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Agenda and minutes

Audit Committee
Thursday, 31st May, 2018 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
No. Item

1.

Appointment of Chair

To invite nominations to appoint a Chair of the Committee for the forthcoming year.

Minutes:

RESOLVED – That Jerry O’Keeffe (Independent Lay Member) be appointed Chair of the Audit Committee for the forthcoming year.

2.

Apologies for Absence

Minutes:

Apologies for absence were submitted on behalf of Councillor Rondo Roberts.

3.

Appointment of Vice-Chair

To invite nominations to appoint a Chair of the Committee for the forthcoming year.

Minutes:

RESOLVED – That Councillor Dana Davies be appointed Vice-Chair of the Audit Committee for the forthcoming year.

4.

Welcome

Minutes:

The Chair welcomed Councillors Frank Hemmings, Ronnie Prince and Rodney Skelland to their first meeting of the Audit Committee.

5.

Confirmation of Minutes pdf icon PDF 85 KB

To sign as a correct record the Minutes of the Meeting held on 22 March 2018.

Minutes:

The Minutes of the meeting held on 22 March 2018 were submitted.

 

Matter Arising:

 

Audit Ref: 2017 – 013 Information Management – including Data Security:

The Audit Lead reported that improvements had been made with regard to compliance by departmental managers with the procedures and controls in place to record new starters and to close down former employee accounts. The Audit Committee would receive a verbal update as to the level of assurance from the 1st Follow-up Audit at the Audit Committee meeting in July 2018 and the audit would be included in the Interim Audit Report at the Audit Committee meeting in September 2018.

6.

Work Programme pdf icon PDF 45 KB

To consider the report of the Head of Finance.

Minutes:

The Head of Finance submitted an updated Work Programme.

 

It was agreed that a training session on the new CIPFA guidance on the role of the Audit Committee be held prior to the July 2018 Audit Committee meeting.  To accommodate the holding of an Audit Committee Planning and Preparation Meeting the session to commence at 3.00pm.

 

A Member suggested that the governance / performance of the Clwyd Pension Fund could be a topic for future consideration.  The Head of Finance reported that the Fund was managed by the Clwyd Pension Fund Committee and administered by Flintshire County Council.  Councillor Trevor Bates was this Council’s representative on the Pension Fund Committee.  He agreed to circulate all Committee Members a link to the Clwyd Pension Fund website.

 

RESOLVED – That the Work Programme be noted.

7.

Draft Statement of Accounts 2017/18 pdf icon PDF 60 KB

To consider the report of the Head of Finance.

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/55/18) to present to the Audit

Committee the Council’s 2017/18 draft Statement of Accounts.  A copy of the draft Statement of Accounts was attached at Appendix 1 to the report.

 

In introducing the report, the Service Manager, Accountancy, commented that the Statement of Accounts had been prepared in accordance with the Chartered Institute of Public Finance and Accountancy’s (CIPFA’s) Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 (the Code).  As part of the early closure programme the draft accounts have been prepared a month earlier than required with the audit of the accounts also  accelerated by two months.   Members will be asked to formally approve the Statement of Accounts at the 26 July 2018 meeting of the Audit Committee.

 

The Service Manager – Accountancy then gave an overview of the Statement of Accounts section by section.  The 2017/18 revenue outturn report had been considered by the Executive Board on 8 May 2018.  Members were asked to note the Statement of Accounts on the basis that they had achieved a broad understanding of the contents of the accounts, were satisfied that they were consistent with other financial information received and they have received satisfactory answers to questions asked.  In addition, she was prepared to hold further informal training sessions on understanding the Statement of Accounts with Members prior to the July meeting.

 

During consideration of the draft Statement of Accounts Members sought clarification and commented upon the following matters in particular:

 

Narrative Report

 

·         7.   Revaluation and Disposals of Non Current Assets: The Service Manager – Accountancy confirmed that the £32k profit from the disposal of assets was a notional figure being an accounting adjustments made in accordance with the Code.  Capital receipts could only be used to fund future capital investment or repay debt and did not impact on the Council’s revenue balances.

·         With reference to the disposal of Council Dwellings, an accumulated depreciation of £140k had reduced the net amount to £2,291k. (Note 18 to the Statement of Accounts refers).

·         9.   Interest in Companies and Other Entities: Reference was made to the Wrexham Commercial Services Ltd pension deficit and further information was provided on the Council’s liabilities in the event of the failure of the company (Note 41 refers).  In addition, a Member requested that a copy of the company’s accounts be included as an appendix to the Statement of Accounts in future reports.  The Head of Finance commented that the company’s accounts were produced and audited by an external accountancy agency and he would investigate the feasibility of them being included in the July report.

 

Notes to Accounts

 

·         Note 12 Agency Income and Expenditure:  It was noted that no activity had been undertaken with regard to the VVP – Empty Property Acquisition loan for bringing empty properties back into use during 2017/18 (Note 12).  The Head of Finance commented that a report had been submitted to the 8 May 2018 meeting of the Executive Board  ...  view the full minutes text for item 7.

8.

Annual Governance Statement 2017/18 pdf icon PDF 81 KB

To consider the report of the Head of Finance.

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/58/18) which sought the Committee’s approval of the Annual Governance Statement (AGS) for the year ending 31 March 2018.

 

The Audit Lead introduced the report and commented that the purpose of the AGS was to provide assurance on the Council’s governance arrangements and the extent to which the Council has complied with its Governance Code.   A copy of the AGS for year ended 31 March 2018, which had been reviewed by the Council’s Heads of Department and Executive Directors and signed by the Leader and the Chief Executive as required, was attached at Appendix A to the report.

