

since the 1st of November and as part of that the council's website the council's member portal our

internal portal that we use as officers are all being updated.

So as the members portal is being updated,

there will be more information on the portal

so that you as members can pop on there and have a look

more information about the Code of Conduct

and how it's handled and how to avoid getting into trouble

would be the key one.

Thank you, Chair.

Thank you.

Councillor Nigel Robbins - 1:12:36

Well, I think we can now move on to the annual Treasury Management Strategy

9 Annual Treasury Management Strategy and Annual Non-Treasury Investment Strategy 2025/26

and the investment strategy for non -Treasury.

We have a nice, thick report in front of us.

I'm going to ask David to summarise it in four sharp strokes.

Thank you, Chair.

David Stanley, Deputy CEO - 1:13:08

Again, apologies that these reports were late.

They were published slightly ahead of the audit opinion reports, but not necessarily

much ahead of those.

And I did email round members at the end of last week apologizing for that.

What I said to the chair on the briefing we did yesterday, I'd prepare a very small number

of slides.

And you'll be pleased to know there's five in total of which that is the first one.

There's not an awful lot of content deliberately.

So to summarize what the key issues are,

because I appreciate you may not have had the

requisite time to read through the annual

Treasury management strategy, the annual

non -Treasury investment strategy, and the annual

capital strategy, I have over the course of the

last few days sought to confuse both Kira and

Nikki in democratic services on these reports,

which is why there's quite a meaty pack here for you

to look at.

These are draft reports. These will be going on to Council at the meeting on the 24th of

February and they are draft in the sense that they reflect the emerging position there was

on the Budget and the Capital Programme probably about a week ago. That is another report I'm

working on that will be published tomorrow with some slightly updated numbers in which

will then require the Treasury Management Strategy and associated appendixes to be updated

because that is based on the flow of capital expenditure and capital financing and reserve

balances that are contained in the budget and MTPES.

It's a bit of a tangled web, a lot of these reports at this time of the year.

So without further ado, Treasury Management Strategy, that's the main report that you've

got in front of you.

That outlines how the council will manage and invest its surplus cash and the principles

upon which it may seek to borrow or how it would make investment decisions.

And ultimately how we would report that to those charged with governance, which is this

committee.

So that's the governance element of it.

Treasury management is determined by the SLIE principle, security liquidity yield, in that

very specific order.

So when we're looking at treasury management across the piece, we are mindful that we need

to ensure that the council's money is as secure as it possibly can be, rather than trying

to get the best yield or the best return.

So we're always mindful that we need to have security of cash for that cash to be liquid

to enable the council to conduct its day -to -day business, and the yield is a third consideration.

Our approach on the Treasury management strategy

is to have a high degree around and stability

around the cost of interest and very low risk

to the sums that we invest.

So that sets the overall direction when we're making

investment decisions, both either in the short term

or the slightly longer term, that we are looking

to maintain a predictable and stable interest rate

return or cost, and that we're not taking excessive risk.

We have within our treasury management strategy

positions on both short and longer term investments,

the average sum that we are projecting that we'll be

investing during the forthcoming financial year

is around about $27 .5 million.

That is an average figure that will fluctuate from

day to day as the timing of receipts largely from

Council tax and business rates start to come through in April.

There's a slightly different pattern to how we pay those receipts out,

either to major preceptors on the collection fund or business rates, but

also in terms of when we make our spending on day to day revenue or capital expenditure.

The report also sets out the forecast that interest rates are going to fall.

I would remind members that every forecast that's probably come out over the last 15

years on interest rates has been wrong, or degrees of wrong.

So we are mindful of the direction of travel.

We're not mindful necessarily of the exact timing of when those interest rate reductions

will come.

Arlene Close is suggesting that the next interest rate reduction will be next month, timed with

the Monetary Policy Committee's quarterly reporting cycle.

So every February, every May, every August,

and every November, the Monetary Policy Committee

publishes a report that sets out what they've

been doing in those three months and what their projections are.

That's when they would most likely

see a change in direction.

The report also sets out limits on investment type

and counterparty to ensure that we are making sure we're not

taking excessive risk, we're not exposing the council to putting all our funding in

one place or all eggs in one basket. That happened a good number of years ago, not at

this council but back in the council of the Western Islands, the BCCI issue where a number

of Scottish authorities had their investments in very single places, BCCI, and lost significant

amounts of money. That was also an issue back in 2007, 2008 with the Icelandic banks crisis,

a number of authorities had investments of which this was a council because there was

too much of a counterparty.

And finally on that slide, the excitingly titled IFRS 9 statutory override. That is

something the council and all councils have had a benefit from. The international financial

reporting standard nine would require us to account for unrealized losses or unrealized

gains on our pooled funds in a particular way, but the statutory override takes that

accounting treatment back out. In the local government finance settlement that was published

shortly before Christmas, the government indicated they were minded not to extend that statutory

override, that statutory override would end on the 31st of March 2025. So when we have

the balance sheet date of the 31st of March 2026, if the council is holding pooled funds

and if those pooled funds have unrealized losses on, the council needs to have adequate

resources available to mitigate that balance sheet position regardless of whether or not

it has any intention to crystallize those losses.

