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 Governance and Audit Committee held on 29 June, 2023.

The minutes of the previous meeting of the Governance and Audit Committee held on 29 June, 2023 were presented and were confirmed as correct.

To present the report of Audit Wales.

The report of Audit Wales setting out the detailed audit plan for the Isle of Anglesey County Council for the 2022/23 audit year was presented for the Committee’s consideration. The Plan set out the work proposed to be undertaken in relation to the financial audit, the performance audit programme for the year along with the programme of grant certification work and audit reporting timetable and fees. The document was presented in draft version pending further discussions with the audited and inspected body.

Mr Derwyn Owen, Engagement and Audit Director for Audit Wales presented the report and provided an overview of the contents. Since the outline audit plan was presented to the Committee in June, 2023 the more detailed risk assessment work in relation to the accounts has been undertaken. Mindful that the auditors do not seek to obtain absolute assurance on the truth and fairness of the financial statements and related notes but adopt a concept of materiality, the level of materiality for the 2022/23 audit of the financial statements has been set at £2.845m. The audit planning and risk assessment work to date has identified the risk of management override of controls as the most significant financial statements risk as per Exhibit 1 of the plan. This risk is present in all entities and is not unique to Anglesey. No significant risks specific to the Isle of Anglesey County Council’s accounts were identified during the planning stage. Exhibit 2 outlines the other areas of audit focus along with the auditors’ planned response; these relate to the valuation of land and buildings, the valuation of pension fund net liability, pension scheme surpluses and issues reported in the 2021/22 audit of accounts report and how they have been addressed to minimise reoccurrence. The audit team is yet to conclude all areas of the risk assessment and should any further significant financial risks arise on completion of this work then the Section 151 Officer will be updated as will the Governance and Audit Committee via its Chair. The detailed Audit Plan will be re-issued if necessary. The programme of performance audit work remains unchanged from that set out in the outline Audit Plan in June. The Audit of Financial Statements Report 2022/23 is scheduled to be finalised and delivered by November, 2023. The proposed audit fee is set out in Exhibit 5 of the plan. Fee rates for 2023/24 have increased by 4.8% for inflationary pressures and the financial audit fee reflects a further increase of 10.2% for the impact of the revised auditing standard ISA 315 on the financial audit approach. This is in line with the industry standards nationally in the private and public sectors. Any fees not required/used will be refunded.

In considering the Plan contents, the Committee highlighted the following –

·      A discrepancy between the Welsh and English versions of the Plan with the omission from the Welsh version of the schedule of audit fees.

·      The increased audit costs, specifically the nature of the additional requirements imposed by  ...  view the full minutes text for item 3.

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

The report of the Head of Profession (HR) and Transformation incorporating the draft Annual Governance Statement (AGS) for 2022/23 was presented for the Committee’s consideration.

The report was presented by the Programme, Business Planning and Performance Manager. To demonstrate good governance the Council must show that it is complying with the core (and supporting) principles contained within the CIPFA/SOLACE Framework for Delivering Good Governance in Local Government. The draft Annual Governance Statement has been prepared in accordance with those principles. The Annual Governance Statement for 2022/23 has been streamlined in form and content following the presentation of the Local Code of Governance to the Committee in December, 2022. The Statement sets out the Council’s scope of responsibility and expectations regarding how it conducts its business, the Governance Framework and the elements contained therein, how the effectiveness of the governance framework is evaluated and the assessment of performance against the core principles along with a progress update on issues identified in last year’s Statement. Although no significant governance matters were identified for the year ending 31 March, 2023, the assessment process did identify a number of governance issues that will be addressed in 2023/24 as noted within the Statement. The Statement seeks to provide assurance about the Council’s arrangements for the governance of its affairs including its ability to identify opportunities for further improving governance and the management of risk and resources. The Statement has been through an internal process having been considered by the Leadership Team and by the Head of Audit and Risk.

In considering the Annual Governance Statement the Committee raised the following points –

·      The meaning of “significant” as it applies in the context of no significant governance matters having been identified for the year ending 31 March 2023.