 

During discussion, Members requested that the following minor amendments be made to the Annual Governance Statement:

 

·         Page 91 Evaluating Performance: Include links to the Council’s Social Media websites within the box.

·         Page 93 Decision Making and Responsibilities: First sentence in box should read “are available for six-months” not “are archived for six-months”.

 

With reference to the Annual Governance Statement 2018: Action Plan for Implementation in 2018-19 Members requested further information on the progress being made with regard to the following actions:

 

·         Ref 6 Health and Safety:  The Audit Lead commented that during 2017/18 the governance processes were modified but that assurance concerning the effectiveness of these was required, especially at operational level.  Assurance was also required concerning the effectiveness of the modified inspection regime arrangements.  Possible partnership work with the Health and Safety Executive in 2018/19 will help to confirm this.

·         Ref 8 Information Management: Continue Implementation of GDPR Project Plan:  The Head of Finance reminded Members that a Corporate Data Protection Officer has been appointed and major progress has been made to ensure that the Council complies with statutory requirements of the General Data Protection Regulations (GDPR).   A Corporate Project Team has been established to ensure compliance across all parts of the Council’s activities, raise staff awareness and to address any on-going issues.

·         Ref 10 Projects: The Head of Finance confirmed that there had been difficulties in filling some ICT vacancies, however, it was the aim to fill all critical posts by September 2018.

·         Ref 12 Service Continuity Plans: Clarification was sought on whether the contents of the Service Continuity Plans would be shared with Members.  In response the Head of Finance stated that these were operational plans to ensure that the Local Authority could continue to provide critical services in the event of any disruption or incident and were not intended to be shared with Members.   He would make further investigation on ways to include Members in Emergency Planning arrangements, if possible.

 

RESOLVED – That the Annual Governance Statement as to report HF/58/18, as amended, be approved.

9.

Internal Audit Interim Report - February to March 2018 pdf icon PDF 73 KB

To consider the report of the Head of Finance.

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/57/18) which enabled consideration to be given to the Service Manager – Audit and Technical’s Interim Report for February 2018 – March 2018.

 

The Audit Lead introduced the report and drew attention to the main findings of the audit work undertaken during this period. Twenty audits, split between planned / unplanned work, had been completed during the reporting period, four of which had been given ‘Red/Amber’ levels of assurance.  The Executive Summaries from these audits were shown in Appendix A2  to the report. The report also included the counter-fraud work undertaken by Wrexham Internal Audit Services during the reporting period.

 

During discussion of the report Members raised the following matters in particular:

 

·         It was noted that the level of support from Heads of Department continued to be strong and no resistance had been encountered from staff in relation to the audits undertaken or recommendations made.

·         Audit Ref 2017-012 ICT Security - Networks: The Audit Lead provided further information on this item.

·         Audit Ref 2017 – 036 Creditors System:  The Audit Lead provided further information on the high value, duplicated payment found as a result of the audit.  It was noted that the overpayment was being recovered.  He added that this had occurred due to a combination of control failures at different stages but there was no evidence to suggest that this had been due to a systematic non-compliance with controls or that it was anything other than an isolated incident.  Members sought an assurance that all members of staff with responsibility for the procurement of  services on behalf of the Council were informed that the Purchase to Pay (P2P) system should be used for raising orders unless the Head of Finance had agreed an exemption in advance.

·         With reference to Counter Fraud Work, the Service Manager – Audit and Technical confirmed that the Financial Instruction Note on cash security had been produced and that an e-learning module was near completion and would be made available to all staff handling cash income in the near future.

 

RESOLVED – That the report be noted.

10.

Internal Audit Report 2017/18 pdf icon PDF 80 KB

To consider the report of the Head of Finance.

Additional documents:

Minutes:

The Head of Finance submitted a report (HF/56/18) to enable consideration to be given to the Service Manager - Audit and Technical’s Annual Report 2017/18 as to the overall adequacy of the Council’s internal control environment. 

 

The Service Manager, Audit and Technical introduced the report and commented that the Annual Report submitted at Appendix 1 to the report, was presented in accordance with the Council’s Financial Regulations and Wrexham Internal Audit Services (WIAS) Internal Audit Charter 2017/18.  The report was also required in order to comply with the Public Sector Internal Audit Standards (PSIAS). 

 

He further commented that the report gave a brief description of the role of WIAS, the control environment within which Internal Audit operated and provided a summary of the audit work completed by WIAS during 2017/18. On the basis of the internal audit work undertaken during 2017/18 and taking into account all available evidence, it was his opinion that the Council’s control environment was generally effective in achieving the Council’s objectives. This was subject to a number of qualifications which were detailed in the Annual Internal Audit Report.  He recommended that, where appropriate, these should be considered for inclusion in the Annual Governance Statement 2017/18 or the Action Plan.

 

Members welcomed the report and raised the following matters:

 

·         It was noted that in addition to the completion of the 54 planned audits approved by the Audit Committee in March 2017, WIAS had undertaken a further 12 unplanned audits during the year.  Feedback via the WIAS Client Satisfaction Form indicated that client satisfaction levels remained high with an average score of 4.5 out of 5.0.

·         In response to a Member question, the Service Manager – Audit and Technical provided an assurance that WIAS would continue to have appropriate resources available to undertake sufficient work to offer an independent opinion on the Council’s internal control environment. 

 

RESOLVED – That the Service Manager – Audit and Technical’s Annual Internal Audit Report be noted.