Minutes of a meeting held on 23rd February, 2012.
Present: Councillor A.C. Williams (Chairman); Councillors Mrs. P. Drake, J.F. Fraser, K. Hatton, N. Moore and C.L. Osborne.
Also present: Mr. S. Barry, Wales Audit Office.
915 APOLOGY FOR ABSENCE -
This was received from Councillor J. Clifford.
916 MINUTES -
RECOMMENDED - T H A T the minutes of the meeting held on 21st December, 2011 be approved as a correct record.
917 DECLARATIONS OF INTEREST -
No declarations were received.
918 AUDITOR GENERAL FOR WALES: ANNUAL IMPROVEMENT REPORT 2012 (REF) -
Cabinet, on 15th February 2012, were advised of the results of the Assessment by the Auditor General for Wales of the Council’s arrangements to secure continuous improvement.
The Wales Audit Office’s Performance Assessment of the Council was contained within the Auditor General’s Annual Improvement Report 2012. The Report focused on key elements of corporate management arrangements that underpinned the way the Council was able to make effective use of its resources and the outcome of its activity in specific areas. The Report’s conclusions were summarised below:
the Council had strong corporate management arrangements in place and was securing improvement across a range of services
effective financial management, good use of information technology and strengths in people management
much to do to improve the management of its land and property and performance for delivering Disabled Facilities Grants remained poor despite improvements in recent years
good arrangements in place for setting its objectives and monitoring delivery of actions.
The Report had made the following two proposals for improvement:
P1 continue the development of outcome focussed measures moving from reporting arrangements that primarily focussed on performance indicators and on the completion or otherwise of an action and ensuring that intentions were expressed in a way which allowed the progress to be measured and that reporting arrangements consistently provided Members with an evaluation of performance in the context of the objective the Council was aiming to achieve
P2 implement specific proposals for improvement arising from the reviews of Human Resources, Asset Management and Disabled Facilities Grants.
Cabinet had been provided with further details of significant efforts which continued to be made corporately to improve upon delivery times for Disabled Facilities Grants for all clients. In light of ongoing service developments, it was anticipated that the Council would achieve the current Welsh average performance by 31st March, 2013.
Having considered the report, Cabinet had
(1) That the report be noted.
(2) That the report be referred to the Scrutiny Committee (Corporate Resources) and Audit Committee.
Having considered the contents of the Auditor General for Wales’ Annual Improvement Report 2012 together with the resolution of Cabinet, it was
RECOMMENDED - T H A T the decision of the Cabinet be noted.
Reason for recommendation
Having regard to the contents of the Annual Improvement Report, and the decision of the Cabinet.
919 WALES AUDIT OFFICE: IMPROVEMENT ASSESSMENT UPDATE (HARM) -
Committee received an update of progress by the Wales Audit Office (WAO) on the various projects in support of their work on the Council’s Improvement Assessment for 2011/12.
The Audit Committee meeting on 2nd June 2011 received a report from Mr. S. Barry, Improvement Assessment Lead from the WAO setting out their proposed Regulatory Programme for Performance Audit at the Council for the period April 2011 to March 2012.
As part of this process, the WAO intended to provide the Audit Committee with regular update reports on their progress on the various projects and studies which would inform their work on the Council’s Improvement Assessment.
Committee received an update of the WAO progress. It set out their intended work plan and a brief status report outlining the position as at 13th February 2012.
RECOMMENDED - T H A T the progress made by the Wales Audit Office on their Improvement Assessment work be noted.
Reason for recommendation
To keep the Audit Committee informed.
920 INTERNAL AUDIT - OUTTURN REPORT - APRIL TO JANUARY 2012 (HARM) -
Committee were informed of the actual Internal Audit performance against the 2011-12 Plan for the period 1st April 2011 to 31st January 2012.
The 2011/12 Internal Audit Operational Plan had been approved by the Audit Committee on 9th May 2011. The Plan outlined the assignments to be carried out, their respective priorities, an estimate of resources needed and differentiated between assurance and other work.
Committee received a report which showed the actual position for the ten months compared against the Plan.
The figures showed that 1,520 actual productive days had been achieved, which equated to 98.5% of the overall planned productive time available for the ten month period. This was considered to be an incredible achievement when taking into account that staff had been relocated during the period to Bridgend and had had to embrace new working practices such as agile working and hot desking, together with the fact that a number of staff had left the Section during the period.
