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Audit, Governance & Standards Committee

Annual Report

2016/17

Introduction by Chairman of Audit, Governance and Standards Committee

This report provides an overview of the Audit, Governance and Standards Committee’s activity during the municipal year 2016/17.

I am pleased to report the continued good work of the Committee in providing an independent overview of the Council’s governance.  This role includes detailed consideration of the work of external and internal audit plus robust scrutiny and challenge of the Council’s financial performance and, through our Ethical Standards role, the approach the Council takes in investigating complaints made about Members.

During 2016/17 the Committee met five times and was pleased to note, among the highlights, a further unqualified accounts and value for money opinion from our external auditors and a positive conclusion on the Council’s control and governance from our internal auditors.

Once again during 2016/17 the Committee is grateful for the contributions of its members and parish members, as well as to those officers who support its work.

                                    Councillor Steve McLoughlin

Audit, Governance & Standards Committee Chairman (2016/17)

Introduction

Maidstone Borough Council has always supported and understood the value and benefits of having an independent Audit Committee. The role of the committee was expanded in 2015 when the Council established the Audit, Governance and Standards (AGS) Committee. Its functions incorporate those undertaken by the former Audit Committee as well as some of the functions previously the responsibility of the Standards Committee.

The AGS Committee is an essential check on the corporate governance framework, providing an independent and high-level overview of internal control, governance and risk management for the Council.

The Committee monitors internal and external audit activity, reviews and comments on the effectiveness of the Council’s regulatory framework and reviews and approves the Council’s annual statements of accounts.

The Committee is independent from the Council’s executive management and Service Committee functions and has clear reporting lines and rights of access to discharge its responsibilities in line with its Terms of Reference (Appendix I). This includes direct access to the Council’s Appointed Auditor and Head of Audit Partnership without the presence of other officers where appropriate.

The Committee is not a substitute for the management function in relation to internal or external audit, risk management, governance, or any other review or assurance function. It is the Committee's role to examine these functions, and to offer views and recommendations on the way the management of these functions is conducted.

Membership

The Audit, Governance and Standards Committee comprises of 11 members: 9 Borough Councillors and 2 Parish Councillors.

Meetings & Attendance

Business

During the year the Audit, Governance & Standards Committee has commented, examined and reviewed the following:

The work of the Committee during 2016/17 has resulted in recommendations which have enhanced the operation of the Committee and wider Council functions.  In particular:

-          Discussion around the Annual Governance Statement ahead of its approval at Policy & Resources Committee

-          Amendments to the Whistleblowing Policy and endorsement of raising its profile

-          Requests for assurances over the adequacy of the Councils contract monitoring arrangements

-          Regular budget strategy risk updates reviewed and commented on by Members

The business outlined above has been fulfilled in accordance with the Committees agreed Terms of Reference (detailed in Appendix I).  Furthermore the Committee has, where applicable to 2016/17, undertaken the functions outlined within the Terms.

Sources of Assurance

In drawing a conclusion for the year, the Audit, Governance and Standards Committee gained assurance from the following sources:

The work of Internal Audit (Mid Kent Audit)

The Head of Audit Partnership issued an unqualified Head of Audit Opinion for 2015/16 which concluded that the Council was operating an effective sound system of internal control, governance and risk management. Throughout the year the Committee has been kept up to date with delivery of the Internal Audit plan and implementation of audit recommendations.

The Committee has been kept aware of emerging risks, and enhancements to the risk management process.  They have also been provided with a briefing on the risk management process during the year.

The Internal Audit plan for 17/18 included a breakdown of internal audit assurance work for the coming year, and the Committee were given the opportunity to comment on the work of internal audit prior to endorsing the plan for delivery.

Adverse audit opinions and progress against the implementation of audit recommendations have been presented to the Committee.  At Members’ request the Committee has been provided with regular updates on the implementation of audit recommendations.

