Top

Top

 

AUDIT COMMITTEE

 

Minutes of a meeting held on 21st November, 2016.

 

Present:  Councillor K. Hatton (Chairman); Mr P.R. Lewis (Vice-Chairman) (Lay Member); Councillors J.C. Bird, Mrs. P. Drake, J. Drysdale, C.J. Williams and M.R. Wilson.

 

Also present:  Messrs. S. Barry and S. Wyndham (Wales Audit Office).

 

 

531     APOLOGY FOR ABSENCE –

 

This was received from Councillor A.C. Williams.

 

 

532     MINUTES – 

 

RESOLVED – T H A T the minutes of the meeting held on 21st September, 2016 be approved as a correct record.

 

 

533     DECLARATIONS OF INTEREST –

 

No declarations were received.

 

 

534     OUTCOME OF THE WALES AUDIT OFFICE CORPORATE ASSESSMENT REPORT 2016 INCORPORATING THE ANNUAL IMPROVEMENT REPORT 2015-2016 (REF) –

 

The above matter had been previously considered by the Cabinet at its meeting held on 5th September, 2016 and had been subsequently referred to the Audit Committee for consideration.  In addition, the report of the Wales Audit Office (WAO) had also been previously considered by the Full Council at its meeting held on 28th September, 2016. 

 

Mr. Barry, Audit Manager Local Government (WAO), was in attendance to address Members in respect of the above report.

 

Mr. Barry referred to the report as being positive as far as the Council was concerned and confirmed that it was well placed in terms of its vision and future development.  He alluded to some of the main “messages” contained in the report which had been based on the comprehensive Assessment itself.  

  • Given the extremely wide-ranging and broad nature of a Corporate Assessment report, he referred to the fact that a small number of Proposals for Improvement had been identified (albeit certain of these had already been identified as issues to address by the Managing Director and Corporate Management Team and / or on which some work was already underway). 
  • He had attended the Cabinet meeting on 26th September, 2016 to, again, address Members and had acknowledged the clear plan which the Council had in place in terms of monitoring the Proposals for Improvement through its Cabinet and Scrutiny arrangements.
  • It was possible that the WAO would undertake some further observations around the Scrutiny Committees in terms of their monitoring of the new Performance Management Framework arrangements.
  • Finally, he alluded to the dialogue which had been undertaken with the Managing Director in terms of planning for the future and reviewing further progress following the Corporate Assessment. 

A Member of the Committee referred to the general message from the Assessment that there was a strong focus on outcomes etc. and enquired how and what the Council was doing to deliver this.  In response, the Head of Performance and Development referred to the Council’s new Performance Framework where such matters would be addressed.

 

RESOLVED – T H A T the contents of the Wales Audit Office Corporate Assessment Report 2016 incorporating the Annual Improvement Report 2015/16 be noted.

 

Reason for decision

 

To note the outcome of the Corporate Assessment process and the Annual Improvement Report for 2015/16.

 

 

535     WAO PERFORMANCE WORK PROGRAMME UPDATE 2016/17 (MD) –

 

Consideration was given to the updated Performance Audit Programme for 2016/17, details of which were set out in Appendix A to the report.  Committee was advised that this Appendix also included an update of the Local Government Studies for 2015/16 and 2016/17. 

 

Details of the WAO work programme and Local Government Studies related to the following topics: 

  • WAO Work Programme

-       Financial resilience review (Publication December 2016)

-       Governance review (Publication January 2017)

-       Transformation review (Publication May 2017). 

  • 2016/17 Improvement Assessment

-       Corporate Improvement Plan Audit (Publication May 2016)

-       “Improvement Plan” Audit (To be confirmed)

-       Follow up Corporate Assessment proposals for improvement (To be confirmed)

-       Annual Improvement Report (To be confirmed). 

  • Local Government Studies 2015/16

-       The strategic approach of Councils to income generation and charging for services (Publication 9th November, 2016)

-       Council funding of third sector services (In progress)

-       The effectiveness of local community safety partnerships (Publication October 2016). 

  • Local Government Studies 2016/17

-       How Local Government manages demand: Homelessness services (Publication October 2017)

-       Strategic commissioning of learning disability services by Local Authorities (Publication June 2017)

-       Improvement wellbeing through housing adaptations (Publication September 2017).

