Agenda, decisions 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 Governance and Audit Committee held on 9 December, 2021.

The minutes of the previous meeting of the Governance and Audit Committee held on 9 December, 2021 presented and were confirmed as correct

Arising thereon – with regard to item 9 on the minutes, the Head of Audit and Risk confirmed that there had been no further amendments to the Local Code of Governance and that the Code would now be submitted to the Full Council for approval on 10 March, 2022.

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

The report of the Head of Audit and Risk updating the Committee on progress as at 25 January, 2022 with recruiting the additional lay members to the Governance and Audit Committee in accordance with the provisions of the Local Government and Elections (Wales) Act 2021 was presented for information.

The Head of Audit and Risk briefly summarised the requirements of the Act in terms of committee membership composition and proceedings which means that for the Isle of Anglesey County Council, its Governance and Audit Committee will include four lay members. She confirmed that as Mr Dilwyn Evans, current lay member has indicated that he is willing to serve a second term, three additional lay members are required. The Council participated in the Welsh Local Government Association’s Task and Finish Group to develop an application form and advert for the recruitment process as well as a national programme of promotion. The Council received 13 application forms from which four candidates were shortlisted for interview by a panel consisting of the Chair and Vice-Chair of the Governance and Audit Committee and the Director of Function (Resources)/ Section 15 Officer. The shortlisted candidates will be interviewed by a panel of the Chair of the Governance and Audit Committee, the Director of Function (Resources)/Section 151 Officer and the Deputy Chief Executive in February, 2022. In accordance with the requirements of the Council’s Constitution, the Chair and Vice-Chair of the Committee will recommend the appointment of the lay members to the Governance and Audit Committee at its April, 2022 meeting.

It was resolved to note the progress made with recruiting the additional three lay members required for the Governance and Audit Committee from May, 2022.

To present the report of the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer incorporating the Treasury Management Strategy Statement for 2022/23 was presented for the Committee’s consideration. The report outlined the Treasury Management Strategy for 2022/23 including the Annual Investment Strategy, the Annual Minimum Revenue Provision Policy Statement, the Treasury Management Policy Statement, the capital plans and associated Prudential Indicators.

The Treasury Management Strategy sits below the Capital Strategy and considers the impact of that strategy on the Council’s borrowing and investment. It sets out how both strategies will be undertaken in a controlled way which is in line with a suitable level of risk that the Council wishes to take having regard to the guidance set out in the CIPFA Code of Practice on Treasury Management. The Treasury Management Strategy outlines the Council’s approach to borrowing and investment which follows on from the Capital Strategy, sets out the constraints on borrowing, determines a set of prudential indicators that ensure the affordability of the Council’s capital plans and determines the Council’s risk appetite and approach to managing its investments. These elements cover the legislative and regulatory requirements.

The Strategy for 2022/23 covers two main areas – capital issues and treasury management issues and considers the key factors in relation to each area and how those shape the Treasury Management strategy and approach.

The Director of Function (Resources)/Section 151 Officer in presenting the report confirmed that there are no proposed amendments to the core principles of the 2021/22 Statement and highlighted the following –

·         The economic background commentary (Appendix 3 to the report) and interest rate forecast to March 2025 and implications for the Treasury Management Strategy.

·         The proposed capital expenditure programme for 2022/23 to 2024/25 as set out in table 3 of the report including proposed capital spend, how this is to be financed and the balance to be funded from borrowing over each of the three years.

·         The impact of the Council’s capital expenditure plans and the Minimum Revenue Provision (MRP) charge on the Capital Financing Requirement (CFR) and the level of external and internal borrowing as shown in Table 4 of the report showing a projected increase in external borrowing over the next three years but remaining within the acceptable parameters.

·         The borrowing strategy confirming that an under borrowed position is being currently maintained and that a pragmatic approach to changing circumstances will be adopted i.e. if it was felt there was a significant risk of a sharp fall in long and short term rates then long term borrowings will be postponed and potential rescheduling from fixed rate funding to short term borrowing will be considered if it is cost-effective to do so. Conversely, if it was felt that there is a significant risk of a much sharper rise in long and short term rates than currently forecast, then the portfolio position will be re-appraised.

·         The Council’s approach to borrowing in advance of its needs confirming that the approach remains not to borrow solely to profit from the investment of the  ...  view the full minutes text for item 4.

To present the report of External Audit.

The report of Audit Wales setting out the findings from the Auditor General’s review of care home commissioning arrangements across North Wales was presented for the Committee’s consideration.

