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AUDIT COMMITTEE

 

 

Minutes of a meeting held on 19th November, 2012.

 

Present: Councillor K. Hatton (Chairman); Mr. P.R. Lewis (Vice-Chairman);

Councillors Mrs. P. Drake, J. Drysdale and K.J. Geary.

 

Also present: Mr. J. Golding (Grant Thornton UK LLP) and Mr. S. Barry (Wales Audit Office).

 

 

545     APOLOGIES FOR ABSENCE -

 

These were received from Councillors J.C. Bird, A.C. Williams and M.R. Wilson.

 

 

546     MINUTES -

 

RECOMMENDED - T H A T the minutes of the meeting held on 17th September, 2012 be approved as a correct record subject to it being recorded that Councillor A.C. Williams had been present at the meeting.

 

 

547     DECLARATIONS OF INTEREST -

 

No declarations were received.

 

 

548     PRESENTATION – RISK MANAGEMENT –

 

Committee received a presentation on “Risk Management”, i.e. identifying and analysing potential risks and determining ways of minimising either the likelihood that a risk would happen, or the impact that it could have on the Council. 

 

Areas covered by the presentation included:

  • Defining Risk – where does risk come from
  • Core Risk Process
  • Toolkit
  • Identification – Risk Breakdown Structure
  • Two-dimensional Risk
  • Risk Matrix
  • Management Risk
  • Monitoring Progress
  • The Corporate Risk Management Group
  • Audit Committee’s Terms of Reference in relation to Risk Management.

RECOMMENDED – T H A T the contents of the presentation be noted.

 

Reason for recommendation

 

Having regard to the contents of the presentation.

 

 

549     RISK MANAGEMENT STRATEGY AND CORPORATE RISK REGISTER REVIEW (CRMG) –

 

Committee considered the revised Risk Management Strategy for approval, and received an update on the current Corporate Risk Register. 

 

The Corporate Risk Management Group (CRMG) of officers met on a quarterly basis to consider the position of each risk detailed on the Corporate Risk Register.  The Group considered any changes in either the internal or external environment, including the introduction of mitigating controls which may cause each risk to be re-evaluated.

 

The process by which the Group assessed and controlled each risk was set out in the Council’s Risk Management Strategy.  This included a checklist of the following ten risk “themes” which was attached to each individual corporate risk in order to best assess the nature of the risk and its potential effects:

  • business continuity
  • collaboration
  • sustainability (including Social Inclusion)
  • health and safety
  • workforce planning
  • sickness absence
  • equalities
  • information management (including E-Government)
  • project management
  • financial management.

A copy of the latest Risk Management Strategy was attached at Appendix A to the report.  This incorporated some minor changes to reflect the new senior management structure and the process for service planning, although the seven principles set out for the management of risk remained unchanged.  The seven principles were:

  • identifying risk
  • analysing risk
  • profiling risk
  • prioritising action
  • determining action
  • controlling risk
  • monitoring and reporting progress.

At the last meeting of the CRMG, in September 2012, it was agreed that the implications of Welfare Reform should be included as a burgeoning corporate risk, as this posed a significant threat to the Council both in terms of additional financial burdens and the increase in demand for services e.g. homelessness, social care.

 

CRMG last reported to Corporate Management Team in October 2012 on the 12 fundamental risks facing the Council (including the new Welfare Reform risk), which formed the Corporate Risk Register.

 

As part of the risk management process, the CRMG had since reassessed the position of the risks, and considered sickness absence to no longer pose a significant risk to the Council (although it would continue to be monitored through reports to Scrutiny Committee and Cabinet).  The remaining 11 risks were as outlined below, together with their related corporate risk “themes”, allocated “owner” and risk score:

 

Risk Title

Risk Theme

Risk Owner

Risk Score

Financial implications of job evaluation and equal pay conditions and their impact on workforce planning.