 

Brief discussion ensued and centred on Members’ awareness of the below publications, the specific nature of the project briefs and how the information was disseminated.  As a number of the briefings were WAO publications, Mr. Barry agreed to ensure the related information was up to date and explore how the information was made available to Elected Members.

 

Having considered the above update, it was

 

RESOLVED – T H A T the contents of the WAO Performance Audit Programme for 2016/17 be noted.

 

Reason for decision

 

In acknowledgement of the Committee’s responsibility for reviewing and progressing the above Programme.

 

 

536     WAO – 2015/16 AUDIT OF ACCOUNTS REPORT (MD) –

 

The Audited 2015/16 Statement of Accounts was presented to the Audit Committee on 21st September, 2016.  The Council's External Auditors highlighted for Members the key matters arising from the audit, which included the corrected and uncorrected misstatements together with other issues for the Council's attention.  None of the issues raised by the Council's External Auditors prevented the Auditor General from issuing an unqualified opinion on the financial statements.  However, action was required by the Council to address these issues particularly when preparing the 2016/17 financial statements.

 

Attached at Appendix A to the report was a copy of the 2015/16 Audit of Accounts Report for Members' information.

 

The Council had considered each of the recommendations made and provided responses on the action to be taken.

 

Having considered the report, it was

 

RESOLVED –

 

(1)       T H A T the contents of the WAO 2015/16 Audit of Accounts be noted.

 

(2)       T H A T an update on the progress being made to implement the recommendations relating to the undermentioned matters be the subject of a further report to the Committee’s meeting in July 2017, together with the draft 2016/17 Statement of Accounts: 

  • Quality control of the Statement of Accounts
  • Timing of provision of working papers to support the draft Accounts
  • Incorrect accounting treatment of non-enhancing capital expenditure
  • Contract retention liabilities not recognised in the Accounts
  • Employee emoluments disclosures
  • Netting off Council Tax debtors and creditors
  • Residential Care debtor classification error
  • Narrative report
  • Whole of Government Accounts. 

Reasons for decisions

 

(1)       In acknowledgement of the Committee’s responsibility for monitoring the Council’s audit function.

 

 

537     WELSH CHURCH ACT ESTATE TRUST ACCOUNTS 2015/16 – REPORTING TO THOSE CHARGED WITH GOVERNANCE (MD) –

 

The Committee considered the unaudited Welsh Church Act Accounts for 2015/16 as recommended by the Council’s External Auditors (WAO).

 

The Charities (Accounts and Reports) Regulations 2008 required that the Annual Report and Accounts should be approved by the Trustees as a body in accordance with their normal administrative procedures.

 

The accounts had been reported previously to Welsh Church Act Trust Committee on 3rd October, 2016 and recommended:

 

“That the Annual Report and Accounts 2015/16, as set out at Appendix A to this report be approved, and that the Chairman be authorised to sign the same on behalf of trustees.”

 

The Annual Report and Accounts for the year ended 31st March, 2016 was set out at Appendix A to the report.

 

The main features of the report when compared to the previous year were as follows:

 

In regard to the Statement of Financial Activities, there was a deficit of £17,000 which was an increase from a deficit of £5,000 in 2014/15. This was due to a reduction in investment (£6,000) and rental income (£6,000) in 2015/16 and a slight increase in grant making activity (£8,000) in year.  There was a reduction in expenditure on repairs and maintenance in 2015/16 of £8,000.

 

The balance Sheet showed a reduction in the value of Investment Properties following the sale of Southerndown £450,000, and an increase in the value of Investments (£693,000) mainly due to the investment of the proceeds from the sale of Southerndown.

 

The value of the fund at year end was £4.803m, an increase of £225,000 on the previous year.  This was mainly due to the profit made on the disposal of Southerndown £316,000 which was partly offset by the reduction in the value of investments £68,000.  The fund was also reduced by £17,000 for the deficit on the revenue account.

 

There had been a new Charities Statement of Recommended Practice (SORP) introduced for the 2015/16 accounts which had changed the format and terminology used in the main statements.  The new SORP also introduced the requirement for a cashflow statement.  A policy on reserves had also been introduced for the 2015/16 accounts.

