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AUDIT COMMITTEE

 

Minutes of a meeting held on 22nd September, 2014.

 

Present:  Councillor K. Hatton (Chairman); Councillors Mrs. P. Drake, J. Drysdale and K.J. Geary.

 

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

 

 

 

397     APOLOGIES FOR ABSENCE –

 

These were received from Mr. P. Lewis (Vice-Chairman).

 

 

398     MINUTES –  

 

RESOLVED – T H A T the minutes of the meeting held on 7th July, 2014 be approved as a correct record.

 

 

399     DECLARATIONS OF INTEREST –

 

No declarations were received.

 

 

400     AUDITOR GENERAL FOR WALES: ANNUAL IMPROVEMENT REPORT 2014 (MD) –

 

Committee 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 Annual Improvement Report of the Council was presented to Committee.  Each year, the Auditor General must report on how well Welsh Councils were planning for improvement and delivering their services.  Drawing on the work of the relevant Welsh inspectorates, as well as work undertaken on his behalf by the Wales Audit Office, the report presented a picture of improvement over the previous year. 

 

Overall, the Auditor General had concluded that the Council was making good progress on 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 Council’s planning for improvement and its arrangements to support improvement were sound. 

 

The report concluded that:

  • The Council had achieved most of its objectives and was focused on addressing areas of weakness but should make greater use of external benchmarking in relation to internal targets and reporting performance
  • The Council complied with Welsh Government publication requirements, although its methods of data verification from the Leisure Services contractor were not as strong as for its own services
  • The Council had effective plans for managing the financial challenges it faced and had developed a plan intended to prepare its workforce for the future
  • The Council generally had strengths in driving improvement across most services and responded positively to challenge.  However, significant improvement was required in the delivery of disabled facilities grants and in managing the leisure contract.

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

 

Reason for decision

 

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

 

 

401     UPDATE ON THE PERFORMANCE AUDIT PROGRAMME 2014-15 (MD) –

 

Committee received an update on the Performance Audit Programme 2014/15 as produced by the Wales Audit Office. 

 

The Performance Audit Programme outlined work to be undertaken in the Council between April 2014 and March 2015 by and on behalf of the Auditor General under the Local Government (Wales) Measure 2009 and Parts 2 and 3A of the Public Audit (Wales) Act 2004.

 

A copy of the Performance Audit Programme update was attached at Appendix 1 to the report. 

 

RESOLVED – T H A T the update on the Performance Audit Programme for 2014/15 be noted.

 

Reason for decision

 

In order to review and progress the Performance Audit Programme.

 

 

402     CONTRACT MONITORING (MD) –

 

Committee received an update on the Council’s External Auditor – Grant Thornton UK LLP report on the review of Contract Monitoring arrangements. 

 

The Annual Governance Statement published in September 2013 had highlighted key control issues that had been identified as part of the work undertaken by Internal Audit.  In particular, there were concerns relating to the lack of contractual arrangements within the Waste Management Service and also to the adequacy and effectiveness of the financial and quality monitoring arrangements surrounding partnership arrangements between the Council and the Leisure Centres’ service provider.

 

Following on from discussions with the Managing Director, the Council’s External Auditors – Grant Thornton UK LLP were commissioned to independently examine the key control issues highlighted.  This report had been presented to the Audit Committee on 7th July 2014. 

 

The External Auditors – Grant Thornton UK LLP’s report identified four proposals for improvement and a response in the form of a Management Implementation Plan was sought. 

 

The relevant Director had responded formally in writing to the proposals and this was attached at Appendix A to the report. 

 

The Director of Development Services advised that the contract with Parkwood Leisure involved a significant number of clauses which required monitoring. 

 

In response to the comments of the External Auditor, the Contract had been condensed to a simpler schedule of easily identifiable clauses which had been prioritised and a Monitoring Action Plan devised.

 

During consideration of the recommendations as contained in the Monitoring Plan, the following emerged:

 

Recommendation 1 – It was reported that the group of four officers had initially met on 4th September 2014 and would continue to meet regularly.

 

Recommendation 2 – The Contract Monitoring Plan stated that the formal contract monitoring meetings would meet six times per year.

 

Committee were requested to agree that these meetings be held monthly. 

 

Recommendation 3 – A Contract Monitoring checklist was distributed at the meeting. 

 

It was felt that Scrutiny Committee Members needed to be aware of the clauses in order to scrutinise the contract and to assist in this process, it was suggested that a training session be held. 

 

Recommendation 4 – It was suggested that “exceptions†be reported to Scrutiny Committee on a quarterly basis regarding contract monitoring and contract performance against indicators, with full reporting to take place very six months.

 

It was suggested that a presentation on contract monitoring and performance measures be given to Scrutiny Committee (Economy and Environment) (as lead Scrutiny Committee) to ensure effective Member involvement in contract monitoring and that all Members of the Council be invited to attend.

  • The order of Recommendations 4 and 5 should be reversed i.e. training to be provided prior to the commencement of contract monitoring.
  • A mystery shopper approach should be adopted to ensure effective quality control checks are undertaken at all Parkwood sites. 

Members enquired as to the skills required by officers for effective contract monitoring and were advised that this was something that would be considered. 

 

It was reported that the contract monitoring process would be reported to Scrutiny Committee (Economy and Environment) as quickly as possible.

 

Following discussions on the Parkwood Leisure Contract Monitoring Plan and the suggested amendments as outlined above, it was

 

RESOLVED –

 

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

 

(2)       T H A T the suggested amendments to the Parkwood Leisure Contract Monitoring Plan as outlined above be adopted.

