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 meetings of the Audit and Governance Committee held on the following dates:

·         24 April, 2018

·         15 May, 2018 (election of Chair and Vice-Chair)

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

•           24th April, 2018

Arising thereon – The Committee sought an update on the position with regard to the review of the Committee’s terms of reference, the task having been postponed over the course of several meetings due to the delay in the publication of new CIPFA guidance.

The Head of Audit and Risk said that it was planned that the review would take place at the Committee’s July meeting; however due to the proximity of the Committee’s meetings in June and July, it is unlikely that the timescale for the July meeting will be met. The review is now scheduled to take place at the Committee’s September meeting. The Officer said that the Committee’s two Lay Members have indicated that they are happy to look at a first draft of the revised terms of reference with the aim being to forward the documentation to them in the next few weeks.

•           15th May, 2018 (election of Chair/Vice-Chair)

To present the report of the Head of Function (Resources) and Section 151 Officer.

The report of the Head of Function (Resources) and Section 151 Officer incorporating the draft pre-audit Statement of Accounts for the 2017/18 financial year along with the draft Annual Governance Statement for 2017/18 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. The Statement of Accounts for 2017/18 was completed well in advance of this date in readiness for the earlier closedown of accounts in 2018/19 when the legal deadline for the completion of the draft accounts becomes 15th June, 2019. As from 2020/21 onwards, the legal deadline for completing and signing the draft Accounts will again be brought forward to 31 May. The Officer said that the structure and contents of the accounts have not materially changed with the prefatory narrative report, which is a key section of the accounts, providing a guide to the most significant matters reported in the accounts in an accessible and easy to understand way along with contextual information about the Isle of Anglesey County Council. The format of the Statement is prescribed by accounting regulations and practices and contains the Comprehensive Income and Expenditure Statement, the Expenditure and Income Analysis; the Movement in Reserves Statement, the Balance Sheet, the Cash Flow Statement and the Notes to the Accounts which elaborate in an explanatory way on the figures in the main accounts. Also included are the Housing Revenue Account and accompanying notes and the Annual Governance Statement for 2017/18.

The Officer highlighted the following as main points of consideration within the Statement of Accounts for 20-17/18:

•           That although the Statement of Accounts is meant to give electors, local taxpayers, member of the Council, employees and other interested parties clear information about the Council’s finances, it is a complicated and technical document which is set out in accordance with the Code of Practice on Local Authority Accounting - compliance with the requirements of the Code in preparing the accounts being one of the factors which the External Auditor assesses in conducting the audit of the accounts.

•           That paragraph 3.4 of the narrative report gives a summary of the Council’s financial performance for the financial year ending 31 March, 2018 including its revenue and capital expenditure. In 2017/18, the Council reported an overspend of £1.78m against a planned activity of £126.2m (net budget) and achieved £1.704m of savings. The table in paragraph 3.4.1 reflects the final budget for 2017/18 and the actual income and expenditure against it by service. The Capital Budget was underspent in the year with the total spend amounting to £29.355m against a Capital Budget of £52.672m. The Capital Programme has made steady progress in the year achieving a delivery rate of 55.73%.  ...  view the full minutes text for item 3.

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

(The report of the Head of Function (Council Business) with regard to GDPR is attached to the above)

The report of the Head of Audit and Risk setting out the progress as at the 8 June, 2018 with regard to the Internal Audit (IA) reports issued since the Committee’s previous meeting in April, 2018 was presented for the Committee’s consideration. The report provided an update on the IA reports issued since 26 April, 2018; the outcome of follow up of previous IA reports; implementation of Management actions; progress in delivering the IA Annual Plans for 2017/18 and 2018/19 as well as the timeline for the review of the Committee’s terms of reference.

The Head of Audit and Risk reported on main matters as follows –

•           That the Internal Audit Service finalised three reports during the period referred to; these were in relation to the Recruitment and Retention of Foster Carers which resulted in a Reasonable Assurance opinion as did the review report on Corporate Health and Safety.

The third report which was in relation to the Council’s Preparation for the General Data Protection Regulations resulted in a Limited Assurance opinion with 6 major, 1 moderate and 1 minor risks/issues being raised.

•           That no follow-up reviews were undertaken during the reporting period, although six are scheduled over the next six months.

•           That the Council has steadily improved its performance in implementing IA recommendations and/or addressing risks raised by IA over the last 17 months as shown by the table in paragraph 22 of the report. As at 8 June, 2018, 90% of High/Red/Amber issues had been addressed, 92% of Medium/Yellow issues and 91% of Low/Green issues.

•           That due to the significant slippage of work from 2016/17 and loss of staff because of a retirement, sickness absence and a resignation, the resource available to complete the Operational Plan for 2017/18 was significantly reduced and the Plan was revised accordingly. The revised Plan has been delivered and some audits rolled forward dependent on their priority. Although progress in delivering the 2018/19 Operational Plan (attached at Appendix A to the report) has been slow as a result of two vacancies and a long-term sickness absence, the Service has completed one Final Account Verification and commenced work in four areas as well as being involved in three ongoing investigations. The Operational Plan has been revised in accordance with the revision to the Corporate Risk Register approved by the Senior Leadership Team on 12 February, 2018.

