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Joint Audit Committee 22 September 2020

Minutes

Date: Tuesday 22 September 2020
Time: 1pm
Location: Due to COVID-19, the meeting used ‘Teams’ for participants to dial-in.

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

In Attendance:
CC Olivia Pinkney (OP) Hampshire Constabulary
DCC Sara Glen (SG) Hampshire Constabulary
James Payne (JP) Chief Executive, OPCC
Andrew Lowe (AL) Chief Finance Officer for the Police and Crime Commissioner
Richard Croucher (RC) Chief Finance Officer for the Chief Constable, Hampshire Constabulary
Anne Hibbert (AH) Corporate Accounting Manager (HCC)
Rob Sarfas (RS) Principal Accountant (HCC)
Karen Shaw (KS) Chief Internal Auditor, OPCC and HC
Lucy Hutson (LH) C/Supt. Hampshire Constabulary
Gabe Snuggs (GS) Head of Organisational Learning, Hampshire Constabulary
Kevin Suter (KS) Associate partner, Ernst and Young
Sarah Croft (SC) Manager, Ernst and Young
Richard Andrews (RA) Head of Standards and Compliance (OPCC)
Shirley Semke (SS) Executive Office Manager, OPCC (Minutes)

DECLARATION OF INTERESTS
Members were mindful that, where they believed they had a personal or prejudicial interest in any matter to be considered at the meeting, they should at the time of the debate, declare their interest and consider whether to leave the meeting whilst the matter was discussed. There were no declarations of interest.

APOLOGIES
PCC Michael Lane, Nadia Siouty-Burke (Programme Office Manager)

455. CHAIR’S REPORT (ITEM 8)
MN advised the meeting that he has an invitation to attend a virtual session with Tony Redmond, author of a recent report on local authority financial reporting and external audit, on 1 October. MN will provide an update to the next meeting of the Committee.

456. MEMBERS’ REPORTS (ITEM 9)
Nothing to report.

457. MATTERS ARISING AND ACTION LOG (ITEM 10)
Nothing to report.

458. STATEMENT OF ACCOUNTS 2019/2020
The Members thanked AH for her training session earlier in the morning which included an explanation between the draft and latest accounts.
AH confirmed the accounts are prepared in accordance with required legislation and accounting requirements.
The COVID pandemic has seen a change change in statutory deadlines. The timeline for finalising the accounts is extended to 30 November 2020. HCC are working hard with the External Auditors to reach a conclusion by this date.
AH noted advised that there is one small accounting adjustment and the Eastern PIC (Police Investigation Centre) capital adjustment is to be disclosed on the balance sheet. The audit of the accounts is ongoing and no other changes are anticipated.
MN referred to para 6.1- public inspection of accounts where a request was made for information on Contact Management Platform (CMP) expenditure incurred, asking if there had been further follow-up to this request. RC advised he has not seen any.
MN referred to p8 of the PCC statement and the initial uplift of 156 officers, asking whether numbers for future uplifts are known. RC advised no numbers are available at this stage. The allocation of officers to the Regional Organised Crime Units (ROCU) may affect numbers.
MN asked about the process for funding capital expenditure, i.e. the choice between capital receipts, capital grants or revenue. AL confirmed he reviews the best way of funding at any one time.
LM asked whether the current 3-year uplift commitment is likely to be recurring. RC advised the Spending Review is due in the Autumn the outcome of this is awaited to confirm this.
PL referred to the going concern statement from EY, asking if the requirement to produce a cash-flow statement is going to delay matters and if EY are happy with the going concern statement. AL advised he would be updating the statement slightly, while EY confirmed there is more work to do. Changes include more context and numbers to support the words.
MN noted that the CC Statement of Accounts, p57 point 2.4 states that the Scheme of Corporate Governance is reviewed at the JAC. This has not been seen to date and is to be circulated to the next JAC meeting. MN suggests this should be changed to ‘periodically reviewed by the JAC’. AL confirmed this change.

Action 92 (AL): Change p57 point 2.4 to the Scheme of Corporate Governance is periodically reviewed by the JAC.