 

The Committee, having considered the above Accounts,

 

RESOLVED – T H A T the unaudited Welsh Church Act Accounts 2015/16 be noted.

 

Reason for decision

 

In the acknowledgement of the Committee’s responsibility in regard to the governance of the Welsh Church Act Trust.

 

 

538     CORPORATE RISK REGISTER UPDATE (MINUTE NO. 578 2015/16 REFERS)  (MD) –

 

The Committee was apprised of the current position of the Council’s Corporate Risk Register by the Head of Performance and Development.

 

Details regarding each Corporate Risk, which number totalled 13, were set out in the Risk Register attached at Appendix A to the report.  This had been updated to ensure that the relevant mitigating actions outlined in Service Plans were reflected in actions within the Register.  The purpose of this was to strengthen the connection and monitoring of risk at service and corporate levels as contained as a proposal for improvement in the WAO Corporate Assessment of the Council.  Appropriate linkages had also been made with any regulatory reports / reviews, by ensuring that any improvement proposals / recommendations outlined in the report from the Inspectorates had also been appropriately referenced in the Register (where applicable to a Corporate Risk). 

 

In terms of risk status, three Risks were medium / high, seven Risks were medium and three Risks were medium / low.  In terms of direction of travel, two Risks were increasing, eight Risks were unchanged and two Risks were decreasing.  The risk score had been reviewed for two risks in the Register.  The Reshaping Services Risk has changed from 6 to 9 on the Risk matrix and the Waste Risk had changed from 4 to 6 on the Risk matrix.  

 

The following provided the Committee with a description of the Risks where changes had been made or proposed.

 

The Climate Change risk had been broadened and renamed to become Environmental Sustainability.    

 

In concentrating on those areas identified as Red direction of travel, the Head of Performance and Development specifically referred to the following matters:

 

Reshaping Services Risk had two aspects to it.  The first was the risk of failure to deliver the Reshaping Services Programme (and therefore not realise the benefits associated with it).  Secondly, a risk associated with pursuing such a programme which brought with it the need to deploy resources and develop new skills at a time when these were under pressure for the Council and its partners.  In reviewing this Risk, the likelihood of both of these risks materialising was considered to have increased to probable (a score of 3) whilst the impact remained at high (a score of 3).  This re-categorised the Risk as a medium / high risk.  The ongoing period of austerity and the impact upon the Council’s resources and those of its partners looked to remain and as such, it was considered prudent to suggest that the likelihood of this Risk materialising would continue upwards in the future.  In response, the Council was considering the nature of projects that would contribute to the Programme in future years and the balance between Reshaping Services projects and other financial savings as part of the Council’s budget setting process.  

 

In regards to Waste Management, it was anticipated that the direction of travel would be in an upward direction due to a possible Welsh Government directive in regard to co-mingled waste, which was awaited.  Although the Council had achieved a recycling rate of 58% (above the national average) for the 2015/16 financial year, the ongoing Waste Resource Action Programme (WRAP) process with Welsh Government had resulted in a reviewed risk score of 6 and a direction of travel that remained as increasing.  

 

Following the positive outcome of Estyn’s Inspection of the Central South Consortium Joint Education Service in February 2016, it was considered that the risk of the Joint Education Service failing to deliver statutory school improvement functions was unlikely.  As a result, both the Interim Director of Learning and Skills and the Head of Performance and Development felt that the regular monitoring of this Risk through the Corporate Risk Register no longer added value.  Subject to the approval of the Committee, it was suggested that this risk be removed from the Register.    

 

A Member considered that there were specific problems with the Register in that he felt that “counter measures” specified were potentially outdated over the life of the Register.  He also considered that many of the mitigation actions lacked focus and insufficient detail to anticipate difficulties that may “trip” the Council up at a later date.  The Head of Performance and Development acknowledged the point raised, agreeing that the matter would be addressed going forward; however, he was satisfied that the methodology for identifying and dealing with corporate risks was sound.

 

Discussion ensued with a number of Members of the Committee making a case for the inclusion of additional perceived risks to the Register i.e. Aberthaw Power Station and risks relating to its potential decommissioning, economic development at St. Athan and Cardiff Airport Enterprise Zone, the Council’s Contracts management arrangements and Brexit implications for the Council.