Mr Jeremy Evans, Audit Wales reported that the review looked at how the members of the North Wales Regional Partnership Board work together to commission care home placements for older people (the term care homes being used to reflect all types of residential and nursing care homes in a generic sense). The Social Services and Well-being (Wales) Act which came into force on 6 April, 2016 requires councils and health boards to work together to assess the care and support needs of the population in their area. The Act established Regional Partnership Boards (RPB) to prioritise the integration of services including for older people with complex needs and long-term conditions including dementia. In North wales the RPB includes the statutory partners – the six local authorities and the Betsi Cadwaladr University Health Board.

In early 2020 Audit Wales identified strategic commissioning of care home placements for older people was a risk to both councils and the Health Board for the reasons set out in paragraph 5 of the report. Fieldwork was undertaken in February and March of 2021 and as the messages were drawn together it was found that the legislative and policy frameworks were leading to a way of working that is impacting on health and social care professionals and users of the services. Although a review of the Partnership Boards in Wales has not been carried out, it is anticipated that many of the finding and challenges highlighted in the review for North Wales will to a greater or lesser extent be replicated nationally.

The key messages and overall conclusions from the review are as follows –

·         Partners are working together to provide care for vulnerable service users but are carrying significant risks associated with market stability, workforce and pre-placement agreements along with a reliance on spot purchasing.

·         The RPB’s 2018 Market Shaping Statement set out some aspirations for care home commissioning which were added to by the RPB’s response to “A Healthier Wales” in 2019, however, neither of these have driven the development of a clear regional strategy for commissioning care home placements for older people in North Wales or a delivery plan to take forward the aspirations that have been identified.

·         Whilst the RPB network brings partners together to “think regionally”, its structures, largely set out by the Welsh Government, are extensive and complex, and lines of accountability need to be strengthened.

·         Nationally set fee structures are complex and result in a significant focus on cost which causes division amongst partners and has the potential to impact adversely on service users and their families.

·         Partners need to do more to demonstrate they are meeting their statutory responsibilities around the Welsh language, and the Well-being of Future Generations Act, when commissioning care homes provision and making individual placements.

Audit Wales has reported separately to Welsh Government and has recommended  ...  view the full minutes text for item 5.

·        To present the report of External Audit.

·        To present the report of the Head of Audit and Risk with regard to addressing the recommendations of Audit Wales in relation to countering fraud.

·         A letter by Audit Wales’ Engagement Director dated 19 March, 2020 to the Chief Executive in relation to counter-fraud arrangements was presented for the Committee’s consideration.

Mr Jeremy Evans set out the context to the letter which was a high-level review of counter-fraud arrangements across 40 organisations in Wales including all 22 local authorities. The purpose of the review was to establish whether the arrangements for preventing and detecting fraud in the Welsh public sector are effective. The local fieldwork at Isle of Anglesey County Council comprised a high level evaluation of the Council’s counter-fraud arrangements based on a document review, a self-assessment completed by the Council and some interviews with relevant officers. The Audit Engagement Director wrote to the Chief Executive to set out some of the review’s key findings more formally as opportunities to strengthen the Council’s counter- fraud arrangements had been identified although the limitations on the Council’s resources were also acknowledged. It was felt that the Council would benefit from the following –

·         updating the relevant policies and plans including the anti-fraud and corruption policy and fraud response plan; 

·         promoting a good anti-fraud culture and building fraud awareness amongst staff;

·         undertaking a comprehensive fraud risk assessment;

·         to consider fraud risk as part of the overall risk management process;

·         developing an annual programme  of proactive counter-fraud work covering the risks in the risk assessment;

·         clear communication of the structure, roles and responsibilities in relation to counter-fraud to ensure lines of accountability are understood by all;

·         to consider introducing a corporate case management system;

·         to consider regular use of data analysis to validate data;

·         to consider ways to provide an appropriate level of fraud related information to the Governance and Audit Committee for it to take a proactive role in counter fraud matters.

·         The report of the Head of Audit and Risk setting out the Council’s response to the letter by Audit Wales’ Engagement Director was presented for the Committee’s information.