The government is mindful that it won't extend that.

There is significant lobbying from the likes of the LGA

and individual councils because ultimately what the council

would have to do to mitigate that is store resources up

on the balance sheet that would be, take those away

from council taxpayers and wouldn't be able to support

the council's priorities because we're mitigating a risk

that sat on the balance sheet.

Also on the Treasury management strategy, we set out the position on the Council's borrowing.

So we do have a very small amount of external borrowing.

That's the CMI external debt.

There is within the report an underlying need to borrow in 2728.

So that's at the far end of the projections that report is setting out.

And that is largely because the internal resources that are available to support the capital

programme will have largely been depleted by that point.

So in order to support the capital expenditure programme, the council without those internal

resources would have to look to borrow externally.

The approach and the borrowing strategy as set out in the Treasury Management Strategy

is to strike that balance between getting nice and

attractive low rates and predictability around

interest rate costs.

In the current interest rate environment,

that is going to be very challenging.

Longer -term borrowing is probably around about 6

percent, I haven't checked it for a few days,

and it has been more volatile over the last few weeks.

We have seen much more significant upward and

downwards swings in the borrowing rates.

If you took that rate over a longer -term period,

the average Bank of England base rate probably over the

last 30, 40 years has been closer to 4, 4 .5, 5 percent.

We've had the benefit of very low,

very stable interest rates between 2009 and up until

around about 2022.

So the current interest rate environment is much more

volatile.

You're seeing more significant changes in those interest rates that are offered by PWB

or external organisations, and so the timing of any borrowing must be taken into account.

That's kind of the final point on that.

So there is a revenue cost of borrowing.

That is included in the MTFS, both as an interest rate cost and something called minimum revenue

provision.

That's a prudent position to take into the MTFS because at this point in time with that

underlying need to borrow and the capital program as it's currently drafted, we are

reflecting that revenue cost in the MTFS should the council not need to borrow because it

has generated additional internal resources than that interest rate cost and that MRP

would fall away.

So it's a prudent position to outline because that's currently where the plans are.

On the non -Treasury investment strategy, so this is where it gets a little bit tongue -tied.

We have the Treasury Management Investment Strategy and the non -Treasury Management

Investment Strategy.

This is essentially everything else the Council does where it makes an investment.

So largely for us, it's loans for service purposes, for example, to a housing association

or to you, because we can.

That's within our strategy.

The large part of what we do on a non -Treasury site

is commercial investments in property.

And we do have loan commitments and financial

guarantees where we've been supporting a housing

association, Cotsway.

That forms part of that non -Treasury site.

So it's where we're making capital financing available,

but we're not doing it through the usual day -to -day

Treasury management activities.

We're doing it for a service purpose.

So providing a loan to a housing association will be

to help the delivery of affordable housing

and to support that part of the council's priorities.

That non -Treasury investment strategy sets out

the approach around limits and risk

and the key word there is proportionality.

That's something that SIPVA and the government

have been concerned about for a few years

and I think the message has come through

that whatever you're doing on a non -Treasury side

needs to be proportionate to the resources you've got.

There are a number of authorities that have not

necessarily been as proportionate as the

government a few years ago would have liked them to

have been.

That's the Woking's, the Spellthorn's, and so on.

That's not where this authority is.

And the non -Treasurer investment strategy also

sets out the skills and experience of the finance

team and members and then covers off the role for

the particular for this committee around

corporate governance.

And the final slide will be pleased to know, is the

Capital Strategy, which is 10 .1 in the additional pack.

That is a much higher level document that sets out

the best practice approach that the Council would take

to the longer term strategic planning of its investment

and should be seen as the ambition the Council has

for its capital program.

So the type of activity it would seek to make investments in

and outlines the current approach, the available capital resources that are there.

It does tend to cross over into the Treasury management strategy, so there are a number

of parts of the capital strategy that are the same as what's in the Treasury management

strategy.

aligned to the corporate plan and aligned to those corporate priorities and how you

would use capital investment and that capital strategy to deliver those priorities. The

capital strategy also outlines what I've said before, limited internal resources, so we

are utilising the capital receipts and our earmarked reserves over the MTFS period. That

That gives rise to the underlying need to borrow, which would come from external resources.

And there's some key words that the Capital Strategy puts through sustainability, risk

management and governance.

So is your investment through your capital strategy, is that a sustainable position?

So let's say, I'll give a very poor example.

The Capital Strategy for ANR, the Council said, we're going to build lots of things

and we're going to borrow lots of money to build lots of things, is that sustainable

over a much longer period of time, something like 40 years?

At which point I shall shut up, but there's quite a level of detail in the report, which

clearly you've had a limited amount of time to review.

I'm happy to answer questions, as with Michelle, on the content of that report, but I thought

I'll try and summarize what those reports are trying to do,

but do mind they are draft.

They will be changed by the time they get to Council

in the 21st February.

Thank you, David.

Councillor Nigel Robbins - 1:27:16

I must say I find that last slide particularly helpful.

The other way of looking at that business

of aligning to corporate priorities is to say

what you shouldn't do is invest simply for yield,

for profit, like putting money on the 330 at Towsler.

