Minutes of a meeting held on 27th July, 2016.
Present: Councillors J.C. Bird, Mrs. P. Drake, J. Drysdale, K. Hatton, C.J. Williams, M.R. Wilson and Mr. P.R. Lewis (Lay Member).
246 APPOINTMENT OF CHAIRMAN –
RESOLVED – T H A T Councillor K. Hatton be elected Chairman for the current Municipal year.
247 APPOINTMENT OF VICE-CHAIRMAN –
RESOLVED – T H A T Mr. P.R. Lewis be elected Vice-Chairman for the current Municipal year.
248 APOLOGY FOR ABSENCE –
This was received from Councillor A.C. Williams.
249 MINUTES –
RESOLVED – T H A T the minutes of the meeting held on 25th April, 2016 be approved as a correct record.
250 DECLARATIONS OF INTEREST –
No declarations were received.
251 ANNUAL GOVERNANCE STATEMENT 2015/16 (MD) –
The above Statement was submitted for review and endorsement and subsequent adoption by the Leader of the Council and the Managing Director.
The Annual Governance Statement (AGS) should relate to the mechanism used to demonstrate that, during the financial year ending 31st March, 2016, the Council had an adequate governance regime in place and all business was conducted in compliance with the existing arrangements.
The AGS for the 2015/16 financial year relating to the activities of the Council was set out in Appendix A to the report and had been drawn up with regard to the Code of Practice on Local Authority Accounting in the UK: A Statement of Recommended Practice (SORP). The AGS also had regard to guidance issued by CIPFA / SOLACE in its publication “Developing Good Governance in Local Government” and the Council’s Code of Corporate Governance.
The overall Annual Governance arrangements within the Council for the financial year 2015/16 were considered to be satisfactory. However, issues relating to the unprecedented challenges the Council faces with ever diminishing funding impacting on how the Council delivered its services, embarking on an ambitious programme of transformational change made planning for the future difficult. This together with the control weaknesses identified within the Waste Management were reflected in Section 11 – Significant Governance Issues of the AGS.
The Head of Finance referred to the synergies of the AGS with the new Corporate Plan, the recent thorough Corporate Assessment and subsequent Action Plan which had been signed off, the Council’s new performance framework and proposed performance indicators which would be subsequently reported to the Scrutiny Committees. One point of concern for the Head of Service was the matters referred to in the AGS relating to the management of waste contracts. Reference was made to a report on the issue which would be made to the Audit Committee at its next meeting in September.
Having regard to the above, it was
RESOLVED – T H A T the Annual Governance Statement for 2015/16 be recommended for adoption by the Leader of the Council and the Managing Director.
Reason for decision
In acknowledgement of a review of the governance framework and the system of internal control, which had been in place within the Council for the year ending 31st March, 2016.
252 UNAUDITED STATEMENT OF ACCOUNTS 2015/16 (HOF / S151O) –
The 2015/16 Vale of Glamorgan Council Statement of Accounts was set out at Appendix A to the report and had been prepared in accordance with the requirements of the International Financial Reporting Standards (IFRS). This was intended to provide for comparable accounts across all accounting boundaries, public and private, national and international. The Shared Regulatory Services Joint Committee 2015/16 unaudited Statement of Accounts was also attached at Appendix B to the report, and the Vale, Valleys and Cardiff Joint Committee Annual Return 2015/16 was also attached at Appendix C.
It was proposed that any comments of the Committee on the above accounts would be referred to the Head of Finance as the Section 151 Officer and Treasurer of the Joint Committee respectively, for subsequent discussion with the Council’s External Auditors (Wales Audit Office) (WAO). The actions taken with regards to the 2014/15 matters arising recommendations were as follows:
Matter Arising 1 – Debtors’ Evidence
Debtors Evidence had been routinely collected as part of the closing process, however, to ensure that supporting evidence was retained over a certain value it was a specified action that a document was saved onto a central folder for all individual debtor balances that exceeded £50,000 as part of the closing process.
Matter Arising 2 – Creditors’ Evidence
A report of outstanding purchase orders was run as part of the closing process and was circulated to Accountants for review as part of the closing process to enhance the audit trail and evidence that appropriate accruals are made for outstanding purchase orders.
Matter Arising 3 – Bad Debt Provision
A review was carried out in year of all debt collected that related to bills that were more than one year old. This actual debt collection data was used to calculate how much bad or doubtful debt should be provided given the age of the debt. Development work remained ongoing with Internal Audit to produce a corporate procedure.
Matter Arising 4 – Provisions
A review of all provisions had been carried out in year and as a result £787,000 had been unearmarked as part of the 2015/16 closing process.
Matter Arising 4 – Employee Emoluments
Work on jointly funded staff was carried out as part of the closing process. Where staff were funded 50% or more by the Vale of Glamorgan Council and the employment contract was with the Council, the staff were included in the Employee Emoluments calculation as it was considered that the balance of risk was with the Council.
Matter Arising 4 – Journals
Internal audit undertook work in year on the main accounting system which included the financial control arrangements for Journals. The internal audit report made the following evaluation of the current journals process:
The current control framework surrounding the journal process was effective. Although it was noted that without an authorisation control, the Accountancy team should ensure that the existing controls were maintained and there was routine monitoring of the process.
Therefore, given the resources implications of an authorisation control and the above findings the Council had not introduced an authorisation step in the Journals process but would continue to keep this area under review.
In addition to the above, the Principal Accountant provided additional context in regard to the Accounts for 2015/16 and referred to specific issues which had been addressed within the Accounts. In working through the Council’s Statement of Accounts the Principal Officer provided the Committee with some background information in regard to the following areas:
- In the run up to closing the 2015/16 Unaudited Statement of Accounts a number of issues had been encountered in respect of the WAO Annual Report in that the Local Authority Audit Summary highlighted issues raised in the 2014/15 Audit at another Welsh Local Authority with regard to the valuation of operational assets on a Depreciated Replacement Cost basis in that they included the cost of financing element which was an error, therefore adjustments had had to be made. She referred to specific emerging issues which related to Council dwellings assets which had been historically treated as buildings whereas an estimate of the land value should have been made. Following discussions with the Council’s valuers it had been determined that 30% was a reasonable estimate for the land value. This meant that the historic depreciation had been overstated and therefore needed to be corrected in the Accounts.