The Head of Audit and Risk in confirming that an action plan to address the recommendations has been developed and is set out at Appendix 1 to the report clarified that the Audit Wales’ letter was received at the onset of the Covid 19 pandemic following which all non-essential work was postponed and Internal Audit staff were redeployed within the Council. However the Counter Fraud, Bribery and Corruption Strategy was presented to and approved by the Committee at its December, 2021 meeting and covers all the matters raised by Audit Wales excepting the procurement of a case management system which it was deemed is not relevant to Anglesey because of the very small number of fraud cases arising (one to two cases per year) which do not justify the outlay and would not represent value for money. Also, the policy for the Prevention of Fraud and Corruption forms part of the Constitution and as such is revised annually as part of the regular review of the Constitution. Four of the ten recommendations have been implemented and the  ...  view the full minutes text for item 6.

·        To present the report of External Audit.

·        To present the response of the Head of Regulation and Economic Development.

·         The report of Audit Wales setting out the main findings from the Auditor General’s review of how local authorities in Wales are managing and regenerating their town centres was presented for the Committee’s consideration.

Mr Mathew Brushett, Audit Wales outlined the context to the report and the audit approach and methodology which involved looking at previous regeneration programmes and current regeneration strategies across councils as well as interviewing regeneration lead officers. The full evidence base for the review is detailed in Appendix 1 of the report. A review tool to enable councils to self-assess their current approaches to town centre regeneration and to identify areas where further work is needed was also produced along with an interactive data tool.

The key messages and overall conclusions from the review are as follows –

·         Town centres are at the heart of Welsh life and can be vibrant and sustainable places, but addressing the many challenges they face requires brave decisions and ambitious leadership;

·         The growth of out of town retail, the progressive loss of essential services from town centres – banks, post offices and public services – and the growth in online shopping have contributed to a steady decline in many town centres. The pandemic has added to these problems.

·         The Welsh Government has invested heavily in town centre regeneration in the last seven years but despite this funding town centres often struggle.

·         Town centre regeneration remains a national priority, but the Welsh Government’s town-centre-first policy is not yet fully embedded.

·         Local Authorities are the key public bodies to help regenerate town centres but they often lack capacity and skills to deliver the sustainable regeneration needed.

·         Local authorities are well-placed to prioritise and lead on place planning but must be clear on the purpose of their town centres and involve public sector partners, the third sector, town and community councils, communities and businesses in decisions. Local Authorities will also have to become increasingly interventionist to address the challenge facing town centres.

The report makes six Wales wide recommendations which are set out in detail in Exhibit 3 but can be summarised thus –

·         Welsh Government should review Non-domestic rates to ensure the system better reflects town-centre conditions when the payments holiday ends in March, 2022

·         Welsh Government should work with local authorities to review transport challenges facing town centres and agree how best to address these

·         Welsh Government should facilitate local authorities’ access to funding for town centres by streamlining and simplifying processes and grant conditions; providing multi-year funding and providing revenue as well as capital support to help address staff capacity and skills shortages

·         Local authorities should effectively and consistently use their existing enforcement, financial and debt recovery powers to support regeneration working across departments.

·         Welsh Government should set out how it plans to deliver its Town Centres First approach in practice, its expectations of partners and the practical steps it will take to make this ambition a reality

·         Local authorities should be receptive to and plan to manage the  ...  view the full minutes text for item 7.

To present the report of External Audit.

The Annual Audit Summary report for 2021 for the Isle of Anglesey County Council by Audit Wales was presented for the Committee’s information. The report showed the work completed by Audit Wales and other inspectorates since the last Annual Audit Summary (for 2020) issued in February 2021 and provided a summary of the outcome of each piece.

It was resolved to note the Annual Audit Summary report for 2021.

To present the report of External Audit.

An update on the Audit Wales Work Programme and Timetable for the Isle of Anglesey County Council as at 31 December, 2021 was presented for the Committee’s information. The update showed the status of each piece of work currently in progress by Audit Wales and other inspectorates and their proposed publication dates as well as confirming work completed and work planned for 2021/22 at the Council and nationally.

It was resolved to note the quarterly update on the Audit Wales Programme and Timetable as at 31 December, 2021.

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

The report of the Head of Audit and Risk incorporating the Annual Insurance Report for 2020/21 was presented for the Committee’s consideration. The report provided information about how the Council has managed its insurance activity over the last five years and its challenges going forwards.

The Risk and Insurance Manager provided an overview of the summary of claims included in Appendix A to the report which provided a breakdown per policy per financial year for the Council as a whole of the number of claims that have been paid; those settled without cost or payment being made and those where the claim has not yet been settled. It was emphasised that not all “still open” claims that have a reserve against them will be paid or settled for the amount reserved which is especially true of liability claims which are often settled for much lower sums or at no cost at all. Also, the number of claims might increase over time as claims are sometimes presented several years after the event. There are 4 public liability claims that pre-date the timescale covered by the report that remain open and for which there are outstanding reserves of approximately £215k.

