Agenda item

1.1            The Head of People, Policy and Transformation presented to the Committee an update on the Corporate Risk Register.

1.2            At the end of Quarter 4, there were 14 risks recorded in the Corporate Risk Register that were considered to have a significant impact on the achievement of the Council’s objectives and legal obligations.

1.3            Overall, there were eight Severe risks (risk scores 15 to 25); six Major risks (risk scores seven to 14); that were outlined in the report. In comparison to the Quarter 3 corporate risk register, two risks decreased their risk score, and there was no change with the remaining 12 risks. One risk was escalated from the children’s social service area risk register, and one Environment and Public Protection risk was de-escalated from the corporate risk register to be monitored on a service area level. As set out in the Council’s Risk Management Policy, the Governance and Audit Committee reviewed the Corporate Risk Register on a quarterly basis ensuring adequate procedures were in place to monitor the management of significant risks.

Comments of the Committee:

1.4            Dr Barry was worried about the Eliminate Programme and asked was anything being done nationally to address this.  The Performance and Programme Manager advised that this was an ongoing programme in Children services through the region and that the Strategic Director for Social Services and Head of Children Services were in constant contact with Welsh Government.  The Strategic Director, Transformation and Corporate advised that the escalated risk itself was not within the remit of the committee, as this would be considered through Scrutiny, however a written response could be provided for information only to Governance and Audit Committee. 

1.5            D Reed thanked the Performance and Programme Manager on the improvements within the report based on previous feedback given by the Committee.  D Reed raised queries in relation to Pages 87, 93 and 94 concerning the risk mitigation action plan, which referred to estimated completion dates as being 31 March 2023.  D Reed sought clarification on whether this had been completed or if there had been any slippage as a verbal update. The Performance and Programme Manager agreed to confirm this as part of Quarter 1 and Quarter 2 reports so that it was clearer as to which actions were completed, and which were still ongoing as part of retrospective reporting.  The Strategic Director reminded the Committee that their role was about the assurances of the system in place around risk management rather than the detail of individual risks.  The Director referred to a live system, My Hub, used for risk monitoring and management, and offered to arrange a brief demonstration before the next committee.

1.6            D Reed referred to page 93, the people’s capital group and asked what the group did.  The Head of People, Policy and Transformation advised that they were an internal officer group, who specifically looked at projects relating to people, such as education and social care. This would be reworded to internal officer group.

1.7            D Reed also referred to page 87 the risk overview ‘…could lead to prosecution of Head of Children’s Service… what was the likelihood of that happening. The Strategic Director for Corporate considered that this was the wording of the Head of Children’s Services and that it was a real possibility.  The Head of People, Policy and Transformation mentioned that the detail of the risk was collated by officers and signed off by the Head of Service themself.

1.8            D Reed mentioned that there was one risk that stated a shortfall of £27M in relation to the Medium-Term Financial Plan (MTFP).  This appeared to be a major risk, therefore how was this being mitigated.  The Head of People, Policy and Transformation advised that this was covered by p79, concerning balancing the Council’s medium-term budget.  Whilst this had been a risk on the corporate register for some time, his was a snapshot as at the end of last year but not the position for next year, therefore the figures would be kept under review and as such would be subject to change.

1.9            Chair referred to point that Councillor Horton raised, that for the next quarter there was a capacity issue regarding the Internal Audit Team.  There has been a significant number of staff who have left the audit team, which would leave one remaining member of audit staff.  Councillor M Howells, Chair Performance and Scrutiny Committees – Place and Corporate has written to the Chair raising this as a concern.  The Chair therefore wanted to put this to be addressed as a matter of urgency and having referred to the Terms of Reference considered that the Committee should seek the assurance of the Leader of the Council through recommendation.

1.10         The Head of Finance agreed it was an unprecedented challenge for the service area and the Head of Finance and the team were working on this to consider alternative models of delivery of the audit plan for 2023/24 and future years.

1.11         Part of this year’s Internal Audit plan would be delivered by way of using an external contract and in the short term the agency would be asked to increase the number of days of support.  It would therefore still be a challenge and he could not give assurance that 70% of the audit plan would be delivered but the team would do everything they could. In the longer term, development of a regional audit service is being considered.

1.12         Dr Barry asked if exit interviews were carried out, considering the service had lost five posts over four months, and if there were any plans to engage young graduates or retirees to cover this. The Strategic Director for Transformation and Corporate clarified that the Council had lost staff members, but the team had only been reduced by one post as part of MTFP, funding was therefore still available. The Director confirmed that exit interviews are offered to all leavers, and although individual responses are confidential, trends are monitored.  The Strategic Director for Transformation and Corporate confirmed that traineeships, apprenticeships, and graduate programmes are offered. Recruiting retirees could be explored, as well as offering market supplements in certain circumstances. Given the potential to move towards a regional service, the Director confirmed that the dilemma is whether to recruit now or hold the posts until more information is available.

