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AUDIT COMMITTEE

 

Minutes of a meeting held on 18th November, 2014.

 

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

 

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

 

 

604     APOLOGIES FOR ABSENCE –

 

These were received from Mr. P. Lewis (Vice-Chairman), Mr. J. Golding (Grant Thornton UK LLP), and Councillors J.C. Bird and M.R. Wilson.

 

 

605     MINUTES – 

 

RESOLVED – T H A T the minutes of the meeting held on 22nd September, 2014 be approved as a correct record.

 

 

606     DECLARATIONS OF INTEREST –

 

No declarations were received.

 

 

607     BUILDING SERVICES UPDATE (HOA) –

 

Committee were provided with an update on the current situation as it relates to Status 10 Jobs (either jobs which were ongoing or jobs that have been finalised and as yet unclaimed) within Building Services.

 

Whilst scrutinising the Annual Governance Statement for 2013/14, the Audit Committee on 22nd September had noted the comments relating to Building Services which stated 'there is a trend which sees an increasing number of jobs remaining unclosed'.  Committee had further regard to the fact that the Auditors felt that speedy and efficient closing of work must continue to be a priority as it would allow for a more accurate monitoring of budgets and a more positive reputation between Building Services and its clients. 

 

Audit Committee had expressed the view that this situation must be investigated and that the Head of Housing and Building Services appear before the Committee. 

 

The classification of Status 10 referred to either jobs which were ongoing or jobs that had been finalised and as yet unclaimed.  During the follow up review of Building Services, it was noted that the number of Status 10 jobs were increasing, indicating that there appeared to be delays in closing jobs. 

 

Committee were provided with a breakdown of the number of Status 10 jobs for the period July 2013 to September 2014 as follows:

 

Month

Data Report Date

Total of Status 10s

Per Month

2013

July

August

September

October

November

December

December

 

29th July

14th August

18th September

15th October

20th November

9th December

16th December

 

1,459

2,131

2,368

2,114

1,859

1,185

1,180

2014

January

January

February

February

February

March

April

May

June

July

August

September

15th January

22nd January

3rd February

11th February

21st February

10th March

2nd April

2nd May

2nd June

22nd July

31st August

24th September

1,153

816

725

660

1,029

853

534

1,293

1,564

1,165

1,198

1,043

 

Committee were advised of the most up to date figures, namely:

 

Report Date

Total of Status 10s per Month

8th October 2014

1,131

20th October 2014

958

11th November 2014

1,155

  

The details above showed that the numbers had peaked in September 2013 with 2,368 jobs outstanding following which there was a steady decrease and that in April 2014, the numbers had significantly decreased by over 77.5% to a total of 534.  However, the trend showed an increase in numbers of Status 10 jobs outstanding. 

 

Appendix A to the report provided a further analysis of the numbers and percentage of Status 10 jobs by officers.  By far, the greatest proportion of Status 10 jobs was within Building Services.  The details also showed that the highest percentage of jobs outstanding were those classified as 'Confirmer' which were mobile jobs assigned via the PDAs, followed by 'WHQS' and 'Mobile Jobs not in Confirmer'.  Auditors had established that in the case of 'Confirmer Jobs', it was the responsibility of two allocated Maintenance Officers to undertake the necessary checks.  A Maintenance Officer’s Status 10 Report which listed raised and released jobs was provided to all Maintenance Officers within the section on a monthly basis by the Business Support Officer in order for the Maintenance Officers to investigate why the jobs detailed within the report had not been completed.  For accurate trading account information, it was essential that jobs were completed and closed in a timely manner to ensure that jobs were charged to clients and income recovered.  The Building Services Financial Procedure Note to all Maintenance Officers stated that 'All mobile responsive repairs are to be closed by the relevant Maintenance Officers in 'Confirmer' (mobile jobs).'  This was to be completed on a daily basis and where Maintenance Officers were on annual leave, adequate cover was to be provided to cover the 'Confirmer' role.  Therefore, there was an expectation that Maintenance Officers would ensure that 'they are always up to date in clearing these reports'.  It was clear from the information contained on Appendix A to the report that this had not been a priority since May 2014.