Some of the key points to be noted include the following –

·         The Council uses a combination of self-insurance and external insurance to address the financial consequence of risk; in some cases the Council has arranged external insurance but self-insures a large proportion of the claims paid by opting for a large excess.

·         The external premiums paid in 2021/22 were approximately £718.5k (an increase of 8% since 2020/21) including £73k of insurance premium tax. Whilst a proportion of the increase relates to inflationary factors, there have been rate increases as a result of losses incurred by insurers globally due to weather events and should not therefore be considered as specific to Anglesey.

·         The number of claims for personal injury presented by employees (Employers Liability Claims) remains low at 2 to 3 per year over the 5 year period.

·         The number of public liability claims has continued to fall over the last five years; whilst historically, injury to road users and damage to other vehicles on the highways make up a significant proportion of these claims the number of highways related claims remains low with only 10 such claims having been made since April, 2021. Claims incurred by other services are few but include claims with high reserves relating to child protection issues and a maritime related claim which together have reserves amounting to £325k.

·         The number of motor claims has fallen over the last two years which can be attributed to fewer officers travelling during the pandemic. The cost of motor claims has however increased due to the increased cost of parts, increased cost of hire cars and the increased sophistication of modern vehicles.

·         Property claims are primarily driven by the weather with Storm Ophelia and more recently Storm Arwen having caused damage to Council property.

·         Overall, the trend is that the  ...  view the full minutes text for item 10.

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

The report of the Head of Audit and Risk which updated the Committee on the work of the Internal Audit section since the last update as at 1 December, 2021 was presented for consideration. The report set out the audits completed in the period, the current workload of Internal Audit and its priorities for the short to medium term.

The Head of Audit and Risk highlighted the two audit reports finalised in the period, the one – Information Governance resulted in a Reasonable Assurance opinion and raised 2 major and 5 moderate issues/risks details of which are provided in paragraphs 3 to 11 of the report and the other – Software Licence Management which is one of three pieces of work which Salford City Council’s specialist IT Audit team was commissioned to undertake resulted in a Limited Assurance opinion and raised one major and 9 moderate issues/risks. Further details are provided in paragraphs 12 to16 of the report. An action plan to address the issues/risks identified has been agreed and has been made available to the Committee’s members; assurance is taken from the Council’s proposed migration to “Cloud” based applications for some of its mission critical applications which will mitigate some of the risks identified.

The six audits noted in the table at paragraph 17 of the report are currently in progress and work continues on investigating the first tranche of the National Fraud Initiative 2020/21 matches released in January, 2021.  As at 1 February, 2022 there were 18 overdue actions (8 major and 10 moderate) which all fall within the Resources Services and relate to issues/risks raised in the four audits listed at paragraph 27 of the report. Internal Audit is working with the service to provide support with implementing the actions. Internal Audit’s short to medium term priorities are set out in paragraphs 30 to 32 of the report and focus on reviewing the red and amber residual risks not yet reviewed or not reviewed in the last two years from the now re-designated Strategic Risk Register. The Annual Internal Audit Strategy for 2022/23 is also in development. For the longer term, Internal Audit will be looking to deliver the Counter Fraud, Bribery and Corruption Strategy for 2021-24, working with colleagues in the Performance Team to improve assurance mapping across the Council and contribution to the development of the Performance Review, and preparing for the External Quality Assessment due in June, 2022. In addition, following its issuing of the final report on the Management of School Unofficial Funds, Internal Audit has been working on refreshing the guidance document, providing training for head teachers and governors and undertaking quality assurance checks of the certificate submitted by schools.

Officers responded to the Committee’s questions as follows –

·         With regard to the Limited assurance review of Software Licensing, the IT Team Manager advised that the cost of all the software licences for the Council for 2021 was in the region of £580k and included all individual licences, software licences and the  ...  view the full minutes text for item 11.

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

The report of the Head of Audit and Risk incorporating the Forward Work Programme updated to reflect amendments made due to workload and/or other factors was presented for the Committee’s endorsement.

It was resolved to note the minor amendments to the approved Forward Work Programme for 2021-22.

To consider adoption of the following:-

“Under Section 100(A)(4) of the Local Government Act 1972, to exclude the press and public from meeting during discussion on the following item on the grounds that it may involve the disclosure of exempt information as defined in Schedule 12A of the said Act and in the attached Public Interest Test”.

