Agenda and minutes

Governance & Audit Committee, Council Offices, Llangefni and virtually via Zoom, Governance and Audit Committee - Thursday, 18th July, 2024 2.00 pm

A number of council meetings are live-streamed.

All meetings are also uploaded after the event onto the our webcasting site.

Venue: Committee Room - Council Offices and Zoom

Contact: Ann Holmes 

Items
No. Item

The Chair welcomed all those present to this meeting of the Governance and Audit Committee. The Chair extended his and the Committee’s members’ condolences to Mr Alan Hughes, Audit Wales’s Performance Audit Lead on a recent close family bereavement.

 

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 Previous Meeting pdf icon PDF 165 KB

To present the minutes of the previous meeting of the Governance and Audit Committee held on 27 June 2024.

Minutes:

The minutes of the previous meeting of the Governance and Audit Committee held on the 27 June, 2024 were presented and were confirmed as correct subject to noting that Councillors Dyfed Wyn Jones and Margaret Roberts had tendered apologies for absence for the meeting.

 

3.

Governance and Audit Committee Action Log pdf icon PDF 60 KB

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

Minutes:

The report of the Head of Audit and Risk incorporating the committee action log was presented for consideration. The report updated the Committee on the status of the actions/decisions it had agreed upon at its previous two meetings (the action log having been introduced for the 18 April 2024 meeting) to allow members to monitor progress against all actions.

 

The Head of Audit and Risk confirmed that two actions had been completed and would be removed from the log and that reports in connection with the remaining actions were not scheduled to be presented until later in the year. The action under number 10 is in progress and will be completed by December, 2024.

 

It was resolved to note the actions detailed in the action log table and to confirm that the Committee is content that the actions have been implemented to its satisfaction.

 

4.

Draft Statement of the Accounts 2023/24 pdf icon PDF 1 MB

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

Minutes:

The report of the Director of Function (Resources)/Section 151 Officer incorporating the draft Statement of the Accounts for the 2023/24 financial year was presented for the Committee’s consideration. The Statement of the Accounts is a statutory document that is prepared in accordance with proper accounting practices and is produced annually to give electors, local taxpayers, members of the Council, employees, and other interested parties information about the Council’s finances in the previous financial year.

 

The report was presented by the Director of Function (Resources)/Section 151 Officer who thanked the Finance team and all those who had had an input into the production of the draft accounts for their work in enabling the draft accounts to be published by the deadline which for 2023/24 has been extended by Welsh Government to 30 June 2024. The Director of Function (Resources)/Section 151 Officer referred to the principal purpose of the accounts as being to provide their readers with the information to allow them to form an opinion about the Council’s financial position and its management and use of public money. He provided an overview of the main sections of the accounts comprising of the core financial statements and the key explanatory notes and what they reflect as regards the Council’s financial standing, and referred to Tables 1, 2 and 3 in the introductory report which summarised the Council’s reserves and balances position including how each type of reserve has changed over the year. The accounts show that at the end of 2023/24 the draft Council reserves stood at £15.604m and the total usable reserves stood at £50.099m. The value of the council’s net assets increased by £37.682m from £404.650m last year to £442.332m as at 31 March 2024.

 

The following were points of discussion by the Committee –

 

  • School balances and whether schools in a deficit position are an emerging development.
  • Electrical Installation Condition Report (EICR) Certificates as a contingent liability. Questions were asked about the reasons why in some instances copies of the certificates confirming the completion of electrical checks were not provided to Council tenants as required as well as the total rent that might have to be repaid to those tenants who did not receive copies of the certificates as compensation and whether it would have a bearing on the accounts.
  • The increase of £7.896m in short-term creditors to £42.465m as a result of a backlog of invoices.
  • Clarification of the £6.615m of capital grants received in advance for the Council’s share in the North Wales Economic Ambition Board (NWEAB) which it was noted was greater than the £4.618m stated as an increase in grants received in advance.
  • The reduction in the Housing Revenue Account balance. Questions were also asked about whether S106 Housing Developer contributions and the affordable housing reserve are transferred to HRA balances.
  • Over expenditure in Children and Families’ Services as a risk to the Council’s financial health going forward.
  • The use of reserves to fund significant costs. Questions were asked about the amount of reserves used  ...  view the full minutes text for item 4.

5.

Draft Annual Governance Statement 2023/24 pdf icon PDF 471 KB

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

Minutes:

The report of the Head of Profession (HR) and Transformation incorporating the draft Annual Governance Statement for 2023/24 was presented for the Committee’s consideration. The Governance Statement shows how the Council is complying with the core and supporting principles contained within CIPFA/Solace’s Framework for Delivering Good Governance in Local Government 2016 in having proper arrangements for the governance of its affairs, facilitating the effective exercise of its functions including arrangements for the management of risk together with adequate and effective financial management.