 

In addition to the above, and as contained within the Financial Procedure Note, it also stated that 'A monthly overview report would be provided to the Building Services Manager outlining progress of all Maintenance Officers and for reporting to the Maintenance Officer Service Improvement Group'.  Copies of the minutes for the last six meetings of the Maintenance Officer Service Improvement Group had been requested in order to ascertain whether any issues in relation to the closing of Status 10 jobs had been identified and addressed.  It was disappointing to note that these meetings had not been held at monthly intervals, with only four having been held since January 2014, the most recent of which had been 11th August 2014. 

 

The report had concluded that there did not appear to be any identifiable reason as to why the number of Status 10 jobs had increased.  However, the fact that a monthly meeting of the Maintenance Officer Service Improvement Group were not taking place as regularly as expected; there were defined acceptable levels / targets for the number of Status 10s outstanding and a lack of prioritisation could all be contributory factors to the increase.

 

The Operational Manager Building advised the Committee that:

 

-               It was fair to say that Status 10 jobs had not been managed effectively in the past but were now receiving priority

-               At any point in time, there would always be some outstanding Status 10 jobs

-               Attempts were being made to establish a satisfactory level of outstanding Status 10 jobs

-               The oldest Status 10 job went back as far as August 2014.  The reason for it being outstanding was that an invoice was awaited.

-               The Operational Manager spoke of seasonal fluctuations

-               Whilst the figures may appear to have increased, they were being closely managed.

 

Members were of the view that the 'open jobs' involved a significant amount of income, and were informed that the danger was that should a job be closed prematurely, a subsequent invoice for an unexpected amount may subsequently be received. 

 

Concern was expressed that some of the figures related to scheduled jobs and Members enquired if that information was available. 

 

Members were advised that this information was not evidenced, and expressed a wish to view such information and furthermore, the information be provided by reference to:

 

-               Value

-               Numbers of each type of job.

 

The Operational Manager Building outlined the monitoring procedure for dealing with Status 10 jobs and ventured that this process was more robust than had originally been envisaged.

 

RESOLVED –

 

(1)       T H A T the February meeting of the Committee receive an update report on the situation of Status 10 jobs.

 

(2)       T H A T the update report include information concerning DLO jobs that had been completed but for which the paperwork had not been completed and that these be listed in terms of

 

-               Value of jobs

-               Numbers for each type of job.

 

Reason for decisions

 

(1&2)  For the information of the Committee.

 

 

608     UPDATE ON CIVIL PARKING ENFORCEMENT – SHARED SERVICE (HOA) –

 

Committee was provided with an update on the Civil Parking Enforcement Shared Service arrangement.

 

The meeting of the Committee in July 2014 requested that the Audit Committee Forward Work Programme 2014/15 should be updated to include a review of the shared Civil Parking Enforcement scheme. 

 

On 1st April 2013, Bridgend and the Vale of Glamorgan Councils were made responsible for the enforcement of the majority of on-street and off-street parking regulations under a scheme entitled Civil Parking Enforcement (CPE). 

 

The two Councils operate a shared service arrangement, led by Bridgend County Borough Council and guided by a joint Service Agreement.  The administration and income collection of a Penalty Charge Notice (PCN) was managed by the Welsh Penalty Processing Partnership (WPPP) which was part of Denbighshire County Council who also processed and collected penalty charges on behalf another eight local authorities. 

 

The objective of the audit was to ensure that the Civil Parking Enforcement Shared Service arrangement was providing an efficient and effective service for the Vale of Glamorgan Council in compliance with the Service Agreement. 

 

During the audit, a number of strengths and areas of good practice were identified.  Policies and procedures were found to be fully documented and available, Civil Enforcement Officers (CEOs) were actively and well managed by the Parking Manager with issues addressed as and when they occurred and a Parking Board, consisting of Nominated Representatives, had been established in accordance with the 'Service Agreement relating to Civil Parking Enforcement between Bridgend County Borough Council and the Vale of Glamorgan Council'. 

 

A number of key issues were also identified, for example, performance indicators had not been established, and the Auditor had found little evidence of monitoring.  Parking Board meetings were not a priority and were not minuted.  Additionally, the option to move CEOs from the Alps Depot would enable Officers to be more efficient yet little action had been taken to secure an alternative base.