It was considered and was resolved Under Section 100 (A) (4) of the Local Government Act 1972, to exclude the press and public from the meeting during the discussion on the following item on the grounds that it involved the disclosure of exempt information as defined in Paragraphs 14 and 16 of Schedule 12A of the said Act and in the Public Interest Test presented.

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

The report of the Head of Audit and Risk updating the Committee on the risk management position was presented for consideration. The report provided an overview of developments in respect of managing risks since the last report on the corporate risk register was presented to the Committee in December, 2020 and included the new strategic risk register at Appendix C.

The Risk and Insurance Manager reported that since the corporate risk register was last presented to the Committee, the Senior Leadership Team (SLT) has undertaken a thorough review of the entire risk register and a decision has been made that the SLT’s focus should be on those risks to the achievement of the strategic priorities, hence a new strategic risk register aligned to the corporate priorities has been developed and replaces the corporate risk register. The risk assessment matrix (presented as Appendix B to the report) has also been reviewed and all of the “Likelihood” descriptors have been amended as have several of the “Impact” descriptors. The new strategic risk register contains 14 risks which is half the number on the previous corporate risk register and each risk has a designated SLT member leading on it. A detailed review of the wording, scores/priorities, control measures and further action required to mitigate each risk has been carried out with each new risk owner; the SLT has then reviewed the strategic risk register in its entirety.

The SLT will continue to review a small number of strategic risks on a monthly basis and will review the strategic risk register in its entirety twice a year. Those risks that are common to several service areas (e.g. in relation to collaboration and partnership working, health and safety contracts, sickness absence and fraud) have been removed and where not already the case will be included in individual service risk registers. The SLT recognises however that cumulatively these risks could have a significant impact on the Council as a whole and will therefore monitor those risks as part of normal performance monitoring arrangements.

The SLT has identified the top five red/critical residual risks to the achievement of the Council’s corporate and strategic objectives and these relate to workforce management, IT continuity, cyber-security, school modernisation and the ongoing suitability of physical assets.

The Committee welcomed the streamlined strategic risk register as less cluttered than the previous corporate risk register making the register easier to understand in terms of the most significant risks faced by the Council. The effectiveness of the control measures in terms of reducing both likelihood and impact was discussed as was the sufficiency of the control measures with regard to school modernisation with it being noted that there was no specific measure in relation to the supply and demand for school places. The Committee was advised that the control measures outlined for school modernisation are those which the risk owner considers appropriate to meet the level of risk at this time.

It was resolved to note the amendments made in relation to risk management  ...  view the full minutes text for item 14.

To consider adoption of the following:-

“Under Section 100(A)(4) of the Local Government Act 1972, to exclude the press and public from meeting during discussion on the following item on the grounds that it may involve the disclosure of exempt information as defined in Schedule 12A of the said Act and in the attached Public Interest Test”.

It was considered and was resolved Under Section 100 (A) (4) of the Local Government Act 1972, to exclude the press and public from the meeting during the discussion on the following item on the grounds that it involved the disclosure of exempt information as defined in Paragraphs 14 and 18 of Schedule 12A of the said Act and in the Public Interest Test presented.

To present the report of the Head of Profession (HR) and Transformation.

The Cyber Security Annual Report for 2021 was presented for the Committee’s consideration. The report set out the common cyber threats facing the Council and outlined the mitigating and operational controls that are in place to detect and prevent malicious activity.

The ICT Cyber Security Officer provided an overview of the main messages from the report including the notable challenges in cyber security which the Council encountered during 2021 and how these were addressed and/or resolved. The Committee was advised that the Council has a wide range of technologies that help detect and/or prevent cyber-attacks on the network and that all the measures that are in place are geared towards strengthening the Council’s cyber-security posture. During the year the IT Service employed two new members of staff who are dedicated to the discovery, remediation and prevention of vulnerabilities within the Council’s network. The Service is also in the process of procuring additional technologies to aid in early detection of vulnerabilities and intrusive events which will work alongside the technologies already in place. Additionally, updates to policies and procedures have been taking place during 2021 which will help strengthen the investigative process when responding to incidents. The report also notes some of the challenges going forward in dealing with the growing volume and sophistication of cyber threats in terms of having to continuously review and update approaches and the resources which this entails.

It was resolved to accept the Cyber Security Annual Report for 2021 and to note its contents.