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The decisions as the council's minutes record them. A plain-language summary follows once it has been written.
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
RESOLVED – That: (1) the Committee noted the Audit Strategy; (2) the Committee approve the Internal Audit Charter 2024/25 (including the Governance and Audit Committee Terms of Reference 2024/25, ahead of a request for approval by Council); (3) the Committee approve the Internal Audit Plan, 2024/25
RESOLVED – That the report be noted.
RESOLVED – That: (1) the Treasury Management Strategy for 2024/25 be noted; (2) Officers to arrange a further Member Briefing Session on Treasury Management.
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
RESOLVED – That report be noted.
RESOLVED – That the report be noted.
Apologies were received from Councillor Palmer.
No declarations of interest.
Decision as recorded
RESOLVED – That the report be noted.
The Committee received a report on the control environment within the Economic Development directorate. Members were advised that the Economic Development Directorate is responsible for a wide range of functions, services and statutory duties. The Directorate manages the Council’s Economic Development team; City Centre Management; Tourism; Major Projects; County Estates; Culture, Venues & Events teams; Parks; Sport & Leisure; Harbour Authority; Recycling Neighbourhood Services; and Shared Regulatory Services. The Directorate employs 1,234 FTEs. The report highlighted the strategic priorities for 2023/24 illustrating the scale and variety of work undertaken. Members were asked to note the governance arrangements and processes in place to manage and monitor strategic commitment, operational responsibilities and risk management. Those arrangements were summarised in the report. Additional assurance was provided by the Council internal audit and scrutiny arrangements. The Chairperson welcomed Neil Hanratty, Director of Economic Development and officers from the directorate senior management to the meeting. The Director was invited to deliver a brief presentation on the control environment. The Chairperson then invited questions and comments from the Committee. Those discussions are summarised as follows: · A Member asked whether the directorate has any engagement with the Cardiff Capital City Region in terms of economic development and whether those arrangements may change when the Cardiff Capital City Region becomes and incorporated body. The Director stated that when the Cardiff City Region was first established there was a lot of engagement with the UK Government in relation to securing City Deal funding. Officers from within the Directorate are currently engaging with the Cardiff City Region and that Jon Day, Operational Manager for Economic Development is the main contact. The transition to the South East Wales Corporate Joint Committee (CJC) is likely to have an effect on the service area over time. The Director considered that the establishment of the CJC would provide opportunities in terms of regional economic development and access to new funding at a time when the Council’s Economic Development budget has been narrowed year on year. · Responding to a follow-up question regarding where responsibilities for audit related issues would lie, the Director stated that the CJC will have defined areas of responsibility and Cardiff Council will still have areas of responsibilities that they will deliver. The Section 151 Officer advised that the Cabinet recently received a report on the CJC transition arrangements and the role of Cardiff Council as the Accountable body. In terms of governance, there are audit arrangements in place provided by Rhondda Cynon Taff and there are also Joint Scrutiny arrangements. The CJC is seeking to strengthen those arrangements moving forward operating as its own entity. Chris Lee, Section 151 Officer, anticipated that the 10 local authorities that form the CJC will each want to seek assurance in terms of CJC governance. · A Member noted the comments in the report regarding the business case process for selecting major projects and the management of associated risks. The Member asked how the directorate decides on the optimal mix of major projects carried forward by the authority. The Director stated that some major projects, such as the development of an indoor arena, have been ambitions of the Council for many years. Stakeholder engagement with the business community, which sought as part of the development of a new vision for the future economy of the city, was undertaken and from that a number of key major projects were proposed. Any smaller Council projects proposed are considered by the Investment Estate Board which can provide funding to undertake feasibility studies and business cases before decisions are taken on whether to proceed with the proposals. · A Member noted that a number of the features requested as part of the Weighsoft project were not delivered. Officers were asked comment. Members were advised that the specification for new software was drawn up following the problems identified relating to the previous software used at the weighbridge. There are processes in place which control access to the weighbridge system and these were incorporated within that specification. Unfortunately, some of those aspects had not been brought forward. The Neighbourhood Services Digital Project Team have now been tasked with working with the Weighsoft developers to ensure that those processes are put in place. Assurances have been provided by the developers that the Council’s requirements can be built into the system. In the interim, manual controls have been put in place. The service area is also working with colleagues from Internal Audit regarding the implementation of the seven audit recommendations to be implemented. · A Member asked whether there was question regarding the wider assessment of ICT procurement or whether ICT supported the service area throughout the procurement process for the Council in general. Officers advised that the recommendation to move forward with the procurement of the Weighsoft package was taken in partnership with colleagues in ICT. Weighsoft met the compliance levels required by the authority in terms of data protection. The service area works closely with colleagues in ICT on various aspects of the different software packages used within the directorate and there is a process of continual improvement. The Chairperson suggested that the Audit Manager may like to consider this issue as part of the on-going review. The Audit Manager stated that the Audit Plan for 2024/25 includes and assurance audit on the weighbridge system and associated controls and technology. RESOLVED – That the report be noted.
