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RESOLVED Lynne Hamilton was elected Chair for the ensuing year.
RESOLVED John Brautigam was elected Vice-Chair for the ensuing year.
Resolved: The Annual Governance Statement was approved by the committee.
Resolved: Annual Self-Assessment was approved by the committee.
Resolved: The Forward Work Programme was noted.
Apologies for absence were received from Committee Member, County Councillor B Baynham. Apologies for absence were received from County Councillors: J Gibson Watt and M Dorrance. Officers: Emma Palmer Chief Executive Officer and Anne Phillips Interim Head of Finance.
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RESOLVED Lynne Hamilton was elected Chair for the ensuing year.
RESOLVED Lynne Hamilton was elected Chair for the ensuing year.
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RESOLVED John Brautigam was elected Vice-Chair for the ensuing year.
RESOLVED John Brautigam was elected Vice-Chair for the ensuing year.
There were no disclosures of interest by Members relating to items to be considered at the meeting.
Governance and Audit Committee resolved to authorise the Chair to sign the minutes as a true reflection of the meeting held on 18th April 2024. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: It was commented that an update on the compensation aspect of the Red Dragon Project had not been scheduled for this meeting. Officers would meet with Committee members concerned outside this forum, date would be confirmed. Assurance sought that Powys County Council’s systems were not impacted by the recent Microsoft Outage. Assurance was given that the Microsoft outage had not impacted the Council, and learning was taken from every incident that took place.
Background: • Audit Planning included examination of the risk to the financial statement of management override. • Other areas of focus for work would include the: • Pension fund net liability, • Valuation of land and buildings, • Senior officer renumeration, • Related party disclosures. • Performance Audit work would be looking at the assurance and risk assessments. • Local pieces of work were the: • Follow up of planning work, • Corporate safeguarding review follow up. • Materiality was based on previous years signed accounts of £550m. Meaning materiality for 2023-2024 would be £5.5m with a reporting threshold of £275k. • Discrepancies over £275k would be reported to Governance and Audit Committee via the ISA260 Report. • Materiality for renumeration disclosures was £1k. • Materiality of related party disclosures was £10k. • Fee for 2023-2024 would be £49k. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: In regard to override of controls, beyond the financial elements how broad would the review be. Page 28 of the report – Significant Financial Statement Risk. Audit Wales was required to provide opinion on the truth and fairness of accounting statements. Work would be limited to transactions taking place in financial statements. Internal Audit assessed the Council’s internal controls. If management override was suspected, Internal Audit would report it to the Chief Executive Officer, the Chair of the Audit Committee and the Audit Committee. Officers assured that there were appropriate processes in place to mitigate management override. Clarification as to why the Audit fee remained low. New audit regulations last year had been built upon and efficiency improved. More information was requested regarding the legal cases potentially impacting upon the net liability. This was a caveat if changes required in legal cases which may be reviewed when auditing financial statements. Was concern raised in terms of the net liability of the Pension fund for example due to potential risks associated from political turbulence and investment choices Audit Wales’s role was not to define risk. Data was reviewed retrospectively as shown in financial statements and were as accurate as possible within the materialistic threshold. Was it seen as acceptable that one land agent company was used to value the Council’s County Farms. External auditor experts would assess the assumptions and valuations made and Audit Wales would check that it was within the materiality threshold.
Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: In acknowledgment of officers’ workload and time required to prepare papers for audit, officers were requested to comment on whether this had a negative impact. Assurance was given that meetings between Powys County Council and Audit Wales were held regularly and scheduled throughout departments to ensure manageable workloads.
