Agenda and minutes

To appoint a Chair of the Committee.

   The Chief Legal and Monitoring Officer, Jill Coule, opened the meeting and invited nominations for the appointment of Chair of the Audit and Governance Committee for the ensuring year 2022/23.

   Councillor Graham Morgan, seconded by Councillor Mike Wharton nominated Councillor Edna Finneran as the Chair of the Audit and Governance Committee for 2022/23.

   RESOLVED - That Councillor Edna Finneran be appointed the Chair of the Audit and Governance Committee for 2022/23.

Councillor Edna Finneran

Chair of the Audit and Governance Committee

(in the Chair)

To appoint a Vice-Chair of the Committee.

        Councillor Graham Morgan, seconded by Councillor Mike Wharton nominated Councillor James Hansen for the position of Vice-Chair of the Committee.

   Jill Coule advised that Councillor Hansen was not in attendance today and therefore the Committee would need to confirm that appointment.

   RESOLVED – That in his absence, Councillor James Hansen be appointed Vice-Chair of the Audit and Governance Committee for 2022/23.

An apology for absence was received from Councillor James Hansen.

          A declaration of interest was received from Councillor Pat Maloney in respect of him serving as a member on the Merseyside Pension Fund Local Pension Board.

To consider the minutes of the last meeting held on 30 March 2022.

The minutes of the previous meeting held on 30 March 2022 were approved

as an accurate record.

The Committee considered the report of the Monitoring Officer which provided the Audit and Governance Committee with details of the Annual Review for 2021-22 including Audit and Governance activity and key achievements during the year. The report also proposed a work programme of wide activity for 2022-23 which was set out in Appendix 2, demonstrating how the Committee would discharge its functions for consideration and comment.

  Some of the key achievements included:

·        the updating of the Merseyside Model Code of Conduct following collaboration with local authorities;

·        The review of the process dealing with Member complaints under the Code of Conduct;

·        A fundamental review of the Corporate Risk Register alongside alignment with the LCRCA Corporate Plan 2021-24; and

·        All the meetings of the Committee held in that year had been quorate.

A series of pre-meeting briefings would also be facilitated this year in order to provide Members with information on relevant topics and to assist in the consideration of business on the agenda.

Jean Gleave referred to the provisional work programme 2022-23 on page 31 of the report and noted that there had been no reports from External Audit included on the work programme. Lisa Backstrom confirmed that she had not been notified of any items for inclusion from the External Auditors, but she would share the proposed work programme with them so that they could notify her of any particular items they wanted to submit for consideration by the Committee during the year and these could then be added in consultation with the Chair and Vice-Chair, the Head of Internal Audit and the Monitoring Officer.

        RESOLVED That:-

(a)      the Annual Review Report for 2021-22 at Appendix 1 and delegated authority be granted for any amendments/insertions to be made in consultation with the Chair, Vice-Chair, the Head of Internal Audit and the  Monitoring Officer; and

(b)      the proposed work programme for the Audit and Governance Committee for 2022-23 at Appendix 2 be approved and delegated authority be granted for any amendments/insertions to be made in consultation with the Chair, Vice-Chair, the Head of Internal Audit and the Monitoring Officer.

To consider the report of the Monitoring Officer.

  The Committee considered the report of the Monitoring Officer which detailed the Government’s response to the Committee on Standards in Public Life (“CSPL”) review into Local Government Ethical Standards.

Jill Coule, Chief Legal Officer and Monitoring Officer, stated the CSPL review into Local Government Ethical Standards report was printed in December 2018 and had been brought to the Committee in March 2019. As indicated in the work programme, some work had been undertaken in this area around the Code of Conduct for Members and the procedures in place to support the administration of that Code of Conduct. Work had been undertaken with Local Authorities to prepare the Code of Conduct and a Merseyside version had been adopted by the Combined Authority as recommended by this Committee in June 2022.

The CSPL had also produced a number of recommendations which were set out in the table in the report. The Combined Authority had gone through each of those recommendations and said where it was in relation to each of those actions. The Combined Authority had done all the actions it could in respect of those that were in its control. There were a number of actions outstanding but they required either the Government to respond in a different way than they had responded or to introduce legislation which clearly they were not minded to do at this juncture.

RESOLVED - That the contents of the report be noted.

The Committee considered the report of the Head of Internal Audit which provided the Annual Report and Opinion for the financial year 2021-22. The report summarised the work undertaken by Internal Audit during the year, the key conclusions that could be drawn from this, and the overall opinion on the organisation’s governance, risk and internal control environment.