Decision as recorded
RESOLVED – That the report be noted.
The Committee received the draft Audited Statement of Accounts for Cardiff Council and Cardiff Harbour Authority, revised to included agreed amendments during the audit and feedback from the Committee from the previous meeting. The report was prepared to allow Audit Wales to present their findings to the Committee in accordance with International Standard on Auditing 260 and to provide the Committee with the opportunity to consider the audit findings and opinion, the letter of representation, to seek assurances on the delivery of the audit and any resulting adjustments made to the accounts. Anil Hirani, Operational Manager, Capital, Corporate and Treasury was invited to present the report. Julie Rees of Audit Wales addressed the Committee and presented the key findings from the audit. The report covered the status of the audit, the audit opinions, relevant representations and set out any significant issues arising from the audits, such as corrected and uncorrected misstatements. In respect of the Cardiff Council report, Julie Rees advised outstanding audit work in respect of cashflow and notes has been completed. No issues were reported. In terms of the audit opinion, a schedule of requested representations was included in the report at Appendix 1. Audit Wales requested an additional representation regarding ongoing discussions with HMRC on the landfill tax assessment and management have provided the draft response also appended at Appendix 1. Audit Wales will propose that the Auditor General signs an unqualified audit opinion set out at Appendix 2. There are no uncorrected misstatements and the corrected misstatements identified during the audit are included at Appendix 3. A significant issue identified during the audit related to property, plant and equipment. Audit Wales advised that it was no longer considered sufficient to have a rolling programme of valuation of assets given high rates of inflation and rises in building costs. To provide assurance, the Council commissioned its valuers to review Council housing and a representative sample of other land buildings. The review concluded that there was a material change in the valuation, particularly around the Depreciated Replacement Cost buildings and associated land, and management applied an uplift to provide assurance that the valuations applied at 31 March 2023 are materially accurate. The report recommended that asset valuations are subject to review annually in order to provide the Section 151 Officer with assurance that the accounts are materially accurate. The second significant issue identified in the report related to the evidencing of impairment – the downward valuation of property, plant and equipment. As part of the audit three amendments were required to the valuation of three large assets following the commissioning of valuation updates in February 2024, namely County Hall, City Hall and St Davids Hall. The authority’s policy is to revise these annually but it was to be recommended that where possible, these be undertaken in advance of the production of the annual accounts or as soon as known. The Cardiff Harbour Authority report was also appended to the report. Members were asked to note the similar misstatement relating to property, plant and equipment. An unqualified audit opinion for these accounts was proposed. A Member noted that £38 million capital expenditure was allocated to ‘invest to save’ schemes. Officers were asked how rigorously invest to save schemes were monitored to ensure savings are realised. Anil Hirani, Operational Manager, Capital, Corporate and Treasury, stated that the authority’s policy on invest to save seeks to encourage innovation and to tackle the wider revenue savings. Schemes range from small scale ICT projects to larger schemes such as the development of the indoor arena. The Operational Manager considered that there was some room for improvement in terms of post project appraisal across services areas across all capital investment projects. If savings are not generated from invest to save then this will impact on revenue budgets and this will be reported through monthly budget monitoring reports to Cabinet. Members were advised that officers in finance are able to approve funding for small invest to save schemes but where there are significant projects based on borrowing then business cases are considered by Cabinet. Members supported further scrutiny of whether there was a unified post project review and evaluation process. A Member noted the reference made to the Cardiff Capital Region City Deal and the Council share of accumulated balances and usable reserves of £3.8 million. The Member asked officers to explain what happens to those funds when the Cardiff Capital Region becomes an incorporated body. The Operational Manager, Capital, Corporate and Treasury stated on 2 April 2024 the cash balance held by the Council will be transferred over to the Cardiff Capital Region to allow the new entity to function with a cash balance. The Joint Committee accounts for 2023/24 should then provide an accurate reflection of the balances held. The Council’s accounts for 2024/25 will show a nil balance. The Member asked whether those arrangements were unpinned by an agreement with the other members of the Joint Committee. The Operational Manager, Capital, Corporate and Treasury and Section 151 Officer confirmed that there is a legally binding agreement in place. A Member asked whether there was an understanding of the expected savings that may potentially be realised from an invest to save schemes, prior to the start of the projects. The Operational Manager, Capital, Corporate and Treasury stated that there is an expectation that there would be a reasonably robust business case in place that would identify savings or additional income. A risk assessment would be undertaken around any significant variables. A Member asked whether schemes such as the ‘buy back scheme’ (Council housing stock) and the retrofitting of Council housing are considered to be invest to save schemes. Members were advised that such schemes do not generate a cash saving, but may be considered as cost avoidance. The Capital Programme includes a range of new affordable housing schemes in the city and, though these may pay for themselves from rental income over a long period, controls and viability assessments are in place. Responding to a question, colleagues from Audit Wales confirmed that satisfactory responses have been received to the significant issues highlighted in Exhibit 2 of the ISA 260 report. Recommendations will be added to an addendum report to allow management to action and response accordingly. The final audited statements, AGS and ISA 260 reports will be considered by Council in March. RESOLVED – That the report be noted.