Background: • 43 assignments were undertaken throughout the year. • A level of some to good coverage was given across all strategic risks across the Council. • 85% of outputs from that work showed a reasonable or substantial audit opinion, which meant the Council had sound systems of internal control. • No high corporate risks were identified during the year. • Several themes of significant concern were identified to be brought to the committee’s attention: • School finance and school budget theme work found problems with, • Operating with deficit and unlicensed budgets, • Failure to submit credible recovery plans, • Overall governance showed limited financial oversight and limited challenge to the budget setting proposals. • Second area of significant concern was around contract management, coming from Red Dragon work. Wider issues found from that work included, • Contract setting, • Guidance, skills and training of conducting officers, • Responding to financial risks, • Looking at risk mitigation, • Cultural behavioural theme of silo work resulted in communication gaps and determination of ownership of roles. • Limited oversight and challenge to those processes. • Management submitted action plans in both examples above, those action plans would be submitted as part of the 2023-2024 plan. • Other areas that impacted upon this work included: • Fraud, • Risk management – the council had implemented a new system, policies and introduced risk appetite, the audit committee had also helped the process via deep dives. • Overall, a reasonable annual opinion for 2023-2024 was provided, with assurance that generally sound systems of governance, risk management and control were in place. • The Committee was asked to accept the report. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: Assurance was sought that Internal Audit received sufficient information on whistle blowing cases for an informed audit opinion decision to be made. Assurance was given that Internal Audit was one avenue for whistleblowing, and due process was in place to support whistleblowing in Powys County Council. Complaints were considered as part of the internal audit planning process and would be used to understand the control risks and failures that led to the complaint. Assurance was sought that senior officers and the Senior Leadership Team were mindful of the risk of silo working when moving forward into Sustainable Powys. It was stressed that the risk of silo working must be addressed to maximise the impact of Sustainable Powys plans. Committee was reminded of the Report presented by Head of Procurement in April 2024 that discussed the issues raised. Assurance was given that all learning from audit reports would be reviewed by the Senior Leadership Team and frameworks were in place to mitigate the risk of silo working.
Background: • Within 2023-2024 the internal audit team had completed 13 reviews across various departments; eight support/ advisory, and five assurance rated reports. • SWAP worked with Senior Leadership and managers to develop agreed actions to remediate issues identified. • SWAP’s level of coverage against internal and external measures was mapped out in the report; analysing the root cause of issues and various areas of risk identified. This data was then used to influence the selection of forward work from the rolling audit plan. • As an authority the current overall rating was low to reasonable, due to two out of the five assurance audits having received a limited rating. It was envisaged that the rating would improve as the year progressed, and more assurance work was undertaken. • The two jobs rated as limited were ‘Levelling up Montgomery Canal’ and ‘Direct Payments’. Both would be presented at the next meeting of the Governance and Audit Committee. • Real time data was available to Committee Members via the audit board dashboard. • SWAP was on track to deliver the annual audit opinion at the end of the year. No issues were raised by the committee.
Background: · SWAP was commissioned to undertake a review of procurement cards, investigating the fraud risk elements. · Questionnaire used to gather data had a response rate of 50%. · 12 months’ worth of data was analysed, including 62,000 transactions and £12million of expenditure. · Overall rating was low/reasonable. Rating expected to improve throughout the year. · Council staff were found to be reasonably aware of fraud. · General fraud training was delivered widely across all staff at the council. But there was an opportunity to undertake more at the induction stage and some of the guidance needed changing to reflect new practices. · It was felt that Powys County Council could provide a more informal mechanism for support and challenging. · Security practises were mostly good but there were isolated instances of security breaches. · Due to the number of users, there could be less accountability and transparency with lodged cards. · Inconsistency was found between the definition of personal and allowable expense between departments, which needed to be controlled and reviewed. Further guidance may assist. · The back-office function worked well, however further training for specific signs of fraud could be identified as part of the workflow process. · The approval process was identified as a risk area. · The audit found that certain individuals had high volumes of approvals at any given time, which may affect their ability to scrutinise the approved expenses. · Average time from purchase to approval was 28 days. Which was not a robust process and needed to be more agile. · It was found that a large volume of transactions remained unapproved by year end. £440k was identified as unapproved, some expenses were more than three months old. · Overall controls in the system were good but work could be done around spending patterns. Oversight and management of purchase cards could improve