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RESOLVED- That the minutes of the Governance and Audit Committee held on 27 November, 2023 be approved and signed as a correct record.
RESOLVED:- That the Governance and Audit Committee Forward Work Programme (FWP) be approved, subject to the Chair and Vice-Chair, together with appropriate officers meeting to review the FWP in line with the Local Government (Wales) Measure 2011.
RESOLVED: That the Audit Wales’ detailed Audit Plan for Conwy County Borough Council 2022-2023 be noted.
RESOLVED: That the Internal Audit Performance report (1 April 2023 to 30 September 2023) be noted.
RESOLVED: (a) That the Governance and Audit Committee acknowledge the self-assessment in terms of areas of full and partial conformance with the Standards and agree that the current area of partial conformance does not significantly impact on the Service’s ability to demonstrate overall compliance. (b) That the results of the Internal Audit Self-Assessment 2023/2024 be noted.
RESOLVED: That the current positon and work being undertaken to respond to in year financial pressures and to set a balanced budget for 2024/2025 be noted.
RESOLVED: That the Treasury Management Quarter 3 update 2023/2024 be noted.
RESOLVED: That the external regulatory reports and accompanying action plans responding to recommendations and proposals for improvement be noted.
Apologies for absence were received from Councillors Stephen Price and Andrew Wood.
Whilst not a formal declaration, Nigel Rudd (Lay Member) noted that he was a Member of Denbighshire County Council’s Governance and Audit Committee.
None.
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RESOLVED- That the minutes of the Governance and Audit Committee held on 27 November, 2023 be approved and signed as a correct record.
The minutes of the meeting of the Governance and Audit Committee held on 27 November, 2023 were submitted for approval. In response to a query regarding the monitoring of partnership issues involving Betsi Cadwaladr University Health Board (BCUHB) (minute 536), the Cabinet Member for Integrated Adult and Community Services advised that she, together with the Chief Executive, Strategic Director – Social Care and Education and the Leader of the Council were collectively working together to try and improve the working relationship with BCUHB. In addition, a further update report on partnership working was scheduled to be presented to the Governance and Audit Committee in May, 2024. In relation to minute 537 – Corporate Issues Register and Corporate Risk Register, the Cabinet Member for Democracy and Governance advised that he had highlighted to Cabinet on 28 November, 2023 the Governance and Audit Committee’s observation that the risk that the Council does not set a balanced budget for 2024/2025 was not set out explicitly enough within the Corporate Risk Register. Cabinet acknowledged the concerns of the Committee and suggested that the risk could include the negative impact associated with the issuing of a Section 114 Notice, whereby the Council could not commit to any new expenditure. RESOLVED- That the minutes of the Governance and Audit Committee held on 27 November, 2023 be approved and signed as a correct record.
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RESOLVED:- That the Governance and Audit Committee Forward Work Programme (FWP) be approved, subject to the Chair and Vice-Chair, together with appropriate officers meeting to review the FWP in line with the Local Government (Wales) Measure 2011.
The Governance and Audit Committee Forward Work Programme (FWP) was presented. • The Head of Audit and Procurement was in the process of arranging fraud training for members of the Governance and Audit Committee. The proposed date was Monday, 25 March 2024 at 10am. Those Members, who had not yet confirmed their attendance were encouraged to do so. • Re-configuring the FWP, having regard to the Local Government (Wales) Measure 2011. It was proposed and seconded that the Chair and Vice-Chair, together with appropriate officers meet to review the FWP to ensure that the Committee performed and complied accordingly with the measure. In response, the Strategic Director – Finance and Resources reiterated the role of Overview and Scrutiny and the Governance and Audit Committee in terms of financial monitoring. RESOLVED:- That the Governance and Audit Committee Forward Work Programme (FWP) be approved, subject to the Chair and Vice-Chair, together with appropriate officers meeting to review the FWP in line with the Local Government (Wales) Measure 2011.
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RESOLVED: That the Audit Wales’ detailed Audit Plan for Conwy County Borough Council 2022-2023 be noted.
