Transcript

I would like to welcome everyone to this meeting of the Audit Governance Committee on the 22nd of January 2025 at 10 o'clock in the council chamber at Woodhatch Place also like to welcome the cabinet member for finance and resources David Lewis from Cobham and officers also from the corporate leadership team in attendance in person and online so in terms of fire drill there's no fire drill expected today in case of emergency in case there is a fire alarm sounding everyone present is asked to leave by the nearest exit and assemble at the top car park reporting to a member of the building management team staff will be on hand to guide you to your nearest exit in terms of mobile phone use please ensure that your mobile phones are either switched off or put on silent in line with our guidance on the use of social media I'm happy for anyone attending today's meeting including members of the committee to use social media if this does not disturb the business of the meeting today's meeting is being webcast to the public and recording will also be available online afterwards I would also like to mention that this meeting allows for participation by video conference via Microsoft Teams and that some attendees are participating remotely for those participating remotely please note that the chat feature is disabled as it uses limits the transparency and open discussion we aim to maintain in a public meeting for those officers who have joined the meeting remotely please use the raise hand function to indicate that you are if you would like to speak and please mute your microphone and turn off your camera when not speaking for those officers and members who have joined us in person please may ask everybody everybody presenting to speak clearly and directly into their microphones when called upon to speak press the right hand button on your microphone and start speaking when the red light appears please remember to turn off your microphone when you are finished if you are sharing a desk and microphone you need to press the right or left hand button and start speaking to speak to the right hand button on your microphone you are sitting on part two exempt business if required we are being formed there is none so we can move on to agenda item number one so this is apologies for answers and substitutions I don't think we have any no thank you very much so minutes of the previous meeting that's of the 20th November 2024 this is to approve the minutes of the 20th November 2024 meeting as a true record of the meeting does anybody have any comments before we approve are we all happy to approve those minutes then fine thank you very much declarations of interest to receive any declarations or of disclosable pecuniary interest significant personal interests any gifts or hospitality accepted does any member of the committee have any declarations of interest to make no thank you very much item number four questions petitions we have no members questions questions we have no public questions the in terms of petitions the deadline for petitions 14 days before the meeting no petitions had been received item number five recommendations tracker and work plan so there are several items for me which I will action uh yeah they're all for me uh yeah they're all for me to action and do does anybody else have any comments on the tracker uh uh steven thanks chair that's why get started early yeah I know um but just some items on the tracker which have got um some tbc's and dates and so forth on them um so I just wanted to pick up on an item on it's a 29 slash 24 I think it's on page 19 of the deck and I think it a 29 24 and a 30 24 they kind of relate um it's about partial assurance opinions tree management and social value etc um and the audit manager flagged the action with the chief internal order to liaise with the deputy chief executive and executive director um so the liaisons happened um so can I just seek clarification about what action is going to happen please on that particular item I think it may it seems that the the action beneath the a30 slash 24 is inviting CLT to attend this meeting but I just want to seek clarity on that please chair yes we've got the deputy chief executive here maybe you can answer that thank you very much yeah let's hope so um so yeah morning uh all um I can't really read this I mean uh um so on the tree management there's a report uh coming to the march committee um and there is a let me put that on pan so I can scroll down there is to be confirmed I think um on page 21 uh 835 about um a meeting so I have met with the monitoring officer and the chief executive and um we are going to be meeting um and a meeting date is going to go go in to uh to discuss that with with with the audit and governance committee uh in terms of uh forward plan and and and issues arising particularly in in respects to audit so I think that is with the monitoring officer to uh to arrange uh thanks very much for that one um I just wonder if we might be able to update the the tracker to reflect those those items transactions otherwise I know I'll forget next time um but yeah I think the the the item on that particular issue was around I think there were internal audit um re-reviews on tree management and social value um and it was a re-review because and it came back and the the previous order had had suggested some actions and then they did another audit and nothing had been done and that was the main concern that it's it's it's pointless internal audit doing reviews if nothing gets done by this organization about the findings and think that was the concern um and for my um adult memory so yeah if we could just update that one that'd be great thank you we shall do that thank you very much Stephen for raising that thank you does anybody else have any comments no okay so yeah there was one item 842 24 uh can we ask deputy chief exec whether um for resources whether he's got an update on reflecting the committee comments into the updated report concerning the annual governance statement the half year updates at all please yeah um so i'm liaising with the monitoring officers to make put that in um so it was raised at the last committee meeting about the specific um memory it was about the the unit four aspect and the controls around that obviously we've got the report today uh but making sure that we are picking that up from the action based on the discussion to reflect more accurately in the annual government statement so that is being taken through with the monitoring officer just click on that thanks very much indeed thank you so there's no other comments uh the committee is asked to monitor progress on the implementation of the actions recommendations from the previous meetings and it's a note the work planner annex b and any changes to it are we all agreed thank you very much so item number six so this is the treasury management strategy statement 25 26 is on pages 35 to 76 so this report sets out the council's treasury management strategy for 25 26 which is required to ensure compliance with the charter institute of public finance and accountancy's treasury management in the public services code of practice and i think this is capable