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Joint Audit Committee Minutes 23 July 2019

Meeting Minutes


Date: Tuesday July 23rd
Time: 12pm
Location: Office of the Police & Crime Commissioner, St George’s Chambers, St George’s Street, Winchester

Committee Members:
Melvyn Neate (MN) Chair
Liz Mackenzie (LM) Vice Chair
Peter Lloyd (PL)
Katherine Pears (KP)
Gordon Manickam (GM)

In Attendance:
PCC Michael Lane (ML) Office of the Police and Crime Commissioner
CC Olivia Pinkney (OP) Hampshire Constabulary
Mr Andrew Lowe (AL) Chief Finance Officer for the Police and Crime Commissioner
Mr. Richard Croucher (RC) Chief Finance Officer for the Chief Constable, Hampshire Constabulary
Ms Anne Hibbert (AH) Corporate Accounting Manager (HCC)
Mr Rob Sarfas (RS) Principal Accountant (HCC)
Ms Karen Shaw (KS) Chief Internal Auditor, OPCC and HC
Ms Clare Simkin (CS) Head of Organisational Learning, HC
Mr Richard Andrews (RA) Head of Standards and Compliance
Mr Rob Griffiths (RG) Strategic Risk Manager, Hampshire Constabulary
Ms Maria Grindley (MG) Associate Partner, Ernst and Young
Ms Sarah Croft (SC) Manager, Ernst and Young
Mr Neil Shovell (NS) Chief Internal Auditor, Thames Valley Police (by conference call)
Ms Nadia Siouty-Burke (NSB) Programme Office Manager, OPCC
Ms Shirley Semke (SS) Executive Office Manager, OPCC (Minutes)

AGENDA

PART 1- MATTERS TO BE CONSIDERED IN THE PRESENCE OF THE PRESS AND PUBLIC (this session will commence at 12pm)

DECLARATION OF INTERESTS

All members who believe they have a personal or prejudicial interest in any matter to be considered at the meeting must declare that interest and consider whether to leave the meeting whilst the matter is discussed, save for exercising any right to speak. The declaration should be made at the time of the relevant debate.

387. APOLOGIES
DCC Sara Glen, Terry Lowe

388. CHAIR’S REPORT (ITEM 3)
The Chair was invited to attend a recent meeting of the TVP JIAC (Thames Valley Police Joint Internal Audit Committee) and will write a note to share with members.

389. MINUTES OF THE MEETING HELD ON 24th APRIL 2019, MATTERS ARISING AND ACTION LOG (ITEM 4)
Item 382, page 3: KS advised that the Order to Cash rating is adequate not inadequate. The minutes will be amended.
The minutes were agreed as a correct record.

390. STATEMENT OF ACCOUNTS 2018/19 (ITEM 5)
The Statement of Accounts was presented by AH, Corporate Accounting Manager. The Statement is a legislative requirement and follows the CIPFA (Chartered Institute of Public Finance and Accountancy) Code of Practice and is subject to external audit opinion. There are two changes to note, IFRS (International Financial Reporting Standards) 9 and 15. Apart from these changes as required by the Code of Practice there have been no changes in accounting policies this year. The McCloud judgement of the 27th June 2019 resulted in an updated actuarial report for the net pension liability.
MN thanked AH for the Statement of Accounts training session which had preceded the Committee and had provided clarification and assurance.
AL noted on the summary on p.6 the text is in the past tense. This will be updated.
MN asked how IFRS changes are handled nationally to ensure consistency across the public sector. MG advised a Central Technical Group meets monthly or more often nearer accounts sign-off. MN further asked if there is work to complete on the accounts and if the opinion is likely to change. MG explained that there is just some writing up to complete and she is confident that the unqualified opinion will remain.
MN commented on the complexity and length of the accounts and, supported by PL, asked whether it is possible to provide a simplified version of the accounts to improve understanding and public confidence. This was supported by the CC and PCC.
MN expressed his thanks to all concerned for the completion of the accounts. This was supported by the PCC and CC. The CC thanked the Chair for the committee’s contribution.
The accounts were signed by the PCC and CC together with the letter of representation.
The PCC left the meeting.

391. EXTERNAL AUDIT – ANNUAL AUDIT PROGRESS REPORT (ITEM 6)
The report was presented by the external auditors.
The Value for Money report was completed with no issues.
SG explained the land and buildings valuation as a 5 year rolling programme. An explanation of the indices marker was given by MG.
The pension valuation was explained (p.11).
On p.9, Judgement of capitalization of expenditure, the wording will be amended slightly after discussion with the CFO.
SC outlined the change proposed on p.29 of the report. There is no ‘official’ process when processing journals within the system. EY recommend that the documentation of the process is undertaken by budget holders to enhance this control by evidencing the review the budget holders complete in order to demonstrate it operates effectively.