- In addition to the above, an issue with regard to the Shared Regulatory Services Joint Committee had been identified following the consolidation of the Joint Committee financing into the Council’s Unaudited Statement of Accounts for 2015/16. Following the Council becoming the Host Authority during the above period, a large number of staff had transferred into the Council’s employment from the predecessor Authorities (Bridgend and Cardiff) which had subsequent implications for the Council’s pension calculations. The transfer of staff had led to a significant impact on the Council’s actuarial valuation and it had been decided to commission support to review the Joint Committee to assess their pension liabilities. However, due to time constraints this information had not been received in time to allow the information to be included in the Unaudited Statement of Accounts and consequently an adjustment to the accounts for these would be made as part of the ongoing audit process. As such, similar adjustments would also need to be made for the Vale, Valleys and Cardiff Adoption Service.
The Principal Accountant then drew the Committee’s attention to the fact that the Council had, for the first time, introduced surplus assets as an asset class (Fair Value Disclosure) and therefore there was an in-year requirement to value the Council’s surplus and investment properties based on their fair value at their highest valuation which required an associated disclosure.
Her attention then turned to the Explanatory Foreword which was intended to give an overview of the Council in terms of where it received its funding from and how it spent the same. Also what monies were contained in the budget and the management of accounts and provided an explanation of the matters which Members should be aware of in relation to a decrease in the Council Fund of £2.469m; Council Tax at £1.987m; Capital Expenditure of £108m and the Housing Revenue Account Subsidy Buyout in the amount of £63.156m. She referred to the Highways Network Assets for 2015/16 and that a significant change for such accounts would take place in 2016/17. She also referred to the Reserve Statement which was contained on Pages 21 to 22 of the Accounts and referred to a number of points relating to useable reserves which were attributed to pensions and capital adjustments, etc.
In referring to the Comprehensive Income and Expenditure Statement which set out the accounting costs in year of the provision of services in accordance with generally accepted accountancy practices. This was an area which had required amendment, in particular the £63m Housing Subsidy Buyout which should not have been submitted within the HRA Service and should have been identified on a separate line.
In regard to the Cash Flow Statement, these required a change i.e. the net cash flow in the reporting period i.e. analysed into operating / investing and financing authority for 2015/16 should read £45,276,000.
In addition to the above matters, she also referred to a number of adjustments to the Notes to the Accounts in respect of the following:
- Note No. 8 – a statutory adjustment had been made to remove the impact of accounting adjustments from the tax payer and adjustments had been made to all categories of usable and unusable reserves e.g. pensions, holidays, depreciation, revaluations and other capital accounting adjustments
- Note No. 9 – Council’s earmarked reserves e.g. school reserves where there was a slight increase to £2.9m and was attributed to capital reserves into the School Investment Strategy.
An amendment had been made to include a line for the various Joint Committees.
- Note No. 13 – this related to property, plant and equipment and contained those adjustments with regard to the depreciation of Council dwellings, the related revaluation of associated land value and the removal of these costs from Depreciated Replacement Costs.
- Note No. 14 – the recategorisation of surplus assets as the Council valuations were judged to be Level 2 and these valuations would be carried out by the Council’s valuer.
- Note No. 18 – financial instruments. An increase in loans was attributed to the Housing Subsidy Buyout (£63m).
Significant use and unearmarking of provisions in year - £1.8m transferred out.
- Note No. 20 – Slight increase in cash and cash equivalents. Balance is due to overnight investments on 31st March of £8.6m.
- Note No. 22 – This was in acknowledgement of a note by the Auditor in last year’s Accounts and the subsequent undertaking of a review of provisions.
- Note No. 31 – In relation to employee emoluments, remuneration ratios for 2016/17 would be 1:6, it being noted that in 2014 this was a ratio of 1:7. This would be amended and included in comparative information contained within the Accounts. There was a significant increase in number and value for exit packages for 2015/16.
- Note No. 33 – this reflected a new addition by the consolidation of the various Joint Committee Accounts.
- Note No. 37 – this had been amended in light of the recent information received from the Actuary. The Pension Assets and Liabilities may need to be amended based on the Actuary’s response for the Shared Regulatory Services and Regional Adoption Service.
The Principal Accountant’s attention then turned to the HRA Accounts which commenced on page 74 of the Accounts which reflected the £63m in relation to the Housing Subsidy Buyout: a judgement in regard to the depreciation of Council housing land value; capital grants and the HRA share of the pension fund adjustments.
The Principal Accountant referred to the Council’s Accounts in respect of the Trust Funds which were contained on the last page of the Statement of Accounts. In regard to Welsh Church Act Estates, discussions were being held with the WAO and it had been subsequently agreed to bring the accounts for this Trust to the Committee for consideration in September. The main change in respect of the Trust funds related to the disposal of Southerndown Home. In regard to land formerly Cowbridge Sixth Form Site, work was continuing with the Charity Commission to progress the matter.
In concluding, the Principal Accountant referred to the Shared Regulatory Services Joint Committee’s accounts which had recently been reported to the Joint Committee for endorsement. She reminded the Committee that there were no joint assets so that the accounts at Appendix B were considerably shorter. In terms of debtors and creditors, these were largely the responsibility of the partner Authorities and the Host Authority. She referred to significant staff exit costs in the first year of the establishment of the Joint Service and significant savings had been made but this did not include pension adjustments which now may need to be included. In regard to the Vale, Valleys and Cardiff Adoption Service, these accounts had been reported to Member Authorities and a balance of £134,000 had been carried forward.
