AUDIT AND RISK SCRUTINY COMMITTEE · 2. The Corporate Accountancy Manager circulate information to Committee Members regarding the dividend write-off in respect of Sheffield City

AUDIT AND RISK SCRUTINY COMMITTEE

AGENDA

Meeting to be held in the Council Chamber,

Retford Town Hall, DN22 6DB on Thursday, 17th November 2016

at 6.30pm

(Please note time and venue)

Please turn mobile telephones to silent during meetings. In case of emergency, Members/officers can be contacted

on the Council's mobile telephone: 07702 670209.

In accordance with the Openness of Local Government Bodies Regulations 2014, audio/visual recording and photography at Council meetings is permitted

in accordance with the Council’s protocol ‘Filming of Public Meetings’.

1

AUDIT AND RISK SCRUTINY COMMITTEE Membership 2016/17 Councillors R B Carrington-Wilde, D Challinor, C Entwistle, G Freeman,

J M Sanger, A Simpson, M. Storey, A D Tromans and C. Troop

Substitute Members: Any Member except those appointed to the Cabinet Quorum: 3 Members Lead Officer for this Meeting Mr D Hill - Ext. 4503 Administrator for this Meeting Linda Dore - Ext. 3249

2


17th NOVEMBER 2016

INDEX OF AGENDA ITEMS

1. APOLOGIES FOR ABSENCE

2. DECLARATIONS OF INTEREST BY MEMBERS AND OFFICERS * (pages )(Members and Officers' attention is drawn to the attached notes and form)

(a) Members(b) Officers

3. MINUTES OF THE MEETING HELD ON 15TH SEPTEMBER 2016 * (pages 7 - 12)

4. MINUTES FOR ACTION AND IMPLEMENTATION * (pages 13 - 14)

5. OUTSTANDING MINUTES LIST * (pages 15 - 16)

6. TRAINING PRESENTATION:- TREASURY MANAGEMENT+

7. INFORMATION PRESENTATION:- Health & Safety SHE Reporting System+

SECTION A – ITEMS FOR DISCUSSION IN PUBLIC

Key Decisions

8. REPORT(S) OF THE DIRECTOR OF CORPORATE RESOURCES *

(a) Budget Monitoring and Capital Programme Update Report to 30th September 2016 (Key Decision No.588) (pages 17 - 60)

Other Decisions

9. REPORT(S) OF THE DIRECTOR OF CORPORATE RESOURCES *

(a) Internal Audit Progress Reports 2016/17 (pages 61 - 110) (b) Internal Audit Outstanding Service Recommendations Update 2016/17 (pages 111 - 114) (c) Annual Audit Letter 2015/16 (pages 115 - 124) (d) Amendments to the Council Constitution (pages 125 - 132)

Exempt Information Items

The press and public are likely to be excluded from the meeting during the consideration of the following items in accordance with Section 100A(4) of the Local Government Act 1972.

SECTION B - ITEMS FOR DISCUSSION IN PRIVATE

Key Decisions

None

F:\Docs\Members\Ms8\REPORTS\Audit\index.doc 3

Other Decisions

None

10. ANY OTHER BUSINESS WHICH THE CHAIR CONSIDERS TO BE URGENT

* Report attached+ Verbal report

NOTES:

1. The papers enclosed with this Agenda are available in large print if required.

2. Copies can be requested by contacting us on 01909-533249 or by [email protected]

F:\Docs\Members\Ms8\REPORTS\Audit\index.doc 4

mailto:[email protected]

Agenda Item No. 2

DECLARATION OF INTEREST

COMMITTEE ………………………………………………………………………………

DATE ……………………………………………………………………..

NAME OF MEMBER : ……………………………………………………………………………… Type of Interest 1. Disclosable Pecuniary 2. Non Pecuniary Agenda Item

No. REASON * Type of Interest

(1 or 2)

Signed

Dated

Note:

* When declaring an interest you must also state the nature of your interest. Completion of this form is to aid the accurate recording of your interest in the Minutes. The signed form should be provided to the Minuting Clerk at the end of the meeting. A nil return is not required. It is still your responsibility to disclose any interests which you may have at the commencement of the meeting and at the commencement of the appropriate Agenda item.

F:\Docs\Members\Ms8\REPORTS\Audit\2 Interest form.doc 5

DECLARATION OF INTERESTS

HOW TO USE THIS FORM

There are now only two types of Declaration of Interest: Disclosable Pecuniary Interests ) Details can be found in the Councillors ) Code of Conduct which is contained in ) the Council’s Constitution (a summary is Non Pecuniary Interests ) printed below) Upon receipt of the attached form you will need to enter the name and date of the Committee and your own name. By looking at the Agenda you will no doubt know immediately which Agenda Items will require you to make a Declaration of Interest. Fill in the Agenda Item number in the first column of the form. Enter the subject matter and any explanations you may wish to add in the second column. In the third column you will need to enter either if you are declaring a disclosable pecuniary interest, or a non pecuniary interest. The form must then be signed and dated. Please remember that if during the actual meeting you realise that you need to declare an interest on an additional Agenda Item number please simply amend the form during the meeting. The form must be handed into the Committee Administrator at the end of the meeting. NB. The following is a summary prepared to assist Members in deciding at the actual meetings their position on INTERESTS it is not a substitute for studying the full explanation regarding INTERESTS, which is contained in the Council’s Constitution and the Code of Conduct for Councillors, which is legally binding. Members and Officers are welcome to seek, PREFERABLY WELL IN ADVANCE of a meeting advice from the Council’s Monitoring Officer on INTERESTS.

Disclosable Pecuniary Interests Action to be Taken May relate to employment, office, trade, profession or vocation carried on for profit or gain May relate to sponsorship May relate to contracts May relate to interests in land May relate to licences to occupy land May relate to corporate tenancies May relate to securities

Must disclose to the meeting - existence of the interest - the nature of the interest - withdraw from the room - not seek improperly to influence a decision on the matter

Non Pecuniary Interests Action to be Taken May relate to any body of which you are a member or in a position of general control or management and to which you are appointed or nominated by the Council May relate to any person from whom you have received a gift or hospitality with an estimated value of at least £25 A Member may also have a non pecuniary interest where a decision in relation to that business might reasonably be regarded as affecting wellbeing or the wellbeing of other council tax payers, or ratepayers or inhabitants in the electoral division or ward, as the case may be, affected by the decision. . (Note – there are special provisions relating to “Sensitive Interests” which may exclude the above provisions in certain circumstances.)

Must disclose to the meeting - existence of the interest - the nature of the interest - not seek improperly to influence a decision on the matter.

F:\Docs\Members\Ms8\REPORTS\Audit\2 Interest form.doc 6

DRAFT


Minutes of the Meeting held on Thursday, 15th September 2016 at Worksop Town Hall Present: Councillor D Challinor (Vice in Chair);

Councillors, C Entwistle, G Freeman, D Hare, G Jones, J M Sanger, M Storey and C Troop.

Officers: L Dore, D Hill and N Wilson. Others present: A Ali – RSM

T Crawley - KPMG (Meeting commenced at 6.30pm.) The Chair welcomed all to the meeting. (He read out the fire alarm/evacuation procedure and also enquired as to whether anyone wanted to film/record the meeting; however, there were no members of the public or press in attendance.) 10. APOLOGIES FOR ABSENCE Apologies for absence were received from Councillors R B Carrington-Wilde, A Simpson and A D Tromans. 11. DECLARATIONS OF INTEREST BY MEMBERS AND OFFICERS (a) Members There were no declarations of interest by Members. (b) Officers There were no declarations of interest by officers. 12 MINUTES OF THE MEETING HELD ON JUNE 16th 2016 A member requested an update regarding the write-off in respect of a Sheffield City Region dividend payment as detailed in Minute No. 6(a) - Budget Monitoring Budget and Capital Programme Update Report to 31st March 2016. The Corporate Accountancy Manager advised he would need to enquire and then circulate a response to the Committee following the meeting. With reference to Minute No. 7(h) - KPMG External Audit: Progress Report and Technical Update, Mr T Crawley from KPMG advised the Committee that the KPMG Annual Governance Report and Statement of Accounts for 2015/16 should be scrutinised before being presented to Council for ratification. This year, as in previous years, it is scheduled to be presented directly to Council at its meeting on 29th September 2016. The External Auditor recommended that the Council should amend its procedures so that in future, the report can be scrutinised first and any issues resolved beforehand.

Agenda Item No. 3

7

The Chairman introduced the recently appointed Head of Finance and Property to the Committee who advised there was nothing wrong in the report being presented straight to Council but few local authorities choose to do this now. The situation can be remedied by adjusting future work processes enabling the accounts to be prepared earlier, so that the option of presenting the report to Audit and Risk Scrutiny Committee prior to being referred to the September Council meeting could be considered. It would not be possible to change the process for the current municipal year but changes to future arrangements from 2017/18 can be proposed through a report to Council as a change to the Constitution will be required. The Committee unanimously expressed concern about the implications for the authority of the existing process but accepted that changes in processes can be made in future to resolve this. RESOLVED that:

1. The Minutes of the meeting held on 16th June 2016 be approved. 2. The Corporate Accountancy Manager circulate information to Committee Members

regarding the dividend write-off in respect of Sheffield City Region. 3. A report be prepared to recommend a change in the accountancy process to provide

options such as the Audit & Risk Scrutiny Committee receiving the Annual Governance and Statement of Accounts reports prior to being presented to Council from the municipal year 2017/18.

13. MINUTES FOR ACTION AND IMPLEMENTATION RESOLVED that the Minutes for Action be received.

14. OUTSTANDING MINUTES LIST With reference to Minute 4, Minutes for Action and Implementation - Dog Warden Service, an update on the Dog Warden and Dog Kennelling Tendering Process had been circulated to the Committee on 24th August 2016. The Environmental Health Manager had been unable to attend the meeting but had sent an update to advise that the tendering process had been put on hold as the Procurement Manager at Newark & Sherwood District Council had not approved the proposed tender specification. A further update will be provided at the next meeting of the Committee after further discussion between the two authorities. RESOLVED that:

1. The Outstanding Minutes List be received. 2. A further update regarding the Dog Warden and Dog Kennelling Tendering Process be

presented to the next meeting of the Audit and Scrutiny Committee. SECTION A – ITEMS FOR DISCUSSION IN PUBLIC Key Decisions 15. REPORT(S) OF THE DIRECTOR OF CORPORATE RESOURCES (a) Budget Monitoring and Capital Programme Update Report to 30th June 2016 (Key

Decision No. 575) Members were presented with the Budget Monitoring and Capital Programme Update Report to 30th June 2016 which had been reported to Cabinet on 6th September 2016. The report is for the first quarter of the year and showed the outturn variance for each portfolio area against approved budgets for the financial year 2016/17. In the absence of the Finance Manager, the Corporate Accountancy Manager informed the Committee that the report forecast:

8

• An overachievement in Fees and Charges income in year (£0.058m) which is mostly due to planning development control fees.

• A budget underspend of £0.033m in year for the General Fund (detailed in Appendix 1 of the report).

• A budget underspend of £0.034m in year for the Housing Revenue Account due to revenue income expected from the capital project of the installation of ground source pump to some dwelling properties.

• The Capital Programme to be fully expended. • The unallocated Capital Receipts Balance of £0.218m at 31st March 2017 is likely to

reduce as income from the sale of property at Newgate Street is now not expected to be realised.

Members were also advised that Cabinet will be asked to consider and approve proposed additions and amendments to decrease the Capital Programme budget by £0.667m to £16.825m. Their attention was also drawn to the further £0.013 dividends received this quarter in respect of Icelandic bank Kaupthing Singer & Friedlander and that there were no issues to highlight in respect of Prudential Indicators. A Member commented on the following items included in the Capital Works Position Statement: • The Monitoring Officer had been asked to respond to the Member regarding a Member

D.D. relating to the sale of Old Brewery Yard which had been circulated after the property had already been sold.

• Lack of advertising on the BDC website for Community Sports Scheme funding. • The use of residents waste bins by the major voids contractor:- instead of removing waste

as per contractual arrangements, bins for the property had been filled with cleared items. A1 Housing Customer Services had been asked to investigate and respond to the Member.

The Vice-Chairman agreed with the comment made regarding the Community Sports Scheme and also suggested that there should be publicity showing where and how funds had been spent and the on-going benefit to communities. He also offered to discuss the matter of the waste put into residential property bins by the major voids contractor at the next Health & Safety Committee meeting as the over-heavy weight of such bins could cause injury. RESOLVED that: 1. The ‘Budget Monitoring and Capital Programme Update Report to 30th June 2016’ as

reported to Cabinet on 6th September 2016 is noted. 2. The Vice-Chairman contact the Leisure & Cultural Services Manager with regard to the

advertising of funding available through the Community Sports Scheme and report back to the Committee.

3. The Vice Chairman discuss the issue of waste left in residential bins by the major voids contractor at the next Health & Safety Committee meeting and report back to the Committee.

Other Decisions 16. REPORT(S) OF THE DIRECTOR OF CORPORATE RESOURCES (a) Internal Audit Progress Reports Quarter 2 2016/17 Members were presented with information regarding the following internal audits: • Trade Waste Collection • Bassetlaw Museum

9

Mr Ali briefly outlined details of each of the internal audits and advised that required actions have been agreed with managers prior to the writing of the reports. For the two internal audits included in the report, seven management actions have been agreed in total with four classified as medium risk and three classified as low risk. No actions were classified as High Risk. There were no ‘red’ audit reports. The attention of the Committee was drawn to the programme for the current year showing the status of the assignment areas: 28% of assignments are complete with 15% in progress and 57% due later in the year. In response to a query from a Member, Mr Ali confirmed that actions are followed up to check that they have been implemented. RESOLVED that the audit reports be received and the actions taken be noted. (b) Internal Audit Outstanding Service Recommendations Quarter 2 2016/17

The Committee was presented with a report which provided an update on medium risk recommendations previously identified by Internal Audit but where action on the recommendations is still outstanding. It will in future be a standing report for each meeting and, as at this meeting, a list detailing the outstanding medium risk recommendations will be tabled to provide the Committee with up to date information. The Corporate Accountancy Manager updated the Committee regarding medium risk audits outstanding in the areas of:

• Community Safety & Anti-Social Behaviour • Facilities Management (x2) • Grounds Maintenance (Tree Register) • Car Parks • Trade Waste Collection

Members raised issues/asked questions regarding the Tree Register and the reasons for the delay in the recommendations being implemented. RESOLVED that the progress of actions identified against the agreed medium recommendations be noted. (c) Corporate Risk Management Quarter 2 2016/17 Members were updated on the current level of assurance that can be provided against each corporate risk, of which there were nine reported: • Welfare Reforms creates significant negative community impact • Supply chain failure • Data loss or privacy incident • Financial integrity of the Council • Failure to properly risk assess our practices and take appropriate action • Failure to properly risk assess our tangible assets • Effective programme management required for commercial activity • ICT cyber attack • Inspection regime on tree management Only one of the reported risks had changed and the Corporate Accountancy Manager advised that the risk regarding an ICT cyber attack has improved and is now marked as ‘Green’. Discussion

10

will take place with the Monitoring Officer with a view to it being removed from the Register as the risk has been mitigated as far as possible. There remain three outstanding “high risk” recommendations from previous years which have not yet been implemented, namely: • Dog welfare (reported to ARSC in February 2015) • Corporate Governance Planning (reported to ARSC in February 2016) • Review of Core Outsourced IT Contract with Meritec (reported to ARSC in June 2016) Updates on these three outstanding issues were given in the report. Following a question raised regarding how risks were assessed and how the Council monitors risk assessments, the Vice-Chairman suggested that it would be useful to invite the Safety & Resilience Manager to attend the next meeting of the Committee to explain how the ‘SHE System’ used by the Council works. RESOLVED that:

1. The progress of actions identified within the Corporate Risk Register be noted. 2. The Council’s Safety & Resilience Manager be invited to the next meeting to inform

members of the Audit & Risk Scrutiny Committee regarding the ‘SHE’ Health and Safety system as utilised by the Council for risk assessment and incident reporting.

SECTION B – ITEMS FOR DISCUSSION IN PRIVATE Key Decisions None. Other Decisions None. 17. ANY OTHER BUSINESS WHICH THE CHAIR CONSIDERS TO BE URGENT As there was no further business to consider, the Chair closed the meeting. (Meeting closed at 7.40pm.)

11

12

Agenda Item No. 4

MINUTES FOR ACTION AND IMPLEMENTATION SHEET

AUDIT AND RISK SCRUTINY COMMITTEE 15-9-16

FROM: Electoral & Democratic Services Officer TO: CAM = Corporate Accountancy Manager HFP = Head of Finance and Property DCR = Director of Corporate Resources

EHM = Environmental Health Manager VC = Vice Chairman CA = Committee Administrator The following decisions are brought to your attention for action by the appropriate officers within your Service:

12. MINUTES OF THE MEETING HELD ON 16TH JUNE 2016 RESOLVED that:

2. The Corporate Accountancy Manager circulate information to Committee Members regarding the dividend write-off in respect of Sheffield City Region.

CAM 3. A report be prepared to recommend a change in the accountancy process to provide options

such as the Audit and Risk Scrutiny Committee receiving the Annual Governance and Statement of Accounts reports prior to being presented to Council from the municipal year 2017/18.

HFP/DCR __________________________________________________________________________ 14. OUTSTANDING MINUTES LIST RESOLVED that:

2. A further update regarding the Dog Warden and Dog Kennelling Tendering Process be presented to the next meeting of the Audit and Scrutiny Committee.

EHM _________________________________________________________________________________ 15. REPORT(S) OF THE DIRECTOR OF CORPORATE RESOURCES (a) Budget Monitoring and Capital Programme Update Report to 30th June 2016 (Key Decision No.

575) RESOLVED that:

2. The Vice Chairman contact the Leisure and Cultural Services Manager with regard to the advertising of funding available through the Community Sports Scheme and report back to the Committee.

3. The Vice Chairman discuss the issue of waste left in residential bins by the major voids contractor at the next Health & Safety Committee meeting and report back to the Committee.

VC

13

(c) Corporate Risk Management Quarter 2 2016/17

RESOLVED that:

2. The Council’s Safety & Resilience Manager be invited to the next meeting to inform members of Audit & Risk Committee regarding the ‘SHE’ Health & Safety system as utilised by the Council for risk assessment and incident reporting.

CA _________________________________________________________________________________

14

Agenda Item No. 5


17th November 2016

OUTSTANDING MINUTES LIST Members please note that the updated positions are shown in bold type following each item. (HFP = Head of Finance & Property; DCR = Director of Corporate Resources; EHM = Environmental Health Manager; VC = Vice Chairman; SRM = Safety & Resilience Manager) Min. No.

Date

Subject

Decision

Officer Responsible

12. 15.9.16 Minutes of the meeting

held on 16th June 2016 (3) A report be prepared to recommend a change in the accountancy process to provide options such as the Audit & Risk Committee receiving the Annual Governance and Statement of Accounts reports prior to being them presented to Council from the municipal year 2017/18.

HFP/DCR

See Agenda Item No. 9(d)

14. 15.9.16 Outstanding Minutes

List (2) A further update regarding the Dog Warden and Dog Kennelling Tendering process be presented to the next meeting of the Audit and Scrutiny Committee

EHM

Update circulated to Committee Members on 9th

November 2016

15(a) 15.9.16 Budget Monitoring and

Capital Programme Update Report to 30th June 2016 (Key Decision No. 575)

(2) The Vice-Chairman contact the Leisure and Cultural Services Manager with regard to the advertising of funding available through the Community Sports Scheme and report back to the Committee.

VC

(3) The Vice-Chairman discuss

the issue of waste left in residential bins by the major voids contractor at the next Health & Safety Committee meeting and report back to the Committee.

VC

To be reported at Agenda Item No. 4

15

15(c) 15.9.16 Corporate Risk

Management Quarter 2 2016/17

(2) The Council’s Safety & Resilience Manager be invited to the next meeting to inform the Committee regarding the ‘SHE’ health and safety system as utilised by the Council for risk assessment and incident reporting.

SRM

See Agenda Item No. 7

16

Agenda Item No.8(a) BASSETLAW DISTRICT COUNCIL

AUDIT & RISK SCRUTINY COMMITTEE 17th NOVEMBER 2016

REPORT OF THE DIRECTOR OF CORPORATE RESOURCES

BUDGET MONITORING AND CAPITAL PROGRAMME UPDATE REPORT TO 30th SEPTEMBER 2016

Cabinet Member: Finance Contact: David Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, David Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To provide the Audit and Risk Scrutiny Committee with the attached ‘Budget

Monitoring and Capital Programme Update Report to 30th September 2016’, which will be reported to Cabinet on 6th December 2016.

3. Background and Discussion 3.1 As per the attached report. 4. Implications

a) For service users

As per the attached report. b) Strategic & Policy

As per the attached report. c) Financial - Ref: 17/71

As per the attached report.

17

d) Legal – Ref: 655/11/16

As per the attached report. e) Human Resources

As per the attached report. f) Community Safety, Equalities, Environmental

As per the attached report. g) Whether this is a key decision, and if so the reference number

As per the attached report. 5. Options, Risks and Reasons for Recommendations 5.1 As per the attached report. 6. Recommendations 6.1 That Members note the attached ‘Budget Monitoring and Capital Programme Update

Report to 30th September 2016’. Background Papers

Location

Cabinet Report and associated papers Head of Finance & Property’s Office

18

Agenda Item No. BASSETLAW DISTRICT COUNCIL

CABINET

6TH DECEMBER 2016


BUDGET MONITORING AND CAPITAL PROGRAMME UPDATE REPORT TO 30TH SEPTEMBER

Cabinet Member: Finance Contact: David Hill Ext: 3174 1. Public Interest Test 1.1 The author of this report, David Hill, has determined that the report is not confidential. 2. Purpose of the Report 2.1 To inform Members of the spending position for the period 1st April to 30th September

2016 for the Council’s General Fund, Housing Revenue, and Capital Programme, and update them of any significant variances from the approved budgets.

2.2 To request approval for new additions, variations and reprofiling to the existing

Capital Programme. 2.3 To provide information on the proposed resourcing of the capital programme and the

level of Council capital resources available, including capital receipts. 2.4 To update Members on Treasury Management budget issues. 2.5 To provide Members with the regular quarterly update on performance against the

approved Treasury Management Prudential Indicators for the period ending 30th September 2016.

2.6 To provide Members with the mid-year Treasury Management Strategy and

Investment Strategy report. 3. Background and Discussion 3.1 The Council’s initial budget for the 2016/17 financial year (1st April 2016 to 31st March

2017) was approved on 7th March 2016.

3.2 This report is the second quarter position, and shows the forecast outturn variance for each portfolio area against approved budgets.

19

3.3 Members may be aware that the Council uses Collaborative Planning (CP) to monitor its revenue budgets. The system involves Budget Managers forecasting their outturn position for each of the cost centres they control. They are asked to pay specific attention to forecast variances against controllable budgets which are equal to or are greater than £10k. Managers are asked to explain these variances in detail and to identify actions they can take to address any pressures. These variances are detailed in Appendix 1.

