• Abstract and Figures
• Public Full-text

Committee: AUDIT COMMITTEE Date: WEDNESDAY, 22 APRIL 2009 Venue: MORECAMBE TOWN HALL Time: 6.00 P.M. A G E N D A 1. Apologies for Absence 2. Minutes Minutes of the Meeting held on 21st January, 2009 (previously circulated). 3. Items of Urgent Business authorised by the Chairman 4. Declarations of Interest 5. Investments in Icelandic Institutions - Update (Pages 1 - 130) Report of the Head of Financial Services 6. Risk Management (Pages 131 - 173) Report of the Head of Financial Services 7. Internal Audit Monitoring (Pages 174 - 178) Report of the Internal Audit Manager. 8. Results of Internal Audit Work (Pages 179 - 186) Report of the Internal Audit Manager. ADMINISTRATIVE ARRANGEMENTS (i) Membership Councillors Malcolm Thomas (Chairman), Jon Barry, Abbott Bryning, Roger Dennison, Janice Hanson, Geoff Knight and Keith Sowden (ii) Substitute Membership Councillors Shirley Burns, Tina Clifford, Tony Johnson, Karen Leytham, Geoff Marsland, Ian McCulloch, Sylvia Rogerson, Peter Robinson and Paul Woodruff (iii) Queries regarding this Agenda Please contact Sharon Marsh, Democratic Services - telephone (01524) 582096 or email [email protected]. (iv) Changes to Membership, substitutions or apologies Please contact Members’ Secretary, telephone 582170, or alternatively email [email protected]. MARK CULLINAN, CHIEF EXECUTIVE, TOWN HALL, DALTON SQUARE, LANCASTER LA1 1PJ Published on 9th April 2009 Page 1 Agenda Item 5 AUDIT COMMITTEE Investments in Icelandic Institutions - Update 22 April 2009 Report of Head of Financial Services PURPOSE OF REPORT This report provides the Committee with an update on actions taken since it last considered this matter back in November, and includes the Audit Commission’s and the Treasury Select Committee’s recently issued reports for Members’ consideration. This report is public. RECOMMENDATIONS (1) That the report be noted. (2) That the Committee indicates whether there are any further specific aspects of the attached reports they wish to be considered, as part of any subsequent review of the internal control and governance arrangements for the Council’s treasury management function. 1 Report 1.1 At the special Audit Committee meeting held last November, in considering details of the Council’s Icelandic investments Members resolved that a report be requested regarding any future changes in investment policy and also that updates be provided to each meeting of Full Council. 1.2 With regard to the latter point, updates have been included in each of Cabinet’s budget reports to Council. These have included recent briefings provided by the Local Government Association (LGA); the latest of which is included at Appendix A for information. Initially these briefings were provided weekly but given the timing of new information becoming available, these are now produced monthly. 1.3 As yet, there is no further information available on which to make an informed view regarding exactly how much of the total amounts owing (£6M plus £260K accrued interest to October 2008) will be returned. Now that the budget exercise for 2009/10 is completed, as reported to Council it is intended that formal updates will be included through the usual reporting routes (i.e. in particular through quarterly PRT meetings). Monthly updates from the LGA to Group leaders will continue. 1.4 With regard to reporting on future changes in investment policy, the Council’s treasury management framework has been updated significantly for 2009/10 and Page 2 prior to it being finally approved by Council on 04 March, it was also considered by both Cabinet and Budget and Performance Panel. 1.5 Since then, the Audit Commission has released its report on Icelandic investments (English authorities) and the Treasury Select Committee has also very recently released a report “Banking Crisis: The impact of the failure of the Icelandic banks”. This is one of a series of reports that the Committee is publishing as part of its broader inquiry into the banking crisis. 1.6 Copies of both the Audit Commission’s and the Select Committee’s reports are attached for Members’ information. It is clear that further information, advice and guidance will follow in due course, from the Audit Commission and from other bodies such as the Chartered Institute of Public Finance and Accountancy (CIPFA). In view of this, and the actions already taken in updating the current year’s treasury management framework, at this stage it is recommended only that Members indicate whether there are any further specific aspects of the reports they wish to be considered, in reviewing the internal control and governance arrangements surrounding the function. 1.7 Once the Audit Commission and CIPFA have completed their deliberations, a further review of the Treasury Management Framework will be completed for Members’ consideration. This will pick up on any points raised at this meeting, as well as any other external reports etc. that may be issued by other bodies in the meantime. It should be noted that at present, general responsibility for scrutinising the treasury management framework proposals rests with Budget and Performance Panel, rather than the Audit Committee. Given the Audit Commission’s recommendations, it is envisaged that this aspect will be considered further in due course. 