There were no apologies

There were no disclosures of interest.

The minutes of the meeting held on 6th March 2007 were submitted and signed

The Committee received the quarterly report of requests made under the Freedom of Information Act 2000 (FOI). Members commented on the variety of issues covered and asked whether these were the sort of requests that would have been answered regardless of the FOI provisions. The Finance Director agreed that most of the questions were quite routine but the fact that they had been submitted as FOI requests introduced a discipline in terms of timescales.

In response to a question about sensitive information and information relating to projects which had not yet been completed, the Finance Director said that they had to be aware of people attempting to obtain commercial advantage although most information about Council projects was available to the public anyway. There were provisions for some information to be excluded from the FOI provisions. She added that the Head of Legal & Democratic Services would advise on the appropriateness of releasing information and some case law was now being established which was also helpful.

Members agreed that they should continue to receive the list but asked if more information could be included regarding the type of response given rather than just a "yes" or "no" in the "responded within timescale" column.

The Council's external auditors issued an Annual Letter to Members summarising their work during the past year. The Letter had been previously circulated to Members and was now presented for formal consideration.

The Finance Director introduced the report. She informed the Committee that, whilst the Financial Reporting score had moved from 1 to 2, which was good news, the overall score had remained at 2. It was unlikely that the overall score would increase in the next year because changes to the timing of the assessment had created very tight timescales which left little time to work on further improvements.

The Chair asked about auditors' charges as some concerns had been expressed at the Procurement & Contracts Board about costs increasing. He had subsequently received information showing that audit fees had been reduced. The Finance Director responded that the Council was transferring to private sector auditors. Charges had come down as less work was necessary now the Council had improved its position. It was hoped that if the Council's CPA score moved from "weak" there would be further scope to re-negotiate the fees. She added that this was something the District Councils across Hertfordshire were looking at.

The Committee received the Audit Manager's Annual Report on the work of the Internal Audit Service for 2006/2007 and his opinion of the adequacy and effectiveness of the Council's control environment.

The Audit Manager introduced the report. He referred specifically to some areas of concern highlighted in the report. A Member referred to the control weaknesses identified in the payroll system and asked whether these related to procedure or software.

The Audit Manager responded that there was a lack of understanding about how the software operated and also inputting errors. This was due to the fact that the payroll section comprised temporary staff who had not been fully trained.

The Chair added that if a person complained about being underpaid this would be dealt with. However, over-payments were more difficult to resolve. In response to his question about outstanding overpayments, the Audit Manager said that he was aware of one outstanding where the balance was due to be paid back by the end of March.

Another Member expressed his concern that audit recommendations might not be being taken seriously enough. For example, this was now the 4th successive year that the Payroll Section had been identified. He stressed that the situation needed to be managed and suggested that the Chair meet with the Managing Director to seek re-assurance that the issues were being picked up and actioned.

The Portfolio Holder commented on the effectiveness of the Council's control environment and the fact that issues were dealt with satisfactorily in most cases. He had regular meetings with the Head of Finance and would be happy to specifically raise issues of concern with him to ensure they were addressed. He would also be happy to ask the Portfolio Holder with responsibility for HR to carry out a similar exercise with the Head of that Service in respect of the payroll issues.

He asked the Audit Manager whether there was general compliance with the Internal Audit reports. The Audit Manager confirmed that most recommendations were implemented and there was a rigorous follow-up system in place. The Director of Finance added that the Audit Manager was required to escalate to CMB any Internal Audit recommendations which were not carried out in a timely manner.

With regard to Payroll, she explained that, whilst the current staff had not been trained, the previous staff had been. Unfortunately there had been no permanent manager for 3 years. She added that Payroll was an area of most concern to her in her role as S151 Officer, primarily because of the risks inherent in a small team relying on temporary staff. Officers working on payroll had to get it right first time; there was no room for error and this was a tall order for a small team in a small local authority. Consideration was being given to whether Payroll could be accelerated into the Shared Services Programme.

A Member asked why temporary staff were employed in Payroll, to which the Finance Director responded that there had been an expectation that the situation relating to the use of an external provider would have moved on more quickly. It had therefore not seemed prudent to employ permanent staff who might then have been made redundant.