 

RESOLVED –

 

(1)       T H A T the current position in relation to the Council’s Corporate Risks be noted.

 

(2)       T H A T the key recent developments and changes to Corporate Risks be noted.

 

(3)       T H A T the suggested removal of the risk relating to the School Improvement Joint Education Service be recommended to Cabinet.

 

(4)       T H A T the disbanding of the Corporate Risk Management Group following its amalgamation with the Council’s Insight Board from September 2016 be noted.

 

(5)       T H A T the change to the Climate Change risk to reflect a wider focus on Environmental Sustainability be noted.

 

(6)       T H A T in the light of the issues raised within the report relating to Contracts Management, Cabinet be recommended to include the subject in the Corporate Risk Register.

 

(7)       T H A T although the inclusion of Brexit in the Corporate Risk Register was not considered appropriate, Cabinet should agree to maintaining a watching brief over developments.

 

(8)       T H A T the report on the Corporate Risk Register update be referred to Cabinet for consideration.

 

Reasons for decisions

 

(1)       In acknowledgement of the current position of Corporate Risks for the Council.

 

(2)       In acknowledgement of the Committee’s responsibility to effectively monitor all Corporate Risks for the Council so that they are addressed, reviewed and updated on a regular basis.

 

(3)       In acknowledgement of the reduced risk.

 

(4)       In acknowledgement of changes in the Corporate Governance arrangements and the establishment of the Insight Board.

 

(5)       To raise Audit Committee’s awareness of the proposed change.

 

(6)       The Committee acknowledged the proposed action to be taken by the Managing Director, nonetheless, it was considered that the weaknesses identified were significant to merit inclusion in the Register and the allocation of an appropriate risk score.

 

(7)       Having regard to the potential implication for the Council in relation to loss of EU funding, impact on revenue / income streams and wider implications for citizens and businesses of the County.

 

(8)       To ensure the Cabinet was aware of and endorsed the Corporate Risk Register and the actions being taken in mitigation.

 

 

539     NATIONAL FRAUD INITIATIVE (MINUTE NO. 583 2015/16 REFERS) (HOF / S151O) –

 

For the 2016-17 exercise, data sets were extracted, checked and uploaded to the National Fraud Initiative (NFI) secure website during October 2016, with the results expected to be released in January 2017.  The Council Tax data would be submitted in December 2016, with the results being released the same day.

 

Internal Audit acted as the Key Contact and provided access to the reports on the NFI website to the relevant Council departments who were asked to investigate the matches and update the NFI website accordingly.

 

The NFI data matching exercise was ongoing and the data represented the status as at a specific point in time.  For departments with matches that remained open, the NFI website was continually being updated either on an individual match basis or on a whole report basis where work had been undertaken offline.

 

Committee Members were provided with an update report in November 2015 of the progress made by departments of the results that were released in January 2015.  The following table provided a further update of those results and the progress made so far by departments against each report group and the types of resolutions being achieved.  The exception was Council Tax matches, which related to the latest Council Tax matches released in December 2015.

 

In some reports certain matches would be highlighted as being stronger and the NFI recommended these were given priority.  However, the NFI advised that each organisation prioritised the order in which matches were investigated depending on the resources available. 

 

[View Updated Results Table]

 

Of the Council Tax matches generated, an initial review had identified 205 cases where further information was needed.  Letters were sent to confirm eligibility for discount and in 107 cases the discount had subsequently been cancelled.  This had resulted in a recoverable amount of £42,249.75 being identified and action was being taken to reclaim this money.

 

In regard to Creditors, there were usually a large number of matches generated.  This was due to difficulty in distinguishing between duplicate payments and regular payments with the limited information used for matching.  An exercise was undertaken in late 2015/16 to review a number of the recommended Creditors’ matches as part of the Creditors’ audit and no issues had been identified.

 

Having considered the report, it was

 

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

 

Reason for decision

 

In acknowledgement of progress made to date on the National Fraud Initiative.

 

 

540     FORWARD WORK PROGRAMME (HOF / S151O) –

 

Consideration was given to an updated Forward Work Programme for 2016/17 which had been previously approved by the Committee at its meeting held on 25th April, 2016 (Minute No. 1047 2015/17 refers).

