Agenda and minutes

Governance and Audit Committee - Thursday, 28th January, 2021 5.00 pm

Venue: Committee Room 1 - Civic Centre. View directions

Contact: Pamela Tasker  Governance Officer

No. Item


Declarations of Interest





Minutes of the Last Meeting pdf icon PDF 120 KB


The minutes of the meeting held on 19 November 2020 were submitted.


It was noted that R Khan, Audit Lead attended the meeting not G Lucey.


Item 4 - Corporate Risk Register Update under Questions:


Councillor K Thomas referred to the last sentence; in relation to number of redundancies in the Council, this was in relation to the monitoring of numbers in the likelihood of citizens redundancies and not council staff redundancies.  This was duly noted by the Committee.


Councillor Hourahine referred to an action for the Head of People and Business Change in relation to the speculation on a raise in capital gains tax and it’s potential effect on the private housing rental market.  It was confirmed that the Head of People and Business Change would go back to the service area to find provide more detail and it was not an action for the Audit Committee.  An update would be provided in writing to the Committee.


Item 8 Call in for the Chief Education Officer, Deputy Chief Education Officer and Head of Gwent Music re Internal Audit Unsatisfactory Opinion:

It was confirmed by the Chief Internal Audit Officer that the above item was moved to Spring 2021 as most of the staff were placed on furlough and would not have the opportunity to address the issues raised by Audit Committee, including retrieval of musical instruments.



That the Minutes were accepted subject to the above.



Corporate Risk Register (Quarter 2 July to September) pdf icon PDF 176 KB

Additional documents:


The Council’s Corporate Risk Register monitored those risks that might prevent the Council from achieving its Corporate Plan or delivering services to its communities and service users in Newport. 


At the end of Quarter two, the Council monitored 56 risks across its eight service areas; 19 of the 56 risks were recorded in the Council’s Corporate Risk Register and considered to have a significant impact on the achievement of the Council’s objectives and statutory obligations.  At the end of quarter two, there were no new or escalated risks from service area risk registers; and no risks were closed or de-escalated. Overall, there were 11 Severe risks (risk scores 15 to 25); six Major risks (risk scores seven to 14) and two Moderate risks (risk scores four to six) that were outlined in the report.   


The role of the Audit Committee was to review and monitor the corporate governance and risk management arrangements in place, with comments and recommendations of the Committee on risk process considered by Cabinet.


A brief introduction on the report looked back in time to the end of the September Risk Register.  This monitored risks that might stop the Council achieving its objectives as well as covering escalated Risks in the Register.  These risks could be challenged through the Scrutiny process rather than at Audit Committee.  An additional paragraph in relation to an all member seminar on the Local Government Elections (Wales) Bill, addressed potential changes around performance management.


The Chair asked for a brief outline regarding any potential changes to Audit Committee due to the forthcoming Act and whether this could be an agenda item for a future meeting.  Any responses arising from the consultation would come into force hopefully in April this year.  If there were any potential changes to Audit Committee, this would relate to performance management requirements.  Following consideration of the consultation from Welsh Government, this could be discussed at Audit Committee later this year and could possibly be considered in the work programme at an October/November meeting.


Discussions included the following:


·         Referring to page 15 in the Agenda papers, Councillor Hourahine was disappointed with the table of risks, one risk had been addressed, however it was noted that the rest of the figures were static.  Councillor Hourahine expected this to be dealt with as close to the source as possible.  The Chair agreed with the observation and referred to the target risk table, which he felt was a tick box exercise and considered the risk appetite was not there unless the scoring was changed from 1-10 to 1-5, therefore it was not sure what was a valid risk or not.


Councillor Hourahine referred to the matrix numbers and suggested there might be other ways of achieving a better outcome, rather than five by five, which might mean too many equal risks.   The Head of People and Business Change advised that the table represented the top risks that the Council was dealing with.  Most were incredibly difficult to address in  ...  view the full minutes text for item 3.


Internal Audit Plan - Progress (Quarter 3) pdf icon PDF 147 KB


The attached report identified that the Internal Audit Section was making progress against the 2020/21 audit plan and internal performance indicators even though the agreed revised plan only took effect from October 2020 due to the impact of the Covid-19 pandemic.


Covid-19 significantly impacted on Internal Audit and its ability to deliver the original full year plan.  Corporately the focus was on delivering essential front line services to deal with the pandemic.  The Internal Audit team supported the business grants process and undertook extensive counter fraud work whilst the majority of the regularity audits were put on hold for an interim period.


The original audit plan was based on 1208 audit days; the revised audit plan was based on 626 audit days.


The Chief Internal Auditor went through the appendices within the report for the Committee.


Discussions included the following:


  • The Chair referred to the number of audit days carried out by staff in Paragraph 8; Audit Plan and the Impact of Covid-19. The Chair observed that if someone were to look at the figures coldly it would imply that during the 626 audit days, staff were not doing their work for 600 days, although as outlined in the report, staff were carrying out other duties.  The 1208 days related to a full year audit plan; the 626 days related to the revised plan, which was to be undertaken during Q3 &Q4 of the 2020/21.