A Member, in referring to certain variations contained in page 23 of the report, enquired as to why there was a variance in the figures contained in the comprehensive Income and Expenditure Statement. He also referred to the Council’s Building Fund and also enquired why the reserves held were higher than in previous years. In response, the Principal Accountant was unable to provide an explanation in regard to the reasons for the variations within the comprehensive Income and Expenditure Statement but indicated that she would provide that information to the Committee Members. In regard to the Member’s second query, she indicated that the main reason was due to the projected reduction in capital financing and therefore, a higher level of usable reserves held to maintain capital asset renewal. Funding had also been put aside for specific schemes.
A number of Members made reference to typographical errors contained in the report and, in particular, to the Balance Sheet and usable reserves (contained on pages 24 and 25) and the information contained within the pie chart explanation on page 2 of the report with it being highlighted that this should be attributed to Housing.
The Chairman enquired as to the reason for the balance figure in respect of Equal Pay Claims. The Principal Accountant responded by confirming that this related to the potential for the need to settle related pay claims. It was expected that this amount would reduce. The Chairman then referred to “Other Service Expenses” and enquired as to the reasons why there was a difference between 2014/15 and 2015/16. The Principal Accountant indicated that she was unable to provide an answer but would e-mail Members following the meeting to clarify the position.
A Member referred to the previous audit recommendations made in the ISA260 document and as contained in paragraph 7 of the report. The Principal Accountant, in response, pointed out that progress in respect of these recommendations were contained in paragraph 11 to 16 of the report, but then proceeded to provide a detailed explanation on these matters.
Brief discussion also touched upon the progress of the development of joint scrutiny arrangements for the Shared Regulatory Service with Bridgend and Cardiff Councils. In response the Principal Democratic and Scrutiny Services Officer provided an update for Members and referred to a report recently considered by the Shared Regulatory Services Joint Committee. The purpose of the report was to set out a way forward for joint scrutiny arrangements between the Councils and it was anticipated that joint scrutiny arrangements would be in place for the new Municipal year.
Subject to the above, a further report would be submitted to the next meeting of the Committee following the completion of the audit of the Statement of Accounts and then to Council for final ratification.
(1) T H A T the Unaudited Vale of Glamorgan Statement of Accounts for 2015/16 be referred to the Head of Finance as the Section 151 Officer for subsequent discussion with the Council’s External Auditors (Wales Audit Office).
(2) T H A T the Unaudited Joint Committee Shared Regulatory Statement of Accounts for 2015/16 and the Shared Regulatory Services Annual Government statement be referred to the Head of Finance as Treasurer of the Joint Committee for subsequent discussion with the External Auditors (Wales Audit Office).
(3) T H A T the Annual Return for the Vale, Valleys and Cardiff Regional Adoption Service 2015/16 be referred to the Head of Finance as Treasurer of the Joint Committee for subsequent discussion with the External Auditors (Wales Audit Office).
(4) T H A T the actions following the Council’s External Auditors’ recommendations for the 2014/15 Accounts be noted.
Reasons for decisions
(1-3) To allow for the internal review of those charged with governance of the relevant Statement of Accounts / Annual Return.
(4) In acknowledgement of the Council’s progress against the implementation of the External Audit recommendations.
253 COMPUTER AUDIT SERVICE – PILOT SCHEME (HOF / S151O) –
In referring to the background to the report, the Operational Manager for Audit made reference to a previous report submitted to the Committee in July 2015, which highlighted the opportunities that were available to the Council to extend the service and to look at the potential to undertake a pilot scheme relating to computer audit for other Local Authorities. Consequently, Newport City Council had made contact indicating that they were interested in being part of the pilot with the Council to undertake such an audit on their behalf. Work had consequently progressed with a brief being agreed by Newport City Council on the areas that they wished the Council to undertake the review and this had subsequently progressed to the production of a draft report being issued. As this was a pilot, it had been previously agreed that feedback would be provided from both Heads of Audit in order to identify any lessons that may have been learned during the process to aid future improvements going forward. The Committee noted that the Head of Audit from Newport City Council had been unable to attend the meeting.
The Operational Manager for Audit indicated that overall it was felt that the pilot had proved a success. During the feedback meeting between both Councils it had been acknowledged that the specialist computer knowledge and skills resulted in Newport City Council receiving the audit report, the findings and recommendations of this Council’s Internal Audit team which would be invaluable moving forward. It was also recognised that the area reviewed would have not have been covered in such detail in-house by Newport City Council’s internal audit section as it did not have the level and depth of specialist knowledge that was required. In terms of lessons learned from the exercise, the Operational Manager for Audit indicated that this work would assist in developing any future work with Local Authorities and highlighted some of the challenges that were faced during the process and the means of resolution going forward:
- The review had been undertaken over five months from approving the audit scope to issuing the draft report which was not considered to be timely. Problems had related to the availability of staff and in terms of lessons learned, it had been suggested that going forward a date for exit meetings should be agreed as part of the initial scope. It was hoped that this would ensure that all relevant officers from both Authorities were working to the same agreed deadlines.
- There were initial issues in identifying and contacting key officers and accessing data and systems for which reliance was placed on staff at Newport City Council to address. However, suggested improvements have since been discussed which would minimise reliance on others.
- The pilot had enabled the roles of both Internal Audit Sections to be clarified as Newport City Council had agreed to “buy in” the Council’s computer expertise. In future, these requirements would be addressed and solutions put in place before the review was undertaken.
- In addition, a methodology for issuing draft and final reports had also been agreed which would again, in future, streamline the process. The review itself had been delivered over 20 working days, which had been agreed in advance with Newport City Council.
Overall, the review had been undertaken in a collaborative spirit and the final report would be issued appending both Authorities’ logos. The Operational Manager for Audit also indicated that it was proposed to take a report to the next Welsh Chief Auditors Group for consideration. It was hoped that this would promote the work of the Council’s Internal Audit service with a view to undertaking work on behalf of other Councils in Wales.