You need to have some very clear objectives that are

stated for which you're investing.

A couple of other questions.

You explained to me very well yesterday,

and it might need another bit of underlining,

what the government is expecting us to do if the

value of pooled funds goes down in the future.

Mr Gifford.

So thank you, Chair.

David Stanley, Deputy CEO - 1:28:04

So that refers to the IFRS 9 statutory override.

So if the value of our pooled funds,

and we bought pooled funds for around about $11 .5 million

off the top of my head, if the balance sheet

date on the 31st marked 2026, the value of those pooled funds

is less than the $11 .5 million that we bought them for,

that difference the council would need to cover off

through holding either adequate reserve balances or other means.

There is other mitigation options that the council may need to consider,

but those mitigation options may crystallise that loss.

So, for example, if the council has a pooled fund that's got an unrealised loss of, say, 200 ,000 on,

that 200 ,000 could fluctuate during the course of the financial year, so it might reduce to zero,

It might appreciate in value it might end up losing a million pounds one way the council has of mitigating that is to

dispose of that pulled fund investment and

Realize that loss at the point in time that that pulled fund is disposed of

It is something the council will need to consider because as it stands at the moment

I think I'm going back to about the end of November when Arlene close provided the data

We had unrealized losses since purchase of those pooled funds of just over a million pounds.

Other things being equal, with the statutory override not being renewed, if that was to be the position on the 31st of March 2026,

we would have to have enough resources on our balance sheets or enough reserve balances to cover that loss.

Thank you David. Councillor Colle.

Councillor Nigel Robbins - 1:29:50

Councillor Patrick Coleman - 1:29:51

Yes Chair, I've got a slight difficulty before I come to the point in that Appendix 1 in the introduction is actually Appendix 2 and Appendix 2 in the introduction is Appendix 1 but I'm sure that's one of the things that can be sorted out.

It's just a little bit confusing when we're looking at one called Treasury and one called

non -Treasury.

But the point that bothers me is I'm hoping that our Deputy Chief Executive can give us

an opinion as to whether he might agree with me that on the face of it, losing that statutory

override that I arrest a verb, nine, is bloody, excuse me, extremely stupid and will result

in counters putting money aside they don't need to put aside.

At the very least they should have said you must start thinking about it if you've lost

more than, I don't know, 10 or 20 % of what you invested.

But since they're invested for the long term, this is a ridiculous piece of Treasury, presumably

Treasury meddling, just to show who's boss.

Well, perhaps I've got that entirely wrong.

I value your opinion.

Councillor Nigel Robbins - 1:30:55

I'm seeing a few nods behind you, so maybe on the right lines.

Do you want to express a view David or should we move on?

I'll try and express a balanced view.

David Stanley, Deputy CEO - 1:31:08

A balanced view might say that the statutory override has been extended once before already

and that was during the Covid pandemic and it was considered at the time by the government

of the time that ending the statutory override in the middle of the Covid pandemic was probably

not the most sensible thing to do. With that in mind it could be argued by the

government that given this has been talked about probably for five or six

years around the statutory override that authorities should have been preparing

for the end of a statutory override because actually proper accounting

practice would be to account for those unrealized losses. Where we are though is

what that would do if the statutory override isn't renewed a number of

authorities, and it's quite significant, the LGA are lobbying on behalf of those authorities,

would have to divert resources that it would ordinarily use to support its priorities,

to support day -to -day service provision, to support an unrealised loss.

There is a similar issue around a statutory override on the dedicated schools grant deficits

that's a much bigger problem that runs into the tens of millions per authority. I think

Wiltshire as an authority where the level of reserves it would

need to mitigate the statutory override on the dedicated

schools grant deficit not being renewed is far exceeds

the available resources they've got.

That is probably, in my opinion, what is consuming government in

terms of the priority.

The priority might be to sort that issue out rather than the

pooled funds.

And I think where the LGA will be is making the government

aware of the scale of that across the sector is quite significant. When you look at it

on an individual authority basis, you might say, well, Cotswold District Council, you

should be able to find adequate resources or adequate mitigation strategies, but when

taken across the sector, that might run into the tens, if not slightly bigger numbers than

that.

Councillor Nigel Robbins - 1:33:14

Thank you, David. I will just add that a lot of the secondary schools have got reserves

that they're not quite sure how to spend.

They've been given orders to set up a plan for spending it,

and I suspect in some cases there may well be a few vanity

projects emerging from that.

That would help the dedicated schools grant deficit,

wouldn't it?

Councillor Michael Vann - 1:33:38

This time I'm rather hoping that I've

got something which is relevant, which it wasn't last time.

Page 14, Appendix 1, an unidentified property within Cotswold District.

Councillor Michael Vann - 1:34:04

The first property doesn't have an address.

Councillor Nigel Robbins - 1:34:22

Can anybody answer that? Are we allowed to?

David Stanley, Deputy CEO - 1:34:26

This is a classification of a number of investment properties that will be within the district.

So it's not a single property. So what this table is doing is subdividing that. So we

published on the council's website, there's a list of all the assets the council holds.

