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Agenda Item No.

 

AUDIT COMMITTEE

 

Minutes of a meeting held on 8th July, 2013.

 

Present: Councillors J.C. Bird, Mrs. P. Drake, J. Drysdale, K.J. Geary, K. Hatton, A.C. Williams and M.R. Wilson.

Mr. P.R. Lewis (Lay Member).

 

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

 

 

166     APPOINTMENT OF CHAIRMAN –

 

RESOLVED – T H A T Councillor K. Hatton be appointed Chairman until the first meeting of the 2014/15 municipal year.

 

           

167     APPOINTMENT OF VICE-CHAIRMAN –

 

RESOLVED – T H A T Mr. P.R. Lewis be appointed Vice-Chairman.

 

 

168     MINUTES -

 

RECOMMENDED - T H A T the minutes of the meeting held on 29th April, 2013 be approved as a correct record, subject to it being noted that Councillor M.R. Wilson had not, in fact, been present but had tendered his apologies.

 

 

169     DECLARATIONS OF INTEREST -

 

No declarations were received.

 

 

170     BUILDING SERVICES: MOBILE WORKING REVIEW (MD) –

 

On 15th March 2013, potentially serious operational issues within Building Services had been brought to the attention of the Head of Accountancy and Resource Management.  Consequently, those matters were passed to Internal Audit for further investigation by the Managing Director.  The Committee noted that issues had also been raised by the recently appointed Head of Housing and Building Services.  The Director of Visible Services and Housing confirmed that, prior to this occurring, no concerns had previously been raised with him regarding the issues detailed in the report.

 

The audit review comprised an examination of specific allegations and a review of controls surrounding the allocation, collation, monitoring and charging of Building Services jobs, specifically relating to Mobile Working Responsive Repairs.  As far as the allegations raised were concerned, these were the subject of ongoing investigation and would be dealt with in future audit reports. 

 

In September 2009, Building Services had adopted a mobile working system comprising two phases.  Firstly, a mobile solution providing real time messaging and job transfer to staff (e-ConSol) and, secondly, job scheduling (Opti-Time).  A Business Improvement Initiative (BII) Report in 2011 indicated that significant benefits had been achieved, with improvements in customer satisfaction and internal control.  However, a second independent BII report produced in February 2013 contrasted significantly with the earlier report.  A number of serious concerns in relation to mobile working planning and operations were identified.  Specific observations of particular concern to Internal Audit were:

 

-                 too many operatives

-                 operatives working at half the capacity of industry standards

-                 travel time not being efficient (operatives were visiting the Depot without the need to or were not where they were supposed to be)

-                 the need for the entire repairs team to be evaluated and significant changes made to address the existing lack of delivery.

 

In addition to the above, Internal Audit had concluded that the existing staff structure could not be regarded as fit for purpose.  Lines of management were unclear and there appeared to be little accountability at any level from management to operatives.  The lack of supervision and management and the failure to challenge operatives on production levels and other practices had allowed the effectiveness of mobile working to deteriorate significantly. 

 

The Director of Visible Services and Housing and the Head of Housing and Building Services were in attendance at the Committee and both stressed their commitment to resolving the issues as a matter of priority.  They were looking to ensure maximum Member involvement and awareness of the proposed change process which would be instigated and they circulated for Members’ information a proposed governance structure for a Building Services Change Plan.  This would be submitted to Cabinet for approval.  The Director stressed that the system itself was well-proven and remained capable of facilitating significant savings.  The Head of Housing and Building Services indicated that, soon after joining the Authority, she had become aware of the issues.  These included structure-related concerns and an apparent lack of understanding of the roles and responsibilities within the middle management structure.  She had already begun meeting with staff at various levels prior to the instigation of the formal Change Plan.  Both officers acknowledged the significance of the report and the need for cultural change within the service. 

 

During the ensuing discussion, several Members expressed concern regarding the fact that the issues had not been identified earlier.  However, Members also acknowledged the commitment of the Director and Head of Service and also expressed their confidence in those officers to implement the changes necessary to address the situation. 