A Member enquired if the service had covered its own costs. In response, the Operational Manager for Audit indicated that the service had been paid for the work. The Member then asked the Operational Manager for Audit if the 20 days for undertaking the work included time spent on administration, meetings, etc. In response, the Operational Manager confirmed that this work was not part of the 20 days and it also did not include the travel time of officers to Newport City Council's premises. The Member responded by suggesting that officers needed to review fees charged for undertaking such work to reflect fees charged by external providers in the private sector. In response, the Operational Manager acknowledged the point made and indicated that this would be a consideration in the event of future opportunities arising.
RESOLVED – T H A T the Computer Audit Service – Pilot Scheme for Newport City Council be noted.
Reason for decision
To apprise Members of the results of the above pilot scheme.
254 BUILDING SERVICES UPDATE (HOF / S151O) –
In July 2013, the Committee were informed of significant control weaknesses within Building Services. Since that time, a number of audit reviews had been undertaken with the Committee considering further reports from 2013 through 2014 and latterly the last report being considered by the Committee on 24th February, 2015. Due to the issues raised, it was necessary to highlight the significant control weaknesses in the Council’s Annual Governance Statement for 2013/14.
As alluded to above, the last review had been reported to the Committee in February 2015 and concluded that the Building Services had been working to implement the changes necessary to demonstrate that improvements had been made and based on the testing undertaken at the time, the outcome of the review concluded that reasonable assurance could be placed on the overall control environment. However, the report did identify a further follow up review on the area of Sub-contractors and Inspections would be undertaken within the 2015/16 Audit Plan.
The Operational Manager for Audit indicated that this last follow up review had been recently completed. The scope of this audit review was to ensure that the recommendations made and agreed during the previous audit reviews (including follow ups) had been implemented and that satisfactory controls were in place and operating effectively in the below areas:
- Mobile working;
- Status 10’s;
- Call out;
- Ticketed work and
The audit testing used data from the financial year 1st April, 2015 to 31st March, 2016.
The Operational Manager indicated that during 2015/16, 15,698 jobs were raised on ConSol by Building Services to a value of £4,683,996 of which 80% of jobs were responsive repairs undertaken by the mobile workforce. The audit review identified that the implementation of the Trackyou system, which was used to monitor vehicle use and movements, together with a software upgrade to improve the functionality of the handheld devices, had greatly improved the productivity and accountability of the mobile workforce. Therefore, the Operational Manager was pleased to report that the overall control environment in regard to the above matters continued to be satisfactory. Based on testing undertaken, the outcome of the latest audit review concluded that reasonable assurance could be placed on the overall control environment and the planned ongoing improvements would continue to strengthen the controls already in place. She commended the service for their hard work and the resultant significant improvement and had invited the Director to attend the meeting to give feedback on the above.
In responding to the report, the Director of Environment and Housing had acknowledged that during the period of 2013 there had been significant change within the senior management structure of the service and that there had been a loss of focus. He referred to the hard work of the Head of Housing and Building Services and the Operational Manager – Building Services. He referred to the significant efforts and commitment to deliver the associated action plan and he welcomed the positive outcome highlighted in the report.
A number of Members of the Committee responded by thanking the officers for their efforts indicating it was pleasing to see the progress made, but looked forward to further updates on the continued progress in Building Services.
RESOLVED – T H A T the contents of the progress report be noted.
Reason for decision
To apprise the Audit Committee of the ongoing monitoring of the Council’s overall internal control environment.
255 EFFECTIVENESS OF AUDIT COMMITTEE – SELF-ASSESSMENT 2015/16 (HOF / S151O) –
The Chartered Institute of Public Finance and Accountancy (CIPFA) 2013 Position Statement: Audit Committees in Local Authorities and Police emphasised the importance of Audit Committees being in place as they were seen as key components of governance. The purpose of an Audit Committee was to provide those charged with governance independent assurance on the adequacy of the Risk Management Framework, the internal control environment and the integrity of the financial reporting and annual governance processes. The Audit Committee was an important source of assurance for the organisation’s arrangements for managing risk, robust governance arrangements, maintaining an effective control environment and reporting on financial and other performance.
The Operational Manager for Audit indicated that the effectiveness of the Council’s Committee had been reviewed in line with guidance published by CIPFA. Whilst this guidance was not mandatory, it did provide fundamental principles to compare the Audit Committee to, which if not followed could lead to a lack of confidence in Internal Audit and the Audit Committee and could indicate weaknesses in overall governance processes.
The Operational Manager, in referring to a completed checklist which was set out at Appendix A to the report, advised this indicated the overall effectiveness of the Audit Committee as being good. Of the responses received, 26 out of the 28 were positive representing overall a 93% positive response rate which was exceptional. In regard to the negative responses received, these related to the membership of the Committee. The first related to the fact that the checklist asked if the Chairman of the Audit Committee was free from Executive or scrutiny functions. It was noted that the Chairman of the Audit Committee was a Member of the Council’s Scrutiny Committee process. In commenting on this issue, the Operational Manager indicated that although total independence was seen as best practice, membership of the Council’s Scrutiny function was not seen as an issue that impacted upon the effectiveness of the Council’s Audit Committee. It was acknowledged that due to the number of Committees that the Council had in place there was an expectation of Members to play a role in more than one of the Council’s Committees. In regard to the second issue, the Operational Manager indicated that this related to the Audit Committee Members being sufficiently independent from other key Committees of the Council. She indicated that during the Municipal year 2015/16, four of the seven Members of the Audit Committee were also Members of the other Scrutiny Committee, with one being a Chairman and the other a Vice-Chairman. Having said that, she indicated that there was no evidence to suggest that this had any detrimental impact on the effectiveness of the Audit Committee.