efficiency. · Descriptions placed against transactions could be improved to provide a better understanding of purchases. · There were improvements in VAT areas, but further improvements were needed. · The system itself was robust, the main challenge lay with the behaviour of the card users and approvers. · Clear guidance and framework for compliance had been set but support via awareness and training could help. · Going forward; deep dives would be conducted in certain areas of the council and reported back to the committee. · Director of Corporate Services added that purchase cards were an effective way of making payments for the council but were only effective if the controls were in place to manage the system. · The report highlighted that the process was effective, the controls in place were not of any issue. The issues that were being picked up were around accountability, behaviour and officer responsibility. · The authority had done a lot of work over the last few months in response to an output from a previous audit report that recognised a weakness in purchase card use. The CEO immediately asked the Heads of Service for their assurance of purchase cards being used in their service areas. Every Head of Service reviewed the transactions across their service and gave assurance to the CEO. · It was important to recognise that different expenditures were appropriate across different services and accountability lay with purchase card users, the management of staff and the reporting processes through the organisation. · Fraud training was mandatory. Compliance rates across all mandatory training were over 90% across the organisation. · The reporting had been reviewed and amended to give managers a better oversight of transactions which should help with effectiveness and scrutiny at a service level. · Lodged cards and more than one approver were not seen as an issue. It was acknowledged that responsibility sat with the approver to ensure the appropriate use of the card. · Improvements could be made regarding the speed of the approval process. Housekeeping was crucial to ensure financial statements were as up to date as possible and budgets could be monitored effectively. · Dormant cards and cards that were used inappropriately would be and have been withdrawn. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: Would further work be carried out to gather feedback from the 50% who did not reply to the questionnaire. The 223 cases provided a good grounding for the work. Work might follow on from this but that was undecided. Was fraud identified in any department and if so, would it be included as a case study. No cases of fraud were identified. If fraud was detected, the Counter Fraud team would investigate. Relevant case studies could be brought into future audit work. Most responses to the questionnaire came from schools/ education. Did that include the Pupil Referral Units. If the Pupil Referral Units had a purchase card, then they would have been included in the survey. 50% of questionnaire respondents from schools/ education stated that there was a probable/ almost certain threat of fraud, would this be an area of focus going forward. Page 118, table. The high percentage of respondents remarking that there was a probable / almost certain threat of fraud showed that schools were aware of the risk of fraud, therefore they would be more likely to identify and combat it. What was being done to ensure staff were aware of what to do in the event of fraud and who they could report to if they were not confident in contacting their immediate supervisors. Did that tie in with any of the other governance frameworks such as whistleblowing. The whistleblowing mechanisms were in place. Where cases may fall into the gap of concern or query, a secondary process should be available to check and receive guidance. There were several mechanisms by which fraud could be reported. E.g. reporting to the managerial level, reporting to the director level, or using the ‘report fraud’ button on the staff intranet. Did some services have more purchase cards than others. There were operational differences between services as seen in the report. Assurance was given that deep dive work would be carried out across departments to ensure SWAP was happy with different processes. Could assurance be given that the council was achieving value for money through the use of purchase cards and were any trends or patterns identified. Procurement card spend last year was £12m which equated to 5% of the total expenditure of the council. Purchase cards allowed increased flexibility and it was the responsibility of the purchaser to use it appropriately and the approver to question the payments made and ensure value for money. It was added that financial regulations stipulated how the council should properly procure. In the diagram on page 109, two areas were highlighted in red as a significant risk. How were the levels of risk decided. The risk levels were decided via auditor judgement. Sometimes there could be one specific risk in that area which was so important it would colour all the other areas red, or it could be a more general failing in that area. In future deep dives would there be a focus on those two areas of red. Yes, risk deep dives would be taking place in those areas. More work would also be done around procurement and legitimacy of expenditure. The criteria to assess risk level here had been created using the prism of fraud. What would those colours be if it was created using the prism of control frameworks. The colouring of the diagram would likely be similar due to internal control frameworks being considered when assessing risk through the prism of fraud. ACTION – Committee noted that the Internal Audit Working Group would look at flagged areas in more detail. It was agreed the internal audit working group would be engaged in future work.