Laura Williams, Head of Internal Audit, advised that this was one of the most important reports of the year. It summarised all the work undertaken during the year, drew the key conclusions from that work and provided an overall opinion of the organisation’s governance, risk and internal control environment.

There had been 50 pieces of work completed by Internal Audit during the year, and these had been used to inform the annual opinion. There were additional pieces of work that had been completed which were more around advice and guidance and those had also been taken on board as part of the opinion.

The report summarised those reports and outcomes and gave information as to how the opinions and recommendations broke down. All of those pieces of work had been reported to the Committee during the year. The only ones which would not have been seen were those which had been completed late last year or early this year, and these were included in the Internal Audit Update report on the agenda for this meeting.

The single report covered the Combined Authority and Merseytravel and it recognised that there was a blended system of internal control, governance and risk management across the two organisations. However, in terms of the overall opinion for the year on each organisation, these had been delivered separately and it was noted that they were the same across both the Combined Authority and Merseytravel – ie that there was an adequate overall opinion for  both organisations and a good capacity for improvement rating again for  both organisations. An opinion of “adequate” is the highest rating that can be given, and this arises from due professional scepticism and alsothat Internal Audit can not review every single control or be aware of every single risk or piece of governance or procedure.

The report set out the key elements that arose from the annual review of governance and synergies would be seen between those findings and the Annual Governance Statement (AGS) as the work  is one of the feeder pieces of work upon which the AGS was based.

Laura Williams concluded that it was a positive report and it did reflect the considerable progress that had been made across the organisation. She drew attention to section 7 of the report (pages 84 and 85) which set out the opinions, the work that was still to be done and the areas which still needed to be developed. It would also be necessary to continue to develop the organisation’s risk management arrangements..

Councillor David Burgess-Joyce referred to a question that he had asked previously as to whether there was any work ongoing in respect  ...  view the full minutes text for item 8.

The Committee considered the report of the Head of Internal Audit which provided the Combined Authority Audit and Governance Committee with an overview of the internal audit work completed in the fourth quarter of 2021-22 and first quarter of 2022-23, in accordance with the Internal Audit Plans 2021-22 and 2022-23.

Laura Williams, Head of Internal Audit, advised that there was an element of duplication as some of this work had been included in the Annual Report due to the fact that it related to last year. The report summarised the 15 new audits which had been completed and also included the outcomes from the governance work which again could be seen in the Annual Report and it also cut across to the Annual Governance Statement. Members might have noticed that the format of the report had changed a little and that was cognisant of the changes to the way that the Audit Plan had been set out. The report had been split into core work and responsive work and some detail had been provided around the responsive piece of the work as to what was in progress and why those particular pieces of work had been chosen and how these linked into the Corporate Risk Register. It was important to show that when selecting pieces of work it was not done on an arbitrary basis but that it was something that linked into our Corporate Risk Register and would likely be significant issues affecting the organisation.

The other element which had been included within the report was the CIPFA report on the state of Internal Audit. She confirmed that she had provided a summary of the key findings in the report and how those would impact on the Combined Authority and what was required to move those forward. The majority of the actions were things that had already been recognised and were being worked on. There were a couple of areas which had been teased out in the report where there was more work to do particularly around capacity and resources and work was ongoing as to how the team was resourced and how new entrants might be attracted to the Internal Audit profession. 

Councillor Graham Morgan referred to section 3 on page 103 of the report which set out 13 high priority recommendations of which two were still outstanding in respect of the assurance framework and health, safety and wellbeing in  operational transport. He asked when it was expected that those responses would be received and were there any concerns in terms of the delay. Laura Williams advised that those pieces of work had only been issued very recently so were not causing concern at the moment. She advised that more attention was paid to recommendations now and the team worked with Executive Directors to inform them about where there might be delays in their directorate. If there had been any concerns, then they would have been drawn out in the report. 

Jean Gleave referred to section 4 on  ...  view the full minutes text for item 9.

The Committee considered the report of the Head of Internal Audit which provided the Combined Authority Audit and Governance Committee with an update in respect of the system of corporate risk management and the activity that had been undertaken in continuing to embed this system during the first quarter of 2022-23.

