Agenda and minutes

LCR Audit & Governance Committee - Thursday, 29th September, 2022 10.00 am

Venue: Authority Chamber - No.1 Mann Island, Liverpool, L3 1BP. View directions

Contact: Lisa Backstrom 


No. Item



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            Apologies for absence were received on behalf of Councillors David Baines, Edna Finneran, Mike Wharton and Independent Member, Jean Gleave.



Declarations of Interest

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            There were no declarations of interest submitted.



Minutes of the last meeting pdf icon PDF 184 KB

To consider the minutes of the meeting of the Committee held on 27 July 2022.


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The minutes of the previous meeting held on 27 July 2022 were approved as an accurate record. 



Internal Audit Update pdf icon PDF 132 KB

To consider the report of the Head of Internal Audit.


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            The Committee considered the report of the Head of Internal Audit which provided an overview of the internal audit work completed in the second quarter of 2022-23, in accordance with the Internal Audit Plan 2022-23.


            Laura Williams, Head of Internal Audit, advised that the report set out the work that had been undertaken and included the following key points:-


·        a summary of Internal Audit Plan delivery for the period;

·        details of work undertaken, recommendations made, and key items of note;

·        an update on the implementation of recommendations;

·        a summary of the work undertaken in respect of fraud, bribery and corruption;

·        an update on internal audit performance with reference to the key performance indicators detailed in the Quality Assurance and Improvement Programme (QAIP); and

·        an update on the service’s compliance with the Public Sector Internal Audit Standards (PSIAS).


            Members of the Committee were given the opportunity to ask questions on the report.


            Councillor Graham Morgan referred to section four on page 110, relating to gifts and hospitality and declarations of interest. He asked for detail on the type of risk identified during review.


            Councillor Morgan also referred to the twelve recommendations classed as a high priority, five of which were awaiting a response from Manager and asked why there was a delay in the response.


            Laura Williams advised that the key point was that there were a number of improvements to the system that the audits identified as being required. The reason that a number of the recommendations were awaiting response was because the findings had only recently issued. Discussions had taken place with the relevant Managers with agreement in terms of the improvements to the  system that were required.


            Laura Williams added that this piece of work was the only one completed within the period that had a moderate opinion. It was of slight concern as usually with a system like this, you would expect compliance to be the issue but actually there were some quite fundamental system issues in this instance. Some improvements to the system would be required, hence the number of high priority recommendations and the largest opinion to ensure that those issues were being highlighted.


            Councillor Morgan responded, stating that Combined Authority Managers to provide the answers to the questions raised by Auditors in a timely manner and asked if updates could be included in future reports.

            Councillor David Burgess-Joyce agreed with Councillor Morgan’s comments.


            Councillor Burgess-Joyce referred to asset shrinkage. The organisation had many assets and a lot of organisations have lost a large amount of materials, particularly during the pandemic, electronic or otherwise. He asked if this was picked up during the audit.


            Laura Williams stated that there was an element of counter fraud audit work built into the plan, details of which were picked up. There were two aspect to the issue. The first was proactive counter fraud work, being visible in the business and using that work to raise the profile of counter fraud issues. This work was carried very frequently and  ...  view the full minutes text for item 17.


Risk Management Update pdf icon PDF 47 KB

To consider the report of the Head of Internal Audit.


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            The Committee considered the report of the Head of Internal Audit which provided an update in respect of the system of corporate risk management and the activity that had been undertaken in continuing to embed the system during the second quarter of 2022-23. The report also presented the updated Corporate Risk Management Policy and Handbook for approval.


            Laura Williams, Head of Internal Audit, advised that the report detailed the key activities undertaken to embed the system of corporate risk management and included the following key points:-


·        an update on the Corporate Risk Register including the key changes made since the last report;

·        the ongoing activity to embed risk management further into the organisation; and

·        a summary of the key updates made to the Corporate Risk

          Management Policy and Handbook.


Members of the Committee were given the opportunity to ask questions on the report.


            The Vice-Chair, Councillor James Hansen referred to the current economic crisis and the potential for rates of fraud to increase. He asked how prepared for that was the City Region and also were preparations in place for the potential effects of the economic crisis and the potential risks to the business, particularly in relation to interest rate rises.


            Laura Williams responded and stated that in terms of fraud, there had already been a situation of enhanced fraud risk for some time as a result of the pandemic with changes to ways of working. As the fraud risk had already been heightened, there was no anticipated change for some time. In terms of recession, economic difficulties, etc, that that risk continued to present itself.


            Laura Williams added that as mentioned in the previous report, a considerable amount of time was spent on counter fraud work and fraud awareness. This focus would continue to ensure that across the audit work any areas of weakness would be identified or areas where developments may be necessary. Also, as part of the fraud awareness piece was around ensuring that management was also in a heightened state of awareness around fraud and the organisational approaches to that. Laura commented that from an audit perspective, a lot of time was spent concentrating on those matters and the Audit Team were well placed to support the organisation in that regard.