What we can do for members of this committee is cross reference those addresses with the heading that's here.

So we do have a working paper that supports this.

There is particular investment property inside the, or in the vestment property, there's a misspelling there that we need to correct.

We have named the investment properties outside of the district, of which there are three.

a super drug in Worcester, Tesco's in Seaford,

and the former Wilkinson store in Great Bridge,

which I'm reliably informed is not West Bromwich,

it's Great Bridge, nowhere near West Bromwich.

So we can provide you with those investment properties

within the Cotswold district.

There is one more that's significant,

which is why it's named, which is 27A Dyer Street,

but there will be investment properties

such as Ably House in Blackjack Street

that form part of that because it is held for investment purposes.

Councillor Nigel Robbins - 1:35:44

So nothing sinister there we think no casinos that are being disguised.

Councillor Helene Mansilla - 1:35:56

Yeah related to that table on page 13 14 and 15 regarding commercial investments

What specific measures are in place to mitigate the risk

of potential valuation losses in commercial property portfolio,

particularly given their recent market value reductions?

And how will these measures ensure sustainable revenue

generation to support the Council's medium -term financial plan.

Councillor Nigel Robbins - 1:36:42

David Stanley, Deputy CEO - 1:36:46

In terms of the Council's investment properties, particularly the out -of -district investment

They were purchased some years ago with capital receipts.

The council adopted its asset management strategy early in the 2024 and that set out the process

by which the council would review its asset holdings and particularly around the out of

district investment properties.

There's a piece of work that is being undertaken in February to do a market appraisal of those

investment properties to say what are they worth in terms of their value, what income

are they generating, what's the condition of them, what work would need to be done,

what's the value of the lease, to then enable a clear decision to be made as to whether

or not that is something the council would continue to hold, would make an alternative

decision on.

But you're quite right in understanding that there is an income return that flows through

the council's revenue budget and MTFS in relation to those investment properties.

I've been very mindful of that and that with retail properties in particular

Superdrug, the former Wilco's Tesco, the direction of travel on retail property

investments has been for lower rental returns. The MTFS has been aware of that

and has made that adjustment over the last two years so we have in a way

Reduce the council's reliance on that investment income to support the MTFS

Which then allows for that decision on whether to hold?

Do it reinvest within that property or do something else an easier?

conversation

What you don't want is where the council is very reliant on that investment income to support its day -to -day

services so it's been a conscious decision from a

a financial planning point of view to understand the nature of that risk and to start planning

for that because with changes that were made in 2020 it is much harder now for councils

to hold investment properties outside of its district or its borough boundaries. It's one

of the changes that was made to the way capital financing works so effectively we can continue

to hold those properties what we cannot do is dispose of a property and then go

and buy another one that's out of district that would put us in a very

difficult position because what would happen with that is we would lose the

ability to borrow from the PWLB for a period of I think it's about three years

given that the PWLB is probably the most attractive way for the council to

undertake external borrowing, that could be quite

a costly issue.

So, overall, the direction of travel has been, from

the government's perspective and, I suppose,

a regulatory perspective, is they are seeking

councils to make decisions that would see them exiting

from that type of investment.

So, it's something that we'd be mindful of.

Thank you for the question.

Councillor Nigel Robbins - 1:39:58

Councillor Coleman, I think you had your hand up.

Thank you, Chair.

Councillor Patrick Coleman - 1:40:04

It's that table on page 14.

This is one of the ones that's only a draft, isn't it?

So I just thought line by line.

I think there's a minus that should be a plus in the second one, I think.

So that's 27 8 Dire Street.

Should be a plus.

Yeah, you all spotted it as well.

It's 10 grand there.

And...

I don't need 10 grand.

Now look, excuse me, I'm trying to...

You've completed about 2000 before.

All this shows is that we've been regularly updating our values,

but we haven't done our arithmetic yet.

Not totally anyway.

And I think some of the others are right and some of them aren't.

I'll just leave it at that.

Thank you.

Councillor Nigel Robbins - 1:40:55

Let's have a little bit more decorum please, Members.

Are there any further questions? I do note that of course a council is required, as it

says on the front page, to approve the strategies before the 1st of April. I don't think that

means that we're going to get the opportunity in all it can governance before that time

to comment further, does it?

I'm out of time.

David Stanley, Deputy CEO - 1:41:32

Yeah, I mean, in terms of these are draft reports that the numbers,

particularly around the reserve levels and capital programme will be changing

and giving that some consideration

here in the draft is useful but clearly there will be another version of the report that goes to

Council. My view on that would be to ensure that you

members of the audit and governance committee have the opportunity to pass comments to the

chair of the committee on those finalised reports and those comments can then be considered

in the full council meeting on the 24th of February so that you're able then to provide

that final view on the final version rather than having the draft that you've had tonight

which clearly needs a little bit more finessing particularly around the arithmetic.

Can we take that point, Councillor Colman?

Councillor Wiggings.

Councillor Nigel Robbins - 1:42:27

It's more a comment than a question.

We relate to risks and interests and in 2007, when both Councillor Colman and I were here,

we thought the Wilko's thing was the best thing since sliced bread, because the interest rates were so high.

