Minutes of a meeting held on 1st May, 2018.
Present: Councillor M.R. Wilson (Chairman); Councillor L.O. Rowlands (Vice-Chairman in the Chair until the commencement of Agenda Item 4); Councillors G.D.D. Carroll, Mrs. P. Drake, V.P. Driscoll, Dr. I.J. Johnson and K.F. McCaffer and Mr. P. Lewis (Lay Member).
Also present: Mr. A. Veale and Mr. S. Wyndham (WAO).
921 MINUTES –
RESOLVED – T H A T the minutes of the meeting held on 27th February, 2018 be approved as a correct record.
922 DECLARATIONS OF INTEREST –
No declarations were received.
923 INTERNAL AUDIT – OUTTURN REPORT – APRIL 2017 TO MARCH 2018 (OM / HOA) –
The Head of Audit commenced by presenting the actual Internal Audit performance for the Audit Plan year covering April 2017 to March 2018 and which Committee was informed included the Annual Audit Opinion.
Appendices A and B to the report detailed the work undertaken by Internal Audit for the year together with the Head of Audit’s annual opinion. It was noted that following an analysis of the work undertaken the work planned for the year had been 1,145 days whereas the actual work that had been delivered was 789 days. This was as a direct result of staff vacancies throughout the year and long term absences during the first half of the year.
As at 1st April, 2017 the overall structure of the Section was based on 18 Full Time Equivalents (FTE), however, following a restructure, this was subsequently reduced to 14 FTEs which came into effect from 1st October 2017 and at the time of reporting, the section was carrying 7.5 vacancies.
The opinion contained within the report at Appendix A related to the system of internal control at the Council and the overall control environment that was in place. The system of internal control was designed to manage risk to a reasonable level rather than to eliminate the risk of failure to achieve corporate / service policies, aims and objectives and it could therefore only provide reasonable and not absolute assurance of effectiveness. Included within Appendix B was the supporting evidence which listed all those assignments which had either commenced or completed during the ten months and where an assignment had been completed, an audit opinion had been applied.
In referring, to the delays in respect of e-procurement and leasehold surveys a Member queried the likely timescales when the work would be carried out. In response, the Head of Service advised that the piece of work in relation to e‑procurement had commenced and it was the intention to commence work in relation to Leasehold Surveys by the end of June 2018. In referring specifically to Deprivation of Liberties (DoLS), it was noted that a further review of the application of DoLS had been undertaken as part of the 2017/18 annual Internal Audit Plan and key issues had been identified. A significant backlog of DoLS referrals still existed and there was the failure to implement government documents despite recommendations made in the previous Internal Audit report. The Committee raised concerns in relation to these aspects and requested information on the implications for the Council to some of the standards around DoLS not being met. The Section 151 Officer however took the opportunity to advise the Committee that the Council was not out of step with other Local Authorities in Wales who were all in a similar position.
Members suggested that the matter needed urgent attention and queried the resources required to address the issue. Committee agreed that it was important to request that the relevant officer from the Directorate attend the next meeting of the Committee to provide an update report on the current situation and the impact for the Council of the legislation. The report to also include any benchmarking figures available and the request to seek Counsel’s opinion on the Council’s failure to implement governance documents.
In also recognising the resourcing implications for the Audit service, Committee was informed that the South West Audit Partnership had been commissioned to undertake some internal audit functions under the Plan and that it was also the Head of Audits further intention to commission their assistance in the delivery of the 2018/19 risk based plan in the short term. Aware that a number of posts were being advertised Committee was informed that an internal senior auditor appointment had recently been made. Of further note was that a meeting of Local Authority Section 151 Officers was to take place the coming Thursday where such similar issues would be discussed.
Having considered the report it was subsequently
(1) T H A T a progress report be presented to the next meeting together with an invitation extended to the relevant officer from the Social Services Department to be invited to provide an update on applications and process for Deprivation of Liberties to include:-
- the impact of the legislation on Council resources
- to seek Counsel opinion on the legal duties / requirements
- to provide benchmarking data that may available of performance by other Local Authorities
- What actions are being taken to address the backlog.
(2) T H A T the Internal Audit performance for the financial year ending 31st March, 2018 and the Head of Audit’s Annual Opinion as contained in Appendix A to the report be noted.
Reasons for decisions
(1) In order that the Committee may be made aware of the impact on the service area and the systems in place to address the backlog.
(2) To apprise Audit Committee.