The Chair was assured that this was in relation to many issues, including with working from home, research work and information gathering.  Audit were dealing with front line staff including social workers and the Audit team were respectful of that and gave staff space; making allowance for the circumstances surrounding Covid-19.  This meant that it had taken longer for the work to reach the Audit team in some areas but they were working their way through the plan. The Chair felt if the paper was read in isolation, it could give the impression that things were not as active as actually explained by the Chief Internal Auditor.  When reviewing the annual governance statement, the Committee could place reassurance on the fact that staff were doing proactive work which helped to control the environment.

  • Councillor Jordan asked if the Audit Team were still down one member.  This was the case; however their work was being covered with external support.
  • Councillor Lacey appreciated that the team were struggling with man-hours and asked if this had an impact on previous months work, would the team be able to catch up with any backlog.  The Chief Internal Auditor revised the plan in the first six months of the pandemic and reprioritised work, assessing the risk of audit and putting a plan in place going forward.  Work had to be re prioritised with less important jobs being put on hold.  In addition, Councillor Lacey asked had lessons been learned from the pandemic on how to deal with work and any challenges carried forward. It was agreed that there would be  ...  view the full minutes text for item 4.


Code of Corporate Governance - Update (2020) pdf icon PDF 430 KB


It was important for the Council to have an up to date and relevant Code of Corporate Governance.  The Council’s Annual Governance Statement was based on the Code of Corporate Governance.  The Code was last revised in 2014 and approved by Cabinet. Newport City Council’s Code of Corporate Governance was updated and revised to comply with the published good practice of Chartered Institute of Public Finance & Accountancy (CIPFA) and the Society of Local Authority Chief Executives and Senior Managers (SOLACE).  This was “Delivering Good Governance in Local Government Framework 2016” and “Delivering Good Governance in Local Government Guidance Notes for Welsh Authorities 2016”, which embraced the elements of internal financial control required by the “Code of Practice on Local Authority Accounting in the United Kingdom”. 


The Chief Internal Auditor went through the Appendices, outlining the intention to reduce the size of the Annual Governance Statement by referring to the Code of Governance. The report had been considered by the performance team and Heads of Service for comment.  Members of the Committee were therefore given the opportunity comment on the report, to shape the governance before it went to Cabinet for approval.


The Chair observed that there were similarities in the Code with the AGS-this would remove a lot of duplication.


Discussion included the following:


  • Cllr Hourahine referred to page 85, Item 7 in the report which stated there were no  financial issues relating to the report. Councillor Hourahine considered that any changes to a process within Local Government usually meant that there would be financial implications, such as in the officer’s time.  With this in mind, would there be more or less officer’s time to comply with the code, as it was rarely a static situation. 

The Chief Internal Chief Auditor Officer advised that there were no additional financial implications to bring this Code together. It was generally the role of the Chief Internal Auditor to prepare the AGS and this input had remained fairly static over the past couple of years; any impact on finances was therefore minimal.




That the Audit Committee endorsed the Code of Corporate Governance before being presented to Cabinet for formal approval.



Financial Memorandum on the 2019-20 Financial Audit pdf icon PDF 745 KB


This report was an addendum to the Audit of Accounts Report that was presented to the Audit Committee on 28 September 2020.  The report set out the recommendations arising from an audit of the 2019-20 accounts for Newport City Council and Newport City Council Group.


This report was a summary of the work carried forward from September with three principle recommendations.  There were fewer incidences last year where items were accrued and no material impact.  The Audit Team would work with management for the next planned audit. 


Recommendations referred to version control and classification of accounts such as cash equivalents.


The Chair took the opportunity to once again thank all the staff who contributed to the work throughout the audit.


Discussions included the following:


·         Cllr Hourahine asked whether Audit Wales gave reasonable notice to Council staff that an audit would take place, as services would be stretched to provide figures on time. In addition, were staff cooperating with the audit?  The Wales Audit representative assured the Councillor on both counts that there were no issues and that there was a good working relationship with Newport City Council staff. 



That the Audit Committee noted the Audit of Accounts Memorandum arising from the 2019/20 Audit.



Capital & Treasury Management Strategy pdf icon PDF 3 MB


The Council had ambitious plans for the city as set out in its Corporate Plan and the promises set out within it. A key enabler to deliver on this ambition was the capital programme. This report included both the Capital and Treasury Management Strategies which, at their core (i) confirmed the capital programme, as part of the Capital Strategy and (ii) the various borrowing limits and other indicators which governed the management of the Councils borrowing and investing activities, as part of the Treasury Management Strategy.


The ‘Capital Strategy’ also set out the long-term context (10 years) in which capital decisions were made and demonstrated how the Local Authority took capital / investments decisions in line with service objectives, giving consideration to both risk/reward and impact; as well as properly taking account of stewardship, value for money, prudence, sustainability and affordability.


