Agenda and minutes

Governance and Audit Committee - Thursday, 27th January, 2022 5.00 pm

Contact: Pamela Tasker  Governance Officer

No. Item


Declarations of Interest




Minutes of the Last Meeting pdf icon PDF 414 KB



The minutes from the last meeting of 11 November 2021 were confirmed as a true record.


Corporate Risk Register (Quarter 2) pdf icon PDF 415 KB

Additional documents:


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

The Chair reiterated to the Committee that it was not their role to query the scoring of the risks but the process around the risks.

The report was presented to the Committee by the Strategic Director – Transformation & Corporate Centre.



Main Points:

The Strategic Director stated that looking back to July to September 2021 there were a few significant potential risks the organisation were dealing with at that time. One of these was the post EU transition period and Brexit and implications associated with that, as well as the Delta variant risk due to the start of the new school term. 

·       Within the service plans there were 46 specific risks across its eight service areas with some changes, with a closed risk associated with the strategic development plan as a result of corporate committee arrangements. There was a new risk associated with the replacement Local Development Plan.

·       For the Corporate Risk Register there were 18 risks, with Covid escalating and deescalating in relation to infection rates etc.

·       Pressure on community services also depended on the risks associated with Covid and how that was managed.

·       Increased risk with Brexit and the HGV drivers shortage which carried on into Quarter 3.

·       Reduction in safeguarding was a risk due to the organisations self-assessment that was undertaken.


Councillor Hourahine enquired about the risk against Brexit and whether it was a blunt tool to define where the risks actually were as there was a difficulty in recruiting for care workers for care homes and it was noted that recruitment was sought in the community.

The Strategic Corporate Director explained that outside of this period, but due to the Omicron variant and the pressures on social care, there was a range of interventions to manage this ongoing risk. This was not to do with Brexit but within each service plan there were risks and workforce planning where there had been a lot of work in the organisation on this. This looked at the current workforce and future workforce retention, training, and activities, and in each service plan there was a section as to how those problems were tackled.

Councillor Giles stated that ALN and SEN issues along with school budgets were ongoing but were not as serious as once thought which was impressive. Councillor Giles gave thanks to the Authority and all the schools for their hard work. Councillor Giles requested an update on schools and ALN and SEN issues and commented on the post covid picture and what this would look like as some financial issues of schools were somewhat alleviated.

The Strategic Corporate Director stated that the schools finance cost pressures were an ongoing issue, and this was a huge piece of work led by Finance colleagues and Education who were working with schools to alleviate budget pressures which was very successful so far.  ...  view the full minutes text for item 3.


Capital & Treasury Management Strategy pdf icon PDF 2 MB


The purpose of this report was to gather the Committee’s views and responses to the Council’s draft Capital and Treasury Management Strategies. These views and responses would then be reported to both Cabinet and Council, to inform their respective considerations of these documents.


The report was presented to the committee by the Assistant Head of Finance, and it was explained that this was the last year of the Capital Strategy Programme and there would be a more fundamental review next year as the new programme was developed.







Main Points:

  • There were 2 additional years added to cover schemes that extended beyond 2023 such as the 21st century schools Band B programme which was a multi-year programme that extended beyond the next financial year.
  • The report was brought to the Governance and Audit Committee for consideration and comment and then Cabinet and full Council for sign off which was the process followed.
  • This was a long-term document covering a 10-year period and beyond in some cases and it was required of the team to underpin all considerations with the 3 main objectives of affordability, prudence, and sustainability, and they were critical within the decisions that were taken in conjunction with this report.
  • In the Head of Finance comments, it was noted that one of the main aims was to limit the growth and debt funded Capital Expenditure e.g., expenditure funded by borrowing. Internal borrowing capacity would reduce over time and the way that the MRP policy worked, the charges would increase over time.
  • On page 3 there were two sections that gave an overview of the two strategies, what their main purpose was and how they were set out within the prudential code.
  • In terms of the main highlights, the 7 years in total was £288 million which included £2.4 million of currently uncommitted borrowing headroom and in 2022-2023 we were looking at a spend in excess of £100 million which was a significant challenge for the Council to achieve.
  • £77.5 million was anticipated to be funded through borrowing with £43.1 million was still to be incurred.
  • Within the report, the prudential indicators- the two critical ones were the external borrowing limits and the authorised limit in the operational boundary. They were derived from the Capital Programme and at £271 million and £192 million respectively, excluding PFI’s and leases. This reflected an increase on the limits that were currently in place in this financial year and that just underlies our position as a net borrower going forward.
  • Table 3 contained the capital financing costs that we have budgeted for within the Council's revenue budget which were still relatively high and were reduced in proportion of the Councils overall revenue budget going forward. This was mainly due to the positive settlement that's being received this year, and the indicative settlements that we've had from the next two years, but it ultimately showed the ultimate impact debt funded Capital Expenditure had on an authority’s finances.
  • The Council needed to develop a new Capital  ...  view the full minutes text for item 4.