The Finance Director commented that the overall situation in the Council had improved significantly over recent years and added that, whilst some of the Statements of Assurance were a bit weak, this was largely due to lack of training for Heads of Service on how to complete them rather than an indication of a major problem

A Member referred to the reference in the report about controlling software changes. He commented that changes to software from external suppliers would be the responsibility of the vendor. He asked whether the distinction between external and internal suppliers had been picked up.

The Audit Manager explained that most software came from external suppliers. Part of the issue was about the introduction of new systems and recording changes to existing.

The Committee received a report which considered the evidence to support the view that internal audit had been effective over the past year. Members were advised that it should be read in conjunction with the Annual Report set out elsewhere on this agenda.

The Committee received a report setting out progress made in implementing the action plan drawn up in response to the Benefit Fraud Inspectorate's (BFI) report "Inspection of Security". The Audit Manager introduced the report and commented that he was pleased with progress. The introduction of a new Case Management System had been successful and work would continue on embedding the system.

In response to a question from the Portfolio Holder about the extended contract of the Fraud Manager, the Audit Manager confirmed that the contract would continue to be extended for as long as necessary.

The Finance Director informed the Committee that officers expected to bring back a detailed business case on shared services in December/January and there might be an option to bring the Fraud Team forward. If, however, it was targeted for a later date, it would be necessary to make a more permanent appointment.

The Portfolio Holder explained that the crucial test was that, as a weak authority, the Council addressed those weaknesses through an action plan and actioned them. The Council had demonstrated that they accepted the recommendations and acted on them following informal feedback. Progress would be monitored through Quarterly Reviews.

The Committee received a report setting out progress made in implementing Risk Management arrangements during 2006/2007.

The Member who acted as the Risk Management Champion raised two issues: He asked whether the Council had considered carrying out tabletop exercises. He also referred to some information he had previously requested on partnership working but which he had not yet received.

The Finance Director responded that the Council had not organised any table top exercises as such but the flood last year had put many procedures to the test. However, other areas needed testing and spot checks could be carried out to confirm that procedures were in place. She confirmed that the Council's Business Continuity Plan would be available for Members.

In response to a further question from the Member about Members' involvement, she explained that this would be more likely in respect of the Emergency Plan because of media interest etc.

Another Member said it would be useful for councillors to have a comprehensive list of contacts for use in the event of systems going down as was the case in the flood.

A Member asked about the Disaster Recovery Plan following the flood and the Finance Director explained that the ICT recovery plan was implemented along with bits of the Emergency Plan. She added that a lot of lessons had been learnt.

The Portfolio Holder commented that it might be worth giving consideration to Members' role in business continuity especially in view of their contacts.

The Chair had agreed that this report could be considered at the meeting as a matter of urgency. The reason for urgency was that the Statement set out in this report would form part of the Statement of Accounts that had to be approved by 30th June 2007. Ensuring that it reflected the annual reviews elsewhere on this agenda and was as current as practical before submission had resulted in a delay in circulation. It could have been signed by the Mayor and Managing Director without being considered by this Committee but that would not be good practice.

The Committee received a report covering the annual assessment of internal controls within the Council. It was a statutory requirement that such a statement was included in the accounts. Supporting evidence was contained within the report.

The Director of Finance said that the report had been circulated to CMB and Heads of Service and their comments had been incorporated. The last updates of the Fraud and Whistle-blowing policies should show 2007.

A Member commented that the supporting evidence should make it clear that Budget Panel were sent the Finance Digest and that Budget Monitoring Reports went to Call-in & Performance Scrutiny.

The Chair had agreed that this report could be considered at the meeting as a matter of urgency. The reason the report was late was due to the pressure in achieving the tight timetable for the closure of the accounts. This had not allowed the statement of accounts to be prepared in line with the Committee agenda deadlines. As the Council had to have its draft statement agreed by the end of June 2007 this report had to be considered by this Committee.

The Committee was asked to receive and approve the Council's Final Accounts for the financial year 2006/07 and the statutory Statement of Accounts. The Head of Finance highlighted the main issues, including the effect of the changes in accounting practice required and the points covered in the recommendations.

In response to a Member question about the implications of the Council being debt free, the Head of Finance responded that if the Council were not debt free the formula relating to a minimum revenue provision would have to be incorporated.

Another Member raised the issue of valuation of the housing stock. The Finance Director confirmed that there would have to be a re-valuation adjustment to reflect the different basis for valuation that would apply on stock transfer. This would be accompanied by explanatory notes.

The Chair concluded by informing Members that he would advise them if there were any significant changes to the final Statement.