459. EXTERNAL AUDIT – ANNUAL AUDIT REPORT (ITEM 12)
KS presented the report. The team have substantially completed the audit for 2019/2020 and noted a number of challenges have arisen as a result of Covid-19 which will impact on the audit opinion. A change to regulations came in to force on 30 April 2020, which announced a change in publication date for final, audited accounts to 30 November 2020.
An unqualified opinion is expected on the financial statements.
Consideration is being given to the need to flag Covid-19A judgement on the going concern basis. Work on the going concern is not yet concluded.
SC outlined the Areas of Audit focus p11.
• There were no identified weaknesses in controls, inappropriate judgements applied, journal entries without a business purpose or other transactions outside the normal course of business.
• Under presumed risk of fraud and revenue an identified expenditure is noted which should have gone through balance sheet (NPIC). This is to be corrected.
• P13 Valuation of Land and Buildings Covid is noted as the key change to the uncertainty of value. A difference in the auditor’s analysis of assets not revalued in the year is above the nominal amount and therefore recorded as a misstatement.
• P14 Pension Liability Valuation. The Actuary report was reviewed and no material mistakes identified.
• P15 Going concern work is ongoing as advised by KS

KS: The Value for Money (VFM) statement showed no risks and no matters to report. The independence of the auditors is noted on p.38. KS highlighted the status of the fees. The auditors are not in a position yet to finalise the fees and will bring this back to the next meeting.
MN asked if the situation with the going concern means the accounts are not yet ready to be signed-off and asked about the timescale to resolve this. KS advised there is internal consultation to go through and a mid-October date is likely. There will be no significant changes to the accounts, just a minor change to the going concern disclosure. KS added there is good assurance from the current document.
PL noted the JAC responsibility for the accounts and asked if it is EY opinion that the Committee can say they have reviewed the accounts and there are no issues to raise, or is it necessary for the Chair to see final version. KS advised this is a decision for the Committee. PL confirmed he is happy for the Chair to review the accounts and to delegate to the Chair to approve further minor changes with the support of the Committee.
The CC confirmed she is happy to sign the accounts once the small amendments are concluded.
JP confirmed the PCC is happy with the position and questioned whether a further meeting of the Committee is required when the accounts come forward.

MN noted his thanks for a clean set of accounts and an unqualified opinion.
He commented that the accounts are complicated and not easy reading for the purposes of public accountability

460. INTERNAL AUDIT PROGRESS REPORT (ITEM 13)
KS presented the report on the delivery of the 2020/2021 audit plan. There has been a slower start in delivering reports due to the impact of COVID on operational policing and the request to delay reviews, which impacted on operational staff. Regular Audit Liaison meetings review changes and variations to the plan, and are shown on p.10 with work on two audits to start imminently.
Two audits for 2019/2020 are ongoing with Shared Services escalated and progressing. The Chief Auditor for TVP confirmed to KS that the result of the Collaboration audits would be available for the next meeting. MN asked if there are any outstanding recommendations for TVP. KS advised there are none.
MN noted the significant progress in dealing with outstanding recommendations.

461. TREASURY MANAGEMENT OUTTURN REPORT (ITEM 14)
RS presented the report setting out performance to 31.03.2020. Low interest rates, Brexit and the COVID pandemic have all had a big impact on the economy.
RS further drew attention to table 1 para 5.1 where a typing error was noted and an updated paper circulated.
RS further advised:
• During 2019/2020, the OPCC repaid £0.5m of maturing PWLB debt and did not replace this borrowing. This will reduce the future cost of interest payments on the OPCC’s external debt.
• There is an increase in external pooled funds
• There is an increase in shorter-term investments.
• Table 5 outlines the impact of the falling bank rate, which is noted, will be lower again in 2021.
• Attention was drawn to p8.15, the impact of the COVID pandemic on financial markets and the fall in capital value over the year to March 2020.
• Arlingclose continue to recommend the use of pooled fund investments.
MN referred to the CIPFA Code in para 8.2 and asked if there is ongoing review of the situation. RS advised investments would only be made in counter parties where Arlingclose advice has been sought.
MN further noted that PWLB rates are up. RS rates may go back to where they were before.
PL asked whether the £31m from PWLB is on a term basis or repayable without penalty. RS notes this is payable at maturity with fixed interest repaid six-monthly. They is a hefty penalty for early payment.
PL asked how the arrangement at p6.1 works. An explanation was given by RS AL added there is an option to restructure at any time.