Decision as recorded
RESOLVED – That the report be noted.
The Corporate Director Resources and Section 151 Officer, Chris Lee, presented a financial update including resilience issues on the 2023/24 Month 9 Monitoring position, Budget Strategy 2024/25 and the Medium-Term Financial Challenge. A Member considered that the efficiency savings set out in the presentation indicated that the Council would be delivering the same services with less resource. Officers were asked to provide details of the processes used to establish whether assumptions made regarding the level of savings achievable are realistic. The Section 151 Officer advised that each service area has been set an efficiency savings target. Officers from the service area and from Finance establish the robustness of savings proposals. Each saving proposal is risk assessed in terms of its deliverability and are monitored on a quarterly basis as part of the Budget Monitoring reports. The Section 151 Officer considered that, with reference to the current financial year, the authority has good track record on delivering efficiency savings. A Member asked whether there are some service areas where efficiency savings are not being achieved, for example Children Services. The Section 151 Officer stated that demand pressures in some service areas, such as Schools, Adult Care and Childrens’ Care, make it more difficult to achieve efficiency savings. In recognition of this, lower efficiency savings targets have been set for some service areas. A Member raised concerns that maximum possible level of efficiency savings may have been already derived at a time when there was increasing demand for service and that these issues were not unique to Cardiff. Officers were asked whether there were any forums where peer authorities discuss these issues and what can be done to address them. The Section 151 Officer advised that there are a number of networks where approaches to these issues are discussed such as the WLGA and the Core Cities Network. However, Cardiff is also keen to look at approaches beyond local government both within the public and private sectors. A Member referred to the level of school balances depicted in the presentation. The Member commented that, given the large proportion of school budget allocation on the Council budget as a whole, and the fact that the authority has no direct control over those budgets, if the position worsened then there would be serious consequences for the Council. Therefore, it was considered that school budget deficits should be closely monitored as a developing risk. The Section 151 Officer agreed and stated that new Savings Board and Efficiency Board arrangements have been put in place to monitor the process over coming years. RESOLVED – That the report be noted.
Part of an issue followed across 9 meetings
Decision as recorded
RESOLVED – That the report be noted.
The Operational Manager, Capital, Corporate and Treasury presented a report providing Members with the proposed timescales for the 2023/24 statements; the draft accounting policies on which the Statement of Accounts for 2023/24 will be based, along with the key areas in the accounts where estimates and assumptions are used in preparation of the accounts; the key changes expected to be implemented for the 2023/24 accounts arising from the 2023/24 CIPFA Code of Practice (the Code); and the factors impacting on the preparation of future Statement of Accounts. Members were asked to note the main change to the Accounting Policies set out in an appendix to the report. Members were advised of a new policy to allow the Council to capitalise interest on borrowing for major projects. The policy had been introduced to allow major projects to continue where the impact of the short-term costs during the development and construction phase of those projects in terms of interest may not be affordable. The approach has been researched and it is an approach taken by other authorities. The approach also accords with the CIPFA Code of Practice. Members were asked to note that a number of key thresholds, set out in the policy, must be achieved before this policy can be used. Officers were asked whether and consultation had been undertaken with colleague in external audit regarding the change to the Accounting Policies referred to. The Operational Manager, Capital, Corporate and Treasury confirmed that consultation has been undertaken and Audit Wales have provided feedback and this was confirmed by Audit Wales. RESOLVED – That the report be noted.