Background: · Section two of the report showed the Anti-Fraud, Fraud Sanctions and Prosecutions and Anti-Money Laundering Policies. All three had been reviewed recently. As discussed in the April 2024 minutes, the last two policies had been updated, effective from the beginning of August 2024. · Table 3.3 provided a summary of the cumulative figures and outcomes at the end of quarter one. 60 new investigations had taken place in 2024-2025 so far. The outcomes around overpayments, rebills and gains was a request of the previous Committee. · Figure 4 of the report showed Total Gains and Outcomes of fraud and error work to where we are in Q1. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: Should the whistleblowing policy have been included in the HR policies areas of the corporate handbook. This report focused on the policies that were relevant to the anti-fraud team. Whistleblowing was not part of the direct responsibility of this team which is why it was not included in the report. 3.3 - Breakdown of Figures Regarding the category of Insufficient Evidence. It was asked how evidence was gathered. What would be the next steps if there was insufficient evidence to support a report of fraud Members of the public were encouraged to report fraud, and every report was treated with equal priority. However, without sufficient information, not every case could be investigated. The Fraud Case Management System contained all information and anything new inputted would alert officers allowing them to develop a case if needed. Would it be possible to stop fraud from happening. If fraud cases were shown to be caused by system failure or a lack of policy framework, recommendations of improvement could be made which would reduce reoccurrence. However, it was noted that fraud would likely always occur. The officers were commended on the outcome of their work, as shown by income gains. Committee asked if figures could be improved if the staff had additional resources. Yes, figures could be improved further if the Anti-Fraud team had additional resources. Were there plans to mark international fraud awareness week. International fraud awareness week was something the anti-fraud team marked every year. Would it be possible to liaise with members of Council to highlight fraud in member training. Since fraud awareness training had become mandatory, the anti-fraud team had been regularly contacted by staff in different service areas. The team had also been sharing external fraud risks and ran the Wales Fraud Officer Group and invited other professionals to those meetings.
Background: • Able to reduce overall debt by around £20million in 2023-2024. • Quarter one report provided an update for respective quarter. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: Could future borrowing be guaranteed. There was no reason to suggest the use of cash reserves would hinder future borrowing. Powys County Council would be able to borrow from various sources including other councils and the Public Works Loan Board. Wording on paragraph 3.11 to be reconsidered in relation to cost of living crisis. It was agreed that the wording would be reviewed and reconsidered. Were interest rates beginning to reduce. Interest rates were projected to reduce over the coming years. The refinancing of loans in this financial year had shown that rates were lower than last year. The Cabinet Member for Finance and Corporate Transformation added that the Bank of England Monetary Policy Committee would be meeting next week to take a decision on the level of interest rates and the cost-of-living crisis was still present. Had there been an impact on the amount of council tax received due to the cost-of-living crisis. A slight drop in council tax collection rates had been noted across Wales, including in Powys County Council. It was noted that a money advice team was available to residents, and investment into this service had been achieved using grant funding. Committee asked whether sundry debt was a matter of concern after noting it had increased over Q1 by £850k, and the trend for this debt was consistently upwards. ACTION – response to be added to Q2 report brought to the next committee meeting.
Background: • At end of Q4 2023-24, there were 13 risks on the Strategic Risk Register. • Appendix B presented results of the quarters risk assessment process visually. It was noted that seven residual risks sat in the upper right-hand quadrant of the heat map. • During Q1 one risk had changed its risk rating. Further details could be found in section 3.5. • Risk Management strategy software was upgraded in March 2024. • New risk management training had been introduced, bookable via itrent. Extra dates had been added due to demand. Feedback had been excellent. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: Risk reference ASC0064 had a higher residual risk than inherent risk, it was asked whether this was correct. Officer explained the inherent risk defined the risk rating when first identified. Residual risk defined the risk with the controls in place to date (for this report the end of Q4). Regarding Risk ASC0064, the residual risk was higher due to increased concern regarding the national teams’ progress, timescale and procurement approach. The probability of this risk occurring increased, resulting in increased residual risk. Concern was raised regarding risk ASC0064; Welsh Community Care Information System (WCCIS). The committee requested more information on the way forward and a stronger level of assurance. ACTION - Assurance was given that the Senior Leadership Team were focussing on this issue and more detail would be brought to the next meeting. The Quarter One Strategic Risk Register was being taken to Corporate Leadership Team & Senior Leadership Team this afternoon and it would be coming to the Governance and Audit Committee meeting in autumn. Was there a risk in Sustainable Powys that needed to be articulated in the Strategic Risk Register. Officers would investigate further to identify if additional risks were to be added to the Strategic Risk Register. Regarding risk IAWARD0009 and the Council being susceptible to higher levels of fraud during the cost-of-living-crisis. Would it be better to reduce council tax to affordable levels through Sustainable Powys and focus on the needs of residents, thus, reducing the need for committing fraud. No comment was made regarding the political decision of setting council tax levels. Noted that council tax was not set on its own but was set up to support Council services. Cabinet Member for Finance and Corporate Transformation added; The Council had not decided the council tax level for next year’s budget, it was dependant on money given by Welsh Government to meet the services. However, the council tax reduction scheme was available for vulnerable residents. Why had the residual risk level for Risk Register Item ASC0071 been reduced. ACTION - Officers would circulate additional information to the committee.
