Agenda and minutes

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Venue: Committee Room 1 - Council Offices

Contact: Ann Holmes 01248 752518 

Items
No. Item

1.

Declaration of interest

To receive any declaration of interest by any Member or Officer in respect of any item of business.

Minutes:

No declaration of interest was received.

2.

Minutes of the 28th March, 2017 Meeting pdf icon PDF 275 KB

To present the minutes of the previous meetings of the Audit and Governance Committee held on the following dates –

 

·         28 March, 2017

·         31 May, 2017 (election of Chair/Vice-Chair)

Additional documents:

Minutes:

The minutes of the previous meetings of the Audit and Governance Committee held on the dates noted below were presented and confirmed as correct –

 

           28th March, 2017

           31st May, 2017 (election of Chair/Vice-Chair)

3.

Statement of Accounts 2016/17 and Annual Governance Statement pdf icon PDF 2 MB

To present the draft Statement of Accounts for 2016/17 and Annual Governance Statement.

Minutes:

The report of the Head of Function (Resources) and Section 151 Officer incorporating the draft pre-audit Statement of Accounts for the 2016/17 financial year along with the draft Annual Governance Statement 2016/17 was presented for the Committee’s consideration.

 

The Head of Function (Resources) and Section 151 Officer reported that the Council has a statutory duty to approve and publish a Statement of Accounts for each financial year. Before External Audit can commence, the Section 151 Officer is required to sign the Statement of Responsibilities for the Statement of Accounts prior to the statutory deadline of 30th June each year. Whilst the Statement is produced annually to give electors, local taxpayers, Members of the Council, employees and other interested parties information about the Council’s finances, it is a technical document and is set out in a form prescribed by accounting regulations and practices.

 

The Officer referred to and elaborated on the key statements contained within the accounts as follows:

 

           The Narrative report which provides a guide to the most significant matters reported in the accounts including the main influences on the financial statements thereby linking the Council’s activities and challenges to how these impact on its financial resources.

           The Comprehensive Income and Expenditure Statement (CIES) – this shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation.  There are items within the Statement which are included due to accounting requirements e.g. depreciation which are then removed from Council Tax setting because as accounting items, they do not relate to how services are funded and are not true costs which affect Council usable balances. The CIES shows a deficit on the provision of services of £8.548m.

           Expenditure and Funding Analysis – this shows the information in the CIES but with the accounting adjustments cancelled out (Note 7); this helps to identify usable Council balances without the accounting adjustments. The first column of the Expenditure and Funding Analysis provides the real impact of the year’s financial performance on the Council and the HRA’s balances and reserves. When the accounting adjustments are cancelled out, the true impact of the Council’s cost of services (including the HRA) is reduced to £2.743m for the year giving an overall balance of usable reserves of £31.638m. This has reduced from 2015/16 as earmarked reserves have been used to fund costs for which the original reserves were earmarked.

           The Movement in Reserves Statement (MIRS) – this shows movement in the year to and from the reserves held by the Council divided into usable reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The statement shows the true economic cost of providing the Authority’s services and how those costs are funded from the various reserves. The Statement shows that the General Council Reserve reduced by £0.189m for 2016/17 resulting in a total general reserve of £8. 687m.The Housing Revenue Account (HRA) generated  ...  view the full minutes text for item 3.

4.

Internal Audit Annual Report 2016/17 pdf icon PDF 2 MB

To present the Internal Audit Annual Report for 2016/17.

Minutes:

The Annual Report of the Internal Audit Service for 2016/17 was presented for the Committee’s consideration. The report provides an analysis of the performance of the services for the period from 1 April, 2016 to 31 March, 2017 and incorporates an assurance statement based on the work of Internal Audit during the year ended March, 2017.