Gareth Lucey (Financial Audit Manager - Wales Audit Office) presented the Audit Wales’ detailed Audit Plan for Conwy County Borough Council (CCBC) 2022-2023 and summarised the key areas to be further looked at in detail, the proposed fee estimate for the year and timetable for completion of work. Discussion ensued regarding the following: • How much public participation was involved in drawing up the Audit Plan? In response, The Financial Audit Manager – Audit Wales advised that the Audit Plan was produced locally, in consultation, with a particular audit body and the only element of the plan open to public consultation was the fee element of the scheme. • A Member of the Committee indicated that, he knew of at least one member of the public, who had actively pursued a complaint with a CCBC officer regarding CCBC’s procurement and management of contracts. In addition, he stated that he wasn’t fully persuaded that Audit Wales were aware of the issues and that perhaps they consider it further. In response, the Strategic Director – Finance and Resources advised that CCBC had its own internal audit function and that contracting an external auditor would not be financially viable for CCBC, when CCBC’s own Internal Audit Service could do the work. In addition, the Head of Service – Audit and Procurement advised that she had not had sight of an official complaint and encouraged Members to signpost members of the public to the proper complaints process. The Financial Audit Manager – Audit Wales encouraged interested parties or members of the public to write to Audit Wales in relation to the Audit Plan. In addition, it was noted that annually, a Joint Assurance Assessment Workshop took place to help shape the Audit Plan for the following year. • It was acknowledged that some formatting issues had arisen within the Audit Plan in relation to financial risk and management override. • Members were assured that other areas of focus e.g. legislation would be looked at further as they were identified audit risks. RESOLVED: That the Audit Wales’ detailed Audit Plan for Conwy County Borough Council 2022-2023 be noted.
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RESOLVED: That the Internal Audit Performance report (1 April 2023 to 30 September 2023) be noted.
The Audit Manager (Systems and Compliance) presented a report on the Internal Audit Performance 1 April, 2023 to 31 December, 2023. The Head of Audit and Procurement Services was required to regularly report to the Committee on the Internal Audit Service’s progress and performance during the year. The following was discussed: • Concerns were raised regarding the recent Housing Support Grant (HSG) audit, which provided limited assurance and the alert and escalation methodology that was used. It was also raised at a recent Service Performance Review (SPR), that problems arose when 3 members of the Team left the Authority and that perhaps the alert and escalation method that CCBC currently used was not robust enough? In response, the Audit Manager (Systems and Compliance) advised that the 3 members of staff responsible for managing the HSG had all left within 3-4 months, which had affected the management of the grant. Assurance was provided that procedures were now in place and matters had since improved. • The Chair of the Finance and Resources Overview and Scrutiny Committee (FROSC) expressed concern regarding the Housing Support Grant audit and the fact that she was not made aware of the HSG issue until it was raised at the recent SPR. In response, the Audit Manager (Systems and Compliance) agreed to provide a copy of the audit report, which was issued in December 2023. The report had been correctly issued to the Leader, Cabinet Member and responsible Overview and Scrutiny Committee. The need to consider whether it would have been appropriate for the report to have been shared with FROSC was noted. • Concern was expressed that, at a time when resources were scarce, an officer spent 5 weeks investigating a disciplinary case. In relation to the officer time spent on a disciplinary matter, Members were advised that it was a specialist investigation, with a high degree of complexity that was ongoing for approximately 8 months. RESOLVED: That the Internal Audit Performance report (1 April 2023 to 30 September 2023) be noted.
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RESOLVED: (a) That the Governance and Audit Committee acknowledge the self-assessment in terms of areas of full and partial conformance with the Standards and agree that the current area of partial conformance does not significantly impact on the Service’s ability to demonstrate overall compliance. (b) That the results of the Internal Audit Self-Assessment 2023/2024 be noted.
