Agenda, decisions and minutes

Purpose: To receive any Declarations and advise Members accordingly.

The Chairman declared a personal and prejudicial interest on Agenda Item 13 ‘Internal Audit Progress Report’, however this item was later deferred.

The Chairman declared a personal and prejudicial interest on Agenda Item 13 ‘Internal Audit Progress Report’, however this item was later deferred.

Purpose: To confirm as a correct record the minutes of the meeting held on 24 September 2015 (copy enclosed).

That the minutes be approved as a correct record and signed by the Chairman.

The minutes of the meeting held on 24 September 2015 were submitted.

Matters Arising

Minute number 33: Minutes of the previous meeting - the Chief Officer (Governance) reminded Councillor Alison Halford of her comments on the minutes and the sharing of a copy of the handwritten notes which showed that the Chief Executive had clarified a section of the minutes but had not added to them.  As such, he asked if Councillor Halford was willing to withdraw her comments, as had been requested.  Councillor Halford refused and said that she was entitled to check and to challenge the minutes for inaccuracies which she felt was an issue.  She explained that her comments had been based on her concerns about the source of the salary of the Police & Crime Commissioner (P&CC) and that she had discussed this with the Assembly Member.  She continued to dispute the accuracy of the response which had been given by the Chief Executive.

Whilst the Chief Officer acknowledged the right of Members to query the minutes, he said that her insinuation that the Chief Executive had added in his own opinion not said at the meeting went beyond challenging the accuracy of the minutes.

The Chief Executive advised that he had discussed his concerns with Councillor Halford and that her comments were not acceptable given the evidence shared.  He added that the Police and Crime Commissioner himself had given an explanation of the funding for his office at a meeting of full Council and the Corporate Resources Overview & Scrutiny Committee, which was consistent with that given by the Chief Executive.  However the substantive issue was about the insinuation made against him which he felt should be retracted.

The Chairman asked if Councillor Halford wished to retract her comments to which she declined.

RESOLVED:

That the minutes be approved as a correct record and signed by the Chairman.

That the progress made in implementing the actions from the original report be noted.

The Internal Audit Manager presented a report on the outcome of the follow-up review undertaken in response to the findings of the Wales Audit Office (WAO) in the Audit of Financial Statements report considered in September 2015.  Following consideration at that meeting, the follow-up review by Internal Audit had been brought forward to share the findings and give assurance to the Committee, along with other actions from the WAO review.  The report indicated that substantial progress had been made by Employment Services and Payroll to implement most of the recommendations, some ahead of schedule, with work on the remainder underway.

The Chief Executive explained that the Chair and Vice-Chair had been briefed on the outcomes and confirmed that Sharon Carney was the Interim Human Resources and Organisational Development Manager.  As a result of the concerns raised, the establishment of a project group had helped to make progress in putting in place more robust arrangements.  The issues involved a number of complexities but were not about accuracy of payroll payments, and the process was particularly important in respect of Single Status.  The Chief Executive added his appreciation to WAO for raising the concerns to eradicate any risk for future accounting.

Mr. Paul Williams thanked the Chief Executive and officers for their rapid progress and for the new actions added by the Internal Audit Manager.  He referred to the request for employees to complete the ‘Reporting Manager’ fields on the iTrent reports and felt that this should be a stronger directive to Chief Officers for their employees to provide this information.  The Internal Manager said that progress on this action was indicated in the follow-up report and that the need to complete this action would be stressed.  The Chief Executive agreed that an instruction would be issued to require responses back by 31 March 2016 with any incomplete records to be followed up with Chief Officers.

Councillor Alison Halford expressed concern with some of the issues in the report and sought clarity on the area of responsibility for the failings.  The Internal Audit Manager said it was not the fault of the software, but was due to incompletion of some of the data within the fields on the system.  He provided responses on actions being taken to address three of the issues, as set out in the report.  In response to a query on the reporting of accurate data for the Clwyd Pension Fund, he advised that some improvement had been made with more work to be made as the issue was still being investigated.  Councillor Halford asked for more detail on this, which the Internal Audit Manager agreed to provide separately.

When asked for his views by Councillor Halford, the Chief Executive repeated his earlier comments that the issues were around record-keeping and not individuals, software or inaccuracy of payments.  He advised that swift progress had been made on the action plan to the satisfaction of all parties, recognising that there was still some work to do.

Councillor Halford asked the  ...  view the full minutes text for item 41.