Fees and Charges 3.4 The income generated by fees & charges is significant to balancing the Council’s

budget and is a key area of attention for Bassetlaw. The accurate forecasting of income for the year can be problematic especially as factors external to the Council can influence how much income is generated. The value of the fee charged is also crucial to maximising income. Fees & Charges are reviewed annually in line with the Corporate Charging Policy. The Fees & Charges for 2016/17 were approved by Cabinet on 1st December 2015.

The table below monitors the major income streams for the Council and shows the

current year’s annual budget, quarter 2 budget, quarter 2 actuals, quarter 2 variance and forecast outturn variance as at 31st March 2017. This table shows that the forecast outturn at quarter 2 for 2016/17 is for an overachievement of £0.077m. Members should be aware that this is just a forecast and there is a possibility this will change in the coming months.

FEES AND CHARGES INCOME

Annual Budget

Cumulative Quarter 2 Budget

Cumulative Quarter 2

Actual

Cumulative Quarter 2 Variance

Forecast Annual Outturn Variance

£m £m £m £m £m

Building Control 0.181 0.090 0.071 (0.019) (0.018)

Car Parking (incl. Season tickets) 0.698 0.349 0.370 0.021 0.018

Cemeteries 0.211 0.106 0.104 (0.002) 0.000

Land Charges 0.110 0.055 0.066 0.011 0.020

Licensing 0.186 0.093 0.060 (0.033) 0.009 Planning Development Control 0.786 0.393 0.547 0.154 0.044

Retford Enterprise Centre 0.239 0.119 0.090 (0.029) 0.003

Retford Market 0.165 0.083 0.077 (0.006) 0.001

Waste 0.459 0.179 0.228 0.049 0.000

Worksop Market 0.160 0.080 0.079 (0.001) 0.000

Total 3.195 1.547 1.692 0.145 0.077 Note: Variances in brackets denote underachieved income

20

General Fund Revenue 3.5 The Table below summarises the second quarter position analysed over the different

portfolio areas. The current projections are that an overspend of £0.057m on the overall General Fund budget is expected to occur.

3.6 The forecast variance at Quarter 2 is summarised in the table below by portfolio

area. A traffic light system is being operated:- GREEN for variances between £0-£9,999 AMBER for variances between £10,000-£19,999 RED for variances equal to or greater than £20,000

3.7 The table below represents the expected outturn for 2016/17:

Portfolio Area Annual Budget

Forecast Outturn for the Year

Forecast Outturn Variance

£'m £'m £'m

Chief Exec 0.136 0.139 0.003

Corporate 1.299 1.274 (0.025)

Finance Property & Revenue Services 2.976 3.031 0.055

Human Resources 0.019 0.019 0.000

Neighbourhoods 7.092 7.002 (0.090)

Regeneration 3.558 3.610 0.052

Sub-Total Service Areas 15.080 15.075 (0.005)

Other Budgets 0.816 0.671 (0.145)

Reserves 1.166 1.373 0.207

Grand Total 17.062 17.119 0.057

3.8 Members should note that the estimated overspend at quarter 2 is a forecast only

and may reduce or increase. Close monitoring of performance against budget must be a top priority for Managers to identify any areas that pose significant budget pressures.

3.9 Appendix 1 gives a detailed analysis of the forecast outturn variances. However the

main issues that Members should be aware of relating to the forecast £0.057m overspend are:-

• (£0.058m) write back of Leisure Centre Gas Provision • £0.058m expected transfer of Leisure Management underspend to Ear

Marked Reserves • (£0.149m) unexpected Council Tax Support Grant. • £0.149m transfer of unexpected Council Tax Support grant to Reserves. • (£0.077m) forecast overachieved income • (£0.009m) forecast net employee cost savings

21

• £0.017m forecast loss of rental income due to the sale of Old Brewery Yard

• £0.016m Procurement Shared Service trading deficit • £0.026m pressure due to external expertise required for Tree Officer

duties. • £0.020m agreed by Cabinet in March to underwrite any shortfall in the

provision of CCTV to rural communities. • £0.013m Maintenance of Equipment due to the increase in playparks. • £0.021m Condition survey and removal of horse from Council land. • £0.018m forecast pressures for bank charges and insurance premiums.

3.10 If the forecast £0.057m overspend materialises the impact would be to decrease

balances at 31st March 2017 from £1.630m to £1.573m. 3.11 One of the key factors the KPMG External Audit Engagement Lead assesses the

Council on is its ‘Financial Resilience’. Bassetlaw therefore needs to demonstrate it can manage emerging issues, like those seen in this budget monitoring report, and can also maintain its declared level of minimum reserves, which are an important measure of financial management. Therefore the Minimum Working Balance needs to be maintained at £1.0m at 31st March 2017.

3.12 The forecasted overspend has moved between quarter 1 and quarter 2 by £0.090m

to £0.057m. The table below details the main movements between quarter 1 and quarter 2 budget monitoring reports. Quarter 1 (to 30th June 2016) was reported to Cabinet on 6th September 2016. The main movements between quarters are detailed below:

MOVEMENT BETWEEN Q1 & Q2 £m Over/Underspend reported at Quarter 1 (0.033) Re-evaluation of employee savings 0.025 Movement in income forecast (0.019) Tree Officer External expertise 0.026 CCTV provision to rural communities 0.020 Maintenance of equipment in playparks 0.013 Various minor movements 0.025 Over/Underspend reported at Quarter 2 0.057

Housing Revenue Account

3.13 The table below summarises the first quarter position for the Housing Revenue

Account. The current projections are that an overspend of £0.050m on the Housing Revenue Account budget will accrue, details of which are contained within Appendix 2.

22

A traffic light system is being operated:-

GREEN for variances between £0-£9,999 AMBER for variances between £10,000-£19,999 RED for variances equal to or greater than £20,000

Division Annual Budget

Actual for the year

Actual Variance

£m £m £m A1 Management Fee 11.981 11.981 0 Expenditure 6.231 6.235 0.004 Income (27.099) (27.053) 0.046 Net Cost of Services (8.887) (8.837) 0.050 Other Adjustments 8.986 8.986 0 In Year Use of Reserves 0 0 0 Surplus/Deficit 0.099 0.149 0.050

3.14 Members should note that the estimated overspend at quarter 2 is a forecast only and may reduce or increase. Performance against budget must be monitored closely throughout the year. Any areas that pose significant budget pressures should be addressed.

3.15 If the forecast overspend does materialise the estimated HRA balance as at 31st

March 2017 will reduce from £1.484m to £1.434m. This would be above the minimum requirement of £1.3m which was set by Cabinet and full Council.

3.16 Appendix 2 gives a detailed analysis of the forecast outturn variances. However the

main issues that Members should be aware of relating to the forecast £0.050m overspend are:-

• Revenue income expected from the capital project of the installation of

ground source pump to some dwelling properties (£0.034m) • Reduced income expected from dwelling rents £0.080m.

Capital Programme Expenditure 3.17 The table below summarises the second quarter position for the Capital Programme,

and is split between General Fund and Housing Services.

Quarter 2 Actual Spend

£m

Approved Annual Budget

£m

Percentage Spend

%

Estimated Outturn

Variance £m

General Fund 1.201 4.542 26.4% 0 Housing 4.799 12.308 39.0% 0 Total 6.000 16.850 35.6% 0

23

3.18 The Capital Programme changes during the year as projects are developed and spending commitments are made. It is a requirement that the Cabinet approves all variations to the Capital Programme, for which the budget approved at the 6th September 2016 Cabinet for 2016/17 was £16.825m. The additions and amendments that now require approval for quarter two of 2016/17 are detailed in Appendix 3 as follows:

• New Approvals funded from Capital Receipts £0.012m • Other variations £0.778m • Re-profiling (£0.765m)

3.19 If these variations to the Capital Programme are approved, then the revised budget

will increase by £0.025m to £16.850m. A more detailed breakdown of the current Capital Programme is provided at Appendix 4.

3.20 There is bi-monthly capital monitoring of the projects within the General Fund chaired by the Cabinet Member for Finance, and includes finance officers, project managers and relevant Cabinet Members. This meeting has been proactive in ensuring that existing capital projects are delivered as efficiently and quickly as possible.

3.21 The A1 Board monitor the expenditure within the HRA capital schemes. The A1

Housing capital scheme monitoring is appended to this report at Appendix 5.

Capital Programme Resourcing

3.22 The capital resources available to the Council are not static. Capital receipts are generated throughout the year, additional grants and contributions are paid to the Council, and borrowing may be increased to fund some types of project.

3.23 In summary, the current requirement of £16.850m will be financed as follows, minimising the impact on the Council’s revenue budgets:

24

Capital Receipts 3.24 Previously the Council had been successful in securing a number of capital receipts

for both General Fund and Housing land and property in the last few years, however due to the current market climate conditions are now proving difficult and as such Capital Receipts are currently very low. These were taken into account when developing the current Capital Programme for 2017/18 to 2020/21. The current level of capital receipts is detailed in the table below:

Note: the four individual categories are explained within the Capital Investment Strategy.

General Fund Unsupported

Borrowings, £1.011, 6%

General Fund Section 106, £0.031,

0%

General Fund Capital Receipts, £2.124,

13%

General Fund External Grants and

Contributions, £1.376, 8%

Housing Unsupported

Borrowings, £1.000, 6%

Housing MRR-Major Repairs Reserve,

£9.395, 56%

Housing Capital Receipts, £1.141, 7%

Housing External Grants and

Contributions, £0.772, 4%

Capital Financing £m

General Fund

£m

HRA for DFGs

£m

HRA for Housing

£m

Retained Right to

Buys £m

Total

£m Balance @ 1 Apr 2016 1.385 0.786 (0.070) 0.084 2.185 Received to 31 Aug 2016 (net of costs of disposal and pooling) 1.307 1.150 1.545 0.072 4.074 Used to fund schemes in 2016/17 (1.627) (0.497) (1.141) 0.000 (3.265) Currently Unspent Receipts 1.065 1.439 0.334 0.156 2.994 Estimated Q3-4 capital receipts (N.B. these are yet to be realised) 0.000 0.000 0.000 0.000 0.000 Funding for approved schemes in future years 2017/18 to 2020/21 (1.278) (1.121) (1.540) 0.000 (3.939) Receipts to be generated in 2017/18 to 2020/21 0.000 0.000 1.540 0.000 1.540 Unallocated Capital Receipts Balance @ 31 Mar 2017 (0.213) 0.318 0.334 0.156 0.595

25

Community Infrastructure Levy Receipts 3.25 Officers have been requested to periodically report to Cabinet on the progress with

Community Infrastructure Levy (CIL) awards, and to date 46 Liability Notices have been issued. Of those, 27 have been granted self-build relief, 2 Social Housing Relief and 2 Exceptional Circumstances Relief. During 2016/17 (as of 30th September 2016) we have received payments totalling £0.195m.

Treasury Management

3.26 The interest payable on borrowing budgets is based on the projected cashflow for the

year, borrowing need and forecasted future borrowing rates. The original estimates assumed that the Council would borrow £1.575m during 2016/17, which related to various capital schemes. The original estimate has since been revised to include those schemes that underspent in 2015/16; hence it has now increased to £2.011m. However, £1.0m of this borrowing is HRA and required to fund the housing capital improvement works.

3.27 The borrowing position is closely monitored, as the Council needs to ensure that any long-term borrowing is undertaken at the lowest market or PWLB interest rate. In this quarter there has been no long-term or short-term borrowing.

3.28 Similarly, investment income is monitored for performance, as it is directly affected by changes in the base rate. The Bank of England has reduced national interest rates to 0.25% in this quarter.

3.29 Investments are also affected by slippage in the Capital Programme, and by any

long-term borrowing the Council may make. A considered approach to long-term borrowing must be made because it is illegal to borrow to invest, and must be borrowed against planned capital expenditure.

3.30 For the two UK registered Icelandic bank investments, the Council has received no further dividends this quarter in respect of Kaupthing Singer & Friedlander bank and Heritable bank. This leaves the total amount of recoveries at 30th September 2016 against the £3.0m (plus interest) investment at £2.862m (83.8% for KSF and 98% for Heritable bank).

3.31 The Chief Executive maintains close contact with the Local Government Association,

and Members are circulated with the latest briefings on a prompt basis. 3.32 Member should be aware that during quarter 2 a banking error occurred on the daily

downloadable balance reports which resulted in the £1m investment limit which we set with our bank, Barclays, being breached for one day only. Once the error was rectified funds were transferred on the following day, ensuring the Council was within approved limits.

3.33 Appendix 6 details the Prudential Indicators that the Council is required to report and

monitor. There are no issues to highlight to Members on these indicators. 3.34 Appendix 7 provides a graphical summary of the weekly investment balances made

throughout the first quarter of the financial year, in conjunction with relevant benchmarking data for the Council.

26

3.35 Appendix 8 provides details of the mid-year Treasury Management Strategy and Investment Strategy which will be reported to full Council on 15th December 2016.

4. Implications


The existence of a stringent budget monitoring process ensures that resources are available to deliver the Medium Term Financial Plan, and appropriate early interventions take place if a service is forecasted to significantly overspend. The ongoing capital expenditure will ensure that existing services improve with a number of new initiatives. The bids have been developed appropriately according to legislation, national guidance, and the Council’s own objectives.

b) Strategic & Policy This report is in line with best practice, and provides confidence in the

financial management process. All of the capital projects detailed within this report are in line with the

strategic objectives of the Council, as contained within the Corporate Plan. c) Financial – Ref: 17/468

These are contained within the main body of the report. The following highlights areas that can have a significant impact on the current budget position: General Fund Revenue Budget:

• During the 2016/17 budget setting process an amount of £0.587m was

removed from the base budget in order to set a balanced budget. This was primarily achieved through a combination of expenditure reductions including; reduced long term borrowing costs, reduced contingencies, review of staff car mileage, Zero based budgeting review, ICT Contract review, Service Level Agreement reviews; and increased income through Council tax increases and growth in the taxbase, sharing of office accommodation, and retained business rate growth. The achievement of these savings is monitored as part of the normal budget process highlighted within this report. A detailed analysis of variances is highlighted in Appendix 1.

• The current forecast overspend is £0.057m, and if this materialises then this would require a transfer from the General Reserve at year end.

Housing Revenue Account:

• The new HRA self-financing regime commenced in April 2012 which enables the Council to retain all of the rent that it collects, and utilise this to pay for the day-to-day revenue running costs, and make localised

27

investment into the council housing stock. Officers from A1 Housing and the Council have updated the detailed 30-year business plan, which shows that the HRA is sustainable into the future.

• The current forecast overspend is £0.050m, and if this materialises then this would be transferred from the HRA General Reserve.

Capital Programme:

• Capital expenditure is not year-specific, and progress on schemes will continue to be monitored by the bi-monthly meetings. There may be changes to the way the Capital Programme is financed as further grants and capital receipts are generated, and option appraisals are undertaken for previously leased assets.

Treasury Management: • The Prudential Indicators for quarter two are within approved limits and

present no implications for the budget.

d) Legal - Ref: 656/12/16

Budget monitoring is conducted by the Chief Financial Officer under the provisions of Section 151 of the Local Government Act 1972.

e) Human Resources None from this report. f) Community Safety, Environmental, Equalities Some of the Capital Schemes do have positive implications on community

safety, equalities, and the environment, and these have been considered at the project appraisal stage, prior to approval to the Capital Programme.

g) This is key decision number 588.

5. Options, Risks and Reasons for Recommendations 5.1 The budget monitoring section of this report provides Managers’ forecasts and is for

information only. There are always some risks that the actual outturn variance could be substantially different from that currently shown, (mainly due to the volatility of income), but the report sets out officers projections, and as such the financial risks that may occur by 31st March 2017.

5.2 The Council has responsibility for delivering its Capital Programme on time and not

doing so could undermine the achievement of its objectives. The bi-monthly capital monitoring meeting will continue into the future.

6. Conclusions

28

6.1 This report is for the second quarter of the year. Current indications are that there will be a budget overspend of £0.057m in year for General Fund and an overspend of £0.050m in year for HRA. However it is important to note that this report is only highlighting that a problem may or may not arise, and draws to both officers and Members attention that these need to be closely monitored throughout the year.

6.2 The continual pressures on Local Government finances have led to yet another

challenging budget for 2016/17 and this is forecast to continue. A total of £0.587m was removed from 2015/16 base budget to produce the 2016/17 budget. The Financial Management of these budgets by spending officers’ is crucial. This quarterly report is just one element of the robust monthly budget monitoring process that the Council operates. Spending officers’ are pivotal in this process and are required to recognise and report any forecast variances to budget as early as possible, to enable appropriate action to be taken. The financial equation is simple, any overspends in the current year will increase the savings target for all services in future years if the Council is to survive the cuts to public sector funding that the central government are implementing.

7. Recommendations 7.1 That the position with regard to revenue and capital budget monitoring is noted.

7.2 That Cabinet approves the ‘new approvals funded from capital receipts’ to the

2016/17 Capital Programme totalling £0.012m as discussed in paragraph 3.18 and detailed in Appendix 3 of this report.

7.3 That Cabinet approves the ‘other variations’ to the 2016/17 Capital Programme

totalling £0.778m as discussed in paragraph 3.18 and detailed in Appendix 3 of this report.

7.4 That Cabinet approves the ‘reprofiling’ to the 2016/17 Capital Programme totalling

(£0.765m) as discussed in paragraph 3.18 and detailed in Appendix 3 of this report.

7.5 That the proposed resourcing of the Capital Programme and the level of capital receipts currently available to fund any further capital expenditure is noted (paragraphs 3.22 – 3.24).

7.6 That Members note the quarterly update on performance against the approved

Treasury Management Prudential Indicators for the period ending 30th September 2016 (Appendix 6).

7.7 That Members note the weekly investment balances made throughout the second

quarter of the financial year, in conjunction with the Security, Liquidity and Yield benchmarking data for the Council (Appendix 7).

7.8 That Members recommend the approval of the mid-year Treasury Management

Strategy and Investment Strategy report to full Council on 15th December (Appendix 8).

Background Papers

Location

Budget Reports ABS Reports Capital programme working papers Treasury Management data

Accountancy, Queen’s buildings

29

30

APPENDIX 1

Description

Estimated Outturn Variance

£'000

Explanation

Land Charges (20) Forecast overachievement of income.

Legal & Licensing Services (9) More renewals/new licences than expected at half way stage of financial yearTOTAL VARIANCES (29)

Description


£'000

Explanation

Procurement 16 Trading Account deficit.

Pension Gains and Losses (10) Lower than expected pension recharges.

Property 17 Sale of Old Brewery Yard will reduce the rental income.Estates, Miscellaneous Properties and Town Halls 21 Conditions Surveys and removal of a horse from Council land.

Finance 18 Corporate Accounts, Bank Charges and Insurance Administration.

Benefits Administration (17) Staff vacancies.

TOTAL VARIANCES 45

Corporate Services

GENERAL FUND REVENUE CONTROLLABLE VARIANCES EQUAL TO OR EXCEEDING £10,000

Finance Property & Revenues

31

APPENDIX 1


Neighbourhoods

Description


£'000

Explanation

Environmental Public Health (27) Savings from vacancies.

Leisure & Arts Management & Admin (48) Reversal of the gas provision for the supply to the Worksop Leisure Centre.

Street Cleansing (49)Savings on employees due to movement of staff between areas to meet service needs and vacancies earlier in the year.

Waste Collection & Disposal 34Refuse Collection Non Trading - overspend on Agency staff to cover absences, sickness and movement of staff between areas to meet service needs.

TOTAL VARIANCES (90)

32

APPENDIX 1


Description


£'000

Explanation

CCTV 23

March 2016 Cabinet Report agreed to underwrite any shortfall relating to the provision of additional capacity to rural communities. Therefore there is an approved £20k overspend and unforeseen circumstances have led to 1 employee being on leave

Homelessness 23

Housing Needs Team variances £15k due to unexpected back dated lump sum payment & increased weekly overtime payment in respect of out of hours services. Bed & Breakfast variance of £7.5k relating to considerable increase in demand, with 50% increase on number of cases as at same point last year

TOTAL VARIANCES 46

Description


£'000

Explanation

Corporate Contingency (149)

At last years budget setting it was believed that Council Tax Admin support Grant would be included within Revenue Support Grant (RSG) and therefore was not budgeted for. However, this grant has been received over and above RSG and is therefore a windfall in year.

TOTAL VARIANCES (149)

Regeneration

Finance - Other Budgets

33

APPENDIX 1


Description


£'000

Explanation

Transfer to/from Earmarked reserves 207

Transfer to earmarked reserve the expected underspend in Leisure Services to support future Leisure Service requirements £58k, and transfer to Business Rates Volatility Reserve unexpected Council Tax Support Grant £149k.

TOTAL VARIANCES 207

Reserves

34

APPENDIX 2

Description Estimated Outturn Variance

£'000

Explanation

Income 50

(£35k) revenue income expected from the capital project of the installation of ground source pump to some dwelling properties, £75k underachieved dwelling income due to above estimated write to buy during 2015/16 and the number processed during the first 5 months and the assumption used of the new building being available to let was different to reality.

TOTAL VARIANCES 50

HOUSING REVENUE ACCOUNT CONTROLLABLE VARIANCES EQUAL TO OR EXCEEDING £10,000

35

APPENIDX 3

NEW APPROVALS

FUNDED FROM CAPITAL

RECEIPTSOTHER

VARIATIONS REPROFILING£ £ £

General Fund

Sandhill Lake Car Park Improvement (45,000)Due to the enforcement letter from the Environment Agency for Langold Lakethis budget has been utilised for the works.

Langold Lake Improvements 45,000New budget requirement following an enforcement letter from the EnvironmentAgency under the Reserviors Act 1975 (as amended) Section 10 (7)(b) for urgentworks to Langold Lake.

Bircotes LC New Boiler 93,000New budget approval via Delegated Member Decision no 14 in 2016/17 fundedfrom the unapplied capital reserve from Serlby Park Academy.

Vehicles & Plant - Replacement (90,000)Reprofile to 2017/18.

Worksop Creative Village Phase 2 75,000Increase in budget due to a contribution from Notts County Council.

Worksop Creative Village Phase 2 (75,000)Reprofile to 2017/18.

Memorial Library (210,000)Reprofile to 2017/18.

Fire Alarm Queens Building 80,000New budget to make the Council comply with the Fire Reform Act, as currrentlythe fire alarm on the 3rd floor and link building are on an old EDA system and therest of the building is on the new Vigilon System .

Planned Maintenance & Capital Upgrades (50,000) 50,000Move budget from 2017/18 Capital Programme and reallocate to coverrequirement for the Fire Alarm in Queens Building capital scheme.

Flood Alleviation - Small Schemes/Retford Beck (30,000)Reallocation of budget to cover requirement for the Fire Alarm in QueensBuilding capital scheme.

IT Computer Replacement Fund 12,000Increase in budget for the purchase of new PC's to replace the current end of lifePC's.

Affordable Housing Scheme 440,000 (440,000)New budget approval via Delegated Member Decision no 15 in 2016/17 fundedfrom Section 106. This budget will be set up in the 2017/18 capital programme.