•           That the resource available to deliver the current plan has significantly reduced due to the vacancies and the absence. This has been managed by reducing coverage where possible and by the use of contingency. However, there remains a shortfall of 50 days and it is unlikely that the Service will achieve 100% coverage of the Red and Amber Residual Risks in the Corporate Risk Register. The Plan will therefore be further prioritised to ensure that the areas of greatest risk to the organisation are covered first.

•           That the Committee’s terms of reference were originally due to be reviewed at its September, 2017  ...  view the full minutes text for item 4.

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

The Annual Report of the Internal Audit Service for 2017/18 was presented for the Committee’s consideration. The report provided an analysis of the performance of the IA Service for the period from 1 April, 2017 to 31 March, 2018 and contained the annual opinion of the Chief Audit Executive (i.e. the Head of Audit and Risk) on the adequacy of the Council’s risk management, control and governance processes for the reporting period.

The Head of Audit and Risk reported that based on the work and activities carried out by the Internal Audit Service during 2017/18 as documented in Appendix A she was able to confirm that for the 12 months ended 31 March, 2018 the Isle of Anglesey County Council had an adequate and effective framework for risk management, governance and internal control. While she did not consider there to be any areas of significant corporate concern, some areas require the introduction or improvement of internal controls to ensure the achievement of objectives and these are the subject of monitoring. There were no qualifications to this opinion.

With regard to performance, the Officer said that a comparison of the Service’s performance against target and benchmarked with the Welsh Chief Auditors Group (Appendix D) shows that it is in the top quartile in five areas and in those areas that it performs less well by comparison e.g. cost, it is because Anglesey is a smaller sized authority. The Officer also highlighted that the Internal Audit Service places value on training and development and has invested significantly to ensure that members of the team continue their professional development and stay abreast of emerging risks and developments in the sector. 

The Committee considered the information provided. The Committee noted in relation to performance that against a target of 44 (compared with a WCAG average of 69), the Service’s actual performance is 29. The Committee also noted that the opinion concludes that there are no areas of significant corporate concern, despite several areas where the assurance level was limited and where progress was slow or off target having been brought to its attention over the course of the year.

In relation to the Service’s performance the Head of Audit and Risk said that having checked the basis for the WCAG average, she had found that some councils define an audit differently  and include the verification of information as an audit hence the higher WCAG average of 61. Benchmarked with the six North Wales authorities the performance of Anglesey’s Internal Audit compares well. With regard to there being no areas of corporate concern, the Head of Audit and Risk said that there are only 4 red risks now outstanding so on the balance of all the work done she could confirm  that it was her view that there were no areas of significant corporate concern. There were however areas which require improving which is also noted in the opinion.

It was resolved to accept the Annual Report of the Internal Audit Service for 2017/18 and  ...  view the full minutes text for item 5.

To present the report of External Audit.

The report of External Audit was presented for the Committee’s consideration.

Mr Huw Lloyd Jones, Wales Audit Office (WAO) reported that Welsh Government Officials have discussed with the Council the potential for the Welsh Government to provide additional support given the scale and complexity of the Wylfa Newydd project. Following discussion with both the Council and Welsh Government, it was decided that the WAO would conduct a review focusing on the Council’s capacity to achieve its strategic objectives, whilst managing and mitigating the risks associated with the Wylfa Newydd project. The review looked at the Council’s capacity and readiness to support the delivery of the Wylfa Newydd project within the context of the Energy Island Programme and the Council’s wider strategic objectives. Consideration was given to whether the Council has the plans and capacity to maximise the opportunities and mitigate the risks associated with Wylfa Newydd without compromising its ability to deliver all its priorities and services.

The Officer said that the review found that the Council has made good progress as host authority for the Wylfa Newydd project without compromising the delivery of other priorities but that a challenging period lies ahead during which close collaboration among public sector partners will be vital.  The report makes three proposals for improvement. These are in relation to the need for the Council to monitor capacity on an ongoing basis as the Wylfa Newydd project progresses; the need for the Council to work with other public sector consultees to co-ordinate the assessment of risks associated with the project and to share information to enable a common understanding of the risks and how they can be mitigated ; and the need for the Council to work with public sector partners to identify lead responsibilities for developing the supply chain and increasing training opportunities across the North Wales region.

The Committee noted that there are a number of milestones to be reached before the project comes to fruition and that this element of uncertainty represents a risk particularly in terms of the financial investment that is required in making preparations for it.

The Assistant Chief Executive (Partnerships, Community and Service Improvement) said that she welcomed the report and in particular the finding that preparing for the Wylfa Newydd project has not impacted on the Council’s fulfilment of its core responsibilities. The Council fully realises the extent of the work involved in preparing for Wylfa Newydd and a dedicated team has been established and appropriate structures put in place to deal with this and with the National Grid project. Tîm Cymru comprising of representatives of all the key partners has also been set up and had its initial meeting recently. However, the Council has been liaising and working collaboratively with partner organisations on the Wylfa Newydd project for a long time and has been providing support in responding to Horizon documentation including by sharing information and key documentation templates. The Officer said that the Council recognises that sharing expertise is essential and that partnership working  ...  view the full minutes text for item 6.

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

The report of the Head of Audit and Risk incorporating the Committee’s Forward Work Programme to April, 2020 was presented for the Committee’s consideration and review.

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

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

ADDITIONAL ACTION: None