Meeting documents

To approve as a correct record the minutes of the previous meeting held on 28^th July 2022.

The minutes of the meeting from 28^th July 22 were approved as a correct record and signed by the Chairman.

Apologies for absence were received from Councillors Dave Bulmer and Mike Best.

In accordance with the Council's current Code of Conduct (as amended 26 February 2015), which includes all the provisions relating to Disclosable Pecuniary Interests (DPI), personal and prejudicial interests, Members are asked to declare any DPI and also any personal interests (and whether or not such personal interests are also "prejudicial") in relation to any matter on the agenda for this meeting. 

There were no declarations of interest.

The Committee was addressed by a member of the public who asked the External Auditors through the committee how much the auditors had spent on the Audit to date that was over and above the agreed fee.

He then raised several questions regarding the settlement agreement highlighted in the external auditors report.

He suggested that it was in the public interest to know who was involved in the payment that was made and what sanctions were taken.

The Key Audit Partner, Grant Thornton explained that work was still in progress to complete the audit but a representation to public sector audit appointments had been made and they were proposing a fee of around £170,000.

In response to the other questions raised, the Chief Executive explained that the Chief Executive at that time asked payroll to pay the amount. Neither the Monitoring Officer nor the Leader of the council was informed and there was insufficient legal advice obtained. At that time there was insufficiently robust control arrangements in place. A report would be going to Full Council that would set out the control arrangements that had since been put in place so this didn’t occur in the future. She clarified that the process was not followed appropriately, and that control arrangement were not put in place appropriately. It was not to say that the payment made was wrongful.

The settlement agreement between the individual and the council was a legal agreement, and both signed to say they would respect the confidentiality of that agreement. The council was not hiding behind HR policies but by law, would not be naming names of individuals.

The Key Audit Partner Grant Thornton confirmed that they would not want to breach a confidentiality agreement that was in place. The recommendation highlighted that it was a failure in the arrangements to ensure the amount was appropriate and represented value for money. They had deemed that a public interest report was not appropriate in this case and so it was raised as a statutory recommendation.

The Chairman thanked the member of the public for his questions.

Councillors are requested to note that the next Audit Committee meeting is scheduled to be held at 10.00am on 22^nd September 2022 in the Council Chambers, Brympton Way, Yeovil.

Members noted the next Audit Committee had been arranged for 10.00am on Thursday 22 September 2022 in the Council Chamber, Brympton Way, Yeovil.

The Manager, Grant Thornton introduced the report that provided a statement as to the progress of the Group PPE element of the External Audit. They had identified that there was a difference of opinion between the expert that the auditors had used and the expert that management had used, which was resulting in a potentially material difference in valuation of the battery site in Taunton. A decision had been agreed whereby a third party would be involved to produce a further valuation to take the matter forward and conclude work in the area. This was the key reason why the final audit report was unable to be produced.

In response to questions raised by members the Chief Finance Officer, Lead Finance Officer, Monitoring Officer, and the Key Audit Partner Grant Thornton gave the following responses.

·         A written response from the relevant officer would be given about whether the new valuation report would include the disposal of the batteries at the end of their life.

·         A separate valuer had been engaged and was being finalised. The timescale would be better known in a few days but it was thought the valuer would need around 1 month before the auditors were able to review the report, finalise their work and come back with any follow up questions.

·         The valuation had no impact on the revenue or capital expenditure

·         The current issue with the valuation only related to the Taunton site as it was currently the only site energised and operational.

·         The total fee that was in the audit plan that had been previously presented to committee was expected to be £67,000. The final additional fees will be up from that figure.

·         Several reasons and pressures had attributed to the increase in fees, a breakdown of increase would be provided to members if possible.

·         The finance team were in the process of filling a vacant SSDC finance post.

·         The exercise was to find out what the fair value of the asset was at the close of the accounting period 2020/21.

·         The payment made to the employee was identified and backing documents were made available to the Auditors by officers when requested. 

·         The payment was known by officers after the event by undertaking the last quarters budget monitoring review, it showed an overspend and the money was identified.

·         The previous CEO was not given any similar payment. He resigned his position and left the authority after his notice period.

·         In settlement agreements it was normal to have a confidentiality agreement. The rules around public sector settlements at the time allowed for this.

·         Members were advised not to make any assumption about which individual received the payment.

·         The Chief Executive explained that she made the leader aware of the payment when she was made aware of the payment within the first month of joining the council. Internally it was made clear that the process followed at that time would not be allowed to happen again.

There were no further questions from members and the Chairman  ...  view the full minutes text for item 39.

The Chief Finance Officer presented the Annual report which looked at value for money and governance issues. There was a statutory recommendation that would go to Full Council of the 15^th September. There were also 2 key recommendations and 15 improvement recommendations. The management response was contained in the body of the report.

Full discussion of this item was considered under item 8 of the agenda prior to members agreeing to note the auditors report.

(note – the meeting of full council was subsequently postponed an rearranged for the 22 September)

The Key Audit Partner Grant Thornton introduced the Annual report and informed members that his colleague who undertook the detailed work was online for any questions if needed. The requirement for Value for Money (VFM) work was introduced by the national audit office and applied to this year to provide more comprehensive details around financial sustainability, governance and improving economy efficiency and effectiveness.

He highlighted to members the key recommendations and some of his comments included;

·         A Statutory recommendation had been made.

·         Significant weakness were found in the final accounts preparation process.

·         Commercial Strategy and Investment key recommendation. It was found that there was a clear plan for the future funding of investments moving forward.

·         Management had provided comprehensive responses found in the body of the report.

In response to questions from members the Chief Finance Officer, Lead Specialist Finance and Key Audit Partner Grant Thornton gave the following responses;

·         The finance team were over establishment currently. Since the management response to the initial findings report, 2 permanent finance colleagues had left and management were keeping a close eye going forwards.

·         The individuals who had left the finance team had now been replaced and were experienced local government officers.

·         The Local Government Reform Program (LGR) was looking at all the somerset districts investment for yield activity and identifying the potential options for the future that included handing over the assets and the reserves to the new authority.

·         3 million pounds from the commercial contingency reserve was moved to the general reserves fund. At the time of the budget the interest rate increase had not taken effect as much as now. It could be moved back if needed.  

·         In relation to the settlement agreement, there was no set of arrangements in place at that time that payroll could follow to ensure that the payment had gone through the correct process.

·         The controls checks and balances had been designed but weren’t followed in this instance.

·         Best practice for agreements would be put to full council to adopt.

·         In the scheme of delegation, the financial limits for senior officers had been in place for some time.

·         Settlements like this were rare but undertaken on occasion in local government. The details would have been agreed between the lawyer of the individual and the council. The details of this agreement would not be disclosed. 

·         The report did not say that the amount paid was unlawful. It was clarified that the legality was not confirmed through the Monitoring Officer nor was there evidence of obtaining separate legal advice.

·         An officer of local government should be named publicly if they were earning £150,000 or more.

·         A written answer would be provided to members on the question of the CEO overspend for transformation.

·         The settlement agreement was made during a period of significant change for the organisation and that increased risks within the control environment.

·         There would be a raised awareness of the arrangements that were being put in place for all officers who might likely be involved  ...  view the full minutes text for item 41.

Following a brief discussion about the draft statement of accounts, Members agreed to keep the Draft Statement of accounts 2021/22 on the forward plan for the 22^nd September meeting.