 

The Service Agreement required parties to undertake a review of the Agreement with particular reference to the costs, income and effectiveness of the arrangements.  Thereafter, parties should review the agreement at 12 month intervals.  The Auditor had identified that neither the Service Agreement nor the cost apportionments had been reviewed since the contract commencement date, i.e. 1st April 2013.  The Auditor had therefore recommended that the Service Agreement should be reviewed by both parties immediately. 

 

A Parking Board had been established and meetings were found to have taken place during January, April and June 2014 but further meetings had not been arranged at the time of the Audit.  It had been noted that meetings were not a priority for all Officers.  Furthermore, no formal minutes of the meetings were documents or disseminated to Officers.  The Auditor had therefore recommended that Parking Board meetings should be held on a quarterly basis and that a timetable of forward meetings should be produced in advance together with standard agenda items, and all meetings should be minuted to ensure key points were documented and actioned.

 

Little evidence was found regarding the regular monitoring of the service.  It was felt that this should be a fixed agenda item for the Parking Board as well as an ongoing priority for both Authorities.  The Service Agreement did not set out specific indicators or areas for performance monitoring.  When the Agreement was reviewed, it was felt that this area should be revisited and clarified to ensure that specific, measurable, accurate, reliable and timely indicators were created, implemented and regularly monitored.  It was felt that these indicators should be qualitative as well as quantitative because ultimately the key objectors of the scheme is to run the CPE operation (both on and off street) efficiently, effectively and economically.  The purpose of penalty charges was to dissuade motorists from breaking parking restrictions and therefore the key objective should be 100% compliance, with no penalty charges issued.  The Traffic Management Act states that raising revenue should not be an objective of CPE, nor should Authorities set targets for revenue or the number PCNs they issue. 

 

It was identified that CEOs are roughly apportioned 70% to Bridgend and 30% to the Vale although the Vale would only pay for the actual hours worked by the CEOs and these hours could be evidenced via the rotas sent to the Vale Accountant on a monthly basis.  There were five officers that regularly patrolled the Vale of Glamorgan and they had been assigned here because they lived within the Vale.  This was also the case for officers who worked in Bridgend.  Assignment was not based on the Officer’s performance, and where there were staff shortages, CEOs who normally worked in Bridgend would provide cover to the Vale and vice versa. 

 

To reduce travelling times and costs, CEOs were based at Bridgend Innovation Centre and the Alps Depot in Wenvoe depending on their nearest patrol area.  It had been recommended and discussed that an alternative base be sought in the Vale because Officers were required to travel to their base twice daily to sign out their Hand Held Computers and upload them at the end of the day.  This took up approximately an hour of enforcement time per Officer per day.  The original suggestion to move the base office was made 16 months ago and although enquiries into alternative bases had been looked into by the Principal Engineer, CEOs were still reporting to the Alps at least twice a day.  This was costing the Vale Officer downtime and mileage costs.  There was no deadline for the implementation of this action and therefore, the Auditor had recommended that an alternative base for CEOs in the Vale should be secured as soon as possible.

 

The Auditor had tested a 5% sample of all cancelled PCNs to ensure that they had been cancelled in accordance with the prescribed processes.  No issues had been identified.

 

During the testing process, it had been noted that the Vale had a potential to increase revenue by charging Blue Badge holders for car parking, in areas where other users were required to pay.  The Auditor found that current practices allowed the cancellation of a first time contravention for Blue Badge holders.  During 2013/14, 78 PCNs were cancelled due to a first contravention with a potential income of £3,656. 

 

Based on an assessment of the strengths and weaknesses of the areas examined, and through testing, it had been concluded that the effectiveness of the internal control environment was reasonable.  In summary, the main recommendations were:

 

-               That the Service Agreement (including Appendix 3 – CPE Cost Apportionment) should be reviewed by both Councils immediately;

-               That the Parking Board meetings should be held on a quarterly basis.  A timetable of forward meetings should be produced in advance together with standard agenda items and all meetings should be minuted to ensure key points were documented and actioned;

-               That an alternative base for Civil Enforcement Officers in the Vale should be secured as soon as possible.

 

A response from management to the above recommendations was awaited.