hands of mickey thank you very much thank you chair and morning all um so so here today to present to the committee the treasury management strategy for 2025 26 this is part of a wider capital investment and treasury management strategy which forms a key part of the budget the annual budget planning process and the final budget papers due to go to the cabinet at the end of this month and council in early february um the council choose to amalgamate the three strategies into a single document because the capital program our investment decisions and our approach to treasury management can't operate independently but this committee are asked to consider and note the treasury management strategy specifically which is section four of the documents in advance of formal approval um at both cabinet and full council as i say so we covered the main parts of the main components of the proposed strategy in a training session last week which i know many of you were at led by our external advisors are in close um as a kind of heads up there is no fundamental changes proposed to the existing treasury management strategy so in relation to borrowing our borrowing requirement is set to continue to rise during 2025 26 and over the medium term financial strategy period and that is driven by the proposed capital program for those five years um the capital program has been through a number of iterations and a great deal of scrutiny as part of the budget planning process for 25 26 and has been reduced um but still represents an increase in our borrowing requirement over the five years and therefore drives part of the borrowing strategy that you that you see here today we um will continue to try to reduce um holding large cash balances and the cost of carry associated with that by continuing to optimize our internal resources and our internal borrowing opportunities where we do need to borrow we continue to focus on balancing lower interest rates with cost certainty that you get from locking in longer term borrowing um we do currently have a high level of short-term borrowing proportionate to our overall total borrowing and that is due to the interest rate environment we've experienced over recent years years um we think that remains the correct strategy i.e avoiding locking in those higher interest rates for long periods of time um but given that the forecast remains for interest rates to reduce over the coming financial year albeit not as fast as internally forecast it is very likely that the council will take out some further long term borrowing over the next 12 months um the right time to do that will be kept under constant review and will protect depend on prevailing interest rate and cash flow forecasts so uh as as the committee knows we bring regular updates on the treasury management position through this committee um and we'll keep you abreast of those in terms of investment same no fundamental changes to the proposed strategy we continue to aim to keep our cash balances low and to put security and liquidity considerations before yield achievable the strategy sets out clearly where we would invest and sets limits on the durations and the amounts of those investments um although it's quite likely we are we will continue to utilize money market funds for the majority of our short-term investments um over the next 12 months given the ability to access all i was going to say in terms of a high level overview very happy to take any questions recognizing that there was an opportunity to ask a lot of questions at last week's session as well thank you thanks very much indeed nicky i think that training session was a very very good last last week for everybody who managed to attend i think my only comment is here with regards to the capital program is it could be subject to change depending on the local government of the organization so is there scope to do you think or not so there go on uh yeah anything lgr point point to me to me i think we um right now we we um we shouldn't be factoring that in um and if you look at the look at the budget in the section 25 statement um i've said you know this shouldn't detract us from delivering the budget and you shouldn't deliver uh detract us from delivering the capital program as well without doubt uh whatever the future holds we're going to have to that will have to be looked at in terms of um whatever the variables are but it's not for it's not for now and and not for this this time um while i've got the mic so to speak um i just want you to point out there is a slight change that i wanted to make in this uh report to this committee is is to uh to note the report rather than the audit and governance uh not a change it it's in the report just make sure not confusion in previous this the audit and governance committee have approved the treasury strategy but it's actually for the cabinet to recommend it on to full council to prove audit and governance as charged with governance and to make sure that the things the governance is in place for the treasury operations to to work correctly and you're not if you approve the treasury strategy you're most implicit uh in what in what might happen but that is with cabinet and then and obviously then full council as well just to be clear uh in previous that that's a change that i wanted to see okay thanks very much and we are today we are noting that thank you anybody uh as helen and then matthew and it's this question this is slightly um off the board really but i was asked the other day and i was trying to find this information obviously we've got here is our investment strategy and our balance sheet but what is the and if you can't answer it perhaps it could be a written reply sometime what is the actual um balance sheet of the property owned by the county council so what is the overall um of the county accounts or value do we have that sort of um information and so if it's too tough to get an immediate response nicola then i'm happy to wait but to know what everybody's got in their back pockets i think you'll probably find the asset figures on the balance sheet in the accounts that we'll be looking at yeah absolutely and the property plant and equipment figure in the accounts as at march 24 is 2.1 billion there's i mean that's they're valued in in all sorts of different ways depending on what assets we're talking about but as a high level response to your question does that include the countryside estate yes that's what we've got in our back pocket uh matthew thanks um yeah just on the borrowing i mean i know we did cover that a better as part of the training session with i'm in close but when we i know we need to strike a balance between short and long-term borrowing but do we link our assessment over that balance to any sort of risk appetite or a specific criteria or is it a more of a we prove we get advice from all in close and we make a bit of a judgment based on more the latter than setting hard and fast criteria um but we do we we aim to not have more than 60 percent of our total borrowing in short term borrowing um as a kind of indication that we're our exposure then to to interest rate volatility is is higher than we're comfortable with we are approaching that