A Member referred to page 1 of the questionnaire and to four of the responses that were categorised as Yes. He referred specifically to the Committee’s review of the Council’s Whistleblowing Policy and he felt that care needed to be taken how the responses were interpreted and to the evidence to support such an assertion. This was particularly timely, given that the Committee was considering whistleblowing as a report later on the Committee’s agenda.
In addition to the above matters, brief discussion also centred on “private meetings held with External Auditors” with the Vice-Chairman indicating that since being a member of the Committee he had not been offered or attended such a meeting. The Chairman, in response, sought to clarify the position in regard to this and indicated that he did hold meetings with the Operational Manager for Audit and had attended quarterly meetings with both the Head of Finance and the Operational Manager for Audit. However, he was happy for the Vice-Chairman in the future to be invited to attend.
RESOLVED – T H A T the outcome of the self-assessment which demonstrated the effectiveness of the Council’s Audit Committee and compliance with the Committee’s Terms of Reference be endorsed.
Reason for decision
To apprise the Audit Committee Members of the effectiveness of the Audit Committee.
256 CORPORATE COMPLAINTS (HOF / S151O) –
The Council’s current Corporate Complaints Policy had been operational since 1st July, 2013 with the Policy applying to members of the public receiving or seeking a service from the Council. The Policy did not incorporate complaints in relation to Social Services which were done via a separate statutory policy. Similarly, separate policies existed in relation to dealing with complaints being made against Council Members, Schools and in relation to the Welsh Language.
The Policy itself provided clear guidance to the reader on the various stages of a complaint, the associated timescales for investigation, the expectations the complainant could place on the Council and how to take matters further should the complainant feel their complaint had not been properly addressed. In addition, the Council’s StaffNet provided detailed guidance for officers who investigated complaints at both Stage 1 and Stage 2 levels and the Council had a dedicated Corporate Complaints Officer, whose role included ensuring all Stage 2 complaints were logged on the Council’s Oracle CRM system, supporting officers as they investigated complaints within the timescales, monitoring complaints received and importantly, the lessons learnt.
In 2014/15 an audit review of the above Policy was undertaken and included a review of the system used by the Council to log and monitor complaints within the Oracle CRM system and testing to ensure adherence to the Policy, especially in relation to timescales for investigation. The audit review also incorporated a review of the complaints process in operation within Social Services.
The findings of the above review concluded that at that time, Reasonable Assurance could be placed on the control environment. A small number of recommendations had subsequently been made, primarily relating to ensuring complaints were dealt with within the pre-set timescales and were closed down on the Oracle CRM system in a timely manner.
Of the complaints made during 2014/15, 34% were upheld with a further 15% partially upheld. The analysis further showed that 71% of complaints were investigated within the target timescales, suggesting an area for improvement and in line with the findings of the 2014/15 audit report. In regard to 2015/16, there were 377 complaints received, which represented a 24% increase on the number received in 2014/15. Of these, 333 were resolved at Stage 1 of the Policy and a further 44 were escalated to Stage 2. The fact that more complaints had been made should not necessarily be seen as a negative point as the Council’s policy was to encourage the public to make contact, raise their concerns and provide a chance for the problem to be rectified and for lessons to be learnt.
During the current year, six Stage 2 complaints were escalated by the complainant to the Public Services Ombudsman for Wales. Of these: three were looked at during the year and the Ombudsman subsequently made a decision that no investigation was necessary on their part. The remaining three were carried forward into 2016/17. Again, the Ombudsman had taken a decision in regard to two of these complaints that no further investigation was necessary on their part. The remaining one complaint had yet to be decided upon.
Of the complaints made, 42% were upheld with a further 16% partially upheld. In the majority of cases (47%) there was no learning outcome as a result of the complaint. For 37% of cases, staff training and development was identified as a learning outcome. The remaining learning outcomes were to review / amend systems (6%), review / amend policies and procedures (5%) and review / amend information and communication (5%). In addition, 74% of complaints were investigated within the target timescales and this represented an improvement on the previous year of 71%. With the potential roll out of access to dashboard to Managers, it was anticipated that this figure would continue to improve as greater monitoring could be undertaken.
In terms of the analysis by Directorates of complaints made, the following was noted:
- Environment and Housing received the most complaints with 77% of the total (264 Stage 1 and 27 Stage 2).
- Resources received 20% (61 stage 1 and 15 Stage 2)
- Learning and Skills received 3%.
The Committee was reminded that Social Services complaints were not recorded in the same way on the Council’s Oracle CRM system. It had been established that there had been 52 complaints in 2015/16 compared to 55 in 2014/15 for the service. It was also noted that the Social Services complaints procedure was also contained within the Audit Plan.
Members of the Committee referred to the practicalities of the timelines to undertake and deal with a complaint, any implications of third parties operating on behalf of the Council being subject to a complaint and if such information was recorded and latterly, the capability of managers to use the dashboard and the necessity for training to be provided. In response, the Operational Manager for Audit confirmed that 71% of complaints had been carried out within the policy timelines. Regarding third party involvement of contractors acting on behalf of the Council and the issue of accessibility / training for managers for the use of the dashboard, the Operational Manager for Audit indicated that she would investigate/ look into both areas.
RESOLVED – T H A T the update on the Council’s Corporate Complaints Procedures and Processes be noted.
Reason for decision
In acknowledgement of the Committee’s responsibility to monitor the above policy /procedures and, where necessary, to make recommendations to the Cabinet and / or Council as appropriate.
257 INFORMATION AND ACTION REQUESTS (HOF / S151O) –
The report summarised the actions and information requests made by the Audit Committee at its meeting held on 25th April, 2016 and any other items outstanding from previous meetings in respect of the following:
Action / Request
21 Sep 2015
407 AUDIT OF THE 2014/15 FINANCIAL STATEMENTS – REPORTING TO THOSE CHARGED WITH GOVERNANCE (MD) –
Head of Finance / Section 151 Officer
That a further report be brought before Audit Committee after March 2016 outlining the outcome of the Officers’ actions in respect of the weaknesses identified by the Appointed Auditor and detailed in Appendix 4 to his report.