924 AUDIT COMMITTEE – PROPOSED INTERNAL AUDIT SHARED SERVICE STRATEGY AND DRAFT ANNUAL RISK-BASED AUDIT PLAN 2018/19 (OM / HOA) –
Members were requested to consider, review and approve the proposed Internal Audit Shared Service Strategy and draft Annual Risk-Based Audit Plan for 2018/19 as appended to the report.
The Head of Audit advised that it was important for Internal Audit to plan effectively to ensure that the service contributed to the Council’s objectives at both strategic and operational levels. The Internal Audit Service was delivered under a shared service agreement with Bridgend County Borough Council with the Vale of Glamorgan Council being the host Authority.
The report highlighted that resource requirements were reviewed each year as part of the audit planning process and were discussed with the Internal Audit Shared Services Board (IASSB). The impacts of the financial pressures with the requirements to generate efficiencies and hard savings had seen internal audit resources reduce year on year. Following a restructure in 2017/18, the current establishment for 2018/19 was based on 14 full time equivalents. It was noted that at the commencement of 2018/19, the Section was carrying approximately 50% vacant posts. Arrangements were in place to address the shortfall, however, with such a high level of vacancies, it was important to be prudent when determining the number of productive days that could be realistically achieved. The following were the assumptions that had been made for 2018/19:-
Quarter 1 and 2. Status remained the same at 50% of the establishment.
Quarter 3 and 4. This would increase to a maximum of 70% of the establishment in post.
In order to address the shortfall in resources it was envisaged that once again the services of the South West Audit Partnership would be commissioned to help bridge the gap. In addition, during 2018/19 work would be underway to further explore the proposal to extend the Internal Audit Shared Service and as a consequence, should this proceed some latitude would be needed during this transitional year.
In considering the report, a Member queried whether with the lack of resources available the Strategy was achievable. The Head of Audit, in response, advised that she was hoping that the Strategy was achievable but that she would bring an update report to every meeting of the Committee to show progress and identify any slippage.
In referring to the previous evening’s Corporate Performance and Resources Scrutiny Committee meeting where the Committee had considered the Council’s Employee Satisfaction Survey, a Member on both Committees queried to what extent the implications of the comments made in the survey, in particular in respect of the ALN service, were being correlated together within the Audit service area. The Head of Audit in response stated that she was fully aware of the issue and she kept herself abreast of the issues affecting the Council as she also attended the Council’s Insight Board meetings and the Corporate Management Team meetings.
It was subsequently
RESOLVED – T H A T the proposed Internal Audit Shared Service Strategy and draft Annual Risk-based Audit Plan 2018/19 as appended to the report be approved.
Reason for decision
To apprise the Audit Committee and to approve the strategy and draft annual risk based plan 2018/19 to ensure compliance with the Public Sector Internal Audit Standards (PSIAS) and the Committees terms of reference.
925 AUDIT COMMITTEE – FORWARD WORK PROGRAMME 2017/18 AND PROPOSED FORWARD WORK PROGRAMME 2018/19 (OM / HOA) –
Appendix A to the report provided a final updated Forward Work Programme for the municipal year 2017/18 for the Committee’s information and Appendix B detailed the proposed Programme for 2018/19. In recognising the amount of detail being put forward for the proposed Forward Work Programme, a Committee Member suggested that extra meetings may be required. The Chairman, in response, stated that should extra meetings be considered all Members would be contacted accordingly.
Having considered the report, it was subsequently
RESOLVED – T H A T the final updated Forward Work Programme 2017/18 and the proposed Programme for 2018/19 be approved.
Reason for decision
To apprise Audit Committee and agree a proposed Work Programme.
926 EXTERNAL AUDIT PLAN 2018 (MD) –
This report was presented by the WAO. A copy of the External Audit Plan 2018 was attached at Appendix 1 to the report with the key highlights being reported as
- To issue a certificate and report on the Council's financial statements which included an opinion on their "truth and fairness". Whether the Council had made proper arrangements for securing economy, efficiency and effectives in its use of resources and report by exception if the Annual Governance Statement did not comply with requirements;
- To audit / independently examine the Joint Committee arrangements which were hosted by the Council, these being Shared Regulatory Services and Adoption Service. In addition an independent examination of the Welsh Church Act Fund would be undertaken in accordance with timescales agreed with the Council and the Charity Commission;
- A programme of performance audit work would be undertaken as outlined in Exhibit 4 within the report.
