Agenda item

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

The report of the Head of Audit and Risk providing an update as at 31 March, 2024 on the audits completed since the previous update as at 31 January 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 four internal audit reports finalised since the last update in relation to Galw Gofal (Partnership Governance) (First Follow-Up) (Reasonable Assurance); IT Audit – Corporate Access Management (Reasonable Assurance); Recovery of Council Tax, Non-Domestic Rates and Sundry Debts (First Follow-Up) (Limited Assurance) and the Administration of Disabled Facilities Grants (Limited Assurance). The two Limited Assurance reports were accompanied by action plans to address the issues/risks raised by the internal audit review.

The report was presented by the Head of Audit and Risk who provided an overview of the contents.

The Director of Function (Resources)/Section 151 Officer provided the background to the Limited Assurance report in relation to the recovery of Council Tax, Non-Domestic Rates and Sundry Debts and outlined the factors which had impacted on the debt situation and explained the measures being taken to improve the position and the effectiveness of income collection and debt recovery. Further details were provided by the Revenue and Benefits Service Manager.

The Head of Housing Services provided contextual information with regard to the Limited Assurance report in relation to the Administration of Disabled Facilities Grants and he referred to increasing demand not being matched by additional resources as challenges with the administration and delivery of DFGs. The Service accepts the report and action plan and is committed to addressing the issues raised within the allotted timescale of 1 July 2024.

Points of discussion by the Committee –

·      That it would have been helpful had the audit follow up report included contextual information in relation to Council Tax, Non-Domestic Rates and Sundry Debts to help members get to the nub of the matter in respect of outstanding debt and how to tackle it. It was noted that the report does not reference any of the challenges, mitigating factors and actions taken as described by the Section 151 Officer in his presentation of the background, to address issues and improve the situation. The Committee further noted that where assurance is limited, members need to be able to focus attention on areas where actions can have an effect rather than on areas where the prospect of improvement is limited as in the recovery of certain debts especially social care debts. Adopting a project management methodology was suggested.

·      That it would also be helpful if the Committee was apprised of the total sum of non-recoverable debt so that it could make recommendations for a way forward.

·      Whether there is a formula for determining when the pursuit of debt becomes uneconomical.

·      Whether the application process for business rates relief is too complicated and a disincentive to apply.

·      The treatment of debt on the Council’s balance sheet as part of the accounts.

·      With regard to the administration of DFGs, specifically the non-alignment between DFG key performance indicators and Welsh Government’s Housing Adaptations Standards expected timeframes, members sought clarification of the Housing Service view of this being an issue for the Council as a whole, not solely the Housing Service.

·      Capacity within Internal Audit and whether having two vacant posts within the service is likely to affect the delivery of the audit plan.

The Committee was advised as follows -

·      That the Resources Service is aiming to reach a position whereby it is able to identify those debts which are recoverable and focus resources in those areas to maximise the opportunities for recovery whilst accepting that there will be some debts that will not be collected despite best efforts.

·      That that assessment cannot be made until such time as the existing debt backlog has been sifted and analysed with consideration being given by the Section 151 Officer and Revenue and Benefits Service Manager to applying an additional resource to that task, funds allowing. Arriving at a total non-recoverable debt figure is part of that process.

·      The details regarding the work undertaken and work remaining to be undertaken to address the issues raised are all contained within the action plan agreed by management and internal audit. It is a matter for the Committee to determine whether it is able to take assurance from the information provided.

·      That with regard to business rates relief the Service has been actively encouraging businesses to apply for relief and has engaged Menter Môn in that endeavour.

·      That whilst the gross debt is shown in the Council’s accounts a provision for bad debt is included which reduces the net carrying value of the debt. The calculation is made based on the age, amount, and type of the debt and where collection is deemed unlikely or the debt is aged, the provision is higher. The revenue account will have therefore absorbed the loss each year meaning that writing off the debts would not incur a significant one-off revenue cost as it has been accounted for in the provision calculation each year.

·      With regard to the DFG performance indicators being a matter for the Council, the issue relates to whether the timeframe applies from when the client initiates contact which would then also involve the Social Services or from when the Housing Service commences the adaptation.

·      With regard to the capacity of the Internal Audit Service, the two current vacancies within the service have not affected the progress of work against the audit strategy as the budget savings from the vacancies are being utilised to commission external support particularly in specialist areas. Internal Audit teams across the board are currently experiencing recruitment challenges.

·      In response to a suggestion about introducing a graduate trainee programme the Committee was advised that Internal Audit does not have the resources/capacity at present to support a graduate trainee and that the expectations on internal audit in terms of the skills necessary to keep up with the challenges of providing assurance and risk assessment as those areas become more complicated and specialised means that entry into the service in Anglesey is at qualified, senior level.

It was resolved to note the outcome of Internal Audit’s work, and to accept the assurance provided and priorities going forward.