The Committee was advised that in relation to the Governance Statement a significant matter would be any matter that affects the Council’s ability to fulfil its statutory duties and to deliver the strategic objectives as set out in the Council Plan for 2023-28. No such matter has arisen as evidenced by the regular update reports and regulatory review reports presented to the Committee during the year. Additionally, the annual report of the Head of Audit and Risk setting out the chief audit executive’s formal audit opinion for the year ending 31 March, 2023 did not find any areas of significant corporate concern.

·      The ways in which the corporate scorecard as an effective performance management tool might be further enhanced and whether the process for reviewing the indicators for inclusion on the scorecard should be expanded to include members of the Governance and Audit Committee to provide an additional perspective.

The Committee was advised that the Corporate Scorecard is in the process of being reviewed to ensure that it aligns with the newly approved Council Plan for 2023-28. The Council’s governance framework of which the Corporate Scorecard is a component is reviewed and refined annually to ensure it remains effective and while it would be impractical to bring the  ...  view the full minutes text for item 4.

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 draft Statement of the Accounts for 2022/23 was presented for the Committee’s consideration. It was noted that the figures contained within the report are unaudited and may therefore be subject to change.

The report was presented by the Director of Function (Resources)/Section 151 Officer. The draft accounts were signed by the Council’s Responsible Financial Officer i.e. the Director of Function (Resources)/Section 151 Officer on 30 June, 2023 with the audit of the accounts due to commence in August 2023. A correction was made to Table 1 in the report in that the figure of £3,258m in being a contribution from useable reserves and balances should not therefore appear in brackets. Although efforts have been made in recent years to streamline and simplify the accounts by removing notes that are considered nonmaterial, the Statement remains a technical and complicated document. The accounts including the Comprehensive Income and Expenditure Statement are presented in accordance with statutory accounting requirements rather than on the basis of how the Council is funded and as such they contain a number of items which are not charged against Council Tax and which are then reversed out to arrive at the Council’s final financial position in respect of reserves and balances.

The following elements of the Statement of Accounts were highlighted –

·         The Narrative Report which provides an overview of the Council’s financial performance for the year in question covering both revenue and capital expenditure and refers to the Council’s vision, priorities and strategies and the challenges it has faced. It also lists the core financial statements that are to follow. The narrative report provides a commentary on how the Council has used its resources during the year to achieve its stated objectives.

·         The draft Comprehensive Income and Expenditure Statement (CIES) shows the cost of providing services in the year in accordance with statutory accounting requirements and covers both the Council Fund and the Housing Revenue Account. It includes accounting adjustments such as depreciation and pensions adjustments which are not funded by Council Taxpayers so the impact of these is excluded in the note called Adjustments between Accounting Basis and Funding Basis (Note 6 in the Statement of Accounts). The CIES shows that the net cost of services was £179.355m with a deficit of £15.993m on the provision of services. Adjustments are made as per Table 1 of the introductory report to determine the movement in reserves and balances (Note 6). The CIES and adjustment Note 6 are then brought together in the Movement of Reserves Statement to show the Council balances as at 31 March, 2023 which is a true reflection of the Council’s financial position.

·         The Movement in Reserves Statement shows the changes in the year in the different reserves held by the Council. The Council had total usable reserves of £54.742m distributed between the General Reserve, Earmarked Reserves, the Housing Revenue Account, School reserves, Capital Receipt Reserves and Capital Grants Unapplied Reserve as  ...  view the full minutes text for item 5.

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

The report of the Head of Audit and Risk incorporating the Committee’s updated Forward Work Programme and Training Programme for 2023/24 was presented for the Committee’s consideration.

The Principal Auditor highlighted the following –

·      The redistribution of items between the September meeting and the subsequent three meetings in December 2023 and February and April 2024 to accommodate a session at the end of the 21 September meeting with the CIPFA Facilitator in relation to the Committee’s sef-assessment.

·      The withdrawal from the work programme of the item on the Local Code of Governance as it is only required to be considered once in an electoral cycle and was last considered by the Committee in December 2022.

·      The withdrawal from the work programme of the Partnerships and Regeneration Scrutiny Committee Annual Report following consultation with the Scrutiny Manager as previously reported. Consequently, partnerships and collaborations as an area will be addressed as part of the Internal Audit Strategy for 2023/24.

It was resolved –

·      To accept the updated Forward Work Programme proposed for 2023/24 as meeting the Committee’s responsibilities in accordance with its terms of reference.

·      To note the changes to the dates on which reports will be submitted.