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Agenda and minutes

Audit Committee
Thursday, 15th December, 2016 4.00 pm

With effect from 1 April 2016 Agenda and Minutes will be available in both Welsh and English. Reports are working documents and produced in English only in accordance with Welsh Language Standard 41 of this Council’s Final Compliance Notice from the Welsh Language Commissioner.

Venue: Meeting Room 1, Guildhall

Contact: Ken Bickerton  Committee Officer

Items
Note No. Item

Decision published: Adroddiad Blynyddol Craffu 2015/16

35.

Apologies for Absence:

Presented By: Decision published: Adroddiad Blynyddol Craffu 2015/16

Minutes:

Apologies for absence were submitted on behalf of Councillors William Baldwin, Terry Boland, Mike Edwards and Colin Powell.

Actions: Decision published: Adroddiad Blynyddol Craffu 2015/16

36.

Welcome

Minutes:

The Chair welcomed Matthew Edwards (Financial Audit Manager) and Paul Goodlad (Performance Audit Lead) wales Audit Office, to the meeting.  

Decision published: Adroddiad Blynyddol Craffu 2015/16

37.

Declarations of personal interests, if any

Presented By: Decision published: Adroddiad Blynyddol Craffu 2015/16

Minutes:

There were no declarations of personal interest.

Actions: Decision published: Adroddiad Blynyddol Craffu 2015/16

38.

Confirmation of Minutes pdf icon PDF 77 KB

To confirm as a correct record the Minutes of the meeting held on 22 September 2016.

Minutes:

The Minutes of the meeting of the Audit Committee held on 22 September 2016 were submitted.

 

RESOLVED – That the Minutes of the Audit Committee held on 22 September 2016 be received and approved as a correct record.

 

Matters Arising

 

Item 31- Internal Audit Report April 2016 – August 2016: The Audit Lead (Mike Sheehan) reported that the Work Area Investigation referred to alleged fraud at ITeC, the case was proven and disciplinary action undertaken.

 

Item 34 – Statement of Accounts 2015/16: Clwyd Pension Fund: The Head of Finance reported that he had attended the Clwyd Pension Fund Committee held on 27 September 2016 and that action had been undertaken to ensure that the apparent discrepancy in the membership records held in the pension’s administration system had been remedied.

 

Matthew Edwards, Financial Audit Manager, Wales Audit Office, informed Members that progress on this matter will be reported in the 2016/17 audit of the Clwyd Pension Fund by the Auditor General for Wales.

39.

Audit Committee Work Programme pdf icon PDF 43 KB

Minutes:

The Head of Finance submitted an updated Work Programme to the end of the 2016/17 Financial Year.

 

RESOLVED – That the Work Programme be noted.

40.

School Governance Update

To receive a verbal update from Dafydd Ifans, Service Manager, Education Effectiveness and Infrastructure.

Minutes:

The Chair reminded Members that, in order to encourage improved standards of governance in Wrexham, all schools have been asked to complete an annual Governance Assurance Statement, showing the extent to which they comply with statutory and other policy requirements.  In accordance with the resolution of the July 2016 meeting of the Audit Committee, the Head of Education Infrastructure and Support was in attendance to provide an update report on the number of completed Governance Assurance Statements received. 

 

The Head of Education Infrastructure and Support informed Members that following the July meeting, a letter had been sent to all School Governing Bodies requesting return of a completed Government Assurance Statement by 2 December 2016.  Eighty-one percent of School Governing Bodies had returned a completed form (51 of 63) by that date.   Following a reminder letter being sent to those schools that had not responded, the department was now only waiting on responses from 4 schools.   All four schools had provided reasons for not being able to provide completed statements at present and it was anticipated that these would be received by the end of January 2017.

 

Members welcomed the positive outcome and that this process should assist schools in carrying out their corporate governance responsibilities more effectively.

 

RESOLVED – That the information be noted.

41.

Internal Audit Interim Report April 2016 - November 2016 pdf icon PDF 89 KB

To consider the report of the Head of Finance.

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/119/16) which enabled consideration to be given to the Service Manager, Audit and Technical, Interim Report for April 2016 -  November 2016.

 

The Service Manager, Audit and Technical, introduced the report and commented that 20 audits, split between planned / unplanned work, had been completed during the reporting period.  Two new audits had been given a ‘Red’ level of assurance and one audit given a ‘Red/Amber’ level during this period.  The Executive Summaries from these audit reports were shown in Appendix 2 to the report.  The level of support from Heads of Departments continued to be strong and no resistance has been encountered from staff in relation to the audits undertaken or recommendations made.   The report also outlined the current status of the Audit Plan 2016-17.

 

The 1st Follow up audits of Fleet Management (2016/702) and Garage and Storage Units (2016/710) still had Red/Amber levels of assurance and in accordance with the Audit Charter, this had been brought to the attention of the Chair of the Audit Committee.  The Chair had decided that the relevant Heads of Department be requested to attend the meeting to explain to Members the reasons for the recommendations not being implemented.

