Agenda and draft minutes

The Chair to welcome Members to the meeting.

Lead:  Chair

1.1          The meeting was held as quorate. Cllr Crane and Cllr McLaren introduced themselves as new Officers to the meeting. Apologies were received from Mr Green, Cllr Mundry and Ms Openshaw.

Members are required to declare any personal, prejudicial, or disclosable pecuniary interest they may have relating to items on the agenda and state the nature of such interest.

Lead: Chair

2.1          There were no declarations of interest.

To approve as a correct record the minutes of the Audit & Governance Committee held on Friday 6September 2024.

Lead: Chair

3.1          The chair reviewed the minutes from the previous meeting and highlighted areas and/or actions to be picked up in the respective agenda items.

3.2          With regards to reference to the spending review and the DfT, the Finance Director confirmed that initial thinking for the spending review will be taken to Board on the following Monday. 

Corporate Risk Update

• Corporate Risk Register
• Risk Deep Dive Schedule 2025
• STP Overview & Inclusivity/Disconnectivity Update

Lead: Daniella Della Cerra Smith

4.1          The Risk Manager presented the Corporate Risk Register. The Chair highlighted how important context is in terms of understanding the direction of travel, what the priorities are for TfN and what is influencing its work. The Risk Manager stated that there have been minor changes to some risk descriptions to ensure that they are reflective of the current environment and that a couple of risks have closed.

4.2          Mr Thomas helpfully fed back some comments on risk prior to the meeting. Current risk assessment is calculated by looking at what existing controls are in place now and target assessment is calculated by looking at what further mitigations over and above those controls can be put in place to further mitigate. There is a funding allocation until March 2025; we are awaiting the funding allocation for 2025/26.

4.3          Mr Thomas thanked the Risk Manager for the response to his questions. He asked a supplementary question with regarding risk 647 in terms of whether timing could be given around the state of play overview and whether there was a process that would help the situation. The Risk Manager replied that the state of play is continuing to develop. A review date of March 2025 has been set. Results will be fed through to various forums. The Finance Director said there is a working document in place that is being discussed at Board. It was first discussed at the last Board cycle; it shows how all the interventions will occur and has been fed into from member authorities in the North.

4.4          Cllr Baker Rogers thanked all who were involved in facilitating the closure of ten actions on the register and asked whether a 3-year funding award will be secured. The Finance Director explained that there will a one-year settlement for 2025/26, and a spending review submission will consider a longer-term settlement; it is unknown at the moment what that will be. The DfT are helpful and supportive of our approach to maintain capacity and capability from a workforce perspective.

4.5          Cllr Crane asked whether devolution is referenced as a risk factor, the new government has plans to escalate the speed at which the regions are being devolved. The Risk Manager said it ties into risks 647 and 310, which is the Norths role in the rail industry and TfN engaging with the shadowing of Great British Railways to ensure that the current level of devolution is maintained. Cllr Crane asked whether devolution with regards to Local Authorities has also been picked up. The Risk Manager replied that it is being considered when reviewing the risks and TfN will consider how it may be more explicit within the report.

4.6          The Finance Director stated that devolution is a critical factor in the business planning process. Some areas, who are in the early stages of devolution, require more Support. TfN’s challenge is to navigate that and support all entities. The priorities for TfN are around supporting the STP and providing evidence to member  ...  view the full minutes text for item 4.

To note the Audit Completion Report

·       Forvis Mazars ACR

Lead:  Daniel Watson

5.1          Mr Watson presented the Audit Completion Report and highlighted key areas.

5.2          Mr Thomas appreciated the signing off of the accounts so quickly; an achievement to TfN Finance staff.

5.3          Cllr Baker Rogers asked whether TfN are aware of the issue with the South Yorkshire mayoral combined authority accounts and the £65million that they are in deficit. Mr Watson looked at the issue during the meeting and reported that it was in relation to the police and crime commissioners’ minimum revenue commission; TfN does not have any borrowing for capital spending so it is not an issue that TfN would encounter.

Resolved:

That the external audit update be noted.

Annual Progress Report of the Audit and Governance Committee

To note the Chair’s Annual Report

·       Annual Progress Report of the Audit and Governance Committee

·       Audit & Governance Terms of Reference

·       Audit & Governance Terms of Reference Activity

Lead: Chair

6.1          The Chair noted that the report is built around the committee's principal purpose which is to provide independent review and assurance on governance risk management and control frameworks.