HRA

Better Care Fund Adaptations 170,000Three disabled child cases have been identified by the Occupational Therapistreferral process for current or imminent A1 tenants for works that are required totheir properties including bathroom and bedroom extensions. All to be fundedfrom the Councils allocation of the Better Care Fund monies.

12,000 778,000 (765,000)

VARIATIONS AND ADDITIONS TO THE 2016/17 CAPITAL PROGRAMME

36

APPENDIX 4

Cost Centre

CAPITAL SCHEME Capital Programme Approved

Approved Revised Capital

ProgrammeForecast Outturn

Q2 Update

07 March 2016 2016/17 Expected Actual Variance 2016/17£'000 £'000 £'000 £'000 £'000 £'000 £'000

NEIGHBOURHOODS -COUNCILLOR JULIE LEIGH

B001 Vehicles & Plant - Replacement P Jones 544 151 605 80 75 5 605Refuse vehicle has been ordered totalling £170k, joint tender for new refuse sweeper is to go out next week. There is a vehicle not being replaced for street cleaning, budget of £190k is to go on grounds maintenance equipment, specifications to be drawn up will then go through procurement

B042 Play Areas - St Augustines J Foster 210 32 242 30 26 4 242There have been works on site over the summer holidays which included fencing the area where the new equipment will be going. Works have been tendered which are expected back next week, once a joint evaluation with the school has been completed and a preferred option selected then expect works to start on site in January with a completion end of February / Early March.

B009 Community Sports Scheme P Clark 0 104 104 0 0 0 104 The requirement on this scheme is to be decided by cabinet.

New Bircotes LC New Boiler P Clark 0 0 93 0 0 0 93 New budget approval via Delegated Member Decision no 14 in 2016/17 funded from the unapplied capital reserve from Serlby Park Academy.

B041 Retford Leisure Centre Car Park Extension P Clark 25 0 25 0 0 0 25Scheme is a simple contribution towards Notts County Council when the car park extension has been completed. However as the projected costs have gone over £300k for Notts County Council they have to go back to NCC cabinet for approval, awaiting outcome of cabinet.

B027 Carlton Forest Depot Vehicle Wash P Jones 20 0 20 0 0 0 20 Scheme to be revaluated as original idea of linking with the drainage improvements has proved to be too expensive.

B049 Sandhill Lake J Foster 0 6 6 0 0 0 6 Works complete on picnic area, remainder of budget for signage improvements.

FINANCE - COUNCILLOR JUNE EVANS

B006 Walkeringham Flood Alleviation Scheme I Davies 760 85 845 50 34 16 845 Tenders have been received and evaluated, contract has been awarded to J Breheny Contractors Ltd, with a tender price of £570k. Works expected to be completed end of January / early February.

B002 Queens Building Modernisation/Open Plan M Evans 0 236 236 150 86 64 236Ground floor and the first floor are now fully complete and are functional. Second floor is near completion and expecting staff to be relocating there around third week of October. Decision required on the layout of rooms for the 3rd floor.

B011 Planned Maintenance & Capital Upgrades M Evans 100 0 100 100 94 6 100 Multiple schemes have been identified with in the budget allocation. Including electrical upgrade at 73 Bridge Street and caretakers office at Retford Town Hall.

B059 Fire Alarm at Queens Building P Rose 0 0 80 0 0 0 80 New approval to bring the fire alarm on the 3rd floor and the link building into line with the Fire Reform Act requirements.

B003 Flood Alleviation - Small Schemes/Retford Beck I Davies 50 37 57 25 25 0 57

First element of the scheme is for the ongoing Environment Agency grant application for Retford Beck which has a delivery of 2020, works include survey works. Second element is for the small schemes flood alleviation works, works have been completed in the following areas Clarborough, Langold Lake, Shireoaks and Rhodesia.

B016 Langold Lake Improvements I Davies 0 45 45 0 0 0 45 Budget has been reallocated from Sandhill Lake car park improvements as per formal request from Environment Agency and these works have to be completed by end of October.

B013 Carlton Forest Drainage Improvements I Davies 50 -6 44 0 1 -1 44 Ongoing discussions with Viking pumps on the design on the works required on the two pumping stations at Carlton Forest.

B012 Carlton Forest Depot Office Improvements J Bowler 0 39 39 0 0 0 39 Options for the project is currently under review.

B036 Canch Redevelopment I Davies 0 22 22 22 20 2 22 Scheme has been completed and currently awaiting final few invoices.

B057 Memorial Library J Unstead 231 0 21 21 21 0 21 Budget is to facilitate the Aurora charity to grant bid for works to building. Phase 1 for HLF bid has been successful, next phase result expected early next year. Move remainder of budget to next financial year.

B056 Portakabin at Rectory Road J Unstead 0 0 20 20 29 -9 20 A portakabin has been delivered and installed which will provide suitable alternative facilities for the staff.

B058 Improvements To Pedestrian Bridge I Davies 0 0 13 0 0 0 13 New budget approval via Delegated Officer Decision.

B023 Asbestos Removal M Evans 0 6 6 6 6 0 6 Scheme completed.

B030 Retford Town Hall Security Upgrade P Rose 0 5 5 0 0 0 5 Residual monies carried forward from previous year’s project, caretakers’ office is complete just awaiting our IT to install linkage to CCTV room.

REGENERATION - COUNCILLOR JO WHITE

B007 Retford - Public Open Space Improvements D Watson 246 99 406 406 414 -8 406

Scheme completed and splash pool is open, a few more minor works and invoices to be received. Projected overspend off around £13k on whole project. Was due to the new sewer connection installed by Severn Trent Water, works were expected to cost around £5k however once digging had commenced and the poor state of the land became apparent there was an increase in works and time required which resulted in the total cost being £15k.

B014 Manton Regeneration J Davies 60 0 60 0 0 0 60 Cabinet report going to October Cabinet for members to decide on the available options for the site.

CAPITAL PROGRAMME 2016/17 BUDGET MONITORING - POSITION AS AT 30TH SEPTEMBER 2016

Project Manager

Reprofiling Approved21 June

2016

To 30 September 2016

37

APPENDIX 4

Cost Centre

CAPITAL SCHEME Capital Programme Approved

Approved Revised Capital

ProgrammeForecast Outturn

Q2 Update

07 March 2016 2016/17 Expected Actual Variance 2016/17£'000 £'000 £'000 £'000 £'000 £'000 £'000

CAPITAL PROGRAMME 2016/17 BUDGET MONITORING - POSITION AS AT 30TH SEPTEMBER 2016

Project Manager

Reprofiling Approved21 June

2016

To 30 September 2016

B055 Changing Places Toilet D Watson 12 0 60 0 12 -12 60 Prelims started to ascertain services and utilities in proximity to planned build. Architect briefed on design and function required. Drawings should be produced within next 4 weeks.

B015 Harworth Bircotes Town Centre D Watson 30 14 44 23 23 0 44 Planning permission has been granted for the works required for the shop fronts. Lead time on the works is around 6 weeks and expected to start on site as soon as possible.

B018 Buildings at Risk S Britt 38 0 38 0 0 0 38Works for Haxey Gate Bridge have been estimated at £100k, unfortunately both NCC and English Heritage have withdrawn any potential contribution or match funding. Currently awaiting a decision from Heritage Lottery Fund on whether they may be willing to contribute.

B021 Prince Trust Retford Worksop J Davies 0 36 36 0 1 -1 36

For the Retford element the project relates to the front of Kings Park, a change of use has been confirmed awaiting a traffic registration order from NCC, which can take a considerable amount of time, so works will be dependent on when the TRO is confirmed. Original Worksop project was to look at improving the lighting on Victoria Square, however have had no response from NCC so may have to re-evaluate the scheme in line with the list of projects from the Prince’s Trust.

B024 Crematorium Feasibility Study B Alderton - Sambrook 0 20 20 0 0 0 20 Majority of monies are going to be spent imminently as there a potential agreement on the preferred site,

this will lead to a more in depth design stage which will include build costs.

B025 North Notts Visitor Experience J Davies 0 10 10 0 3 -3 10 This scheme is a carry forward and continuation on previous financial years project, signage on Retford Train station underpass is fully installed, discussions with Virgin for remainder of signage looking positive.

B004 Worksop Creative Village Phase 2 R Wilkinson 422 0 0 0 0 0 0 Scheme has been moved to next financial year, however we have had confirmation from Notts County Council that they will contribute £75k towards the scheme.

B031 Market Canopy Renewals R Blagg 10 -10 0 0 0 0 0 Due to overspend in previous financial year this years budget has already been used.

CUSTOMER AND SUPPORT SERVICES - COUNCILLOR KEVIN DUKES

B008 ICT Storage & Server Infrastructure D Harwood 0 84 96 50 49 1 96SAN project nearing completion, desktops procured for 1st and 2nd floor of Queens Building Open Plan, all desktops for 1st floor has been installed and 2nd floor desktops will be installed 3rd week in October. Remaining budget is for the purchase of the 3rd floor desktops.

B040 ICT updates and development D Harwood 0 66 66 10 3 7 66Skype for business will now incorporate A1, one outcome is that members will have their own skype area in the cloud which includes a new email address, outside the PSN compliment regulations for officers. IDOX upgrade near completion but depends on departments signing off IDOX work on infrastructure once that complete can update ORACLE.

POLICY & COMMUNITY ENGAGEMENT - COUNCILLOR SIMON GREAVESB053 Nottinghamshire Countywide Broadband Initiative 0 51 51 51 51 0 51 Scheme complete as all contributions have been paid to Notts CC for the county wide broadband

improvements.HOUSING GENERAL FUND - COUNCILLOR STEVE SCOTTHORNE

B005 Disabled Facilities Grant C Staniforth 1,231 210 1,000 280 225 55 1,000 Committed £531K to date. This includes 71 applications in the system, £337K has been formally approved, £194K are applications being processed.

B019 Empty Homes Grant C Staniforth 0 27 27 3 3 0 27 Committed £7K. There is 1 application in the system, not yet approved.

TOTAL GENERAL FUND 4,039 1,369 4,542 1,327 1,201 126 4,542

HOUSING - COUNCILLOR STEVE SCOTTHORNE

Various Other Capital Improvements Various 8,000 702 8,926 3,500 3,173 327 8,926 Progressing throughout year.

B520 Airey Houses Various 2,750 632 3,382 1,500 1,626 -126 3,382 Progressing throughout year.

TOTAL HOUSING 10,750 1,334 12,308 5,000 4,799 201 12,308

GRAND TOTAL 14,789 2,703 16,850 6,327 6,000 327 16,850

38

Cost Code SCHEME Original

Budget Revised Budget

Spend to Date -

September '16

% of Revised Budget Spent

Contractor Comments

B501 Major Improvement Works 3,356,009 3,006,009 1,742,754 58% United Living On target, with final £300k of works currently being programmed

B546 BRS Major Works 100,000 20,802 21% BRS On target

B561 Major Voids 165,000 160,618 97% Tomlinsons Ad hoc works as properties become void - may need additional budget

B562 HHSRS 50,000 11,641 23% Ad hoc work, budget to be continuously monitored

B563 Major Improvements Contingency 60,000 48,061 80% Fans, ad hoc minor works to be continuously monitored

B500 Boiler Replacement/system upgrades including continuation of Open Flue gas appliance removals. 399,093 399,093 184,981 46% BRS On target

B507 Structural Repairs 63,492 63,492 21,283 34% On target for full spend at year end

B508 Lifetime Homes 31,746 36,746 0 0% On target for full spend at year end

B509 Fire Risk Assessments - Sheltered Schemes 163,265 208,616 205,152 98% United LivingAxis Lifts

Westmorland nearing completion. Swallow Court to be targetted next year.

B510 Community Centres - Improve Fire safety 181,406 135,406 3,075 2% Awaiting strategic decision - possible carry forward

B512 External Wall Insulations 181,406 181,406 3,813 2%Six dwellings in Hallcroft commencing shortly, further properties to follow to ensure budget spent

B517 Smoke and heat alarms to general stock 68,027 68,027 32,069 47% Lambert Electrical Ltd On target for full spend at year end

B519 Secondary ECV installs to Westmorland House and misc properties - 5,000 2,627 53% On target

B527 Improved Waste Storage Facilities in Communal Areas and Dwellings - 45,000 0 0% Plantation Hill flats to commence shortly

B529 Electrical installation condition testing (Yr.2) 299,320 299,320 140,601 47% McIntyre Electrical Ltd 1250 dwellings tested.

B530 Community Alarm Equipment 181,406 295,906 198,856 67% Tunstall Telecom On target to complete in December

B531 Non Dwelling Assets - the Gateway building 226,757 367,109 179 0% Approx £10k spend on Planning Fees - programmed for a 01/04/17 start on site

B532 Flats above Shops 63,492 113,492 0 0% Awaiting quote from United Living, other blocks to be assessed

B533 Damp Proof Course's 126,984 134,984 15,811 12% Phase 1 works complete, Phase 2 contract awarded work to commence October and

B536 Adaptations - Minor / Major 408,163 408,163 192,092 47% United Living On target

B538 Asbestos encapsulation/removal 90,703 90,703 19,458 21% City Asbestos Project progressing well, on target for full year spend.

B539 Lightning Protection - 9,000 1,374 15% Hannah Park complete, Osberton View to follow

B542 Fire Protection to Flats with communal areas 317,460 317,460 29,370 9% 132 Flat entrace doors out to tender in next few weeks.

TECHNICAL and HOUSING SERVICES CAPITAL WORKS POSITION STATEMENT - SEPTEMBER 2016

Appendix 5

39

Cost Code SCHEME Original

Budget Revised Budget

Spend to Date -

September '16

% of Revised Budget Spent

Contractor Comments

TECHNICAL and HOUSING SERVICES CAPITAL WORKS POSITION STATEMENT - SEPTEMBER 2016

B549 Larwood House Flood Damage - 30,000 0 0% Final designs being developed

B551 Heat Metering Larwood 45,351 0 0 0%Deemed not Legislative works therefore budget transferred to FRA Sheltered Schemes.

B552 Ashford Court Demolition & Carpark 31,746 31,746 0 0% Scheme carried forward to 2017/18

B553 Vehicles 150,000 120,000 121,657 101% Vehicles purchased, remaining £30k transferred to new build

B554 Beverley Road New Build 181,406 181,406 0 0% Costings currently being developed

B555 Compartmentation work pilot scheme 18,141 18,141 0 0% Quotations received for surveys above 2 storey blocks

B556 Plantation Hill Front Entrance 27,211 27,211 0 0% Awaiting quote from United Living for works at Plantation Hill

B557 Car Parking Schemes 72,562 107,562 44,711 42% Currently working in Ranskill, on target for full year end spend

B558 Planned Works 181,406 181,406 13,292 7% On target - works to commence in Elkesley on facias and roofs in November

B559 Prospect 113,379 113,379 0 0% Validation surveys ongoing

B521 Flood Prevention 45,352 258,000 80,000 31% BDC Controlled Budget

B544 ICT Updates and Development - 4,000 0 0% BDC Controlled Budget

B548 Strategic Intervention Fund - 53,750 0 0% BDC Controlled Budget

B560 Conway Heating and Metering 108,844 20,344 625 3% £63.5k transferred to Community Alarm budget; £25k transferred to Major Voids

B520 New build development, Smith Sq and Thompson Ave, Harworth 2,685,185 3,500,185 1,927,309 55% £35k added to budget from Vehicles and Secondary ECV Budgets

B534 Fees 930,687 930,687 465,344 50% On target

Totals 10,750,000 12,137,750 5,687,553 47%

Note: The actual spend does not agree to that reported in Appendix 4 of this report as these figures represent the spend from A1's perspective and not BDC.

40

APPENDIX 6

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual% % % % %

General Fund 14.61 9.68 8.82 8.82 8.82HRA 33.13 33.86 33.14 33.14 33.14

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£ £ £ £ £

Increase in Council Tax Band D 1.30 2.16 3.06 3.36 3.06Increase in Rents 1.13 0.85 6.62 1.48 6.62

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

Total Capital Expenditure - General Fund 2,510 4,039 4,687 4,687 4,480Total Capital Expenditure - Housing (HRA) 11,337 10,750 12,138 12,138 12,138Capital Programme 13,847 14,789 16,825 16,825 16,618

Indicator 3 - Total Capital Expenditure (Including Leasing)

This indicator represents the estimated and actual outturn position of capital expenditure based on the latestCapital Programme shown elsewhere in this report.

PRUDENTIAL AND TREASURY INDICATORS QUARTER 2 - 2016/17

Indicator 1: Ratio of Financing Costs to Net Revenue Stream

Indicator 2 - Incremental Impact of Capital Investment Decisions

This indicator identifies the trend in the cost of capital (borrowing costs net of interest and investment income)against the net revenue stream. Estimates reflect the changes to the capital programme (as reportedelsewhere on this agenda) and the effect on revenue funds.

This indicator illustrates the impact of new capital investment decisions on the level of Council Tax and housingrents. The fluctuations reflect the impact of changes to the capital programme of schemes which are to to befunded by borrowing, this will include new approvals, carry forwards and movements on financing of theseschemes and the expected useful life of the assets financed from borrowing. The difference at Q2 to theoriginal estimate is that underspends from the previous Financial year have been included, and schemesprojected to be completed by 31st March 2016 were not actually completed.

Explanations of the indicators are given below:-

To facilitate the decision making process and support capital investment decisions the Prudential Code requiresthe Council to agree and monitor a minimum number of prudential indicators. For housing authorities, theseare separated for the Housing Revenue Account (HRA) and the General Fund capital investment. Theseindicators are mandatory, but can be supplemented with local indicators if this aids interpretation and many willcover three years forward. The indicators cover affordability, prudence, capital expenditure, external debt andtreasury management.

41

APPENDIX 6

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual

Capital Expenditure £'000 £'000 £'000 £'000 £'000General Fund 2,510 4,039 4,687 4,687 4,542HRA 11,337 10,750 12,138 12,138 12,308Total CapitalProgramme 15,265 14,789 16,825 16,825 16,850

Financed byGENERAL FUNDBorrowing 423 575 1,111 1,111 1,011Capital Receipts 1,107 1,912 2,262 2,262 2,124Capital Grants & Contributions 941 1,552 1,314 1,314 1,407Capital Reserves 0 0 0 0 0Revenue 40 0 0 0 0Leasing 0 0 0 0 0Total 2,511 4,039 4,687 4,687 4,542

HRABorrowing 0 1,000 1,000 1,000 1,000Capital Receipts 1,951 385 1,141 1,141 1,141Capital Grants & Contributions 979 0 602 602 772Major Repairs Reserve 8,407 9,365 9,395 9,395 9,395Revenue 0 0 0 0Leasing 0 0 0 0Total 11,337 10,750 12,138 12,138 12,308

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual

Capital Financing Requirement £'000 £'000 £'000 £'000 £'000CFR - General Fund 25,519 25,501 26,039 26,039 25,939Net Movement -1,287 -18 520 520 420

CFR - HRA 95,143 96,093 96,091 96,091 96,091Net Movement 0 950 948 948 948

Total CFR 120,662 121,594 122,130 122,130 122,030Total Movement in CFR -1,287 932 1,468 1,468 1,368

This CFR is shown in total and is also split between General Fund and HRA

Indicator 4 - Capital Financing Requirement

The expected movement in the CFR is dependent on the level of Prudential borrowing required to fund capitalexpenditure decisions taken during the budgeting cycle. The introduction of the Prudential Code provided newfreedoms that enabled the Council to enter into projects such as spend to save schemes, or decisions toallocate additional resources from revenue. The changes to the Capital Programme are reflected in both theRevised and Quarterly Estimates.

The CFR measures the Council’s underlying need to borrow for a capital purpose, and the change year on yearis influenced by the capital expenditure in the year.

42

APPENDIX 6

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

Capital Financing RequirementBalance b/f 1 April 121,949 120,662 120,662 120,662 120,662Balance c/f 31 March 120,662 121,594 122,130 122,130 122,030In Year Borrowing Requirement -1,287 932 1,468 1,468 1,368

Annual Change in Capital Financing RequirementGeneral Fund -1,287 -18 520 520 420HRA 0 950 948 948 948

-1,287 932 1,468 1,468 1,368

Represented by

MRP - General Fund -1,710 -589 -589 -589 -589Financing need for the year - GF 423 575 1,111 1,111 1,011Long Term Debt Receipts 0 -4 -4 -4 -4

Voluntary MRP - HRA 0 0 0 0 0Downward Revaluation of non-Dwelling HRA Assets 0 -50 -50 -50 -50Prior Year Adjustment 0 0 0 0 0Mortgage Receipts 0 0 0 0 0Financing need for the year - HRA 0 1,000 1,000 1,000 1,000Total Net Financing Need -1,287 932 1,468 1,468 1,368

Net Borrowing/DebtLong Term Borrowing 109,363 109,363 109,363 109,363 109,363Temporary Borrowing 0 0 0 0 0Other Long Term liabilities 0 0 0 0 0

Estimated Total Gross Debt 31 March 109,363 109,363 109,363 109,363 109,363

Indicator 5 - Gross Borrowing and the Capital Financing Requirement

In order to ensure that over the medium term the Council's borrowing will only be for capital purposes, theCouncil must ensure that net external borrowing does not, except in the short term, exceed the total of capitalfinancing requirement in the preceding year plus the estimates of any additional capital financing requirementfor the current and next two financial years. This is a key indicator of prudence.

43

APPENDIX 6

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

General Fund Borrowing 30,000 27,468 27,468 27,468 27,468HRA Borrowing 102,738 105,436 105,436 105,436 105,436Other long Term Liabilities 0 0 0 0 0

AUTHORISED LIMIT 132,738 132,904 132,904 132,904 132,904

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

Borrowing 130,044 127,904 127,904 127,904 127,904Other Long Term Liabilities 0 0 0 0 0

OPERATIONAL LIMIT 130,044 127,904 127,904 127,904 127,904

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

Borrowing 109,363 109,363 109,363 109,363 109,363Other Long Term liabilities 0 0 0 0 0Estimated Total Debt @ 31 March 109,363 109,363 109,363 109,363 109,363

Indicator 6 - Authorised Limit

Indicator 7 - Operational Boundary

This represents the limit beyond which borrowing is prohibited. It reflects the level of borrowing which, whilenot desired, could be afforded in the short term, but is not sustainable. It is the expected maximum borrowingneed with some headroom for unexpected movements. The indicator has been increased to take into accountthe Debt Cap determined by the Government for HRA Self Financing.

This indicator is based on the probable external debt during the course of the year. It is not a limit and actualborrowing could vary around this boundary for short times during the year. It should act as an indicator toensure the authorised limit is not breached.

Indicator 8 - Actual External Debt

This indicator shows the Council’s actual levels of external debt as at each quarter (borrowing and other longterm liabilities).