The Head of Service - Audit and Procurement presented Members with the Public Sector Internal Audit Standards (PSIAS) Self-assessment for 2023/2024. The Governance and Audit Committee must review Internal Audit’s Checklist for Assessing Conformance with PSIAS and the Local Government Application Note 2019 (Appendix A). The checklist was developed to satisfy the requirements set out in the PSIAS 1311 for periodic self-assessment as part of the Quality Assurance and Improvement Programme, which covered all aspects of internal audit activity and enabled conformance with all aspects of the PSIAS to be evaluated. The report provided assurance that Conwy’s Internal Audit Service was fully compliant against 99.6% of the 305 individual requirements. The Self-assessment identified 1 area of partial conformance in respect of Standard 1130 Independence and Objectivity as a consequence of the Head of Audit and Procurement being responsible for the Corporate Procurement function. The following was discussed: • In respect of conformance with standard 68 – if there had been any assurance engagements in areas over which the Head of Service - Audit and Procurement also had operational responsibility and had the engagements been overseen by someone outside the internal audit activity? A Member of the Committee raised concerns regarding a possible conflict of interest surrounding the management and supervision arrangements within Internal Audit and Procurement and questioned if Audit Wales were comfortable with such arrangements. In response, the Strategic Director – Finance and Resources assured Members that, the area had adequate safeguards in place to mitigate and limit the threat of independence or objectivity. In respect of audits relating to procurement, responsibility was delegated to the Audit Manager (Systems and Compliance), who provided sufficient levels of independence and any relevant audit work was overseen and the reports signed off by herself (Strategic Director - Finance and Resources). In addition, the Head of Service – Audit and Procurement reiterated to Members that she remained independent and objective at all times. As a result of Local Government finances/resources, the arrangements in place were common across Wales and Conwy was comfortable that the arrangements provided adequate safeguards. In addition, the external assessors had fully acknowledged the risks and mitigation measures put in place. • As a result of appointing a Head of Service for the newly formed Strategic Housing Service on 26 February 2024, some key transfers of teams had resulted in the Head of Service – Audit and Procurement now being responsible for Information Governance and Compliments and Complaints. The Director was of the view that this would have huge potential and synergy to the Service and allow Internal Audit to identify good practice and be alerted to any control issues. RESOLVED: (a) That the Governance and Audit Committee acknowledge the self-assessment in terms of areas of full and partial conformance with the Standards and agree that the current area of partial conformance does not significantly impact on the Service’s ability to demonstrate overall compliance. (b) That the results of the Internal Audit Self-Assessment 2023/2024 be noted.
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RESOLVED: That the current positon and work being undertaken to respond to in year financial pressures and to set a balanced budget for 2024/2025 be noted.
The Strategic Director - Finance and Resource provided an overview of the current financial position and outlook for the Council, which in turn, allowed the Governance and Audit Committee to assess the adequacy of the arrangements that the Council had in place to ensure the Council remained financially viable. Reference was made to the following: • The importance of delivering a balanced budget. • Financial resilience. • The need to be cautious re: financial modelling in terms of pay and capital budgets. • The need to be appropriately prudent in terms of reserves. • Reference was made to historic decisions made by the Authority. • Comparisons were made with that of neighbouring Local Authority Denbighshire County Borough Council. • The importance of a robust Medium Term Financial Plan (MTFP). In response, Members were informed that the MTFP was updated in the context of the forecast of future pressures and also recognised a range of activities already started. Also in development, was a process to develop a timeline of when the savings would be realised. • The need to gain a better understanding/learn from direct experience in terms of S114 Notices. In response, the Strategic Director - Finance and Resource advised that Conwy County Borough Council (CCBC) was engaging with CIPFA, by means of a health check and hoping to learn from their experiences in relation to S114 Notices. • How robust were the business cases – concern was expressed that some savings targets may be over ambitious and may not be well evidenced. In response, the Strategic Director - Finance and Resource advised that, whilst she recognised the concerns raised, she was reasonably confident that the proposed savings would be achieved, however, savings for the following year would become increasingly unpalatable. • The need to drive meaningful change, taking into account service led requirements/demands was acknowledged. • Income generation often got lost in debates surrounding savings. The need to perhaps separate additional income generation from those services, who had income generation means was highlighted. • Reserves / financial resilience – was the right approach being used? In response, the Strategic Director – Finance and Resources advised that, whilst there was no planned use of reserves in the proposed budget and the current approach was to try not to use any reserves, but to build on them should opportunities present, service demands continued to increase, which could impact on reserves. • Were there opportunities to look at stress testing the affordability of the Capital Programme or seeking an external opinion on the process? In response, the Strategic Director – Finance and Resources advised that advice was sought in terms of borrowing and going forward, it was the intention to engage further in a more holistic way and discuss / seek further advice. • An update was sought on the recent CCBC Budget Consultation - Members were informed that the consultation had now closed and the results would be presented to the next meeting of the Finance and Resources Overview and Scrutiny Committee (FROSC). • The Chair of FROSC advised that the Cabinet decision on 23 January, 2024 in relation to Local Government Budget 2024/2025 had been called in as some Members of the Committee felt that the Cabinet’s decision was a significant deviation from FROSCs recommendation. • Statutory duties and the need to further debate the flexibility and nature of such duties was highlighted. In response, Members were advised that it was one of the aspects CCBC wished to discuss further with CIPFA as part of the planned health check. • Scenario planning - the need to look at both medium and long term scenarios and that the Governance and Audit Committee should form part of any such discussions. • Governance and Audit Committee membership - a Member of the Committee felt having a Cabinet Member on the Audit and Governance Committee would give the Committee a voice at Cabinet and also assist with a more synchronised approach within democracy. • Transformational change was considered an excellent tool and one that should be explored further. RESOLVED: That the current positon and work being undertaken to respond to in year financial pressures and to set a balanced budget for 2024/2025 be noted.
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RESOLVED: That the Treasury Management Quarter 3 update 2023/2024 be noted.
The Head of Finance provided Members with an update of Treasury Management activity for Quarter 3 2023/2024. RESOLVED: That the Treasury Management Quarter 3 update 2023/2024 be noted.
The Principal Accountant provided Members with a report in relation to the Capital Strategy and Treasury Management Strategy 2024/2025. The Capital Strategy and Treasury Management Strategy report for 2024/2025 brought together all the elements of the reporting requirements for Treasury Management that required approval; the Capital Strategy, Treasury Management Strategy and the Investment Strategy. Members discussed the following: · Clarity was sought in terms of the liability benchmark figure as it appeared static. In response, the Principal Accountant advised that the figure was a net loan requirement, therefore, the figure reported was a benchmark figure only. · Members of the Governance and Audit Committee praised the recent Treasury Management training. · More meaningful terminology was suggested in respect of Treasury Management and how it linked with capital funding etc. · The intention to develop a more localised Capital Strategy that took a longer term view (e.g. minimum of 10 years) and link with CCBC’s Corporate Plan, Medium Term Financial Strategy and Asset Management Strategy was highlighted. The Head of Finance acknowledged the need for such a document and stated that the recent Peer Review had also referenced the benefit in Capital Strategy development, however, it was acknowledged that it would take time to develop due to a number of factors, such as, capacity and the availability of an Asset Strategy. RECOMMENDED TO COUNCIL: a) That the Capital Strategy for 2024/2025 be approved. b) That the Treasury Management Strategy and Prudential Indicators for 2024/2025 – 2026/2027 be approved. c) That the Investment Strategy 2024/2025 – 2026/2027 be approved.
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RESOLVED: That the external regulatory reports and accompanying action plans responding to recommendations and proposals for improvement be noted.
The Corporate Performance and Improvement Manager presented an overview of regulatory reports recently issued by external regulators. The regulatory reports presented were as follows: 1) A Missed Opportunity - Social Enterprise (National Report) 2) Together we can - Community resilience and self-reliance (National Report) 3) Digital Inclusion (National Report) 4) Joint Inspection of Education, Training and Employment Services (Local Report) In addition, Members were informed that from May 2024, external audit reports and corresponding action plans would be shared with the respective overview and scrutiny committee to scrutinise the effectiveness of the actions to address audit recommendations. The change to the current process was intended to further strengthen Conwy’s approach to addressing regulatory recommendations and enhancing the governance processes. A subsequent 6 monthly report would then be presented to the Governance and Audit Committee providing progress updates on all external recommendations. RESOLVED: That the external regulatory reports and accompanying action plans responding to recommendations and proposals for improvement be noted.
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