Transcript

Okay good evening colleagues welcome to the governance and audit committee meeting which is being live streamed on Nozze Council's public eye portal. In this respect members are asked to ensure that they switch on their microphone before speaking and switch it off again afterwards in order that the cameras in the room can follow the proceedings and speak us correctly for the live stream. In addition could everyone please ensure that their mobile phones are turned to silent. Thank you. Moving to our agenda then colleagues Donna have there been any apologies received? We've received a number of apologies chair Councillor M Burke, Councillor S Donnelly, Councillor Flute, Councillor Kate Bannan. Thanks chair. Okay thank you. Moving to item one colleagues the minutes the last time we met and are there any objections to the minutes from the meeting held on the 11th of March? Okay colleagues thank you I'll take it that the minutes are agreed with your permission. Thank you. Moving to item two which is declarations of interest. Donna any declarations of interest? None received chair thank you. Okay thank you Donna. So we move to our first substantive item colleagues this is a presentation from Lorraine Cox and Elizabeth McKenna from Star Procurement. Over to you folks. Thank you chair and I'll just introduce myself I'm Lorraine Cox I'm the director of Star Procurement and I've got my colleague Elizabeth McKenna who is an assistant director and particularly responsible for the delivery of procurement and if I may I'll just explain who Star is because some of you may not have heard of us or may not have come across us before so basically I'd like you just to think that we are your internal team that does procurement for Knowsley Council we just happen to do the same thing for six councils so we are a public sector shared service we are hosted by Trafford Council so in simple terms we sit with Trafford in terms of pay and rations I think that's the easiest way to sort of describe the the way that we operate but we are the public sector and as I say you can just think of us as an internal team and we shouldn't actually feel any different. In terms of the presentation today this is something that Elizabeth and I do for all of the Star partners there's actually six councils now that are in the Star family four from Greater Manchester and yourselves and St Helens councils from the Liverpool City region and what we get asked to do and bear in mind Star has been around for over 10 years now is we do get invited very graciously to the audit committees of all six councils and we will always come more often if you'd like to see more of us or if there's something particular that you want us to deep dive into we're here you know at your request as required but what we try and do is we try and explain particularly when we're new working with a particular organisation is the sources of assurance that we can provide because ultimately this committee is about governance it's about risk management and equally looking at you know the role of the audit function within your council and beyond so today what we're trying to do is almost really a little bit of a scene set to show you what we do in Star that helps you as a council to be hopefully risk free or certainly to help you identify risks and work with you to to manage those moving forwards. There we go obviously the six are on the screen and we mentioned Trafford as the host we started with three councils back in 2014 so Stockport, Rochdale and Trafford where the founders of Star and then Tameside joined us in 2018 and yourselves and St Helens joined in October last year. So just to give you a little bit of flavour of Star's achievements because again it's always really important when we're talking in the context of obviously risk assurance governance but actually what do we do in terms of performance so what this is is just a very simple illustration just to demonstrate how we measure performance within Star and what we will do moving forward from the 1st of April just past is this data set will start to encompass Knowsley and St Helens councils also and we report to our joint committee but what we also do is we break this down for each individual organisation so this sort of intelligence will be broken down and there will be a Knowsley version of this as we move through your first full year with us so there's sorts of things we look at obviously you want some cashable savings from us because Dan and colleagues in finance need to balance a very tricky budget as we all do in the public sector these days. We look at things around local spend so what we've currently done is benchmarked your spend position I can't share that data with you today but we will no doubt be sharing it with you in the future but we try and put a benchmark in to say how are you currently spending your contracted spend with the businesses that are actually based within the borough of Knowsley. The other thing we do in Greater Manchester is we don't just assess individual council spend so if I use Stockport as an example we always say if we don't actually retain the money within Stockport do we retain the money within Greater Manchester and we will apply the same principle for Knowsley but obviously we'll be looking at the LCR catchment as well. Another little figure on there which is probably the most important to this committee is 92.2% of compliance so what Elizabeth's team in particular do is we look at how much of your spend activity is on the contract register because that's really our Bible that we work from that actually tells us what you spend, who you spend it with, what type of contract is in place and more importantly what isn't in place. So in 22/23 our compliance in terms of on contract spend for the four Greater Manchester Hills was 92.2% and we are just about to release the figures for 23/24 at our joint committee this week and that figure has improved based on that year. So our role for you is to make sure that your spending activity has the right due diligence in place, we are spending appropriately, we have rigorous contracts in place and more importantly they're not expired and we're not rolling things over so compliance in terms of contractual spend is a biggie for us. Just a click on, right, I don't want to give you a lecture here but it's just really important just to share this visual with you. This was created actually based in America and it's the Institute of Internal Auditors and it's something called the three lines model. Some of you will be familiar with it, there used to be one called three lines of defence spelt with an 's', Dan picked up on that one in the presentation, but what it basically does it