Agenda Item No. 9
The Vale of Glamorgan Council
Audit Committee: 22nd February 2016
Report of the Operational Manager - Audit (as the Head of Audit)
Audit Committee - Waste Recycling - Information and Action Request
Purpose of the Report
To provide Members with a response to their request for further information relating to the Head of Audit's Outturn Report - April to September 2015 and more specifically the update provided on the control weaknesses identified in the waste recycling review.
THAT Members note the report.
Reason for the Recommendation
To keep the Audit Committee informed and to provide a response to the request for further information raised at the Audit Committee held on the 16th November 2015.
As part of the Audit Committee's Terms of Reference to oversee and monitor the work of the Internal Audit Shared Service, the Operational Manager - Audit as the Head of Audit provides regular updates on the performance of the service in the form of outturn reports.
The outturn report covering the period April to September 2015 was presented to the Audit Committee at their meeting held on 16th November 2015.
From time to time, the outturn report will bring to Members attention those reviews where weaknesses have been identified within the overall control environment. Contained within the April to September 2015 outturn report was one such review, this being Waste Recycling. During the presentation of this item to Committee and following comments made by the Wales Audit Office, Committee Members felt that they should receive a further report on the issue, to include details of any risks that the Council had faced and details of procedures that could be put in place to prevent such a situation occurring again.
Relevant Issues and Options
Cabinet at its meeting held on 10th March 2014 approved the awarding of the contract for the processing of Co-Mingled Recyclable Materials for the period 1st April 2014 to 31st March 2017 (option to extend to 31st March 2018) to the preferred bidder of G A E Smith (Holdings) Ltd., trading as Casepak Ltd.
In October / November 2014 Internal Audit undertook an audit review into the operation of the Co-mingled Waste contract where it was noted at that time that no formal contract was in place, despite it being operational for some seven months. As a consequence of these findings a Limited Assurance report was issued in December 2014. A formal response was received from Management indicating that a formal contract would be in place in the immediate future with an implementation date of December 2014.
In April 2015 a follow up review was undertaken where it was identified that a contract was still not in place. Therefore, once again only Limited Assurance could be placed on the overall control environment. Once again a formal management response was received providing an implementation date of January 2016.
The Auditors have subsequently been informed that the Co-Mingled Waste Contract has been signed by both parties on the 18th December 2015. Although this was within the implementation date of January 2016 (as indicated on the Management response to the April 2015 follow up review) it must be acknowledge that this was 20 months after the contract became effective on 1st April 2014.
It is without doubt that the failure to secure a signed and legally binding contract has exposed the Council to unacceptable levels of risk. With no legally binding contract in place prior to the commencement of the service provision, any terms and conditions contained within the contract could prove difficult to enforce in a court of law. Some of the possible risks could include but are not limited to: inadequate performance, operational dispute; charging issues; reputational damage; future service delivery and health and safety. It is fortunate that there does not appear to have been any contractual issues identified to date that resulted in the realisation of these risks for the Council.
In order to ensure that this situation cannot occur again, Internal Audit will be reviewing all other Waste Contracts and a sample of cross directorate contracts. The Council's Corporate Management Team is actively overseeing the implementation of a number of recommendations to improve the overall control environment. In addition, the Council's Contract Management Guidance and Toolkit is being reviewed and updated and Corporate Management Team has agreed that this will form part of the training being rolled out on Project Management.
Resource Implications (Financial and Employment)
8. None as a direct consequence of this report.
Sustainability and Climate Change Implications
9. None directly from this report
Legal Implications (to Include Human Rights Implications)
10. Provision of an adequate and effective Internal Audit function is a legal requirement under the Accounts and Audit (Wales) Regulations 2005 (as amended). The PSIAS replace the Code of Practice for Internal Audit in Local Government in the United Kingdom, last revised in 2006. In local government in Wales, the PSIAS is mandatory for all principal local authorities and other relevant bodies subject to the Accounts and Audit (Wales) (Amended) Regulations 2010.
Crime and Disorder Implications
11. Pursuing initiatives to prevent, detect and deter crime is encompassed within the terms of reference under which the audit function operates.
Equal Opportunities Implications (to include Welsh Language issues)
12. None as a direct consequence of this report.
13. The work of audit is intended to assist in the achievement of all corporate and service objectives.
Policy Framework and Budget
14. The proposals in this report are in accordance with the policy framework and budget.
Consultation (including Ward Member Consultation)
15. No further consultation is proposed.
Helen Smith - Operational Manager - Audit Tel: 01656 754901
External Audit - Wales Audit Office
Carys Lord- Head of Finance and Section 151 Officer