 

The Internal Audit Manager highlighted the main considerations as follows –

 

           A schedule of the Service’s performance against established targets for the year (Appendix A) shows that the Service achieved 73.85% of the Annual Plan against a target of 80% and an all Wales average performance indicator of 85%. There were 3 audits which constitute work in progress at the year end and will demonstrate on completion that 78.46% of the Annual Plan has been achieved. The shortfall was due to the factors described in section 3.2.2 of the report.

           The Service completed 48 audits during the year, 4 of which were unplanned, against a planned target of 65 audits. 79.17% of audits were completed within the planned timescale against a challenging performance indicator of 90% and compared to an all Wales average figure of 68%. Achievement of this indicator was affected by 7 projects which exceeded planned targets and which accounted for 97.62 days.

           The performance with regard to recommendations accepted is 98.57%. Out of a total of 279 recommendations issued, there was a failure to agree on 4 which were assessed as being low impact.

           Draft audit reports were issued within 3.59 days against a performance target of 7 days and an all Wales average of 7.2 days.

           Slippage of 258 days occurred in the year that resulted in 23 planned audits not being performed for the reasons outlined in paragraph 3.2.2 of the report. Audit assurance cannot be provided in respect of audits removed from the 2016/17 Plan. These areas for review will be prioritised during 2017/18. A schedule of the actual slippage that occurred in the year is shown under Appendix B to the report.

           All the audits performed during the year have resulted in positive levels of assurance with the exception of the 7 audits listed in paragraph 4.2.2. of the report which were assessed as providing Limited Assurance. These will be followed up during 2017/18.

           A further review of the Risk Management Framework was undertaken during 2016/17 which demonstrated reasonable progress in embedding risk management in the Authority.

           The overall results of the Internal Audit work identified that 81.08% of reviews resulted in a positive assurance opinion (Substantial or Reasonable) and 18.92% resulted in a negative assurance opinion (Limited or Minimal). The 18.92% of reports receiving negative assurance opinions is made up of 7 reports (7 Limited, Nil Minimal).

           A schedule of the 11 follow up audits and their outcome is provided at Appendix E to the report. The table in section 4.4.3 of the report summarises the implementation of High and Medium rated recommendations as at 31 March,  ...  view the full minutes text for item 4.

5.

Public Services Internal Audit Standards (PSIAS) - External Assessment pdf icon PDF 892 KB

To present the external assessment report in relation to the Isle of Anglesey Internal Audit Service together with an associated Action Plan.

Minutes:

The report of the Head of Audit and Risk incorporating the results of the external assessment of the Isle of Anglesey County Council’s Internal Audit Service along with an Action Plan to respond to the areas for improvement identified was presented for the Committee’s consideration.

 

The Head of Audit and Risk reported that the PSIAS require the chief audit executive to develop and maintain a quality assurance and improvement programme that covers all aspects of the internal audit activity. The quality assurance and improvement programme must include both internal and external assessments. The assessment must be conducted at least once every five years by a qualified independent reviewer from outside the organisation, either by a full external assessment or a self-assessment validated by an external reviewer. The Welsh Chief Auditors Group (WCAG) has collaborated to undertake a peer review approach to the external assessment with a self-assessment validated by an external reviewer. Denbighshire County Council’s Head of Internal Audit was nominated by WCAG to undertake the assessment of the Isle of Anglesey County Council’s Internal Audit Service and this was carried out in March, 2017.

 

The Officer said that whilst the results of the external assessment as conducted by Denbighshire’s Head of Internal Audit documented under Appendix A to the report, provides assurance that Anglesey’s Internal Audit service generally conforms with the Standards, the external assessor  highlights three areas where conformance is partial and raises seven areas for improvement. Most notable is the absence of an audit assurance framework to ensure that Internal Audit’s work focuses on key areas. The Internal Audit Service will undertake a complete review of the service’s approach and practices in the current financial year with a view to having an assurance framework in place in 2018/19.In addition notwithstanding it was fully compliant at the time of the external assessment, the chief audit executive’s additional responsibilities for risk management and insurance as from April, 2017 has jeopardised continued compliance with Standard 1100 in relation to the independence and objectivity of the audit function. However, the PSIAS have also been revised with effect from April, 2017.  Standard 1112 in respect of Chief Audit Executive Roles Beyond Internal Auditing now recognises that chief audit executives may have operational responsibilities other than for internal audit. The Internal Audit Charter will be updated to reflect the new arrangements and the revised version will be presented to the Committee in September, 2017.

