Agenda and minutes

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Venue: Committee Room 1, Council Offices, Llangefni. View directions

Contact: Ann Holmes 

Items
No. Item

1.

Election of Chair

Minutes:

In the absence of the Chair and Vice-Chair, Mr Dilwyn Evans, Lay Member was elected Chair for this meeting of the Audit and Governance Committee.

 

2.

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.

 

3.

Minutes of the Previous Meeting pdf icon PDF 360 KB

To present the minutes of the previous meeting of the Audit and Governance Committee held on 27 June, 2018.

Minutes:

The minutes of the previous meeting of the Audit and Governance Committee held on 27th June, 2018, were presented and were confirmed as correct.

 

Arising thereon –

 

           In response to a question about the review of the Committee’s Terms of Reference, the Head of Audit and Risk clarified that as she had been away on leave immediately following the Committee’s previous meeting in June, she had not as yet been able to forward a first draft of the revised Terms of Reference to the two Lay Members for them to look through as agreed. However, she confirmed that they would receive a copy in good time for the September meeting when the terms of reference would be formally reviewed by the Committee.

 

           With reference to the Statement of Accounts 2017/18, the Chair confirmed that he had been provided with information on how the Budget out-turn figures in the narrative section of the Accounts are reconciled to the Comprehensive Income and Expenditure Account in the Financial Statements.

 

The Committee noted that although the Statement of Accounts is meant to provide electors, local taxpayers, Members of the Council and other interested parties clear information about the Council’s finances, in particular the cost of services provided by the Council in the year, how services were paid for as well as the Council’s assets and liabilities at year end, it is not set out in a way that makes the information easy to obtain or understand. The Committee further noted that neither is it easy to deduce from the Financial Statements how the Council is performing financially as regards managing its business in terms of profit and loss, thus limiting the usefulness of the Statement as a tool to hold the Council to account for how it spends public money.

 

The Head of Function (Resources) and Section 151 Officer said that the Statement of Accounts is prepared in accordance with the Code of Practice on Local Authority Accounting which prescribes how the accounts are presented and on the basis of which they are audited by the External Auditor. The Statement as a document has grown in complexity as it accommodates CIPFA requirements becoming less accessible to the lay reader along the way. In terms of accountability, the way the Council organises and manages its business and uses its resources is monitored closely, but the main line of reporting this information is not the accounts but the regular in-year budget monitoring reports which show how each individual service is managing its budget. The Officer said that in terms of the Financial Statements, the introductory narrative report which accompanies the Statement conveys the main messages about the Council’s financial performance during the year in line with the budget reports - the narrative commentary may allow some latitude to provide further analysis. The Officer said that the Service will review the contents of the Narrative Report to establish whether this is possible.

4.

Internal Audit Progress Update pdf icon PDF 877 KB

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

Minutes:

The report of the Head of Internal Audit and Risk which provided an update on Internal Audit’s latest progress with regard to service delivery, assurance provision, and reviews completed was presented for the Committee’s consideration.

 

The Head of Audit and Risk reported as follows –

 

           That the two Internal Audit reports were finalised during the period, the one in relation to Deprivation of Liberty Safeguards (DoLS) which was assessed as providing Reasonable Assurance, and the other relating to Audit Certification of the Rent Smart Wales Grant which produced a Substantial Assurance rating.

           That six follow-up reviews of reports with a Limited assurance rating are due over the next six months as outlined in the table at paragraph 13 of the report. Three scheduled for July, 2018 are currently underway.

           That due to the proximity of the previous Audit and Governance Committee meeting, an update on the implementation of Management actions has not been provided for this meeting of the Committee. A detailed report on all outstanding recommendations and issues/risks will be presented to the Committee at its September meeting.

           That although progress in delivering the Internal Audit Operational Plan for 2018/19 has been slow due to completing the 2017/18 Plan and carrying two vacancies and a long-term sickness absence, to date one audit, a Final Account Verification and a grant certification have been completed. The Service is also involved in other work as described in paragraphs 15 and 16 of the report.

