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AUDIT COMMITTEE

 

Minutes of a meeting held on 16th September, 2013 at the Innovation Centre, Bridgend Science Park.

 

Present: Councillor K. Hatton (Chairman); Mr. P.R. Lewis (Vice-Chairman - Lay Member); Councillors Mrs. P. Drake and K.J. Geary.

 

Also present: Mr. J. Golding and Ms. G. Turner, Grant Thornton UK LLP.

 

 

400     APOLOGIES FOR ABSENCE –  

 

These were received from Councillors J.C. Bird, J. Drysdale, A.C. Williams, Mr. S. Barry and Ms. J. Holownia (Wales Audit Office).

 

 

401     MINUTES –  

 

RESOLVED – T H A T the minutes of the meeting held on 8th July, 2013 be approved as a correct record.

 

 

402     DECLARATIONS OF INTEREST –

 

No declarations were received.

 

 

403     OVERVIEW OF ICT IN VALE OF GLAMORGAN COUNCIL –  

 

The Committee received a presentation from Mr. Richard Watkins Group Auditor which advised of the role of ICT, the structure of the department and the scale of coverage.  The role of ICT was defined as to support the organisation in delivering effective services and ….. increasingly to facilitate change to transform services and achieve efficiency savings.  Members were informed that 24 employees covered Networks, Telecommunications, Servers, Storage and Support Team.   A further 23 employees dealt with applications with systems administration of applications including development, test and production (live) systems.  These were all supported by a Head of Strategic ICT.

 

In referring to scale this covered the following:

 

Networks and Communications:

·         200 Sites

·         2,300 telephone extensions

·         1,000 mobile phones

 

Support Teams

·         2,000 internal staff and Elected Members using:

·         1,800 PCs and Laptops

·         400 Printers

·         1,000 mobile phones

·         2,300 telephone extensions

 

Servers and Storage

·         172 Servers (Unix and Windows)

·         Physical and virtual servers

 

Applications Team

·         160 applications, including:

·         Email (Outlook, GCSX, Clearswift)

·         Electronic Document

·         Management System (TRIM)

·         Internet and Intranet (StaffNet)

·         E-Business Suite (Oracle).

 

The presentation also referred to information security with three main elements being confidentiality, integrity and availability. Confidentiality was preventing the disclosure of information to unauthorised individuals or systems.  Integrity was referred to as maintaining and assuring the accuracy and consistency of data over its entire life cycle and availability was to ensure that information was available when required.

 

The Group Auditor further stated that the challenges facing ICT and ICT Audit related to:

 

·         budget cuts

·         more for less

·         extremely fast paced technology changes

·         dealing with increased security risks and threats

·         collaborative working and rationalisation.

 

The presentation also highlighted ICT trends and risks and opportunities such as  

 

·         mobile technologies – smart phones, tablets, building your own device (BYOD), agile working,

·         Cloud computing – a pay as you use service run from the internet

·         use of social media – Twitter, Facebook and Hwb (school service)

·         Big Data – linking vast amounts of data together.

 

Discussion ensued in relation to new technology and the various different types of methods that could be used which Mr. Watkins stated would have an affect on the way in which the audit team approached their work.

 

With regard to the issues of integrity and confidentiality, Members queried the level of integrity that existed within the Council with the response being that currently user names and passwords were used to access systems initially but that there would be further user names and passwords that would be required when accessing further applications. These would each have their own security settings depending on the particular application.

Following the presentation Members requested to receive an email copy of the slides in a larger font via email to the Democratic and Scrutiny Officer.

 

It was subsequently

 

RESOLVED - T H AT Mr. Watkins be thanked for his informative presentation.

 

 

404     UPDATE ON THE REGULATORY PROGRAMME FOR PERFORMANCE AUDIT SEPTEMBER 2013 (MD) –  

 

The Local Government (Wales) Measure 2009 and the Local Government Act 1999 required the Auditor General to carry out an annual Improvement Assessment to determine whether the Vale of Glamorgan Council was likely to comply with the requirements of Part 1 of the Measure.  The Regulatory Plan outlined the work to be undertaken in the Council during April 2013 and March 2014.  A copy of the Regulatory Programme update was attached at Appendix 1 to the report.

