Agenda and minutes

To receive any declaration of interest by any member or officer in respect of any item of business.

No declaration of interest was received.

To present the minutes of the previous meeting of the Audit and Governance Committee held on 28^th June, 2017.

ARISING THEREON

To receive a verbal report by the Head of Housing Services in relation to the two Limited Assurnace audit in relation to the Housing Maintenance Unit in Gaerwen.

The minutes of the previous meeting of the Audit and Governance Committee held on 28^th June, 2017, were presented and confirmed as correct.

Arising thereon –

•           Statement of Accounts

Michelle Hopton, Deloittes, informed the Committee that the audit of the accounts had commenced in mid-June and that the substantive work is expected to have been completed by the end of this week. The Auditor confirmed that there were no issues of significance to report of at this point in time. External Audit’s full report and conclusions regarding the accounts would be presented to the Committee’s September meeting.

•           Limited Assurance Audits – Housing Maintenance Unit

The Internal Audit Update presented to the Committee’s 28th June, 2017 meeting had highlighted two reviews relating to the Housing Maintenance Unit in Gaerwen where the assurance provided was deemed to be Limited. The Committee had requested that the Housing Services Manager be called to the Audit and Governance Committee to explain how the weaknesses in internal controls arose, how the service is delivering on the agreed actions to address the control issues identified in the audit reviews and how it proposes to ensure that the system of control remains effective in future.

The Housing Technical Services Manager informed the Committee that the two audit reviews had formed part of the process of transforming the Housing Maintenance Unit (HMU). Following the adoption of new arrangements, Housing Maintenance Management asked Internal Audit to review the systems for effectiveness and to identify any potential weaknesses that needed remedying. The HMU’s General Manager has been co-ordinating the introduction and implementation of new processes within the existing system with the ICT Service.

The HMU’s General Manager reported that the internal audit review had produced in the region of 15 recommendations some of which were due for implementation by 31 May, 2017. All of these latter recommendations have been actioned and the processes to which they relate are now being re-audited the results of which are due by the end of July. The Officer said that he did not foresee any major problems as the initial results have been favourable apart from some more minor issues which will need to be addressed but which are not unexpected given that the implementation date  was only the end of May. Other recommended actions are due to be completed by October which he was confident would be fulfilled and the final tranche of recommendations are to be actioned by March, 2018. Arrangements are in place to ensure that the dates will be met; the HMU’s staff have embraced the recommendations and actioning them has already yielded improvements especially with regard to recording information within the Orchard Housing Management system which is the service’s key system as regards housing and asset management.

The Committee considered the information presented verbally and it made the following points –

•           The Committee sought clarification of whether actioning the audit recommendations had entailed introducing new systems. The HMU’s General Manager said that that changes have been  ...  view the full minutes text for item 2.

To present an update on Internal Audit activities.

The report of the Head of Internal Audit and Risk which provided an update on Internal Audit’s latest progress with regard to service delivery, assurance provision, and reviews completed was presented for the Committee’s consideration.

The Head of Audit and Risk reported as follows –

•           That the three Internal Audit reports finalised during the period, relating to grant certification work (Rent Smart Wales Grant 2016/17, Education Improvement Grant 2016/17 and the Pupil Deprivation Grant 2016/17), all produced Substantial Assurance ratings.

•           That one follow-up review in relation to the Council’s Corporate Safeguarding arrangements was finalised in the period the outcome of which is summarised in section 5 of the report. A further follow up review will be undertaken during October, 2017.

•           That progress in delivering the Internal Audit Operational Plan for 2017/18 is set out in section 6 of the report and shows that work is currently ongoing in 12 areas. The Head of Audit and Risk will review and amend the Annual Plan during the year to ensure the coverage remains relevant and risk-based. Changes will be reported to the Audit and Governance Committee at each meeting.

The Committee noted the information presented; the Committee sought clarification of whether the progress on Corporate Safeguarding was considered satisfactory given the sensitivity of the area and given that the initial review was conducted back in September, 2016, and resulted in a Limited assurance opinion. The Committee noted that it would have expected the planned follow-up review in October, 2017 to confirm completion of the recommendations rather than assessing progress. The Head of Audit and Risk said that the majority of the recommendations will have been completed by September, 2017; a further recommendation is due to be implemented in December, 2017 and involves exploring an ICT solution to monitor compliance with DBS checks – the service is in discussions with Northgate to provide a central database of DBS records. The Head of Function (Resources) and Section 151 Officer said that the whole Payroll/HR system and how it is used is under review which is a long-term project. A number of modules need to be examined and these include Recruitment and Training encompassing the recording of DBS checks. The recommendation referred to by the Head of Audit and Risk is linked to the corporate project for reviewing and improving the use of the Payroll/HR system and explains the longer implementation timeframe.