2 Options and Options Analysis (including risk assessment) This report is primarily for information and no options are put forward. CONCLUSION OF IMPACT ASSESSMENT (including Diversity, Human Rights, Community Safety, Sustainability and Rural Proofing) No implications directly arising or quantifiable at this time. FINANCIAL IMPLICATIONS In terms of the legal advice obtained through the LGA, to date the City Council’s share of costs amounts to £1,501.91. This will be funded from the existing Contractor / Consultancy budget in Financial Services. DEPUTY SECTION 151 OFFICER’S COMMENTS This report has been prepared by the s151 Officer. LEGAL IMPLICATIONS Legal Services have been consulted and have no further comments. MONITORING OFFICER’S COMMENTS The Monitoring Officer has been consulted and has no further comments. BACKGROUND PAPERS Contact Officer: Nadine Muschamp Treasury Management Framework 2009/10 Telephone: 01524 582117 E-mail: [email protected] Ref: Page 3 promoting better local government From the Chairman and Chief Executive of the Association Councillor Margaret Eaton John Ransford To Group Leaders and Chief Executives All councils with exposure to Icelandic banks 20 March 2009 Dear Colleague ‘File on Four’ report Many of you will have heard or read about the recent ‘File on Four’ report on council finances and investments in Icelandic banks, which included suggestions about councils’ likely recovery from the banks. The information quoted was provided by an individual not involved in the administration processes for any of the banks and does not accord with information that is publicly available about potential recovery. We would advise councils to discount the forecast made on the programme; this update provides further information about progress and potential recovery from each of the banks councils invested in. Individual bank update The next creditor meetings for Landsbanki and Glitnir will take place during week beginning 30 March. As outlined in our previous update, the key issue in relation to both banks is the issue of preferential status for depositors, including local authorities. There are positive signs that depositors will be treated as having preferential creditor status under Icelandic legislation (as is the case in other jurisdictions such as the US). If this is the case, councils are likely to recover a very significant part of their deposits through this route (or even all of it, in the case of Glitnir). However, the position is not yet confirmed and it is likely to be several months before it is resolved. The expectation is that the issue will need to be tested in the courts, and draft legislation is before the Icelandic parliament which should enable this to happen once it is passed. Through our lawyers Bevan Brittan we are continuing to monitor this issue and, under the direction of the relevant local government creditor committees, will take appropriate action as necessary. The administration process for Heritable is ongoing. As stated in previous updates, the administrator has advised that he expects to make a material payment to E-mail [email protected] Local Government House, Smith Square, London SW1P 3HZ DX 119450 Clerkenwell 3 Chief Executive: John Ransford Tel 020 7664 3000 Fax 020 7664 3030 Information Helpline 020 7664 3131 http://www.lga.gov.uk Page 4 2 creditors. Further information about the administration will be made available to creditors in the statutory report required in April. There remains significantly less clarity about possible recovery from Kaupthing, Singer and Friedlander, although the administrator has advised that he expects a dividend will be payable. A meeting of the statutory creditor committee was held on 16 March. The committee were updated on payments and activity by different parts of the business, as well as on a Bank of England trust account holding some £150m of deposits made with KS&F between 2 -7 October 2008. A fuller update will be provided to creditors in the statutory report due by 21 April. Audit Commission and other reports We are anticipating that the Audit Commission will be publishing its report into local authority treasury management and Icelandic banks on 26 March. We will share further information with council finance officers and media teams as soon as possible. We understand that the CLG Select Committee report into local authority treasury management is unlikely to be published until after Easter. Dialogue with government We have had further dialogue with Treasury officials and their advisers at meetings in London and Reykjavik, and they have continued to provide useful information about processes taking place in Iceland and their dialogue with the Icelandic government / IMF. A further meeting has been scheduled for the end of April.

Load more

  188

Copy Link