 

The Head of Environment and Planning was in attendance to respond to the Fleet Management audit.  The Head of Housing and Economy had apologised for not being able to attend as he had a previous appointment, however, the Strategic Assets Lead (Denise Garland) and the Housing Tenancies Lead (Sarah Evans) were in attendance to respond to the Garage and Storage Unit audit.

 

The Head of Environment and Planning reported that a number of audits had been undertaken by Internal Audit following the merger of the two departments and this had had an impact on officer time and resources.  Good progress has been made in implementing the audit recommendations and improvements have been made in the Fleet Management operation.  In particular, a new accident investigation processes has been implemented to ensure that an initial (not full) investigation of all accidents be undertaken within 2 days of being reported.  He gave an assurance that all of the audit recommendations would be implemented prior to the next report to Committee. 

 

With reference to the Garage and Storage Unit Audit, the Strategic Assets Lead reported that all of the audit recommendations had now been implemented and internal procedures and processes strengthened, however, the department had been slow to respond to inform Internal Audit that this had been done.

 

Members considered the report and commented upon the following issues in particular:

 

·         Reference was made to the analysis of High and Medium Priority audit recommendations which related specifically to non-compliance with the Council’s policies and procedures.  Members sought further information on the measures being undertaken to improve compliance.

·         With reference to the current position of the 2016/17 Audit Plan, Members noted that the majority of the planned audits were expected to be completed although a small number of medium priority audits  ...  view the full minutes text for item 41.

42.

External Assessment of Internal Audit pdf icon PDF 209 KB

To consider the report of the Head of Finance

Minutes:

The Head of Finance submitted a report (HF/122/16) which informed Members of the outcome of the external assessment of Internal Audit introduced by the Public Sector Audit Internal Audit Standards (PSIAS) and to be conducted at least once in every five years.   A copy of the ‘External Quality Assessment of Wrexham CBC Internal Audit’ carried out by the Chief Auditor from Powys County Council was attached at Appendix 1 to the report. 

 

The Head of Finance introduced the report and informed Members that the assessment had concluded that “the internal audit activity generally conforms with the Standards and Code of Ethics. We have identified some opportunities for further improvement … but none of these non-conformance are considered a significant failure to meet with the Standards.”   Internal Audit complied with 328 of the 334 required standards with partial conformance in two areas and non- conformance in four areas.   An Action Plan had been prepared to respond to the areas of partial and non-compliance, a copy of which was attached at Appendix 2 to the report.

 

Members welcomed the report and raised the following matters:

 

·         It was noted that all six areas of partial or non-conformance were already known and mitigating controls were in place to address any risk.  The comments and suggested improvements were intended to build on an already efficient and effective internal audit service.

·         Recommendation 4 – Objectivity and Independence: With reference to the other operational responsibilities of the Service Manager Audit and Technical,  it was noted that organisational independence was maintained as audits with a potential conflict of interest were signed off by an Audit Lead.  This had been set out in the Internal Audit Charter accepted by the Audit Committee.

·         Recommendation 9 – Monitoring: Clarification was sought for no action being taken to update the time recording system as the present Galileo audit management system was no longer supported.

 

RESOLVED – That the report be noted and that the Audit Committee continues to monitor the implementation of the actions to address the recommendations during future reports in order to ensure that Wrexham Internal Audit Services continues to comply with the PSIAS standards.

43.

Risk Management Arrangements pdf icon PDF 83 KB

To consider the report of the Head of Finance

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/120/16) which enabled consideration to be given to the Council’s corporate risk management arrangements.   A copy of the Risk Management Arrangements Update Report was attached at Appendix A

 

David Stewart,  Audit Lead, presented the report and reminded Members that the Audit Committee had a constitutional responsibility to consider the effectiveness of the Council’s risk management arrangements.  The update report provided reasonable assurance that the Council’s Risk Management arrangements were effective.

 

During discussion of the report the following matters were raised:

 

·         Members noted that, from December 2016, the Risk Management Group would challenge Heads of Department concerning the contents of their department risk and control register on at least an annual basis.

·         Paragraph 6.16 – Risk Management Group (RMG) checks that all known Level 1 (corporately significant) projects have been risk assessed: Concern was expressed that it was possible for some projects not to be risk assessed due to them not being formally identified as projects.   The Head of Finance reminded Members that Project Managers were responsible for ensuring that their projects were risk assessed.  In addition, Performance Improvement, Partnership and Scrutiny Services officers attend all corporately significant project team meetings and draw to Project Managers’ attention that these projects must be risk assessed and recorded in accordance with the Council’s project management processes.

·         Paragraph 6.19 - Schools operating risk registers:  The Audit Lead confirmed that all schools were encouraged to maintain up-to-date registers, however this was not a mandatory requirement and that recent audits indicated that currently approximately 50% of schools kept risk registers.