With the two sections now together, it was envisaged that staff would work alongside one another to ensure that both Councils’ Audit Plans were achieved in line with risk.
A summary of the audits completed during the period April to January 2012 was detailed in the report. This provided Committee with details of the reviews completed, together with an overall Audit Opinion and this would support the annual audit opinion at the end of the financial year.
Detailed reports were issued to the relevant service managers on the results of individual audits and where significant weaknesses were identified, these would be followed up to ensure high priority recommendations were implemented.
Overall, the reviews completed during the ten months of the financial year to date had not identified any significant weaknesses in the system of internal financial control. However, four reviews had resulted in an overall opinion of limited assurance due to the weaknesses identified in the internal control environment. These reviews would be subject to follow up work during the year.
RECOMMENDED - T H A T the report on actual Internal Audit performance during the ten months of the Financial Year be noted.
Reason for recommendation
To facilitate monitoring of the audit function.
921 SELF ASSESSMENT CHECKLIST - MEASURING THE EFFECTIVENESS OF THE AUDIT COMMITTEE (HARM) -
Committee received a report which informed of the findings of the self assessment checklist which measured the effectiveness of the Audit Committee.
The Chartered Institute of Public Finance and Accountancy (CIPFA) published practical guidance for local authorities on the role of audit committees. Although not mandatory, the Guidance contained certain fundamental principles which, if not followed, could result in criticism from the Council’s External Auditors Grant Thornton UK LLP.
Effective audit committees helped raise the profile of internal control, risk management and financial reporting issues within an organisation. They enhanced public trust and confidence in the financial governance of an authority.
In order to ascertain how effective the Audit Committee was in contributing to good governance, a self assessment had been undertaken applying the model as contained within the CIPFA guidance and comparing this with the Audit Committee’s existing Terms of Reference.
Attached at Appendix A to the report was the outcome of the self assessment checklist. This had been used to measure the overall effectiveness of the Council’s Audit Committee.
The overall assessment was very good with all positive responses. Therefore, it could be concluded that the Council’s Audit Committee made an effective contribution to the overall governance arrangements of the Council.
RECOMMENDED - T H A T the results of the self assessment on the effectiveness of the Audit Committee be noted.
Reason for recommendation
To provide for a review of the effectiveness of the Audit Committee.
922 COMPLIANCE OF INTERNAL AUDIT TO THE STANDARDS AS CONTAINED WITHIN THE CODE OF PRACTICE FOR INTERNAL AUDIT IN LOCAL GOVERNMENT IN THE UNITED KINGDOM 2006 (HARM) -
Committee were informed of the findings of the self assessment checklist which measured the compliance of Internal Audit to the Standards as contained within the Code of Practice for Internal Audit in Local Government.
The Code of Practice defined the way in which the Internal Audit service should undertake its functions. It consisted of 11 Standards together with a checklist for compliance with the Code.
In order to assist the Committee in discharging its obligations under the Constitution, and to facilitate the monitoring of the Internal Audit function to ensure that a continuously effective level of performance was maintained, compliance with the Code of Practice for Internal Audit was mandatory.
The checklist was included as an Appendix to the Code, which offered the Head of Internal Audit - Head of Accountancy and Resource Management to measure the service provision against the Standards within the Code. It was suggested that the results of the review should be used as part of the annual audit report to those charged with governance to demonstrate compliance with the Code and to identify any areas for further action.
Attached at Appendix A to the report were the results of the self assessment of the Vale of Glamorgan Council’s Internal Audit Section against the checklist. It was pleasing to report that with the exception of two minor partial compliance scores, the Section overall had achieved over 99% compliance with the Code. Such compliance would be subject to a separate annual review by the Council’s External Auditors - Grant Thornton UK LLP.
The areas identified where action was required would be addressed when the Terms of Reference for Internal Audit were brought before the Committee, thus ensuring adherence to the Standards.
RECOMMENDED - T H A T the results of the Self Assessment Checklist and the overall compliance of the Section with the Code of Practice be noted.
Reason for recommendation
To facilitate the monitoring of the audit function.
923 DEVELOPMENT OF A SHARED SERVICE FOR INTERNAL AUDIT WITH BRIDGEND COUNTY BOROUGH COUNCIL (DFICTP) -
Committee were updated on the progress to develop a full shared service for Internal Audit with Bridgend County Borough Council (Bridgend CBC).