as we are at the moment and as i say it's not a hard and fast rule we wouldn't we wouldn't want to be in a situation where we forced ourselves to take out long-term debt at a really high rate just to avoid breaching that threshold but we have we have indicators that we discuss in that way um but it is a it's it's kind of a moving feed depending on those regular conversations what the market is suggesting interest rates might do and indeed our cash flow forecasts and and the rate of capital spend because while we'll set the capital program um as part of the budget setting process we wouldn't be borrowing based on what we say we're going to spend we will borrow based on what we actually spend and just another follow-up question if that's okay and obviously i know we rely on arlene close for quite a few things do we do anything to manage the risk associated with the reliance on arlene close i.e how do we make sure we get the right balance between you know how much advice we take from them versus retaining some decisions and knowledge within the council itself yeah so so we use them as an advisor not as the sole source of our information we've got um officers internal in finance who are you know trained and go on training and and review market as well it's not solely based on on just arlene close's view okay thank you chairman this is a bit of a side issue as well but one that i'm not being able to get an answer to when we did a um when we did a deep dive into the capital program in the communities and highways committee we recommended that where major changes were being were being suggested that local members should be consulted about those and at least informed about them um which didn't appear to be happening and can i just have a comment about whether any actions being taken with regard to that uh yeah i mean i was going to come in about some some other things i'll try to um because that's obviously talking about the capital program rather than treasury specifically um and um i know owen's on on the line that nick maybe talk about um the capital program and individual projects and alerting local members i think they that is the intention uh might not always be uh be be the way but certainly from um capital projects that that was that was the uh that was the intention um um so i think that's about as much as i can cover on on that specific specific point there was two things i just wanted to add um because uh nick is right in in in terms of the team it is um years of experience next to tease in terms of in terms of taking treasury treasury dealings ultimately it's you know there's my sign off on that and um i might test a few things and a few areas and we would then potentially um cross that with our enclose in terms of advice uh from that perspective we don't always have to take the advice uh be be brave to to to go against it some uh sometimes but that's um that would be our call within within within the strategy equally what's important here is when we set the strategies we could stretch the boundaries of of risk um so you could say from an investment point of view um let's go in and put our monies into property funds uh for so on and so forth now island place will have a a give a strong view uh on that and we've got to be um conscious with the risk that we're taking but i think it goes back to the um the the overriding points uh around this the particular investment stride uh investment side right around uh the security being the uh the most prominent factor for us um and then lastly i just wanted to come in on the balance sheet um and uh because it was uh money in the back pocket and i know i know where the sentiment is coming from if only we could sell bridges and make cash from it then that would be great there's a lot on the balance sheet that doesn't translate into cash debt is cash that has to be financed assets and balance sheet uh you forgive me if you think that you can't we're not a private company in that sense and we can't realize that um and if uh i'm sure our auditors would recognize that as well steven any just to uh just to add chairman that as i said earlier this was a side issue but i would like to have a confirmation from someone somewhere um whether in fact local members are being consulted about changes in the capital program that affect their divisions or whether they're just supposed to accept them without any consideration uh owen if you've got a hand up please yes certainly i mean we should absolutely be um speaking to local members on changes to the capital program so um and that and that should be at a reasonably detailed level so if for example a scheme slips from one year into another year um for for whatever that reason might be then we should be keeping the um local members informed of that and similarly if we are pulling schemes out of the capital program entirely then obviously we should be speaking to those local members in that in that um process so so um that's what we should be doing if if you've got thoughts or examples of where that's not happening then i can happily follow that up but uh we we uh we should absolutely be speaking to local members in all cases steven thanks chair i'm just a just to follow up on that one it's quite an interesting interesting item around um if there are changes in the capital program then division members are included etc i mean has this this is this basically been a process or procedure that's been followed from for a while and if it has um where's the evidence of that happening because i know i've not seen any evidence of anything happening um of you know i'm not saying there has been changes in the capital program that affects my division but again it would be nice to know that it has been happening um and you know if the process isn't in place um how can we be assured that that will be put in place and what evidence is available to actually show and because again there's another example about property which has happened close to my division where um a piece of land has been put up by surrey for sale it's caused quite a lot of disruption in epson manure and i know the division member wasn't made aware of that coming so councillor kingston wasn't made aware either so again is this in place now um and what's where's the evidence and if it's not in place how can we get assurance that it will be put in place and what's the evidence that we can see that that is happening thank you chair steven i think communities are going to take this up a bit more strongly um yes there is a a a disposal program isn't there as evidence that looked up the agenda yeah yeah that's a good point richard and owen's got his hand up again thank you i was just going to suggest that um because obviously there are different parts to that capital program there's the there's the highways um stuff there's major infrastructure stuff there's the property land and property stuff and so on um what i'm going to suggest is that i take that away um and actually map out what the process should be in terms of um local member engagement in that process because it should be fairly uniform um across all of those asset types um but if i if i take that away and actually um work with across those