just shows you how the information flows from the governing body and in the public sector term we think about obviously the executive, the committees that work around the executive, scrutiny committees and that sort of thing, how we work in terms of the management team within the organisation, how we work with internal audit and then over to the right how we actually work with external assessors and auditors and you will no doubt, like every council, have an external auditor who's possibly present, thank you, new faces, who put that rigour and scrutiny in. So what our role is is to actually help you to actually remove or reduce risk to do with procurement very much at that first line in order that we've got good processes, good controls in place, good rigour, so things shouldn't really need to start to bubble towards the internal audit teams but Elizabeth will probably tell you a bit more about that shortly. So what risks do we think about, you definitely need binoculars for this slide, so this is just a flavour of the sorts of things we think, we all know what's going on in the world and so we've just put global financial crisis there and obviously I'm aware that we are in a pre-election period so I don't want to say too much today, but we have to always think about whatever we are buying for you and with you, what are the risks and the impact of the market. Prices go up, prices don't ever really go up, we've gone through the Covid times and life changes, the world changes, so we're always trying to look at the global impact even when we might just be buying some pens or paper for you, so that's really important that we understand the markets globally, nationally, regionally and locally. To pick another one out, if I look at regulation policy changes, one of the blue circles at the bottom, some of you will be aware that we actually had the Procurement Act 2023 announced last year and that has gone through an extremely rigorous process in terms of moving it all the way to the point that it will go live on the 28th of October this year. Again, I can't give an opinion on that because of being in pre-election period, but you will know that there are chances that we may or may not hit that deadline, but the instruction we've got at the moment from central government is we're still working towards that going live on the 28th of October. That's what we're planning and working towards. So if I put that into a risk context, why does that matter to Noesley Council? Well clearly the law that we work to is changing and what we have to do is we have to say are our processes and practices rigorous and compliant in order to help you be ready for that 28th of October deadline. Now the line from my colleagues at central government at the moment is remember Rome wasn't built in a day, so we're not looking at on the 28th of October that we're going to move into a perfect world because there's a significant amount of change in that legislation, particularly when you start to unpick it and all the bits that I get excited about around particularly looking at how we can be more flexible with our approaches to procurement and we'll come and give you a more detailed view of this at some point, we're working with officers on this at the moment, but actually looking at how we can use the letter of the law more flexibly, more creatively, looking at how we can target more local businesses and communities and actually look at how we can ring fence and drive that local spend better and more effectively within your region and that region for you will be classed as Liverpool city regions the way that the law is interpreted. So there's a lot of regulation change afoot and what we have to do is make sure that every officer in the council knows about this over time, we need to make sure that our rules and your internal constitution aligns, so that's something Elizabeth and colleagues have got to work on, so as we pass through October we need to work with David Morin and colleagues to actually look at how constitutionally that aligns as well, so there's a massive piece of work there but I can assure you that we have a lot of progress and we're quite developed nationally in terms of where we are within the Star family. Another quick one I'll pick over to the left hand side is employment charters and real living wage, again this is something that we all know about in terms of making sure that we're paying people a fair wage for a fair day's work but actually some councils across the country have chosen to be real living wage employers, in Greater Manchester we have a Greater Manchester Good Employment Charter and what we do within the policy and the processes of Star for you is we look at your local policies within your council and we look at how we can align our practices to help you enable and deliver to those types of policies and local commitments, so that's just a flavour of the sorts of risks and indeed opportunities that we help you to move forwards. So if I just jump back to the first line, second line and third line, the sorts of things we look at in terms of first line is we have a very rigorous structure within Star to look at how we put management controls in place, so myself as the director is the last point of call before it actually gets passed to our Star board. On the Star board at the moment we have James Duncan representing Nosley and we also have a joint committee, the joint committee meets quarterly during the course of the year and we have an executive representative, Councillor Lonergan who represents Nosley and then what we do is we work as a management board and a joint committee who basically steers Star and what we have to have is an executive member that actually sits on that committee because the committee does actually have decision making powers. Four things it can do, it can make a decision for a new council to join Star, it can make a decision for a council to leave Star if one chose to leave or we may choose to ask them to leave for whatever reason, it deals with myself as the most senior person in terms of paying rations and appointment and the fourth one, the most important, is setting the budget and making sure that I manage the budget with rigour on behalf of the partners, so that's the interrelationship really of the management controls. We also have numerous internal controls and this is the bit that I think is the most important because my job with Elizabeth's help is to make sure that everything we do in our procurement practices, protocols, our handbooks, our quality assurance documents, that they are all continuously improved up to date and that staff are trained and supported, now that's not just my team of 50 plus staff within Star, what