Workforce Planning, Business Continuity, Equalities, Financial Management

Head of Human Resources

6

(Medium)

 

 

 

Failure to deliver the School Investment Strategy

 

Business Continuity, Collaboration, Project Management, Sustainability (including Social Inclusion), Health and Safety, Financial Management

 

Head of Strategic Planning & Performance (Learning & Skills)

 

6

Medium

 

 

 

Failure to meet Welsh Housing Quality Standards and a sustainable solution for the Council

 

Project Management, Sustainability (including Social Inclusion), Financial Management

 

Director of Visible Services & Housing

 

 

 

6 (Medium)

 

 

 

Failure to meet the national waste agenda and targets

 

Financial Management, Collaboration, Project Management, Sustainability (including Social Inclusion)

 

Director of Visible Services & Housing

9 (Medium / High)

 

Inability to anticipate and plan for the workforce needs of the future in order to meet changing services requirements

 

Workforce Planning, Business Continuity, Collaboration, Equalities

 

Head of Human Resources

 

6 (Medium)

 

Ability to maintain services to an acceptable standard in light of reduced funding levels

 

Business Continuity, Collaboration, Sustainability (including Social Inclusion), Workforce Planning, Equalities, Project Management, Financial Management

 

Head of Accountancy & Resource Management

 

12 (High)

 

The failure to implement adequate information security management systems across the Council

 

Business Continuity, Collaboration, Information Management (including E-Government), Project Management

 

Head of Legal Services

 

9 (Medium / High)

 

Failure to deliver projects on time, within budget and in accordance of an agreed specification

 

Sustainability (including Social Inclusion), Project Management, Financial Management

 

Operational Manager – Property

 

6 (Medium)

 

Failure to adapt to the impact of climate change and failure to mitigate against climate change in the Vale of Glamorgan

 

Sustainability (including Social Inclusion), Health and Safety, Workforce Planning, Financial Management

 

Head of Performance & Development

6 (Medium)

 

Failure to manage the collaboration agenda effectively

 

Collaboration, Sustainability, Equalities, Project Management, Financial Management

 

Head of Performance & Development

 

6

(Medium)

 

Impact of Welfare Reform Measures

 

Sustainability (including Social Inclusion), Workforce Planning, Equalities, Information Management (including E-Government),  Financial Management

 

Head of Financial Services

 

12

(High)

 

 

 

 

 

 

 

Detailed risk templates for each of the above were attached at Appendix B to the report.

 

It was reported that the process of identifying corporate risks from the service planning process was well established throughout the Council.  This also helped inform the Council’s Improvement Plan and the process of Annual Risk Assessments formed part of the overall Risk Management Strategy adopted by the Council.  The CRMG would continue to assess the controls and implementation of necessary counter measures to mitigate these risks throughout the year. 

 

Reference was made to Figure 1 of the Risk Management Strategy (Risk Management Framework – Risk Management in the Performance Management Framework), and Members expressed the view that there was a role in the process for Audit Committee. 

 

Regarding Table 4 (Page 15) of the Risk Management Strategy, a view was expressed that the contents could be more “outcome-focused” and it was agreed that this could be re-visited. 

 

A further discussion ensued of the column entitled “Risk Themes” on the forms attached at Appendix B to the report where it was stated that this column reiterated what was to be done with each category of risk, and did not offer any additionality.  The Chairman, by way of explanation, advised that each risk topic was supported by further work, for example Appendix B(11) to the report “Welfare Reform” was supported by the work of a Task and Finish Group.  To progress consideration of the report, and to assist in the Members’ understanding of how the process worked, the Chairman suggested that a future meeting of the Committee receive a report outlining how the process of calculating risk was carried out.  It was suggested that the topic of Welfare Reform be used as an example. 

 

Members also referred to the Council’s decision regarding the Local Development Plan and felt that this should be referred to the Corporate Risk Management Group for review. 

 

Mr. Golding also suggested that each entry in the Risk Register contain an indication of whether the risk factor had increased or decreased since the last review, and the use of a “risk radar” was mentioned. 

 

RECOMMENDED –

 

(1)       T H A T the revised Risk Management Strategy be approved.

 

(2)       T H A T  the position regarding the current Corporate Risk Register be noted.

 

(3)       T H A T the next meeting of the Committee receive a report outlining how the process of calculating risk was carried out, with particular reference to Welfare Reform. 

 

(4)       T H A T the Corporate Risk Management Group be requested to review the likely level of risk as a result of the Council’s decision regarding the Local Development Plan. 

 

Reasons for recommendations

 

(1)       To facilitate the management of risk across the Council.

