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 13 February, 2018.

The minutes of the previous meeting of the Audit and Governance Committee held on 13th February, 2018 were presented and were confirmed as correct.

Arising thereon -

•           The Committee sought an update on the position with regard to schools’ readiness in preparing for the implementation of the new General Data Protection Regulations in May, 2018; the Committee also sought clarification of whether a planned internal audit of this area scheduled for early in 2018/19 is sufficiently timely in terms of being able to highlight any problems with GDPR compliance.

The Head of Audit and Risk said that the internal audit is underway and the resultant draft findings are in the course of being discussed with the relevant Officer for verification and agreement prior to the final report being issued. It is Internal Audit’s intention to report on the outcome of the audit and the level of assurance provided to the Committee’s June meeting.

•           The Committee sought an update on the position with regard to the First Follow-Up Review of the Corporate Procurement Framework which had identified two actions that had not been completed because of a lack of response by the relevant officers.

The Head of Audit and Risk informed the Committee that the Officer that made the response in relation to the Corporate Procurement Framework was an interim officer covering Officer absence. The permanent Officer has since returned to work and has become aware of the outstanding recommendations and has actioned them.

To present the report of the Chair of the Audit and Governance Committee.

The Annual Report of the Audit and Governance Committee for 2017/18 was presented for the Committee’s endorsement. The report detailed the activities of the Audit and Governance Committee during the year including progress on actions raised by the Committee during 2017/18 as at Appendix A to the report.

The Head of Audit and Risk reported that the Audit and Governance Committee is required under its terms of reference to report annually on its activities to the Full Council which requirement is fulfilled by the report above.

The Committee noted and accepted the overview of its activities provided by the Annual Report. The Committee sought an update on the position with regard to its Terms of Reference which it had been due to review back in September, 2017 but which task had since been deferred pending publication of updated CIPFA guidance.

The Head of Audit and Risk said that CIPFA has been postponing publication of its new guidance which has been completed as it has been awaiting the Home Office to issue its new Financial Code of Practice that impacts on police audit committees. CIPFA has now confirmed that the new guidance will be published during April, 2018 in any case. The Officer said that she would therefore review the Audit and Government Committee’s Terms of Reference against the updated CIPFA guidance and recommend any amendments as appropriate to the Committee at its June, 2018 meeting.

The Chair said that he wished to take the opportunity to thank both the Members and Officers who had contributed to and supported the Audit and Governance Committee in its activities during the past year. He emphasised the importance of the Committee’s work and its particular relevance in the current economic climate in ensuring that the Council is run in a sound manner and that value for money is being obtained.

It was resolved to endorse the Annual Report of the Audit and Governance Committee for 2017/18 for submission to the County Council on 15 May, 2018.

NO ADDITIONAL ACTION  WAS PROPOSED

To present the report of External Audit.

An update report on the External Audit Performance Work Programme including current and planned Wales Audit Office work both national and Anglesey specific was presented for the Committee’s consideration.

Mr Gwilym Bury, WAO Performance Audit Lead referred specifically to the status of local reports and their planned publication. He said that with regard to work by other regulators, apart from the local school inspection programme, no inspection of the Isle of Anglesey Education Service has yet been announced. Similarly, Care Inspectorate Wales (formerly CSSIW) has not yet announced any local follow-up work in the Isle of Anglesey County Council.

The Committee noted the information presented. The Committee sought clarification of the determining factors in establishing the timescale for the publication of External Audit reports given that the issue date for some reports appears to be open-ended. Mr Gwilym Bury said that the timescale for publishing local reports is more specific as it involves consulting with one local authority at a time. With national reports the timescale can be more indeterminate due to the need to consult not only with the 22 local authorities but also with Welsh Government, and depending on the area reviewed, with other relevant bodies as well.

The Committee noted with regard to the External Audit review of the Council’s readiness to support the delivery of the Wylfa Newydd project that the approach taken by the Council has been to involve all Members from the outset in scrutinising the development and progression of the project rather than assigning the task to one or other of the scrutiny committees so that all Members are kept up to date and are able to provide challenge along key stages.

The Committee sought clarification with regard to financial audit work of the process for setting the fee payable to Deloitte as the Council’s financial auditors. The Head of Function (Resources) said that Deloitte is contracted to and undertakes financial audit work at the Council on behalf of the Wales Audit Office; the fee payable to the Wales Audit Office includes payment for the financial audit work undertaken by Deloitte.

It was resolved to accept and to note the update on the External Audit Performance Work Programme.

NO ADDITIONAL ACTION WAS PROPOSED

To present the report of External Audit.

The External Audit report incorporating the proposed Audit Plan for the 2017/2018 financial year was presented for the Committee’s consideration. The Plan set out the audit approach, the key financial audit risks, a summary of performance audit and grant certification work along with the estimated fees.