we have to do is work with the council officers to make sure anybody that has a budget responsibility, a procurement responsibility, a commissioning responsibility, somebody that may be project managing, some major infrastructure scheme, etcetera, so we touch a lot of people in procurement, more than people think, but what we have to do is look at how we educate, support and help the workforce to make sure that those control measures are in place, appropriate, relevant and help us to keep the council safe. The second line is more to do with how we look at maybe elevating or escalating risk, so the sorts of things we look at there, we talk about security, we have many protocols, obviously we are bound by the law as everybody else is in terms of GDPR, we have protocols in place to do with data sharing, so again what we do is we build mechanisms in place so where it's not perhaps the day-to-day business of Star, the second line is about how we apply that rigour in a broader sense, another example would be getting external advice and guidance, so one example was before we actually onboarded yourselves and St Helens, we employed or commissioned an external lawyer to actually give us advice and guidance on our trading activity, so all the time we're looking and assessing as an entity, well not a legal entity, but actually are we applying the best rigour that we possibly can to keep the council's money and procurement activities safe. The third line is a little bit I mentioned before, we do have a collaborative audit group and we have internal audit representation now from Nosley who's joined this group, now this isn't a shared service, this is six colleagues all meeting together quarterly, sometimes more often and what we do is we create an audit plan, so you'll have your own council audit plan and we will feature on there I'm sure somewhere and then what we do is we ask each council to take an audit forwards for Star each year, but they don't go and audit six councils because clearly that would be a duplication, but what we ensure is through that group that those audit reports and findings are shared in order that we've got that cross-sharing and learning from each other. Obviously like we do in any of the councils, we contribute to your annual government statement, I've just actually been working on that with Trafford only last week, so again I might only feature in a couple of sentences, so the one for Trafford was talking about rigour of process and the other element I put sentencing was to do with social value, so again we contribute to your corporate governance status as well. I've mentioned external audit, we meet a number of different external auditors, particularly when we come to do these meetings and equally nationally and regionally myself and Elizabeth work in regional working groups to do with procurement and social value and quite often there are audit colleagues that are represented that we share and learn from each other. And number four on there in terms of third line is looking at the regulations I've already mentioned, we have things called a national procurement policy, we have a national strategy for procurement which sits with the local government association and we also have something called PPNs which is procurement policy notices which are notices that come out from central government, sometimes they may be central government focused and sometimes they may be local government focused as well. And what we do is we interpret all of that information for you as your subject matter experts and make sure that that's disseminated back within your organisations. The other third line of importance, I've mentioned James already and we've obviously got Councillor Lonergan in particular who comes to the joint committee who you will all know and Justin Thompson is the senior officer to attend with her as well. But we also have representation where myself and Elizabeth will come to your corporate leadership teams, we are coming here on the 27th, oh 10th of July, 10th of July to look at and work with your senior managers so it's probably about your top 80ish officers. So what we try and do, which is quite challenging with six councils, is we try and immerse ourselves within the business of your council because there's no point as trying to work for no-sleeve, we don't really understand corporately what's important to you, what your priorities are, what your risk points are because otherwise we're just being a process and we're not actually understanding how you work as a council. And then the last one, I've mentioned boards and committees, I've mentioned audit committee attendance here tonight and equally now and again we do get called to scrutiny panel where there's a particular issue that members want us to help with in terms of that scrutiny role. Elizabeth? Good evening everyone, as Lorraine said I'm Elizabeth McKenna, assistant director for delivery at STAR, so I'll just take you through the final slides of the presentation. I know Lorraine has already spoken about the STAR collaborative audit group but we thought it was really important to share that with you today, so if Karen Hogan sits on that collaborative group, and some of the audits that we've been looking at through there are obviously the Procurement Act 23, we've got a social value audit being undertaken, we've had an audit around our income processes, and what we do through that group as well is go through linked audits, so there was a payments audit that Trafford did and the results of that is shared across the six partners, and there is a contract management audit in the pipeline as well. Again, the results of that will be shared across the six partners and any important notes to make will be highlighted. We talk about our STAR risk register at every meeting, we also go through past audits and any outcomes of past audits and what we've done in terms of our management instructions on there, and like I said, the linked audits and any follow-ups that we need to do, so it's a real robust group, the auditors get a lot out of that group meeting quarterly, and that's the benefit of a shared service, is we share that best practice, but also share those audits, so you get the benefit of six audits, but only deliver one yourselves as a council. So the next slide is around performance management framework, and this is the 23/24, so this is what we have measured during 23/24 for the four GM partners, for 24/25 you will then get your nosily specific results. So in terms of commercial, what we have measured is our revenue savings, so any revenue savings that are a result of a procurement, the target for the four councils was one million, obviously that target will increase now we've taken on two new partners. In terms of communities, so we have two measures there, so we have social value and local spend, so the social value target is secured as a percentage of the contract value, and the target there is 25 per cent, and the local spend is around the local authority spend as a percentage of the total controllable spend, and that's measured on an annual basis. The target there is to get 50 per cent local spend, so that's something that we'll be looking to do.

