Matter Which the Chairman has decided is urgent by reason of the need to meet Welsh Government’s Consultation Deadline of 28th April, 2015
THE VALE OF GLAMORGAN COUNCIL
CABINET: 27TH APRIL, 2015
REFERENCE FROM AUDIT COMMITTEE: 20TH APRIL, 2015
“ WHITE PAPER - REFORMING LOCAL GOVERNMENT: POWER TO LOCAL PEOPLE (REF) -
At the meeting of Cabinet on 23rd February, 2015 Cabinet had been requested to approve the circulation of the White Paper ‘Reforming Local Government - Power to Local People’ to stakeholders for their comments in advance of the Council’s formal response to Welsh Government; the document had subsequently been referred to the Audit Committee for consideration.
The White Paper "Reforming Local Government: Power to Local People" was Welsh Government's statement of intent about the future of local government in Wales.
The White Paper set out Welsh Government's proposals for making changes in the following fields:
the roles and remuneration of Elected Members and senior officers,
community governance and Community Councils,
inspection and regulation,
The Head of Performance and Development, present at the meeting, informed the Committee that a draft response to the White Paper would be considered by Cabinet and would take into account the comments made by the Audit Committee and the other Committees to which it had been referred. He drew the Committee’s attention to the relevant part of the White Paper, ‘Corporate Governance and Improvement’ which specifically related to proposals regarding the roles and responsibilities of Audit Committees.
The Committee was informed that one of the proposals was to clarify the responsibilities and remit of Audit Committees, rename them Corporate Governance and Audit Committees, and expand their independent membership, which would include the requirement that the Committee be Chaired by a suitably appointed independent person. The Committee was informed that the aim of this proposal was to strengthen internal Audit Committees.
The Chairman invited the Head of Finance to comment and, in response he expressed the view that the Council’s Audit Committee performed its function well and he was unsure of the value of having an independent person as the Chairman of Audit Committees and unsure whether the White Paper added value in terms of governance the Operational Manager for Audit expressed the view that an independent person may not have the depth and breadth of experience to perform this crucial role.
Discussion of the White Paper took place during which the following concerns were raised:
• Concern was expressed that proposals in the White Paper seemed to indicate that Audit Committees should become less political, which was of concern as Members expressed the view that the Council’s Audit Committee was not political in performing its functions.
• Members were unsure of the benefits of the proposal to increase independent membership of Audit Committees which seemed to indicate a move away from Elected Members and felt that this would be detrimental to the function of the Audit Committee. Furthermore, views were expressed that although the Audit Committee took professional advice from the external Auditors it did not feel that it was handing over responsibility for the Committee to these auditors.
• Views were expressed that it was a difficult undertaking for a Lay person to sit on an Audit Committee and the independent advice should come from the professional external auditors who were independent of the authority. Furthermore, Independent members may not have the relevant understanding of local government that Elected Members had and concern was expressed that this could potentially be a hazardous way forward.
• A Member expressed the view that Independent Members simply meant that the individual was not an Elected Member, however, they may not necessarily be independent. It was crucial that Independent Members knew what was expected of them and the White Paper did not provide this assurance.
• Concern was expressed in regard to the frequency of the biennial peer reviews proposed in the White Paper. The Head of Performance and Development expressed the view that light touch self-assessments would be acceptable, however, if they were hugely bureaucratic and required to be carried out every two years, this would be too frequent and burdensome, particularly if other inspectorates e.g. Estyn and CSSIW continued to be required to carry out service assessments as proposed in the White Paper.
• Members were of the view that self-assessments should be short and sharp and then focus in on areas of concern where improvement was required, furthermore, they should be carried out on a risk basis.
• Members of the Committee expressed concern in relation to the proposal that the Annual Improvement Plan would be replaced by annual self-assessment plans and biennial peer reviews. Members agreed that local authorities should carry out self-assessments, however, were of the view the quality varied and a lot of effort would be required for how these would be run and they would require input from external auditors. Furthermore, concern was expressed that biennial peer reviews on top of the annual self-assessments may prove to be overly bureaucratic.
The Head of Performance and Development advised that the draft response to be considered by Cabinet did not support the proposal for an independent member to be Chairman of the Audit Committee and Members endorsed this.
The external auditors expressed the following views
They had experienced politics at play in some Audit Committees, however, advised that this should not be the case.
It was important to strengthen governance and broadening Audit Committees ability to see what was happening was good..
It was important that Audit Committee Members had an appropriate skill set which needed to be strengthened.
The Chairman expressed the view that he agreed with the point in relation to strengthening governance and if the White Paper could do this and elevate the standing of Audit Committees it would be a good thing.
RESOLVED - T H A T the Audit Committee’s concerns and comments in relation to the White Paper: “Reforming Local Government: Power to Local People”, as set out above, be submitted to Cabinet for consideration within the Council’s formal response to the White Paper.
Reason for decision
To ensure that the Council’s formal response on the White Paper “Reforming Local Government: Power to Local People” to Welsh Government is informed by the response of the Audit Committee.