The Committee inquired whether it was reasonable to keep the Corporate Safeguarding audit review open simply because an element of it forms part of a larger project. The Committee, whilst recognising that putting the right system in place to deal with DBS records might take time, took the view that it should not be a reason for delaying the finalisation and sign off of the Corporate Safeguarding review as long as there is assurance that the issue of DBS checks is covered and will be actioned under the broader Corporate Payroll/HR system review. If that is the case, the Committee  ...  view the full minutes text for item 3.

To receive an update on the External Audit Performance Work Programme.

The Wales Audit Office update on current and planned WAO work encompassing financial and performance audit work as well as the Auditor General’s programme of national value for money examinations was presented for the Committee’s information. The Committee resolved to accept and to note the information as presented.

NO FURTHER ACTION ENSUING

To present the Annual Report of the Audit and Governance Committee for 2016/17.

The report of the Audit and Governance Committee documenting the activities of the Committee during the 2016/17 municipal year was presented for the Committee’s endorsement prior to its submission to the Full Council as required by the Committee’s terms of reference.

It was resolved to endorse the Annual Report of the Audit and Governance Committee for 2016/17 as presented.

NO FURTHER ACTION ENSUING

To receive a report by the Head of Function (Resources)/Section 151 Officer.

The Annual Treasury Management Review of Activities Report for 2016/17 was presented for the Committee’s consideration and scrutiny in line with regulations under the Local Government Act 2003 and the Council’s Treasury Management Scheme of Delegation for 2016/17.

The Head of Function (Resources) and Section 151 Officer reported that treasury management involves managing the Council’s cash flow and balances and making decisions about investment   and borrowing in a way that supports the Council’s corporate objectives.  Treasury management activity is undertaken in accordance with the Treasury Management Strategy which is approved by Full Council before the commencement of the financial year and which is then reviewed both mid-year and at year end. The report sets out in detail the activities and outcomes in the 2016/17 financial year in relation to the following areas –

•           Capital Activity

•           Impact of capital activity on the Council’s underlying indebtedness (the Capital Financing Requirement).

•           The actual prudential and treasury indicators which define the parameters for treasury management activity during the year against which performance is assessed. These are agreed by Full Council at the beginning of the financial year

•           Overall treasury position identifying how the Council has borrowed in relation to this indebtedness and the impact on investment balances

•           Interest rate movements in the year

•           Debt activity, and

•           Investment activity

In general the year was fairly stable with the most significant activity being a loan from PWLB amounting to £6.2m for the 21st Century Schools project. Investment returns reduced to an all-time low due to the cut in the base rate down to 0.25%. The Council held appropriate cash balances at all times although the low interest rate meant that returns were low. However, this was consistent with the Treasury Management Strategy for 2016/17 where the key objectives were low risk and ensuring there was sufficient cash to pay the Council’s creditors. The key messages were that the Council continued to prioritise security over return in its investment approach and that borrowing was only taken out for capital purposes and that the statutory borrowing limit (the authorised limit)  was not breached. The Council continued to implement the internal borrowing strategy as has been the case for each of the last six years. There was no debt rescheduling during the year as the average 1% differential between the Public Works Loan Board’s new borrowing rates and premature repayment rates made rescheduling unviable. The Council complied with all its legislative and regulatory requirements in 2016/217 and the year continued the challenging investment environment of previous years, namely low investment returns.

The Committee considered the information presented and it made the following points –

•           The Committee inquired in light of the poor returns on investment and the likelihood that this trend will continue for the foreseeable future, whether it was feasible for the North Wales authorities to be considering pooling their resources for joint investment purposes in order to try to secure more advantageous returns. The Head of Function (Resources) and  ...  view the full minutes text for item 6.

To submit a report by the Head of Internal Audit and Risk.

The Committee’s Forward Work Programme was presented for review and comment.

The Head of Audit and Risk said that progress on ICT Business Disaster Recovery will be presented as part of the Internal Audit update to the Committee’s September, 2107 meeting.

It was resolved to accept the Forward Work Programme as presented.

NO FURTHER ACTION ENSUING