Can I just ask a question on the local spend, I know it's a very important thing, but have you got figures on where we're off to at the moment on outcomes? Chair, if I may respond, we've just put a baseline in place because you only joined us on the 1st of October, so what we're doing is assessing that information that we've created through your finance system primarily to actually say this is where we think you're at from the 1st of October to the 31st of March. What we are taking to the Star Joint Committee on Thursday is then a target for nosily specific and Liverpool City Region specific, so once it's gone through the Joint Committee, we'll be able to share that information with you. It is quite low is all I can say at the moment, but that's quite normal at this time of working with Star. >> And then there's measuring places to improve that? >> Yeah, we have many strategies that we've deployed within the time of Star that will actually take you way above that 50 per cent target, and the other thing we will measure is how much is retained within Liverpool City Region as well, and I'm just thinking of geography now. I know St Helen's auditors were very interested, or Audit Committee, sorry, were very interested about spend that goes beyond the borough, and they were talking about who they neighbour with and actually deal with catch of that sort of information. Stockport have always questioned this because they're very close with Cheshire East, for those of you that know the geography over there, and obviously they say a lot of their activity does drift into Cheshire East, and whilst that is okay, obviously what you're really interested in is your local businesses here. >> So Stockport and Trafford and whatever have been pretty long, what's their effectiveness? >> Ten years, I'll talk about Stockport to name one, because they are our highest performer. They retained last year, 22-23, 85 per cent of their spend was retained within their borough, and they're probably one of the best in the country, and that's where we want to get you. We want to exceed, according to James Duncan, he said he wants to blow everybody out of the water, no pressure. Thank you. So in terms of collaboration, so we launched a programme of work called Collaboration First, which was last March, and so we spent 23-24 just baselining the figures around collaboration with a view to put a target in place for 24-25, and then the final measure is confidence, so this is around our non-verified spend as a percentage of a total controllable spend, and we're aiming to push that 5 per cent and lower. So they were the measures for 23-24, as Lorraine said, there's a report going to joint committee this week giving the targets for a six council organisation. So the staff focus for 24-24 is obviously the new procurement regulations, just making sure that we are fully prepared and we are ready to implement those as of the 28th of October. We are always looking for performance improvement, and that's why we have that rigour around the measures and the reporting back to board and joint committee. Risk management and the team were in a risk management workshop, our wider leadership team this morning, so we're always looking at not just identifying risk, but what are we doing to mitigate those risks. Continuous improvement, I chair a group of officers from each of the six partners where we look at continuous improvement, so that could be anything from operational procedures to the strategic work that we do around the measures as well, so we're always looking for those continuous improvements. Social value bespoke approach, so this is looking at your corporate priorities, looking at how we can bespoke the social value asks through procurement and how we can get that secured and delivered through your procurement activity. And we have just, well our business plan does expire this year, 2024, so we're working as a leadership team to review our business plan and pull together a renewed procurement strategy for the next three to four years. And then again, I mentioned around social value policy as the priorities, so that's looking across LCR what the priorities are for social value and how we can help deliver those. That leads us to the end of our presentation, and we welcome any questions. Thank you. Okay, Elizabeth, Lorraine, thank you. Great stuff. With thanks to Councillor Galbally, are there any further comments that members would like to make on this item? Any observations, questions for staff? Councillor Deva. Thanks, Chair, and thanks Lorraine and Elizabeth for the presentation, it was really good. Three questions, if I may. The annual procurement dashboard that you flashed up, I think that would be really helpful for this committee in terms of an annual report, the CR performance, and then over several years with you being with us, we'll be able to see trends, favourable trends, so I look forward to seeing that. You mentioned there's 92% compliance and due diligence across the processes and activities within STAR and the local authorities. Is it a national or a nosely KPI or SLA? There isn't a, sorry, Chair, there isn't a current target for you other than we're applying the same target that we applied to the STAR family last year, which is the 5%. The STAR family, forgive me, was the four original GM councils, now a family of six. What we've done is based on the performance measure, which it is a public report on Thursday, we've actually just for the first time gone under that 5%, so we're I think 4.7% of compliance. So as you can see, we've reversed it in our reporting because members asked us to do that, which is very sensible. So for the first time, we're actually below that 5% threshold of compliance, which I think is probably one of the best in the country in terms of my networks of other, you know, equal officers. What the importance is for members in particular is to make sure that we're understanding what is in that 4.7% because it's okay saying, well, that's, isn't it great, we've got below the threshold, but actually what is making those contracts non-compliant on what we're doing this year, which again, we'll go to Joint Committee in, where are we, June, what is September now, is we will be providing