Agenda and draft minutes

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Contact: Lisa Richards  01597 826371

Items
No. Item

1.

APOLOGIES

To receive apologies for absence.

Minutes:

Apologies for absence were received from County Councillors

2.

DECLARATIONS OF INTEREST

To receive declarations of interest from Members.

Minutes:

County Councillor T J Van Rees  declared a personal interest in item 11 as a Council appointed Trustee of Theatr Brycheiniog.

 

County Councillor R Williams declared a personal and prejudicial interest in item 11 as a Friend of Theatr Brycheiniog

3.

DISCLOSURE OF PARTY WHIPS

To receive disclosures of prohibited party whips which a Member has been given in relation to the meeting in accordance with Section 78(3) of the Local Government Measure 2011.

(NB:  Members are reminded that under Section 78 Members having been given a prohibited party whip cannot vote on a matter before the Committee.)

 

Minutes:

There were no declarations of party whips.

4.

MINUTES pdf icon PDF 210 KB

To authorise the Chair to sign the minutes of the previous meeting.

Minutes:

The Chair was authorised to sign the minutes of the previous meeting, held on 7 August 2019, as a correct record.

5.

Statement of Accounts and Annual Governance Statement pdf icon PDF 162 KB

To consider the following:

 

·         Report of the Head of Financial Services

·         WAO Audit of Financial Statements Report – Powys County Council

·         WAO Audit of Financial Statements Report – Powys Pension Fund

·         Letter of Representations for Powys County Council

·         Letter of Representations for the Powys Pension Fund

·         Statement of Accounts 2018-19 – Powys County Council

·         Statement of Accounts 2018-19    - Powys Pension Fund

·         Annual Governance Statement 2018-19

Additional documents:

Minutes:

Documents:

·         Report of the Head of Financial Services

·         WAO Audit of Financial Statements Report – Powys County Council

·         WAO Audit of Financial Statements Report – Powys Pension Fund

·         Letter of Representations for Powys County Council

·         Letter of Representations for the Powys Pension Fund

·         Statement of Accounts 2018-19 – Powys County Council

·         Statement of Accounts 2018 -19 – Powys Pension Fund

·         Annual Governance Statement 2018-19

 

Discussion:

 

Report of the Head of Financial Services

·         The Accounts had been submitted 2 weeks ahead of the deadline

·         The Auditor General proposes to issue an unqualified opinion on both the Powys County Council and Pension Fund accounts

·         If the Committee approve the Accounts today, the Chair and S151 Officer will have authority to sign the Accounts

·         The Committee have had two seminars, one to consider the draft Accounts and one to consider the changes made to the final Accounts

·         One misstatement had not been amended – this was for £374K and relates to Plant Property and Equipment

·         The impact on liabilities of the McLeod judgement, which refers to age discrimination within the pension scheme, has resulted in an increased impact on liabilities of the County Council Accounts of £10.13M and £7.1M on the Pension Fund

·         The process had been completed within a shorter timescale and had taken a project management approach

·         Continual improvements are being made and are recognised – there are always further improvements that can be made

·         Resources are under continued pressure and the S151 Officer needs to ensure that finance can be delivered as efficiently and effectively as possible

·         No-one took up the opportunity for public inspection

·         Training for staff is ongoing

 

WAO Audit of Financial Statements Report – Powys County Council

·         The Auditor General’s responsibilities were outlined

·         Significant issues identified were corrected and therefore would not affect the Auditor General’s opinion

·         Post project learning has been analysed and discussed with Finance

·         Tighter deadlines in future may mean more uncorrected amendments

·         A revaluation of assets had been carried out on a different basis to previous years.  The WAO were asked if the new basis was correct and whether that was common throughout Wales.  The Audit ascertained that assets had been revalued in line with the CiPFA Code.  Each authority appoints its own valuers.  The WAO were satisfied that the revaluation had been appropriate and in line with professional criteria.  There had been a change of valuer following a tendering exercise.  The WAO would consider what steps the Authority had taken in challenging the revised valuation whether this had been an increase or decrease.

·         It was suggested that an explanation of the misstatement of £374K could be explained in more user- friendly terms for those of the public who may wish to view the accounts

·         The level of materiality has been defined – the level of materiality agreed by the WAO had been £4.97M which was deemed appropriate

·         The WAO had published a report regarding errors and misstatements, and in what circumstances these need to be corrected – this would be considered at  ...  view the full minutes text for item 5.

6.

Annual Audit Opinion pdf icon PDF 1 MB

To consider the Annual Audit Opinion.