Decision as recorded
RESOLVED – That the report be noted.
The Committee received a progress report providing an update on the work and performance of the Internal Audit and Investigation Teams. The report covered the period from 1 January – 29 February 2024, and follows the updates provided in the Committee meeting held on 23 January 2024. The Internal Audit Progress Report (Annex 1) set out performance in relation to the Internal Audit Plan. It summarised the work performed, the priority recommendations raised, the critical findings, emerging trends, and relevant value for money findings across the Council for the assurance of the Governance and Audit Committee. The Investigation Team Progress Reports (Annex 2) focused on proactive and reactive fraud awareness, detection, and investigation activities, including participation in initiatives, such as National Fraud Initiative (NFI) data matching exercises. Members were advised that the new Global Internal Audit Standards have been recently published and will take effect during 2025. Guidance is awaiting on public sector application of the standards. Members would be updated in due course. The Audit Manager provided an update on the work of the Audit Team, progress made against the Audit Plan and the work of the Investigation Team during the period. A Member asked whether the number of cases of fraud identified under the National Fraud Initiative were typical when compared with other local authorities within Cardiff’s peer group. The Audit Manager stated that comparative data was not available. However, the matches identified under the scheme require accurate data to be provided by local authorities. Cardiff’s data is cleansed with the aim to be as accurate as possible so that matches are viable and useful. A large number of cases reference in the report were generated from NFI data matching. A Member noted that the audit of Cardiff Capital Region City Deal was given an audit outcome of ‘Effective with opportunity for improvement’ rating. Officers were asked whether any of the opportunities for improvement identified would have a bearing on the value of the assets that will be transferred from the Council to the City Region. Officers confirmed that the opportunities for improvement had no bearing on the assets to be transferred. RESOLVED – That the report be noted.
Decision as recorded
RESOLVED – That: (1) the Committee noted the Audit Strategy; (2) the Committee approve the Internal Audit Charter 2024/25 (including the Governance and Audit Committee Terms of Reference 2024/25, ahead of a request for approval by Council); (3) the Committee approve the Internal Audit Plan, 2024/25
The Committee received a report seeking approval for the Audit Charter and Audit Plan 2024/25. Responding to a question from the Committee, Chris Pyke, Audit Manager, confirmed that Directorate Risk Registers are included within the audit programme. Directorate Risk Registers are considered as a standard element in every audit and are used to inform audit planning. They are considered to be a key piece of information in that regard. RESOLVED – That: (1) the Committee noted the Audit Strategy; (2) the Committee approve the Internal Audit Charter 2024/25 (including the Governance and Audit Committee Terms of Reference 2024/25, ahead of a request for approval by Council); (3) the Committee approve the Internal Audit Plan, 2024/25
Decision as recorded
RESOLVED – That the report be noted.
Ian Allwood, Head of Finance presented a report providing an update on the risk management position at quarter three 2023/24 and highlighting any changes from the quarter two 2023/24 report. Members were asked to note that fifteen Directorate risks would be carried forward as SMT escalated risks at quarter three. Eleven of the fifteen escalated risks have a target risk to be achieved by Q4 2023/24 and this will be reported at the end of year report having considered the latest risk data available for each identified escalated risk. Four escalated risks were de-escalated during the period. Furthermore, the Homelessness Housing Emergency has been added to the Corporate Risk Register for corporate oversight of the risk which details both the current and future actions designed to manage the risk. There is an expectation that this risk will remain Red for the forthcoming two years as investment is made in solutions to significantly impact on the shortage of housing supply. Members were advised that the Quarter 4 report will set out the work being undertaken to review the target risk progress on each escalated and corporate risk to ensure that they remain relevant and reflective of the environment within which each risk operates. The Quarter 4 report will also provide a level of assurance for risks across the medium and longer term. Feedback received from the Core Cities Risk Management Group will also be included in the Quarter 4 report. A Member asked whether the description of the Homelessness Emergency risk could more clearly identify the consequences of the risk for the Council. The Head of Finance stated that the risk arose from a Motion to Council. Colleagues in Risk Management and Housing collaborated on the risk description which summarised the issues set out in the Council motion. The Head of Finance accepted the point raised. In terms of assurance, Members were advised that there are some actions arising from the risk which will manage the consequences for the Council. RESOLVED – That the report be noted.
Decision as recorded
RESOLVED – That: (1) the Treasury Management Strategy for 2024/25 be noted; (2) Officers to arrange a further Member Briefing Session on Treasury Management.