This will be reported at 27th July Audit Committee meeting.
16 Nov 2015
That Committee receive a further report concerning the failure to finalise the contract identified in the Audit Report, such report to recommend procedures that should be put in place to prevent this matter occurring again.
Head of Finance / Section 151 Officer
A report was presented to the Council’s Audit Committee at its meeting held on 22nd February 2016.
A further resolution was made by Committee that:
the Action Plan currently being overseen by the Council’s Corporate Management Team regarding the implementation of a number of recommendations to improve the overall control environment and outcome of the review of the Council’s Contract Management Guidance and Toolkit be brought before a future meeting of the Audit Committee
An update report will be presented to Audit Committee at its November meeting.
16 Nov 2015
That a further report be presented to Members in due course, setting out the proposed scope and objectives of the assessment in accordance with the preferred choice as outlined above. This should ensure that the Committee can gain the necessary external assurances on the effectiveness of the Internal Audit Shared Service function.
Head of Audit
A report will be scheduled for the Council’s Audit Committee to consider at a future meeting of the Committee.
Complete – Included within the Agenda Papers for 27th July, 16 Committee meeting.
16 Nov 2015
That the Operational Manager – Audit provide Members of the Committee with further information on the potential of the National Fraud Initiative
Head of Audit
A report will be scheduled for the Council’s Audit Committee to consider at a future meeting of the Committee.
Outstanding – due to the number of agenda items for the July Committee. This item has been deferred to November 2016.
22 Feb 2016
That training be arranged for the Members of the Audit Committee and Scrutiny Committee (Corporate Resources) on Treasury Management issues, to include a breakdown of the Council’s debt schedule, and to also include data relating to the Vale of Glamorgan Council and examples of what could be done to mitigate the Council’s debt repayments.
Head of Finance
This will be arranged for prior to the start of the July 16 Committee Meeting.
Deferred and Scheduled for the September meeting.
RESOLVED – T H A T the summary of actions and information requests, including the current status of each as indicated above, be noted.
Reason for decision
In acknowledgement of the Committee’s responsibility for monitoring the Internal Audit Shared Service.
258 WHISTLEBLOWING (HOF / S151O) –
The Council’s Whistleblowing Policy provided clear guidance to the employee on types of concerns that should be raised, how to raise their concerns and to whom and the framework for protected disclosure and guidelines for managers. The Policy (including the School Template Policy) was available on the Council’s StaffNet, along with general guidance for staff on what should be deemed as whistleblowing, what constituted a grievance, template forms for completion, points of contact, Wales Audit Office leaflets and information on how to whistleblow to an external organisation. The Policy also formed part of the Council’s Constitution.
The Operational Manager for Audit referred to current policy arrangements which clearly identified that the Operational Manager – Customer Relations was responsible for the registration and maintenance of a central record of all whistleblowing concerns and to monitor the progress and outcome of each investigation undertaken. In addition, the Head of Human Resources had the responsibility for updating the Policy as required.
The Committee noted that during 2015/16 there had been four recorded instances of whistleblowing under the above Policy. Two related to Social Services, one related to ICT and one to a school (that was reported under the Corporate Policy). The Committee also noted that the subject matter of the cases varied between staff behaviour, non-compliance with Council policies and operational and quality of service issues. The Operational Manager for Audit updated the Committee following the receipt of information from the Operational Manager for Customer Relations on the outcome of the four recorded incidences. It was noted that two of the cases were not upheld as there was no action necessary. One case was partially upheld where a verbal warning had been issued to the member of staff concerned and an action plan had been put in place to address concerns. The final case was currently under investigation where an external independent investigation had been commissioned.
Discussion ensued regarding the Council’s Policy in regard to Elected Members’ awareness of the Policy, getting the balance right between protecting the whistleblower and complaints being made that were vexatious, including the involvement of recognised Trade Unions in the process, the need not just to publicise the Policy but, also Members having the confidence that staff were able and confident enough to make a complaint under the Policy and the appropriateness of a question being included in the Staff Satisfaction Survey. Members of the Committee felt that such a question being included in future Staff Satisfaction Surveys would be useful to allow them to monitor the utilisation of the Policy.
(1) T H A T the update on the Council’s Whistleblowing Procedures and Processes be noted.
(2) T H A T the Operational Manager for Audit and the Section 151 Officer take the necessary steps to ensure that an appropriate question on Council’s Whistleblowing Policy and Grievance Procedure was included within the next Staff Satisfaction Survey.
Reasons for decisions
(1) In acknowledgement of the Committee’s role to monitor the Council’s Policy on “Raising Concerns at Work” and to make recommendations to Cabinet and / or the Council as appropriate.
(2) To allow the Committee to better understand the use of the Council’s Whistleblowing / Grievance procedures.
259 EXTERNAL ASSESSMENT (HOF / S151O) –
The Committee, at its previous meeting held on 27th February, 2016, expressed a preference for the External Assessment against the Public Sector Internal Audit Standards (PSIAS) to be carried out by an independent organisation rather than a peer review. Consequently, and in accordance with the requirements of both Councils’ Audit Committees, a procurement exercise would be undertaken to procure the most economically advantageous organisation to undertake the above assessment and in compliance with the Vale of Glamorgan Council’s Contract and Financial Procedure Rules. It was anticipated that the proposed external assessment would be undertaken during the latter half of the current financial year in order to comply with the requirements of the above Standards.
The Operational Manager for Audit indicated that in advance of the External Assessment, the Head of Audit would complete the Checklist for Conformance with the PSIAS. In addition, the scope of the External Assessment would consist of a broad scope of coverage that would include a review of the following elements of Internal Audit activity:
- Conformance with the Standards, Definition of Internal Auditing, the Code of Ethics, Internal Audit Shared Service Charter and the Annual Risk Based Audit Plan;
- Policies, Procedures, Practices and any applicable legislative and regulatory requirements;
- Integration of the Internal Audit activity into both Bridgend and the Vale of Glamorgan Councils’ governance framework, including the audit relationship between and among the key officers and Members involved in the process;
- Tools and techniques used by Internal Audit; and
- The mix of knowledge, experience, and disciplines within the staff group, including staff focus on process improvement delivered through the Quality Assessment and Improvement Programme (QAIP).
