No apologies were received.

Members are reminded that they must declare their disclosable pecuniary interests and other registrable or non-registrable interests in any matter being considered at the meeting as set out in Appendix B of the Members’ Code of Conduct and consider if they should leave the room prior to the item being considered. Further advice can be sought from the Monitoring Officer in advance of the meeting.

Members were reminded that they must not participate in the discussion or voting on any matter in which they have a Disclosable Pecuniary Interest and should leave the room prior to the commencement of the debate.

The Minutes of the meeting held on the 14 February 2023 are attached for confirmation. 

Contact Michelle Dulson (01743) 257719

RESOLVED:

That the Minutes of the meeting of the Audit Committee held on the 14 February 2023 be approved as a true record and signed by the Chairman.

Matters arising:

Dog Warden

In response to a query, the Internal Audit Manager explained that the Dog Warden Management update would be on the Agenda for the July meeting as this meeting was just for the Statement of Accounts.

Paragraph 67 – Second line assurance: Treasury Strategy 2023/24

Members sought reassurance on the statement made by the Executive Director of Resources (Section 151 Officer) that ‘local authorities could not go bust as they were underwritten by Central Government’.  In response, the Executive Director of Resources (Section 151 Officer) explained that it was a statement of fact and he explained the way in which local authorities were set up under statute which meant that if it looked like a local authority was going bust certain mechanisms would come in from Central Government to either make a special provision for the use of capital, provision for increasing Council Tax above referendum limits and other mechanisms to ensure that didn’t happen.  In relation to borrowing from other Local Authorities that security was underwritten on the above basis.

Paragraph 62 - Third line assurance: Internal Audit performance report and revised Annual Audit Plan 2022/23

An update was requested about whether the internal audit plan would indeed be completed by year end.  In response, the Head of Policy and Governance explained that the work being delivered by external contractors had been substantially completed and would be reported in the Internal Audit Performance Report and the Annual Audit Opinion report being presented to the July meeting.

Further to the explanation that there would be a point whereby the internal control environment became a Strategic Risk if Internal Audit fell below a certain level, the Executive Director of Resources (Section 151 Officer) gave an update.  He explained that all of the strategic risks were reviewed on an annual basis and that the internal control environment was not currently below the level where it would be considered a strategic risk but this would be continually reviewed.

To receive any questions from the public, notice of which has been given in accordance with Procedure Rule 14.  The deadline for this meeting is 5pm on Friday 16 June 2023.

There were no questions from members of the public.

To receive any questions of which Members of the Council have given notice.  The deadline for this meeting is 5pm on Friday 16 June 2023.

There were no questions from Members.

The report of the Section 151 Officer is attached.

Contact: James Walton (01743) 258915

The Committee received the report of the Executive Director of Resources (Section 151 Officer) – copy attached to the signed Minutes – which set out the Annual Governance Statement (AGS) and a review of the effectiveness of the Council’s Internal Controls and Shropshire Council’s Code of Corporate Governance.

The Executive Director of Resources (Section 151 Officer) gave a brief introduction and explained that the AGS sat alongside the Statement of Accounts and it provided assurance that the appropriate governance had been undertaken over the last financial year.  The Executive Director of Resources (Section 151 Officer) went on to explain how the AGS was produced and confirmed that once signed off by the Chief Executive and Leader of the Council, the AGS was published on the website and presented to the Audit Committee along with the Financial Outturn Report and Statement of Accounts so that overall assurance could be considered. 

In response to a query about the enforcement notice received by the Council from the Information Commissioners Officer (ICO) in relation to Freedom of Information (FOI) response times, the Executive Director of Resources (Section 151 Officer) explained that whilst adhering to the relevant legislation, the timescales for delivering responses (20 days) had been breached due to a number of issue in relation to the capacity of staff being able to pull together responses from across the organisation. 

In direct response to the levels of FOI response rates that failed to meet the deadline, the Council have looked to restructure the Information Governance Team and the entire approach and processes for FOI responses across the organisation and would be discussed at an information governance review meeting scheduled for the following day to which the Executive Directors and senior officers would attend. 

The Executive Director of Resources (Section 151 Officer) confirmed that the visibility for this was known across the organisation and that the enforcement notice had been issued on the basis of the information available to the ICO at that point in time and was part of the reason for the creation of the new post of Head of Policy and Governance.  He assured the Committee that the Council was well on its way to ensuring it met FOI response times in future.

In response to further comments, the Head of Policy and Governance explained that this issue had been a keen focus since he took on the role in April and he had been in direct contact with the ICO since then and had agreed the Action Plan with them.  The Action Plan set out the measures that the Council would take to ensure it complied with the legislation.  The ICO were comfortable with the actions being proposed and the timescales for which they would be implemented although it was hoped to accelerate that process to ensure that the Council were following up on it. 

A brief discussion ensued and the Head of Policy and Governance responded to a number of queries and explained how the action plan addressed how FOI  ...  view the full minutes text for item 6.

The report of the Section 151 Officer is attached.

Contact: James Walton (01743) 258915

The Committee received the report of the Executive Director of Resources (Section 151 Officer) – copy attached to the signed Minutes – which provided details of Shropshire Council’s 2022/23 financial performance for revenue and capital.  The Executive Director of Resources (Section 151 Officer) introduced and amplified his report.  He explained that the report had already been to Cabinet and would be going to Council in July and sat alongside the Statement of Accounts. The report provided a suite of information in relation to the financial position and the overall assurance that could be taken in relation to the last financial years’ accounts and followed the format of the quarterly monitoring reports which were considered by Cabinet and Scrutiny.