 

(2)       To ensure that all fundamental risks facing the Council are regularly monitored, addressed, reviewed and updated.

 

(3)       To assist the Committee in understanding how the Corporate Risk Register was reviewed.

 

(4)       In view of the Council’s recent decision.

 

 

550     AUDITOR GENERAL FOR WALES: IMPROVEMENT ASSESSMENT UPDATE (MD) –

 

Committee were advised of the results of the latest assessment by the Auditor General for Wales of the Council’s arrangements to secure continuous improvement.

 

The Auditor General for Wales (AGW) has a duty under the Local Government (Wales) Measure (2009) to undertake and report upon his audit and assessment work in relation to whether the Vale of Glamorgan Council had discharged its duties and met the requirements of the Measure.

 

Specifically, this included the AGW’s views on:

  • whether the Council had discharged its statutory duties in respect of improvement – planning
  • the Council’s compliance with requirements to make arrangements to secure continuous improvement, based on work carried out to date by the Wales Audit Office and relevant regulators, including:

          -          the Council’s progress on areas for improvement and recommendations identified in previous

                     assessments

          -          any relevant issues that may have emerged since the AGW’s last report, including comments on

                      how the Council was addressing financial challenges, and a brief summary of any reports of

                      relevant regulators issued since the last report.

 

A copy of the AGW’s letter was attached at Appendix 1 to the report.  Matters of note included:

  • the Council had discharged its improvement planning duties under the Measure and had acted in accordance with Welsh Government guidance
  • based on, and limited to, work carried out to date by the Wales Audit Office and relevant regulators, the AGW believed that the Council was likely to comply with the requirement to make arrangements to secure continuous improvement during this financial year.  This conclusion was based upon evidence that:

          -          a number of the proposals for improvement identified in the AGW’s previous assessments were

                     being, or were planned to be, progressed

          -          results from the local work undertaken showed the Council was able to demonstrate it was

                     continuing to improve in most areas although it needed to strengthen arrangements for

                     monitoring delivery of the AGW’s proposals for improvement

          -          the Council was well placed to address its financial challenges and had clear transformation plans

                     which were supporting the delivery of efficiency savings, but its impact had only been evaluated in

                     terms of cost savings.

 

The AGW had indicated that he would be updating his views during the year and would provide a further letter by the end of November 2012.

 

RECOMMENDED – T H A T the contents of the report be noted.

 

Reason for recommendation

 

To keep the Audit Committee apprised and provide for scrutiny and review of the Auditor General’s letter.

 

 

551     INTERNAL AUDIT – OUTTURN REPORT – APRIL TO SEPTEMBER 2012 (HARM) –

 

Committee were informed of actual Internal Audit performance against the 2012-13 Plan for the period 1st April to 30th September 2012.

 

The actual position for the first six months compared against the Plan was detailed at Appendix A to the report.

 

The figures showed that 696 actual productive days had been achieved, which equated to 92% of the overall planned productive time available.  The shortfall of 59 days was directly attributable to staff shortages.

 

A summary of audits completed during the period April to September 2012 was detailed in the progress report attached at Appendix B to the report.  This, together with Appendix A, provided the Committee with details of the reviews completed, together with an overall Audit Opinion which 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, with the exception of four reviews where only limited assurance could be given, the remainder of the reviews completed during the first six months of the financial year had not identified any significant weaknesses in the system of internal financial control.

 

Of the four reviews where issues had been highlighted, these were being closely monitored and would receive follow up visits during the last quarter of the financial year.

 

RECOMMENDED – T H A T the contents of the report be noted.

 

Reason for recommendation

 

To facilitate monitoring of the audit function.

 

 

552     AUDIT COMMITTEE – UPDATE OF THE FORWARD WORK PROGRAMME (HARM) –

 

Committee received the updated 2012/13 Forward Work Programme for the Audit Committee. 

 

In order to assist the Audit Committee in ensuring that due consideration had been given by the Committee to all aspects of their core functions, an updated Forward Work Programme was attached at Appendix A to the report. 

 

RECOMMENDED – T H A T the updated 2012/13 Forward Work Programme be noted.

 

Reason for recommendation

 

To keep the Audit Committee informed.

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