44

APPENDIX 6

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

Upper Limit on Fixed Rate Exposure 89% 100% 100% 100% 100%• Debt Only 97,163 109,363 109,363 109,363 109,363Upper Limit on Fixed Rate Exposure 35% 31% 32% 32% 12%• Investments Only 6,000 6,000 6,000 6,000 2,500

Upper Limit on Variable Rate Exposure 11% 0% 0% 0% 0%• Debt Only 12,200 0 0 0 0

Upper Limit on Variable Rate Exposure 65% 69% 68% 68% 88%• Investments Only 11,127 13,587 12,587 12,587 18,386

2015/16 Actual

2016/17 Original

Estimate

2016/17 Revised

Estimate

2016/17 Q1 Actual

2016/17 Q2

Actual£'000 £'000 £'000 £'000 £'000

Actual Principal Investments over 365 days 0 0 0 0 0Upper Limit for Principal Sums Invested for Over 365 Days 0 0 0 0 0

Maturity Structure of Fixed Rate Borrowing

2015/16 Actual

2016/17 Upper Limit

2016/17 Revised

Upper Limit

2016/17 Q1 Actual

2016/17 Q2

Actual% % % % %

Under 12 Months 9 25 0 0 012 Months to 2 Years 0 50 6 6 62 Years to 5 Years 17 50 4 4 45 Years to 10 Years 12 50 8 8 810 Years and Above 62 100 82 82 82

This indicator is set to limit the amount of funds the Council can invest for periods over 365 days. Due to thecurrent uncertainty with financial markets, investments over 365 days are not allowed under the Council'sadopted Treasury Management Strategy.

This indicator reflects the fact that the Council is exposed to the risk of having to refinance debt at a time in thefuture when interest rates may be volatile or uncertain. This indicator assists the Council in avoiding havinglarge concentrations of fixed rate debt that has the same maturity structure and would therefore need replacingat the same time.

Indicator 11 - Maturity Structure of Fixed Rate Borrowing

Indicator 10 - Upper Limit for Total Principal Sums Invested Over 365 Days

Indicator 9 - Upper Limits for Fixed and Variable Interest Rate Exposure

This indicator sets a limit for exposure to fixed and variable interest rates (net borrowing). The indicator reflectsthe importance of interest rate risk management. While fixed rate borrowing and investment can contributesignificantly to reducing the uncertainty surrounding future interest rates, the pursuit of optimum performancemay justify or even demand, retaining a degree of flexibility through the use of variable interest rates on at leastpart of the treasury management portfolio. There was no long term borrowing made during the quarter. MoneyMarket Funds held at the end of the quarter totalled £18.386m (variable rate) and £2.5m fixed rate investmentswith the DMO until October 2016. All of the Councils borrowing is fixed rate.

45

APPENDIX 7

INVESTMENTS

Breakdown of investments from July 2016 to August 2016.

Below is a graph of Bassetlaw District Council’s value of investments over the period of July 2016 to August 2016.

The graph can be split over the following banks, investments and Money Market Funds.

03-Jul 10-Jul 17-Jul 24-Jul 31-Jul 07-Aug 14-Aug 21-Aug 28-Aug Organisation £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 banks/building society Heritable 10 10 10 10 10 10 10 10 10 Singer & Friedlander 128 128 128 128 128 128 128 128 128 Handelsbanken 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Debt Management Office 0 0 0 0 0 0 0 0 0 Other Local Authority 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 Money market fund Blackrock 3,900 3,900 3,900 3,900 3,900 3,900 3,900 3,900 3,900 Fidelity 3,900 3,620 3,620 1,360 2,974 3,584 3,584 3,584 3,584 DB Advisors 920 920 3,920 3,920 3,920 480 2,098 3,898 3,149 Insight 2,767 2,767 3,922 2,409 3,846 0 0 1,507 507 CCLA 1,020 1,020 1,020 1,020 1,020 3,920 3,920 3,920 3,920

Total 19,645 19,365 23,520 19,747 22,798 19,022 20,640 23,947 22,198

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

03/0

7/16

10/0

7/16

17/0

7/16

24/0

7/16

31/0

7/16

07/0

8/16

14/0

8/16

21/0

8/16

28/0

8/16

2016/17 Quarter 2 Investments

Investments Outstanding Icelandic Outstanding

Appendix 7

46

APPENDIX 7

PERFORMANCE/YIELD

7 day LIBID - 2 month average (whole UK) 0.25% Daily interest rate - 2 month average (BDC) 0.39%

The graph shows how the Council has been performing on their daily interest rate return on investments, compared to the market comparison of the 7-day LIBID. The graph clearly shows that the Council has been performing well above the market comparison on their investment interest returns during the 2 month period.

0.000%

0.100%

0.200%

0.300%

0.400%

0.500%

0.600%

Bassetlaw District Councils Average daily interest rate compared to 7 day LIBID rate

7 Day LIBID

BDC average ratereturn

July August

47

APPENDIX 7

SECURITY BENCHMARKING

Average Cumulative Credit Loss Rates by Letter Rating, 1982-2015 Rating Year 1 Year 2 Year 3 Year 4 Year 5 Aaa 0.00% 0.01% 0.00% 0.00% 0.02% Aa 0.01% 0.04% 0.07% 0.10% 0.18% A 0.04% 0.10% 0.22% 0.37% 0.49% Baa 0.12% 0.32% 0.57% 0.84% 1.19% Ba 0.64% 1.91% 3.54% 5.41% 6.90% B 2.77% 6.73% 10.45% 13.49% 15.57% Caa-C 11.66% 19.62% 26.40% 30.64% 35.08% Investment Grade 0.06% 0.15% 0.28% 0.43% 0.60% Speculative Grade 3.09% 6.42% 9.56% 12.13% 14.00% All Rated 1.13% 2.31% 3.38% 4.22% 4.85%

There are a number of ways that a security benchmark can be produced. The Council will take the above table and apply the percentages to calculate a portfolio position. This will weight actual investments in the portfolio in accordance with the credit rating and term of investment.

Current Investments at 31 August 2016

Portfolio Risk on 30 June 2016. Principal (P) Moody's

Rating Days to Maturity

(Dtm) P x Dtm Historical Exp of Default Weighting

3,584,000 Aaa 1 3,584,000 0.00% 0 3,149,000 Aaa 1 3,149,000 0.00% 0 3,900,000 Aaa 1 3,900,000 0.00% 0 1,457,000 Aaa 1 1,457,000 0.00% 0 3,920,000 Aaa 1 3,920,000 0.00% 0

16,010,000 16,010,000 0

Period Weighted Average Life Default % Under 1 yr 1.00 0.00 Over 1 yr 0 0.00 Overall 1.00 0.00

Due to the Council only applying its surplus cash into the Money Market Funds or highly rated institutions for no longer than 6 months this is deemed the safest possible investment decision. All Money Market accounts are ‘AAA’ rated with Moody’s and are instant access.

48

APPENDIX 7

Market Review

On 4th August 2016, the Monetary Policy Committee (MPC) revealed a comprehensive stimulus package. They voted 9-0 in favour of a 25 basis point cut to the Bank Rate, bringing it to a historical low of 0.25%. The Committee was split 6-3 on the decision to expand the asset purchase programme beyond the current £375bn, agreeing to purchase a further £60bn of government bonds over six months starting 8th August and £10bn of corporate bonds with details to be announced in due course (expected to start mid-September and be completed over an 18-month period). Lastly, the MPC introduced a Term Funding Scheme (TFS) that will offer £100bn in bank funding designed to offset any decrease in bank margins as a result of the lower Bank Rate.

Throughout August we have seen a significant amount of economic data released post the Brexit vote on June 23rd. Despite serious concerns for the impact the Brexit vote would have on the UK economy, data across the board was positive and exceeded expectations by the largest margin in three years. Headline Consumer Price Index (CPI) rose to 0.6% for July and jobless claims for July came in 8.9% lower with three month employment rising by 172k.

The most significant improvement came in the form of retail sales for July which were up to 1.5% MoMand 5.4% YoY against the predicted 0.3% and 3.9% respectively. The MoMand YoY Q2 Gross Domestic Product (GDP) figures both came in as expected. Finally, in the last week of August we saw both the Manufacturing and Construction Purchasing Managers Index (PMI) data come in at 53.3 and 49.2 against the expected 49.0 and 46.3, respectively. Sterling money market yields fell in the month of August due to the Band of England’s (BoE) 25 basis point rate cut to 0.25%. The three, six and twelve month LIBOR levels ended August at 0.39%, 0.52% and 0.73%, respectively. The Sterling Overnight Index Average (SONIA) again was down and traded in a range of 0.23% to 0.24%. It ended August at 0.23%.

0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

0.009

0.01

<1 year 1 to 2 yrs 2 to 3 yrs 3 to 4 yrs 4 to 5 yrs

His

toric

Def

ault

(%)

Period

Relative Investment Risk Vs. Rating categories

Benchmark Limit

AA

A

BBB

COUNCIL

49

APPENDIX 7

Borrowing Summary for 1 July 2016 to 31 August 2016

Interest Rate

01.07.16 Opening Balance

New Borrowing

Princ repaid

Closing Balance 31.8.16

PWLB From Maturity £ £ £ £ 486017 16-Oct-01 30-Sep-61 5.125% 3,500,000 3,500,000 494089 26-Nov-07 26-Nov-37 4.510% 5,000,000 5,000,000 494235 09-Jan-08 09-Jan-43 4.390% 10,000,000 10,000,000 494618 07-May-08 31-Mar-58 4.430% 5,000,000 5,000,000 496124 21-Oct-09 21-Mar-18 3.540% 5,000,000 5,000,000 496753 02-Mar-10 02-Mar-20 4.200% 4,000,000 4,000,000 497886 10-Sep-10 31-Mar-33 3.990% 4,000,000 4,000,000 497986 28-Sep-10 31-Mar-28 3.920% 4,000,000 4,000,000 498951 31-Aug-11 30-Sep-22 3.910% 5,000,000 5,000,000 498968 07-Sep-11 31-Mar-24 3.940% 4,000,000 4,000,000 502033 28-Mar-13 30-Sep-17 1.610% 1,500,000 1,500,000

HRA Self Financing Loans 499563 28-Mar-12 31-Mar-27 3.050% 5,500,000 5,500,000 499564 28-Mar-12 31-Mar-29 3.180% 5,500,000 5,500,000 499566 28-Mar-12 31-Mar-35 3.410% 5,500,000 5,500,000 499567 28-Mar-12 31-Mar-39 3.480% 5,500,000 5,500,000 499565 28-Mar-12 31-Mar-41 3.490% 4,863,000 4,863,000

77,863,000 77,863,000 Market

FMS Wertmanagement 15-Mar-04 16-Mar-54 4.750% 5,000,000 5,000,000 DEXIA Municipal Agency 19-Mar-04 19-Mar-54 4.750% 5,000,000 5,000,000 FMS Wertmanagement 30-Jan-06 30-Jan-66 3.560% 5,700,000 5,700,000 EAA Covered Bond Bank 18-Apr-06 19-Apr-66 4.630% 6,500,000 6,500,000 Barclays Bank 06-Oct-06 06-Oct-76 4.850% 5,000,000 5,000,000 Barclays Bank 06-Oct-06 06-Oct-76 4.850% 4,300,000 4,300,000

31,500,000 31,500,000 Temporary No temporary loans outstanding

Total Temporary Borrowing 0 0 Total Long Term Borrowing 109,363,000 109,363,000 Total Gross Borrowing 109,363,000 109,363,000

50

APPENDIX 7

£0

£2,000,000

£4,000,000

£6,000,000

£8,000,000

£10,000,000

£12,000,00020

16-2

017

2017

-201

820

18-2

019

2019

-202

020

20-2

021

2021

-202

220

22-2

023

2023

-202

420

24-2

025

2025

-202

620

26-2

027

2027

-202

820

28-2

029

2029

-203

020

30-2

031

2031

-203

220

32-2

033

2033

-203

420

34-2

035

2035

-203

620

36-2

037

2037

-203

820

38-2

039

2039

-204

020

40-2

041

2041

-204

220

42-2

043

2043

-204

420

44-2

045

2045

-204

620

46-2

047

2047

-204

820

48-2

049

2049

-205

020

50-2

051

2051

-205

220

52-2

053

2053

-205

420

54-2

055

2055

-205

620

56-2

057

2057

-205

820

58-2

059

2059

-206

020

60-2

061

2061

-206

220

62-2

063

2063

-206

420

64-2

065

2065

-206

620

66-2

067

2067

-206

820

68-2

069

2069

-207

020

70-2

071

2071

-207

220

72-2

073

2073

-207

420

74-2

075

2075

-207

620

76-2

077

Prin

cipa

l

Year

Borrowing Maturity at 31.8.16

51

APPENDIX 8

TREASURY MANAGEMENT STRATEGY AND INVESTMENT STRATEGY

MID YEAR REVIEW REPORT 2016/17

1 Background The Council operates a balanced budget, which broadly means cash raised during the year will meet its cash expenditure. Part of the treasury management operations ensure this cash flow is adequately planned, with surplus monies being invested in low risk counterparties, providing adequate liquidity initially before considering optimising investment return.

The second main function of the treasury management service is the funding of the Council’s capital plans. These capital plans provide a guide to the borrowing need of the Council, essentially the longer term cash flow planning to ensure the Council can meet its capital spending operations. This management of longer term cash may involve arranging long or short term loans, or using longer term cash flow surpluses, and on occasion any debt previously drawn may be restructured to meet Council risk or cost objectives.

Accordingly, treasury management is defined as:

“The management of the local authority’s investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.”

2 Introduction The Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management (revised 2011) was adopted by this Council on 3 March 2009. The Treasury Management Strategy, Borrowing Strategy, Investment Strategy and MRP Policy 2016/17 were approved by Council on 7 March 2016.

The primary requirements of the Code are as follows:

1. Creation and maintenance of a Treasury Management Policy Statement which sets outthe policies and objectives of the Council’s treasury management activities.

2. Creation and maintenance of Treasury Management Practices which set out the mannerin which the Council will seek to achieve those policies and objectives.

3. Receipt by the full council of an annual Treasury Management Strategy Statement -including the Annual Investment Strategy and Minimum Revenue Provision Policy - for theyear ahead, a Mid-year Review Report and an Annual Report (stewardship report)covering activities during the previous year.

4. Delegation by the Council of responsibilities for implementing and monitoring treasurymanagement policies and practices and for the execution and administration of treasurymanagement decisions.

5. Delegation by the Council of the role of scrutiny of treasury management strategy andpolicies to a specific named body. For this Council the delegated body is the Audit andRisk Scrutiny Committee:

This mid-year report has been prepared in compliance with CIPFA’s Code of Practice on Treasury Management, and covers the following:

• An economic update for the first part of the 2016/17 financial year;• A review of the Treasury Management Strategy Statement and Annual Investment

Strategy;• The Council’s capital expenditure (prudential indicators);• A review of the Council’s investment portfolio for 2016/17;• A review of the Council’s borrowing strategy for 2016/17;• A review of any debt rescheduling undertaken during 2016/17;• A review of compliance with Treasury and Prudential Limits for 2016/17.

52

APPENDIX 8

3 Economics and interest rates 3.1 Economics update UK. UK GDP growth rates in 2013 of 2.2% and 2.9% in 2014 were the strongest growth rates of any G7 country. However, the 2015 growth rate finally came in at a disappointing 1.8%, though it still remained one of the leading rates among the G7 countries. Growth was +0.4% in quarter 1 and +0.6% in quarter 2, (first estimate), but forward looking indicators point to a sharp slowdown in the second half of 2016 as a result of the Brexit vote. During most of 2015, the economy had faced headwinds for exporters from the appreciation during the year of sterling against the Euro, and weak growth in the EU, China and emerging markets, plus the dampening effect of the Government’s continuing austerity programme and uncertainty created by the Brexit referendum. However, since the peak in November 2015, sterling has fallen in value, especially after the referendum result, which will help to make British goods and services much more competitive and will increase the value of overseas earnings by multinational companies based in the UK. In addition, the Chancellor has announced that the target of achieving a budget surplus in 2020 will have to be eased in order to help the economy recover from the expected slowing of growth during the second half of 2016. He has also said he will do ‘whatever is needed’ to stimulate growth which could mean fiscal policy action e.g. cutting taxes, increasing investment allowances for businesses etc and / or increasing government expenditure on infrastructure, housing etc.

• The Bank of England August Inflation Report included a sharp reduction in forecasts for growth for 2017 @ +0.8% and for 2018 @ 1.8%, though 2016 was kept at 2.0%. While this does not indicate the economy could go into recession in the second half of 2016, growth is expected to be minimal during that period

• The August Bank of England Inflation Report forecast also included a sharp upward revision to the forecasts for inflation rising up above the MPC’s 2% target in 2018 to about 2.3% due to the recent fall in the value of sterling etc. However, the MPC is likely to look through that and take a longer term view in order to give time for economic growth to recover

• The American economy had a patchy 2015 – quarter 1 0.6% (annualised), 3.9% quarter 2, 2.0% quarter 3 and 1.4% in quarter 4, leaving growth in 2015 as a whole at 2.4%. Quarter 1 of 2016 came in at a weak 0.8% (annualised) and quarter 2 at 1.2% (first estimate). While these overall figures were disappointing, they were depressed by a significant run down in inventories which masked an underlying strength in consumer demand; forward indicators are therefore pointing towards a pickup in growth for the rest of 2016. The Fed embarked on its long anticipated first increase in rates at its December meeting. At that point, confidence was high that there would then be four more increases to come in 2016. Since then, more downbeat news on the international scene and then the Brexit vote, caused a re-emergence of caution over the timing and pace of further increases. However, in recent weeks, increases in non-farm payroll figures have again boosted confidence that the economy is on a strong upward trend and have renewed expectations of at least one increase in the Fed. rate in 2016.

• In the Eurozone, the ECB commenced in March 2015 its massive €1.1 trillion programme of quantitative easing to buy high credit quality government and other debt of selected EZ countries at a rate of €60bn per month; this was intended to run initially to September 2016. In response to a continuation of weak growth, at the ECB’s December meeting, this programme was extended to March 2017 but was not increased in terms of the amount of monthly purchases. At its December and March meetings it progressively cut its deposit facility rate to reach -0.4% and its main refinancing rate from 0.05% to zero. At its March meeting, it also increased its monthly asset purchases to €80bn. This programme of monetary easing has had a limited positive effect in helping a recovery in consumer and business confidence and an initial start to some improvement in economic growth. GDP growth rose by 0.6% in quarter 1 2016 (1.7% y/y) but disappointed in quarter 2 with a reversal to only 0.3% (1.6% y/y). The ECB is also struggling to get inflation up from near zero towards its target of 2%. Japan is still bogged down in anaemic growth and making little progress on fundamental reform of the economy while Chinese economic growth has been weakening and medium term risks have been increasing.

53

APPENDIX 8 3.2 Interest rate forecasts The Council’s treasury advisor, Capita Asset Services, has provided the following forecast:

Capita Asset Services undertook its last review of interest rate forecasts on 8 August shortly after the quarterly Bank of England Inflation Report and the MPC cutting Bank Rate from 0.50% to 0.25% and launching various quantitative easing measures. This action was prompted by concerns that the UK economy would slow down sharply as a result of the Brexit vote. It is widely expected that the MPC could cut Bank Rate further to nearly zero, probably at the November quarterly inflation report meeting. Since the Brexit vote on 23 June, gilt yields and PWLB rates have fallen sharply. Investment rates also fell after the cut in Bank Rate.

The above forecast includes a very tentative first increase in Bank Rate in June 2018. The overall balance of risks to economic recovery in the UK is currently to the downside but huge variables over the coming few years include just what final form Brexit will take, when finally agreed with the EU, and when.

There are also concerns that weak growth in the UK, EZ, China and Japan is only being achieved by monetary policy being highly aggressive. While such policies undoubtedly help to stimulate growth, there is substantial doubt that without additional aggressive fiscal action by national governments to stimulate growth and inflation, (and also fundamental economic and political reforms in some countries), then many countries are likely to have a prolonged struggle to return to both strong growth, and inflation rising to around 2%, within the next few years.

Downside risks to current forecasts for UK gilt yields and PWLB rates currently include:

• Emerging country economies, currencies and corporates destabilised by falling commodity prices and / or Fed. rate increases, causing a further flight to safe havens (bonds).

• Geopolitical risks in Europe, the Middle East and Asia, increasing safe haven flows.

• UK economic growth and increases in inflation are weaker than we currently anticipate.

• Weak growth or recession in the UK’s main trading partners - the EU and US.

• A resurgence of the Eurozone sovereign debt crisis.

• Weak capitalisation of some European banks.

• Monetary policy action failing to stimulate sustainable growth and combat the threat of deflation in western economies, especially the Eurozone and Japan.

The potential for upside risks to current forecasts for UK gilt yields and PWLB rates, especially for longer term PWLB rates include: -

• The pace and timing of increases in the Fed. funds rate causing a fundamental reassessment by investors of the relative risks of holding bonds as opposed to equities and leading to a major flight from bonds to equities.

54

APPENDIX 8

• UK inflation returning to significantly higher levels than in the wider EU and US, causing an increase in the inflation premium inherent to gilt yields.

4 Treasury Management Strategy Statement and Annual Investment Strategy update The Treasury Management Strategy Statement (TMSS) for 2016/17 was approved by this Council on 7 March 2016. There are no policy changes to the TMSS; the details in this report update the position in the light of the updated economic position and budgetary changes already approved.

5 The Council’s Capital Position (Prudential Indicators) This part of the report is structured to update:

• The Council’s capital expenditure plans; • How these plans are being financed; • The impact of the changes in the capital expenditure plans on the prudential indicators

and the underlying need to borrow; and • Compliance with the limits in place for borrowing activity.

5.1 Prudential Indicator for Capital Expenditure This table shows the revised estimates for capital expenditure and the changes since the capital programme was agreed at the Budget.

The Capital Programme is subject to change throughout the year upon approval by the Cabinet.

5.2 Changes to the Financing of the Capital Programme The table below draws together the main strategy elements of the capital expenditure plans (above), highlighting the original supported and unsupported elements of the capital programme, and the expected financing arrangements of this capital expenditure. The borrowing element of the table increases the underlying indebtedness of the Council by way of the Capital Financing Requirement (CFR), although this will be reduced in part by revenue charges for the repayment of debt (the Minimum Revenue Provision). This direct borrowing need may also be supplemented by maturing debt and other treasury requirements.

Capital Expenditure by Service 2016/17 Original Estimate

£m

Current Position

£m

2016/17 Revised Estimate

£m General Fund 4.039 1.201 4.542 HRA 10.750 4.799 12.308 Total 14.789 6.000 16.850

55

APPENDIX 8

The financing of the Capital Programme will be determined by the S151 Officer at the year end based on best use of resources.

5.3 Changes to the Prudential Indicators for the Capital Financing Requirement (CFR), External Debt and the Operational Boundary The table below shows the CFR, which is the underlying external need to incur borrowing for a capital purpose. It also shows the expected debt position over the period, which is termed the Operational Boundary.

Prudential Indicator – Capital Financing Requirement The CFR has been adjusted due to the approved carry forwards from 2015-16 which included £536k of additional borrowing.

