Agenda and minutes

Governance and Audit Committee - Thursday, 21st November, 2019 5.00 pm

Venue: Committee Room 1 - Civic Centre. View directions

Contact: Pamela Tasker  Governance Officer

No. Item


Declarations of Interest


Councillor D. Williams declared an interest in relation to item 4 on the Agenda.


Minutes of the Last Meeting pdf icon PDF 114 KB


The Chair stated that on Page 9 of the minutes from the last meeting, that in the last paragraph, the Chair confirmed that this advice was erroneous as being caught within IR35 did not mean that a contract of employment existed. IR35 is tax law not employment law. They did not need an employment contract for this individual but the worker was still caught by IR35.

On Page 8 the Chair confirmed that a letter had been sent to the Headteacher of Caerleon Comprehensive School requesting a written response in relation to the audit report and this had been subsequently received by the Audit Committee. Also on page 8 it was agreed at the previous Audit Committee for a verbal update on financial progress of Caerleon Comprehensive School to be provided by the Head of Finance which is to be provided in agenda item 4. 


Call in the Headteacher and Chair of Governors of Caerleon School re the Internal Audit Unsatisfactory Opinion pdf icon PDF 268 KB


The Chair reiterated for the Committee that the Headteacher of Caerleon Comprehensive School had requested for the item agenda to be presented first which had been agreed by the Chair.

The Chief Internal Auditor stated that following the presentation of Internal Audit’s six monthly update on unfavourable audit opinions in June 2019, Members of the Audit Committee agreed to escalate their concerns and call the Headteacher and Chair of Governors of Caerleon Comprehensive in to provide assurances to the Audit Committee that there were proper controls in place.

The Chief Internal Auditor stated that it was important to note that the Internal Audit Opinion was based on a balance of strengths and weaknesses identified within the internal control environment and that this was the case for all audits undertaken.


It was further stated by the Chief Internal Auditor that various tests were undertaken to verify whether or not there was compliance with Council or School policies/procedures/sound financial management. All of the conclusions within the Internal Audit report were based on evidence, much of which was provided or obtained from the school site at the time when the audit was undertaken.


The Chief Internal Auditor also confirmed that information was requested during the Audit which was not forthcoming and that this itself was a weakness, and this was recorded within the report. Other conclusions within the report were supported by evidence, all of which were previously discussed with the Headteacher and the Internal Audit team. The report presented to Audit Committee contains the Headteacher’s comments previously provided to Internal Audit along with her comments provided directly for Audit Committee; these differ slightly.


The draft report was issued on 15th March 2019 to the Headteacher and was subsequently finalised on 17th October 2019; the delay was due to ongoing discussions with the Headteacher who was given every opportunity to provide additional evidence to support the audit findings.


The timeline provided by the Headteacher and included in her comments provided directly to Audit Committee contained inaccuracies.


The Chief Internal Auditor stated that the summary of weaknesses was shown in Appendix B.


The Chair explained to the Committee that the key concerns of the original draft report were presented to the Audit Committee in June 2019 as per normal protocol. Usually the Audit Committee would not call the Manager/Headteacher into Audit Committee unless there were 2 consecutive unsatisfactory audit opinions; however, if the issues identified were potentially significant then Members could call in the Headteacher to the Audit Committee earlier and this was the case in this instance.


The Chair provided context for the Audit Committee that it considered discussing this school agenda item in September 2019, but it was advised by the Chief Internal Auditor that as it was a new school term the agenda item was moved to October 2019; subsequently this was moved to November 2019.


The Chief Internal Auditor stated that Appendix B showed that there was 1 Critical weakness and 26 significant issues and that the Headteacher’s response in  ...  view the full minutes text for item 3.


Internal Audit Plan 2019/20- Progress (Quarter 2) pdf icon PDF 147 KB


The Chief Internal Auditor requested the Committee to view the Internal Audit Plan. The report’s aim was to inform Members of the Audit Committee of progress of work undertaken by the Internal Audit Team against the agreed Audit plan as at 30th September 2019.