6.2           The Chair highlighted paragraphs within the report for the attention of the committee.

·       Paragraph 3.2 highlights challenges associated with membership and attendance at the Audit and Governance committee; hopefully things will improve going forward but poor attendance in the past has undermined an ability to do the job as a committee.

·       Paragraph 3.5 confirms that there have been no instances of fraud or corruption reported to the committee.

·       Paragraph 3.13 and 3.14, are assurances that the committee can give regarding internal controls, the operation of those controls and the management actions arising from internal audit work. 

·       Paragraph 3.19 includes the recommendation of the accounts subject to any further changes from the external auditors.

·       Paragraphs 4.1 and 4.2 repeat the assurance in respect of internal controls and again recommendations in respect of statement of the accounts. The report reflects our purpose and picks out the specifics in terms of what we are recommending at Board.

Resolved:

That the Committee recommends the reports submission to the Transport for the North Board.

To consider the year end draft statement of accounts for and the annual governance statement 2023/24

·       Accounts (track changed / annotated from drafts)

Lead: Paul Kelly

7.1          The Finance Director presented the draft accounts that were made available for public inspection by 31 May 2024. The work of the Management and Financial Accountant was to be recognised.

7.2          Between the version in May and the current version in the papers, there are minor changes all of which have been marked up so changes can be seen. There will be a clean version going to Board and external auditors have indicated the intention to issue a clean audit report. They be signed and published on TfN website.

7.3          Mr Thomas stated that he is familiar with the accounts and treatment depreciation but asked whether amortisation could be explained. The Finance Director said amortisation is referenced in the accounts but is not applicable because the only assets that are subject to amortisation have been amortised in full. Amortisation is spreading the cost of an asset over a period of time for example the 3-year term ledger.

7.4          The Chair said the narrative at the beginning of the accounts is helpful, giving context to what TfN is doing. The governance statement within the accounts is very comprehensive, it encourages attendance of elected members at this committee and talks about further devolution arrangements.

Resolved:

That the committee the Committee recommends the draft Statement of Accounts to the TfN Board meeting on 9 December 2024 that they be considered for approval subject to there being no material changes as agreed with the external auditors.

To consider the draft annual governance statement for 2024/25

·        Draft 2024/25 AGS

Lead:  Joanne Barclay

8.1          The Senior Lawyer went through the Draft AGS 2024/25. She confirmed that enhancements made to the AGS 2023/24 were carried forward to the new draft. The final document will be brought to the meeting on 7 March 2025. Any changes or noticeable developments in governance will be included. The Finance Director said the AGS is shared with the Directors and Senior Management team throughout the year, and it will be a live document and evolve during the year.

8.2          Cllr Baker Rogers queried the diagram on page 164, where the Audit and Governance committee was in green. She asked whether it should be in lime green i.e. mixed membership of elected and independent members. The Senior Lawyer thanked Cllr Baker Rogers for noticing this. She advised that it will be rechecked.

8.3          Cllr Baker Rogers highlighted that the signed statement is at the end of the document. She said it may be better to have the main sign off at the front of the AGS and indicate what the two signatories think about the AGS .  The Senior Lawyer thanked Cllr Baker Rogers for the feedback and noted this point will be considered.

8.4          Mr Thomas said that there are often areas within an organisation where assurances can be obtained from other people e.g. trusted third parties, in order to add to the overall assurance framework. The Senior Lawyer thanked Mr Thomas for this contributory factor.

8.5          The Chair said changes to legislation and codes of practice could be added to the introduction, especially due to recent change in government. The Senior Lawyer said something that could be included is how membership is reducing because the constituent authorities are reducing due to the establishment of combined authorities.

Resolved:

1)   That the Committee notes the draft statement for 24/25

2)   That the Committee supports further work to be undertaken in relation to the annual review of the effectiveness of internal controls for 24/25 and that the additional work on this will be included in the final draft Annual Governance Statement for 2024 /2025.

To note the reports from RSM Risk Assurance Services including:

·       Draft2025/26 Audit Plan

·       Progress Report

·       Northern Powerhouse Rail (NPR) Co-Sponsorship Model Arrangements (02.24.25)

·       NPR TAME Delivery Model Framework (03.24/25)

·       TfN Offer (04.24/25)

·       Internal Audit Code of Practice Briefing Paper

Lead: Alex Hire

9.1          Ms Hire presented the progress report, audit reports, summary document and the draft plan for 2025 and the new amended internal audit code of practice which comes into effect in March 2025.