 

The report was presented by the Corporate Planning, Performance and Programme Manager who provided an overview of the conclusion of the assessment of the effectiveness of the Council’s Governance arrangements against the core principles of the CIPFA/Solace Framework as per the table at page 5 of the document. The report also contained a summary of progress against the governance matters identified last year as well as governance matters identified by the assessment process for 2023/24.

 

The following were points of discussion by the Committee –

 

  • The discrepancy between the timeline of March 2026 which the Council has set for complying with the requirements of the new Procurement Act 2023 and the date on which the provisions of the Act will come into effect which is 28 October 2024.
  • With regard to governance matters identified in 2022/23 in relation to the Local Government and Elections (Wales) Act 2021, it was suggested that the statement that the Council did not undertake the planned training on the General Power of Competence and has no plans to undertake this training is an unsatisfactory response and leaves the matter unresolved and requiring explanation especially as it relates to legislation which it might be inferred requires the training to be undertaken.
  • With regard to managing and rationalising the Council’s assets to ensure they are fit for purpose and if not, identify the work required to bring them up to standards, how success against this objective will be measured given that upgrading the Council’s assets requires significant investment which is unlikely to be realised.
  • Whether with regard to the financial resilience of the Council, the processes requiring review and streamlining to improve the efficiency and effectiveness of services and reduce the impact of reduced funding have been identified and a schedule compiled, whether there is capacity/expertise to undertake the task and whether the Committee will be party to that work.

 

The Committee was further advised as follows –

 

  • That the Procurement Act 2023 provides a transition period for local authorities to comply with its requirements. The Council has put in place a strategic plan and work programme to ensure that it is in a position to meet the new requirements.
  • That the training on the General Power of Competence is no longer offered by the WLGA due to the emergence of other priorities. The Local Government and Election (Wales) Act 2021 affords local authorities in Wales general powers of competence and it is a matter for the Council to decide whether and how the power  ...  view the full minutes text for item 5.

6.

Review of the Annual Draft Corporate Self-Assessment Report 2023/24 pdf icon PDF 639 KB

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

Minutes:

The report of the Head of Profession (HR) and Transformation incorporating the draft Annual Corporate Self-Assessment Report for 2023/24 was presented for the Committee’s consideration. The report provides an evidential basis of how the Council has performed over the year using its available resources whilst managing and mitigating associated risks in line with the expectations of the Local Government and Elections (Wales) Act 2021.

 

The report was presented by the Corporate Planning, Performance and Programme Manager who referred to the seven key areas which are the focus of the self-assessment. Four areas (service planning, financial planning, workforce planning and performance management) are assessed as exceeding expectations while three areas (asset management, procurement and contract management, and risk and audit management) are assessed as meeting expectations. The report also identifies several areas as presenting opportunities for improvement and monitoring throughout 2024/25.

 

The following were points of discussion by the Committee –

 

  • The contradiction between financial planning which is an area where the performance has been assessed as exceeding expectations and the Council’s financial resilience which has been identified as an area where the Council could do better due to the cost-of-living crisis and a decrease in funding. Similarly with regard to workforce planning which has also been assessed as exceeding expectations but where addressing workforce challenges is an area identified as presenting opportunities for improvement and monitoring throughout 2024/25.
  • The Council’s risk appetite and approach to risk. Questions were asked about the positive aspects of risk in terms of presenting opportunities for improvement and progress and the extent to which the Council is willing to take risks to maximise those opportunities.

 

The Committee was further advised as follows –

 

  • That the overall assessment rating for each of the 7 key areas is based on each service’s self-evaluation of its performance in those areas against one of 5 criteria as set out in the Council’s Service Position Statement at the end of the document. Financial planning involves the strategic management of the Council’s finances, creating plans to allocate resources and budgeting whilst financial resilience relates to the Council’s preparedness and ability to withstand financial shocks that may occur in the longer term. Opportunities for improvement and monitoring have been recognised with regard to the latter. Similarly, the assessment recognised that the Council has a strong understanding of workforce planning and has the requirements in place for achieving its commitments, plans and objectives as regards human resources but that there are areas where implementing the actions identified could further improve performance to take it to the next level.
  • That the Council’s approach to risk and its risk appetite as evidenced by the strategic risk register is based on managing the risks that may prevent it from achieving its objectives rather than on taking risks in order to improve performance which may not lead to the desired outcome. The Council has not formally assessed its risk appetite from the perspective of how much risk it is willing to accept to realise additional benefits. The  ...  view the full minutes text for item 6.

7.