The capital plans of the Authority was inherently linked with the treasury management activities it undertook and therefore the ‘Treasury Management Strategy’ was included alongside the ‘Capital Strategy’.


The main recommendations arising from the two strategies were summarised in the report and were also appended. 


It was highlighted that the borrowing would increase over the next three to four years, therefore a sustainable limit was needed.  This limit would be set in order that Council could not go over the capital programme.  The Audit Committee were asked to provide their recommendations to Council.


Discussions included the following:


·         Councillor Jordan referred to Page 124, Table 1: Prudential Indicator Estimates of Capital Expenditure and Capital Financing for the year 2021/22 £62.3M and 2022/23 £71.6M.  Councillor Jordan noted a dramatic increase over the period from 2020/21 where figures showed as £33.1M.  The Assistant Head of Finance advised that this was due to slippage in the previous years, however as we came to the back end of programme there were a few schemes that needed to be completed.  A lot of this referred to the Band B school project, along with other up and coming big schemes in those years.  The City Deal cost had accelerated its programme forward into largely 2021/22 and 2022/23 and in addition, grant funded schemes were also being carried into the next two year period.  The Capital Programme was shown further down within the appendix in further details but essential it was finishing off the current Capital Programme.


·         Councillor Lacey referred to the medium to long term Capital Investment and taking into consideration the past 12 months, how much was wiped off our investment as a result of this and was the Council into medium risk investment and what would happen next.  The Assistant Head of Finance advised that no investment into a risk category prior to the pandemic, therefore from an investment balance had not lost any money at all.  Interest rates however, on cash balances were very low, e.g. 0% and on some days were placed with the Government DMO who gave negative interest rates at the moment, which was why it was important to  ...  view the full minutes text for item 7.


Call in the Head of Children & Young Peoples Services and Service Manager of Resources re the Internal Audit Unsatisfactory Opinion on SGO/Kinship Payments pdf icon PDF 133 KB


The Audit Committee took this item first to allow for all members present to have their say.


The report informed the Audit Committee of the action taken by management in the Service Area to date and its progress against the agreed action plan in respect of the Unsatisfactory audit opinion for Special Guardianship Orders (SGO) / Kinship Payments.


The Head of Children and Young People Services presented her case to the Audit Committee.  This was a challenging period with a depleted management team from five to two managers and the service area was awaiting new guidance from Welsh Government along with further work, hence the delay.  There was also a national piece of work to change parameters in relation to this matter, which also added to the delay in implementing the agreed management actions.


In the meantime, the Head of Children and Young People Services was pleased to report a full complement of staff in the management team and the recently appointed Service Manager (Resources) had taken a proactive step towards approaching financial support and had care funding from Welsh Government.  The team supported special guardian kinship and child care.  Work had grown exponentially and there was a positive change in culture. 


It was hoped that the Chief Internal Auditor would agree that the service area was in a better place in light of all the recent changes.


The Chair thanked officers for their presentation. 


Discussions included the following:


  • Councillor Hourahine queried the high turnover of management staff.  It was advised that there had been changes, however going forward there was only one agency social worker out of 340 staff.  There were still vacancies however the working relationship with staff was good, most of which came to the Council as students and stayed with us.  The service area was in a very different place to where it was in 2013.  This would always be a watching brief but the Head of Service felt much more confident.  In addition, there would always be vacancies but staff more recently had left for good reasons such as promotions. Councillor Hourahine added that social workers did a wonderful job and worked hard for the Council.


  • Councillor K Thomas asked if most of the payments had gone through.  Fortunately, the Head of Service advised that they had, however, the problem was with the process and procedures, although families were not left without financial support.  Additionally, Councillor K Thomas asked was Internal Audit part of the process at the time.  It was confirmed that Internal Audit were not at that time, and a number of assessments were linked to the Courts and financial assessment.  There were two yearly reviews on a finance and needs basis, which was part of the regulations.  The Director of Social Services Annual Report to Council highlighted that the preventative side of social work was paramount.   Councillor K Thomas also asked if the amalgamation of teams had strengthened this.  The Head of Service advised that the challenge was that children/families were  ...  view the full minutes text for item 8.


Draft Work Programme pdf icon PDF 86 KB


The purpose of the forward work programme was to help ensure Councillors achieved organisation and focus in the undertaking of enquiries through the Audit Committee function. 


The report presented the current work programme to the Committee for information and detailed the items due to be considered at the Committee’s next two meetings.


It was noted that Councillor Jordan would not be at the next Audit Committee.


The Chief Internal Auditor would liaise with the Governance Team Leader to make any changes.


The Audit Wales Officer asked for the March Annual Audit plan to be added to the work programme.



That the Audit Committee endorsed the proposed schedule for future meetings, confirming the list of people it would like to invite for each item, and indicated whether any additional information or research was required.



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