 

RESOLVED – That the Risk Management Update Report attached at Appendix A to report HF/120/16 be received and noted.

44.

Annual Governance Statement 2016 pdf icon PDF 163 KB

To consider the report of the Head of Finance

Minutes:

The Head of Finance submitted a report (HF/123/16) which informed Members of progress on the Annual Governance Statement (AGS) 2016 Action Plan to 30 September 2016.  A copy of  the Annual Governance Statement Action Plan for implementation in 2016/17 was attached at Appendix 1 to the report.

 

David Stewart, Audit Lead, introduced the report and commented upon progress made in implementing the 2016/17 Action Plan.  Following challenge by the officer group, an additional item has been included as part of Action 17 (Safeguarding).   Also, renewed regulatory guidance has recently been received on the compilation of the Annual Governance Statement and the Audit Committee will be informed of the implications of any changes in due course.

 

During discussion of the report Members sought clarification on the following::

 

·         Item 3 – Asset Management: The Head of Finance reported that the specialist asset management system would not be purchased as the Council was in the process of procuring an alternative system which may be able to fulfil the same function.

·         Item 8 – Health and Safety: Members noted that the completion target date had been extended to 31 March 2017. 

 

RESOLVED – That the progress made in the implementation of the Annual Governance Statement action plan be noted.

45.

Wales Audit Office Annual Audit Letter pdf icon PDF 70 KB

To consider the report of the Head of Finance

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/121/16) which enabled representatives of the Council’s external auditors (Wales Audit Office) to report directly to Members on their 2015/16 audit and inspection work.

 

Matthew Edwards, Wales Audit Office (WAO)  reported details of the Annual Audit letter dated 17 November 2016 issued by the WAO to the Leader of the Council and Chief Executive, a copy of which was attached to the report.  He informed the Committee that the Appointed Auditor had concluded that the Council had complied with its responsibilities relating to financial reporting and use of resources.  The Appointed Auditor was satisfied that the Council had appropriate arrangements in place to secure economy, efficiency and effectiveness in its use of resources.   It was further reported that work to date on certification of grant claims and returns had not identified significant issues that would impact on the 2015/16 accounts or key financial systems.  The Council had agreed to participate in a Wales Audit Office  ‘outcomes pilot’ aimed to test the feasibility of a new outcomes approach on Welsh Government grants.  This work would be concluded in December 2016 and a report on the outcome of the pilot would be submitted to the Welsh Government and the Head of Finance in due course.

 

RESOLVED – That the Wales Audit Office Annual Audit letter 2015/16, be noted.

46.

Wales Audit Office National Reports pdf icon PDF 372 KB

To consider the report of the Head of Finance.

Minutes:

The Head of Finance submitted a report (HF/114/16) which updated Members on the national performance reports published by the Wales Audit Office over the last twelve months.  The report also included information on how the findings of national reports had been considered by the Council in local action plans.

 

Paul Goodlad (Wales Audit Office) commented that the sharing of the Auditor General’s findings contained within these National Audit reports on various service areas was becoming more relevant as partnership working between public bodies increased.

 

During consideration of the report several Members suggested that an article with link to the  National Audit reports be placed in the Friday Bulletin which is  e-mailed to all members of staff.

 

RESOLVED –

 

(i)         That the national reports published by the Wales Audit Office and the responses made by the Council as set out in report HF/114/16 be noted.

(ii)        That the Head of Finance arranges for an article on National Audit reports be included within the Council’s Friday Bulletin.

Decision published: Adroddiad Blynyddol Craffu 2015/16

47.

Additional Item of business - Safeguarding Children

Presented By: Decision published: Adroddiad Blynyddol Craffu 2015/16

Minutes:

The Chair referred to recent media attention around football sex abuse claims.  He asked whether it would be worthwhile in inviting the Council’s Safeguarding Officer to attend a meeting of the Audit Committee to enable Members to seek assurances that adequate safeguarding controls were in place to mitigate and protect vulnerable children from abuse when undertaking such activities within schools and Council run youth services. 

 

Members commented upon their role in ensuring that internal safeguarding controls were effective and on the potential implications to the Council.  This matter should be pursued either by the Audit Committee or relevant Scrutiny Committee.  They also suggested that assurances of relevant controls being in place should be obtained from Third Sector organisations engaged by the Council to provide youth services.

 

The Head of Finance suggested that he raises Members’ concerns with the Council’s Statutory Safeguarding Officer and reports back to the Chair in order to determine an appropriate way to progress this matter.

 

RESOLVED – That the Head of Finance raises Members’ concerns with the Council’s Director of Social Services, Clare Field, Executive Director People (Customer and Customer Engagement) and reports back to the Chair in order to determine an appropriate way to progress this matter.

Actions: Decision published: Adroddiad Blynyddol Craffu 2015/16