Agenda item

The Head of Law and Regulation updated the Committee that Leanne Rowlands had been appointed as the new Democratic Services Manager and that Connor Hall had been appointed as a new Scrutiny Advisor.

The Head of Law and Regulation stated that this report was about the process rather than the functionality of the Audit Committee. It was explained that the new legislation came into force in January 2021 and there would be new changes introduced between now and May 2022.

Main Points:

·       The title of Audit Committee had now changed to Governance and Audit Committee.

·       There would be a change to some statutory functions so there were some additional terms including reviewing performance assessment and the complaints handling processes.

·       The Committee was asked to note these changes and recommend to Council to amend the constitution to change the name of Audit Committee from 1 April and to include those additional functions in the terms of reference.

·       Appendix 1 contained the current terms of reference for Audit Committee and Appendix 2 had been amended to what it should be.

·       In terms of performance assessment, the act entirely changed the Council’s framework in terms of the annual improvement report and the corporate plan report. It changed to a self-assessment process where councils assessed their own performance, and it was subject to an independent peer review on an annual basis. This would have an impact on Scrutiny committees going forward.

·       According to the WLGA this would be a fundamental change of culture as to how the Council assesses its performance.

·       The current duties under the 2009 measure in terms of continual improvement and annual audit report would be discontinued and replaced with a self-assessment process which would have an impact across the Council in terms of Scrutiny and service planning and how scrutiny reviewed performance.

·       The new Governance and Audit Committee would have an enhanced role as part of the annual self-assessment process and to assess that the Councils processes were robust. Complaints that go to Cabinet would in future be referred to the Governance and Audit Committee in terms of how we handled complaints as opposed to the outcome.

·       The final point discussed was the membership of the Governance and Audit Committee, which was not immediate, but the composition of the committee would change. At present there was one lay member which was a legal requirement who is an independent Chair, and the other 8 members are elected Members, and this was proportionally balanced. As of next May 2022, there would be a legal requirement that one third of the committee were independent members. Therefore, the Council would have to recruit new additional members. The Chairs term comes to an end next May 2022 so 3 new independent members would be needed to serve on the committee. 

The Head of Law and Regulation stated that this recruitment process was currently being discussed with the Chief Internal Auditor and the Head of Finance as to how to commence this process as all Councils across Wales would be recruiting for these members.

Questions:

·       Councillor Hourihane stated that they were concerned that continuous improvement might be swept away in exchange for lighter auditing, and that shouldn’t the Council still aim for this.

The Head of Law and Regulation explained that it was a different process and that this was a different way of monitoring and assessing. So instead of an annual improvement report and Audit Wales coming in annually to give a Certificate of Compliance this was more of a self-assessment process and it gave Councils more flexibility. 

The Council would need to set up an external independent peer review panel however the continual improvement was still there.

·       Councillor Hourihane questioned the peer review.

The Head of Law and Regulation confirmed this was an external panel independent of the Council that would provide the peer review and the Council would have an obligation to consider the feedback of this panel when it planned services for next year.

·       Councillor Hourihane referred to the small cost for the Council for implementing these regulations for the Governance and Audit Committee.

The Head of Law and Regulation confirmed that the report was referring to the additional lay members of the Audit committee and the committee would be focused on being process driven. The bigger changes for the self-assessment process would be for the scrutiny committees and the service planning process.

It was confirmed that the cost would be minimal, and that cost referred to appointing 2 additional lay members to the Audit Committee who would be paid an allowance and there would be a one-off cost for the Council for recruitment.

·       Councillor Hourihane enquired the peer review panel and whether it would be expensive.

The Head of Law and Regulation confirmed that this panel would not be paid and that the members of the panel would be volunteers. The Council was still waiting on Welsh Government on the process for establishing these panels. The Council did not have to produce their first self-assessment report until a year after the election.

·       Councillor T. Watkins enquired as to who was going to scrutinise the Governance and Audit committee.

The Head of Law and Regulation confirmed that there would still be an annual audit report as usual, but there would not be an annual improvement plan. At present Audit Wales come in and audit the Council annually which would be removed, and the Council would not have an obligation to complete an annual improvement report.

However, all other Audit reports would remain the same.

·       Councillor K. Thomas asked whether previous lay members who have chaired before could reapply for the position again.

The Head of Law and Regulation stated that at present there was one independent chair who could serve two terms of office. The present chair could not stand again when their term came to an end.

·       Councillor K. Thomas questioned as to whether the recruitment was robust to get members who were impartial to sit on the peer review panel. 

The Head of Law and Regulation confirmed that we were still awaiting guidance from Welsh government on the peer review panel.

There was a role description attached to the report which formed the basis for the recruitment of the independent members. A similar process was carried out recently to recruit new independent members for the Standards Committee and it was thought that the recruitment for the Governance and Audit Committee would be the same process. This was robust where there was an open public advertisement with the setting up of an appointments panel to interview shortlisted candidates.

It was discussed that a mix of experience was needed to assess how well the Council was delivering services.

The Head of Law and Regulation asked for confirmation from Members that they were happy to start recruitment for lay members as soon as possible.

The Chair asked whether the independent members could serve on more than one committee and serve on committees in other authorities. 

The Head of Law and Regulation confirmed that the independent members to be recruited were not elected members and although in theory they could serve on more than one committee in one Council, lay members should only serve on one committee to have a more direct view of Newport Councils processes but legally they could sit on other Audit committees in other Local Authorities. Independent Members access to confidential information also should be considered.

Agreed:

The Committee Members confirmed their agreement for the immediate recruitment of Independent Members for the Governance and Audit Committee