both James Duncan and Justin, but also it will go to your member that sits on Joint Committee, an actual analysis so we can actually understand why. Is it behaviour? Is there something, a loophole that people have found? I'm not suggesting there's anything irregular here, but there are reasons why contracts might roll over. There might be reasons why it's just through behaviour or, dare I say, poor planning, that people aren't ahead on where they need to be. So what we need to do is to say, how do we alert officers quicker and sooner in order that they've got that 18-month, two-year, five-year even timeline? And more importantly, not only is that good in terms of rigour and compliance, it's also good for the business communities as well, particularly USM e-cohorts who want to bid, you know, they work very hard and work seven days a week, most of them, and actually they need the time to prepare because they don't have a room full of people doing their tenders for them. So we have to always think, you know, not just what's good for STAR, what's good for performance, what's good for Knowsley for compliance, but actually what is the impact of us underperforming there and how can we enable our business communities to do better? So it's quite complex, but yes, you will have your own dashboard. All right, thank you, thanks Cher. Did you have a third point, Councillor? I did, but it was answered, to be honest, the question was, is STAR embedded in the pipeline developments of the CAPSOR programme, and by default it was answered, so very good. Any other comments, observations? Okay, members, thank you. The ring, Elizabeth, with my thanks. Nice focus on risk there, which is precisely what we were looking for, so thank you. You are looking to stay, if you prefer to leave at this point, you're more than welcome to do so. Thank you, we'll leave if that's okay. Okay, of course, of course, thank you. Mum and dad today and a ten year old at home waiting for a meeting. Oh wow, okay, that's all, thank you. Members, assuming there are no objections, can we note the presentation and update from STAR Procurement? Okay, thank you. Okay, members, we'll move, if we may, to item 4 at this point. This item will be presented by John, from Grant Thornton. Over to you, John. Thank you, Chair. I'm pleased to be presenting to you here this evening the Council's 23/24 financial year external audit plan. I'm just referring at the moment to page 9 of your pack, which is page 3 of our audit plan. So the plan has been developed in the context of national and local context, so national context clearly some very significant challenges for local government sector, high inflation, cost pressures, demand for local services, and also the context of rotation of auditors within the PSAA framework. So we are your new appointed auditor for the 23/24 audit year onwards. I'm pleased to say we have taken into account the findings of your predecessor auditor and we've met with Mazars also to help with an efficient and a smooth handover of audit arrangements. The audit is within the context of wider delays in local government external audit. It is notable the Council is up to date with publishing its audited accounts. That's a good position to be in. Page 4 of the plan, we will be working on a hybrid basis, so some remote work and use of technology and approaches, but also onsite presence and meeting with key officers at key points through the course of the audit. We will keep yourselves as the governance and audit committee updated on the progress of the external audit throughout the audit cycle. Page 5, the audit plan has been prepared in the context of the national audit office code of audit practice that's applicable for 23/24. That hasn't changed from the prior year and there are two key responsibilities on ourselves as external audit. So to express an opinion on your financial statements, whether they give a true and fair opinion of your income and expenditure for the year, your financial position and whether they've been prepared in accordance with the SEPFA code. We also conduct a programme of value for money audit work which will lead to our auditor's annual report for the financial year. And the work is conducted within the framework of international standards on auditing. The audit is a risk-based audit, so we give consideration to the risk of us giving the wrong opinion on your financial statements or failing to identify a significant weakness in your value for money arrangements. So on page 6, we summarise the significant risks we've identified in relation to the financial statements audit and those are in relation to management override of controls, the valuation of property, plants and equipment and investment properties and the measurement valuation of your pension assets and liabilities. I'll say a bit more about those in a moment. We've determined materiality for the audit to be £8.8 million. There's approximately one and a half per cent of your prior year gross revenue spend. Materiality is an important concept in relation to the audit. If we were to identify errors or omissions, misstatements in the financial statements above that threshold and management decline to amend the accounts, we wouldn't be able to conclude those accounts gave a true and fair view. I'm pleased to say that's quite a rare occurrence and clearly we'll be discussing that in detail with management if that did arise. We've also set what we call a clearly trivial threshold. Clearly 8.8 million is a lot of money. If we were to identify any issues, errors, misstatements, omissions above the 441,000, we would report those three to the committee in our audit findings report so you would have visibility of those as those charged with governance. In relation to the value for money audit, we haven't identified any risks of significant weakness in your arrangements at this stage of the audit. Clearly we will still undertake a programme with VFM work and report to you later in the year. Planning work is taking place in March and April to lead to preparation of the plan you have before us and we will be auditing the financial statements from September through to December later in the year. The proposed fee for the audit just over £323,000 and bottom of page 6 I can confirm that myself and all members of the team are independent of the council. So the next section of the report concerns the risks considered in preparing the plan and the significant risks we've identified. The auditing framework obliges us to consider whether revenue recognition or rather inappropriate revenue recognition could be a significant risk for the audit. That is a rebuttable risk and we have rebutted that risk on the basis that your