Laura Williams, Head of Internal Audit, reported that as had been noted previously the Committee had undertaken a lot of work on the Corporate Risk Register and that was one of the key elements of this report in terms of bringing out the progress that had been made by the Executive Leadership Team and her service to move that position forward. During the period since the last meeting a review had been concluded and a new risk had been added to the Corporate Risk Register around financial sustainability. There had been significant discussions at previous Committee meetings which had talked about some of the pressures that the public sector and the population in general found themselves in and some of the potential issues that that might cause and the need to focus on financial sustainability into the future.  

Laura Williams noted that another review session had taken place with the Executive Directors. These were regular sessions as a group and meetings also took place with them individually to go through their progress and to update their actions.

Laura Williams reported that two Risk Management training packages had been developed. There was a face to face training offer for senior managers and an e-learning package that had been rolled out to all staff to develop that basic understanding of what risk management was about.

A Risk Group had been developed that met quarterly and some spin off groups had started to develop from that. Significant risks which had been identified across the organisation such as supply chain and “knowing the customer” in terms of the organisations who we were trading with or investing with. It was really positive to see that those risks were being considered together with the approaches that could be developed.

Laura Williams noted that an Internal Audit of the Authority’s risk management arrangements had taken place and she had preserved her independence in terms of stepping out of her internal audit role. There had been some recommendations that had emerged from that report on which progress would be reported to the Committee.

Laura Williams concluded that generally positive progress had been made and it was necessary to keep the profile of risk management activity high so that the benefits of good risk management could be harnessed across the organisation.

RESOLVED - That the report be noted.

The Committee considered the report of the Head of Internal Audit which provided the Combined Authority Audit Strategy Memorandum (ASM) from Mazars which detailed their proposed approach to the audit of the Combined Authority’s financial statements for the financial year 2021/22 for consideration and comment.

Mark Dalton, Engagement Lead for Mazars, stated that this report had been discussed and agreed with management prior to its presentation to this Committee. The ASM set out the responsibilities as external auditors in auditing the financial statements and informing a view on the authority’s arrangements in securing value for money in the use of resources. It described the audit approach, the timeline and it highlighted the proposed testing strategy to address the risks that had been identified both in relation to their own financial statements and value for money work.

Mark Dalton highlighted the following key points:

·            Section 5 of the report on page 246 of the pack highlighted the approach to its value for money work. The Committee should note that at this stage the external auditors had not identified any risks or significant weakness in the local authority arrangements which was a positive. It should also be noted that the National Audit Office had extended the deadline for reporting the value for money work and that was three months from the date on which an opinion had been provided on the financial statements. As a result it would likely be early 2023 before the outcome of our value for money work for 2021/22 was reported;

·            Section 6 of the report on page 249 of the pack highlighted the planned fees for the audit. This section highlighted the recurring additional fees associated with the additional work required to be undertaken by our regulators on the pensions liability, property, plant and equipment, and also the additional fees associated with changes in auditing and accounting standards and the new code of audit practice and the new value for money approach that had come into effect in 2021. The planned fee was very much in line with that which had been charged for the prior year. The Committee could be further assured that the Government had confirmed that the additional £15m of funding that was announced last year to help meet these increased external audit costs had been extended for a further two years with the CA’s share of this £15m being £18,730. So comfortably covering the additional fees that was being proposed for the CA; and

·            In Section 7 of the report it was confirmed that the audit team was appropriately independent and objective.

Dawn Watson, Engagement Manager for Mazars, highlighted the following key points:

·            Section 4 on pages 239-243 of the pack detailed the significant risks and the audit procedures proposed in relation to those risks. They were fairly consistent with the prior year. The first of those was the management override of controls and there were no concerns in respect of the Combined Authority but the external auditors were required to look at  ...  view the full minutes text for item 11.

The Committee considered the report of the Executive Director Corporate Services which provided the Combined Authority Audit and Governance Committee with the Combined Authority’s draft statement of accounts for 2021/22 for consideration. The Members of the Committee were requested to review the statements and provide comments thereon.

Sarah Johnston, Assistant Director Finance, stated that the report brought the draft accounts to the Combined Authority to the Committee Members for consideration. Members would be aware that the Authority was required to publish its accounts in line with the Accounts and Audit Regulations. For the last couple of years there had been amendments to the deadlines which had seen the deadlines for the publication of accounts pushed back to the end of July and subsequent audit for the period up to the end of September. The Combined Authority accounts had been published on 8 July 2022 and as referenced by the external auditors, these would be subject to audit starting from the following week. The accounts were a very complicated document reflecting the accounts based on accounting standard.

RESOLVED That:-

(i)   the content of the report be noted; and

(ii) any comments on the accounts to be provided as necessary.

There were no further items of business for consideration.