The Committee received a report on the Treasury Management Strategy for 2024/25 which was approved by the Council in March 2024. Members were asked the note the main points of the Treasury Management Strategy set out in the report, which included an economic update, a number of indicators and an extract from the MRP (debt repayment) Strategy, as discussed previously by the Committee. Members were advised that there was a borrowing requirement that was driven by the capital investment requirements of the Council’s strategic priorities, such as investment in housing. There was a need to undertake additional borrowing to meet those priorities and the Treasury Management Strategy outlines those figures and illustrates that borrowing over the medium-term could reach £1.5 billion. Members were also advised that security and liquidity were the main drivers for the Investment Strategy and yield was a secondary consideration. Members were further asked to note the key point that the authority has moved towards being a net borrower, rather than a net investor and the associated risks, including an increase in the level of short-term borrowing. The Chairperson invited questions and comments from the Committee. Those discussions are summarised as follows: · A Member asked to what extent the liability benchmark KPI was proving to be a useful tool in terms of informing decision-makers. The Operational Manager, Capital, Corporate and Treasury advised that liability benchmark was a new requirement and the Treasury team are considering how best to continually update, monitor and report on the KPI in an accessible way that allows Members to interpretate the information and identify the key risks. The Member stated that in his opinion the KPI did combine complex information in a simplified and accessible way. The Member raised concerns that, if, therefore, it was considered to be a complicated KPI then there may be a requirement for additional training to be provided around the use of the KPI specifically to Elected Members. · A Member noted the Maturity Structure of Borrowing illustration in the report which sets out the time periods applied to repayment of borrowing, in particular the upper limits in borrowing. The Member asked whether these are set with reference to external expertise. The Operational Manager, Capital, Corporate and Treasury confirmed that no benchmarking has been undertaken with other local authorities but the issue will be discussed with the Council’s external advisors. The Member considered that the illustration needs to be premised and supported by ‘intrinsic thinking’. The Section 151 Officer provided assurance that the Treasury Management Strategy is formulated in consultation with the Council’s Treasury Management advisors. · A Member raised concerns whether, in terms of Treasury Management, Elected Members understood the need for borrowing, over what duration, existing borrowing, etc. The borrowing requirement set out in the Treasury Management Strategy will result in circa £1.5 billion debt and concerns were expressed regarding the repayment of that debt over the long-term. The Member asked whether some information could be provided to elected members that the debt the authority is taking on will be repaid within the lifetime of the projects the authority is borrowing for. The Operational Manager, Capital, Corporate and Treasury stated that the Council did not borrow for specific projects. Treasury Management was about the whole budget and the approach to how the authority makes provision its revenue budget to pay off historic debt and expenditure was covered at the previous meeting of the Committee. The Operational Manager, Capital, Corporate and Treasury offered to provide a further additional briefing on the Minimum Revenue Provision Policy, if required, in addition to that requested and provided by officers a few months ago. The officer accepted that there were risks to borrowing but the framework which embeds the budget process captures those risks and affordability. The Section 151 Officer supported the offer to provide further training to elected Members focussing on Treasury Management processes. The Chair considered it was important that elected Members attend training sessions arranged by officers and urged all Members to attend. · A Member also requested whether information could be conveyed in a way that highlights for Members where the Council will receive an asset in return for debt incurred. · A Member supported concerns raised by colleagues and considered that holistically there was a need for traceability from business case to project as these will ultimately link with Treasury Management. The Chairperson welcomed the offer for additional briefings on issues covered during the discussion. RESOLVED – That: (1) the Treasury Management Strategy for 2024/25 be noted; (2) Officers to arrange a further Member Briefing Session on Treasury Management.
Decision as recorded
RESOLVED – That the report be noted.
Anil Hirani, Operational Manager, Capital, Corporate and Treasury presented the Committee with a report providing the annual update on Treasury Management Practices. A Member noted the upper limits on borrowing set out in the report. The Member asked whether those limits are arrived with input from the Council’s external advisors. The Operational Manager, Capital, Corporate and Treasury confirmed that input was received from the Council’s treasury consultants in order to provide assurance. The Section 151 Officer agreed to provide further details. RESOLVED – That the report be noted.
Part of an issue followed across 2 meetings
Decision as recorded
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
Part of an issue followed across 8 meetings
Decision as recorded
RESOLVED – That report be noted.
RESOLVED – That report be noted.
Decision as recorded
RESOLVED – That the report be noted.
RESOLVED – That the report be noted.
No urgent items.
The next meeting is scheduled for 9 July 2024 to be confirmed at Annual Council in May 2024.
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