 

The Operational Manager (Audit) indicated that the findings of the External Assessment of the Council’s Audit Service would be the subject of a report to the Committee in April 2017.

 

RESOLVED – T H A T the updated Forward Work Programme 2016/17 in regard to the Audit Committee, be noted.

 

Reason for decision

 

To apprise the Committee of any changes to its Forward Work Programme.

 

 

541     REGIONAL EDUCATIONAL CONSORTIA (HOF / S151O) –

 

The Central Sought Consortium (CSC) was a Joint Education Service commissioned by Bridgend County Borough Council, Cardiff County Council, Merthyr Tydfil County Borough Council, Rhondda Cynon Taff County Borough Council and the Vale of Glamorgan Council. 

 

Set out in Appendix A to the report for the Committee’s consideration was a copy of the Consortia’s 2015/16 Annual Governance Statement.  The Committee was informed that from the detail as contained in the above Statement it could be concluded that the Consortia continued to have sound governance arrangements in place.  In particular, the Joint Education Committee maintained oversight by the receipt of regular financial and performance reports from the Consortia’s Managing Director.  In addition, the Council’s Internal Audit service had reviewed the core financial systems of the Consortium during the above period and concluded there to be no material weaknesses.

 

A Member referred to the lack of joint scrutiny arrangements in regard to the Consortia.  Brief discussion ensued with the Principal Democratic and Scrutiny Services Officer apprising the Committee of current local arrangements for scrutinising the Consortia and subject areas under consideration at an officer level across Wales with the WLGA and WG relating to the new draft Local Government Bill, which included proposals for expanding Joint Scrutiny working across collaborative partnerships.

 

Having considered the report, it was

 

RESOLVED – T H A T the Central South Consortium Annual Governance statement for 2015/16 be noted.

 

Reason for decision

 

In acknowledgement that the Consortium was reporting under Section 5 of the Statement that there were no significant governance issues raised during 2015/16.

 

 

542     CONTRACT MANAGEMENT (HOF / S151O) –

 

The report sought to update the Committee on progress being made in respect of addressing the weaknesses in the overall control environment  with regard to Waste Management and, in particular, the management of related contracts.

 

As a consequence of matters highlighted in the previous reports to the Committee in November 2015 and February 2016 (Minute Nos. 580 and 864 2015/16 refer) within the Co-mingled Waste Contract, Internal Audit had undertaken reviews of a number of Waste Contracts covering the areas of contract management, procurement and the monitoring of contracts.

 

Consequently, having undertaken the above reviews, a number of concerns had been identified in relation to the undermentioned areas.

 

In respect of the Waste Contracts, a total of nine reports were issued covering the following contracts:

 

Co-Mingled Waste (Casepak Contract);

Household Waste Recycling Centres (BIFFA);

Food and Green (Biodegradable) Waste (Cowbridge Compost).

 

All the above identified significant control issues in respect of the areas examined, these included contract management, contract procurement and contract monitoring.  As the issues identified were similar across all three contracts and the three areas examined, a summary of 14 recommendations had been produced for management response.  Management within both Visible Services and Legal Services had agreed and provided their management responses to the recommendations made.  It could also be confirmed that all three contracts had now been signed and sealed.

 

The main significant control issues identified included: 

  • Poor time management with the procurement processes commencing within a matter of weeks before the contract was due to end / commence.
  • No formal legally binding contract in place prior to the commencement of the contract period.
  • Non retention of key documentation.
  • Approval processes flawed with Cabinet approval being obtained in retrospect in some cases.
  • Discrepancies between key contractual documentation (ITT information missing from Contract or vice versa). 

The Head of Finance indicated that due to the severity of the issues identified and in accordance with the Council’s policies and procedures, disciplinary action had been instigated.

 

As a result of the significant weaknesses identified in Waste Management Contracts and at the request of the Managing Director and Corporate Management Team, a number of cross-Directorate contracts were selected for review.   The overall objective of the review was to provide the Managing Director and Corporate Management Team with the necessary assurances that the issues identified within Waste Management were not replicated throughout other service areas across the Council.  As a consequence, the following contracts were selected for review:

 

Highways Re-instatement;

Highways Emergency and Permanent Repairs Contract

Schools Demountable Classrooms

Residential Care Services.