key income streams, capital tax, non-domestic rates, grant income, fee and charge income are either fairly predictable or readily verifiable to evidence. We will nevertheless undertake a programme of work in relation to accounting for revenue, looking at your policies, testing for cut off and appropriate year of recognition of revenue. Consider the risk of fraud in expenditure recognition. Again we've rebutted that as a risk given the local authority has established controls, governance arrangements in place, commitment to competence and ethical behaviour. We will still conduct a programme of work in relation to expenditure, again looking at accounting policies, looking at cut off, assuring ourselves expenditure has been recognised in the appropriate financial year. So page 9 lists the first of the significant risk areas and these are the risk areas that will receive the greatest attention through the course of the audit. Forgive me if I may John, I'll bring Councillor Golding in at this point, do you want to ask a question Councillor? It's okay, just on the significant risk we've just gone through, one of them is just about the expensive, maybe misstated, the risk probably due to financial pressure and additional demands on the staff. Now whilst the authors can put things in place to pick up what all them issues are, is it anything that the NOGC council can put in place to rectify that as a source of risk? That repeats several times later in the documents that there's a shortage of staff or there's pressures on staff, so I'd like to comment from that. Yes, I mean the council clearly has internal audit arrangements as well to help management in assessing controls and that sort of feedback and governance around controls there, to create a management structure in place at the council, external audit is that sort of third line of defence as well, so if we were to identify issues above that, some trivial threshold I mentioned earlier of 400,000 pounds, we'd be reporting that through to the committee and potentially making control recommendations in our audit findings report for you to take into account. If I may, just to add to that, also each year James Duncan is the responsible financial officer for the council, takes a personal report to the council called his robustness of estimates report and he's required in there to give a personal sort of independent judgement on the robustness of the council's arrangements for financial administration, budget monitoring, budget setting et cetera and he has, even in the most recent one, he's commented about the need to make sure that capacity in particular areas such as finance is adequate and as a result of that there was investment in the financial management service as part of the 24/5 budget, so I think that's another area in which there's a sort of professional judgement applied, a statutory judgement applied to what impact COTS is having on financial management of the council. Would you like to continue, Jack? Thank you, so page nine of the plan sets out the first of the significant risks we've identified and that relates to management override of controls and really this is recognizing that no matter how strong your control environment there are people in positions of trust who could potentially override that control environment, so we're required to exercise due professional skepticism to consider that risk and whether it's manifested itself. We will conduct a program of work to understand your journal arrangements, often management override of controls can take place through processing of inappropriate journals to manipulate the financial position reported, so we will undertake work to understand that journal control environment, we will then identify risks to journals that we consider to be potentially more risky and subject those to detailed testing. We'll also look at the key judgements you've made in preparing the accounts and the key estimates you've prepared in the accounts and just be alert to any potential management bias in relation to those judgements and estimates. On page 10 we set a significant risk in relation to the valuation of land and buildings and investment properties, this really is reflecting the significant professional judgments involved in deriving those values, valuation of land and buildings in your 22, 23 accounts at nearly 300 million pounds, you can see the sort of relativity to the materiality of 8 million pounds, we do a lot of work in this area, we think about the processes you have in place to derive those valuations, the assumptions and data underpinning those valuations. So just a question on that, the valuation of land and buildings, you mentioned again in page 15 that there's been no support and evidence provided to back up the valuation of the land and buildings, is that going to be verified fairly quickly? If you look on page 15 it goes, I think page 15 is picking up recommendations from your predecessor auditor, we will take those recommendations into account in conducting your 23, 24 audit, I suppose we're not yet at that stage of the audit to form a view on that recommendation and response but we'll be very mindful of that in auditing the March 24 balances. Just to add, I think from memory that those, where there is an absence of evidence, a lot of that is down to the professional judgment of the valuer, so one of our professional valuer, Keith Parkinson, is a member of the RACS, he applies his professional judgment when he values a building, now there were occasions when he may not have had a full sort of audit trail of papers to back up his professional judgment, I think that's something that we need to address as part of preparing the evidence for the forthcoming set of accounts. Thank you, yes, so we will be challenging the work of the valuer, we will consider their competence, capabilities, qualifications, we're also going to engage our own auditor's independent valuation expert to help us with that challenge of those property valuations, we'll test a sample of the valuations of individual assets and evaluate the assumptions underpinning those and that the valuations have been appropriately reflected within the financial statements. Page 11 of the plan refers to the third significant risk area in relation to the valuation of pension assets and liabilities, so again significant professional judgment underpinning the valuation in that area, a small movement in actuarial assumptions can have a significant impact on the end result in the measurement of those pension assets and liabilities. We've also got an added complexity, the good news is several local government pension schemes moving into a surplus position, that brings into play another accounting