(a)       That the mid-year summary of the strategic risks of the Improvement priorities of the Council be noted;

(b)       That the refreshed risk management strategy be endorsed; and

(c)       That the Certificate of Compliance provided by the Auditor General for Wales in relation to the publication of the Annual Performance Report 2014/15 be noted.

The Policy & Performance Manager provided an update on the areas of risk management under the remit of the Committee.  The mid-year position on strategic risks in the Council’s Improvement priorities reported positive movement with risks being successfully managed.  A summary of all the risks was appended to the report indicating that 34 remained stable, with eight decreasing and three increasing.  An additional paper was circulated to the Committee showing progress and narrative on the four major (red) risk areas.  Members were reminded that detailed progress on risks in the Improvement Plan was reported quarterly to the respective Overview & Scrutiny Committees.

The report also included a copy of the Risk Management Policy & Strategy which had been refreshed to strengthen the approach to risk management, as previously endorsed by the Committee.  The Strategy was now operational across all work areas of the organisation and had been shared with the Wales Audit Office (WAO) and made available on the Council’s Infonet.  A copy of the Certificate of Compliance by the Auditor General for Wales in relation to the publication of the Annual Performance Report 2014/15 was also provided for information.

The Chief Executive said that the information provided demonstrated the way that the system had been used to capture risks in the Improvement Plan, aligned to milestone and performance targets.  He commented on the role of the Committee in seeking assurance of the systems in place and offered to clarify any areas of concern.

In response to earlier comments, Councillor Alison Halford said that she had no hidden agenda and wanted to ensure value for money.  She referred to the additional information circulated on the supply of affordable housing and pointed out that this was already included in the report.  The Policy & Performance Manager explained that the paper provided more clarity on the four ‘red’ risk areas at the time of the assessment and had been omitted from the agenda in error.  In response to a query on the risks relating to the waste transfer station, the Chief Executive explained that the risk status was now closed as there was no longer any risk because the Council’s facilities were now in place.  He provided further explanation on expected movement on the ‘scale of the financial challenge’ once the budget had been approved and on the ‘capacity and capability to implement necessary changes’ linked to the delivery of alternative delivery models.

Councillor Arnold Woolley raised concerns about the risk in delivering the Welsh Housing Quality Standard (WHQS) due to the size of the work programme and the transfer of funding from health and rollout of Superfast Broadband which could involve issues outside the Council’s control.  In response, the Chief Executive stated his confidence in the funding and delivery of the WHQS work programme, explaining that this was the first year of major spend and ensuring capacity was in place.  Any slippage on targets for the second year would be recaptured with no risk to the overall delivery of the programme.  On health, the  ...  view the full minutes text for item 42.

(a)       That additional information supplied as part of the annual accounts on individual consultants should include spend on all consultants;

(b)       That officers look at the reasons for any further non-compliance with corporate requirements and procedures and check appropriate management actions and accountability; and

(c)       That a separate report outside the usual follow-up update be brought to the Committee’s meeting on 13 July 2016.

The Internal Audit Manager presented a report on the findings of the review on the Council’s use of consultants, following previous discussion by the Committee.  He gave a reminder that the scope of the review had been around the controls and processes of engaging consultants and had not looked at the need for or value of consultants.  However, during the process it became clear that the scope should be widened.

During explanation on the review, the Internal Audit Manager advised that the general ledger figure of £2.8m spend on consultants was considered inaccurate due to miscoding and misinterpretation of consultancy definitions and that this was a major factor of the report.  He provided detail on the findings, adding that a number of actions had been taken since preparation of the report, for example a working group to drive forward the actions, the implementation of new business case arrangements and communications to the Chief Officer team and management to follow-up actions.  He gave assurance on the involvement of Internal Audit as part of that work and that of the officer group on accounting codes.

The Chief Executive provided context by acknowledging the need to widen the scope of the review to include controls, adding that miscoding errors did not mean inappropriate spend, which could for example be on specialist training.  He gave a reminder that consultants were engaged (through agencies or individuals) to provide specific tasks for which the Council had no internal expertise.  He said that consultancy spend this year had decreased and that the Corporate Resources Overview & Scrutiny Committee had been satisfied with the explanations on managing risk within the Change programme.  The new arrangements for consultancy engagement meant that those under £25K would require approval by the Chief Officer (Governance) with the Chief Executive taking responsibility for all proposed consultancy spend over £25K.  Information was shared on the few consultants above this threshold who were engaged in Organisational Change, Streetscene and Social Services.  All were being monitored and had business cases on record.  For the ongoing use of consultants, officers were challenging outcomes and progress to gain assurance with the expectation for knowledge sharing.