We got it wrong. If we'd have been buying AI shares in the last couple of weeks, we'd have also got it wrong by a horrific amount.

Perhaps it's not so much the risk, the amount of investment we should be looking at.

Councillor Nigel Robbins - 1:43:06

Comments? I have nothing to say on that.

Officer - 1:43:46

Councillor Nigel Robbins - 1:43:48

Thanks chair I thought you'd be more looking forward to the item after me.

10 Internal Audit Progress Report

Officer - 1:43:50

This is your usual report and it gives you an update of the work that the

internal audit team conducted on behalf of Cotswold District Council. It is a rather

large report tonight because when I looked earlier I found we issued eight final

reports for the council, three of which have substantial assurances, two with

reasonable. There is a limited one. And you have two others which are advisory reports.

And the reason we have issued those as advisory, because some of those services and responsibilities

are coming back to the council with the transition of services from public back to the council.

So it's things that the council may want to consider going forward, which is why we didn't

put an assurance on those audits. You've also got an update at Annex B on the

the Open Agreed Actions and what you've also got to

annexe tonight is a very draft version of a plan for 2025 -26.

So I brought this to members just for them to at some point

they'd like to read what I've suggested but make any more

suggestions to me either through email or give me a quick ring.

Any ideas would be much appreciated but happy to try and

answer any questions, Chair.

Councillor Nigel Robbins - 1:45:14

Thank you for the draft internal audit plan. That's very much what I hoped for. Quite a

bit more detail on the areas you're proposing to investigate. That's very good.

Well, who would like to start? I'm sure there's plenty to get our teeth into.

Councillor Jeremy Theyer - 1:45:33

Just one little bit, I don't know if it's to do with audit, it was just more the emergency planning and falling back onto Publica.

If all the councils are pulling out of Publica, so I've been told, then there won't be planning officers there to do emergency planning, surely.

So why are we actually putting that in?

I don't know.

Councillor Nigel Robbins - 1:46:02

It's exactly a question I put to our Deputy Chief Executive yesterday.

So would you like to get?

David Stanley, Deputy CEO - 1:46:16

So the emergency planning service will remain a service provided by Publica.

What we have been doing as a result of some of the changes that have taken place,

a lot of the staff that were providing the on -call cover for emergency planning were the assistant directors in public.

And clearly some of those assistant directors have left, some of them have transferred across to individual councils.

What's in place is a section 113 agreement where us as statutory officers across Cotswold,

Forest Street, and West Oxford can provide that emergency planning support at a strategic level.

The next level down, which is the sort of more tactical level, is adequately covered by public or staff in the emergency planning team.

There's a detailed on -call rota with detailed guidance and contact to that.

So the Emergency Planning Service, I think in view of the three partner councils, when

looking at the way in which services may transfer from public to the council, felt that it was

being provided adequately and robustly, is probably a better word than adequate, by the

existing arrangements.

What's changed is the nature of the gold level or strategic support should the local resilience

forum indicate there's a major incident that needs that type of support but at

the more tactical level there's adequate cover within that team.

Councillor Nigel Robbins - 1:47:51

Officer - 1:47:53

Yes of course you will. Just to hopefully give you a bit more

reassurance there are regular meetings between that the emergency planning team

have created of which I'm a member of and we are trained that we could work

for every council if we needed to. Granted my base would be Cotswold so

I'm part of the emergency planning team, I'm part of the coordination team, I'm

actually classed as a rest center manager as well. So it's not just there

are retained staff as well as external staff that are also part

of those groups and we're going through all tactical training sessions in the

near future and we're going to do a real live rest center exercise in February.

Thank you for that.

Excellent.

Councillor Nigel Robbins - 1:48:35

Thank you, Geoff.

Councillor Len Wilkins - 1:48:41

I was looking extremely worried when I read the data protection and data breaches.

I have one inconsistent process for dealing with breach breaches.

We have problems with identifying errors and inconsistencies.

There were no formal arrangements for reported data breaches.

and we have two people, roles should be separated.

One of those suggestions, are they mandatory?

In which case that is great, that solves the problem.

Or is this now going to be put in a cupboard somewhere

and forgotten about?

Councillor Nigel Robbins - 1:49:25

We wouldn't allow it to be put in a cupboard

and forgotten about.

Officer - 1:49:28

Hopefully again that gives you some reassurance.

Again this was the advisory piece of work because of the changes happening with publica.

And this was at a point in time and perhaps what we should have put in this report was

to when this audit was conducted, which we haven't.

At the point in time when we started the audit everything was within publica and the data

breach register wasn't of a very good standard.

It has now moved services within Public Health and I can confirm that that data breach register

is now of a very good standard and everything is there that we would expect to see.

As to your question as to being suggestions or mandatory, I think it's probably more best

practice, but a lot of this comes from the Information Commissioner's office, so we use

their guidance to undertake this audit.

Councillor Nigel Robbins - 1:50:28

Thank you. Yes? Just a moment, Helen. We've got a comment on this very precise point, I think, from David.

David Stanley, Deputy CEO - 1:50:40

Thank you, Chair. More general point linking the advisory report on data protection, data breaches, and the advisory report further on human resources.