teams to map that out then that maybe that's something we can communicate to members more broadly not necessarily just this committee thanks thanks chair and yeah i mean the the capital program or the assets contained in there they are broad and they do touch on a number of different areas select committees etc um but it was just the and agreed that's probably some more work that's needed to have a look at that but it's just the i get a little bit worried when we see there's a blanket statement saying oh divisional members are being made aware of all this stuff um and it's like well really um haven't seen it so i've missed it which is quite likely or it's not happened in my division and so it's just that that follow-up if we can and if it does mean a some process that needs to trickle down into the other select committees i'll pick that up with resource performance and um the chair and my alternate vice chair uh and we'll we'll see if we can get that on our work time as well but yeah it is quite broad and i just like to make sure we get it covered off please thank you then richard and then steven oh and can we we ask for a report back on this because i think it's got a lot of interest at the moment when you've had a good dive into it please okay and steven that's exactly what i was okay i think we've got that noted amelia's noted that so thank you very much uh matthew yeah just on the capital program obviously i can see that it's quite ambitious but like what do we do to demonstrate the balance between sort of ambition and prudence regarding the capital program how do we ensure we're not being too ambitious and what contingencies do we have in place if we have to revisit it so so the capital program as i say has been through multiple iterations and it and it feeds through we've got three strategic capital groups one that focuses on property one that focuses on infrastructure one that focuses on it and it feeds through those into a into a capital program panel that do a level of challenge on deliverability of the program so the capital program as it's presented um or will be presented to um to cabinet and council as part of the final budget papers is a program that those strategic capital groups have committed to delivering and have confirmed they have plans in place to deliver however capital programs in their nature are complex and we do see slippage in capital programs regularly and that is through the kind of monthly budget monitoring process and that feeds then um cash flow forecasts and treasury decisions it's another question about local government reorganization the decisions that we take uh or the cabinet takes and we recommend that goes to council will they be um um um changed by setting the the um investment plan for the next coming year financial year so is that then set um it won't be changed by any changes in reorganizing um investment strategies will have to be brought together into two unitaries and maybe this is a a question for the future but it just worries me that we're setting out something now which actually might not be delivered uh yeah so so without doubt uh that time will come but it but it's not now so the approval of the the budget the capital program the treasury strategy for 20 25 26 uh will happen next next month um and uh that will take us through for the next financial year um looking at the government timetable for uh for any proposed lgr devolution then the earliest of that potential change would would be um from may 26 when there is uh there's elections and the shadow authorities come into into being and at that point they would take powers to make these uh these decisions so up until that point it's for the uh the continuing authorities to to continue across the piece but as you appreciate there's a lot to happen before before we get to that point but therefore from my perspective which is why i've said it out in the budget for 2025 26 all the decisions contracts that we enter into so on so forth are for uh for uh for for surrey county council and we're continuing in that vein and we and we have to and until that point in time when those shadow authorities come into place for whatever that is that's the point that things then then change any other uh matthew yeah me again sorry um on section 4.31 um when we talk about our long-term liability benchmark um how comfortable are we with the accuracy of the assumptions used in the benchmark and have we determined which have the greatest impact on the benchmark um so to take the second question first the ones that have the biggest impact is the capital program because the capital program is driving the capital financing requirement essentially and that is the the biggest number and the one that essentially is driving the need to borrow in the first place and therefore the borrowing strategy that makes sense so that continuous review of um the capital expenditure against the capital program is the kind of important the most important variable there in terms of the other assumptions they are around the council's internal resources essentially and our ability to continue with internal borrowing in order to reduce the amount of external borrowing we need to take immediately and while there are changes in our balance sheet in terms of use of reserves or contributions to reserves changes in our working capital balances and our provisions in the scale of the scale of kind of some of these numbers there they're smaller variables essentially so the key job the questions from anybody on this item i can't see any okay so we on this committee is recommended that the audit governance committee comment on and note the treasury management strategy statement uh part four of the capital investment strategy strategies for 25 26 including the prudential indicators attached in advance of it being considered by cabinet and full council as part of the final budget setting papers are we all agreed all right thank you very much indeed okay so moving on to item number seven so this is the statement of accounts and is this nikki and i've seen janet's uh thanks chair so so yes this is the statement of accounts for the 23 24 financial year which was presented in draft form to this committee back in july 24 and since then um my team have been working very closely with with um ey the external orders to to get to the position that we present today um we are very close to completion although we're not quite in the position to be able to present these as final we don't anticipate there being significant changes um and nothing material um in the areas of the audit that that does remain to be finalized annex a sets out the findings of the external auditors based on their work so far their conclusions and recommendations in respect of the council and the group accounts and annex c does the same for the pension fund accounts um i will hand over to to to janet dawson for me why to summarize the position and provide assurance over the remaining work required to get us to a signed audit opinion i think it's fair to say currently we're not and they are anticipating issuing an unqualified opinion and because of that and how close we are to completion we are asking committee today to delegate