 

The Managing Director was also in attendance at the meeting and stressed that she was taking the matter very seriously.  She reiterated the need to address matters relating to roles and responsibilities.  It would also be important to have the full support of the Trade Unions, who had, indeed, already been briefed and given a commitment to assisting in the process.

 

Members discussed the best means of dealing with any publicity regarding this matter.  Consideration was given as to whether it would be more beneficial to adopt a proactive approach and issue some kind of press release.  However, following discussion of the matter, it was agreed that the Managing Director would personally consider the best means of dealing with this particular aspect. 

 

The Chairman also asked that the Committee receive at a future meeting a copy of the original business case for the mobile working system and this was agreed.

 

RECOMMENDED –

 

(1)       T H A T the report, including the recommendations detailed at paragraphs 17 to 22, be endorsed and referred to Cabinet for approval.

 

(2)       T H A T further reports on progress in implementing the actions necessary to address the issues raised in the audit review be submitted to the Audit Committee by the Director of Visible Services and Housing.

 

Reason for recommendations

 

(1&2)  To keep the Audit Committee informed and to report on the findings of the Mobile Working Internal Audit Review within Building Services and to ensure that appropriate action is taken to address the issues raised.

 

 

171     REGULATORY REPORTS – IMPROVEMENT TRACKING (MD) –

 

The Council was subject to a number of regulators, who passed judgements on its work and made various recommendations / proposals for improvements to services.  These were generally, but not always, submitted to the Audit Committee and also often considered by Scrutiny Committees and the Cabinet.  Service Plans also contained actions arising from regulatory reports. 

 

Previously, there had been no one document which would allow the overseeing and tracking of implementations of regulators’ recommendations / proposals.  With this in mind, a document had been prepared for consideration by the Committee.  It was intended that the Committee would receive six-monthly update reports in the proposed format.  The intention would be that the Committee would be asked to agree that actions identified as completed would be removed from the tracking report. 

 

The Chairman asked whether the proposed format could include an additional column indicating which recommendations / proposals had been submitted to the relevant Scrutiny Committee for consideration.  The Operational Manager (Corporate Policy and Communications) indicated that this could be accommodated, but pointed out that the only actions which would have gone to Scrutiny Committees would be those contained in Service Plans. 

 

Members considered the proposed format of the report and concluded that it would not be practical to simply receive an overall report comprising such comprehensive detail.  It was considered that the recommendations / proposals should, instead, be submitted to the relevant Scrutiny Committees for consideration and determination as to whether they had been completed. 

 

Mr. S. Barry (Wales Audit Office) commented on the rationale for embracing the information in one report.  He pointed out that the WAO had, indeed, been critical of other councils who did not have adequate monitoring of regulators’ recommendations / proposals. 

 

In light of the above, the Committee did not agree recommendation (2) of the report relating to the Committee itself removing actions deemed to have been completed. 

RECOMMENDED –

 

(1)       T H A T the work achieved to address the recommendations / proposals made by regulator be noted.

 

(2)       T H A T the relevant Scrutiny Committees and / or Cabinet consider the recommendations / proposals and determine whether they have been completed and, therefore, should be removed from the tracking report.

 

Reason for recommendations

 

(1&2)  In order to achieve continuous improvement of Council services.

 

 

172     AUDITOR GENERAL FOR WALES: ANNUAL IMPROVEMENT REPORT 2013 (MD) –

 

The Committee received a copy of the Council’s Annual Improvement Report issued by the Wales Audit Office.  The report comprised an assessment by the Auditor General for Wales of the Council’s arrangements to secure continuous improvement.  Overall, the conclusion was that the Council was making good progress in delivering improvement in its priority areas, but needed to report more clearly on the outcomes achieved.  The Council’s performance evaluation and reporting arrangements were improving, but did not yet provide a complete and easily accessible explanation of the outcomes achieved.  The report had concluded that the Council’s planning for improvement and its arrangements to support improvements were sound. 