 

In monitoring the progress to date it was

 

RESOLVED – T H A T the update on the Regulatory Programme for Performance Audit: September 2013 be noted.

 

Reason for decision

 

Having considered the report.

 

 

405     BUILDING SERVICES – UPDATE REPORT (MD) –

 

The purpose of the report was to provide the Committee with an update on the progress being made in respect of Building Services reviews.

 

On 8th July, 2013 the Committee had received a report which outlined the significant control weaknesses within Building Services following an Internal Audit Review.  The Audit report recommended a number of actions to be undertaken by the Head of Housing and Building Services and these were outlined in the report submitted to the Audit Committee on 8th July, 2013.  As a result of the work that had been carried out by the Head of Service and her team, a report had been subsequently submitted to Cabinet on 29th July, 2013 outlining the proposed actions to be taken which would be included in the Time Bound Change Plan.  A copy of the relevant Cabinet Minute (C1444) was attached at Appendix A to the report.

 

The list of actions proposed was not considered exhaustive and was expected to develop further as ongoing audit and investigatory work was reported over the coming months. 

 

Since 8th July, 2013 some audit reviews had been concluded which covered the areas of call-out, pre and post inspections and front contractor payments.  All three reports identified issues that needed to be included within the Time Bound Change Plan.  Members were assured that the reports had all been positively responded to by management and further assurances given that the recommendations made would be included within the Change Plan.  In addition, internal audit had examined a number of specific allegations to ascertain whether there were grounds to commence investigations into a number of issues raised.  It was noted that as expected, work within Building Services was continuing and the Head of Housing and Building Services was facing a significant challenge to ensure that all the issues identified and being identified were addressed.  Internal Audit would also continue their work with the Division and were in the process of reviewing Welsh Housing Quality Standards, stock controls, ticketed work, fleet and fuel usage and outstanding specific allegations together with any other issues that might arise as a result from these ongoing reviews.

 

The Head of Accountancy and Resource Management informed the Committee that a Working Group had been set up by Cabinet and that from an Audit perspective a member of the team would be represented on that group. Due to the fact that Internal Audit would be heavily involved in and undertaking a number of reviews within Building Services, it was noted that this would have an effect on other work for the team.  Members acknowledged that this would be the case but stated that it was essential that Internal Audit were undertaking in-depth investigations in view of the circumstances.

 

Mr. John Golding (Grant Thornton) advised that he had been kept fully apprised of the situation and that from an External Auditor's point of view he did not think there were any issues, at the moment, that required their attention. However, there were issues that would need to be considered within the Council in due course e.g. stock control levels and advised that Grant Thornton would be attending the stocktake at the Alps in March 2014.

 

Following consideration of the report it was subsequently

 

RESOLVED –  

 

(1)       T H A T the content of the report and progress to date be noted.

 

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

 

Reason for decisions

 

(1&2)  To inform Members and to report on the findings of the progress being made in respect of the Building Services Reviews and to ensure that appropriate action is taken to address the issues raised.

 

           

406     LEISURE AND TOURISM – LEISURE CENTRE CONTRACT (HARM) –

 

The report highlighted that from 1st August, 2012 the Council had formally handed over the management of its leisure centres to an external contractor for an initial contract period of 10 years.  It was noted that this was the first time the Council had entered into a partnership arrangement of such magnitude.

 

At the request of the Managing Director and in accordance with the Internal Audit Annual Risk Assessment process, an audit review of the adequacy and effectiveness of the financial and quality monitoring arrangements surrounding the contractual partnership arrangements between the Council and the Leisure Centre service was included as part of the 2012/13 annual Internal Audit Plan.