 

The Operational Manager, Highways and Engineering advised Committee that the system was working reasonably well, although there were a number of key issues that were unresolved.  In response to the findings of the Audit:

 

-               It was contended that there had been an initial review of the Service Agreement

-               A timetable of meetings of the Parking Board had been established, and the effectiveness of the holding of such meetings would be reviewed in 12 months’ time

-               Measurable indicators would be developed over the next few months

-               The need was to focus not on revenue raising, but on road safety

-               The need for the Officers to relocate from the Alps to Barry was acknowledged, and discussions were taking place with the Council’s Estates Division.

 

In referring to the need for office accommodation to be found in Barry for the Officers to sign out their Hand Held Computers and upload them at the end of the day, a Member asked if it would be possible for the Officers to take the devices to their homes for uploading.  It was agreed that this suggestion would be investigated.

 

Having considered the report, it was

 

RESOLVED –

 

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

 

(2)       T H A T a further report, to include the Management Response, be reported to the February 2015 meeting of the Committee.

 

Reason for decisions

 

(1&2)  To facilitate monitoring of the Council’s overall internal control environment.

 

 

609     ANNUAL AUDIT LETTER 2013/14 (MD) –

 

Committee received the Annual Audit Letter for the 2013/14 Financial Year. 

 

The Annual Audit Letter summarised the key issues arising from the work the external Auditors had carried out during 2013/14.

 

In relation to the Statement of Accounts, the Appointed Auditor issued an unqualified audit opinion on the accounting statements confirming that they presented a true a fair view of the Council’s financial position and transactions. 

 

Overall, the Appointed Auditor was satisfied that the Council had appropriate arrangements in place to secure economy, efficiency and effectiveness.

 

The Appointed Auditor issued a certificate confirming that the audit of the accounts had been completed on 30th September 2014.

 

RESOLVED – T H A T the contents of the External Annual Audit Letter be endorsed and referred to Cabinet for approval.

 

Reason for decision

 

To facilitate monitoring of the Audit function.

 

 

610     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. 

 

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.

 

 

611     RISK MANAGEMENT – CORPORATE RISK REGISTER REVIEW (CRMG) –

 

Committee received an update on the current position of the Corporate Risk Register. 

 

The Corporate Risk Management Group (CRMG) meet on a quarterly basis to review the Risk Register to consider the position of each corporate risk identified.  The Group evaluates whether there have been any changes in either the internal or external environment as well as any new mitigating controls that were being put in place that would prompt a re-evaluation of the risk in terms of its score / position.

 

A report providing an update on the status of risks within the current Risk Register was endorsed by CMT on 5th November 2014.  At this meeting, CMT felt that the climate change risk had significantly reduced on the basis that the risks associated with it were being effectively controlled through a range of current controls and counter measures.  CMT recommended that the risk should be scored as low and hence removed from the Risk Register. 

 

Although the majority of risks had remained relatively static, some risks had been forecast to move in an upward or downward direction based on the circumstances known to be on the horizon.  It was forecast that the waste management risk would continue to move in a downward direction as a result of the implementation of the new Veridor waste management energy plan.  It was anticipated that the risk associated with fines would be significantly diminished.  Equally the funding risk had been forecast to decrease overtime.  However, it was anticipated that the work force needs risk would increase over time as a result of the Reshaping Services agenda and factors associated with the proposed merging of local authorities.  CRMG had recommended that the Risk Register template be amended to capture any horizon scanning risks in order to forecast whether a risk is likely to move in an upward or downward direction in the future.

 

Appendix 1 to the report outlined each corporate risk aligned by risk theme and owner and identified the current risk score and the corresponding direction of travel.  For each corporate risk, an update had been provided in relation to any key changes, developments in relation to the risk and its mitigating actions. 

 

The CRMG identified that there was the need to adapt the current risk register to not only identify if a risk was currently increasing / decreasing / staying the same, but also to forecast whether the direction of travel was likely to change in the future.  This would enable the Group to forecast for each risk whether the risk was likely to increase / decrease in light of any knowledge of future internal / external factors that were on the horizon even if the risk currently could remain static. 

 

The CRMG discussed three new emerging corporate risks that include the safeguarding risk, the deprivation of liberties risk and the public buildings corporate compliance risk.  CRMG had agreed that each of these risks would be considered by the Group in more detail at its next meeting to evaluate whether they should be identified as either corporate or service level risks.