Lessons Learned 2020/21 pdf icon PDF 445 KB


This report is to provide the Governance & Audit Committee with an update from the exit meeting with Audit Wales which reflected upon the 2020-21 Statement of Accounts audit process, and whether practices could be amended to benefit the 2021-22 Statement of Accounts process.

The report was presented by the Assistant Head of Finance who confirmed that the Statement of Accounts 2020/2021 were signed off in November 2021, but refinements were acknowledged and corrected. 

The changes made were reflected in the working papers which automatically go through into the 2021-22 process.

·       The focus on the Audit meeting looked at what went well and what could be improved, information sharing aspects and how the team could better meet the statutory audit timescales. Covid flexibilities made the accounts more difficult, but it was recognised that those flexibilities may soon not exist.

·       Auditors have time commitments for other audits and as a result of the Audit meeting there was a consideration by the local authority as to whether there was a look to prepare the accounts with auditor availability or to push to close with early time scales.

·       It was noted about the delay to reserves approval which was covid related. The Covid grant itself which was a lot of money involved around £30 million funding to be allocated to particular services.

·       It was noted this was a good audit process and it was good to be challenged to meet the May deadline and that it was sensible to work to statutory guidelines.

·       It was a small team but very resilient under pressures which was a risk the Council needed to appreciate.


Councillor Hourahine stated that as it was a small team what availability was there in the whole finance system to allocate staff where they were most needed.

The Head of Finance noted that this was a very technical piece of work, and the Assistant Head of Finance stated a certain expertise was needed for certain things such as the presentation of a 160-page document following the international financial reporting standards.

The Assistant Head of Finance explained that certain closing jobs were shared out in the team but with a team of 4 that inherent challenge and capacity was present.

The Head of Finance confirmed that the entire accountancy team were all involved and there was a central team which brought it all together with the Assistant Head of Finance, alongside one capital accountant and a finance business partner. The work was very technical, and this level of knowledge was not available to everyone in accountancy. Everyone was involved in the end process. Resilience was a problem, and this was concerning but with resources that were there the team did the best they could.

The Chair agreed that this problem was everywhere and noted that it was good to have a Lessons Learned document which was great to have. The Chair agreed that it was necessary to go to the end of May deadline and it was correct to stick to this  ...  view the full minutes text for item 5.


SO24 / Waiving of Contract SO's: Quarterly report reviewing Cabinet / CM urgent decisions or waiving Contract SO's (Quarter 3, October to December 2021) pdf icon PDF 241 KB

Additional documents:


This report provided details of decisions on the use of Standing Order 24 (decisions taken urgently) or the Waiving of Contract Standing Orders for the above period.

In consideration of this report, Members were reminded that they are not questioning the merits of the decisions taken but were focussing on why decisions were taken as urgent or why contract standing orders needed to be waived.

The report was presented by the Chief Internal Auditor who explained that this was a regular report to Committee and SO24 allowed Cabinet Members or Cabinet to make urgent decisions without going through the normal consultation process. 