Councillor Alison Halford referred back to when she had first raised the issue of consultants.  She spoke about the time taken to clarify definitions, the report from March 2011 which had focussed on controls rather than cost, followed up by a commitment from former Directors to share information on consultants, a further report on controls in December 2011 and work carried out by the Wales Audit Office (WAO).  She raised concerns about the four bullet-points under the audit opinion in the report, which she felt did not correlate to what the Chief Executive had said.  She went on to speak about the lack of recognition of consultancy organisations used by the Council as opposed to individual consultants and suggested that the £3m spend recorded for 2014/15 could have been much higher.  She asked about the source of the budget for consultants and went to  ...  view the full minutes text for item 43.

(a)       That the draft Treasury Management Strategy 2016/17 and Policy Statement 2016-19 be recommended to Cabinet on 16/02/16;

(b)       That the draft Treasury Management Practices and Schedules 2016-19 be recommended to Cabinet on 16/02/16, with the inclusion of the suggested changes;

(c)       That the draft Treasury Management Mid-Year Report 2015/16 be recommended to Cabinet on 16/02/16; and

(d)       That the Treasury Management 2015/16 quarterly update be noted.

The Finance Manager - Technical Accountancy presented the draft Treasury Management Strategy 2016/17 for review and discussion, seeking recommendation to Cabinet, in conjunction with the draft Treasury Management Policy Statement and draft Treasury Management Practices 2016-19.  Section 1.05 of the report detailed the changes to four areas of the Strategy, although there were no major differences from the previous year.  The annual Treasury Management training session for Members had taken place the day before the meeting.  The report also sought comments from the Committee on the draft Treasury Management Mid-Year report for 2015/16 prior to consideration by Cabinet, and provided a quarterly update for information.

In response to a query from Councillor Arnold Woolley on the Policy Statement, the Finance Manager explained that only significant changes would need to be brought back for consideration by Members, however she did not envisage this to be necessary.

On Treasury Management Practices 2016-19, Mr. Paul Williams suggested further clarification on the sections TPM4 and TPM5 on Part 1 and on the sections for approved methodology for changing counterparty limits and money laundering in Part 2.  The Finance Manager agreed to liaise with Mr. Williams following the meeting to agree the revised wording.

Councillor Glyn Banks asked if anything could be set up at this stage to take advantage of current interest rates.  The Finance Manager explained that the borrowing requirements would need to be identified before entering into a deal and that the best approach would need to be considered.  She added that Mr. Williams’ suggestion at the training session would be discussed with the advisors.

In response to a question from Councillor Ian Dunbar on the need for more detail on Lender Option Borrower Option (LOBOs), the Finance Manager provided explanation but said it was not advisable to reschedule those debts at this stage as the premium would not be cost-effective.

When asked about the contract with Arlingclose, the treasury management advisors, the Finance Manager explained that this had now expired and was currently being tendered.

RESOLVED:

(a)       That the draft Treasury Management Strategy 2016/17 and Policy Statement 2016-19 be recommended to Cabinet on 16/02/16;

(b)       That the draft Treasury Management Practices and Schedules 2016-19 be recommended to Cabinet on 16/02/16, with the inclusion of the suggested changes;

(c)       That the draft Treasury Management Mid-Year Report 2015/16 be recommended to Cabinet on 16/02/16; and

(d)       That the Treasury Management 2015/16 quarterly update be noted.

To bring forward the item on Statement of Accounts.

Following discussion, a change in the order of business was agreed to bring forward the item on Statement of Accounts, due to time constraints.  The remainder of the items would be considered in the order shown on the agenda.

That the following documents be noted:

·         WAO Audit of Financial Statements Report Addendum - Recommendations

·         Council’s Action Plan

·         WAO Annual Audit Letter

·         WAO Annual Audit Letter

The Finance Manager introduced the addendum to the Wales Audit Office (WAO) Audit of Financial Statements which had been considered in September 2015 as part of the Statement of Accounts.  The addendum report set out the recommendations of the WAO and was accompanied by the Council’s action plan on how these issues would be addressed.  Good progress had been made in implementing the action plan, as shared with the Chair and Vice-Chair, and the remaining work would be closely monitored.  Attention was also drawn to the WAO Annual Audit Letter summarising the key messages from the Auditor General for Wales’ statutory responsibilities.