consideration, IFRC 14 and whether there needs to be a cap on any asset, any net asset that's recognised on the balance sheet, so we'll be working with the finance team closely there, we'll be looking for assurance from the Mersey pension fund auditor who happens to be Grant Thornton and indeed I'm the engagement lead for Mersey pension fund, so I will be writing to myself for assurance, so we will conduct a detailed program work to gain the necessary assurance on those pension assets and liabilities. Page 12, a local risk, so recognising the migration of payroll system, recognising there's been some minor teething issues with that transition, we will be looking at the controls in place around migrating data, the data has been completely and appropriately migrated from the old to the new system and documenting our understanding of the controls within that new system. Page 13, we have some other responsibilities, so we read your narrative report that's published alongside the accounts and the annual government statement to assure ourselves that those are consistent with our understanding of the council, consistent with the accounts that they've been prepared in accordance with the relevant practice for those documents. We will conduct the work necessary to support the national audit office in conducting their whole government accounts audit, give electors the opportunity to raise any questions they may have in connection with the external audit process, we'll consider whether we need to exercise any of our formal audit powers and duties and at the end of the audit process we will issue a certificate of completion of the 23/24 audit. Page 14 and 15 set out the open recommendations from your 22/23 and 21/22 audit. We will follow all of those up through the course of our audit and report back in our findings report later in the year. Page 18 of the plan just let's add a little bit more detail in relation to the materiality I mentioned, so headline materiality, the eight million trivial matters, around about the 400,000 and we also set a lower threshold, clearly those larger amounts of not applicable in relation to auditing officer remuneration disclosures, so we have a lower threshold of 10,000 pounds. Page 19 just gives you a little flavour of the IT audit strategy and our response in relation to ISA 315 revised, we will be focusing on the key systems, the oracle system, the general ledger and the set for asset management system for reporting your PPE assets within the financial statements. Page 20 of the plan, now let's look at the value for money, responsibility in relation to the audit, the national audit office code of practice sets out three theme areas for auditors to consider, so your arrangements for securing financial sustainability, for securing good governance arrangements and your arrangements for improving the three E's of economy efficiency and effectiveness in relation to value for money. I will conduct that work and we may raise different types of recommendation on concluding that work. The most serious of those which doesn't happen too often thankfully at audit is what we call the statutory recommendation, if we were to raise one of those it would need consideration at a public meeting of the council within a fairly short period of time and a formal written response to ourselves as external auditors. Key recommendations are where we identify significant weaknesses in your value for money arrangements in one of those three theme areas and then improvement recommendations, the sort of lowest tier of recommendation, sort of are what they say in the tin really, those are the best practice recommendations where we identify areas that could be improved and strengthened within the council's arrangements. So page 22, I'm pleased to say at the planning stage of the audit we haven't identified any significant weaknesses, we will report back to you later in the year. Page 23 sort of summarises the findings from your predecessor auditor, that sort of green assessment of no significant weaknesses across those three theme areas, so we've taken that into account in our planning process. Page 24 just sets out high level logistics and timetable, the key auditors involved in the audit of the Council of 23/24. Turning you then to page 26, set out a little bit of analysis of the audit fee for the 23/24 year, so the PSAA scale fee, the ISA 315 has been a revised audit in standard requiring us to undertake further work. I mentioned earlier we will engage our own independent valuation expert, so that's an estimate of the fee for that, and we will need to undertake some work on the housing benefit claim as we're not engaged to undertake the housing benefits certification work for the council. All those fees are subject to the agreement of public sector audit appointments on conclusion of the audit. Just briefly on page 27 IFRS 16, a long awaited financial reporting standard concerning the reporting of leases, it's been deferred for quite a time for the local government sector, but it is now effective for the 24/25 financial year. That does give rise to some disclosure requirements in your 23/24 financial statements, and we will be engaging with the finance team just to understand their preparedness for the 24/25 financial statements and those disclosures in 23/24. Page 28 just gives you a little bit more information in relation to independence, confirm we are independent. Just full transparency on page 30, Grant Thornton as a firm used to deliver VAT advice to the council. When we were appointed for 23/24, we stepped back from that work, so we resigned that work in December of 2022. The only other thing I was just going to mention on page 33, as a firm we are really keen and committed to playing our part in bringing the local government audit regime back on track, so we have set out an escalation policy where we encountered delays in delivering external audit work. I don't anticipate having to apply that in relation to Nosley, but I think it's just helpful and good practice, and for the interest of clarity, we've set what that protocol would be on page 33. So I will pause there, Chair, and happy to take any questions on the plan. Of course, John, thank you, very comprehensive. Thank you. Members, are there any further comments or questions on the audit plan from Grant Thornton? Okay, thank you. Members, can we note the audit plan from Grant Thornton? Okay, thank you. We will take it that the audit plan is noted. John, did you have anything to add by way of conclusion? Did you want to come back? No, thank you, Chair. Thanks for noting the plan. Okay, thank you. Okay, colleagues, let's press on, if we may, to item 5, the updates on the 23/24 accounts, and