The Operational Manager for Audit, in consultation with the Head of Finance / Section 151 Officer for the Vale of Glamorgan Council, would confirm the Terms of Reference for the review, timescales and the convenient dates for the review to be undertaken. The outcome of the Assessment would be reported to the Internal Audit Shared Service Board in the form of a formal written report. The results would subsequently be reported to the respective Councils’ Corporate Management Team / Board and respective Audit Committees. The Assessment report would also be accompanied by a written action plan in response to any significant comments and recommendations identified. Any significant areas of non-compliance would be reported in the Annual Report of the Head of Audit for 2016/17 and in the Annual Governance Statement if deemed necessary.
The Committee noted that the above proposal had been previously reported and approved by Bridgend County Borough Council’s Audit Committee on 30th June, 2016.
A Member of the Committee referred to paragraph 4 of the report and, in particular, to the procurement exercise which would be undertaken on the basis of the most “economically advantageous organisation” and expressed a view that there should be a balance between economic advantage and relevant expertise. He sought an assurance that any organisation procured to undertake the Assessment had the relevant expertise and experience. The Member also sought clarification on the membership of the Internal Audit Shared Service Board. The Operational Manager for Audit indicated that the Board was constituted by the Head of Finance / Section 151 Officer for the Vale of Glamorgan Council and the Chief Executive of Bridgend County Borough Council.
RESOLVED – T H A T the draft scope for assessing the Internal Audit Shared Service compliance with the Public Sector Internal Audit Standards (PSIAS) be approved.
Reason for decision
To facilitate the monitoring of the Council’s Internal Audit Shared Service and to ensure compliance with the above Standards.
260 AUDIT COMMITTEE – FORWARD WORK PROGRAMME (HOF / S151O) –
The Committee reviewed the updated Forward Work Programme for 2016/17 which had previously been approved by the Committee at its meeting held on 21st April, 2016.
The Committee, having considered the Work Programme as attached to Appendix A to the report,
RESOLVED – T H A T the updated 2016/17 Forward Work Programme be approved.
Reason for decision
In acknowledgement of the Committee’s responsibility for oversight of its Forward Work Programme.
261 2016/17 QUARTER 1 – OUTTURN REPORT APRIL TO JUNE 2016 (HOA) –
In referring to a previous meeting of the Committee held in April 2015, the Operational Manager for Audit referred to the Head of Audit Outturn Report at that time which highlighted some of the control weaknesses that had been identified during that year. In referring to paragraph 5 of the report, the figures indicated that 408 actual days had been achieved, which exceeded that expected by 86 days. As at 1st April, 2016, the overall structure of the Section was based on 18 Full Time Equivalent staff of which, the Section was carrying four vacant posts at present. In addition, nine reviews had been completed to date, two of which were investigations and therefore, only limited assurance could be placed on the control environment. Of the seven remaining, six were closed with substantial or reasonable assurance and one was closed without an opinion as, due to the nature of the work, it was not applicable to do so. The Operational Manager for Audit’s attention then turned to Appendix A which listed those audits which had previously been reported to Audit Committee where weaknesses in the overall control environment had been identified. The list provided the Committee with the current position statement as at 27th July, 2016. She specifically focused on the Telecare follow-up and the associated review that had been undertaken during August 2015, where at that time a limited assurance report had been issued and related to a significant number of weaknesses identified around the provision of service. Since that time a follow-up review of those recommendations had been undertaken which had resulted in a further limited assurance report on the service and in accordance with agreed protocols should a second limited assurance report be issued, then the relevant Head of Service would be required to attend the Audit Committee to respond on the subject. She pointed out to the Committee that one of the fundamental issues of the recent review related to the Telecare system itself, and in particular issues surrounding the upgrade of the system. Failures in relation to the system upgrade related to the accurate recording of information and the associated ability to migrate the data from the old system to the new system, both of which had had a consequence of culminating in a limited assurance report.
The Head of Adult Services / Locality Manager was in attendance.
In expressing his disappointment at the most recent limited assurance report, the Head of Adult Services / Locality Manager outlined the issues affecting the service concerned. He acknowledged that it was considered that the service had improved given the previous audit undertaken in this area and the subsequent issues raised and in turn implemented actions to deal with those issues which appeared since the last audit review to have not been resolved. He summarised the work that had already been undertaken in that the line management for the Telecare service had moved from Business Management and Innovation into Adult Services to ensure that there was connectivity with staff given that that team was relocated to the C1V Contact Centre to make sure that there were appropriate arrangements in place with staff who were undertaking stock control. He also alluded to a number of issues within the service which were directly related to stock control and referred to the recent recruitment of an additional member of staff to assist with this activity. He further touched upon the previous work of the Scrutiny Committee Task and Finish Group Review of the Telecare Service that was completed the previous year and the delivery of the subsequent recommendations contained within the associated action plan. He also acknowledged that this was a very small service but required to be kept under close review by the service department. However, despite the limited assurance report he reminded the Committee of the good work undertaken by Members as part of the above Task and Finish Review exercise, the ongoing work of the Management Team which had contributed towards growing the service in terms of the number of people supported by Telecare, with the target set exceeded.
He referred to the most recent issue identified as part of the last review which in the main attributed to the software upgrade of the Telecare system and specifically information provided by the provider who had given an assurance that the software upgrade had been appropriately tested. However, 43 issues had come to light with the software and the majority had been resolved by the company with the exception of six outstanding issues. He believed that the remaining six issues were not likely to be resolved until a further upgrade was facilitated by the system provider. In response to a question by a Member of the Committee regarding the nature of the six outstanding issues, the Head of Service indicated that these were minor.