 

The main conclusions of the report were that:

 

·               corporate governance arrangements were generally sound

·               the Council had made good progress in modernising its Children’s Services and improving opportunities through collaboration with key partners

·               services for the elderly and vulnerable had improved, although key challenges remained

·               the Council had worked effectively with its partners to introduce arrangements and facilities in the community to support those deemed at risk of harm

·               the Council had achieved some of its improvement objectives to improve the environment, health and hygiene, but faced challenges to revitalise the local economy

·               the Council had made progress in achieving efficiencies, improving its Human Resources (HR) systems and asset management; however, there were some weaknesses in its information technology operations

·               the Council’s arrangements for monitoring and evaluating its performance were improving but the quality of reporting results was inconsistent

·               the Council made its reports accessible to the public and met the requirements of the Welsh Language Scheme

·               the Council was developing a more outcome-focused approach to support its planned improvements

·               the Council had clear and robust financial plans.

 

RECOMMENDED – T H A T the report be noted.

 

Reason for recommendation

 

To provide for review of the Auditor General’s Annual Improvement Report.

 

 

173     REVIEW OF WASTE MANAGEMENT AND CLEANSING CORPORATE RISK (DVSH) –

 

As agreed at the last meeting, Clifford Parish, Operational Manager (Visible and Housing Services) was in attendance in his capacity as a Risk Manager in order to assist the Committee in the preparation of the Corporate Risk Register.  A comprehensive report was submitted detailing the measures in place to mitigate the corporate risks relating to the Council’s waste management function.  An initial Internal Audit review of the contractual arrangements within the Waste Management and Cleansing Division was undertaken in 2012 and identified certain areas of weakness.  However, close work with Internal Audit had subsequently resulted in the weaknesses being addressed.  Indeed, the latest audit report had stated that the areas of weaknesses had been addressed and 'substantial assurance' could be placed upon the management of risk. 

 

Mr. Parish referred to the main remaining risk as being a financial one in the event of the Council failing to meet its statutory waste reduction targets.  Those were referred to the importance of the Welsh Government continuing to support the concept of co-mingling in terms of recycling.

 

RECOMMENDED – T H A T the measures in place to mitigate the corporate risks relating to Waste Management be noted.

 

Reason for recommendation

 

To reassure the Committee.

 

           

174     JOINT EDUCATION SERVICE (MD) –

 

In September 2012, a new Joint Education Service (JES) was established, to provide school support and traded services to the Vale of Glamorgan, Cardiff, Merthyr Tydfil, Rhondda Cynon Taff and Bridgend Councils.  This development was driven by the need to reduce costs and to respond to the drive of the Welsh Government towards regional service provision.  Previously, the Vale of Glamorgan and Cardiff councils each had their own service, whilst the other three Councils shared a service, but within a less formal and more limited structure.

 

As well as providing a more financially sustainable, regional offering, the JES was also designed to address a number of acknowledged weaknesses within the previous arrangements.

 

A review undertaken by the Wales Audit Office (WAO) sought to answer the question:

 

·               'Has the Council got arrangements in place to manage the changes in delivery of school improvement services and can it be confident that the JES provides a service that represents value for money for the Vale of Glamorgan'.

 

In examining this, the WAO also considered the following three sub-questions:

 

·               Does the Council have effective plans to manage the change in schools improvement service delivery?

·               Are the changes to the schools improvement service being implemented effectively?

·               Are monitoring and reporting arrangements in place to track implementation progress and manage any issues arising?

 

The Wales Audit Office's review of the governance arrangements of the Joint Education Service was attached at Appendix A to the report.

 

Overall, the WAO had concluded that at this early stage of implementation, the arrangements in place to manage the changes in school improvement services were still in the process of development, and the Council could not currently be confident that the JES was representing value for money for the Council.

 

The report concluded that:

 

·               The Council’s plan for managing the change in delivery of the schools improvement Service needed to be strengthened.

·               There was, currently, no formal, systematic means of testing whether or not the changes brought about by the introduction of the JES were working effectively.

·               Monitoring and reporting arrangements were in the process of being established but had yet to be fully implemented.

·               At a strategic level, work was needed to create a robust governance framework, particularly in respect of effective risk and performance management arrangements.