 

The Officer confirmed that an Action Plan has been developed to address the areas of partial conformance and those areas identified for improvement and this is appended to the external assessment report. The intention is that for the future the Audit Plan will be risk assessed continually so that only areas of high risk will be audited meaning that areas of low risk, and with them the occurrence of slippage should taper off .

 

The Committee considered the information presented and it raised the following points -

 

           The Committee sought clarification of whether similar standards would be applied  ...  view the full minutes text for item 5.

6.

Internal Audit Update pdf icon PDF 287 KB

To present the Internal Audit update report.

Minutes:

The report of the Head of Audit and Risk setting out the progress to the end of May, 2017 with regard to the Internal Audit reports issued since 1 April, 2017; follow up of previous Internal Audit reports; progress in delivering the Internal Audit Annual Plan 2017/18 and an update on specific areas as requested by the Committee was presented for consideration.

 

The Head of Audit and Risk reported on the following matters –

 

           The Internal Audit reports recently issued which related to Energy Island (April, 2017 assessed as  providing Substantial assurance) Stock Check, Housing Maintenance Unit, Gaerwen (May, 2017 assessed as providing Limited Assurance); Housing Maintenance Unit (May, 2017 assessed as providing Limited Assurance) and the Main Accounting System (May, 2017 assessed as providing Substantial assurance).The Officer referred to the key findings in relation to each of the audits with particular reference to the shortcomings identified in the two Limited Assurance audits. She confirmed that Internal Audit would be keeping a watching brief over these two areas to ensure compliance with the recommendations made for improving the internal controls.

           Follow up reviews completed in relation to Building Regulation Fees – Inspection and Enforcement and ICT Disaster Recovery. In the case of the former the first follow up in April, 2017 found that little progress had been made in implementing the actions agreed to address the internal audit recommendations. A further follow up review will be undertaken in August, 2017 and the outcome reported to the Committee’s September meeting. In the case of ICT Disaster recovery the third follow up review found that little progress had been made in implementing actions to address the internal audit recommendations outstanding from the previous two follow up reviews. A further follow up review will be undertaken in August, 2017. 

           Progress on implementing audit recommendations. The service is currently compiling a report on the performance in implementing all outstanding recommendations which will be presented to the Audit and Governance Committee at its meeting in July, 2017.

           Progress in delivering the Internal Audit Operational Plan 2017/18. Due to the slippage of the work from the 2016/17 Annual Plan, work on the 2017/18 Plan has been slow. However, work is currently ongoing in 14 areas as listed in paragraph 6.2 of the report.

           Updates requested by the Audit and Governance Committee with regard to Corporate Safeguarding and the arrangements for implementing of CSSIW’s recommendation following its inspection of Children’s Services. With regard to the former, early indications are that reasonable progress has been made in implementing the agreed actions and a draft report was issued in 14 June, 2014. The outcome of the follow up review will be reported to the July meeting of this Committee. With regard to the CSSIW inspection report, the Head of Children’ s Services has reported and presented a Service Improvement Plan to the Corporate Scrutiny Committee and the Executive in March, 2017. Progress on implementing the Service Improvement Plan which incorporates the recommendations made by  ...  view the full minutes text for item 6.

7.

External Audit - Presentation on the Regulatory Framework pdf icon PDF 2 MB

To receive a presentation on the regulatory framework and the work of the Wales Audit Office.

Minutes:

This matter was deferred to a planned training session for Members. This matter was deferred to a planned training session for Members of the Audit and Governance Committee to be held in September, 2017. Details of the session to be confirmed in due course.

8.

