Agenda and minutes

The Minutes of the meeting on 30 March were agreed. 

Dr Barry mentioned that there were no deadlines on the action table and also suggested that the action table should be noted in the Minutes and felt that this was good practice.

Mr Chapman was nominated as Chair, seconded by Mr Reed, who was nominated and seconded as Deputy Chair.

Verbal Update from the Democratic and Electoral Services Manager

A verbal update from the Democratic and Electoral Services Manager was provide to the Committee.

The Democratic and Electoral Services Manager advised the Committee that there were 50 out of the 51 the members who had submitted their completed forms and it was expected that the outstanding member would complete and submit their form by the following day.

The Chair asked if the Committee could be notified when all forms had been submitted otherwise, if there was still one form outstanding, the Councillor could be brought to the next committee in July to explain why they did not submit the form.

Following an Unsatisfactory Internal Audit opinion in relation to Purchasing Card (P-Card) Transactions, the Strategic Director and the Head of Service responsible for the P-Card system were invited to the Governance and Audit Committee to provide assurances that appropriate improvements within service provisions and the control environment were made. 

The Committee considered the explanations and assurances provided by the Strategic Director and the Head of Service in relation to the concerns raised by Internal Audit for P-Card Transactions, that improvements were made in service provision following an Unsatisfactory audit opinion.

This annual audit had been finalised with a report and action plan in place and was issued as final in March 2023.

The Head of Finance advised that this was discussed at the Corporate Management Team (CMT) and the executive board.  This was therefore a wider action plan and had received the highest level of attention and would be subject to an annual follow up and a significant improvement in the service area was to be expected when revisited.

The Strategic Director for Transformation and Corporate added context by advising that the audit was undertaken at the back end of the pandemic and staff were not operating a completely different than would ordinarily do so.  It was also important to explain the use of P-Cards within the Council was because a lot of activity had to be responsive on a day to say basis and eliminated the need for petty cash and P-Cards were there to ensure that under the circumstances, there was a continuation to help with spending. The Policy had been re written and reissued.  New online training was online, as of 15 May with a deadline of 23 June for every authoriser, supervisor and user to complete, those who had failed to complete the training would have their P-Cards cancelled. To date 77 out of 217 had undertaken the training and was therefore taken seriously.  In addition, all of the actions that had been put in place had been completed.

Committee Member Comments:

§  Dr Barry had confidence in what officers had said and had that they had taken these issues seriously, however did not accept that it was because of covid as policy should be followed regardless. When going through action list, Dr Barry considered that this was not a capability matter but a disciplinary matter. It was good to hear that training had been taken up and it was hoped that it would tackle the root cause of the problem.  Dr Barry felt that strong management and supervision was needed, with assurances that the policy was robust.  The Strategic Director for Transformation and Corporate referred to some of the management actions, in particular Appendix 2 where monthly inspections were put in place to ensure that staff were adhering to policy. With reference to covid, staff were operating in a remote way, therefore some things were harder to undertaken than previously, which had an impact on management control.  

Dr Barry asked had any disciplinary action been  ...  view the full minutes text for item 5.

The follow up audit was carried out during February and May 2022 with the weaknesses and agreed management actions summarised in the briefing note attached to the agenda papers.  Work had been undertaken by the service area to implement each of the actions outlined in the briefing note and it was noted that these actions were now completed.

The above-mentioned table on pages 41 to 45 summarised the outstanding individual weaknesses identified during the follow up review.

Committee Member Comments:

§  Dr Barry was concerned about future management of this, for example what was being done to ensure DBS checks were up to date and wanted assurance that it would it be managed properly in the future.  In addition, there were three members of staff to be employed to undertake driver licence checking whilst the council was cutting the resources in audit.  The Head of City Services advised that a business case was presented to the executive board in relation to PTU, the concerns and where workloads had increased. It was determined that the extra resource was needed, not solely for checking driver’s licences but additional functions across the PTU. In addition, the computer system was not adequate enough to issue alerts when DBS and licence checks were due. Therefore, a weekly system was developed to provide drivers ample time to renew their DBS forms before they expire.

§  Councillor Jordan asked how long in advance would the DBS reminders take place.  The Head of City Services advised that the reminder would take place six weeks in advance, this was in the form of an email and a follow up phone call.

§  Chair referred to the training of escorts and wanted assurance that every escort had undertaken training.  The Chair was advised that these were weekly check and that they were up to date.