this item will be presented by Dan. Thank you, Chair. This is just a short report updating the Committee on progress in preparing the Council's 23/24 statement of accounts. It follows up discussions that we've had with the Chair, with Grant Thornton, and also with the cabinet member for finance. Just to confirm, in Section 3.1, and as Grant Thornton had just mentioned, we are fully up to date with prior year accounts, one of a relatively small number across the country who are in that position, and also with a high standard of financial information being presented. When it comes to the 23/24 accounts and the process that's going to be adopted over the coming months, the formal deadline for producing the account is the 31st of May. Following discussions with Grant Thornton that were mentioned at the previous committee meeting here, we did establish that there were, because of the national capacity pressures, there were going to be delays to Grant Thornton's ability to commence their audit, and it was unlikely that they'd get into full swing on that audit until September. We have actually been able to make some good progress, I think, already, a little earlier than envisaged in terms of preliminary work in getting the information ready for the accounts. But we took the decision then, in consultation, that we were just building a little more time for quality assurance work on the accounts to make sure that the information we presented was as good as we could get it. The accounts are, therefore, going to be completed no later than the end of June. In fact, we're probably going to get them to Grant Thornton by the end of this week. That's what we're aiming to do. We will come back to this committee over the coming months with updates. I think the latest position is that Grant Thornton will aim to complete their audit by December, and will come to this committee with the audit report on the accounts for your consideration in January 25. And then there's a commitment from both ourselves and from Grant Thornton that we'll try and get things back on track and in line with the static deadlines for the following year's accounts so that everything is back on schedule. So unless there's any questions, Chair, I'd ask the Commission to read the recommendation on page 43 of the agenda. Okay, Dan, thank you. Members, any questions for Dan on this item? And members, are there any objections to the recommendation as detailed on page 43, which is the no progress? Okay, thank you, members. As for no objections, I'll take it the recommendation has been agreed. Thank you. Thank you, Dan. And moving then to Item 6, this is the Internal Audit Quality Assurance and Improvement Program. This item will be presented by Karen. >> Thank you, Chair. The professional standards for internal audit in the public sector require a quality assurance and improvement program for internal audit. This program aims to provide assurance that the internal audit service is effective, it adds value, and it monitors its performance. This report explains how the outcomes from the 2324 program confirm that satisfactory progress has been made in achieving these aims, although there have been some challenges during the year due to capacity issues within the team, which are currently being addressed. The 2324 Quality Assurance and Improvement Program included actions to implement national recommendations from the Chartered Institute of Public Finance and Accountancy, CSPPA, on how to improve the impact of internal audit in public sector organizations. These related to improving the Council's wider assurance framework, and CSPPA guidance on implementing these recommendations was only issued towards the end of 2324. So the related actions have been carried forward to the new Quality Assurance and Improvement Program for 2425. The report also provides a committee with a further update on the recommendations from the external peer review of internal audit, which was reported to the committee on the 19th of June, 2023. Members will recall that the peer review report was extremely positive and confirmed that the internal audit service conforms to all the requirements of professional standards. Under the national standards, the chief internal auditor must report to committee and to see any management any concerns regarding significant non-compliance with the best practice for internal audit. I'm pleased to say that I can confirm that no such issues were identified in 2324. So looking forward to 2425, there will be a requirement to review new professional standards. The International Internal Audit Standards Board undertook a fundamental review of the existing professional standards in 2223, and this review led to a completely new set of global internal audit standards, which were released in January 24. These standards will replace the current standards from January 25, and the 2425 Quality Assurance Program will include a review of how these new standards will affect the operations of the internal audit service at Knowsley. The proposed program for 2425 includes five work streams and some of the key tasks that will be actioned or summarised on page 51. There are also detailed action plans that are included as appendices to the report for information. So that concludes my presentation of this report, and I'd be happy to take any questions that you may have. OK, Karen, thank you. Members, any comments or questions for Karen? Councillor O'Keefe, over to you. Thanks for that report, Karen. Can I just ask you, you did mention it at the beginning of that report, editing 4.3.4 about taking on two internal promotions and a permanent rule to be confirmed. Are they in place now, or are they expected during this year? We've had two internal promotions that have been confirmed from April 24, so they did an acting up period for six months prior to that. And then we've recruited an agency member of staff who started with us in January 24, and we've just permanently recruited him from June. So he's just newly in post now. And then we've got plans to recruit a senior auditor and an auditor in the coming weeks, so we should hopefully be going out to advocate in the next few weeks for those two posts as well. Thank you. Councillor O'Keefe, Karen, thank you. Members, any further questions or comments for Karen on this item? Co-hearts, are there any objections to the recommendations as detailed there on page 48? OK, thank you. As we're on our objections, we'll take it that the recommendations have been agreed. Thank you. Colleagues, I have no further items of business. This is moving to item 7, of course. I have no further items of business, so can I move the resolution to proceed to part 2 of the meeting? OK, thank you.