any residual matters to the um section 151 officer the deputy chief executive to enable the chair and the section 151 officer to sign off the final accounts um as soon as the residual audit activities are completed thanks nikki our report um sets out uh the position of the audit um and and it is as nikki has outlined so we are almost complete with our work you'll see on page 10 of the supplementary agenda we have a status um set out at the point of drafting and the report for the committee papers and you'll note that they will still have clearance of some final queries on some transaction level testing to do last queries on property plant and equipment and investment property valuations which are now complete we talked about receiving the updated valuation for the eco park our specialists have had that they have reviewed that we're awaiting their final report however in working through that um evaluation rt that the specialists and the audit team and have discussed that in in detail and ladies and clearance um internally to complete um what i plan to do is just take you through um some of the key findings that we set out so that in approved material misstatement or other areas of the audit that we wanted to focus on um you'll note that the majority of those areas there are no further issues um so an area of higher inherent risk rather than significant risk to our audit and you'll note that there is an adjustment that the pension fund auditor i million in valuation of one investment and surrey um surrey county council share of that is 6.745 that the county council doesn't propose quite significant amount of work additional work in this area um we looked at uh the waste pfi and the eco park valuation in particular and and felt that that needed to be undertaken using um specialists in waste facilities um so that additional work was done by the county and we're also aware that the council had renegotiated model were appropriately affected in the accounts that you now see on street lighting um we have concluded our work in this area um and we do pfi and don't have any other issues to bring to your attention um just looking at my own notes and struggling to understand them the on page um 21 you'll note that we talk about bulk bulk capital expenditure there's the accounting approach to that so again we don't believe that there's a material misstatement but that's a practice that needs to be improved and then you'll see also that we talk about the tightening of controls or reporting and we've had very constructive um working relationship with um the finance team though and um they're happy to take any questions thank you very much uh both uh just in terms of the timeline completion for these various little minor issues do we do we have a timeline at all janet so yes we have um our team is continuing to work through to february before we're actually getting to final sign off okay thank you and i assume none of these will cause a material misstatement in the accounts these there's very small items that that's our expecting any further uh material impact of those final queries okay and just on section six i know you've got the description of the recommendations and you've got the recommendation is there any care officer response to these at all so not formally in the in the report but we have discussed each each of them and are some of them are already in train some of them are already resolved and we have committed to resolve the remaining ones okay thank you any other questions uh steven thanks chair um a couple of items on page 18 and page 27 of the report there are a couple of items there which are to follow and so specifically on page 18 it talks about an update will be provided here today i don't know if that's available or if it's something that you're going to finish off um a bit later on um are they available now or i covered that in the in the those are the final queries around land building valuations i work in that area and there are no further elements to report um i know it's it's it's nice and conflicted by chair just about the recommendations there are several really good recommendations and a question from my point would be um how would does that work in as much as you get the recommendations and how do you basically decide what you're going to take what you're not going to take how do you track them or what do you implement what do you not implement it's just me being nosy as usual nikki so um so it's just a clarification about there's a lot of work that's been done and it's really robust piece of work and a lot of good good items raised so how does that follow through and how can we how do we know what's going to be implemented and not thank you yeah absolutely so so as i say we we discuss these recommendations they're not news to us when we see the report so so we're aware of them they've been part of discussions over over recent months so we don't you know we will be looking to implement them them all it wouldn't be particularly wise for us to it to ignore them i think given you know given the need to have our accounts for the for next year um signed off as well um i suppose i would just flag some of them are more um have a have a larger impact on the accounts than others and so we'll prioritize them in in that way and also timelines mean we're we're very very close aren't we to the end of the 24 25 financial year and and just in terms of practicality of implementing some of these in their entirety in time for the 24 25 accounts i'll be completely transparent and say we will do our absolute best and we'll prioritize the ones with the biggest impact there are some that just time um potentially will get in the way of us achieving them in time for the next audit but we'll you know we work to them as a we don't we're not disagreeing with any of them and they all need you know they all need to be done um thanks very much and yeah again i mean there are a lot of recommendations and it's basically resource prioritization operational impact and so on and so forth um but it was really just trying to get clarity on that they are going to be acceptably seen them before um and that they would be implemented or at least considered and i guess the follow-on question which you may expect from me is plan and dates but again that might be something that you can come back later on with this if that's necessary that is kind of erring into the operational aspect i get that but it's just one of those those items to say whether our high priority big ticket items it would be um quite useful to see that coming back to this committee just to get that assurance if that is possible chair yeah i'm happy i'm happy to bring something back on that maybe alongside the um the plan for them to provide some update on where we are with those recommendations absolutely fine much appreciate you thank you chair uh richard the dreaded phrase additional work was mentioned um do we have a quantum of that yet or is that something we've got to not look forward to at a future meeting um yes thank you um the dreaded phrase indeed i mean a significant amount of additional work has been undertaken comments on these look it's even nice he's not rising again so