The attached report identified that the Internal Audit Section was making good progress against the 2019/20 audit plan and internal performance indicators.


•Appendix A on page 46 showed that in 2019/20, 33% of the planned audits were completed which was ahead of the 30% target.

•The promptness of issuing draft reports averages at 6 days which was well within the target time of 10 days.

•The promptness of report finalisation averaged 1 day which was well within the target time of 5 days.

•It was flagged up that this year depended on sufficient audit resources being available to complete the audit plan.


Audit opinions issued so far in 2019/20 were shown at Appendix B. It was explained to Committee Members that the term ‘unqualified’ and the full set of opinion definitions was explained in Appendix D and that an unqualified opinion was favourable as it meant that the terms and conditions have been complied with.




 A Member questioned Appendix A regarding work planned and whether this was chargeable time and it was confirmed that this was charged work. 

The Chief Internal Auditor explained that planned audits to be completed was 84% and 80% was achieved due to staff not taking leave in the first half of the year but in the second and that there had been a lot of sickness leave taken this year and interim support had been taken on board.


The target would be updated in the following 2 quarters.




The Audit Committee noted and endorsed the Internal Audit report.



Treasury Management Report pdf icon PDF 200 KB


The Committee was requested to view the Treasury Management report and it was explained that the report indicated that during the first half of the financial year, the Council continued to be a short-term investor of cash and borrower to manage day to day cash flows.


•As shown in Appendix B, Table 2, during the first half of the year the amount of borrowing was reduced by £42million to a balance of £150.8million.

•Early borrowing was completed and as this loan was taken a few weeks earlier than needed it was temporarily invested and then used to repay the bond which led to a small net reduction which was a small amount of borrowing.

•A small amount of long term borrowing of £1.5million was taken out in the first half of the financial year. The Council would also need to undertake additional borrowing on a short term basis to cover normal day to day cash flow activity. It was estimated that the Council would also need to take on some long term borrowing in this financial year.


The Treasury Management report to be presented to January’s 2020 Audit Committee would aim to inform how risks were taken and the benefits of doing so. 


A Member asked about long term investments and money left and the Assistant Head of Finance confirmed that it involved the cash that we hold in terms of how it affects the budget which is what this item was discussing.


The Chair commented that this report looked at mid-term, so will be examined further in January 2020’s Audit Committee.




The Audit Committee noted and endorsed the Treasury Management Report. 


Lessons Learned 2018/19 pdf icon PDF 146 KB


This report presented the findings of an initial lessons learned review carried out by finance officers and examined what went well and what didn’t.

•Draft accounts came to the Audit Committee on the 6th June 2019 which were signed by the Head of Finance.

•Early testing was carried out which helped to reduce the burden allowing the team to meet tighter timeframes.

•Early discussions have taken place with the Wales Audit Office and a meeting has taken place to discuss lessons learned and to review work that could be undertaken earlier.



•There was an improvement in the coding of expenditure and income from 2017/18.

•There were a number of risks highlighted- with changes to accounting policies- IFRS 16 leases and work has started on this on the 2020/21 accounts. 

•A quality review was being completed every year.



External Audit also picked up on a number of Declaration of Interests from Council Members which were not received so this needed to be improved. The Chair stated that this needed to be challenged on the day of the accounts and that Audit were not involved in this process and so the Committee did not know what Audit thought about this process and this could be fed into the self-evaluation exercises.


A Member stated that the Declaration of Interests was mentioned in a recent Standards Committee previously and the Audit Team would be involved with the Head of Law and Regulation to address the matter.


Financial Memorandum on the 2018/19 Financial Audit


The Engagement Director of the Wales Audit Office confirmed that a report was not completed for this item as it has been reported in the previous item of Lessons Learned 2018/19 and as there was a full engagement by Finance officers with the WAO it was felt that it was the case of producing a document for the sake of it.