What both of those reports are picking up is that the

way in which the internal controls were working within

public care aren't adequate for when those services

have transferred across to the councils.

And I've had a conversation with the chief executive

today in advance of this meeting, and what the chief

executive, Rob, was keen for me to stress was that this

isn't something that is going to be buried away in a

locked away. We are going to do something about it. What we were proposed to do is,

what this is highlighting is that as those services are transferring, we need to review

those internal controls and give you as a committee the assurance that those internal

controls can be improved and have been actioned. Particularly if we take human resources example,

the human resources report, the first key conclusion says there's no clear corporate

monitoring sickness absence reporting undertaken by HR. Clearly with the workforce that's come

across from Publica to the Council, we need to change that.

It's almost scary.

And I suppose what it's highlighting is that approach

that's in Publica that has probably worked for Publica

won't work for the Council, and we need to respond to that.

So that's the assurance I will give you as members,

that there are findings in here that are advisory, that are

best practice, they're recommended.

We will be taking some steps, and we'll

come back to a future meeting of the Audit Committee, which

I believe the next meeting is in May.

and set out very clearly what the issues were that have been identified, what action we've

taken and what action we need to take on other issues as they come through.

Because I don't think this will be the only area that gets picked up.

And as an example, on the planning service, we do have the planning advisory service coming

in towards the end of March, and no doubt they will come back with a report that will

suggest some improvements that can be made to the way that the planning service operates,

which will also include issues around internal controls, governments and so on.

Councillor Nigel Robbins - 1:52:52

Ellen was that your concern or another matter?

Councillor Nigel Robbins - 1:53:05

Councillor Helene Mansilla - 1:53:08

Christopher Bass - 1:53:20

Councillor Nigel Robbins - 1:53:27

Christopher Bass - 1:53:28

I just want to, on the data breaches, agree with the comments around the level of concern

that it flags up, but definitely understand what Dave is explaining around more the future

risk and using this as an opportunity to get under control.

but just trying to work out based on some of the commentary it feels probable that there's been a statutory breach of GDPR

Did we actually manage to ascertain if there's any statutory breach or can we be assured that there hasn't been?

Officer - 1:53:56

Off the top of my head, I don't know but what I do I'll look tomorrow and I'll send an email to the committee

The only thing I just want you to add chair was just to reassure councillor Wilkins that we'll be doing a follow -up of both of those

the HR audit and the data breach audit anyway and those will be included in the

25 -26 audit plan so you'll see something next year.

Councillor Nigel Robbins - 1:54:19

Looking through at the judgments Lucy that are given they were given in the

in the frontispiece of this advisory high reasonable mid limited mid

substantial advisory it's quite confusing if you're not an expert to

know exactly what the gradations are.

You might need to produce a sort of rainbow type

table which colors all these particular judgments.

So we know.

Oh, gosh.

Councillor Helene Mansilla - 1:55:07

If I can take you to page 50 please. The report here highlights significant gaps in budget

monitoring and oversight of members' expenses, including the lack of evidence for mileage

and expenses claims. The question is what specific measures are being implemented to

ensure a robust budget monitoring and proper authorisation of claims and how will these

measures mitigate the risk of reputational damage to CDC.

Thank you.

David?

Councillor Nigel Robbins - 1:55:53

If I take the first point first, clearly.

David Stanley, Deputy CEO - 1:55:58

Budget monitoring is insufficient.

That's quite a stark observation and conclusion from the internal audit report.

This was an area that I did highlight to Lucy prior to the start of the audit because I

was aware that wasn't an area that was being reviewed as it should be.

To make it clear for the public record, this is not a member claiming something they're

not entitled to.

This is a member that shouldn't have received the Special Responsibility Allowance.

That wasn't actioned in terms of that change.

And the monitoring, which if it had taken place, would have been picked up fairly quickly.

So the budget monitoring of which member is being paid what, which would have been quite

clear that there was a member and received a Special Responsibility Allowance, they shouldn't

be, would have covered that off.

So that conversation has been had with the service

to ensure that democratic services are taking

more responsibility for that.

We do have detailed reports that are produced every month

that I'm now reviewing in terms of the payroll

now that we have that clear oversight of payroll

following phase one.

So it is something that there is more than one

control in place.

So there's the regular monitoring the service should do

from a democratic services point of view,

but also we're picking up through the way

in which the net pay is being signed off every month, every single change that should be

happening in payroll.

What is much more difficult to do, and this is not an excuse but it's just to illustrate,

if you're expecting a certain type of payment to be a regular payment and you don't pick

it up early enough, it becomes the norm.

And if you're looking for change but you've got a payment that's being made month after

month after month, you are not picking up the variation.

It is being very clear with the instruction to payroll

that when members' responsibility changes,

they get actioned, and that as a result of that instruction

being given to payroll, that the monitoring takes place.

That will, I suppose, give rise to some concern,

particularly on the second point that expenses claims

should be approved with adequate supporting evidence.

My position on that is in terms of an employee, if I've taken a journey from Trinity Road

to Shirehall, let's say that's 25 miles, that's what I'll evidence.