            In terms of the corporate risk around financial sustainability, Laura Williams stated that it was mentioned three or four meetings ago and as a committee in terms of what were the emerging issues arising as a result of economic difficulties. There was a corporate risk identified around financial sustainability, which related to the points raised.  The next review of the Corporate Risk Register was due to commence so this may be reviewed in terms of the level of risk compared to previously and whether any additional actions were required in relation to specific issues.  Laura indicated that the action plan currently in place for the risk as it has existed was well placed, but there could be further pressures. Any further public sector austerity would  ...  view the full minutes text for item 18.


External Audit Annual Report 2020/21 pdf icon PDF 201 KB

To consider the report of the Executive Director of Corporate Services.


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            The Committee considered the report of the Director of Corporate Services, introduced by Sarah Johnston, Assistant Director of Finance which provided the final conclusions and findings of the Mazars, the external auditors for the audit of the annual accounts for 2020 21.


            Mark Dalton, Senior Partner from Mazars advised the Committee that the report was a new style actual auditors annual report which under the new code of audit practice for 2021 replaced the annual audit letter that the committee had received in previous years. The report had been discussed and agreed with management and provided a summary of the work undertaken by Mazars in relation to the year ending the 31st of March 2021.


            Mark Dalton confirmed that on 5 November 2021 an unqualified opinion was issued on the Combined Authority’s financial statement which also includes a new style value for money commentary.


            Mark Dalton drew the Committee’s attention to the following:-


·         Pages 111 214 of the agenda provided details of their view on arrangements under the three specified reporting criteria - financial sustainability, governance and improving the three E's;

·         No significant weaknesses in the arrangements at the Combined authority had been identified and there was no requirement to raise any value for money recommendations;

·         This was a good outcome and overall the auditors annual report was a positive report for the Authority;

·         Page 117 of the agenda provided information on the fees for audit work as your auditors for 2021, in line with those highlighted in the audit strategy memorandum presented to the July committee meeting; and

·         Government had provided £15m additional funding to meet the increased costs with the Authority’s share being £18,730.


Mark Dalton concluded that report was designed to be read by a wider

audience, including members of the public and should be published on the Combined Authority website.


            Members of the Committee were given the opportunity to ask questions on the report.


Councillor David Burgess-Joyce referred to page 117 of the agenda and the additional costs relating to enquiries from and correspondence with a local elector. He asked for further details.


            Mark Dalton responded stating that in 2021 a number of correspondence was received containing a number of questions in relation to the financial statements and local electors are within their rights to raise questions to the external auditors as well as to the Authority. There were a significant number of those types of questions last year which required consideration and response where appropriate. It was right and proper, that as a result, a charge for our time associated with that. There had already been a number of similar requests this year so far so it was also likely that there would be some additional fees in the 2021/22 year.


            Councillor Pat Moloney asked if the query received from the local elector was considered reasonable or could it be described as otherwise?


            Mark Dalton stated that it was right and proper for them to consider the reasonableness of those questions. If there were matters  ...  view the full minutes text for item 19.


External Audit 2021/22 Progress Update pdf icon PDF 205 KB

To consider the report of the Executive Director of Corporate Services.


Additional documents:


            The Committee considered the report of the Director of Corporate Services, introduced by Sarah Johnston, Assistant Director of Finance which provided an update on progress made by the external auditors, Mazars against the audit for the Combined Authority’s financial statements for the year ending 31 March 2022.


            Dawn Watson, Audit Manager, advised the Committee that the report covered two years as 2021 statements were still open. She added that Mark Dalton had covered a lot of the detail but an unqualified audit opinion was issued in late 2021 and there were no new matters to bring to the attention of the Committee.


            Dawn Watson indicated that the one remaining responsibility for 2021 was the review of whole of government accounts. National Audit Office (NAO) group instructions had been received, but they were waiting on the NAO to select a sample of bodies for additional testing. Once advised of who needs the additional testing, completion of any work necessary will be undertaken and the audit certificate that formally closes the 2020-21 year can be issued.


            In relation to 2021-22, planning and some early work was completed at the early part of 2022 and the Audit Strategy Memorandum was presented to the Committee in July. There were no changes to that plan to bring to the Committee’s attention. The audit of the financial statements was currently in progress and the findings from this work would be reported to the next Committee meeting.


            Dawn Watson also advised that completion of the work was subject to a resolution of a national accounting issue relating to infrastructure assets. An agreed solution was awaited that would provide a way forward before this area could be progressed.


            In terms of the 2021 -22  Value for Money commentary, Dawn Watson advised that the plan was to report this within three months of signing the audit opinion, in line with the NAO guidance.


            Dawn Watson concluded by advising that there were some links to various publications at the back of the report which may be of interest.


            RESOLVED – That the report be noted.



Code of Corporate Governance pdf icon PDF 228 KB

To consider the report of the Monitoring Officer.



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            The Committee considered the report of the Monitoring Officer which provided details of recent updates to the Liverpool City Region Combined Authority’s Code of Corporate Governance.


            Louise Outram, Deputy Chief Legal Officer and Deputy Monitoring Officer, stated that the Code of Corporate Governance was an important document to ensure that the Combined Authority discharged its statutory duties, but also complied with best practice guidance. The document was attached as Appendix One to the report and had been compiled as per SOLACE and CIPFA guidance.  The document also highlighted the Nolan principles, affirmed their importance to support compliance and adherence as indicated in the SOLACE/CIPFA guidance.



            RESOLVED – That the updated Code of Corporate Governance, be approved.