9.2          The proposed forward audit plan for 25/26 was presented; the full plan and strategy will be presented at the March meeting for approval.

9.3          Ms Hire stated in terms of the progress report, as part of the follow up in the 25/26 plan, all actions will be completed and validated.

9.4          Mr Thomas asked whether any of the audits were at a limited assurance level at draft report stage. Limited assurance opinion does add value to the organisation before they become issues. Ms Hire replied that there was good engagement and discussion as part of the scoping of the audits especially because the areas audited had not been reviewed from and internal audit perspective before. Escalation processes are documented to make sure that there is the right level of assurance. The Finance Director stated that the independence level of the auditors is valuable.

9.5          The Chair asked whether on reading the summary there was a reference to frameworks being in place and controls operating but not always as intended; from a management perspective are we waiting for audit to identify when things are wrong and does management have sufficient monitoring of those controls and they know about problems before the auditor arrives.

9.6          Cllr McLaren suggested that a summary of documents for the meeting would be advantageous and to meet more regularly. The Chair spoke about committee effectiveness and performance that had been discussed previously such as the need for a vice chair; it would not be possible to reach a resolution today, but members are encouraged to think about the possibility of having a pre-meet and for members to share thoughts about how the volume and complexity of information can be managed.

9.7          Cllr Crane indicated that all members should read all the members prior to meeting but more frequent meetings with shorter agendas may be a more practical solution going forward.

9.8          Cllr Baker Rogers suggested that documents are forwarded in advance to members, once it has been decided that something is going on the agenda.

9.9          Following on from the presentation of the Internal Audit Code of Practice, setting out the new requirements of the code, the Chair asked whether the committee offered sufficient challenge on the performance of internal audit in light of the updated code and what time does the committee allow itself to look at the performance of RSM and do members have experience outside TfN that can be brought to this area of work. Cllr Crane said that they have a 5-year external review, the next one due in 2026, plus other opportunities such as questionnaires to ensure that there is compliance.

Resolved:

That the Committee support the progress of the internal audit programme.

Quarterly Operating Report

To note Transport for the Norths Quarterly Operating Report (July – September)

·       QOR

Lead: Paul Kelly

10.1       The Finance Director presented the report. Cllr Baker Rogers asked how close the milestones highlighted Amber are to becoming Red. The Finance Director gave some examples as to where progress was being made. The Strategic Rail Lead reported that Rail Reform is evolving, and the government’s intention has changed. Cllr Baker Rogers stated that the RAG rating does not work for this particular report, as it does not reflect the difficulties in achieving these actions especially in terms of the external factors that hinder achievement. The Finance Director stated that this is the first year that this report is produced on a quarterly basis and going forward to 25/26 there will be a different focus; the nature of the activities and milestones that we have next year will be more focused, targeted, and more easily manageable.

10.2       The Chair put forward a question with regards to the TfN offer and the value add being a conservatively estimated £3 million, and how was that figure arrived at. The Data and Analytics Service Manager replied that the £3million is from an equivalent framework cost; a realistic and conservative value of the value of the work that goes into the provision of that data. The raw data and raw resource costs are available. The emerging value to partners is not available. The Finance Director said that there are stats on the TfN offer that are not captured on this report, but they could be brought to a future meeting.

Resolved:

That the Quarterly Operating Report be noted.

Items deferred to March 2025 meeting:

·       Member skills appraisal and development

·       Anti-fraud policy review. RSM will be engaged with the anti-fraud policy review

Lead: Paul Kelly

11.1       The Chair suggested that at the March meeting there will be an update from the Senior Lawyer on Member Skills Appraisal and Development, and the rolling out the self-Assessment of good practice which will start from March 2025. There will also be an update on the Anti-Fraud Policy and how internal audit can help. 

11.2       The Senior Lawyer suggested that there should be a discussion as to whether Devolution and Governance should be a standing item going forward.

Resolved:

That the update be noted.

The next meeting of the Audit and Governance Committee will be held on Friday 7 March 11:00 – 13:00 in the Ante Chamber (2^nd floor), Manchester City Council, Town Hall Extension, Albert Square, Manchester, M60 2LA. 

Friday 7^th March 11:00 – 13:00

Antechamber – Manchester City Council Town Hall Extension