 

The review had identified across the board a general lack of controls, culminating in an overall audit opinion of no assurance.  A follow up audit was undertaken in March 2013 with a further follow up in June 2013 which concluded that despite being nearly a year into the contract and having undertaken three audit reviews, little progress had been achieved in the formulation and approval of a clear monitoring methodology for this contract. Discussions with representatives from the Service Provider had been made with regard to introducing monitoring arrangements and the proposals were currently in draft format awaiting approval.  Verbal assurances had been given by the Operational Manager Leisure and Tourism that all the agreed monitoring arrangements would be in place by the end of August 2013.

 

The issues identified as a result of the Internal Audit Reviews were considered to be so significant that this matter had been included within the Council's Annual Governance Statement 2012/13 and the Managing Director has requested and commissioned the Council's External Auditors - Grant Thornton UK LLP to undertake an independent review of these arrangements

 

In view of the above raised it was suggested that the Operational Manager for the service area should be present at the meeting of the Audit Committee when the independent review by the external auditor was due to be presented. 

It was subsequently

 

RESOLVED –  

 

(1)       T H A T the content of the report be noted.

 

(2)       T H A T an update from the Council's External Auditor on conclusion of the independent review be presented in due course.

 

Reason for decisions.

 

(1&2)  To apprise Members.       

 

407     INFORMATION AND ACTION REQUESTS BY COMMITTEE (HARM) –  

 

Attached at Appendix A to the report was a list of information and action requests together with a position statement for each, which covered the period 17th September, 2012 to date.

 

In considering the first action detailed at Appendix A that the Committee receives further reports on the Social Services budget as appropriate, it was noted that the Chairman of the Scrutiny Committee (Corporate Resources) had called for a report in relation to the Adult Services budget which was to be submitted to the Scrutiny Committee (Corporate Resources) within the next few months.  The Chairman advised that he would also be asking for that report to be presented to the Audit Committee for its consideration.

 

The Chairman also requested that an update report on Welfare Reform and the Single Fraud Investigation Service be submitted to the November meeting of the Committee.

 

It was

 

RESOLVED – T H A T the contents of the report be noted and the current status be amended as detailed above.

 

Reason for decision

 

To keep Committee informed.

 

 

408     REVISED ANNUAL GOVERNANCE STATEMENT 2012 – 2013 (HARM) –

 

The report advised that a draft Annual Governance Statement (AGS) for the 2012/13 financial year relating to the activities of the Council had been presented to the Committee on 29th April, 2013 and supported the unaudited Statement of Accounts.  This had been drawn up with regard to the Code of Practice and local authority accounting in the U.K. and had regard to guidance issued by CIPFA/ SOLACE in its publication 'Developing Good Governance in Local Government'. and the Council's Code of Corporate Governance.

 

In accordance with the requirements attached at Appendix A to the report was the revised Annual Governance Statement which reflected any significant events or developments which had occurred between the balance sheet and the date on which the Annual Statement of Accounts was signed by the responsible financial officer.  In particular, changes had been made to Section 4 to reflect the issues raised by the Council's Audit Committee during the review of the draft AGS in April 2013 and Section 11 which reflected issues that had subsequently been identified in relation to Building Services, mobile working responsive repairs and the actions being taken to address them.

 

It was subsequently

 

RESOLVED – T H A T the revised Annual Governance Statement for 2012/13 be recommended for adoption by the Leader and the Managing Director and their signatures appended accordingly.

 

Reason for decision

 

To provide a review of the governance framework and the system of internal control, which had been in place within the Council for the year ended 31st March, 2013.

 

 

409     AUDIT OF THE 2012/13 FINANCIAL STATEMENTS – REPORTING TO THOSE CHARGED WITH GOVERNANCE (MD) –

 

The Council was responsible for the preparation of financial statements that presented fairly its financial position as at 31st March, 2013.  The report of the Appointed Auditor was attached together with the 2012/13 Statement of Accounts which incorporated all the amendments. 

 

Members were reminded that over the past 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 has 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.