External Audit : Good Governance when Determining Significant Service Changes - Isle of Anglesey County Council pdf icon PDF 136 KB

To present the report by External Audit.

Minutes:

The report of External Audit on the outcome of its review of the effectiveness of the Council’s governance arrangements for determining service changes was presented for the Committee’s consideration.

 

The WAO’s Performance Audit Manager reported that the assessment was undertaken during the period September to November, 2016. In order to inform the assessment of the Council’s overall arrangements for developing and determining service changes, aspects of decision making arrangements in relation to a range of significant service change proposals were looked at; these included the Smarter Working review, the Residual Waste Management review and the Libraries review. Overall the report is positive with External Audit finding no flaws in the Council’s decision making only areas which can be further improved. External Audit concluded that the Council’s governance arrangements for decision making on significant service changes are generally effective, but that it recognises that they could be further strengthened. Two proposals for improvement have been made, the one in relation to introducing equality impact assessments at an early stage of the decision making process and to a consistent standard, and the other in relation to developing arrangements for monitoring the impact and benefits of service changes.

 

The Head of Function (Resources) and Section 151 Officer confirmed that Equality Impact Assessment templates are being reviewed and simplified to ensure better consistency across the Council and, as part of the 2018/19 budget setting process they will be made available to Elected Members at an earlier stage in the process at the Members’ budget workshops.

 

It was resolved to accept and to note the External Audit report including the proposals for improvement.

 

NO FURTHER ACTION ENSUING

 

9.

External Audit : Annual Improvement Report 2016/17 - Isle of Anglesey County Council pdf icon PDF 320 KB

To present the report by External Audit.

Minutes:

External Audit’s Annual Improvement Report for 2016/17 in relation to the Isle of Anglesey County Council was presented for the Committee’s consideration. The report summarised the work carried out since the last Annual Improvement report including that of the relevant regulators.

 

Mr Gwilym Bury, Performance Audit Lead – WAO reported that the Council is meeting its statutory requirements in relation to continuous improvements and based on and limited to the work carried out by the Wales Audit Office and relevant regulators, the Auditor General believes that the Council is likely to comply with the requirements of the Local Government Measure (2009) during 2017/18. During the year, the Auditor General did not make any formal recommendations. However, a number of proposals for improvement have been made as documented in the report. Progress against these proposals as well as those made in national reports (Appendix 3 to the report) will be monitored by External Audit as part of its improvement assessment work.

 

It was resolved to accept and to note the report by External Audit.

 

NO FURTHER ACTION ENSUING

10.

Forward Work Programme pdf icon PDF 284 KB

To present for review and update, the Committee’s Forward Work Programme.

Minutes:

The report of the Head of Audit and Risk incorporating the Committee’s Forward Work Programme for the year was presented for the Committee’s consideration and review.

 

The Head of Function (Resources) and Section 151 Officer reported that the work programme has been developed to schedule matters that occur naturally as part of the audit cycle and also to enable the Committee to keep track of issues it has raised during the course of discussions at its meetings and regarding which it requires further assurance; these matters will remain on the work programme until such time as the Committee is satisfied that they have been appropriately addressed.

 

The Committee noted the following as additional items to be logged onto the work programme as arising from the discussions on this meeting’s business –

 

           Update on the Housing Service’s response to addressing the issues raised in the two Limited Assurance audit reviews relating to the Stock Check, Housing Maintenance Unit in Gaerwen and Housing Maintenance Unit, Gaerwen to be made to the Committee’s July, 2017 meeting.

           A review of all outstanding internal audit recommendations to be undertaken by the Committee at its September, 2017 meeting.

 

It was agreed that consideration of the Committee’s terms of reference and whether they need to be amended to reflect wider responsibilities as set out by CIPFA be referred initially to the training session.

 

It was resolved to accept and to note the Forward Work Programme subject to the inclusion of the additional items above.

 

ACTION ENSUING: Head of Audit and Risk to update the Work Programme accordingly.