The proposed fees for work associated with the External Audit Plan 2018, was £261,356. There was an additional fee of £50,000 for the grant certification work which was estimated and was invoiced as the work was undertaken and an estimated fee of £14,374 for the Joint Committee and Welsh Church Act audit work
The Auditor, in presenting the report, stated that key financial risks that had been identified at the planning stage of the Audit were itemised at Exhibit 2 of the report. The table referred to financial audit risks in relation to management override, City Deal, the use of accounting estimates and items of accounts identified as materially sensitive. Under the performance aspect of the report the Auditor stated that he needed to balance the existing, new and proposed statutory duties with the need to continue to undertake meaningful risk-based and proportionate audits and assessments.
The 2018 Performance Audit Programme would include local projects and national studies as detailed below:
- Improvement audit and assessment working improvement planning and reporting audit
- Wellbeing of Future Generations (Wales) Act 2015 examinations
- Assurance and risk assessment
- Environmental health
- Leisure services
- Corporate safeguarding arrangements
- Reshaping services programme and delivery of savings and under Local Government Studies 2018/19 reference was made to the implementation of the Social Services and Well-being Act and the implementation of the Violence Against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015
- Value for money of planning services.
In conclusion, the Auditor stated that details of future developments with audit work included changes to key International Financial Reporting Systems (IFRS) and the Wales Audit Office’s Good Practice Exchange Seminars. The Wales Audit Office’s GPX programme would seek to support the improvement of public services across Wales by identifying and sharing good practice.
Following a query from a Member regarding changes to pension benefit fund management, the Wales Audit Officer advised that he was aware that eight Local Authorities were attempting to join together to provide one LGPS service with the host Council likely to be Carmarthen. Members raised concerns in relation to the security element of such proposals with the Auditor responding that one of the audit functions would be to ensure that each individual assessment fund was monitored and audited properly. Governance arrangements were currently being developed.
RESOLVED – T H A T the External Audit Plan 2018 be referred to Cabinet for approval.
Reason for decision
To progress the External Audit work programme and to ensure that robust scrutiny of the External Audit Plan took place.
927 VALE OF GLAMORGAN ANNUAL SELF-ASSESSMENT: ANNUAL REVIEW OF EXTERNAL REGULATORY RECOMMENDATIONS AND IMPROVEMENT PROPOSALS (MD) –
As part of the ongoing audit work by the Council's regulators, a series of proposals for improvement and recommendations were made as a result of audit studies (locally or nationally). The Council was required to ensure that these proposals / recommendations were appropriately progressed and the results reported.
The Council's Annual Self-Assessment forms a core part of the statutory local government inspection processes in Wales. Under the Local Government (Wales) Measure 2009, the Council was required to undertake a self-evaluation of all its services and use this information to inform planning for improvement. A review of the Council’s regulatory recommendations and improvement proposals was a key part of this annual self-assessment process enabling the Council to demonstrate progress on implementation of these in line with its duties under the Measure.
Appendix A to the report entitled “What our External Auditors Said About Us” was an excerpt from the Council’s Annual Self-Assessment and outlined the progress against current and previous regulatory recommendations and improvement proposals covering the period 2011 to date. This also included a Regulatory Tracker outlining progress covering the period 2011-15 and the more recent Insight Action Tracker (Corporate Improvement Action Plan) covering the period 2016 to date. Also attached was an overview which had been provided from the Wales Audit Office in respect of feedback received on the audit work undertaken during 2016/17 in the Council’s Annual Improvement Report.
A review of the outstanding recommendations and improvement proposals identified within the Regulatory Tracker showed that good progress had been made overall in implementing the actions in response to local and national Local Government Studies and audit work between 2011 and 2015 with the majority being noted as completed.
With regard to Corporate Improvement Action Plans, a series of actions to drive improvement in the following year and the improvement priorities were incorporated within the Council’s Insight Action Tracker. Appendix A provided a summary of the Council’s progress overall as at January 2018.
The report further highlighted that a key role of the Audit Committee was to have oversight of the Council’s response to issues raised by its external auditors through the Annual Regulatory Plan and performance audit work. The Insight Tracker provided the most up to date record of the Council’s regulatory recommendations and improvement proposals as it was updated all year round to reflect the audit work programme work including all local and national Local Government Studies being reviewed on a monthly basis.
In considering the red status of the asset management theme, a Member queried why this aspect was being highlighted as red and whether it had been attributed from lessons learned from the Grenfell Tower incident. In response the Section 151 Officer stated that it had been an issue which had come out of the corporate review aswell as lessons learned from the Grenville Tower incident.
In referring to the work that had commenced on the refresh of the Corporate Asset Management Plan, it was noted that the Insight Board had recently been updated, being advised that the report was anticipated by the Summer recess.