 

The provisional findings of Grant Thornton UK LLP on behalf of the Appointed Auditor on the audit of the Financial Statements were presented to Committee for consideration under the title 'Audit of Financial Statements Report'

 

It was the intention of the Appointed Auditor to issue an unqualified audit report on the Financial Statements once the relevant Council officers had provided a signed Final Letter of Representation. 

 

The External Auditor took the opportunity to formally report his thanks to the Principal Accountant and the finance team for their co-operation in the preparation of the Statement of Accounts.  He also advised that following discussions with officers he had been comfortable with Manager's responses, with regard to issues arising from the audit and that appropriate corrections had been made. 

With particular reference to the report he set out the issues in respect of the MMI Scheme of Arrangement, he considered that certain old debts should now be written off and that the acquisition of the new cash flow computer system model would assist in the preparation of the information required for the next year's accounts.

 

Following the representations by the External Auditor, the Principal Accountant asked Members whether there were any issues that they needed clarification on before the accounts were formally approved. It being noted that the Audit Committee had considered a draft version of the accounts at its meeting on 8th July, 2013 and that Appendix 3 to the Wales Audit Office report provided a summary of corrections made to the draft Financial Statements it was subsequently

 

RESOLVED – T H A T the report of the Appointed Auditor on the audit of the Council's Financial Statements for 2012/13 be approved and the Financial Statements including the Final Letter of Representation be recommended for signature by those authorised.

 

Reason for decision

 

To note that the Members of the Audit Committee as those charged with governance have considered the results of the audit of the Council's Financial Statements for 2012/13.

 

 

410     OUTTURN REPORT – APRIL TO AUGUST 2013 (HARM) –  

 

The report provided the Committee with details of the actual Internal Audit performance against the 2013-14 Plan for the period 1st April to 31st August, 2013.  The actual position for the first five months compared against the Plan was as detailed in the table below:

 

 

Directorates

2013-14

Full Year

Plan Days

Proportion of

Plan Days Available for

April to Aug.

2013-14

April to Aug.

Actual Days

 

Corporate and Customer Services

55

23

16

Resources

440

183

167

Development Services

150

62.5

64

Visible Services and Housing

110

46

24

Learning and Skills

220

92

108

Social Services

155

64.5

62

Cross Cutting

280

117

45

Contingency - unplanned

125

52

244

Contingency - Fraud and Error

100

41

48

TOTAL PRODUCTIVE DAYS

1,635

681

778

 

The figures show that 778 actual productive days had been achieved, which equated to 114% of the overall planned productive time available for the period.

 

A summary of the audits completed during the period April to August 2013 was detailed in the Head of Accountancy and Resource Management's progress report which was attached at Appendix A to the report.  This Appendix, together with Appendix B provided the Committee with details of the reviews that had been completed together with an overall Audit Opinion which would support the Annual Audit Opinion at the end of the financial year.  It was noted that 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.

With regard to the report on the Fraud Service Members asked if this could be presented to the November meeting.  The External Auditor in referring to the challenges facing the team in respect of the amount of resources and input that the Audit Team had undertaken within the Building Services Department advised that he was satisfied that there would be enough coverage to form an overall view on other audit work.

 

Members, in recognising the issues facing the team subsequently

 

RESOLVED – T H AT the actual Internal Audit performance during the first five months of the financial year be noted.

 

Reason for decision

 

In view of the contents of the report.

 

 

411     UPDATED FORWARD WORK PROGRAMME 2013–14 (HARM) –

 

The updated Forward Work Programme for 2013-14 was presented for Committee's consideration and/or approval and was attached at Appendix A to the report. The Chairman also reminded those present of a further meeting of the Committee that had recently been scheduled to take place on Tuesday, 26th November, 2013 at 6.00 p.m. at the Civic Offices.

 

RESOLVED – T H A T the 2013/14 Forward Work Programme be noted.

 

Reason for decision

 

To apprise Members.

 

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