           That the Committee’s Terms of Reference will be submitted for approval to the September, 2018 meeting before being formally approved through the democratic process.

 

The Committee considered the information presented and responded as follows –

 

           With regard to the IA review of the Deprivation of Liberty Safeguards, the Committee sought clarification of the costs associated with Doctor assessments.

 

The Head of Function (Resources) and Section 151 Officer said that a report to the Executive earlier in the year outlined the financial implications of ensuring that the Council meets its DoLS obligations in terms of putting in place a DoLS authorisation for individuals resident in care placements who lack the capacity to consent to their placement in order to ensure that the placement is in their best interests. Assessments have to be made before authorisation is given including a medical assessment which must be undertaken annually and this incurs costs. There is also a risk of litigation where DoLS assessments are outstanding. As the Authority has a significant number of individuals in both its own care and nursing homes as well as in independent care and nursing homes who require assessment for a DoLS authorisation, the overall cost is therefore high. The Welsh Government provided a funding allocation for this purpose as part of the Revenue Support Grant but this proved to be insufficient.

 

           With regard to following up on previous Internal Audit reports, the Committee noted that no update is provided to this meeting even though 2 catastrophic  ...  view the full minutes text for item 4.

5.

Treasury Management Annual Review 2017/18 pdf icon PDF 1 MB

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

Minutes:

The Annual Treasury Management Review of Activities Report for 2017/18 was presented for the Committee’s consideration and scrutiny in line with regulations under the Local Government Act 2003 and the Council’s Treasury Management Scheme of Delegation for 2016/17.

 

The Head of Function (Resources) and Section 151 Officer reported that the review summarises the position in relation to the Council’s capital expenditure, and its borrowing and investment activities during 2017/18. The report also sets out how the Council performed against the Treasury Management Strategy for 2017/18. The Officer referred to the main points of consideration as follows –

 

           Capital Expenditure and Financing – from a starting budget of £53m the total capital expenditure for 2017/18 was £29m with the underspend being due in the main to slippage on major grant funded projects. The table in paragraph 2.2 of the report shows that £7m of capital expenditure was financed by borrowing. No long-term external borrowing (i.e. sourced from external bodies such as the Government, through the PWLB or money markets) was taken out during the year but was internally borrowed, with Council cash balances funding this in the short-term in order to reduce interest payments. This is in keeping with the Treasury Management Strategy.

           The Council’s underlying need to borrow for capital expenditure is called the Capital Financing Requirement (CFR).This figure is a gauge of the Council’s debt position. The CFR results from the capital activity of the Council and what resources have been used to pay for the capital spend. It represents the 2017/18 capital expenditure financed by borrowing and prior years’ capital expenditure funded by borrowing which has not yet been paid for by revenue or other resources.

           The table at paragraph 3.3.4 of the report shows that the Council’s CFR for the year which is one of the key prudential indicators (i.e. indicators that set limits on treasury management activity) was £95m for the Council Fund and £41m for the Housing Revenue Account making a total of £136m. When compared to the gross borrowing position as at 31 March, 2018 which stood at £117m, it shows that £19m of the Council’s balances has been used to fund capital expenditure. In these circumstances it is expected that in the long-term, borrowing will need to be taken out to replenish the balances.

           The Treasury Management Strategy and policy sets a limit on the CFR which is known as the authorised limit. Once this has been set which for 2017/18 was £169m, the Council does not have the power to borrow above this level. The table at 3.5.3 of the report shows that the Council maintained gross borrowing (£117m) within its authorised limit as well as the operational boundary which designates the expected borrowing position of the Council during the year. However, there may be periods where the actual position is either below or over the boundary; this is acceptable providing the authorised limit is not breached.

           The forecast CRF for 2018/19 and 2019/20 is shown in  ...  view the full minutes text for item 5.

6.

Forward Work Programme pdf icon PDF 342 KB

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

Minutes:

The Committee’s Forward Work Programme was presented for review and comment.

 

It was resolved to accept the Forward Work Programme as presented without amendment.

 

ADDITIONAL ACTION: None