 

The report made a number of proposals for improvement.

 

During the discussion the Head of Democratic Services updated the Committee on progress towards the establishment of a Joint Scrutiny Committee in respect of the Central South Joint Education Consortium.  Proposed Terms of Reference drawn up were to be submitted to the Council’s Scrutiny Committee (Lifelong Learning) in July.  He also referred to the work which had been carried out with colleagues in the other constituent authorities regarding the submission of a bid for Welsh Government Scrutiny Development Fund assistance to employ a designated support officer for the Joint Scrutiny Committee.

 

RECOMMENDED –

 

(1)       T H A T the contents of the report and, in particular, the proposals for improvement, be endorsed and referred to Cabinet for approval.

 

(2)       T H A T a copy of the report be referred to the Scrutiny Committee (Lifelong Learning), who be asked to consider the likely intended outcomes for the Joint Education Service. 

 

Reason for recommendations

 

(1&2)  To provide for review of the Wales Audit Office governance review of the Joint Education Service.

 

 

175     UNAUDITED STATEMENT OF ACCOUNTS 2012/13 (HF AS S151 OFFICER) –

 

Under the Accounts and Audit (Wales) Regulations 2005, as amended, the Statement of Accounts must be certified by the Section 151 Officer before the 30th June as presenting a 'true and fair view’. The 2012/13 Statement of Accounts was certified as such on 27th June 2013.

 

The 2012/13 Statement of Accounts would be subject to external audit and the audited accounts would be presented to Audit Committee in September 2013 along with the external auditor’s ISA 260 report for review prior to being submitted for approval by Council before 30th September.

 

Over the last few years, significant changes had been introduced by the Code of Practice on Local Authority Accounting in the United Kingdom as to the presentation and content of the Statement of Accounts. The 2012/13 Statement of Accounts was attached to the report and had been prepared in accordance with the requirements of the International Financial Reporting Standards (IFRS). This was intended to provide for comparable accounts across all accounting boundaries, public and private, national and international.

 

Any comments of the Committee on the 2012/13 unaudited Statement of Accounts would be referred to the Head of Financial Services as Section 151 Officer for subsequent discussion with the Council’s external auditors, Grant Thornton LLP.

 

Members raised questions and received clarification on a number of elements of the report including:

 

·               page 22 – adjustments

·               page 54 / 55 – variances between financial years

·               page 59 – Senior Officers’ Emoluments

·               page 62 - Principal Financial Assumptions

·               page 63 - pension provisions

·               page 65 – Annual Return on Assets

·               page 68 – risk provisions

 

RECOMMENDED – T H A T the Unaudited Statement of Accounts for 2012/13 be noted.

 

Reason for recommendation

 

To allow for the initial review of the unaudited Statement of Accounts by those charged with governance.

 

 

176     INFORMATION AND ACTION REQUESTS BY COMMITTEE (HARM) –

 

During the course of Audit Committee meetings, Members, on occasion, requested explanation, further information and / or actions to be taken to ensure all aspects of their core functions were being covered and that the Committee was being kept fully informed.  The opportunity had been taken to prepare one composite report covering these issues which could be submitted to the Committee as a standing item at each meeting for monitoring / tracking. 

 

It was suggested, and acknowledged, that the inclusion of specific dates wherever possible would be beneficial. 

 

RECOMMENDED – T H A T the report be noted and the actions identified as completed removed from the tracking report.

 

Reason for recommendation

 

To keep the Audit Committee informed.

 

 

177     UPDATED FORWARD WORK PROGRAMME 2013/14 (HARM) –

 

In order to assist the Committee in ensuring that due consideration had been given by the Committee to all aspects of its core functions, an updated Forward Work Programme for 2013/14 was submitted for Members’ consideration.  This item would become a standing item on future agendas.

 

RECOMMENDED – T H A T the amendments to the updated 2013/14 Forward Work Programme, made to ensure that all aspects of the Committee’s core functions are being covered, be noted.

 

Reason for recommendation

 

To keep the Audit Committee informed.