392. INTERNAL AUDIT PROGRESS REPORT 2018/19 (ITEM 7)
KS presented the report noting that it is early days yet for the 2019/2020 audit cycle.
MN questioned the management actions overdue and expressed concerns regarding recommendations and follow-up. Further narrative to support this was requested. CS advised a report was submitted outlining the reasons and progress made on overdue specific actions.
PL offered his thanks for the report and asked why the high priority overdue actions were not all reported. KS reiterated the actions process, advising the report is high level information only. It was agreed that future meetings will receive a report from CS in the confidential section of the agenda to underpin the information.
KS advised of the two-way process between Internal Audit and HC, while MN asked whether the CC and PCC are aware of outstanding actions. The CC advised the DCC is made aware at quarterly meetings. CS provided further explanation of the procedure.
ML confirmed his regular briefing and the triaging of risk with planning and planned review. Urgent actions are addressed immediately they are received.
The CC was encouraged and pleased by the Committee pushing hard on this issue.
Action 85 (SS): Agenda item to be added to the Confidential section of the agenda: Update on Overdue Audit Actions.

393. ANNUAL AUDIT OPINION 2018/19 (ITEM 8)
The report, presented by KS is a PSIA (Public Sector Internal Audit) requirement and complies with the standards. An overall adequate opinion is given with details provided on p.5 and 6 of the report and for the two items with limited opinion checks have been carried out to ensure satisfactory resolution.
PL queried the graphic on p.14 with a red down arrow which indicates some work is not yet completed.
LM referred to p.11, paragraph 2 for an understanding of parameters. KS provided an explanation.
GM noted his congratulations on the customer satisfaction rating of 99%.
MN asked about the liaison between HCC and EY (Ernst &Young). An explanation was provided by MG and supported by KS who advised internal and external auditors meet periodically to identify and resolve any issues.

394. TREASURY MANAGEMENT OUTTURN REPORT (ITEM 9)
RS introduced the report and gave an explanation of table 1, Balance Sheet Summary and table 2, Treasury Management Summary.
The underlying need to borrow has increased and cash balances reduced over the year.
There is likely to be a need for additional external borrowing in the future and the team are liaising with Arlingclose (Financial Management Advisors) to review and mange this.
Table 4, Investment Position outlines the ongoing difference in investments.
Table 5, Investment benchmarking indicates key performance figures and give reassurance of better performance than comparable authorities.
The report confirms compliance with the CIPFA (Chartered Institute of Public Finance and Accountancy) code of practice.
MN questioned point 7.8 about Brexit and an explanation was provided by RS.
PL referred to table 5. An explanation was provided by RS together with an explanation of point 5.3, likely new borrowing. AL supported RS and advised discussions are always ongoing with both CFOs (Chief Finance Officers).
OP Highlighted the swing in annual budgeting and the real challenge of cash-flow discussions.
LM referred to point 7.7 and asked whether management costs will increase. It was advised that nothing should change as management of cash is part of daily activity.

395. POLICY REVIEW (ITEM 10)
RA presented the OPCC report. There are no reviews overdue. The number of Procedures and Processes on the database has increased by two following a visit from the ICO (Information Commissioner’s Office) Audit team. The number is anticipated to increase further.
CS presented the HC report. Efforts have been made to reduce the number of FPPs (Force Policies and Procedures), though the number has increased slightly over the last 12 months in line with changing areas of business and national guidance. There are currently 21 FPPS overdue review awaiting resources.
 MN asked whether the outstanding items due for review are considered a risk. CS confirmed all FPPs are reviewed annually and those outstanding will only be small revisions with fundamental and legislative changes picked up quickly. Those FPPs with areas of known risk are advised to owners 3 months ahead of the due date for review in order that review is timely.

396. DATE OF NEXT MEETING/FORWARD PLAN (ITEM 11)
The next meeting is Thursday December 5th 2019.

397. ANY OTHER BUSINESS (ITEM 12)
There was no other business.

ABOUT THIS AGENDA:

This agenda is available on Police and Crime Commissioner’s website (www.hampshire-pcc.gov.uk) and can be provided, on request to 01962 871595, in alternative versions (such as large print, Braille or audio) and in alternative languages. Any papers are also available on request.

ABOUT THIS MEETING:

The press and public are welcome to attend the public sessions of the meeting.

If you have any particular access requirements, for example if you require wheelchair access or a hearing loop, please contact us on 01962 871595 in advance of the meeting to make the necessary arrangements.

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