Minutes:

Documents:

·         SWAP Annual Report and Opinion 2018-19

 

Discussion:

·         Internal Audit are required to give an opinion on the adequacy and effectiveness of internal control

·         As part of this process, there must be disclosure of any qualification and evidence of work undertaken in order to arrive at the opinion

·         There should also be comment regarding whether improvements have been made following audit work

·         Throughout the year there were no audits with no assurance but seven which had been given partial assurance

·         Most weaknesses have been addressed

·         The Internal Audit Working Group effectively monitors the work of Internal Audit

·         One issue remains outstanding - Risk Management

·         There were no material concerns regarding fraud

·         Weaknesses were rated medium -there were no major weaknesses

·         The Internal Auditor was therefore able to give an opinion of Reasonable Assurance

·         The Committee asked who assesses Internal Audit.  The Assistant Director, SWAP reported that they were covered by professional assessment and were subject to external assessment every five years to ensure compliance with standards

·         The WAO informed the Committee that there were quality assurance arrangements in place and they too were bound by professional standards.  The WAO has an internal team and are also monitored externally by ICAW.  Peer reviews were conducted internally.

·         The report indicates that some key leaders or managers were unavailable which has led to delays with some audits.  Although it was acknowledged that there had been a period of transition and vacancies at senior level, this was not acceptable.  The new senior management team was now in place and stability should no longer be an issue.  The Chair agreed to draw these comments to the attention of the Executive Management team

 

Outcomes:

·         The Opinion was noted

·         The Chair would report concerns regarding unavailability of senior Managers to the Executive Management Team

7.

Internal Audit - Performance Monitoring pdf icon PDF 660 KB

To consider Q1 Performance Monitoring.

Minutes:

Documents:

·         Report of Internal Audit Activity – Q1

 

Discussion:

·         The agreed work programme was not on track due to staff absence

·         Additional resources were being accessed to ensure the programme is brought back on track, but this was unlikely to happen until the second half of the year

·         There were two key areas of concern:

o   Risk Management: there had been delays in the roll out of the new system.  Some areas have been addressed and others still need to be.  The Head of Transformation and Communication had assumed responsibility for Risk Management in April 2019.  The framework has been reviewed and training materials developed.  Timescales have also been put in place.  Risk Champions for each service area will be confirmed by 15 September 2019.  Delivery of recommendations was on track.

o   Software Licenses:  Microsoft Licenses were well managed, but others were not so clear.  It had not been possible to reconcile licenses used against licenses paid for.  This has been an issue and is ongoing.

·         It was noted that the audit of Crickhowell High School  had been reassigned on the request of management.  The Committee did not believe this was acceptable.  The Head of Financial Services clarified that it was not the school that had requested the delay, but Executive Management Team had requested that this be done in the Autumn term.  It was a follow up audit rather than a full review.

 

Outcomes:

·         The report was noted

8.

Business Continuity pdf icon PDF 91 KB

To consider the report of the Project Officer, Events and Civil Contingencies.

Minutes:

Documents:

·         Report of the Project Officer (Events and Civil Contingencies)

 

Discussion:

·         The Authority was classed as a Category 1 Responder under the Civil Contingencies Act 2004.

·         The annual refresh had been postponed due to the organisational restructure

·         A recent Internal Audit gave the service substantial assurance

·         Service level plans are updated, and all are due to be completed imminently

·         These plans will feed through into the Corporate Business Continuity Plan which is due to be considered by Audit Committee at its December meeting.

·         Members noted that they no longer have seminars or updates regarding civil contingencies and requested a seminar

·         The WLGA have recently provided guidance and it was suggested that a seminar be provided based on this information

 

Outcomes:

·         The report was noted

·         A seminar regarding civil contingencies be arranged

9.

Strategic Risk Management pdf icon PDF 712 KB

To consider the report of the Leader.

Additional documents:

Minutes:

Documents:

·         Report of the Head of Strategy, Performance and Transformation Programmes

·         Risk Register

·         Heat Map

·         Alignment of Powys County Council Risk Matrix to Powys Teaching Health Board Risk Matrix

 

Discussion:

·         Nine risks are unchanged

·         There had been a recommendation to include the Mid Wales Growth Deal and long-term financial planning within the register.  The risks within the Mid Wales Growth Deal were managed via that programme.

·         12 services are using the system.  All services and programmes under Vision 2025 will use the system by October 2019.

·         The Authority is to adopt the PtHB matrix

·         By the time Q2 is reported, all risks will have been reviewed and recorded under the revised policy

·         It was noted that a previous risk which had a residual risk rating of catastrophic had now been reduced to high risk following mitigation

·         A risk regarding non-compliance with data protection legislation had been elevated from a departmental to corporate risk and was not a new addition

·         The Portfolio Holder and Corporate Director were ultimately responsible for individual risks

·         Mitigation is provided but the Committee needs assurance that the actions are being progressed.  This is now tracked under the new JCAD system.