Cabinet had approved the implementation of a temporary shared service arrangement for Internal Audit Manager with Bridgend CBC in December 2009, effective from 1st January 2010. Further specific reports on progress had been submitted to the Audit Committee with regular updates also provided by the Head of Accountancy and Resource Management in his capacity as Head of Internal Audit in providing an opinion on the adequacy of the Council’s internal control arrangements.
A three-phase Business Case had been developed, with the third phase being endorsed by the two Councils’ Joint Working Programme Board in May 2011. Phase 3 would realise the option for the provision of a fully integrated Internal Audit Shared Service (IASS). With the success experienced by sharing the Internal Audit Manager (phase 1), it was considered that the next natural progression would be to integrate all staff in one location and second staff from Bridgend CBC to the Vale (phase 2). This had been successfully achieved and had been fully operational since May 2011 with staff from both the Vale of Glamorgan Council and Bridgend CBC coming together and being located at the Innovation Centre situated on the boundaries of both Councils in Ewenny, Bridgend.
Phase 3 of the Business Case was to create an IASS which would deliver a full, professional internal audit service to meet the needs of the Councils and the requirements as defined in the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Internal Audit in Local Government in the United Kingdom 2006.
The stated aim of the IASS project was to provide a shared service solution, focused on a series of identifiable and measurable objectives, in which both Councils had an equal share in terms of control, direction and influence.
As such, the IASS should achieve the following objectives:
is affordable and which represents value for money
enhances the professionalism and quality of audit services provided to both Councils through shared knowledge and best practice
is flexible and can respond to changing service requirements and priorities
extends access to specialist audit services and other related disciplines to both Councils
delivers efficiencies and economies of scale
improves the investment of staff training and development and provides opportunities for career progression for staff within the service.
In order to meet this, the phase 3 Business Case recommended that:
there should be a single employing authority which should be the Vale of Glamorgan Council
staff currently employed by Bridgend County Borough Council should be TUPE (Transfer of Undertakings - Protection of Employment Regulations) transferred to the Vale of Glamorgan Council
a new staffing structure should be implemented to ensure the IASS was fit for purpose and fit for form
the new staffing structure should be implemented after all staff were employed by the Vale of Glamorgan Council
a legal Partnership Agreement based on Section 101 / 102 of the Local Government Act 1972 should be entered into between the two Councils to delegate the function and formalise the provision of services and basis for cost apportionment.
Both Councils would be required to sign up to the terms and conditions of this document for a set period of time (proposed minimum of three years) in order to demonstrate commitment.
Overseeing the IASS would be a Joint Partnership Board comprising the respective Section 151 Officers (or their nominees) from each Council. The Board would monitor the performance of the IASS to ensure that it delivered the standards and expectations set out in the partnership agreement.
Whilst the partners would jointly oversee the performance of the IASS, the responsibility for the adequacy of the whole system of internal audit would remain with the Councils themselves, who would remain responsible for approving audit plans and monitoring delivery via the Councils’ respective Audit Committees.
The individual Councils would continue to be responsible for overseeing the effectiveness of the internal audit function at Council level, and holding the Head of Internal Audit to account for delivery of the approved Audit Plan. They would also be responsible for the effectiveness of their governance, risk management and control arrangements, hold managers to account for delivery and receive regular progress updates on internal audit work as well as considering key themes and issues and to take them forward as necessary.
Initial indications of the level of service required had been considered, and this information had been used to determine the indicative costs of the service. The costs would be shared in proportion to the level of service required on a full recovery basis with the overall position being cost neutral in terms of the existing budget.
The coming together of the two divisions had also identified a need for a new organisational structure to be implemented as part of the process. This would have the impact of reducing the number of full time equivalent posts between the two divisions, at present 29 to a maximum of 24 under the new IASS.
RECOMMENDED - T H A T Cabinet:
(1) Approves the proposal that the Vale of Glamorgan Council hosts and becomes a partner in the Internal Audit Shared Service (IASS) with Bridgend County Borough Council.
(2) Authorises the Head of Paid Service and the Section 151 Officer, in consultation with the Leader, to make the necessary detailed arrangements under delegated authority to establish the IASS, including admission of further interested parties if appropriate subject to an agreed Partnership Agreement and Contract.
Reason for recommendations
(1&2) To facilitate monitoring of the proposal to establish a shared service for the Internal Audit function.