Prudential Indicator – the Operational Boundary for external debt

Capital Expenditure 2016/17 Original Estimate

£m

Current Position

£m


£m General Fund Expenditure 4.039 1.201 4.542 Capital Receipts 1.912 0.891 2.124 Capital Grants 1.552 0.310 1.407 Revenue 0 0 0 Total General Fund Financing 3.464 1.201 3.531 General Fund Borrowing Need 0.575 0 1.011 HRA Expenditure 10.750 4.799 12.308 Capital Receipts 0.385 1.141 1.141 Capital Grants 0 0.602 0.772 Capital Reserves 9.365 3.056 9.395 Revenue 0 0 0 Total HRA Financing 9.750 4.799 11.308 HRA Borrowing Need 1.000 0 1.000 Total Borrowing Need 1.575 0 2.011

2016/17 Original Estimate

£m

Current Position

£m


£m Prudential Indicator – Capital Financing Requirement CFR – non housing 25.503 26.039 26.039 CFR – housing 69.228 69.228 69.228 HRA Settlement 26.863 26.863 26.863 Total CFR 121.594 122.130 122.130 Net movement in CFR 0.932 1.468 1.468

Prudential Indicator – The Operational Boundary Borrowing 127.904 127.904 127.904 Other long term liabilities 0 0 0 Total debt 31 March 127.904 127.904 127.904

56

APPENDIX 8 5.4 Limits to Borrowing Activity The first key control over the treasury activity is a prudential indicator to ensure that over the medium term, net borrowing (borrowings less investments) will only be for a capital purpose*. Gross external borrowing should not, except in the short term, exceed the total of CFR in the preceding year plus the estimates of any additional CFR for 2016/17 and next two financial years. This allows some flexibility for limited early borrowing for future years. The Council has approved a policy for borrowing in advance of need which will be adhered to if this proves prudent.

The Head of Finance and Property reports that no difficulties are envisaged for the current or future years in complying with this prudential indicator. Whilst current investments are high these will be utilised for cashflow purposes during the remainder of the financial year.

A further prudential indicator controls the overall level of borrowing. This is the Authorised Limit which represents the limit beyond which borrowing is prohibited, and needs to be set and revised by Members. It reflects the level of borrowing which, while not desired, could be afforded in the short term, but is not sustainable in the longer term. It is the expected maximum borrowing need with some headroom for unexpected movements. This is the statutory limit determined under section 3 (1) of the Local Government Act 2003.

6 Investment Portfolio 2016/17 In accordance with the Code, it is the Council’s priority to ensure security of capital and liquidity, and to obtain an appropriate level of return which is consistent with the Council’s risk appetite. As set out in Section 3, it is a very difficult investment market in terms of earning the level of interest rates commonly seen in previous decades as rates are very low and in line with the current 0.25% Bank Rate. The continuing potential for a re-emergence of a Eurozone sovereign debt crisis, and its impact on banks, prompts a low risk and short term strategy. Given this risk environment, investment returns are likely to remain low.

The Council held £18.386m of investments as at 30 September 2016 (£16.127m at 31 March 2016) and the investment portfolio yield for the first six months of the year is 0.39% against a benchmark 7 day LIBID of 0.28%. The Head of Finance and Property confirms that the approved limits within the Annual Investment Strategy were not breached during the first six months of 2016/17. The Council’s budgeted investment return for 2016/17 is £0.044m, and performance for the year to date is in line with the budget.

Investment Counterparty criteria The current investment counterparty criteria selection approved in the TMSS is meeting the requirement of the treasury management function.

2016/17 Original Estimate

£m

Current Position

£m


£m Gross borrowing 109.363 109.363 109.363 Plus other long term liabilities 0 0 0 Less investments (6.735) (18.386) (6.386) Net borrowing 102.628 90.977 102.977 CFR (year end position) 121.594 122.130 122.130

Authorised limit for external debt

2016/17 Original Indicator

Current Position 2016/17 Revised Indicator

Borrowing 132.904 132.904 132.904 Other long term liabilities 0 0 0 Total 132.904 132.904 132.904

57

APPENDIX 8

7 Borrowing

The Council’s capital financing requirement (CFR) for 2016/17 is £122.130m. The CFR denotes the Council’s underlying need to borrow for capital purposes. If the CFR is positive the Council may borrow from the PWLB or the market (external borrowing) or from internal balances on a temporary basis (internal borrowing). The balance of external and internal borrowing is generally driven by market conditions. Table 5.4 shows the Council has borrowings of £109.363m and has utilised £6.386m of cash flow funds in lieu of borrowing. This is a prudent and cost effective approach in the current economic climate but will require ongoing monitoring in the event that upside risk to gilt yields prevails.

As shown in the graph below, the general trend to date has been a sharp fall in interest rates in the current financial year.

It is anticipated that further borrowing will only be undertaken if necessary during this financial year.

The graph and table below show the movement in PWLB certainty rates for the first six months of the year to date:

PWLB certainty rates 1 April 2016 to mid-August 2016

1 Year 5 Year 10 Year 25 Year 50 Year1/4/16 1.13% 1.62% 2.31% 3.14% 2.95%15/8/16 0.92% 0.98% 1.44% 2.11% 1.91%

Low 0.83% 0.95% 1.42% 2.08% 1.89%Date 04/08/2016 10/08/2016 10/08/2016 12/08/2016 12/08/2016High 1.20% 1.80% 2.51% 3.28% 3.08%Date 27/04/2016 27/04/2016 27/04/2016 27/04/2016 27/04/2016

Average 1.04% 1.43% 2.05% 2.84% 2.61%

58

APPENDIX 8

8 Debt Rescheduling Debt rescheduling opportunities have been very limited in the current economic climate given the consequent structure of interest rates, and following the increase in the margin added to gilt yields which has impacted PWLB new borrowing rates since October 2010. No debt rescheduling was undertaken during the first six months of 2016/17.

59

60

Agenda Item No. 9(a) BASSETLAW DISTRICT COUNCIL

AUDIT & RISK SCRUTINY COMMITTEE

17 November 2016


INTERNAL AUDIT PROGRESS REPORTS 2016/17

Cabinet Member: Finance Contact: Chris Williams Ext: 01159 489400

1. Public Interest Test

1.1 The author of this report, Chris Williams, has determined that the report is not confidential.

2. Purpose of the Report

2.1 To provide Members with information regarding the following internal audit:

1) Fleet Management2) Parks and Open Spaces3) Retford Enterprise Centre4) Disabled Facilities Grants and other Grants including Aids and Adaptations5) Economic Development – Grants6) Capital Accounting and Asset Register7) Cash and Banking

3. Background and Discussion

3.1 Internal Audit is an assurance function that primarily provides an independent and objective opinion to the organisation on the control environment comprising risk management, control and governance by evaluating its effectiveness in achieving the organisation’s objectives. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic, efficient and effective use of resources.

3.2 A progress report has been provided so that Members are aware of the work undertaken by Internal Audit and can satisfy themselves that adequate reviews have been undertaken and that appropriate responses have been provided by Managers.

3.3 The findings identified and the subsequent management actions agreed have been prioritised to identify their respective risk, High, Medium or Low. Risk is a function of consequence and probability of occurrence.

3.4 For the seven internal audits outlined above, 37 findings have been agreed in total, of which two have been classified as High Risk, 14 as Medium Risk and 21 have been classified as Low Risk. One ‘Medium’ priority finding in the Cash and Bank review was not accepted by management.

61

3.5 Just for clarity, the recommendations containing high risks are the ones that officers must give priority to addressing, as these represent a weakness in controls. Two ‘high’ priority management actions have been raised in the seven reports being presented at this Committee, both of which were raised in the audit of Cash and Banking.

3.6 As a further internal control measure, the Chair of this Committee, the Leader of the Council and the Head of Finance & Property will meet with the relevant Portfolio Holder and the Manager(s) of the service concerned for all reports that have received a ‘red’ (or in some circumstances a ‘red/amber’) audit assurance level. Just for clarity a ‘red’ assurance level is defined as “the Authority cannot take assurance that the controls upon which the organisation relies to manage this risk are suitably designed, consistently applied or effective. Action needs to be taken to ensure the risk is managed.”

3.7 There are no ‘red’ reports being presented at this Committee meeting.

4. Implications

a) For Service UsersAs contained within the individual reports.

b) Strategic & PolicyAs contained within the individual reports.

c) Financial Ref: 17/77As contained within the individual reports.

d) Legal Ref: 658/11/16

Internal audit is an assurance function providing independent and objectiveopinion to the organisation on internal control and effective use ofresources.

e) Human ResourcesAs contained within the individual reports.

f) Community Safety, Equalities, EnvironmentalAs contained within the individual reports.

g) Whether this is a key decision, and if so the reference numberThis is not a key decision.

5. Options, Risks and Reasons for Recommendations

5.1 The recommendations are contained within each individual report. Officers and management have the option to not agree with the recommendation; however this must be because of a valid operational and practical reason. The risks can be varied and therefore it is important that weaknesses are addressed as soon as practically possible.

6. Recommendations

6.1 Members receive the Report and note actions taken or to be taken.

Background Papers Location Audit Files RSM Office, Nottingham

62

BAInte

Aud

17 N

This To thno re

ASSETernal Au

dit & Risk

November

report is solelhe fullest extenesponsibility o

TLAW udit Prog

Scrutiny

r 2016

ly for the use ont permitted br liability in res

DISTRress Rep

Committe

of the personsy law, RSM Rspect of this re

RICT Cport

ee

s to whom it isRisk Assuranceeport to any ot

COUNC

s addressed. e Services LLPther party.

CIL

P will accept

Page 1 of 47

63

Bassetlaw District Council / Internal Audit Report

CONTENTS 1 Introduction ............................................................................................................................................................... 2 2 Reports considered at this Audit & Risk Scrutiny Committee .................................................................................... 3 3 Looking ahead ........................................................................................................................................................... 8 4 Other matters .......................................................................................................................................................... 10 Appendix A: Internal audit assignments completed to date .......................................................................................... 11 For further information contact ..................................................................................................................................... 12

As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at http://www.icaew.com/en/members/regulations-standards-and-guidance.

The matters raised in this report are only those which came to our attention during the course of our review and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made.

Recommendations for improvements should be assessed by you for their full impact before they are implemented. This report, or our work, should not be taken as a substitute for management’s responsibilities for the application of sound commercial practices. We emphasise that the responsibility for a sound system of internal controls rests with management and our work should not be relied upon to identify all strengths and weaknesses that may exist. Neither should our work be relied upon to identify all circumstances of fraud and irregularity should there be any.

This report is solely for the use of the persons to whom it is addressed and for the purposes set out herein. This report should not therefore be regarded as suitable to be used or relied on by any other party wishing to acquire any rights from RSM Risk Assurance Services LLP for any purpose or in any context. Any third party which obtains access to this report or a copy and chooses to rely on it (or any part of it) will do so at its own risk. To the fullest extent permitted by law, RSM Risk Assurance Services LLP will accept no responsibility or liability in respect of this report to any other party and shall not be liable for any loss, damage or expense of whatsoever nature which is caused by any person’s reliance on representations in this report.

This report is released to our Client on the basis that it shall not be copied, referred to or disclosed, in whole or in part (save as otherwise permitted by agreed written terms), without our prior written consent.

We have no responsibility to update this report for events and circumstances occurring after the date of this report.

RSM Risk Assurance Services LLP is a limited liability partnership registered in England and Wales no. OC389499 at 6th floor, 25 Farringdon Street, London EC4A 4AB.

Page 2 of 47

64

1 The total

This

INTRInternal Aud of 38 planne

s report provi

RODUCdit Plan for 20ed reviews.

des a summ

CTION016/17 was a

mary update o

N approved by

on progress a

y Audit & Risk

against that

k Scrutiny Co

plan and sum

Bassetlaw D

ommittee on

mmarises the

District Council /

21 April 201

e results of o

/ Internal Audit R

16 and includ

our work to d

Report

des a

ate.

Page 3 of 47

65

2

This

The

Ass

Fle

Pa

Re

DisGra(8.

Eco(9.

Ca

Ca(12

REPOSCR

s table inform

Executive S

signment

eet Managem

rks and Ope

tford Enterpr

sabled Facilitants includin16/17)

onomic Deve16/17)

sh and Bank

pital Accoun2.16/17)

ORTS UTINY

ms of the aud

Summary and

ment (2.16/17

n Spaces (5

rise Centre (

ties Grants ag Aids and A

elopment – G

king (10.16/1

nting and Ass

CONSY COM

it assignmen

d Key Finding

7)

.16/17)

7.16/17)

and other Adaptations

Grants

7)

set Register

SIDERMMITTE

nt that has be

g of the assig

Status

Final

Final

Final

Final

Final

Final

Final

RED ATEE een complete

gnment belo

s O

T THIS

ed since the

w are attach

Opinion iss

Bassetlaw D

S AUD

last Audit &

hed to this pro

ued

District Council /

IT & R

Risk Scrutin

ogress repor

Actio

H

0

0

0

0

0

2

0

/ Internal Audit R

RISK

ny Committee

rt.

ons agreed

M L

2 3

3 0

6 7

0 1

2 4

1 5

0 1

Report

e.

L

3

0

7

1

4

5

1

Page 4 of 47

66


2.1 Impact of findings to date

Fleet Management (2.16/17)

Conclusion: Reasonable Assurance

Impact on Annual Opinion: Positive

As a result of testing undertaken two medium and three low priority findings were identified. Management actions were agreed in respect of all the findings.

The two medium findings relate to:

• Comparison of the Fleetwave report to MOT certificates found that, of the sample of 30 A1 vehicles tested,incorrect expiry dates were recorded on Fleetwave in 13 instances. There is a risk of not being aware of theactual MOT expiry date, consequently MOTs are not renewed in time and vehicles could be driven illegally.Large numbers of items held within the stores of the Museum have not yet been accessioned, and newlyacquired items are not accessioned in a timely manner. This poses a risk that the contents of these storerooms are unknown, and none have yet been security tagged / asset marked, assessed for potential value,have their latest location recorded or their legal ownership status noted.

• Vehicle keys are not securely stored. There is a risk of unauthorised use and vehicle theft.

Parks and Open Spaces (5.16/17)



As a result of testing undertaken three medium priority findings were identified. Management actions were agreed in respect of all the findings.

The three medium findings relate to:

• No monitoring is undertaken to ensure operational staff are working in compliance with the workprogrammes. There is a risk of failure in operational performance and poor appearance of the open spaceswithin the district, resulting in poor satisfaction of service users and residents.

• Variation orders are not consistently being returned, meaning there is no way of ensuring that high prioritywork has been completed. This creates a risk that dangerous defects and works required are not rectified ina timely manner, resulting in potential reputational damage to the Council.

• There is no communication between the Debt Recovery department and Parks and Open Spaces staffinforming them of which members of public still owe for the use of Council owned sports facilities. There is arisk that bookings are taken from those who already owe the Council money, increasing the risk of bad debtbeing accrued.

Page 5 of 47

67

R

C

I

Am

T

Retford Ente

Conclusion:

Impact on An

As a result omanagemen

The medium

• Of thsevethe sdeladoesare aplaceRetfoshou

• Leascannoverbe mterm

• No techarbookAs s

• The invo2014not atake

• Of 1beenFina

• No ras pa risinacc

erprise Cen

Partial Assu

nnual Opinio

of testing undt action was

findings rela

he eight newen. The eightseven on fileys ranged fros not receiveallowed to me between thord Enterprisuld an issue o

ses should bnot be taken rdue. This dirmade in advams of the leas

erms or condrge imposed kings to be resuch, there is

Retford Enteices. Sample4 and had acaware of. Witn, or unpaid

5 purchasesn raised after

ancial Proced

reconciliationer the rents k that incomcurate financ

ntre (7.16/17)

rance

on: Negative

dertaken, sixagreed for a

ate to:

w tenancies reth was await, six had beeom two week

e a copy of simove in their ohemselves ase Centre Maoccur.

e paid monthuntil at leastrectly contrad

ance, and these, and moni

ditions of hirefor bookingsejected due ts a risk that th

erprise Centre testing idenccrued a debthout being nrent is not re

s for the Centr the invoice

dure Rules an

n is performedue and invoe is miscodecial informati

)

medium andall findings.

eviewed, siging return byen signed anks to nine mogned and seoffice, and bend the Counanager does

hly in advanct 30 days aftedicts the termerefore therees due are n

e are agreeds cancelled. Ato lack of avahe Council is

re Manager intified a tenabt of £13,592notified of unecovered, re

tre reviewedhad been rend increases

d of the incooice requestsed, or that invon or loss of

d seven low p

ned and seay the tenant, nd sealed afteonths. The Realed leases egin paying cil covering t

s not have the

ce. Howeverer the date oms of the leae is a risk thanot being coll

d. No depositAt busy perioailability, onlys turning awa

is not informeant who had n; which the R

npaid fees, thsulting in lev

, we found eeceived. Thiss the risk tha

ome invoiceds sent to the voices are nof income to th

Bassetlaw D

priority findin

aled leases wdespite themer the date th

Retford Enterfrom Legal. rent, withoutthe period ofe master ver

r for those paof the invoicease of tenantst the Councilected in a tim

ts for are takods, this hasy for the meeay bookings

ed of any unnot paid theiRetford Enterhere is risk thvels of bad de

eight where ths retrospectit purchasing

for and receTransaction

ot raised corhe Council.

District Council /

ngs were ide

were held by m moving in ihe tenancy hrprise CentreThere is a ris

t a formal agrf tenancy, anrsion of the le

aid by Direct e, once the ins, in which pl is not adhemely manner

ken for bookin in the past ceting to then and also los

npaid direct dr rent since Srprise Centrehat further boebt accumula

he purchase on is a breac

g controls are

eived, againsal Finance Trectly, result

/ Internal Audit R

ntified, and a

Legal for in April 2016had started. Te Manager alsk that tenanreement in nd that the ease to refer

Debit, the denvoice becomayment shouring to the r.

ngs, nor is a caused be cancelled

ing income.

debits or September e Manager wookings are ating.

order had ch of the e circumvente

st that expecTeam. There ing in

Report

a

6. OfThe so

nts

r to

ebit mes uld

d.

was

ed.

cted is

Page 6 of 47

68


Disabled Facilities Grants and Other Grants including Aids and Adaptations (8.16/17)

Conclusion: Substantial Assurance


As a result of testing undertaken, one low priority finding was identified, and a management action was agreed.

Economic Development – Grants (9.16/17)



As a result of testing undertaken two medium and four low priority findings were identified. Management actions were agreed in respect of all the findings.

The medium findings relate to:

• Evidence of payment forms being authorised by the Economic Development Manager for each grantpayment was not always available on the grant files, resulting in the lack of a full audit trail.

• Grant payment due diligence was not always being undertaken, as there were instances of:

o Copies of invoices not being on file.

o Grant payments being made prior to the invoice date.

o Grant payments being made on invoices dated before the date the application forms were received.

If grant payments are not only made for invoices that are dated after the application form was received and after the invoice date, there is a risk that grant payments will be made without the necessary due diligence being undertaken, resulting in illegible grant payments being made.

Page 7 of 47

69

C

C

I

Aia

T

•

•

T

OCbt

C

C

I

Aa

Cash and B

Conclusion:

Impact on An

As a result oidentified. A allocated a m

The two high

• None ofexpectenot banCouncil

• None ofexpecteis a riskmay leaprovided

The finding f

Of the 33 cCustomer Sebeing receiptthat the inco

Capital Acco

Conclusion:

Impact on An

As a result oagreed in res

anking (10.1

Partial Assu

nnual Opinio

of testing unmanagemen

medium level

h priority find

f the departmed as per souked in full, oand the serv

f the departmed as per souk that incomead to incorrecd.

for which a m

cheques recervices for bated as soon me is not ac

ounting and

Substantial A

nnual Opinio

of testing undspect of this

16/17)

rance

on: Negative

ndertaken, twnt action wasl risk.

ings relate to

ments reviewurce records r that incorrevice for work

ments reviewurce records e which is incct financial in

management

eived duringanking on thas it is receicounted for,

d Asset Reg

Assurance

on: Positive

dertaken, onefinding.

wo high priors agreed in

o:

wed are perfohas been su

ect fees havek performed /

wed are perfohas been ac

correctly codenformation th

action was n

g May 2016e same day ived, there isresulting in a

gister (12.16/

e low priority

rity, one medrespect of a

orming a recoubmitted for be been levied/ service deli

orming a recoccounted for ed within the

hrough incorr

not agreed re

6 for Licensias being rec

s a risk that taccurate fina

/17)

finding was

Bassetlaw D

dium and fivall but one fin

onciliation to banking. Thed, resulting invered.

onciliation to correctly on

e general ledrect income r

elates to:

ng, we noteceived througthe income isancial statem

identified. A

District Council /

ve low prioritnding; this fi

confirm thatere is a risk tn a loss of inc

confirm thatthe general ger is not iderecognition fo

ed six weregh the post. s lost or misa

ments.

A manageme

/ Internal Audit R

ty findings wnding had b

t all income that income icome to the

t all income ledger. Ther

entified whichor services

not passedWithout incoappropriated

nt action was

Report

were een

s

re h

d to ome d, or

s

Page 8 of 47

70


3 LOOKING AHEAD Assignment area Timing per approved IA

plan 2016/17 Status

Land Charges, Street Naming and Numbering Q1 Draft Report issued

Communications and Events Management Q1 Draft Report issued

Creditors and E Procurement Q2 Draft Report issued

Enforcement – (Pollution Control and Housing) Q2 Draft Report issued

S106 Agreements/ CIL Q2 Draft Report issued

Community Safety and Anti-Social Behaviour Q2 Draft Report issued

Procurement – Contract Management Q2 Draft Report issued

Choice Based Lettings * change to audit plan Draft Report issued

Safeguarding Q2 Draft report issued

Car Parks Q2 Draft report issued

Payroll Q2 Fieldwork in progress

Officer Expenses Q2

A1 Governance Arrangements Q2

Strategic Housing including Homelessness Q2

Corporate Governance Q3

Council Tax Q3

Housing Benefits/ Universal Credit/ Council Tax Reduction Scheme Q3

Main Accounting System Q3

NNDR Q3

Budgetary Control and Setting Q3

Cemeteries & Churchyards Q3

Follow Up 2 Q3

Risk Management Q4

Page 9 of 47

71


Assignment area Timing per approved IA plan 2016/17

Status

Right to Buy Q4

IT Review 1 Q4

IT Review 2 Q4

Treasury Management Q4

GIS System Q4

Follow Up 3 Q4

* Choice Based Lettings is an additional audit requested by management and details of this change to the audit plan was included in the progress report presented at the Audit & Risk Scrutiny Committee on 16th June 2016.

Page 10 of 47

72


4 OTHER MATTERS 4.1 Changes to the audit plan There have been no changes to the audit plan since the previous Audit Risk & Scrutiny committee meeting.