The Committee has continued to show its support to the Internal Audit team throughout the year, and has recognised the role, responsibility and authority of the service within the Audit Charter which was agreed by the Committee in March 2016.

Whistleblowing

The Council has agreed its Whistleblowing policy and has taken steps to improve the arrangements for reporting concerns.

The work of External Audit (Grant Thornton)

The external auditors report to the Audit, Governance & Standards Committee providing regular updates on their programme of work. During the year, the External Auditors presented an unqualified value for money conclusion and an unqualified opinion on the financial statements.

The Committee has provided effective challenge to the External Auditors as appropriate and gained assurance from the reports and updates provided during the year.

Finance & Governance Reports 

The Committee provided robust challenge prior to approving the financial reports of the Council in September 2016.

The Committee receives updates on the Councils Treasury Management activity and have provided robust challenge and comment to the overall Strategy and performance of investments. 

The Committee specifically gains assurance from the Annual Governance Statement which is a statutory document that explains the processes and procedures in place to enable the Council to carry out its functions effectively.  The statement is produced following a review of the Council's governance arrangements and includes actions address any significant governance issues identified. The Committee reviewed and approved the 2015/16 Annual Governance Statement.

Dealing with Complaints about Council Members

The Localism Act 2011 obliges Councils to have both a Code of Conduct and a procedure for dealing with allegations that a member has breached that Code of Conduct. The Act further provides that the District/Borough Council for the area is responsible for dealing with complaints against all the Parish and Town Councillors for its area as well as dealing with complaints against Borough Councillors. Full Council, at its meeting on 5 July 2012, resolved to adopt the ‘Kent Procedures’ for dealing with Member Complaints. The ‘Kent Procedures’ are so called because they were devised by the Kent Monitoring Officer Group and have been adopted by Kent County Council and most of the Kent Districts/Boroughs. The concept of proportionality runs through the procedures such that the level of resource and decision on each complaint should be proportionate to the seriousness of the complaint. This very much represents the guidance from Central Government which has stressed Councils should not adopt ‘gold plated’ arrangements.

Under the procedures, authority is delegated to the Monitoring Officer to make an initial assessment of the complaint (in consultation with the Independent Person appointed under the provisions of the Localism Act 2011) and, if appropriate, the Monitoring Officer will seek to resolve the complaint informally.  If it is decided the complaint should be investigated, then following that investigation a Sub-Committee of the Audit, Governance and Standards Committee will determine the complaint.

The Localism Act 2011 sets out the role of the Independent Person in any procedures designed for investigating allegations that a member has breached the Code of Conduct. The Independent Person’s views must be sought and taken into account prior to a decision being made following an investigation into a complaint.  The Independent Person’s views may also be sought at other times during the process.  This Council’s Independent Person, Ms Barbara Varney, was appointed by Full Council in July 2013 following an interview process. 

During the year ending 31 March 2017, 12 new Member complaints were received.  9 of the complaints did not proceed because they did not satisfy either the legal jurisdiction test or the local assessment criteria set out in the Kent Procedures.  The investigations for the remaining 3 complaints were ceased part way through as the members in question resigned and it was not deemed in the public interest to continue.  3 of the complaints related to Borough Councillors.  The remaining 9 complaints related to parish councillors. 

Member Development

In September 2015 the Committee agreed a programme of development briefings to be conducted prior to each Committee meeting.  Members continue to show desire to continually develop their knowledge and skills.

The training delivered in 2016/17 is outlined below:

Proposed Programme 2017/18

The table below sets out the proposed programme of updates and briefings to be delivered in 2017/18:

Conclusion

The Audit, Governance & Standards Committee, in partnership with the Council’s Internal and External Auditors, and with the support of Officers has provided robust and effective independent assurance to the Council on a wide range of risk, governance and internal control areas.

The Audit, Governance & Standards Committee can demonstrate that it has appropriately and effectively fulfilled its duties during 2016/17.

Appendix I

Terms of Reference & Responsibilities