·         Services have the opportunity to update the system daily if they wish but reporting will remain quarterly.  The system is flexible and integrated with the business planning process.

·         An officer will discuss with a service whether a risk should be escalated

·         Significant challenge will be provided by Head of Performance, Transformation and Strategy or her team

·         Audit Committee were asked to comment regarding the pace of change

·         It was suggested that mitigation was not sufficiently robust regarding Brexit.  Daily bulletins were received from the WLGA.  A working group was in place.  The weighting may change by the time Q2 is reported.  The WAO informed the Committee that the Auditor General has published a report regarding the preparedness of public bodies for Brexit.  It is likely that there will be some follow up work in the autumn regarding what work has been done and scrutiny that has been undertaken.  It was suggested that Brexit be used as a test for the system and as training exercise for the Committee.

 

Outcomes:

·         The report was noted

 

10.

Corporate Anti Fraud and Error Team pdf icon PDF 68 KB

To receive a summary of work undertaken between 1 April 2019 and 30 August 2019.

Minutes:

Documents:

·         Details of work/cases/review and results for Powys County Council 1 April to 30 August 2019

 

Discussion:

·         This report was the first to be considered by Audit Committee – this would be considered quarterly in future

·         The Committee were given a brief explanation of the different types of cases that occurred during the period including council tax on holiday homes, single person discount and employee fraud.

·         Intelligence and analytics were used

·         The WAO noted that the National Fraud Initiative participated with Councils and data across many agencies could be accessed

·         Members commented that some advice on the Councils website was contradictory in some instances

·         The Auditor General has issued a report ‘Effectiveness of Counter Fraud Arrangements’ and further work will be conducted over the next 18 months regarding actual arrangements in place

 

Outcomes:

·         The report was noted

11.

Theatr Brycheiniog

To consider the report of the Chair and Vice Chair of the Audit Committee.

Minutes:

Documents:

·         Report of the Chair and Vice Chair of Audit Committee

 

Outcome:

·         The report was deferred pending further review by SWAP

12.

Update on Jistcourt and Dawnus pdf icon PDF 283 KB

To review any updates.

Additional documents:

Minutes:

Documents:

·         Due Diligence – Additional Concerns

·         Extract Companies House Trackers for both Jistcourt and Dawnus

 

Discussion:

·         It was acknowledged that the document Assessing and Monitoring Economic and Financial Standing of Suppliers will solve many of the issues raised at the previous Committee

·         Since the last meeting, further information has been published by Companies House

·         There appear to be similarities between the two companies:

o   Overstated assets, particularly work in progress

o   Restating of their accounts

o   work in progress had been written down

o   Cash flow problems (known by both companies prior to contracts being signed)

o   Rapid decline in profits

o   Secured loans taken out

o   Group considerations which confused analysis

o   Significant churn of directors in the period leading up to the award of the contracts

·         The new guidance provides a matrix together with benchmarking and assessment of non-financial matters.  A Model Services Contract is also provided which imposes a duty for potential and current contractors to declare events of financial distress either before a contract is signed or during the life of the contract.

·         It was confirmed that there was no current liability to either of the companies by the Authority

·         There was concern regarding the way in which this had been handled by the Welsh Government and their lack of responsibility for the  fixed and floating charge – it was considered that no government body should be lending on that basis

·         The Head of Financial Services welcomed the new guidance.  A peer review of processes would be complete by the end of September.  The service was now working towards implementation and it was expected that this would be complete by the end of November.  Caution was urged that whatever process was used, there was no guarantee that a company would not fail.  Service areas must be clear on what contracts are being asked to deliver.  Furthermore, processes should not be so onerous as to limit competition.  Consideration of the risk and type of contract is essential.

·         Procedures were now in place which were welcomed.  However it was suggested that the Committee should ask the Executive Management Team to comment to Welsh Government that the Authority would not be in this position if greater financial discipline had been exercised by them.  There was both reputational damage to the Council and additional costs of retendering contracts.  The Chair agreed to have the discussion with The Executive Management Team.

·         The matter had been considered by the Public Accounts Committee and wider conversations have been had

 

Outcomes:

·         The Chair would discuss the issue of communication with the Executive Management Team

 

13.

WORK PROGRAMME pdf icon PDF 239 KB

To consider the forward work programme and whether any additional items should be included.

Minutes:

Documents:

·         Scrutiny Work Programme

 

Outcomes:

·         The report was noted and items raised during the meeting would be added to the December meeting of Audit Committee