The Executive Director of Resources (Section 151 Officer) informed the Committee that the Council had ended the financial year better than expected with an overspend of £8.5m, which was £1.5m better than previous estimates and although not ideal, showed that the underlying control framework demonstrated a strong grip on the projections for the Council’s financial position which showed a strong governance approach and showed that the estimates being used were based on a solid foundation.  He then drew attention to the appendices to the report which set out the detail of the under/overspends, levels of reserves etc.

In response to an earlier query, the Executive Director of Resources (Section 151 Officer) explained that reserves were used to cover any overspend in order to ensure there was not a negative balance sheet.  The overspend in 2022/23 had depleted the reserves significantly however that was the position as at 31 March 2023 and on the 1 April 2023 the new budget kicked in and as part of that there was an inbuilt allocation to the general fund balance which became £23m a day later.

In response to a query the Executive Director of Resources (Section 151 Officer) explained the approach taken to setting a balanced budget and what the consequences would be of not doing so, as set out in statute, including stopping all discretionary spending.  The Government could also take over the running of the authority and could use special powers such as being able to use capital for revenue purposes, increasing Council Tax above the referendum level, in order to bring the budget back into balance, however that was extreme and had not happened in many cases and was not something that was considered relevant to Shropshire Council. 

In response to a query, the Executive Director of Resources (Section 151 Officer) confirmed that the £51m savings was a base budget reduction, it was not about transferring money into reserves although there were a number of elements that had been transferred into reserves but fundamentally, the budget was built up around a plan based on assumptions around government funding and any increase in that government funding would be put into reserves.  The £1.965m were the savings that were rated as Red and had been carried forward into 2023/24.

In response to a query  ...  view the full minutes text for item 7.

The report of the Deputy Section 151 Officer is attached.

Contact: Ben Jay (01743) 250691

The Committee received the report of the Executive Director of Resources (Section 151 Officer) – copy attached to the signed Minutes – which provided an overview of the Accounts for the year 2022/23 and details of the reasons for the most significant changes between the 2021/22 Accounts and the 2022/23 Accounts.

The Executive Director of Resources (Section 151 Officer) introduced and amplified his report.  He drew attention to the table of deadlines and confirmed that the draft Accounts had been produced by the 31 May 2023, out of line with other Local Authorities who had not yet completed theirs.  He explained that the External Audit work would take place between 19 June and 30 September by which time the Accounts had to be published and the External Auditor would provide his opinion and certificate.  Members of the Committee congratulated the team on all their hard work in producing the draft Accounts by the deadline and within two months of the year end.

The Executive Director of Resources (Section 151 Officer) explained that the Analytical Review (Appendix 2) set out the most significant changes between the 2021/22 Accounts and the 2022/23 Accounts ie a variance of either 10% or £8m.

In relation to reserves, a query was raised that in paragraph 2.3 of the report it stated that ‘the Authority’s earmarked reserves and provisions had decreased by £31.697m, however, on page 117 of the accounts under reserves, it said ‘earmarked reserves have decreased by £37.05m’.  In response, the Head of Finance Management and Reporting explained that paragraph 2.3 referred to ‘Reserves and provisions’ which included things like bad debt provision and other provisions they had to make during the course of the year, whereas the accounts refer specifically just to reserves.

A query was raised in relation to those area referred to in Appendix 2 as having decreased in income following removal of a Covid-19 uplift and whether there had been an increment in those grants based on eg 2018/19, or was there actually a reduction in ‘real’ terms based on the pre-covid period.  In response, the Executive Director of Resources (Section 151 Officer) explained that covid funding was provided for specific purposes over a period of time however it was not ring-fenced and provided that the pressures added up to the amount that was provided, that was fine, however this meant that once the covid uplift was taken away you were suddenly exposed to the underlying issues leading to some areas shifting incrementally in a direction that was not so visible, given the covid funding and the uncertainty about how long the pandemic would continue and how long the funding would continue.  During the budget setting process when those areas were considered, a decision was made to build growth into these areas because they had shifted in a different way that had been hidden. 

Turning to page 149 of the draft Accounts, concern was raised that cashflow at the end of the period 2021/22 had dropped from £27m to £6m.  ...  view the full minutes text for item 8.

The next meeting of the Audit Committee will be held on the 20 July 2023 at 10.00 am.

The next meeting of the Audit Committee would be held on the 20 July 2023 at 10.00am.

To RESOLVE that in accordance with the provision of Schedule 12A of the Local Government Act 1972, Section 5 of the Local Authorities (Executive Arrangements)(Meetings and Access to Information)(England) Regulations and Paragraphs 2, 3 and 7 of the Council’s Access to Information Rules, the public and press be excluded during consideration of the following items.

RESOLVED:

          That in accordance with the provision of Schedule 12A of the Local Government Act 1972, Section 5 of the Local Authorities (Executive Arrangements)(Meetings and Access to Information)(England) Regulations and Paragraphs 2, 3 and 7 of the Council’s Access to Information Rules, the public and press be excluded during consideration of the following items.

The Exempt Minutes of the meeting held on the 14 February 2023 are attached for confirmation. 

Contact: Michelle Dulson 01743 257719

RESOLVED:

That the Exempt Minutes of the meeting of the Audit Committee held on the 14 February 2023 be approved as a true record and signed by the Chairman.