 

In respect of the two Highways contracts examined, the issues identified were very similar to those of Waste contracts.  A total of 16 recommendations to improve the control environment had been made and a management response was awaited.  The contract relating to the Schools Demountable Classrooms identified, very similar issues as those highlighted within Waste and Highways.  A management response had been received stated that all recommendations were agreed and would be implemented with immediate effect.

 

The examination of Children’s Residential Care Services Contract did not identify the same issues as those listed above.  The areas of concern related more to the operation of the contract rather than the procurement itself, these included exceeding authorisation limits and issues relating to contract variation.  Three recommendations had been made and a management response was awaited. 

 

The Head of Finance stressed that the Corporate Management Team had taken the issue very seriously and was actively overseeing the implementation of a number of related recommendations to ensure that improvements to the overall control environment were made, including appropriate training to be delivered to Chief Officers and middle managers to be facilitated by herself.  She also made reference specific operational options / models to bring about additional resilience relating to future contract management e.g. “Finance Officer Model”, collaboration models with an external partner.  The Committee considered supplementary information which had been tabled in advance of the meeting convening which related to an updated Action Plan for the Committee’s information.

 

Having considered the above, including the supplementary updated Action Plan, it was

 

RESOLVED –

 

(1)       T H A T the progress made in respect of addressing the weaknesses in the overall control environment with regard to Waste Management and in particular to management of contracts, be noted.

 

(2)       T H A T a further report be submitted to the Committee in April 2017 on the progress made in implementing the related Action Plan.

 

Reason for decisions

 

(1&2)  In acknowledgement of the Committee’s responsibility for monitoring such matters.

 

 

543     ANNUAL REPORT ON SCHOOLS 2015/16 (HOF / S151O) –

 

Attached to the report at Appendix A was a copy of the report and findings issued to the Director of Learning and Skills by the Internal Audit team in relation to school based audits conducted during the 2015/16 audit year.

 

In essence, the report summarised the following issues: 

  • During 2015/16, 58 Control Risk Self-Assessments (CRSAs) were issued to schools, of which 57 were returned.  The completed CRSAs were evaluated by Internal Audit and any issues addressed with the individual school.  No common trends or significant issues were identified and the overall control environment was evaluated as good.
  • Assurance Statements were issued, the purpose of which were for Headteachers and Chairs of Governors to acknowledge their responsibility in maintaining and operating the school in accordance with the Council's procedures and practices that uphold the internal control and assurance framework, and the Fair Funding Scheme for Schools.  Only 16 Headteachers and 24 Chairs of Governors completed the Assurance Statement and it was found that some did not understand the form or its significance.  In order to improve the response rate, this information as contained within the Assurance Statement and the declaration would be included on the CRSA questionnaire from 2016/17 onwards, which would make the process more efficient.
  • In 2015/16 over £86 million was delegated to the Authority’s Secondary, Primary and Special Schools and of the 59 schools operating at year end, three were in deficit with a value of £215,561.  Of the 56 schools in surplus, 21 had surpluses that, under School Funding (Wales) Regulations 2010, were regarded as excessive and the Authority may direct a Governing Body on how balances in excess of these limits may be spent or they could be clawed back. Although the Council has a policy whereby claw back could be exercised, this had not been applied.  These schools had been requested to submit robust plans of how the balances would be spent which would be monitored by the Education Finance team.
  • During the year some specific risk based audits were undertaken which were detailed in Appendix A.  Of the eight pieces of work, two did not warrant an audit opinion due to the nature of the work, one was a grant claim and the other was advice and guidance regarding financial systems.  Of the remaining six audits, four were given an audit opinion of reasonable and two were given limited assurance.  Limited assurance reports were followed up within three months to ensure improvements had been made and both areas identified at Appendix A had now been revisited and improvements to the control environment had been made, hence reasonable assurance had now been provided to both.
  • During 2015/16 it was found that the move away from cyclical school audit visits had proved a success in ensuring that the Internal Audit resource was targeted effectively to those areas where they were most needed.  A total of 94.5 days of the 114 days allocated were used.  Certain control weaknesses were identified during the year and appropriate recommendations made and accepted.  Overall it was concluded that the control environment within schools was good. 