1.13         D Reed referred to the provision of external consultants, which was confirmed at a previous meeting as costing 50% more than employing staff directly and queried what the revised cost of delivering 70% of the audit plan in this way would be. The Head of Finance will provide a full update including daily costs at the next meeting in September.

1.14         Councillor Horton referred to the recruitment timeline being potentially up to 6-9mths before a full audit team was in place.  The Head of Finance advised that the Principal Audit job advert was now live and with a longer closing date deadline due to the holidays.  Additionally, the Audit Manager role was to be advertised, but overall, it could take up four months to fill both posts.

1.15         Councillor Horton, referred to regional service and asked if the potential pool of auditors who may apply for the currently advertised roles smaller, as some officers in the wider region may be being paid more at other Councils. The Head of Finance advised that the regional service was made up of four Councils and two more Councils, including Newport, were having informal conversations about joining.  The Head of Finance agreed it would make the pool smaller, and the South Wales Regional Service Consortium was Newport’s preference, as creating salary-based competition across local government was counter-productive. 

1.16         Councillor Horton referred to the budget for 6.5 members of staff, was this posts or value.  The Head of Finance advise that the budget supports 6.5 posts. 

1.17         Councillor Horton asked if the number of posts the budget can support would be reduced as the costs of employing staff rose.  The Head of Finance confirmed that the structure of the audit team would need to be reviewed, which could have an impact on grades and budget. Similarly, joining the consortium could also have similar impacts.

1.18         Councillor Horton asked for assurance that vacant posts would not be deleted.  The Strategic Director for Transformation and Corporate clarified that the Council would need to make savings to meet an expected budget gap in 2024/25, however any further reductions of resource in the audit team again would create an issue concerning risk management.

1.19         The Chair wanted to declare his position in chairing two Governance and Audit Committees within two Local Authorities that are serviced by the Regional Consortium. The Chair confirmed that there were universal challenges regarding delivery of audit functions and these other LAs were carrying vacancies as well.

1.20         The Chair considered that the Section 151 Officer and Chief Executive had a statutory duty to report to council if they are unable to deliver a service.  In addition, the Chair stated that the Internal Audit Service had a statutory basis covered by the Accounts and Audit Wales Regulation 2018. 

1.21          The Chair’s recommendation therefore was to suggest that the Head of Finance prepared a comprehensive report for September meeting in respect of what actions he intended to take to deliver the audit plan for 2023/2024 given the current staffing issues.

Secondly, that the Leader of the Council be invited to the next meeting to address this issue, with the reason being that the Leader had a responsibility for this and in accordance with the Terms of Reference, the Chair was seeking an assurance on the matters in relation to the Internal Audit Team and given the seriousness of this issue and delivering the internal audit plan.

1.22         The Strategic Director for Transformation and Corporate advised that whilst the Committee could take a vote on this recommendation, his advice would be that the Leader does not attend the next Committee, as this was a delegated Section 151 officer matter. 

1.23         The Chair felt that the Cabinet had responsibilities for strategic and operational issues and if the Strategic Director for Transformation and Corporate advised the Leader not to attend, the Chair would take advice from another source.  The Strategic Director for Transformation and Corporate advised that Council delegated responsibility of maintaining staffing levels to officers, not Cabinet.  The Chair felt this was legally wrong and that the Strategic Director for Transformation and Corporate should take advice from the Monitoring Officer.

1.24         Councillor Mogford wondered what outcome would be achieved by inviting the Leader to the meeting given that the Head of Finance was the Section 151 Officer.  The Chair considered that the Leader was named in the risk register as the Cabinet Member responsible.

1.25         The Chair also moved that the Section 151 Officer prepare a comprehensive report for September’s Committee to address the audit plan and that the Leader of the Council be invited to the meeting to address the issue.

1.26         Councillor Mogford and Dr Barry asked that the issues be taken separately by the Committee.

1.27         D Reed seconded the two-part recommendation.

Recommendation:

That the Governance and Audit Committee consider the contents of the report and assess the risk management arrangements for the Authority, providing any additional commentary and/or recommendations to Cabinet.

That the following be put to a vote in the two parts, both of which were carried;

1.      The Committee unanimously agreed that the Section 151 Officer would prepare a comprehensive report for September’s Governance and Audit Committee summarising the action plan that will address the current staffing issues and deliver the audit plan for 2023/24. 

2.      And secondly that the Leader of the Council be invited to the Governance and Audit Committee to address the matter of staffing issues within Internal Audit, with four Committee Members voting in favour and two against.