that's fine okay so uh it's recommended that the committee number one notes the contents of the audit results report as attached to annex a secondly approves the 2324 statement of accounts as attached in annex b subject to any additional work carried out and publications on the council's website number three notes the pension fund audit results report as attached in annex c number four approves the executive director of resources letter of rep which is on page 273 uh in annex d and number five approves the group letter of rep and pension fund letter of representation attached at annex e number six the audit governance committee delegates any residual matters related to the audit of the accounts the group accounts and or the pension fund accounts to the section 151 officer are we all agreed fine thank you very much just like to say a big thank you as well to janet and her team and also nikki and her team for for all the work because you know it's a monumental task to not just provide all the documentation but also to audit it so thank you both very very much indeed okay so we're now moving on to the order reports an annual statement of a council subsidiaries of sarah county council so this report provides the audit governance committee with the outcome and findings of the external audits of the 2324 financial statements of hendika group limited surrey choices limited halsey garden residential limited halsey garden property limited and surrey and kent commercial services llp so i think we've got bill and neil online or in person is this bill i think we're over we're over it's over to you bill i think whenever you're ready thank you thank you so much um so hopefully what's been provided is the audit reports for each subsidiary of surrey county council each auditor of the 23 24 financial statements of housey garden property investments and surrey and kent commercial services that all provided unqualified audit reports or report clean reports so for each procedures in place to prevent any override of internal controls found no indication of management bias or significant transactions outside the normal course of business revenue was found to be recognized correctly across all entities no issues were found to recover questions for bill steven um yeah looking at the the report of the um the key audit findings i think it's on page 93 of the deck if that's correct there's an item in there in the middle of that fixed asset additions and it's identified assets below 500 pounds were being capitalized and there's a recommendation when the um the issue is deemed not to be resolved so that's with the um hendecca accounts i believe so advice has basically gone back to the hendecca board and and the team within hendecca not to capitalize those items going forward um um all these um reports go to the board they're all advised to the board um and internally within hendecca the auditors have advised let's not do this going forward and it'll be captured as part of the next audit as well that you know will review the account um to balance sheet yeah i i mean i'm not an accountant at the end of the day but it was uh it was nice and where capitalizing stuff 500 pounds is it's yeah it's um yeah okay any other points or comments i think it's all very very straightforward all as bill said all unqualified opinions no material statements yep okay no other comments or points okay so it's recommended that the audit governance committee consider the contents of the 2324 audit reports for the entities referred to above the financial statements for each company i shared as background information are we all agreed yeah thank you very much so item number nine so this is the unit four my surrey stabilization board report so this provides an overview of the work of the stabilization board in addressing the issues with unit four stroke my surrey a summary of progress today key areas activity planned activity and the model which governs the work will be discussed and this is on pages 315 to 344 so i think we've got is it liz and karen karen karen i don't know who yes liz you just said hi just say a few words by way of introduction uh this report is designed to provide that update um it also draws attention to the progress in relation to the audit recommendations that have been made uh through a series of audits um over the last uh 12 months and we are demonstrating i think good progress against those in line with the stabilization plan that we have in place for the unit four system um we're also pointing towards uh in the final part of this report the next steps which will be to move at the end of march from the stabilization phase into an optimization phase um so yep team is here ready ready to answer questions uh shella um smith is also online um and able to answer anything specifically in relation to uh the hr and od function along with karen and myself okay thank you liz and did you want to say anything at all uh no okay any comments or questions i know we spoke about this last time but stephen um um um chair i just i think it's probably um sensible that i make a declaration at this point on this item that i've seen a version of this report of the resource and performance select committee has been vice chair that one and so i've seen a bulk of this already anybody have any comments just to say that it looks as though that the majority of the problems have been resolved than riders as well so good okay i just have a question how are we doing in response to the internal audit findings and all of this yeah okay breathe yeah karen so you can see an annex two there we have target completion thanks for that uh clarification anybody else uh matthew yeah thanks for that you know in section fishes we've identified uh what the actual cost that's been so what page are you on sorry matthew oh sorry in the summary so that'll be on page uh 319 uh when it's got the point about section 30 there are no direct financial implications arising from this report my thought process was arising from the whole my sorry um situation surely there has been involved with this and have we done anything to quantify that no uh liz is that yes it's true to say that over time we've had to invest additional sums in order to be able to be able to make the um works the remediation works and also to make sure that the teams are resourced to be able to carry out the activities specifically so it's both technical expertise that we've needed to uh make sure that we've um you know got got in the right place at the right time uh but uh those core team members so i i'd point to the sort of payroll payroll um enterprises an example of that um so some of that you might see in terms of the way in which we've had to manage that through usual budget management in the year making efficiencies elsewhere to be able to offset the additional expenditure in those teams and the optimization phase is very much designed on making sure that we're looking towards yielding the benefits that we wanted to realize through the initial business case it's taken us a little longer i think it's fair to say to get to that point because of these issues that we've needed to solve so yes we are undertaking that piece of work just to