Having fully considered the report, it was subsequently
(1) T H A T the progress made to date in addressing the recommendations and improvement proposals made by the Council’s external regulators from the period 2011 to date, as well as the corporate improvement priorities identified by the Council in previous self-assessments, be endorsed.
(2) T H A T the Cabinet’s endorsement on 5th March, 2018 of the removal of the completed actions against previous regulatory recommendations and improvement proposals arising from local and national Local Government Studies for the period 2011 to 2015, following the consideration of respective Scrutiny Committee views, with the remaining actions to be incorporated within and monitored via the Council’s Insight Action Tracker for 2018/19 be noted.
Reasons for decisions
(1) To ensure Members have an up to date overview of progress made by the Council in implementing its regulatory recommendations and improvement proposals in response to external regulatory opinions.
(2) To ensure the Council implements its regulatory recommendations and improvement proposals and responds appropriately to the recommendations and proposals for improvement identified through the Wales Audit Office's programme of local and national Local Government Studies for the period 2011 to 2015 and to date.
928 REVIEW OF THE CORPORATE RISK MANAGEMENT STRATEGY (MD) –
The Council’s Risk Management Strategy had previously been reviewed in 2016. It had been considered good practice to regularly review and update the Risk Management Strategy to ensure that it strengthened the Council’s approach to Risk Management. A revised Corporate Risk Management Strategy was attached at Appendix 1 to the report and a number of notable annexes to the Strategy were detailed as follows:
- A – Risk Register Template
- B – Risk Management Guidance Note (Worked Example)
- C – Service Risk Template
- D – Project Risk Matrix
- E – Project Risk and Issue Log
The revised Corporate Risk Management Strategy outlined the Council’s approach to risk management and focused on three main stages:
- Identification of a risk and its definition
- Evaluation of the inherent risk, the effectiveness of controls and the residual risk
- Management of risk.
Appendix 2 to the report provided Members with a summary of the key sections of the new Risk Strategy, the purpose of the section together with a summary of the changes / revisions and the reasons for the changes. Corporate risks were considered in the context of the Well-being of Future Generations Act in terms of the impact they could potentially have on the Council’s contribution to the well-being goals. The five ways of working were also a key consideration in relation to the Council’s Corporate Risks which showed how these ways of working could have a mitigating effect through actions taken as part of the risk management plans within the Risk Register.
In referring to the work that had been undertaken in the context of the Future Generations Act, a Member queried how much more did the Council have left to complete. The Head of Performance and Development stated that the Vale Council had been early adopters of the Act and had already made quite significant progress in relation to aspects of the Act and its interpretation. Although these were early days in the implementation of the Act, he was confident the Council was well placed for the future.
In referring to the work of the Insight Board, it was suggested that an update report be presented to Audit Committee of the work of the Insight Board, with the Head of Performance and Development stating that at a recent Insight Board meeting discussions had already focused on how the Board and its remit should be developed.
In considering whether the specific leadership of the Council should be called to the Audit Committee, the Chairman asked the Wales Audit Officer whether this happened in other Councils, with the Auditor responding the Leader was not called on a regular basis to Audit Committee meetings to his knowledge. The Audit Committee’s role was to ensure that there were overall arrangements in place and reviews undertaken if necessary, it was the responsibility of each individual Scrutiny Committee to review their service area and their risks.
In referring specifically to the Safeguarding and Deprivation of Liberties risks, the Audit Committee stated that they were aware that the Healthy Living and Social Care Scrutiny Committee should be considering this service area, but the Audit Committee sought assurance in relation to the work and continued with the request that a relevant officer be present at the next meeting to provide an overview.
Following full consideration of the report, it was subsequently
(1) T H A T the revised Risk Management Strategy be approved.
(2) T H A T the revised Risk Management Strategy be referred to Cabinet for their consideration and approval.
Reasons for decisions
(1) To make Members aware of the changes to the Risk Management Strategy and ensure there are robust mechanisms in place to effectively identify, manage and monitor risks.
(2) To ensure that Cabinet are aware and approve of the changes made to the Council's Risk Management Strategy.
929 CORPORATE RISK REGISTER QUARTER 3 UPDATE (MD) –
The report noted that there were currently 15 Corporate Risks on the Register as outlined within Annex A of the Register.
Since the last update, one risk had been removed from the Register (Local Development Plan) and two new risks had been added (CR10: Public Buildings Compliance and CR15: Welsh Community Care Information System).
Of the 15 Corporate Risks, in terms of risk status, one risk was scored high, one risk was scored medium / high, 11 risks scored medium and two risks scored medium / low in terms of their risk status.