There will be a clear reason for that in the expense claim.

It will say I went to a meeting at Shirehall to talk about X, Y, Z.

That's a diary entry.

Rob is my line manager, be aware that that's where I was going.

That evidence is easier to verify than some of the claims

that might be made by members in relation to their board member

responsibilities if they're visiting different parish and

town council meetings or they're doing on -site visits.

So that's not to say that there shouldn't be a good evidence

base, but I think we have to understand that the nature of

the work that members do and the expenses they claim in respect to that might have slightly

less supporting evidence than the type of claim that I would put in.

But clearly to residents, council taxpayers of the district, it is something that we need

to ensure that we can give them that satisfaction that this is being carefully controlled and

monitored.

But clearly there's been, as you'll see from the date of the report, this was a report

that Lucy's team did in October.

There has been detailed discussions

between Lucy's team, Democratic Services, and myself

to ensure that once this report comes through,

that significant changes in process

have been understood and actioned.

Thank you.

Patrick.

Councillor Nigel Robbins - 2:00:06

Councillor Patrick Coleman - 2:00:09

Yes, thank you, Chair.

I do recall member misbehaviour is not totally unknown in other councils and in the past.

I won't go into some of the lovely anecdotes I have.

This is a serious point.

And what I really wanted to ask was that a copy of this report on its own with a covering letter

goes to the leader, the deputy leader and the other group leaders.

So that they know perhaps with a commentary saying that things are being put right.

because I didn't realize this was from October.

This is some time ago now. Not that much.

But I mean, seriously, it's down to members

to make accurate claims with accurate evidence.

Some of us with short journeys can't be bothered,

I must admit.

But we could, and if we did,

then we should supply all the evidence.

And in the past, on the little bit I've done,

I've always had help from Democratic Services,

which I'm grateful. But yes, it's not the size of the money, it's the exposure and the

reputational damage that this sort of thing can cause. Thank you.

That's a good suggestion. I'd be surprised if it hadn't been discussed by the leader

Councillor Nigel Robbins - 2:01:23

and deputy leader and the leader of the other parties. I'm sure it has been, but...

But we'll ensure...

You're in short, will you?

Yes, thank you very much.

Councillor Len Wilkins - 2:01:39

Thanks, Chair. I've got a rural ward.

I do a fair amount of miles to parish council meetings, but I'd be quite happy if you said you can't collect it, because we do get a members' allowance.

And that way you haven't got any problems with double checking.

It would be fair.

Possibly not.

Of course it would be fair.

It's an approved duty, you should claim to try.

You won't, okay.

Yes, Andrea, you might have a view on this.

Councillor Nigel Robbins - 2:02:09

Thank you.

If I could just ask you to turn your microphone.

Angela Claridge - 2:02:23

Turned everybody else off, thank you.

So the members allowance scheme,

we have an independent remuneration panel

individuals have been recruited from the public who some of you will be aware

because you've been you've been interviewed by them in the past and

completed questionnaires. So we take the report to council for sign -off and the

last one went through at the start of the 2023 council I think it was May we

took it to the annual council then so that's when the scheme was signed off

and in there it states clearly that you're entitled to claim mileage as it

with other allowances. So obviously it's up to you if you choose not to but you're

absolutely entitled to claim mileage in most circumstances as you are you know

other sorts of subsistence and caring allowances and what have you so it's all

set out in the scheme so up to you and as Councillor Coleman said he does short

journeys and he chooses not to but you know we've got a clear

scheme and that did get a clean bill of health from Lucy and the team so that

was great.

Councillor Nigel Robbins - 2:03:31

Okay. Are there any other? Yes? Chris first and then Helen.

Christopher Bass - 2:03:37

Yeah. I was just wondering what the general control environment was for expenses and what

level of self -auditing is happening as part of that process. It seems quite unusual that

it's possible to process expense claims without receipts and without proper authorization.

So obviously as has already been pointed out this audit was undertaken in October

Angela Claridge - 2:04:05

so to put no finer point on it we've had a chance to get our house in order and

you know a lot of arrangements have now been put in place to ensure that

expenses are evidenced and that you know if we need to go back and check was

Councillor Wilkins at Audit and Governance Committee tonight you know

Yes, he was.

It is disappointing that we had the audit results that we did, but I am pleased to report

to the committee that all the recommendations have been accepted and put in place.

Thank you.

Councillor Nigel Robbins - 2:04:38

Councillor Helene Mansilla - 2:04:45

My question relates to a different report.

Are we moving from reports?

Councillor Nigel Robbins - 2:04:53

Councillor Helene Mansilla - 2:04:53

If we move into page 51, the government and grant funding, which is a December report,

with approximately 71K of the IAU growth hub project funding remaining unspent and a March

2025 deadline, what specific actions are being taken to accelerate the effective utilisation

of these funds? And how management is ensuring that the project's outputs and outcomes remain

aligned with the wider objectives of the UKSPF and REPF to avoid risk of repayment.

Thank you.

Councillor Nigel Robbins - 2:05:48

Thank you for that question. I would have asked that myself. It is quite a lot of money,

isn't it, to remain unspent. I am sure it is now being targeted, but let's find out.