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Resolved: The Annual Governance Statement was approved by the committee.
Background: The two papers were interlinked, and supported Powys County Council’s legislative requirements under Part six of the Local Government and Elections Act and the need to review that the council was: • Exercising its functions effectively, • Using its resources economically, efficiently, and effectively, • And to show and evidence the extent to which its governance was effective for securing the above, In 2023-24 an Annual Governance Framework was developed in collaboration with officers. This underpinned the Annual Governance Statement itself and set out processes, systems, records and responsibilities. · The Annual Governance Statement allowed Powys County Council to demonstrate “the extent to which governance was effective”, based upon best practice from the Chartered Institute of Public Finance and Accountancy (CIPFA) and SOLACE, and provided an overall assessment of assurance, as well as assurance levels against each of the seven principles - with accompanying supporting evidence. · The assurance levels were based on information provided by Officers, and Cabinet Corporate Leadership as well as valuable feedback from Governance and Audit Committee. · Overall, the assurance level was reasonable. · Assurance levels also given for each of the seven principles. · In terms of the Council’s Self-Assessment, Powys County Council had a rigorous process in place which resulted in a significant amount of reflection and challenge, and this fed future improvement actions contained in these reports. · Governance and Audit Scrutiny Committee had been a key part of this, having the opportunity to feed in at several points during the process. A valuable private seminar was held earlier this week attended by some members of Cabinet and Corporate Leadership Team as well as the committee itself. · The self-assessment report provided an overview of the Council’s performance against the 2023-24 Corporate and Strategic Equality Plan, (Stronger Fairer Greener), and details how the Council rates itself against this plan, which was in its first year. · Overall Cabinet considered the degrees of ambition (as defined by the wellbeing of future generations journey tracker) that had been displayed were: o Objective 1: Being More Adventurous; meaning stepping out of a business-as-usual mindset and acting to change how things are currently done signalling early progress to wider change. o Objective 2: Owning our Ambition: initiatives developing, more people becoming involved, taking well managed risks and reaching out to other sectors to collaborate beyond traditional partners. o Objective 3: Owning our Ambition: • There were various supporting documents providing detail to the self-assessment. • The appendices highlight how work was contributing towards the wellbeing goals. • It showed performance against the supporting measures over the year. • As well as an engagement summary and information on how Powys County Council was working more sustainably. • Endorsement was sought of the Annual Governance Statement, ahead of final approval at Governance and Audit Committee in the Autumn alongside the statement of accounts, as well as the endorsement of the Self-Assessment, before it goes before Cabinet for approval. Issues Raised by the Committee: Responses Received from Officers and Cabinet Members: In the Self-Assessment it stated that the status of the whole sale service design in the context of Sustainable Powys was on track. How was this demonstrated? What does ‘on track’ mean. At this stage, Sustainable Powys was developing its culture, in future there would be a programme that outlined the individual elements of the Sustainable Powys Programme and how these would come forward as proposals for distinct decision making and consultation. There were statutory requirements, for example a balanced budget would be put to Council in March 2025. Staff Survey shown an 18% decrease in staff feeling valued and respected – why was that. Officers would circulate additional information to the committee. Assurance was provided that a more recent survey had been undertaken, which showed an improvement pointing to a changed culture and increased staff engagement in the Council. It was requested that a statement be provided in the report to showcase how the council had been mindful of its governance obligations to tackle financial issues via Sustainable Powys. The comment was appreciated, and it was noted that the updated Medium Term Financial Plan was being presented to Cabinet in the next week, and showed that Sustainable Powys would be the main means for delivering a sustainable and financially resilient Council. Resolved: The Annual Governance Statement was approved by the committee.
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Resolved: Annual Self-Assessment was approved by the committee.
Background was given alongside the Governance and Audit Report – see above. For issues raised by the Committee, see above. Resolved: Annual Self-Assessment was approved by the committee.
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Resolved: The Forward Work Programme was noted.
Resolved: The Forward Work Programme was noted.
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