In relation to communication with Education, PTU and stakeholders, who met on a regular basis, the Chair asked when the group last met.  The Head of City Services advised that they met earlier in the week and issues were discussed at the group, these meetings were held monthly.  The Head of Corporate Safeguarding also attended this group.

§  D Reed mentioned that it was good to see the progress which was ongoing.

§  The Chair also thanked the Head of Service and gave credit to the team on their progress.  The Chair also requested an update from the Head of City Services at the next Committee in July and the following committee on their continuing progress.

Resolved:

The Governance and Audit Committee noted the update from the Head of City Services and requested further updates for the next two committee meetings.

Verbal Update from the Acting Chief Internal Auditor  

A verbal update was provided to the Committee by The Acting Chief Internal Auditor, who met briefly with the Strategic Director, Head of Service and Service Managers the day before this committee.

§  Additional capacity had now been made available.

§  There were some staffing challenges that were being dealt with.

§  Discussions were ongoing as to where Adoption Allowances were overseen. 

§  A second Audit follow up report was still in draft. Service Managers were meeting to agree management actions. The Audit Team would be meeting with them shortly to agree the action plan and timescales for implementation and then finalise the audit report.

§  It was understood that the Strategic Director and Head of Service were invited to the committee meeting in July to provide an update.

The Chair advised that committee members had an opportunity to question the Strategic Director for Social Services at the next meeting in July.

Resolved:

That the Committee noted the comments of The Acting Chief Internal Auditor and that the Strategic Director for Social Services would be invited to the next meeting on 27 July.

In line with the agreed Treasury Management Strategy, the Council continued to be both a short-term investor of cash and borrower to manage day-to-day cash flows. Current forecasts indicated that, in the future, temporary borrowing may be required to fund normal day-to-day cash flow activities and longer-term borrowing would increase to fund commitments in the current capital programme, as well as the impact of reduced capacity for ‘internal borrowing’.

The Authority also invested in three covered bonds within 2022-23, totalling £10m, in line with the Council’s Treasury Management Strategy, which stated that the Council would consider long term investments of up to £10m.

During the year, the Council’s total borrowing had reduced from £142.1m to £138.6m and total investments reduced from £58.3m to £47.2m, meaning overall the Council net borrowing increased by £7.6m to £91.4m as at 31 March 2023.

The report confirmed that all prudential indicators were complied with during 2022/23. 

Committee Member Comments:

§  Councillor Cocks asked how slippage was being managed in relation to Capital Schools Programme, as this had been delayed due to Covid.  The Assistant Head of Finance mentioned that the Capital Programme overall was set and agreed by Cabinet and was profiled as realistically as it could be.  The Finance team were looking at the governance arrangements to manage the risk of slippage in a better way. Covid was a factor as well as inflation but there was a balancing act however it was being managed and it was hoped that there would not be as many reporting of slippages in the future.

Councillor Cocks went on to ask if the Welsh Government would provide funding to help the Council.  The Assistant Head of Finance advised that Welsh Government was always open to discussions and opportunities to provide more funding. 

§  The Chair reminded Councillor Cocks that the Governance and Audit Committee’s role was to ensure that staff had treasury management and prudential indicators under control. As a committee needed to be assured that the programme was fundable to meet the respective commitments and any changes were monitored by officers.

§  Dr Barry commented that it was an excellent paper and it gave assurance to the Committee Members and thanked the Assistant Head of Finance. Dr Barry referred to the £10.6M of Council owned property and asked was capacity being reviewed going forward and was there any opportunity to generate revenue.  The Strategic Director for Transformation and Corporate advised that the assets across Newport were operational nature and that the vast majority of assets were schools, commercial industrial and land.  There was a project in place to develop a new asset strategy and maximising the income associated with the assets, by way of repurposing, disposal and asset transfer.  The Assistant Head of Finance also added that the £10.6M was mainly investment property, which would generate a return.

§  D Reed referred to page 50, point 13 and asked if there was an error in in the Investment and Accrued Interest figures.  The Assistant Head  ...  view the full minutes text for item 8.

The Newport City Council Internal Audit was an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helped an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

This report was prepared in accordance with the Public Sector Internal Audit Standards. It gave an overall opinion on the adequacy and effectiveness of the City Council’s internal controls during 2022/23, which was Reasonable - Adequately controlled although risks were identified which may compromise the overall control environment; improvements required; reasonable level of assurance.