 

Reason for decisions

 

(1&2)  To facilitate the monitoring of the audit function.

 

 

403     REVISED ANNUAL GOVERNANCE STATEMENT 2013 – 2014 (HOF) –

 

Committee received the revised Annual Governance Statement for review purposes and were requested to recommend its adoption by the Leader of the Council and the Managing Director. 

 

Section 4(2) of the Accounts and Audit (Wales) Regulations 2005 as amended, require every Welsh local authority to conduct a review, at least once in a year, of the effectiveness of its system of internal control and those governance arrangements with its Annual Statement of Accounts.  The production of an Annual Governance Statement was a statutory requirement for local authorities in Wales to support the annual Statement of Accounts.

 

A draft Annual Governance Statement for the 2013/14 financial year relating to the activities of the Council was presented to the Audit Committee on 7th July 2014 and supported the unaudited Statement of Accounts.  It had been drawn up with regard to the Code of Practice on Local Authority Accounting in the UK: A Statement of Recommended Practice.  It also 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 requirements, the revised Annual Governance Statement was attached at Appendix A to the report and which reflected any significant events or developments that had occurred between the balance sheet date and the date on which the Annual Statement of Accounts is signed by the responsible financial officer.  In particular, changes had been made to Section 11 to reflect the significant governance issues relating to the intended retirement of the Council’s Managing Director – Director of Resources (Head of Paid Service). 

 

In noting the comments at paragraph 11.8 of the Annual Governance Statement for 2013/14 which stated 'there is a trend which sees an increasing number of jobs remaining unclosed'.  The Auditors appreciated that the increase was nowhere near the original level as identified in March 2013 but the numbers had started to rise.  It was felt that speedy and efficient closing of work within ConSol must continue to be a priority within the Section as it would allow for a more accurate monitoring of budgets and a more positive reputation between Building Services and its clients.  Members expressed the view that this situation must be investigated and that the Head of Housing and Building Services appear before the Committee. 

 

It was further reported that the date on which the Statement was to be signed should have read 29th September, and not 30th September 2014. 

 

Having considered the revised Annual Governance Statement, it was

 

RESOLVED –

 

(1)       T H A T the revised Annual Governance Statement for 2013-2014 be recommended for adoption by the Leader and the Managing Director and their signatures appended accordingly. 

 

(2)       T H A T Audit investigate the situation with regard to the increasing number of jobs remaining unclosed and bring a report on this subject to the meeting of the Committee scheduled for 18th November 2014 and also that the Head of Housing and Building Services be required to attend the meeting.

 

(3)       T H A T the Corporate Risk Management Group consider the level of Corporate Risk arising from the intended retirement of the Council’s Managing Director – Director of Resources (Head of Paid Service).

 

Reason for decisions

 

(1-3)    To provide for a review of the governance framework and the system of internal control, which has been in place within the Council for the year ended 31st March 2014.

 

 

404     AUDIT OF THE 2013/14 FINANCIAL STATEMENTS – REPORT TO THOSE CHARGED WITH GOVERNANCE (MD) –

 

Committee received the report of the Appointed Auditor, Anthony Barrett of the Wales Audit Office, following the audit of the Council’s Financial Statements for 2013/14. 


RESOLVED –

 

(1)       T H A T the report of the Appointed Auditor on the audit of the Council’s Financial Statements for 2013/14 be approved and that the Financial Statements including the Final Letter of Representation be recommended for signature by those authorised.

 

(2)       T H A T the members of the Audit Team be thanked for their efforts in the production of the Financial Statements.

 

Reasons for decision

 

(1)       To ensure 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 2013/14.

 

(2)       To record the appreciation of the Committee.

 

 

405     INTERNAL AUDIT – OUTTURN REPORT – APRIL TO AUGUST 2014 (HOA) –

 

Committee was informed of actual Internal Audit performance against the 2014-15 Plan for the period 1st April to 31st August 2014. 

 

The actual position for the five months compared against the Plan was detailed in the table below:

 

Directorates

2014-15

Full Year

Plan Days

Proportion of

Plan Days Available for

April to Aug 2014

2014-15

April to Aug

Actual Days

 

Resources

565

235

189

Development Services

95

39

17

Visible Services and Housing

165

69

32

Learning and Skills

153

64

81

Social Services

110

46

28

Cross Cutting

225

94

97

Contingency - unplanned

95

39

93

Contingency - Fraud & Error

70

29

64

TOTAL PRODUCTIVE DAYS

1,478

616

601

  

A summary of audits commenced and completed during the period April to August 2014 were detailed in both Appendices A and B.  It could be seen from the table above that actual days achieved for the period were less than expected by 15 days.  In addition, a total of 98% of the contingency for unplanned work had already been utilised. 

 

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.  The work undertaken by the Internal Audit Shared Service has not, so far to date, identified any significant governance, risk management or internal control issues that would warrant inclusion in the Annual Governance statement. 

 

RESOLVED – T H A T the report on actual Internal Audit performance for the five months of the financial year be noted.

 

Reason for decision

 

To facilitate monitoring of the audit function.

 

 

406     AUDIT COMMITTEE – UPDATED FORWARD WORK PROGRAMME 2014-15 (HOA) –

 

Committee received the updated Forward Work Programme 2014-15. 

 

RESOLVED – T H A T the amendments to the updated 2014/15 Forward Work Programme be noted.

 

Reason for decision

 

To keep the Audit Committee informed.