Internal Audit Update pdf icon PDF 314 KB

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

Minutes:

The report of the Head of Audit and Risk providing an update as at 30 June, 2024 on the audits completed since the previous update as at 31 March 2024 was presented for the Committee’s consideration. The report also set out the current workload of Internal Audit and its priorities for the short to medium term going forward. Members of the Committee were provided under separate cover with copies of the three internal audit reports finalised since the last update in relation to Destination – Maritime Team – Income Processes (Reasonable Assurance); IT Audit – IT Supplier Management (Limited Assurance); Robustness of estimates and adequacy of reserves assessment (Section 25 of the Local Government Act 2003) (Reasonable Assurance). The Limited Assurance report was accompanied by an action plan to address the issues/risks raised by the internal audit review.

 

The following were points of discussion by the Committee –

 

  • That the Corporate Self-Assessment assessed procurement and contract management as meeting expectations whereas the internal audit review of IT Supplier Management has identified a number of procurement issues/risks that require management action.
  • The capacity of Internal Audit and the savings derived from the vacancy set against the costs of engaging third party expertise.
  • The issues raised by the audit review in relation to Destination – Maritime Team – Income Processes. This matter was taken in private at the end of the meeting the Chair having proposed and the Committee approved under Section 100 (A) (4) of the Local Government Act 1972 that the press and public  be excluded from the meeting during the discussion on the grounds that the matter involved the disclosure of exempt information as defined in Paragraph 14 of Schedule 12A of the said Act as it refers to the business affairs of the Council which could prejudice the interests of the Council commercially, financially and legally. Members raised questions about the income generated set against the costs of the service and they also sought assurance regarding the vulnerabilities highlighted by the audit review and the actions required to overcome them.

 

The Committee was advised as follows –

 

  • That the new Procurement Act 2023 places a number of responsibilities on local authorities and public sector organisations. Due to limited capacity, the Council has commissioned an external consultancy to review the Council’s procurement arrangements and its readiness for the changes which the new legislation will introduce. They have developed a two-year improvement programme to ensure the Council complies with the new requirements and have been re-engaged to provide support in delivering the improvement plan. Not all requirements have to be met by October 2024 when the legislation comes into effect. The IT Team Manager updated the Committee with regard to the 2 issues pertaining to the IT Unit from the IT Supplier Management review and confirmed that they are progressing in line with the timeframe.

8.

National Fraud Initiative 2022-24 Outcomes Progress Report pdf icon PDF 306 KB

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

Minutes:

The report of the Head of Audit and Risk setting out the latest outcomes from the National Fraud Initiative in relation to Council Tax Reduction and Housing Benefit was presented for the Committee’s consideration. The report detailed the progress made by the Council in responding to the findings of the NFI and the relevant outcomes including the financial outcome estimated to be savings of £3,838.

 

The following was a point of discussion by the Committee –

 

  • The inability of the Benefits team to allocate resources to analyse matches leading to missed counter-fraud opportunities and potential benefits. Questions were asked about the availability of resources for the next NFI exercise for 2024-26.

 

The Committee was advised that the Council did historically have a Counter Fraud service before the function was centralised by the DWP leading to the loss of the resource for the Council. The Council receives grant funding from the DWP to administer housing benefit on its behalf. This funding is reducing as claimants transition from Housing Benefit to Universal Credit. However the Council remains responsible for assessing claims under the Council Tax Reduction scheme which means that the caseload is not reducing at the same rate as the grant funding. The Council is using the DWP grant to focus on processing those applications meaning there is currently no resource available to assign to benefit fraud work. The Council has allocated resources to Council Tax to investigate single person discount claims and non-payment of the premium and the latter has generated additional income for the Council.

 

It was resolved to confirm that the Governance and Audit Committee takes assurance from the report that the council, taking account of the need to prioritise its resources, is seeking to actively embrace opportunities provided by the National Fraud Initiative to use data analytics to strengthen both the prevention and detection of fraud.

 

9.

Review of Forward Work Programme pdf icon PDF 126 KB

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

Minutes:

The report of the Head of Audit and Risk incorporating the Committee’s Forward Work Programme and Training Programme for 2024/25 was presented for the Committee’s consideration. One change to the scheduling of reports was highlighted by the Head of Audit and Risk.

 

It was noted by the Committee that the proposed agenda for the Committee’s September 2024 meeting is especially busy; it was suggested that the Head of Audit and Risk in consultation with the Chair consider the feasibility of rescheduling some of the items of business proposed for the meeting and/or designating items for information only where appropriate.

 

It was resolved to accept the Forward Work Programme proposed for 2024/25 as meeting the Committee’s responsibilities in accordance with its terms of reference.

 

Additional action - Head of Audit and Risk in consultation with the Chair to review the business scheduled for the Committee’s September 2024 meeting with a view to streamlining the agenda.