make sure we understand what that full picture is and to drive that benefit through um uh utilization of the system as we go forward uh steve now just for an explanation chairman under item two of the introduction it says as of the 17th of december there are 41 outstanding tickets with unit four four and three of these have been open for over a year um are all are um the processes to deal with those all listed in the appendix they're not necessarily listed in the appendix so um but they are sort of referred to throughout the report there are twice weekly meetings that held with unit four to review each of those items monitor progress and then we're having monthly meetings with unit four to hold them to on those items i think it's the uh the three that have been open for over a year the perhaps the most worrying aspect i'm happy to um come in there chair if it's useful um just to say that we are making progress on those three um we have very much uh focused on strengthening um the accountability arrangements with our provider um to make sure that we are um driving through those different um improvements where they're needed and we have made substantial improvement on that list it would not be true to say that we've resolved all of the issues i think at current um position and karen can uh uh let us know uh precisely but i think we've got one remaining of those three um long-standing tickets um we are seeing that unit four for some of the resolution in the longer list are looking towards their broader upgrades of the system to be able to resolve them so it's true that sometimes we're held in a pattern until that next release of the product comes through that said we are driving them where it's sensible to do so uh to provide updates and um fixes um as we go um if that's uh better for us and also sensible within the system environment but it isn't always system uh you know sensible within the system environment because you know the overarching impact needs to be right when we make changes to to the to the system itself so yeah very much holding unit four to account for the delivery there in a very different way okay okay uh david you have a comment or question yeah thanks chair um i just really wanted to pick up helen's comment a little bit i mean i i think a huge amount of really good work has taken place in terms of the stabilization um work which this report reflects um you know the the strong governance in place um the the whole relationship with with unit four has changed um holding unit four to account um a lot of work has been done on the contract management side of things um you know in terms of of what could we have realistically expected unit four to deliver um and and and what should we be paying for and there's still work to be done in that space um so i think uh to use this sort of a cliche which is expanded about quite a lot recently i think we're we're fixing the foundations as as part of the as part of the stabilization but i think it's important to sort of manage expectations going forward because you know at the end of march we'll move from stabilization into optimization and there is still quite a lot of work to be done in that phase there will be uh costs attached to that and as part of the budget setting process we have included sufficient monies in the budget to actually take us through that optimization process um so you know really good what's happened but there's still quite a lot more to be done based on those solid foundations which are being put in place thanks so much for those comments david uh steven yeah yeah thanks chair i'm just a um a follow-up on the outstanding items for over a year and it was an item that we picked up in a resource performance select committee um and it's more an item to say if it's anything that we as members or we use this order and governance committee can actually do to help um basically provide some some assistance in whatever shape or form um that may help officers with without interaction with unit four so again it's one of those things i know that there is work going on with them um and i can't imagine it would bode well you know outside of unit four in a public domain or so where um you know fixes or whatever are being delayed for so long it could be um it could maybe not uh not look so good um in the public area so again this is if there's anything that we can we can possibly do to help then let us know and we'll see see if chair will allow us to do that but um i know that work is going on but if there's anything we can do um chance i think okay very fair point uh helen just whizzing through i can't see how many actual um start you know how many people do we actually use unit i just had one comment really it's about the when david talked about fixing foundations i saw on the corporate payroll that uh the reconciliation general ledger is still not done won't be able to because that's literally a fundamental system so i don't it will that definitely be finished by the end of january i think okay it says here target completion day 31st of january 25 um are we saying that's march now then yes i think um i'm happy sorry apologies chair sorry it's difficult to know whether somebody in the room is answering i can't i can't hear but um yes we we have that fixed in our line of sight within the stabilization phase we're definitely pushing hard on that one but um karen or uh nikola might have a more detailed uh date um given their conversation with the info okay karen accounts payable then it's 31st of january absolutely okay yep those dates are accurate fine thank you right any uh uh matthew just on that point because i know the 31st of march point was about when all defects are going to be sorted i get that and we say the aim is to have a stable system environment and again have we articulated what a stable system environment looks like how have we defined what the stable system environment looks like it's a it's a good question so we are um drawing that out as the core functionality of the system across the um domains of activity so that's largely payroll uh pension the finance systems the procurement system uh to make sure that's in place that we also have the governance and the policies and the procedures in place to make sure that our operation of that system is um able to uh be conducted in a way which supports our organisational delivery so we know clearly how to escalate issues when they arise it's not to say that um issues don't arise with systems of course they do uh that we have good governance around the way that we upgrade the system and make decisions about its future use so all of those things um will be in place by the end of this um period um the one exception to that as i say is where we are waiting for the um release um we have the release of the system that is coming from unit four um we will have that in the test environment in march but it is not likely to go live until we have completed and conducted all of our tests until um may possibly the very beginning of june so those things that are being addressed through that release are not issues that are on our high risk or or high impact um kind of issues to list but they are important to us organizationally