David Stanley, Deputy CEO - 2:06:01

Yes, in terms of what this audit report has identified is some unspent allocation both

in UK SPF and REPF.

We are mindful that there is an absolute cut -off point where the government have already indicated

that if you haven't spent it, it goes back.

That said, there has been quite a bit of discussion led by Paul James with the delivery group

meeting to understand how could they make best use of those funds.

and we have had conversations and email exchanges around ways in which the council can minimize

any unspent balance and that will include looking at ways in which we can support communities

with projects that could be spent prior to the 31st of March that fit within the overall

UKSPF guidance and objectives.

and that's included looking at Reesdale Hall in Mortland Marsh, supporting the

flood wardens, supporting some of the work that we've done on the old station.

So where possible we're looking at ways in which we can maximize the use of the

grant over the short period of time that we've got remaining to ensure that we

don't. There is quite a rigid reporting process in place for UK SPF and the sort

the support admin support Mickey that provides that support on behalf of the

three councils has been the easing with the UK SPF and RPF to make sure that

where we are looking to change the way in which we utilize in those funds it's

still within the overall framework that we've signed up to as a council and

there's a robust quarterly reporting process that lists in quite exquisite

detail what we spend the money on what the outcomes are how we were evidence

that I sign off on a quarterly basis.

So I'm satisfied that adequate steps are being taken

to minimise that position and that I'm reasonably confident,

as I am, based on the email that was sent on Wednesday

of the 22nd of January, that there is adequate ways

in which we can make best use of that resource

that is within both the conditions of both grants

and within the overall framework.

Thank you David. I'm sure the committee would like to have this

Councillor Nigel Robbins - 2:08:21

brought back at the next committee meeting or whenever there's a vote to find out exactly how the money was spent and perhaps was it the result of extreme efficiency or an exaggerated expectations of what a particular project might cost. Thank you for that.

By all means, yes please.

Councillor Nigel Robbins - 2:08:52

I have a question on a different report, so moving on.

If we move into page 54, revenues and benefits, so under key conclusions we have unresolved

values in a suspense account dating back to 2020, as well as issues with audit trails

and negative balances. So what specific steps are being taken? A, to resolve these legacy

entries, sorry, to resolve these legacy entries, B, ensure accurate reconciliation moving forward,

and C, prevent similarities from re -occurring, especially given the risk of error or even

Councillor Nigel Robbins - 2:10:04

I'm not at the moment, apart from the agreed action that is in place and there is an implementation

Officer - 2:10:10

date of 31 March.

We will follow that up in preparation for the next order committee.

Thank you, Chair.

Councillor Nigel Robbins - 2:10:22

David Stanley, Deputy CEO - 2:10:24

In terms of historic values in the suspense account that dates back some years, that will

be considered as part of the year end process. So the agreed implementation date as Lucy

set out is the end of March, which is the end of the financial year. For purposes of

this committee, we don't leave the end of March until we close the accounts down. So

whilst the absolute deadline is a firm 31st of March, we'll process entries up to a point

after that to ensure the accounts reflect that.

So we will review that once the revenues and benefits officers

have put that in front of me in terms of what those

suspense account balances are.

In terms of the suspense account negative values and positive

values, that's a bit of matching that goes on.

So when payments are received, that it's not clear which

account they go to.

They go into the suspense account.

What you try and do with the suspense account is through

that reconciliation process, review those entries and clear

them off to the right place.

That's where your regular reconciliation work would be of benefit.

So that, I think, is making sure that the assurance manager liaise with colleagues in

finance, and that would be, largely will be Michelle, but also others in the finance team,

to make sure that where those monies are being received, we are taking every step possible

to identify where that should go.

And it's not always clear from the way the payments come in that it goes to account number

one, two, three, four.

It might have some errors of transposition in the account number.

It might not have the right details.

But that's where you need that detailed review through finance and revenues and benefits

staff interrogating both the financial system in terms of what's being paid in and the revenues

and benefits system and reconciling those off.

but clearly where it's not possible there's a review as part of the end of year process

to ensure that we are minimizing those unclear balances.

Thank you.

Thanks.

Thank you for pointing that out.

Thank you so much, Lucy.

Councillor Nigel Robbins - 2:12:44

Thank you for your questions, everybody.

We move to a different aspect of the meeting now, which is where the papers come in concern.

If we wish to exclude the present public from the meeting, I am reading from a set text,

during consideration of any of the items on the exempt from publication part of the agenda,

we will have to have the committee pass a resolution in accordance with the provisions

of paragraph 42B of the local authorities' executive arrangements, access to information,

England regulations 2012. Notice how easily that floated off the tongue. On the grounds

that their presence could involve the likely disclosure of exempt information as described

in specific paragraphs of schedule 12A of the local government act 1972, do we wish

to go into closed session essentially.

If so, would you please signify your agreement

because this is cyber security.

Thank you.

I think that's very clear that we do want this.

Thank you so much.

So we go offline.

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Audit and Governance Committee - Tuesday 28 January 2025, 4:00pm - Slides Tab - Cotswold District Council Webcasting