During the last quarter there was one report that was submitted which was in relation to a Standard Order 24 and the Committee needed to assure themselves that the reason for pushing through the SO24 was justifiable which would lead to good governance. 

The Chief Internal Auditor explained that their role was to review the decision schedule and the report which was included in the papers and to identify the reason for the urgent decision.

The Chief Internal Auditor stated that in his opinion the justification for the urgency of the decision was not explicit or recorded in the report and there was no timeline included around budget or options.

The Chief Internal Auditor informed the Committee that he was not recommending for the Cabinet Member to be called in to the Committee, but they would suggest that the Committee consider requesting the Cabinet Member to provide a written response as to why it was appropriate to use SO24 on this occasion.

The Chair agreed with the recommendation and stated that further information was needed.


For the Chief Internal Auditor to request the Cabinet Member to provide a written response to the Governance and Audit Committee to explain the use of SO24.




Internal Audit Unsatisfactory Audit Opinions (6 monthly report) pdf icon PDF 448 KB


This report was presented to Committee by the Chief Internal Auditor.

This report was about the opinions that the team issued, and it gave the Committee an update on the progress on the Unfavourable opinions that were issued.

Main Points:

·       During 2018/19, 48 audit opinions had been issued; 10 were Unsatisfactory, 1 was Unsound.

·       During 2019/20, 32 audit opinions had been issued; 6 were Unsatisfactory, none were Unsound.

·       During 2020/21, 29 audit opinions had been issued; 1 was Unsatisfactory, none were Unsound.

·       During 2021/22 (to 30-9-21), 9 audit opinions had been issued; none were Unsatisfactory or Unsound.

This was a promising way forward as the number of unfavourable opinions were reducing. Members can see improvements have been made and there was a commitment made to follow up on any Unfavourable opinions and report back to the Committee the secondary opinion which could be positive or negative.

·       In some case there have been 2 consecutive Unfavourable opinions then Committee have called in the relevant Head of Service to challenge the individual as to why little action was taken and to make those improvements.

·       In 2015-16 Paragraph 6 of the report, 34 audit opinions were issued; 8 of which were deemed to be Unsatisfactory; one was noted in the summary  as table as the 7 previous reports have been followed up and more favourable opinions were issued and have been duly reported to the Committee.

·       Table 6 showed the Joint Venture- Newport Norse which was Unsatisfactory some years ago. There have been some delays in getting this report in terms of follow up. Follow up was started in 2021, continued into 2022 and a new opinion was issued which was reported to be more favourable and this would be reported back to the Committee in due course.

·       In 2016/17, 35 audit opinions were issued; 5 were deemed to be Unsatisfactory, 1 was Unsound. One report has not yet been followed up. This was an SRS issue and the previous 4 Unsatisfactory reports and one Unsound have been followed up by a more favourable opinion. SRS and the Digital Team have engaged with a consultant to identify a gap analysis and an update would be provided to the Committee in due course.

·       Paragraph 8 stated that in 2017/18, 40 audit opinions were issued; 6 were deemed to be Unsatisfactory, none were Unsound. 4 out of the 6 have been followed up; 3 of which have resulted in a more favourable audit opinion. Two reports have not yet been followed up. In relation to the Preferred Catering Contractor this was not yet picked up as the school were yet to engage with a new contract.

·       In 2018/19, 48 audit opinions had been issued; 10 were deemed to be Unsatisfactory, 1 was deemed to be Unsound. 6 audits have been followed up which resulted in more favourable opinions. The outstanding opinions were shown in the table. Adoption Allowances were being followed up in this current financial year. Commercial & Industrial Property Portfolio was originally Unsatisfactory, and  ...  view the full minutes text for item 7.


Work Programme pdf icon PDF 155 KB


The Chief Internal Auditor requested the Internal Audit Charter to go on the agenda for the 31stMarch 2022 Committee.

Audit Wales requested for Audit Wales Annual Audit Plan 2022 to go on the agenda for the 31st March 2022 Committee.

Audit Wales stated that Audit Wales Annual Report on Grants Works 2021-22 Draft may be on March’s Committee but this would need to be confirmed.




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