Mr. John Herniman reported that all recommendations had been accepted and were being progressed and that no significant issues were highlighted in the Annual Audit Letter which summarised areas raised during work on the accounts.  The report on grant claims was in the process of being compiled and would be brought to the Committee in due course.

The Chief Executive referred to his involvement in the establishment of a working group to monitor progress on the action plan and commented on the excellent relationship between the Council and WAO.

Mr. Paul Williams thanked the officer team for their work and welcomed the progress made so far.

Councillor Arnold Woolley welcomed the report but highlighted reference to errors arising from a change in preparing the Consolidated Income and Expenditure Statement (CIES) on page 2 of the Audit Letter.  The Chief Executive clarified that all three issues listed had been addressed, partly as set out in the Payroll update, as well as changes to the accounting process with the Chief Officer team which had proved successful.

When asked by Councillor Alison Halford for her view on the level of resources, the Finance Manager said that she was satisfied with the resources in place to implement the actions.  In addition, there was a mechanism through the working group to flag up issues at an earlier stage to prevent delays in producing the accounts within the statutory deadline.  The Finance Manager also highlighted the vacant post of Technical Accountant as a contributing factor to some of the issues and introduced Tom Williamson who had been appointed in this role.

RESOLVED:

That the following documents be noted:

·         WAO Audit of Financial Statements Report Addendum - Recommendations

·         Council’s Action Plan

·         WAO Annual Audit Letter

·         WAO Annual Audit Letter

(a)       That the updated Code of Corporate Governance be agreed; and

(b)       That the process for the preparation of the Annual Governance Statement be endorsed.

The Internal Audit Manager presented the report detailing proposed changes to the Code of Corporate Governance, as set out in paragraph 1.04 of the report, prior to consideration by the Constitution Committee.  The draft had been prepared following work by the Corporate Governance Working Group and consultation with the necessary senior officers.  The report also sought endorsement on the process for preparing the Annual Governance Statement (AGS) for 2015/16.

Councillor Arnold Woolley highlighted the importance of reviewing job descriptions for all senior officers to ensure all employees were aware of their responsibilities.  The Chief Executive confirmed that this was the case and that one of the outcomes of Single Status was to better evaluate each job up to the most senior levels, with new job descriptions as a consequence of the restructure.

In response to a comment from Mr. Paul Williams on the resilient approach to business continuity, the Chief Executive confirmed that a review was underway following the recent bomb scare at County Hall.

RESOLVED:

(a)       That the updated Code of Corporate Governance be agreed; and

(b)       That the process for the preparation of the Annual Governance Statement be endorsed.

That the process for dealing with reports by external auditors, other regulators and inspectors during 2014 be noted.

The Internal Audit Manager presented the Committee with a summary of reports by external auditors, other regulators and inspectors, pursuant to guidance under Section 85 of the Local Government (Wales) Measure.  This was to provide assurance on the overall framework of assessment in place to monitor and respond to the recommendations.

The Chief Executive referred to the recent County Council presentation on the consultation on the draft Local Government (Wales) Bill which included provision for the roles of Overview & Scrutiny Committees.  He reminded Members that the Council had previously adopted a protocol for regulatory reports involving seeking a response from Cabinet and assurance from the Audit Committee.

Following a question from Councillor Alison Halford on an issue with grant claims previously reported, Mr. John Herniman confirmed that the audit of grant claims had recently been completed by Wales Audit Office.

RESOLVED:

That the process for dealing with reports by external auditors, other regulators and inspectors during 2014 be noted.

That the report be accepted.

The Committee received an update report on actions carried out to date from points raised at previous meeting of the Committee.

RESOLVED:

That the report be accepted.

That the Forward Work Programme be accepted, with the inclusion of the update report on consultants for the meeting on 13 July 2016.

The Committee received the report on the Forward Work Programme for the next year.  No other changes were suggested apart from the update report on consultants for July 2016, as discussed earlier in the meeting.

RESOLVED:

That the Forward Work Programme be accepted, with the inclusion of the update report on consultants for the meeting on 13 July 2016.

That the item be deferred.

The Committee received the update report on progress of the Internal Audit department and agreed that the item be deferred due to time constraints.

RESOLVED:

That the item be deferred.

There were two members of the press in attendance.