 

Having considered the report, it was

 

RESOLVED –

 

(1)       T H A T the current position and key developments in relation to corporate risks be noted.

 

(2)       T H A T the risks associated with climate change be retained within the Risk Register.

 

Reasons for decisions

 

(1)       to highlight the amendments made to the Corporate Risk Register and the current position of corporate risks for the Council.

 

(2)       To ensure that all corporate risks for the Council are effectively monitored, addressed, reviewed and updated on a regular basis.

 

 

612     INTERNAL AUDIT – OUTTURN REPORT – APRIL TO OCTOBER 2014 (HOA) –

 

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

 

The actual position for the seven 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 Oct 2014

2014-15

April to Oct

Actual Days

 

Resources

565

330

258

Development Services

95

55.5

32

Visible Services and Housing

165

96

72

Learning and Skills

153

89

117

Social Services

110

64

36

Cross Cutting

225

131

126

Contingency - unplanned

95

55.5

141

Contingency - Fraud and Error

70

41

114

TOTAL PRODUCTIVE DAYS

1,478

862

896

 

A summary of audits commenced and completed during the period April to October 2014 were detailed in both Appendices A and B.  It could be seen from the table above that the actual days achieved for the period exceeded that expected by 34 days.  In addition, the contingency for unplanned work had already been exceeded by 48%.

 

Detailed reports were issued to the relevant service managers on the results of individual audits and where significant differences were identified, these would be followed up to ensure high priority recommendations were implemented.  To date, there had been no significant issues identified.

 

RESOLVED – T H A T the report on actual Internal Audit performance for the seven months of the Financial Year be noted.

 

Reason for decision

 

To facilitate monitoring of the audit function.

 

 

613     SENIOR MANAGEMENT ASSURANCE STATEMENT (HOA) –

 

Committee was provided with an update on the implementation of the Senior Management Assurance Statement for the Financial Year 2014/15. 

 

The Vale of Glamorgan Council was responsible for ensuring that its business was conducted in accordance with the law and proper standards, and that public money was safeguarded and properly accounted for and used economically, efficiently and effectively.  In discharging its overall responsibilities, the Council was also responsible for ensuring that there was a sound system of internal control which facilitated the effective exercise of its functions and which included arrangements for the management of risk.

 

For there to be effective corporate governance across the Council, active participation from Members and officers alike was required.   Internal Audit had a finite resource that would be used to ensure completion of the annual risk based internal audit plan.  To gain a wider level of assurance for both the Annual Governance Statement and the Head of Audit’s annual opinion, it was proposed to the Corporate Management Team (CMT) that the assurance be sought from Directors and their Senior Management Teams with regard to the systems within their remit.  A briefing note and questionnaire was presented to CMT on 7th May when it was agreed that the Senior Management Assurance Statement be adopted. 

 

In accordance with the agreed protocol and for the first time, Senior Management Assurance Statements (SMAS) were distributed to all Directors for onward distribution to their relevant Head of Service / Operational Managers.

 

A total of 22 Statements had been distributed and responses were required to cover the period April to August 2014. 

 

Only one response indicated only partial compliance as summarised below:

 

No.

Question

No of

Partly

 

Senior

Management

Comment

7.

All audit reports received from external and internal audit are considered in a timely manner and action taken to implement agreed recommendations to enhance the internal control environment. Management actively monitor reports received to ensure all recommendations are actioned in a timely manner.

 

1

Sometimes recommendations are unachievable and responses to the audits reflect and explain why this is.

 

A section of the SMAS asked for management to detail any significant governance issues.  In total, of the 22 SMASs returned, seven had identified governance issues and these were described at Appendix C to the report.

 

Committee noted that three of the significant issues identified had already been reflected in the 2013/14 Annual Governance Statement (AGS); these being reduced funding from Welsh Government, Building Services and the monitoring of Leisure Management Contract.  In addition, of the remaining four issues identified; they had already been pinpointed as having a potential impact on the AGS and therefore assurance could be placed on the value of implementing this SMAS process. 

 

Having considered the content of the report, it was

 

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

 

Reason for decision

 

To facilitate monitoring of the Council’s overall internal control environment.

 

 

614     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. 

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