Mr Wil Bevan, Manager, Deloitte reported specifically on the key financial audit risks identified at the planning stage of the audit, i.e. areas where the risk of material misstatement  are  considered to be significant and therefore requiring of special audit consideration. These are outlined in Exhibit 2 of the report which also sets out the proposed audit response in addressing the risks so highlighted. The Officer said that the financial audit is scheduled to be completed in June/July and to be signed off definitively in September.

The Committee noted the information. The Committee sought clarification of the position with regard to finalising the 2016/17 Housing Benefit Claim in relation to which additional work was stated as being required. 

Mr Wil Bevan said that a significant qualification was issued in relation to the 2015/16 Housing Benefit Claim; consequently there is additional sample testing work that has to be completed under the Grant Audit Framework as required by the DWP in relation to the 2016/17 claim. This work is ongoing due mainly to the volume of work falling to the Council in looking at specific claims and also to the Auditor in reviewing them. The claim itself has been completed but there is substantive underlying work that needs to be done on testing the claim. The Head of Function (Resources) and Section 151 Officer said that the 2016/17 Housing Benefit Claim could not be finalised until the 2015/16 claim had been finalised – a delay ensued because of issues arising with the latter claim. There is also a capacity issue in that the Finance Service has one officer who has the detailed knowledge to assist the Auditors with this aspect of their work. The particular Officer is also involved in end of year financial management work which means that a skilled resource is removed from the process for a period at the end of the year and is unavailable to support the auditors. A timetable has to be agreed with the auditors to complete this work. The Housing Benefit grant claim is a very complex claim and although the Finance Service’s team that is engaged on completing the work to the DWP and auditors’ satisfaction is small, the requirements are the same as for larger local authorities with far greater staff resources at their disposal. Any additional fee for the extra work undertaken will be agreed in discussions between the Section 151 Officer, the Wales Audit Office and Deloitte’s Engagement Lead for Financial Audit.

The Committee noted that property valuations have been identified as a financial audit risk. The Committee sought clarification of whether the focus of the auditors’ work with regard to property valuations is on the accuracy of the valuation in terms of the  ...  view the full minutes text for item 5.

To present the report of the Head of Internal Audit and Risk.

The report of the Head of Audit and Risk setting out the work of Internal Audit in the period since the last committee meeting was presented for the Committee’s consideration.

The Head of Audit and Risk summarised the main considerations as follows –

•           That one report has been finalised during the period which was in relation to Project and Programme Management Arrangements and specifically the governance of programme and project management. The high level audit review undertaken resulted in a Reasonable Assurance rating having found that much work has been undertaken to ensure that the Council’s projects and programmes are governed appropriately with the establishment of two Corporate Programme Boards, the assistance provided by the corporate project managers and the project management methodology used and promoted corporately. Two moderate risks were raised for management attention, with the review having found that insufficient attention is being given to impact assessment and risk registers with no mention of these being made in minutes of meetings. Impact assessments should be used to ensure decisions are made with full awareness of how they may affect different sections of the community.

•           That one follow-up review was finalised in the period relating to School Transport. The review confirmed that significant progress has been made towards improving School Transport arrangements and addressing the issues/risks raised in the Internal Audit review report. Eleven of the risks identified from the audit report have been fully addressed; three risks have been partially implemented or are in the progress of being implemented; these are subject to the issuing of identification badges to all school bus drivers in September 2018, the Capita ONE system to be in operation and the review of the school taxis’ eligibility criteria together with the review of the school taxis’ budget. Two risks remain outstanding which are centred around the next procurement process when the Transport Section will be reviewing its current contractors’ terms and conditions. It is deemed that the Council has demonstrated good progress in addressing the issues and risks raised and as a result the assurance rating has increased to Reasonable Assurance.

•           The withdrawal of the facility enabling managers to extend target implementation dates for risk/issues/recommendations without reference to Internal Audit has resulted in the anticipated dip in performance over the short-term. Notwithstanding, this is a more robust process for ensuring that risks are addressed and reduces the risk of “drift.” Additionally, overall the Council has steadily improved its performance in implementing actions over the last 15 months with a significant year on year improvement as testified to by the graph at section 18 of the report. A more detailed report on all outstanding recommendations and issues/risks is presented to the Committee twice a year with the next report due in September, 2018.

•           Due to a significant slippage of work from 2016/17 and the loss of two officers through retirement and resignation, the resource available to complete the Internal Audit Operational Plan for 2017/18 has reduced. Consequently, the Head of  ...  view the full minutes text for item 6.

To present the Forward Work Programme for consideration and review.

The Committee’s Forward Work Programme to February, 2019 was presented for consideration and review.

The Head of Audit and Risk informed the Committee that the Work Programme is likely to change following the review of the Committee’s terms of reference.

It was resolved to accept and to note the Forward Work Programme without amendment.