Page 11 of 47

73


APPENDIX A: INTERNAL AUDIT ASSIGNMENTS COMPLETED TO DATE Report previously seen by the Audit & Risk Scrutiny Committee and included for information purposes only:

Assignment Status Opinion issued Actions agreed

H M L

Follow Up 1 (1.16/17) Final Little Progress 0 7 8

Trade Waste (3.16/16) Final 0 1 0

Bassetlaw Museum (6.16/17) Final 0 3 3

Page 12 of 47

74

FOR FURTHER INFORMATION CONTACT Chris Williams, Head of Internal Audit

[email protected]

Tel: 07753 584 993

Robert Barnett, Director

[email protected]

Tel: 07791 237 658

Amjad Ali, Client Manager

[email protected]

Tel: 07800 617 139

Address:

RSM Risk Assurance Services LLP

Suite A, 7th Floor City Gate East Tollhouse Hill Nottingham NG1 5FS

Phone: 0115 964 4450

Page 13 of 47

75

Bassetlaw District Council / A1 Housing Bassetlaw Ltd Fleet Management 2.16/17

1.1 Background

A joint review of Fleet Management for both Bassetlaw District Council (BDC) and A1 Housing was undertaken as part of the approved internal audit periodic plans for 2016/17.

The Fleet Management team based at Carlton Forest Depot is responsible for the management of all the fleet of vehicles for BDC and A1 Housing. The fleet currently consists of 167 vehicles, 66 of which are A1 Housing vehicles and 101 are BDC vehicles.

A Service Level Agreement (SLA) is in place between BDC and A1 Housing which includes the provision by BDC to A1 Housing of a fleet of vehicles and fuel, repairs and maintenance, breakdown and accident management and maintaining compliance with legislative requirements such as MOTs, tax and insurance. The SLA was due for renewal in April 2016; however the service is currently continuing under the previously agreed terms.

A tender for the provision of core fleet diesel powered light commercial vehicles up to 3500kg was run in February 2015 and the contract was re-awarded to GK Group Ltd. with the contract commencing in May 2015. The Council led on this project on behalf of the consortium which is made up of BDC and twelve other local authorities within the local geographic area. All the fleet vehicles for the Council and A1 Housing are now procured through the consortium agreement. A retendering exercise is currently being undertaken for refuse vehicles.

1.2 Conclusion

Our review of the Fleet Management arrangements resulted in five management actions being identified, comprising two ‘medium’ and three ‘low’ management actions. All five relate to the compliance with existing controls. Four of themanagement actions raised relate to vehicle maintenance and one to the supply of fuel.

Internal Audit Opinion: Taking account of the issues identified, the Council / Board can take reasonable assurance that the controls in place to manage this risk are suitably designed and consistently applied.

However, we have identified issues that need to be addressed in order to ensure that the control framework is effective in managing the identified risks.

1.3 Key findings

The key findings from this review are as follows:

Fleet Management policies and operational procedures are in place, are current and are available to all relevantstaff.

Road tax compliance is monitored to ensure taxes are updated when expiry is due.

Adequate insurance cover is in place for all the fleet. All vehicle additions and disposals are notified by theAdministrative Assistant to the insurer to ensure that the full fleet is covered.

FLEET MANAGEMENT - EXECUTIVE SUMMARY

Page 14 of 47

76


However;

Incorrect dates were found to be recorded for MOT expiry dates which could result in vehicles being on the road without a valid MOT certificate.

Vehicle keys are not stored in a securely locked cabinet, increasing the risk of unauthorised use or theft.

1.4 Additional information to support our conclusion

Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

The fleet is not maintained in line with the recommended schedule. 0 (9) 3 (9) 2 1 0

Failure to deliver service due to ageing vehicles. 0 (3) 1 (3) 1 0 0

Contracts are not in place for the supply of fuel and this has an effect on the continued supply of fuel 0 (5) 1 (5) 0 1 0

Failure of achieve value for money from the fleet. 0 (3) 0 (3) 0 0 0

Total 3 2 0

* Shows the number of controls not adequately designed or not complied with. The number in brackets represents the total number of controls reviewed in this area.

Page 15 of 47

77


2 ACTION PLAN Categorisation of internal audit findings

Priority Definition

Low There is scope for enhancing control or improving efficiency and quality.

Medium Timely management attention is necessary. This is an internal control risk management issue that could lead to: Financial losses which could affect the effective function of a department, loss of controls or process being audited or possible reputational damage, negative publicity in local or regional media.

High Immediate management attention is necessary. This is a serious internal control or risk management issue that may, with a high degree of certainty, lead to: Substantial losses, violation of corporate strategies, policies or values, reputational damage, negative publicity in national or international media or adverse regulatory impact, such as loss of operating licences or material fines.

The table below sets out the actions agreed by management to address the findings:

Ref Findings summary Priority Actions for management Implementation

date

Responsible

owner

Risk: The fleet is not maintained in line with the recommended schedule.

3 Comparison of the Fleetwave report to MOT certificates found that, of the sample of 30 A1 vehicles tested, incorrect expiry dates were recorded on Fleetwave in 13 instances. There is a risk of not being aware of the actual MOT expiry date, consequently MOTs are not renewed in time and vehicles could be driven illegally.

Medium Management will reiterate the importance of ensuring that the dates on Fleetwave are consistent with or prior to the date detailed on the government website.

Immediate

Principal Operational Services Manager Environment Services

Risk: Contracts are not in place for the supply of fuel and this has an effect on the continued supply of fuel

5 Vehicle keys are not securely stored. There is a risk of unauthorised use and vehicle theft.

Medium The key cabinets at the depot will remain locked.

Immediate

Principal Operational Services Manager Environment Services

Page 16 of 47

78

Bassetlaw District Council / Parks and Open Spaces 5.16/17

1.1 Background

A review of Parks and Open Spaces was undertaken as part of the approved internal audit periodic plan for 2016/17.

The District’s parks and open spaces are regularly used as locations for community events, both organised by the Council and privately arranged. It is therefore imperative that the Council maintain these parks and open spaces in order to make them safe and clean place for the members of the public to use. The Council’s website includes information on the location and facilities available at each of the District’s playgrounds, parks and leisure facilities.

Weekly internal playground inspections are completed so that management are made aware of any defects or damage to play equipment which could cause potential harm to members of the public.

The Council has recently undergone consultation seeking the views of residents on the provision of a Water Play Facility at Kings’ Park, Retford. Following the result of the public consultation, approval has been granted for the park to see water based play facilities that can be used by young people through the summer months.

Local sports teams and recreation groups are able to book the Council’s sports facilities. Payment is made following receipt of an invoice generated by the Debt Recovery Unit upon instruction from the Parks and Open Spaces department. Fees are approved by Cabinet annually.

Green flag status has been achieved by Kings Park, Retford for eight years running, and for The Canch, Worksop two years running. The Council is currently waiting to hear whether they have achieved Green Flag status on the above parks again in July 2016.

1.2 Conclusion

Our review of the Parks and Open Spaces has resulted in three issues being identified resulting in the need for management actions. . All three of these issues relate to the areas where the control framework could be strengthened.

Internal Audit Opinion: Taking account of the issues identified, the Council can take reasonable assurance that the controls in place to manage this risk are suitably designed and consistently applied. However, we have identified issues that need to be addressed in order to ensure that the control framework is effective in managing the identified risks.

1.3 Key findings


Bassetlaw District Council has a Parks & Open Spaces Policy in place which is reviewed on an annual basis and is available to all relevant staff on the Councils intranet. The policy covers key areas including: Activities to be undertaken covering play areas, allotments, fishing, cemeteries etc., Service Risks, Objectives, etc.

Weekly internal playground inspections are completed in a timely manner, ensuring that management are made aware of any defects or damage to play equipment as soon as possible.

PARKS AND OPEN SPACES - EXECUTIVE SUMMARY

Page 17 of 47

79


Service requests are received from members of the public when they wish to inform the Council of extra works which are required that are not in line with the work programmes. All service requests are prioritised following an inspection.

All charges are raised by the Parks and Open Spaces Administrative Officer and are done so in accordance with the fees and charges schedule.

Members of the local communities are consulted to ensure parks and open spaces are meeting the requirements of local residents and facility users.

However, we also identified the follow key weaknesses which have resulted in three medium priority actions;

Compliance with the agreed work programmes for operational staff is not monitored. There is a subsequent risk that parks and open spaces are not maintained in line with operational procedures, resulting in a failure in performance, creating damage to the Councils reputation.

Variation orders produced as a result of service requests received are not consistently being returned to the depot. Without these orders being returned, the Access system cannot be updated and therefore there is no way of knowing if a service request has been dealt with. This increases the risk that high priority service requests are not actioned appropriately or in a timely manner, which could lead to members of the public being subject to a potentially dangerous environment. Monthly feedback reports must be ran off the Access system highlighting which service requests are outstanding and need to be followed up.

There is no communication between the Debt Recovery department and Parks and Open Spaces staff informing them of which members of public still owe for the use of Council owned sports facilities. This increases the risk that Parks and Open Spaces staff are allowing existing debtors to use facilities resulting in further debt being owed. A monthly report will be produced by the Debt Recovery department and disseminated to Parks and Open spaces staff, identifying amounts owed and by whom.


Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

Failure in operational performance. 1 (5) 0 (5) 0 1 0

The current facilities do not meet the needs or wishes of the community, resulting in under usage. 0 (4) 1 (4) 0 1 0

Clubs and organisations using Council-owned facilities are not charged the correct amount, and these amounts are not collected in a timely manner.

0 (5) 0 (5) 0 0 0

Losses due to fraud or error, inefficient processing or inappropriate activity. 1 (1) 0 (1) 0 1 0

Total 0 3 0

* Shows the number of controls not adequately designed or not complied with. The number in brackets represents the total number of controls reviewed in this area

Page 18 of 47

80



Priority Definition






date

Responsible

owner

Risk: Failure in operational performance.

1 No monitoring is undertaken to ensure operational staff are working in compliance with the work programmes.

There is a risk of failure in operational performance and poor appearance of the open spaces within the district, resulting in poor satisfaction of service users and residents.

Medium Team meeting with all Supervisors & Chargehands, Carry out briefing on the reporting back of all scheduled works on a monthly basis. This will be carried out by the use of a work programme which will allow the works to be ticked off on a monthly basis. The identification of any works not being completed will be identified as part of this process.

Immediate

Operational Service Manager

Page 19 of 47

81



date

Responsible

owner

Risk: The current facilities do not meet the needs or wishes of the community, resulting in under usage.

2 Variation orders are not consistently being returned, meaning there is no way of ensuring that high priority work has been completed.

This creates a risk that dangerous defects and works required are not rectified in a timely manner, resulting in potential reputational damage to the Council.

Medium Following the monthly input of variation orders into the Access database by the Administrative Assistant will produce monthly feedback reports, which highlight date specific, amber or red priority service requests which are outstanding.

From this, the Operational Services Manager will chase up any outstanding work instructions to ensure they are completed. It will be reiterated to members of staff the importance of ensuring all Variation orders are returned to the depot.

Immediate Operational Service Manager

Risk: Losses due to fraud or error, inefficient processing or inappropriate activity.

3 There is no communication between the Debt Recovery department and Parks and Open Spaces staff informing them of which members of public still owe for the use of Council owned sports facilities.

There is a risk that bookings are taken from those who already owe the Council money, increasing the risk of bad debt being accrued.

Medium The Transactional Finance Manager will send a monthly invoice report to Parks and Open Spaces staff, detailing amounts outstanding from debtors in order to ensure that bookings are not taken from parties which already owe money to the Council.

Immediate Transactional Finance Manager

Page 20 of 47

82

Bassetlaw District Council / Retford Enterprise Centre 7.16/17

1.1 Background

A review of Retford Enterprise Centre was undertaken as part of the approved internal audit periodic plan for 2016/17.

Retford Enterprise Centre was opened in November 2010, with funding of £1,706,001 provided by the East Midlands Development Agency (EMDA) and £800,000 from the Council’s Section 106 fund. The Economic Development sectionis responsible for the Retford Enterprise Centre, which is run by a full time Manager who has been in post for 18 months, supported by a full time Receptionist.

The Centre is a mix of high quality office, meeting and networking space, comprising 27 units ranging from 23sq metre ‘starter’ units to 56sq metre units, with 25 currently let. The Centre offers an incentive to new office tenants, providing an incremental discount for the first six months of a new tenancy. Two meeting rooms are available for hire to both tenants and non-tenants. The Centre also offers refreshments and catering at a cost to all meeting room occupants. Other facilities offered by the Centre, include photocopying, printing, franking and telephone usage; all are re-charged to tenants on a monthly basis. Tenants receive a 50% discount on meeting room bookings. The Centre also offers various levels of a ‘Virtual Tenancy’ service, in which customers are provided with a postal address, diary management system, and dedicated phone line and telephone answering service.

All charges incurred are invoiced for on a monthly basis by the Debt Recovery Unit, with most being paid by Direct Debit. No payments are taken in advance of room bookings being fulfilled.

The 2016/17 P2 budget shows the expectation that total expenditure will amount to £282k and total income generated will be £222k. This is currently on track.

1.2 Conclusion

Our review at Retford Enterprise Centre resulted in 13 management actions being identified, comprising six ‘medium’and seven ‘low’ management actions. Of these 13, we identified three shortcomings in the control framework, and 10 occasions where the existing control framework was not being applied consistently or adequately. Two findings have not had a management action agreed as the management deemed the existing control framework to be sufficiently robust.

Internal Audit Opinion: Taking account of the issues identified, the Council cannot take assurance that the controls in place to manage this risk are suitably designed and consistently applied. However, we have identified issues that need to be addressed in order to ensure that the control framework is effective in managing the identified risks.

RETFORD ENTERPRISE CENTRE - EXECUTIVE SUMMARY

Page 21 of 47

83


1.3 Key findings


Operational procedures are documented which specify day to day key procedures undertaken within the Centre.

Fees and charges are set each year and approved by Cabinet. Sample testing of eight new tenants set up found that the correct amount of rent was being charged, for the office occupied and the incentives had been applied correctly.

The key stages involved with setting up a new office tenant have been identified and are included on a compliance checklist.

A spreadsheet is sent to Debt Recovery at the end of every month which shows all costs incurred by tenants and external customers. Additional direct debits are raised for tenants, and invoices raised for external customers. Testing of a sample of 20 meeting room bookings and incidental charges incurred found that all corresponded back to source documentation and had been billed correctly.

A Clawback is included within contracts with regards to the incentives offered (i.e. free rent period. This ensures that should tenants cancel their lease within the first year; a portion of the discount offered can be recovered.

The Centre is marketed and advertised to appropriate markets to encourage further growth.

However, we identified six ‘medium’ categorisation findings where actions were agreed with management;

Sample testing of eight new tenants to the Centre found that a signed and sealed lease was held in Legal for seven. We identified large time gaps between the date of the lease, and the tenancy start date; up to nine months. The eighth tenant had moved in to their office and was paying rent, but had not yet returned their lease. We also noted that the Centre Manager is not provided with a copy of the final signed lease for their information and records.

The payment terms advised to tenants on the monthly rental invoices raised directly contradict the payment terms agreed within the lease, which states that payments should be made a month in advance.

No terms and conditions of hire have been established for the booking of meeting rooms. In addition, no deposit is taken, or cancellation fee charged for bookings which do not then take place.

The Centre Manager is not informed of any unpaid direct debits or invoices. Sample testing identified a tenant who had not paid their rent since September 2014 and had accrued a debt of £13,592; which the Centre Manager was not aware of.

Of 15 purchases for the Centre reviewed, we found eight where the purchase order had been raised after the invoice had been received. This retrospection is a breach of the Financial Procedure Rules.

No reconciliation is performed of the income invoiced for and received, against that expected as per the rents due and invoice requests sent to the Debt Recovery Unit.

Page 22 of 47

84



Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

Usage of the Centre is not accurately monitored and reported. 0 (6) 1 (6) 1 0 0

Approved Fees and Charges are not consistently applied and discounts are not consistently applied to all customers.

2 (14) 8 (14) 4 6 0

The facility is not advertised and marketed. 1 (3) 1 (3) 2 0 0

Total 7 6 0


1.5 Progress made with previous audit findings

The last audit in this area was undertaken 2013/14; recommendations made at this time have since been followed up as part of the annual follow up work completed by Internal Audit. Progress has been reported within those reports and to avoid confusion and reiteration and duplication of actions we have not included within this report.

Page 23 of 47

85



Priority Definition






date

Responsible

owner

Risk: Approved Fees and Charges are not consistently applied and discounts are not consistently applied to all customers.

4 Of the eight new tenancies reviewed, signed and sealed leases were held by Legal for seven. The eighth was awaiting return by the tenant, despite them moving in in April 2016. Of the seven on file, six had been signed and sealed after the date the tenancy had started. The delays ranged from two weeks to nine months. The Retford Enterprise Centre Manager also does not receive a copy of signed and sealed leases from Legal.

Medium All efforts will be made to ensure signed and sealed leases are in place as soon as possible after the tenancy begins and tenants who have yet to return their lease will be communicated to the Retford Enterprise Centre Manager and chased. Copies of the signed and sealed lease will be forwarded to the Retford Enterprise Centre Manager for their records.

Immediate Principal Solicitor for Planning and Property

Page 24 of 47

86


There is a risk that tenants are allowed to move in their office, and begin paying rent, without a formal agreement in place between themselves and the Council covering the period of tenancy, and that the Retford Enterprise Centre Manager does not have the master version of the lease to refer to should an issue occur.

5 Leases should be paid monthly in advance. However for those paid by Direct Debit, the debit cannot be taken until at least 30 days after the date of the invoice, once the invoice becomes overdue.

This directly contradicts the terms of the lease of tenants, in which payment should be made in advance, and therefore there is a risk that the Council is not adhering to the terms of the lease, and monies due are not being collected in a timely manner.

Medium Council policy is to allow 30 days for invoice payment, any change to this would require Council agreement. To facilitate payment in advance, Enterprise Centre invoices would have to be raised a month earlier, this would the cancel out the benefit of the ‘free month’ offered to new tenants.

Leases should be amended to say rent will be demanded a month in advance, thereby allowing for an invoice to be raised on the 1st of the month for the month during which it was raised.

31 March 2017 Retford Enterprise Centre Manager

Linked to finding three, we are going to explore the possibility of annual billing for new tenants to enable collection of the rent in line with the existing lease terms.

Page 25 of 47

87


6 No terms or conditions of hire are agreed. No deposits for are taken for bookings, nor is a charge imposed for for bookings cancelled. At busy periods, this has in the past caused bookings to be rejected due to lack of availability, only for the meeting to then be cancelled. As such, there is a risk that the Council is turning away bookings and also losing income.

Medium We will engage with Legal to draw up some terms and conditions for hiring a meeting room; these will be added to the Meeting Room Booking form. In a business environment it is not commercial practice to take deposits, however we will look in to the possibility of charging a cancellation fee for when bookings are cancelled at short notice. We will also look in to the option of obtaining a chip and pin machine, to allow those who want to, to pay for their charges in person, limiting the number of invoices raised, and therefore potential bad debt.

31 March 2017 Retford Enterprise Centre Manager

8 The Retford Enterprise Centre Manager is not informed of any unpaid direct debits or invoices. Sample testing identified a tenant who had not paid their rent since September 2014 and had accrued a debt of £13,592; which the Retford Enterprise Centre Manager was not aware of. Without being notified of unpaid fees, there is risk that further bookings are taken, or unpaid rent is not recovered, resulting in levels of bad debt accumulating

Medium The Retford Enterprise Centre Manager will be added to the automated email which is sent in varying frequencies to other departments within the Council. This will show all outstanding invoices, to allow for more face to face and personalised chasing to be done, alongside the more formal debt recovery procedures.

Immediate Transactional Finance Manager

Page 26 of 47

88


9 Of 15 purchases for the Centre reviewed, we found eight where the purchase order had been raised after the invoice had been received. This retrospection is a breach of the Financial Procedure Rules and increases the risk that purchasing controls are circumvented.

Medium Purchase orders are raised wherever possible, however we will endeavour only to raise a retrospective purchase order where there is a valid reason to do so.

Immediate Retford Enterprise Centre Manager

The value is not committed until after the purchase order has been approved. As a result, budgetary information will not be totally accurate if purchase orders are raised after the invoice has been received.

11 No reconciliation is performed of the income invoiced for and received, against that expected as per the rents due and invoice requests sent to the Transactional Finance Team. There is a risk that income is miscoded, or that invoices are not raised correctly, resulting in inaccurate financial information or loss of income to the Council.

Medium With the assistance of the Transactional Finance Manager, we will begin to undertake a reconciliation to ensure all invoices we expected to be raised, have been, and they have been coded to the D263 cost centre.

31 October 2016 Retford Enterprise Centre Manager

Page 27 of 47

89

Bassetlaw District Council/A1 Housing Bassetlaw Ltd / Disabled Facilities Grant and other including Aids and Adaptations 8.16/17

1.1 Background

An audit of Disabled Facilities and Other Grants including Aids and Adaptations was undertaken as part of the approved internal audit periodic plan for 2016/17.

Bassetlaw District Council (the Council) has a statutory duty to provide Disabled Facilities Grants (DFGs) to qualifying applicants living in the private sector to adapt their home. The main purpose of an adaptation is to modify disabling environments in order to restore or enable independent living, privacy, confidence and dignity for individuals and their families.

The Housing Grant, Construction and Renewal Act 1996 governs adaptations for homeowners and private tenants. The Council also has a duty to provide adaptations to tenants living in its own housing although it is not obliged by statute to require its own tenants to follow the same process as private sector applicants. Minor adaptations costing less than £1,000 such as grab rails, small ramps and additional stair rails are not dealt with via a DFG. Instead, these are organised after applicants have received appropriate referral from the Occupational Therapy team. Major adaptations are those that are likely to cost between £1,000 to £30,000.

The responsibility for the management of DFGs rests with both Bassetlaw District Council and A1 Housing Bassetlaw Limited jointly. Consequently, a joint policy has been devised to which both the Council and Housing Association work towards.

From the 1st April 2015, the funding for the provision of home adaptations grant for disabled people has been paid through the Better Care Fund (BCF) for the first time as opposed to the Local Authority.

1.2 Conclusion

Our review of the DFG including other grants and aids and adaptations found that the design and application of the controls are sound.

Internal Audit Opinion: Taking account of the issues identified, the Council can take substantial assurance that the controls upon which the organisation relies to manage the identified risk(s) are suitably designed, consistently applied and operating effectively.

1.3 Key findings


A DFG Policy is in place, up to date and is available to all staff with DFG responsibilities.

DISABLED FACILITIES GRANT AND OTHER GRANTS INCLUDING AIDS AND ADAPTATIONS - EXECUTIVE SUMMARY

Page 28 of 47

90


A Home Adaptations for Disabled People Good Practice Guide is in place and is used alongside the DFG Policy.

Information and guidance surrounding DFG is available on the Council’s website, with guidance around aids and adaptations on the A1 Housing website.

Testing a sample of 15 DFG applications, found that each application was subject to review to ensure the applicant is eligible for the work to be carried out; including confirmation of disability (via Occupational Therapy referral), means testing and determination of ownership of the property.

Quotes and tenders are obtained for the DFG work required, and the value of the grant available is calculated based on the lowest quote / tender obtained. The applicant has the right to requests that one of the other contractors completes the work, but they are responsible for paying the additional costs in excess of the grant amount.

For aids and adaption works, A1 Housing’s property maintenance contractor, Untiled Living is used to complete the majority of work required, apart from the installation of stair-lifts and hoists, for which OBAM stair-lifts are used.