For 2022/23 the overall opinion was based on the approved Revised Internal Audit plan 2022/23 (July 2022). The full year plan was based on delivering 1073 audit days. Reliance on previous years’ audit work was also taken into consideration in arriving at this year’s opinion in that there have been no significant systems or staff changes.

The second part of the report related to the performance of the Internal Audit Section and how well its key targets in the year were met. 77% of the approved audit plan was completed for the year against a target of 80%.

Committee Member Comments:

§  Dr Barry mentioned that it was a good report with good overall performance considering staff stretched on resources.  The Acting Chief Internal Auditor advised that any issues would be escalated to the Head of Service if necessary as well as the operational managers. Audit ensure that their Terms of Reference were circulated in advance to get everyone on board. Sometimes there were difficulties but there were mechanisms in place to overcome this if necessary.  The Strategic Director for Transformation and Corporate agreed with Dr Barry’s further comments that this was a concern and would hinder audit carrying out their work.  The Chair suggested that if there were issues with escalating audits that it should be referred to the following committee meeting.

Dr Barry was concerned that audit were not able to access a certain level staff and documentation, 9% of the reports actions were not implemented and that due to resource issues, there was no assurance that actions were carried out. This was noted by the Head of Finance.

Dr Barry did not recall the any information on the National Fraud Initiative (NFI) coming to this committee and wondered whether it should. The Acting Chief Internal Auditor advised that audit had not provided any detailed report regarding the NFI.  The Head of Finance confirmed this however would be brought to committee following the next exercise; this ran every two years.  The Chair added that Audit Wales were undertaking a review of the authority and the NFI and a report would be available within the next six to eight weeks.

§  D Reed asked was there any reason why committee should not be calling in an unsound report.  The Acting Chief Internal Auditor advised that the report had been finalised, with a comprehensive action plan in  ...  view the full minutes text for item 9.

Newport City Council’s Internal Auditing was an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helped an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

It objectively examined, evaluated and reported on the adequacy of internal control as a contribution to the proper, economic, effective and efficient use of the Council's resources.

The attached report was the Operational Internal Audit Plan for 2023/24 based on an assessment of risk and available audit resources for the 12 months of the financial year. The plan was based on delivering 862 audit days.

The Council's Section 151 Officer had the legal responsibility for the provision of Internal Audit.

Committee Member Comments:

§  D Reed referred Appendix 3 and asked if the risk column could also be included and in addition, of the same Appendix, there were 74 areas that had never been audited and 223 items that were not audited after 2019/20; how material was this.  The Acting Chief Internal Auditor explained that some areas were never audited but behind the audit plan was information and discussions in terms of how the audit ream arrived at the audit plan and it was based on the available days. Discussions take place with Heads of Services to see which areas were of priority and some areas do get bumped. Covid had an impact, and audit had struggled with vacancies, which had a knock-on effect.  Prioritising jobs was subjective, there was a continual balance. Discussions took place every year to arrive at this audit plan.

§  Councillor Cocks asked was it the Head of Service that decided the level of risk.  The Acting Chief Internal Auditor advised that the Head of Service had influence over the audit plan as well as the Corporate Risk Register, including other factors, such as the executive board and independent review before it was approved, including the Head of Finance. 

Councillor Cocks added that the council budget was to focus on delivering services to most vulnerable and wondered how this played into the plan for example the school meals contract was being audited but Councillor Cocks felt that there were other areas that could be audited in relation to vulnerable people, such as Children with ALN and out of county placements which would be of some concern regarding the financial restrictions.  The Acting Chief Internal Auditor mentioned that there were lots of influencing factors and Heads of Service had an opportunity to contribute to audit plan.  The key issues mentioned might not feature in the Audit Plan but could be other internal reviews of service areas taking place where duplication would be avoided such as ESTYN or Audit Wales, these issues were taken into account.

The Strategic Director also added that every year the Council ran a workshop with regulatory Bodies, ESTYN, Health Care Inspectorate Wales and Audit Wales and the audit team fit into the assurance  ...  view the full minutes text for item 10.

The purpose of a forward work programme helped ensure Councillors achieved organisation and focus on the undertaking of enquiries through the Governance and Audit Committee function. This 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.

Resolved:

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

Safeguarding Children’s money be added to the Work Programme for the next committee meeting.

That the Governance and Audit Committee Annual report be added to the Work Programme, to be discussed with the Strategic Director for Transformation and Corporate.

The next meeting would take place on 27 July 2023 at 5pm.