A Member of the Committee sought an assurance that the safety of users of the service had not been jeopardised as a result of the failings in the system. In response, the Head of Service indicated that many of the issues related to the management of the stock and in particular stock control. He acknowledged that the service covered a vulnerable client group but was unable to give 100% assurance for any service but reiterated that there were no matters relating to responses to alarms.
A Member sought clarification regarding the role of the Audit Committee in relation to this issue and enquired if the relevant Scrutiny Committee had been made aware of the specific matters referred to within the Audit report.
Discussion ensued with a number of comments being made in regard to how the service could be improved to ensure that further limited assurance reports were not issued. The Operational Manager for Audit indicated that as it stood at the moment the service could only be given a limited assurance report given the issues identified in relation to the operation of the system. In that context, she alluded to the fact that as it was a limited assurance report, the plan would be to visit the service and do a further follow up review as soon as practicable within available staff resources.
Discussion digressed onto issues of detail in regard to stock control of the Telecare service with the Head of Service providing an explanation. Also alluded to were other issues that revolved around the approval of charges and fees to coincide with the beginning of the financial year which had been impacted upon as a result of the implementation of the Social Services and Wellbeing Act.
A Member of the Committee referred to one of the fundamental issues of concern being that the service was small, supported by a small team of staff with the resulting lack of resilience. He enquired that when alternative forms of delivery were examined, was consideration given to a collaborative partnership with, for example, a housing association to overcome some of the issues identified within the limited assurance report. In response, the Head of Service indicated that this option had been considered including a number of different options in terms of whether a Local Authority partnership was sought or whether there was the potential for a partner organisation such as Age Connect. However, given that the service provided an income stream for the Directorate, any partnership arrangements was likely to have a detrimental impact on such revenue and consequently, there needed to be a degree of caution regarding future options.
With the exception of the above matter, the Operational Manager for Audit, in referring to the other matters contained in Appendix A to the report, indicated that there were no significant issues to bring to the attention of the Committee and sought to update Members on those limited assurance reports that had been reported to the previous meeting. In referring to the Landlord Compliance Review, she indicated that this was scheduled for late Quarter 2 or possibly Quarter 3. The review of ID and Access Badges would be undertaken shortly. In regard to PCI – DSS, this review would be undertaken in Quarter 3. Asset Valuation Highways remained as a limited assurance currently. However, she indicated that a great deal of work had been undertaken and the report would be subject of a report of the Head of Finance / Section 151 Officer to the Committee meeting in September. Access to Records (Subject Access Requests) indicating that the follow up had recently been undertaken and it was her view that the outcome of the review would provide a reasonable assurance on the service and a further report would be made to the Committee at a future date. An update with regard to Social Media was awaiting her review and therefore it remained unclassified as it stood at the moment, however a further report would be made to the Committee on the matter. Payments of First Aiders and Fire Warden Allowances review had currently been completed and it was likely that reasonable assurance would be reported on the subject with a further update on the matter to be provided at the next meeting of the Committee. In terms of the review of Corporate Firewalls, it was likely that this would receive a further limited assurance report. The matter would need to be reported back to the Audit Committee which was likely to be in September and the Head of Strategic ICT would be invited to attend. ICT Data Support – Learning and Skills – the recent follow up review had been completed and it was likely that a reasonable assurance report would be made on this. Finally, she referred to the four Waste Management Contracts and to the expected update report which would be made to the next meeting of the Committee in September.
A Member raised the issue of the service having four vacant FTE posts and enquired of the Operational Manager for Audit if she had sufficient resources to enable her to carry out her duties / responsibilities. In response she indicated that the Audit Plan was prepared taking account of the vacant posts within the service. Whilst she appreciated the comment, she assured Members that the high risk areas were the priority with the objective of providing a good service. She also alluded to the budget situation at Bridgend Council who were looking for this Council to reduce its costs as indeed the Council was also looking at all service areas within the Resources Directorate to make efficiency savings. With that in mind, she felt that it was sensible going forward not to fill these posts taking account of the above budgetary pressures. She also indicated that if she felt that the service was not capable of managing its workload that she would raise the issue with the Head of Finance / Section 151 Officer. The Head of Finance / Section 151 Officer echoed the comments made by the Operational Manager for Audit and assured Members that the Audit Plan had been prepared on the basis of the available resources. Given the nature of the work catalogued within the Audit Plan, it was imperative that the Operational Manager for Audit to be able to provide assurance on the Council’s systems and processes. She indicated that the service would be kept under review with this in mind and to ensure that it was able and capable of meeting the demands placed on it by both Councils.
A Member referred to the speed of the planning system in that he had received reports from constituents that the application process or the reregistration of application process was taking too long and asked the Operational Manager for Audit how often the Council’s planning system was reviewed and when the next review would take place. In response, the Operational Manager for Audit indicated that she was unaware of any issues with the Council’s planning system and indicated that she would contact the Member regarding when the service would be subject to the next audit review.
Having regard to the above and related issues, it was
(1) T H A T the contents of the report in respect of the Internal Audit Shared Service delivery of work against the 2016/17 Annual Audit Plan be noted.
(2) T H A T it be noted that a further report in respect of Highways and Waste Management Contracts would be subject of a report to the meeting of Committee in September 2016.
(3) T H A T the Telecare follow up management action plan be updated in regard to outstanding actions and submitted to a future meeting of the Committee for consideration.
(4) T H A T the Limited Assurance report in respect of Telecare be referred to the Healthy Living and Social Care Scrutiny Committee for consideration.
Reasons for decisions
(1) In acknowledgement of the Committee’s responsibility to monitor the Annual Audit Plan.
(2&3) To allow the Committee to monitor progress in respect of specific matters.
(4) To allow the Scrutiny Committee to comment on the subject matter.