A completion certificate is filled in by the customer once the works have been undertaken. Payment is not released until the customer is satisfied with the works.

A process is in place to re-coup monies where tenants have moved from their existing property.

Expenditure against budget is monitored as part of the capital programme. This is monitored and reported to the Capital meetings on a monthly basis.

In addition to the above, we have raised a low priority management action. Details can be found in section 2 and 3 of this report.

Page 29 of 47

91



Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

Inappropriate requests for grants are made and accepted due to inaccurate records. 1 (9) 0 (9) 1 0 0

Inaccurate, untimely grant payments are made. 0 (5) 0 (5) 0 0 0

Incomplete works are not identified. 0 (4) 0 (4) 0 0 0

Grant payments are not made or are misappropriated. 0 (3) 0 (3) 0 0 0

Total 1 0 0

* Shows the number of controls not adequately designed or not complied with. The number in brackets represents the total number of controls reviewed in this

Page 30 of 47

92



Priority Definition



High Immediate management attention is necessary. This is a serious internal control or risk management issue that may, lead to: Substantial losses, violation of corporate strategies, policies or values, reputational damage, negative publicity in national or international media or adverse regulatory impact, such as loss of operating licences or material fines.



date

Responsible

owner

Risk: Inappropriate requests for grants are made and accepted due to inaccurate records.

1 Testing a sample of 15 DFG applications found that on four occasions the application form had not been date stamped as received. If the date the application received is not known then there is a risk that applications are not being processed in a timely manner and thus leading to a delay in the works being conducted.

Low We will remind team members of the importance of date stamping receipt of documentation and adding a tick box to our document control sheet to ensure this action is carried out. .

Immediate

Capital Works and DF Manager

Page 31 of 47

93

Bassetlaw District Council Economic Development - Grants 9.16/17

1.1 Background

An audit of Economic Development - Grants was undertaken as part of the approved internal audit periodic plan for 2016/17.

The Economic Development department administers the Enterprise Grant Scheme, which provides assistance for entrepreneurs and developing businesses demonstrating a viable proposition that will create employment opportunities in the district.

The Enterprise Grant Scheme provides grants primarily for capital expenditure whereby new businesses (as defined by being less than 18 months old) apply to the Council for financial assistance of up to £1,500 (£2,500 for town centre businesses) which is at a 50% intervention rate of the ‘project’ total.

In an effort to raise awareness and encourage grant applications, the Economic Development department has an Enterprise Support Manager and Business Advisor whose roles are to encourage new business development within Bassetlaw by publicising grant schemes to entrepreneurs and developing businesses, and support them with the application process.

The budget for the Enterprise Grant Scheme for 2016/17 is £30,000.

1.2 Conclusion

We were satisfied from the testing undertaken and discussions with key staff that a robust grant framework is in place. Key controls we would expect are in place; however testing did identify that there are some instances of non-compliance with these controls. We have identified six management actions to rectify the non-compliance, two ‘medium’ priority and four ‘low’ priority management actions.

Internal Audit Opinion: Taking account of the issues identified, the Council can take reasonable assurance that the controls in place to manage this risk are suitably designed and consistently applied. However, we have identified issues that need to be addressed in order to ensure that the control framework is effective in managing the identified risks.

1.3 Key findings

From the discussions held with key staff in conjunction with sample testing, we found many of the controls upon which the Council rely to manage the risks are suitably designed, consistently applied and are operating effectively. These include:

Information on the Enterprise Grant Scheme is made available to the local business community through the Council website. Information is also available from the Business Advisor and Business Hubs.

Criteria under which grants can be issued have been defined and are supplied to applicants. The guidance notes are available on the website and with the application form.

ECONOMIC DEVELOPMENT – GRANTS - EXECUTIVE SUMMARY

Page 32 of 47

94


Standard application forms exist for funding applications.

Key checks are undertaken to ensure that the criteria for funding are met, which include the assessment of theapplicant's business plan and cashflow forecast. An external credit check is carried out through Experian and aninternal credit check is performed using council services such as council tax to ascertain the applicant's credithistory prior to inviting them to a Business Enterprise Panel meeting.

Applicants are promptly notified in writing of the Business Enterprise Panel's decision in respect of any grantawarded or otherwise.

Grant information is held on an Excel spreadsheet within the economic regeneration drive so relevant staff can gainaccess to this in the absence of the key member of staff.

An annual report is produced showing the outcomes of the grant schemes including:

The number of businesses issued a grant.

The average amount of grant.

The number of jobs created as a result of a new business being set up.

The location of the businesses.

Budget monitoring reports are received from the Council’s accountants on a monthly basis but the budgets canalso be accessed at any time on the self-serve system (Collaborative Planning).

A spreadsheet is also maintained by the Local Economy Officer tracking the running total of grants issued.

However, we have agreed two ‘medium’ and four ‘low’ priority management actions in relation to the following findings:

Application forms processed for the Enterprise Grant Scheme were not always signed and dated by the applicant,and were not always assigned a unique reference number.

A full audit trail of key documentation relating to an Enterprise Grant Scheme application was not alwaysmaintained in the applicant’s file.

Evidence of payment forms were not always being retained showing authorisation by the Economic DevelopmentManager for each grant payment.

Grant payment due diligence was not always being undertaken, as there were instances of invoices not being onfile and payments being made on invoices dated before the date the application forms were received.

The procedure notes were not being reviewed and updated on a periodic basis, and were not made convenientlyaccessible to relevant staff electronically.

The reconciliation between collaborative planning and the grant spreadsheet had not been evidenced.

Page 33 of 47

95



Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

Failure to achieve the Council’s objectives. 0 (8) 4 (8) 2 2 0

Lack of compliance with policies and procedures. 0 (4) 1 (4) 1 0 0

Failure to monitor the use of grants / loans granted to other organisations. 0 (2) 1 (2) 1 0 0

Total 4 2 0


Page 34 of 47

96



Priority Definition



High Immediate management attention is necessary. This is a serious internal control or risk management issue that may, lead to: Substantial losses, violation of corporate strategies, policies or values, reputational damage, negative publicity in national or international media or adverse regulatory impact, such as loss of operating licences or material fines.



date

Responsible

owner

Risk: Failure to achieve the Council’s objectives

3 Evidence of payment forms being authorised by the Economic Development Manager for each grant payment was not always available on the grant files.

Medium Evidence will be retained to show payment forms have been raised and authorised by the Economic Development Manager for each grant payment. Included in the updated procedures.

30 Sept 2016 Local Economy Officer

Economic

Development Manager

4 Grant payment due diligence was not always being undertaken, as there were instances of:

Copies of invoices not being on file.

Grant payments being made prior to the invoice date.

Grant payments being made on invoices dated before the date the application forms were received.

Medium Payments will not be made for invoices dated before the application form has been stamped as fully complete and signed, in line with the procedures. Copies of invoices and receipts will be retained on file.

30 Sept 2016 Local Economy Officer

Economic

Development Manager

Page 35 of 47

97

Bassetlaw District Council / Cash and Banking 10.16/17

1.1 Background

This review covered the Council operations that involve cash collection and banking processes for the areas of; Markets, Car Parking, Licensing, Planning and Building Control. The cash received during May 2016 (four weeks) was tested across these departments.

Each department has separate processes in operation to record and bank the income.

For Markets, cash income is received from market traders, in Worksop and Retford, for which individual manual receipts are issued. The money is then counted and prepared for banking, before being paid in at the bank.

For Car Parks, cash taken by car parking machines is collected by Officers, who empty the machines, count the money and prepare it for banking to await collection by the contracted security firm for secure transportation to the bank (Security Plus).

For Licensing, income received in the post is identified by Mailroom staff, depending upon the type of licence application. Income is passed to Customer Services for receipting on Paye.net and the receipt is forwarded to the department alongside the accompanying paperwork and applications. Money is banked as part of Customers Services daily takings.

For Planning & Building Control, income received in the post is identified by Mailroom staff and passed to Customer Services for receipting on Paye.net. Similarly, payments made in person are receipted directly onto Paye.net by Customer Services. Receipts are attached to the relevant paperwork received, e.g. planning application, and forwarded to the department. Money is banked as part of Customers Services daily takings.

1.2 Conclusion

The conclusions feeding into the overall assurance level are based on the evidence obtained and sample testing during the review. We have raised two ‘high’, one ‘medium’ and five ‘low’ priority findings across the five departmentsreviewed. Both the ‘high’ priority findings contain five separate actions, each one allocated to one of the five departments included within our review. Two issues were identified as being common to all five departments, these related to a lack of reconciliations being performed between the departments’ source data and what was banked, and also a reconciliation of what was banked and what has appeared on the general ledger for their cost centre.

Internal Audit Opinion: Taking account of the issues identified, the Council can take partial assurance that the controls in place to manage this risk are suitably designed; consistently applied and effective, action needs to be taken to ensure that this risk is managed.

CASH AND BANKING - EXECUTIVE SUMMARY

Page 36 of 47

98


1.3 Key findings


The Council has Financial Procedure Rules in place which define roles and responsibilities for cash, income collection and recording and banking. Procedure notes are in place for use by Customer Services staff when compiling and cashing up income received across the Council, ready for banking. Procedure notes are also held by the departments who bank their own income (Markets and Car Parks).

On a daily basis, Finance undertake bank reconciliations, reviewing all transactions to confirm actual amounts banked agree to those declared by departments and also identifying any income received which needs to be recorded and allocated by departments.

Cash and cheques held by Customer Services for banking are stored and transferred to Security Plus safely and securely. All income banked by Customer Services during May 2016 appeared in the Council’s general credit bankaccount within days.

Markets - Income is collected in cash in person by the Market Supervisors, and a handwritten copy of the receipt issued to each payee, with a copy being retained by the Market Supervisors. Values counted are entered on to Paye.net each day to the correct ledger code. Cash and cheques received are banked intact in a timely manner. The deposits appeared in the Councils bank account and on the Markets General Ledger code within days. No exceptions for period of May 2016 were noted.

Car Parks - Car park machines are collected and emptied on a random basis, determined by the amount taken by each machine over the last 24 hours. The income expected, as per the “pull ticket” for each machine is reconciled tothe value removed and counted by a counting machine. This identifies any over or under amounts. Values counted are entered on to Paye.net each day to the correct ledger code. Cash is collected from the Car Parks office each day by Security Plus. Collection receipts are signed by both the Officer and the Collection agent. The deposits appeared in the Councils bank account and on the Markets General Ledger code within days. No exceptions for period of May 2016 were noted.

Licensing – Cheques are received in the Mail Room and corresponding paperwork is sent directly to the Licensing department. Cheques are transferred to Customer Services, where they are receipted on Paye.net and collected by Security Plus each afternoon. No exceptions for period of May 2016 were noted.

Planning and Building Control - Cheques are received in the Mail Room and corresponding paperwork is sent directly to the Licensing department. Cheques are transferred to Customer Services, where they are receipted on Paye.net and collected by Security Plus each afternoon. No exceptions for period of May 2016 were noted.

However, we noted the following lapses or weaknesses in the control framework;

Across the five departments sampled, no reconciliations are being undertaken between the values banked by staff back to that taken as per source (departmental) records, creating a risk that income is not banked in full, or that incorrect fees have been levied, resulting in a loss of income to the Council and the service for work performed / service delivered. As this issue affects all five departments, it has been categorised as a ‘high’ priority finding.

We also identified that none of the five departments sampled were undertaking a reconciliation between the income banked and that received on their general ledger code, which would ensure all amounts banked had been received in the bank account and correctly posted to heir department code. Again, as this issue affects all five departments, it has been categorised as a ‘high’ priority finding.

Page 37 of 47

99


We identified one further weakness which has resulted in a ‘Medium’ priority management action. Sample testing of licensing income for May 2016 found that cheques received in the Mail Room are not banked immediately with Customer Services. We were advised that the cheques can only be banked once checks have been carried out on the supporting application paperwork, and, if this application is incomplete or needs returning, the fee would need to be refunded and therefore it is not banked on the day of receipt. However, without banking all income immediately, there is the risk that the income is lost or misappropriated as the income is not accounted for, resulting in accurate financial statements.


Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

Failure to maximise income revenues. 0 (5) 0 (5) 0 0 0

Misappropriation of funds due to monies not being recorded accurately upon receipt.

General 2 (5) 3 (5) 3 0 2 ¹

Markets 0 (9) 0 (9) 0 0 0

Car Parks 0 (9) 2 (9) 2 0 0

Licensing 0 (8) 1 (8) 0 1 0

Planning 0 (8) 0 (8) 0 0 0

Building Control 0 (8) 0 (8) 0 0 0

Monies are not being securely being held prior to banking or when transferring to the bank. 0 (2) 0 (2) 0 0 0

Banking not being completed in a timely manner. 0 (4) 0 (4) 0 0 0

Total 5 1 2

* Shows the number of controls not adequately designed or not complied with. The number in brackets represents the total number of controlsreviewed in this area.

¹ two ‘high’ findings have been raised to summarise eight actions across the five departments reviewed.


Date of previous audit Low Medium High

Number of actions agreed during previous audit 3 4 0

Number of actions implemented: 1 3 0

Actions not yet fully implemented: 2 1 0

Page 38 of 47

100


As part of this review the Bassetlaw District Council has demonstrated good progress in implementing actions agreed to address internal audit recommendations made within the 12.15/16 Cash and Banking report, finalised in January 2016. Of the four ‘medium’ and three ‘low’ priority actions followed up, we confirmed that three ‘medium’ and one ‘low’priority actions had been implemented in full. Two ‘low’ priority actions were found to have not been implemented,relating to reconciliations between source documentation, banking and the general ledger for both Markets and Car Parks; these actions have been re-raised within this report, and the categorisation increased in line with agreed procedure.

The one remaining ‘medium’ category action related to the banking of Land Charges income, however Land Charges was not subject to scrutiny within this review and therefore will be followed up in our usual follow up of previous recommendations / action procedure.

Page 39 of 47

101



Priority Definition






date

Responsible

owner

Risk: Misappropriation of funds due to monies not being recorded accurately upon receipt.

4 Missing Control None of the departments reviewed are performing a reconciliation to confirm that all income expected as per source records has been submitted for banking. There is a risk that income is not banked in full, or that incorrect fees have been levied, resulting in a loss of income to the Council and the service for work performed / service delivered.

High Markets We will reintroduce the reconciliation spreadsheet to ensure that the records held by Markets correspond to the income banked. We will complete this reconciliation each month and request assistance from Finance where required.

31 December 2016

Town Centres Manager – Operational

Page 40 of 47

102



date

Responsible

owner

Car Parks

We will reintroduce the reconciliation spreadsheet, and this will be completed each week going forward, with any discrepancies notified to the Finance team. Licensing We will reintroduce the reconciliation spreadsheet to ensure that the records held on the Licensing system correspond to the income banked and have this reconciled. We will complete this reconciliation each month and request assistance from Finance where required.

Planning

We will reintroduce the reconciliation spreadsheet to ensure that the records held on the Planning system correspond to the income banked, and have this reconciled. We will complete this reconciliation each month and request assistance from Finance where required.

Building Control

We will reintroduce the reconciliation spreadsheet to ensure that the records held on the Building Control system correspond to the income banked. And have this reconciled. We will complete this reconciliation each month and request assistance

31 December 2016 31 March 2017 31 March 2017 31 March 2017

Facilities Manager Principal Solicitor Planning Support Manager Building Control Manager

Page 41 of 47

103



date

Responsible

owner

from Finance where required.

5 Missing Control None of the departments reviewed are performing a reconciliation to confirm that all income expected as per source records has been accounted for correctly on the general ledger.

There is a risk that income which is incorrectly coded within the general ledger is not identified which may lead to incorrect financial information through incorrect income recognition for services provided.

High Markets We will begin to reconcile our income to the information held within the Finance system, to ensure our income records are accurate. This will be done each month and discrepancies investigated with the help of the Finance team, and then included within the monthly budget monitoring reviewed with the management accountant.

Car Parks

We will have reconciled our income to the information held within the Finance system, to ensure our income records are accurate. This will be done each week and discrepancies investigated with the help of the Finance team and then included within the monthly budget monitoring reviewed with the management accountant.

Licensing We will have reconciled our income to the information held within the Finance system, to ensure our income records are accurate. This will be done each month and discrepancies investigated with the help of the Finance team, and then

31 December 2016

31 August 2016

31 March 2017

Town Centres Manager – Operational

Facilities Manager

Principal Solicitor

Page 42 of 47

104



date

Responsible

owner

included within the monthly budget monitoring reviewed with the management accountant.

Planning

We will have reconciled our income to the information held within the Finance system, to ensure our income records are accurate. This will be done each month and discrepancies investigated with the help of the Finance team, and then included within the monthly budget monitoring reviewed with the management accountant.

Building Control

We will have reconciled our income to the information held within the Finance system, to ensure our income records are accurate. This will be done each month and discrepancies investigated with the help of the Finance team and then included within the monthly budget monitoring reviewed with the management accountant.

31 March 2017 31 March 2017

Planning Support Manager Building Control Manager

Page 43 of 47

105



date

Responsible

owner

Risk: LICENSING - Misappropriation of funds due to monies not being recorded accurately upon receipt.

8 Of the 33 cheques received during May 2016 for Licensing, we noted six were not passed to Customer Services for banking on the same day as being received through the post.

Without income being receipted as soon as it is received, there is a risk that the income is lost or misappropriated, or that the income is not accounted for, resulting in accurate financial statements.

Medium Internal Audit have

proposed actions where

an agreed action has not

been agreed with

management

Cheques received will be transferred to Customer Services for banking on the day of receipt. This will involve Licensing staff advising Mail Room staff of what this should be coded to, in a timely manner, to ensure the financial records are accurate.

Management have not

accepted the proposed

action.

n/a n/a

Page 44 of 47

106

Bassetlaw District Council Capital Accounting & Asset Register 12.16/17

1.1 Background

An audit of Capital Account and Asset Register was undertaken as part of the approved internal audit periodic plan for 2016/17.

At the time of audit the Council’s Capital Programme comprised 36 capital schemes and had an approved revised budget of £16.825m, split between both the Housing and General Fund. To minimise impact upon the Council’s revenue budgets, financing will be generated from a number of avenues.

The Council’s capital priorities are stipulated in the Capital Strategy, providing clear guidance for the five year period from 2016/17 to 2020/21. Additionally the de-minimis limit of £10,000 is in place to ensure assets are capitalised accurately and revenue expenditure is not used for capital purchases.

All assets are recorded in the Real Asset Management (RAM) asset register, which is reconciled with the General Ledger and Budget Managers at year-end to provide the most accurate summary of the Council’s assets. All assets are revalued as part of a five year rolling programme.

1.2 Conclusion

Internal Audit Opinion: Taking account of the issues identified, the Council can take substantial assurance that the controls upon which the organisation relies to manage the identified risks are suitably designed, consistently applied and operating effectively.

CAPITAL ACCOUNTING AND ASSET REGISTER - EXECUTIVE SUMMARY

Page 45 of 47

107


1.3 Key findings


A Capital Investment Strategy is in place and updated on an annual basis to provide a framework for theachievement of the Council’s investment proposals for the subsequent five year period.

Financial Procedures provide guidance for capital expenditure and management. Roles and responsibilities areoutlined for key members of staff, senior management and Committee and Cabinet members.

Annually updated CIPFA guidance notes detailing accounting practices for local authorities in line with the Codeof Practice on Local Authority Accounting are made available to all relevant staff.

Capital bids are presented to the Capital Projects Review Panel for challenge and approval before being added tothe Council’s Capital Programme. There had been no capital bids made since our previous audit and therefore notesting was undertaken in this area.

There is ongoing monitoring of the Capital Programme through a budget monitoring spreadsheets and quarterlyCapital Project Review Panel meetings. All significant budget adjustments, including year-end carry forwardrequests, are accompanied by a business case which is approved by the Head of Finance and Property.

Assets are revalued on a five year rolling programme by the Council’s qualified Estates Surveyors. All valuationsare added to the asset register and statement of accounts, and valuation reports are maintained on file.

Both market value and consumption of economic benefit impairments are reviewed on an annual basis by theCouncil’s qualified Estates Surveyors. In financial year 2015/16 no impairments were identified and therefore notesting was undertaken.

A de-minimis limit of £10,000 has been established and all expenditure above this limit should be capitalised. Itwas identified that a report of revenue expenditure above this limit was not run as part of year-end processes in2015/16 and therefore there was no assurance that all expenditure was correctly capitalised.

The Real Asset Management (RAM) asset register records all of the Council’s assets. Capital acquisitions areadded to the asset register as part of year-end processes and assigned an asset number.

Depreciation policies are in place for all asset types. Depreciation is applied to assets on an ongoing basis and atthe end of the financial year. Reconciliation of depreciation values is completed every quarter and at year-endand are recorded within the statement of accounts.

All disposals are approved by the Head of Service. Council house sales in line with the Right to Buy scheme areaccompanied by a Legal Completion Form as confirmation of sale.

It was established that annual reconciliations are undertaken of the asset register and General Ledger and fixedassets from the prior year’s accounts. Reconciliations between the General Ledger and capital invoices arecompleted on an ongoing basis.

Asset verification is undertaken as part of year-end processes, with Budget Managers confirming agreement withvaluations of assets and identifying any in-year disposals.

The Audit and Risk Scrutiny Committee receive regular capital projects and expenditure updates. CapitalProgramme progress is reported on a quarterly basis, highlighting any significant variances or adjustments to theapproved plan.

Page 46 of 47

108


Cabinet receive regular updates of capital expenditure and quarterly reports on the Capital Programme.Significant capital decisions are approved by the Cabinet prior to works, sales or purchases commencing.


Risk Control

design*

Compliance

with

controls*

Agreed actions

Low Medium High

Capital purchases are not recorded and correctly accounted for. 0 (7) 0 (7) 0 0 0

Existing assets, as well as additions, amendments and deletions to the Asset Register are not properly identified and accurately recorded.

0 (8) 1 (8) 1 0 0

Total 1 0 0

* Shows the number of controls not adequately designed or not complied with. The number in brackets represents the total number of controlsreviewed in this area.


Date of previous audit Low Medium High

Number of actions agreed during previous audit 0 1 0

Number of actions implemented/ superseded 0 1 0

Actions not yet fully implemented: 0 0 0 As part of this review Bassetlaw District Council has demonstrated good progress in implementing actions agreed to address internal audit recommendations made within the 02.14/15 Capital Accounting & Asset Register report. The one outstanding ‘medium’ priority management action has been implemented in full.

Page 47 of 47

109

110

Agenda Item No.9(b) BASSETLAW DISTRICT COUNCIL


17th NOVEMBER 2016


INTERNAL AUDIT OUTSTANDING SERVICE RECOMMENDATIONS UPDATE 2016/17

Cabinet Member: FinanceContact: Nick Wilson Ext: 4503


1.1 The author of this report, Nick Wilson, has determined that the report is not confidential.


2.1 To update Members of the Audit & Risk Scrutiny Committee on the medium Service recommendations that have been identified by Internal Audit, that are currently outstanding.