so from an audit perspective we've mitigated those risks but we won't have got the final system solutions on board for those until we've run that final upgrade if we can do it more quickly than we will oh andy is yeah just just to come into it is on a few things so core functionality fundamentally look at that in terms of paying people staff suppliers correctly uh clearly went when this this system went live it it wasn't doing that and there's a backlog issue that we have to resolve on some of those things um and um part of the resources that david was talking about is to address some of those issues issues since go live but actually when you look at the product spec that we asked for and implemented um there are other core functionality and you can see that in terms of the audit progress that we're looking at in terms of the leavers process so on and so forth um but fundamentally uh we're now at a point where we are paying and it sounds a bit absurd to be saying this 18 months after a go live that we are paying staff correctly we are uh paying uh suppliers correctly and um no payroll which without its errors from that but those should be minimized down in in terms of that that monthly payroll process um but there's a lot more other core functionality components of the thing that we implemented that need to be uh improved some of those will be done in stabilization but some of them will move into uh into optimization the fact that we're very uh that we're discussing this at audit and governance committee and just to pick up on on the point as well um we will be waving these minutes in front of unit four to say uh you know this is on your case do you and this is a public meeting uh do you want to continue your uh performance in in terms of dealing with us in in in this vein but uh the contract meetings that uh liz is having with them is focusing their minds uh differently to what we had uh post uh post go live from from from what i can see and my reflection on it but we do need to therefore keep that on uh their watch and on their radar and make sure that we are tightly managing them um and equally if it's on your forward plan uh you're keeping us on our toes and to make sure because we're all focused to making this this work but then that will also uh conversely also help us in managing unit four in in in in their view of the world as well as well um but that in terms of that core functionality definitely we want to be then moving forward into that optimization because there were benefits predicated off the back of implementing um unit four and we are nowhere near delivering those benefits because we've got resources and and the wraparounds um and manual processes that are um not releasing uh what we would like a system to be able to to achieve for for budget managers where it's controlling workforce uh costs reporting through from from that perspective and that's the next stage the optimization that core functionality aspect that we want to get that information through so if you're in social care you can yes you're doing your day job but you also if you're a manager managing the workforce managing the contracts managing the performance from a core business perspective up at the last committee actually but so given that we've got a system without core functionality um have we investigated what callback mechanisms we've got in place within the contract to make unit four actually pay for some of this stuff and not us so we've got to be careful what i say from a public uh meeting perspective and liz i can see he's already got a hand up ready to jump in onto this one um uh what i will say is that we sign this off as a go live product so we've kind of shot ourselves in the foot a little bit from that perspective but we are doing work um on on that front and liz will probably add you can add more to that yeah yeah very happy to so we we've conducted a review to make sure that we have um uh really clear understanding about the technical delivery in line with the contract that we procured and the delivery of the performance measures that we signed up to as part of that agreement and all of that will feed into the contract management meetings to make sure that we're using all the levers that are available to us um i think it's also fair to say that the contract terms are quite standard um so we are um you know as uh has been explained you know in a position where we did sign off a product um but that's not to say that we should not be holding unit four to account for the performance in line with the contract terms we've agreed so with those parameters we are doing that work yes great thank you uh stephen did you um yeah thanks chair um thanks and the the item you mentioned about forward planning leads into the next logical piece for my point the stabilization board is moving from stabilization into optimization and again if we can actually look to get something on the forward plan agenda for the committee to have a look at what that optimization phases um and you know a bit of a check-in as well this seems logical progression but if it is moving into that area then you know we continue to to share the good news and the updates um and i'm sure there will be many of those but if we can look at getting out on the forward plan of this committee that'll be wonderful thank you yeah we have noted that and i'll go forward thank you very much stephen any other kinds of questions on this item i can't see any okay so we are asked to note the contents of this stabilization report are we all agreed i would just like to add a big big thank you to liz and all your team for progressing this so well and anybody else and these i know probably get involved as well thank you very much indeed thank you thank you okay so moving on to item number 10 so this is the order and governance committee effectiveness review for 2024 so this for the committee to review the outcome of the committee effectiveness self-assessment and degree actions and next steps i think is this one what's wrong with you and d uh it is chair um it's kind of self-explanatory to be honest in terms of um you know this is the the outcome um and you can see the you know the recommendations the report goes through the the outcome and it's over really for the the committee to uh to comment on on on that and um and put um uh put put the next steps in it's over to you to uh to the committee um anybody like to make any comments i think it's quite a good report you know it shows it's a good light so anybody want to add no stone silence wonderful okay so yep so we are recommended that the committee reviews the outcomes of the effectiveness self-assessment uh based on the results from these following exercises so that's the self-assessment of good practice and evaluating the impact and effectiveness of the audit committee so are we all happy with the contents of the report thank you very much indeed i don't think we've got any other business at all i mean you know so thank you once again everybody for all your comments all the officers who have been here thank you so much and the next date of next meeting is on the 12th of march 2025 look forward to seeing you all then thank you very much thank you