In terms of the exceptions the report referred to the following :
Deprivation of Liberty Safeguards, with this being reported as high status. The Risk Summary Report (within Annex A) provided further detail.
Public Buildings Compliance, the risk was scored as 8, giving it a Medium / High status. This was a newly adopted Corporate Risk that had been added to the Risk Register at the request of the Director of Environment and Housing which was endorsed by Audit Committee on 31st January, 2018. Good progress had been made during the quarter by putting in place robust controls to further mitigate the risk.
These controls included the:
- Successful appointment of a Compliance Officer and two trainees to oversee Corporate Building Compliance across the Council and with Third Sector commissioned providers.
- Development of an E-form for the collection of compliance data from schools.
- Development of a spreadsheet of schools that had signed up to an SLA with the Council to manage building compliance on their behalf.
- Inspection of over 10 school sites to establish their compliance position with appointments made with the majority of the other schools.
- Production of an inventory for Social Services premises (including those used by commissioned Third Party providers) to identify a clear compliance position was now 90% complete.
Safeguarding and Contract Management. Both the safeguarding risk and the contract management risk remained medium / low (3) in terms of their risk score.
The safeguarding risk had a robust set of controls in place that were effectively mitigating against this risk. The establishment of a corporate-wide policy on safeguarding covering all Council services had provided strategic direction and clearer lines of accountability in terms of its safeguarding practice. The establishment of the safeguarding hotline had further reinforced the Council’s safeguarding responsibilities by providing staff with a single point of contact to report any safeguarding concerns. Safeguarding was of the utmost importance and the Council’s approach to safeguarding needed to be regularly reviewed and updated to ensure it could effectively manage the risk.
In relation to contract management risk, the existing controls were proving to be particularly effective. There had been cross-directorate training on procurement and contract management as part of the Management Competency Framework that to date over 300 staff had attended. There was regular review of the completion of contractual paperwork and a system had been established for monitoring non-compliance against agreed service targets.
Annex A contained the full Risk Register along with a Risk Summary Report outlining the position of all Corporate Risks.
Reputational risks continued to score more highly across the spectrum of corporate risks because they were governed more by the perceptions of the Council’s performance by customers / residents and regulators. This highlighted how there needed to be a greater focus on controls that could further address the reputational aspects of corporate risks.
During the quarter, strong progress had been made in relation to the Risk Management Plans across all aspects of the Register. In total there were 117 actions currently being monitored via the Register that were linked to a corporate risk. The majority of these were also actions that were aligned to the delivery of our Corporate Plan priorities. During Quarter 3 the Council had been able to assign a RAG status to 112 of these mitigating actions.
In referring to emerging risks no further risks in this category had been identified during the quarter. Any emerging risks that had been identified via the Council's Corporate Self-Assessment process would be considered by the Insight Board, CMT and Audit Committee during the next cycle of quarterly reporting (Quarter 4).
It was noted that some of the risk assessments in the report were also slightly out of date as the Council was currently working on its Quarter 4 reports.
Members referred again to the high risk afforded to the Deprivation of Liberty Safeguards, acknowledging that the report advised that although good progress had been made in relation to procurement of independent professional advocacy, alongside the other existing controls they had a limited effect on controlling the demand.
Following a query regarding Reshaping Services and its progress, the Head of Performance and Development stated that the Reshaping Services programme was directly related to challenging savings targets which currently clearly remained a risk, but the risk was manageable. Following a further query as to whether Brexit would have an effect, the Head of Service stated that the current lack of clarity about the Government’s proposals made it difficult to assess. The Corporate Risk Register would pick up any changes through the Legislative Changes risk already featuring in the Register.
The Chairman referred to his concern in relation to the Waste Management service advising that he had received a number of complaints regarding collection of waste and the risk, in his view, was increasing at a considerable rate. He suggested a review on the risk of waste be presented to the Committee in due course. The Head of Service, in response, advised that the Council had no option but to comply with Welsh Government Standards as the risks associated with the penalty for failure were considerable.
Having fully considered the report it was subsequently
(1) T H A T the current position of corporate risks, the emerging risk themes and the associated recommendations made by the Corporate Management Team as contained within the report be noted and endorsed.
(2) T H A T the report be referred to Cabinet for consideration and endorsement.
Reasons for decisions
(1) To identify the current position of corporate risks across the Council and highlight any emerging risk themes and issues.
(2) To ensure Cabinet receives an up to date position on the Corporate Risk Register and endorses the recommendations contained within this report.