In referring to the response rate by Headteachers and Chairs of Governors to the completion of CRSAs, a number of Members of the Committee expressed their concern and disappointment.  The Operational Manager Audit sought to reassure the Committee that appropriate arrangements were in place to validate received CRSAs and follow up measures to be deployed.

 

Having considered the report, it was

 

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

 

Reason for decision

 

To ensure that the Audit Committee was appropriately apprised of audit reviews undertaken.

 

 

544     INTERNAL AUDIT – OUTTURN REPORT – APRIL TO OCTOBER 2016 (OMA / HOA) –

 

As in previous reports to the Committee, it was informed of the actual Internal Audit performance in regard to activities contained within the 2016/17 Internal Audit Plan and for the above stated period. 

 

Attached at Appendices A and B for the benefit of the Committee were detailed reports (including the Head of Audit’s five months position report) on the work undertaken by Internal Audit so far this year and related to the following matters:

 

Internal Control Weaknesses Identified During the Period (excluding those subject to a special investigation) 

  • Pay Process External Provider –

An independent review of the current processes was undertaken to ensure that procedures are in line with HMRC requirements in regard to employment status and VAT or tax implications.  After reviewing the system recommendations were made to make improvements.   Very limited testing had been undertaken and it was agreed that this area would be revisited once these recommendations had been implemented at which time more detailed testing would be undertaken. 

  • Management of Trees –

The review had been undertaken at the request of the Head of Service in order to provide assurance that the management of trees (both Parks and Highways) was effective and efficient and the control environment sound.   Several control weaknesses were identified that led to an audit opinion of limited assurance.  It was found that there was no Council wide tree management strategy, there was no asset management system or process in place to enable the Council to identify, capture and manage the tree stock, there was no proactive risk based inspection programme and due to limited resource reliance was placed on contractors and consultants.  Recommendations had been made and accepted which would improve the control environment and a follow up review would be undertaken once the agreed actions had been completed, which was planned to be early in 2017/18. 

 

The Committee also considered Appendix A1 attached to the report which listed outstanding reviews where weaknesses were identified during 2015/16 and which culminated in only limited assurance being provided on the overall internal control environment.   This list provided the Committee with an update on the current position and, where applicable, the current Audit opinion.  The Committee was advised that the Council’s Corporate Management Team had also been apprised of the current position relating to such reviews. 

 

Appendix A to the report also dealt with significant governance issues identified in the 2015/16 Annual Governance Statement which in the main related to Waste Management contracts which had been subject to an earlier report on the Committee’s agenda.

 

In terms of the Internal Audit successes, these for the year included:

 Internal Audit Plans for 2015/16 were delivered in accordance with expectations

  • Internal Audit Plans for 2016/17 had been approved by both the Audit Committee and the Council’s Corporate Management Team in a timely manner
  • The service continued to provide an excellent Internal Audit provision to both Bridgend County Borough Council and the Vale of Glamorgan Council, so much so that both Audit Committees had supported the proposal to extend the Shared Service Partnership Agreement until 31st January, 2018, which had been subsequently approved by both Councils’ Cabinets
  • The service continued to support staff in obtaining professional qualifications including CIPFA, the Association of Accounting Technicians (AAT) as well as continuing professional development (CPD). 
  • The service also continued to build on its excellent working relationships with Elected Members, Chief Officers and staff within both Councils. 

As in previous reports to the Committee, it noted that the service was carrying four vacant posts which had recently increased to six Full Time Equivalent posts, but noted a recruitment campaign had been undertaken by the Operational Manager for Audit.  The Committee was updated on the results of the initial recruitment campaign.  It was noted that of the five applications received, only one applicant was suitable for interview.  The Head of Finance intimated that she was discussing with the WAO and CIPFA the issue.  It was noted that other Local Authorities across Wales experienced similar difficulties in recruiting to the profession.

 

Having regard to the above and related issues, it was

 

RESOLVED – T H A T the contents of the Internal Audit Outturn Report for the period April to October 2016 be noted.

 

Reason for decision

 

In acknowledgement of the Committee’s responsibility for oversight of matters contained in the Internal Audit Plan.

 

Share on facebook Like us on Facebook