462. POLICY REVIEW (ITEM 15)
15a.PCC
RA presented the report, noting that there is little to report on. Policies marked overdue or due are the ones due for review this year. This would have coincided with a new PCC and a new term of office and they are therefore delayed in line with the election delay due to the COVID pandemic.
15b.HC
GS presented the annual report on Force Policies and Procedures (FPP). With 272 current policies and procedures, the number has reduced considerably.
Fifty-four reviews are overdue, with the majority being updated at present and outstanding items are chased monthly. The current COVID crisis has had an impact on monthly monitoring and GS advised of the ambition for a Strategic Policy and Review Unit to be formed.
KP questioned whether any of those overdue are giving cause for concern or if there is any immediate consequence to any overdue. GS advised that it is usually updating of the policy that is delayed, and the supporting work is done. The COVID impact may have delayed reviews due to relevant Heads of Department and Subject Matter Experts being committed with other priority matters.

463. DATE OF NEXT MEETING/FORWARD PLAN (ITEM 16)
The next meeting is Thursday December 10 at 1pm.

464. ANY OTHER BUSINESS (ITEM 17)
There was no other business.

The meeting closed at 14.52pm

 

Agenda

DATE: Tuesday September 22 2020
TIME: 1pm
VENUE: by Microsoft Teams
CONTACT: Shirley Semke, 07900 912199

 

1. 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.

2. APOLOGIES

PART 1 – MATTERS TO BE CONSIDERED IN PRIVATE

EXCLUSION OF PRESS AND PUBLIC
To resolve that the public be excluded from the meeting during the following items of business, as it is likely, in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the public were present during these items there would be disclosure to them of exempt information within Paragraph 3 & 7 of Part 1 of Schedule 12A to the Local Government Act 1972, being information relating to the financial or business affairs of any authority that hold that information and any action taken or to be taken in connection with the prevention, investigation or prosecution of crime. Further that in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, for the reasons set out in the report.

3. CONFIDENTIAL MINUTES AND ACTION LOG
To receive, and confirm as a correct record, the confidential minutes of the meeting of the Committee held on 23 July 2020.

4. OFFICE OF THE POLICE AND CRIME COMMISSIONER’S STRATEGIC RISK REGISTER UPDATE
To consider the Strategic Risk Register for the OPCC.

5. HAMPSHIRE CONSTABULARY’S STRATEGIC RISK REGISTER UPDATE

To consider the report of the Strategic Risk Register for HC.

6. INTERNAL AUDIT PROGRESS REPORT – CONFIDENTIAL
To consider a confidential report of the Chief Internal Auditor together with copies of the internal audit reports issued since the last report in May 2020.

7. AUDIT REPORT – UPDATE ON ACTIONS OUTSTANDING (late paper)
To consider the report of the Director of Change

PART 2- MATTERS TO BE CONSIDERED IN THE PRESENCE OF THE PRESS AND PUBLIC (this session will commence at 2pm)

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.

8. CHAIR’S REPORT (Oral)
The Chair to report as appropriate.

9. MEMBERS’ REPORTS (Oral)
To receive notification of attendance and appropriate updates at other committees or boards by members.

10. MATTERS ARISING AND ACTION LOG
To review the action log and consider any matters arising.

11. STATEMENT OF ACCOUNTS 2019/2020
To consider the reports of the Chief Finance Officer for the Chief Constable and Chief Finance Officer for the Police and Crime Commissioner.

12. EXTERNAL AUDIT – ANNUAL AUDIT REPORT (late paper)
To consider the report of the External Auditors.

13. INTERNAL AUDIT PROGRESS REPORT 2019/2020
To consider the report of Chief Internal Auditor on progress to date.

14. TREASURY MANAGEMENT OUTTURN REPORT
To consider the report of the Chief Finance Officer on the Treasury Management Outturn Report.

15. POLICY REVIEW
To consider reports from the Deputy Chief Constable and the Head of Standards and Compliance.

16. DATE OF NEXT MEETING/FORWARD PLAN
The next meeting is Thursday December 10 at 1pm

17. ANY OTHER BUSINESS

MEETING CLOSED

PART 3 – PRIVATE DISCUSSION WITH INTERNAL AND EXTERNAL AUDITORS
(IF REQUIRED)

 

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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