3.1 Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by introducing a systematic, disciplined approach in order to evaluate and improve the effectiveness of risk management, control, and governance processes.

3.2 Internal Audit identify, using a risk based approach, areas with control weaknesses. These are categorised into three priorities:

• Low risks – There is scope for enhancing control or efficiency and quality.

• Medium risks – Timely management attention is necessary. This is an internal controlrisk management issue that could lead to: Financial losses which could affect theeffective function of a department, loss of controls or process being audited orpossible reputational damage, negative publicity in local or regional media.

• High risks – Immediate management attention is necessary. This is a serious internalcontrol or risk management issue that may, with a high degree of certainty, lead to:Substantial losses, violation of corporate strategies, policies or values, reputational

111

damage, negative publicity in national or international media or adverse regulatory impact, such as loss of operating licences or material fines.

3.3 Control weaknesses that are identified within Service audits are discussed with the manager responsible and agreed. Management actions are assigned together with a completion date.

3.4 As completion dates are assigned to each of the agreed recommendations, Internal Audit engage in “Follow up” audits, which are designed to confirm whether recommendations that have been agreed are completed within the agreed timescales.

3.5 Should they not be complete, currently the Service manager will give a revised timescale for the recommendation, which will then mean a further “Follow up” audit is required, increasing the amount of Internal Audit days needed to complete the Audit Plan. This hence increases the cost to the Council.

3.6 High risk recommendations are visible to Members of the Audit & Risk Scrutiny Committee through the Corporate Risk Management quarterly update report. Members can therefore see progress being made on these recommendations. Medium risks are only visible from the individual audit reports; hence Members of ARSC need to see them to bring influence on Service managers to resolve and address these issues raised.

3.7 This report seeks to advise Members of these Medium recommendations that are outstanding, and summarise any progress to date against these.

3.8 The schedule of outstanding risks will be tabled at the meeting and will be at Appendix A.

4. Implications


Should these agreed risks not be implemented, the Council’s objectives maynot be met, and this would be to the detriment of the service user.

b) Strategic & Policy

The Internal Audit function clearly supports the Council’s corporategovernance arrangements and the strategic objective of a Viable Co-operativeCouncil.

c) Financial – Ref: 17/78

The financial implications are considered during each of the individual auditsand this will inform the risk type assigned to the risk.

d) Legal – Ref: 659/11/16

There is an overriding requirement to ensure that the management of risk istreated as a priority, and the Monitoring Officer in conjunction with theCouncil’s Solicitor, will continue to exercise an overview of the discharge ofthe Council’s statutory functions.

112

e) Human Resources

As contained within the report.

f) Community Safety, Equalities, Environmental

As contained within the report.

g) This is not a key decision.


5.1 This report is provided to Members for information and consideration.

6. Recommendations

6.1 That the Audit and Risk Scrutiny Committee note the progress of actions identified against the agreed Medium audit recommendations.

6.2 That, where appropriate the chair of ARSC invite Service managers and the relevant Director to the next ARSC meeting to seek assurance on the action taken to mitigate the identified audit risks.

Background Papers Location Associated Papers Head of Finance & Property’s Office

113

114

Agenda Item No.9(c) BASSETLAW DISTRICT COUNCIL


17th NOVEMBER 2016


ANNUAL AUDIT LETTER 2015/16

Cabinet Member: Finance Contact: David Hill Ext: 3174


1.1 The author of this report, David Hill, has determined that the report is not confidential.


2.1 To present KPMG’s Annual Audit Letter for 2015/16 for the last completed audit year.


3.1 KPMG, as the council’s appointed external auditor, has issued Bassetlaw with an unqualified audit opinion for last financial year’s accounts. This is a sound tradition that the Council has established, and Members will note from the report that Bassetlaw:

• Had proper arrangements for informed decision making, sustainable resourcedeployment and working with partners and third parties;

• Prepared the Statement of Accounts 2015/16 in a timely manner with high qualitysupporting working papers.

3.2 The full Annual Audit Letter is attached to this report as an Appendix for Members attention.

4. Implications

a) For service users. External verification is important to Bassetlaw as itprovides an independent assessment of progress and the standard of serviceprovided for the council tax levied.

b) Strategic & Policy. The Council’s financial statements and annual governancestatement are important as the Council can demonstrate its good stewardshipof public funds.

c) Financial - Ref: 17/79

115

The planned audit fee for 2015/16 was £57,225. An additional charge of £10,000 was made for non-audit-related services relating to the tax implications for leisure services, and a further £3,000 for the certification of the pooling of housing receipts. increasing the total fee for 2015/16 to £70,525.

d) Legal – 660/11/16

The legal implications are as contained within the report.

e) Human Resources. None arising directly from the report.

f) Community Safety, Equalities, Environmental. None are being brought toMembers attention by the external Auditor.

g) This is not a key decision.


5.1 The Council is obliged to receive the Auditor’s report, but Members have the discretion to respond to any points made in the Annual Audit Letter.

6. Recommendations

6.1 That the Audit & Risk Scrutiny Committee notes the Annual Audit Letter for 2015/16, and recommends the report to full Council on 15th December 2016.

116

Annual Audit Letter 2015/16

Bassetlaw District Council

October 2016

117

2

Document Classification: KPMG Confidential

© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The contacts at KPMG in connection with this report are:

Tony CrawleyDirector

KPMG LLP (UK)

Tel: 0116 256 [email protected]

John PressleyAssistant Manager

KPMG LLP (UK)

Tel: 0115 935 [email protected]

This report is addressed to the Authority and has been prepared for the sole use of the Authority. We take no responsibility to any member of staff acting in their individual capacities, or to third parties. Public Sector Audit Appointments issued a document entitled Statement of Responsibilities of Auditors and Audited Bodies summarising where the responsibilities of auditors begin and end and what is expected from audited bodies. We draw your attention to this document which is available on Public Sector Audit Appointment’s website (www.psaa.co.uk).

External auditors do not act as a substitute for the audited body’s own responsibility for putting in place proper arrangements to ensure that public business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively.

We are committed to providing you with a high quality service. If you have any concerns or are dissatisfied with any part of KPMG’s work, in the first instance you should contact Tony Crawley, the engagement lead to the Authority, who will try to resolve your complaint. If you are dissatisfied with your response please contact the national lead partner for all of KPMG’s work under our contract with Public Sector Audit Appointments Limited, Andrew Sayers ([email protected]). After this, if you are still dissatisfied with how your complaint has been handled you can access PSAA’s complaints procedure by emailing [email protected], by telephoning 020 7072 7445 or by writing to Public Sector Audit Appointments Limited, 3rd Floor, Local Government House, Smith Square, London, SW1P 3HZ.

Contents

Page

Report sections

— Headlines 3

Appendices

1. Key issues and recommendations

2. Summary of reports issued

3. Audit fees

4

5

6

118

3



This Annual Audit Letter summarises the outcome from our audit work at Bassetlaw District Council in relation to their 2015/16 audit year.

Although it is addressed to Members of the Authority, it is also intended to communicate these key messages to key external stakeholders, including members of the public, and will be placed on the Authority’s website.

HeadlinesSection one

VFM conclusion

We issued an unqualified conclusion on the Authority’s arrangements to secure value for money (VFM conclusion) for 2015/16 on 30 September 2016. This means we are satisfied that during the year, the Authority had proper arrangements for informed decision making, sustainable resource deployment and working with partners and third parties. To arrive at our conclusion we looked at the Authority’s arrangements to make informed decision making, sustainable resource deployment and working with partners and third parties.

VFM risk areas

We undertook a risk assessment as part of our VFM audit work to identify the key areas impacting on our VFM conclusion and considered the arrangements you have put in place to mitigate this risk. Our work identified the following significant matter:— Delivery of savings – the Authority has introduced efficiencies to manage its spending and achieve its planned

savings. The Authority will however need to continue to review its financial plans and manage its savings plans to continue to achieve longer term financial and operational sustainability.

Audit opinion

We issued an unqualified opinion on the Authority’s financial statements on 30 September 2016. This means that we believe the financial statements give a true and fair view of the financial position of the Authority and of its expenditure and income for the year.

Financial statements audit

The Statement of Accounts 2015/16 was prepared in a timely manner with high quality supporting work papers.There were no uncorrected audit adjustments at the end of the audit process.

Annual Governance Statement

We reviewed your Annual Governance Statement and concluded that it was consistent with our understanding.

Whole of Government Accounts

The Authority prepares a consolidation pack to support the production of Whole of Government Accounts by HM Treasury. We are not required to review your pack in detail as the Authority falls below the threshold where an audit is required. As required by the guidance we have confirmed this with the National Audit Office.

Main recommendation

The main recommendation that we raised as a result of our 2015/16 audit work relates to the Authority’s accounts approval arrangements. This is detailed in Appendix 1 together with the action plan agreed by management. We will formally follow up this recommendation as part of our 2016/17 work.

Certificate We issued our certificate on 30 September 2016. The certificate confirms that we have concluded the audit for 2015/16 in accordance with the requirements of the Local Audit & Accountability Act 2014 and the Code of Audit Practice.

Audit fee Our fee for the audit of the Authority’s accounts was £57,225 plus VAT (£75,400 in 2014/15). This fee is in line with that highlighted within our audit plan agreed by the Audit and Scrutiny Committee in January 2016. Further detail regarding fees is contained in Appendix 3.

119

4



We have given our recommendations a risk rating and agreed what action management will need to take.

We will formally follow up this key issue and recommendation next year.

Follow up of previous recommendations

As part of our audit work we followed up on the Authority’s progress against previous audit recommendations. We are pleased to report that the Authority has taken appropriate action to address the previous recommendations.

Appendix 1: Key issues and recommendationsAppendices

No. Issue and recommendation Management response / responsible officer / due date

1 Accounts approval arrangementsCurrently the Authority takes the final version of its accounts to its meeting at the end of September each year for approval, with the 2016 date being 29 September. This risks missing the deadline and/or stifling debate. RecommendationThe Authority should consider giving delegated authority to the Audit and Risk Scrutiny Committee in relation to the approval of the accounts, or taking the statements to that Committee and having full Council approval earlier than in 2016.

Management Response – Agreed. Officers will liaise with Members and discuss options available for the earlier approval of the audited accounts in all financial years from 2016/17 onwards.Responsible Officer – Head of Finance & PropertyDue Date – 31 March 2017

120

5



This appendix summarises the reports we issued since our last Annual Audit Letter.

Appendix 2: Summary of reports issuedAppendices

2016

January

February

March

April

May

June

July

August

September

October

November

The External Audit Plan set out our approach to the audit of the Authority’s financial statements and to work to support the VFM conclusion.

External Audit Plan (January 2016)

The Audit Fee Letter set out the proposed audit work and draft fee for the 2016/17 financial year.

Audit Fee Letter (April 2016)

The Auditor’s Report included our audit opinion on the financial statements along with our VFM conclusion and our certificate.

Auditor’s Report (September 2016)

The Report to Those Charged with Governance summarised the results of our audit work for 2015/16 including key issues and recommendations raised as a result of our observations.

We also provided the mandatory declarations required under auditing standards as part of this report.

Report to Those Charged with Governance (September 2016)

This Annual Audit Letter provides a summary of the results of our audit for 2015/16.

Annual Audit Letter (October 2016)

This report summarised the outcome of our certification work on the Authority’s 2014/15 grants and returns.

Certification of Grants and Returns (January 2016)

121

6



This appendix provides information on our final fees for the 2015/16 audit.

To ensure transparency about the extent of our fee relationship with the Authority we have summarised below the outturn against the 2015/16 planned audit fee.

External audit

Our final fee for the 2015/16 audit of the Authority was £57,225 plus VAT (£75,400 in 2014/15). This fee is in line with that highlighted within our audit plan agreed by the Audit and Scrutiny Committee in January 2016

Certification of grants and returns

Under our terms of engagement with Public Sector Audit Appointments we undertake prescribed work in order to certify the Authority’s housing benefit grant claim. This certification work is still on-going. The final fee will be confirmed through our reporting on the outcome of that work in January 2017.

Other services

We charged £10,000 for additional non-audit-related services relating to the tax implications for leisure services, and £3,000 for the certification of the pooling of housing receipts which is outside of the Public Sector Audit Appointments certification regime. This work is not related to our responsibilities under the Code of Audit Practice.

Appendix 3: Audit feesAppendices

122


The KPMG name and logo are registered trademarks or trademarks of KPMG International.


kpmg.com/appkpmg.com/socialmedia

123

124

Agenda Item No. 9(d) BASSETLAW DISTRICT COUNCIL


17th NOVEMBER 2016


AMENDMENTS TO THE COUNCIL CONSTITUTION

Cabinet Member: Policy, Strategy & Communications Contact: Ros Theakstone Ext: 3160


1.1 The author of this report, Ros Theakstone, has determined that the report is not confidential.


2.1 To set out proposed amendments to the Council Constitution and to seek approval to refer to full Council for ratification and adoption.


3.1 Section 37 of the Local Government Act 2000 requires a local authority which is operating executive arrangements to prepare and keep-up-to-date a Constitution. The Monitoring Officer is required to monitor and review the operation of the Constitution on an ongoing basis and where necessary bring forward amendments.

3.2 In terms of proposed amendments, there are two areas for consideration. Firstly the proposal to strengthen the role of the Audit & Risk Scrutiny Committee as recommended by the Council’s external auditors KPMG in relation to the end of year accounts. And secondly to the Planning Scheme of Delegation as set out by Council in its motion debated and agreed at the meeting held on 7th March 2016.

3.3 In terms of the first issue, other authorities either delegate approval to their Audit and Risk Committee (or equivalent), or take the final version through the Committee prior to approving at full Council. The process of not taking the accounts to Audit and Risk Committee exposes the Council to unnecessary risk of missing the deadline for publishing the accounts.

3.4 This year Audit and Risk Committee met on 15th September and Council on 29th September. If any serious matters had been raised at Council there was little time for officers to respond and for KPMG to consider any changes that may have been needed. Such a late meeting also risks limiting debate on the accounts as members

125

may not raise matters that they would have done in a committee setting or if the discussion was not so close to the deadline.

3.5 The deadline this year was 30th September but for the 2017/18 accounts this will be

brought forward to 31 July 2018. KPMG, therefore, included a recommendation in their Audit Letter that “The Authority should consider giving delegated authority to the Audit and Risk Scrutiny Committee in relation to the approval of the accounts, or taking the statements to that Committee and having full Council approval earlier than in 2016”.

3.6 Part 3 Responsibility for Functions – Members, sets out the roles and duties of the Audit & Risk Scrutiny Committee on pages 3.19 to 3.21. These were developed in line with CIPFA publication in December 2013, entitled “Audit Committees – Practical Guidance for Local Authorities and Police.” This document set out suggested terms of reference for an Audit Committee. Page 3.19 specifically outlines the Committee’s current responsibilities in relation to Financial Reporting as follows:

29. To review the annual statement of accounts. Specifically, to consider whether

appropriate accounting policies have been followed and whether there are concerns arising from the financial statements or from the audit that need to be brought to the attention of the Council.

Thus the Committee already has a specific role in relation to the annual Statement of Accounts which it has not so far exercised due to the custom and practise of presentation at full Council.

3.7 The changes proposed are as follows:

29. To consider and approve review the annual statement of accounts. Specifically, to consider whether appropriate accounting policies have been followed and whether there are concerns arising from the financial statements or from the audit that need to be brought to the attention of the Council.

They are not significant in terms of the core duties of the Committee, but they do expand on the existing arrangements to address the concerns of KPMG in the Council’s ability to complete and sign-off the annual Audited Statement of Accounts.

3.8 In terms of the second issue, Council resolved at its meeting of 07 March 2016, that a

review be undertaken by the Planning Committee to determine whether any future planning application for energy related drilling for oil, gas or coal, for which the Council is a consultee, should be automatically put before a full Planning Committee.

3.9 Part 4 of the Council’s Constitution provides the Scheme of Delegation to the Head of

Regeneration. Part 4 also includes the delegations to the Planning Consultation Group, whose function it is to enable the Head of Regeneration to seek member level advice on whether to use any of his/her delegated powers, particularly where there are objections, a Member call-in, an application by Council Officer or a Member and some enforcement matters.

3.10 A review of the Scheme was undertaken and proposals presented to Planning

Committee on 20th September 2016. The following was agreed:

126

(e) Development Management Scheme of Delegation for Determining Planning Applications

Members were presented with a report which seeks to review the Scheme of Delegation for determining planning applications. The current and proposed Scheme was appended to the report.

The report follows a resolution at full Council in March 2016 that a review be undertaken by the Committee to determine whether any future planning applications for energy related drilling for oil, gas or coal, for which the Committee is a consultee, should be automatically presented to Planning Committee.

This was also an opportunity to review the scheme in relation to the types of applications that are presented to Planning Committee. Proposed revisions to the scheme will capture smaller developments in rural villages that would have a big impact on the community.

RESOLVED that:

1. The report be received and the recommendations to amend the Schemeof Delegation be endorsed and referred to the Monitoring Officer to seekformal ratification by full Council.

2. The amended Scheme of Delegation be monitored and reported on in 12months after implementation.

3.9 Appendix 1 details the amendments endorsed by the Planning Committee and which recommended for adoption into the Council’s Constitution.

4. Implications


The purpose of Constitutional changes is to ensure the Council remains aseffective as possible through effective delegation arrangements.

b) Strategic & Policy

The Council is meeting its statutory responsibilities by updating and amendingthe Constitution.

c) Financial – Ref: (17 497)

None arising from this report.

d) Legal - Ref: (647/11/16)

Regulatory and constitutional requirements prescribe the procedure to beobserved and followed.

e) Human Resources

None from this report.

127

f) Community Safety, Equal Opportunity, Environmental

None from this report. g) Whether this is a key decision, and if so the reference number

This is not a key decision. 5. Options, Risks and Reasons for Recommendations 5.1 Having an effective Constitution minimises the risk of decisions being taken outside

of the existing framework. 5.2 Without the proposed amendments to the role of the Audit & Risk Scrutiny

Committee’s the Council will be unable to achieve the stringent deadline in 2018/9 to complete the Annual Statement of Accounts within the statutory timeframe.

5.3 The proposed amendments to the Planning Scheme of Delegation address the

motion debated and agreed by full Council in March this year. 6. Recommendations 6.1 That the amendments to the Constitution as outlined within this report are approved

and referred to full Council for ratification and adoption.

Background Papers

Location

Bassetlaw District Council’s Constitution Office of the Monitoring Officer

128

Appendix 1

Revised Scheme of Delegation for Determining Planning Applications

Introduction

The key objective of this scheme is to provide clarity about the circumstances in which applications will be dealt with using delegated powers, referred to Planning Consultation Group (PCG) or referred to Planning Committee.

Any Member of the Council is able to request that applications are considered by Planning Committee. To aid this process the standard form must be completed by Members so that the Call in request is recorded properly. The form will be presented to PCG for consideration before a decision is made to refer the application to Planning Committee. The completed form will be added to the application file. Any requests via email will not be accepted as a Member Call in unless the Standard Form is attached (this form can be completed via Member iPad technology).

In the interest of transparency, the Officer report to PCG will include minutes summarising any relevant issues arising from the discussion at PCG and noting any specific points that Members wish to be recorded. The minutes will be available for inspection as a record of the considerations taken into account in determining the application.

The scheme of delegation sets out the criteria to be used to determine:

• The circumstances in which delegated powers can be used;• The applications that should automatically be referred to PCG;• The applications that should automatically be referred to Planning Committee.

When considering applications that do not obviously meet these criteria. Officers will use their judgement to determine whether the applications raise issues that justify consideration at PCG or Committee.

The scheme of delegation for determining planning applications, and related matters as approved by Planning Committee, is set out below.

Extent of Delegation to Officers

Officers will have the following delegated powers.

Determination of applications for permission, approval or consent, requirements for assessment, issuing of notices and completion or modification of agreements or obligations under the Town and Country Planning Act 1990, the Planning (Listed Buildings and Conservation Areas) Act 1990, the Planning (Hazardous Substances) Act 1990, the Planning and Compensation Act 1991 and the Environment Act 1995, or any subordinate rules, orders or regulations made under such legislation.

Officers will also have delegated powers to determine all other matters required to be

129

dealt with as part of the management and administration of the Council’s Planning function and powers, including (but not exclusively):

• Amendments to Planning Permissions;• Details submitted pursuant to conditions;• Matters relating to protected trees;• Consultation with other bodies on planning matters;• Enforcement of planning control (in consultation with the Head of Legal and

Democratic Services);• Appeals;• Screening opinions under the 2011 Environmental Assessment Regulations.

Applications Referred to Planning Consultation Group (PCG) for Consideration

• Applications made by elected Members of the Council or by Officers of theCouncil or close relatives.

• County Matter Applications with the exception of new full planning applications forany form of energy related drilling for oil, gas or coal, for which the Council is aconsultee, excluding screening or scoping opinions.

• Applications where a request is made in writing on the required form, by anelected Member of the Council, on planning grounds, that an application bedecided by Planning Committee;

• Applications that have received at least one valid objection, on planning grounds,where the recommendation is to grant permission;

• Applications subject to a Parish Council objection on valid planning groundswhere the recommendation is to grant permission or applications explicitly supportedby the Parish Council where the recommendation is to refuse;

• Applications where the recommendation is to grant where there are issues ofconcern raised by a Statutory Consultee;

• Applications for material amendments to applications previously approved atPlanning Committee;

• Applications to vary conditions on applications previously approved at PlanningCommittee;

• Applications for reserved matters following outline approval at PlanningCommittee.

• Confirmation of tree preservation or other orders or directions, which are thesubject of a valid objection.

Applications Referred to Planning Committee

• New full planning applications for any form of energy related drilling for oil, gas orcoal, for which the Council is a consultee*

• The recommendation is to approve where there are issues of principle raisedwithin an objection from a Statutory Consultee,

• Major Applications that require referral to the Secretary of State;• Applications accompanied by an Environmental Impact Assessment;• Applications for residential development or conversions for the following:

- 20 or more dwellings in Harworth, Worksop and Retford,- 11 or more dwellings in Local Service Centres as defined by BassetlawCore Strategy,- 5 or more dwellings in Rural Service Centres and All Other Settlements as definedby Bassetlaw Core Strategy, where the officer recommendation is for approval andthe Parish Council has objected on valid planning grounds or, where the officer

130

recommendation is for refusal and the Parish Council has supported the application on valid planning grounds.

• Employment proposals classified as major schemes not within an existing employment site;

• Free standing chimneys, towers, masts or similar structures, other than structures intended for removal within less than 1 year, higher than 20 metres. In the case of turbines the height refers to the height of the turbine hub.

* Members should be aware that the Council has 21 days to respond to a consultation request. This means that consultations reported to Planning Committee are subject to Nottinghamshire County Council agreeing to extend the consultation time. If they do not agree then Bassetlaw District Council may lose the opportunity to comment on an application. Bassetlaw District Council September 2016

131

132

Documents

AUDIT AND RISK SCRUTINY COMMITTEE · 2. The Corporate Accountancy Manager circulate information to Committee Members regarding the dividend write-off in respect of Sheffield City