Committees
Minutes of Meeting of the Audit and Standards Committee held in Committee Room 1, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 1 December 2005 at 10.30 a.m.
Present
Mr D W Briggs , Mr W Fernie, Mr A MacKay, Mr M Macmillan, Mr I MacDonald, Mr R J Lyon, Mr L Fraser, Mr F D S Black, Mr W Clark.
Non-Members also Present:
Mr G M Smith
Officials in attendance:
Mr A Geddes, Director of Finance
Mr D Robertson, Head of Accounting
Mr B Williams, Head of Corporate Finance
Mr G Robson, Head of Environment, Planning & Development
Mr G Munro, Head of Internal Audit and Risk Management
Mr N Rose, Principal Auditor, Internal Audit
Miss J MacLennan, Principal Administrator, Corporate Services
Also in attendance:
Mrs F Kordiat, Audit Scotland
Mr D W Briggs in the Chair
Business
1. Apologies for Absence
There were no apologies for absence.
2. Minutes of Previous Meeting – 6 October 2005
There had been circulated for information the Minutes of Meeting of the Committee held on 6 October 2005 – which were NOTED.
3. The Highland Council – Report on the 2004/05 Audit
There had been circulated Report No. AS-17-05 dated 15th November 2005 by the Director of Finance which introduced and commented on the External Audit Report to Members in respect of the Final Accounts for the financial year ended 31st March 2005. In this regard, a copy of the External Auditor’s Report for 2004/05 had also been circulated.
During a summary of the report, it was confirmed that the Auditor had issued an unqualified report on the accounts for 2004/05 following submission of the Council’s draft accounts by the prescribed date. In addition, an Action Plan had been prepared by the Auditor on areas which required improvement, including the Housing Revenue Account rent control account, Common Good Funds Accounts, Whole of Government Accounts (WGA) and development of the role of the Audit and Standards Committee in terms of risk management within the Council.
Following discussion, the Committee NOTED the terms of the External Auditor’s Report for the year ended 31st March 2005, together with the Council’s response to the findings of the Auditor and the completed Action Plan.
4. Internal Audit Reviews
Period 24 September to 18 November 2005
There had been circulated Report No. AS-18-05 dated 18th November 2005 by the Head of Internal Audit and Risk Management which summarised the final reports issued since the date of the last meeting, together with other information relevant to the operation of the Internal Audit Section.
Speaking to the report, the Head of Internal Audit and Risk Management highlighted the reviews which had been undertaken as follows:-
TEC Services – Recycling – confirmed that, in general, the planning, monitoring and management of the Kerbside Pilot Scheme had been undertaken in accordance with good practice. Two issues had been identified – the procurement of vehicles and the lack of a formal review of results and knowledge gained at the end of the pilot. One grade three recommendation had been made which had been accepted by management and implemented with immediate effect.
Housing Service – Improvement Grants – confirmed that the areas which had been identified as requiring further guidance and clarity to ensure compliance to the legislation and sufficient controls to reduce the exploitation of the grant system were Disabled Applicants, Payment Direct to Contractors and Increased Award for Additional Unforeseen Work. There was also a need to produce a cohesive and comprehensive procedures manual to ensure that all Area Grant Officers were providing a consistent service which complied with the legislation. Fifteen recommendations had been made and were due to be implemented by the end of July 2006. Of these recommendations, five had been Grade 2, eight had been Grade 3 and two had been Grade 4.
TEC Services – Winter Maintenance – confirmed that the main findings of the audit had confirmed that the Area Plans did not fully comply with the requirements of the Winter Maintenance Operational Procedure Number 711 (OP711) and the signing, certification and checking of Winter Maintenance job cards had not been adequately carried out or evidenced. Also, the processing of salt usage figures from job cards was failing to capture all the data for input to the stores system. Overall, the service provided by the Council was good with an excellent policy and procedural framework. Four recommendations had been made – two at category one, one at category two and one at category three. These had all been accepted by management and were to be implemented within six months of the issue of the final report.
ECS Service – Special Education – confirmed that the findings of the review had demonstrated that Support for Learning budgets devolved to Areas were allocated in a consultative manner to best address known needs within the budget allocation. Also, a documented timetable was in place to introduce the Resourcing Model identified in the Support for Learning Best Value Review for allocating budget to Council Areas. Four recommendations had been made – all of which had been accepted by management.
TEC Services – Subsidised Travel and Concessionary Fares – confirmed that a number of statistics submitted by Travel Operators had shown errors in calculation which had not been uncovered on review or corrected and this had led to inaccurate claims being submitted and paid. Also, there was no procedure in place for determining routes and the calculation for this had been based on the ratio of contract cost to income and the composite social need which had been devised and calculated by one member of staff and had no counter check by another officer. Six recommendations had been made – two at category three and four at category two. These had all been accepted by management and were to be implemented within two months of the issue of the final report.
Finance Service – Housing Benefit (Sutherland) – confirmed that a small number of administration procedures had not been completed when processing benefit forms and staff manuals were not available for use by Benefit staff. Overall, the service provided by the Sutherland Housing Benefit office had been considered to be of a good standard and only the first of the review objectives had been found to have scope for improvement. There had been two recommendations – both at grade 3 – and these were to be resolved within a two month period.
ECS Service – Primary School Meals Income – confirmed that there had been limited guidance and procedural notes in place and those which had existed had been out of date. Also, the number of meals recorded had not been verified or authorised in any way and there had been no ticket control mechanism in place. There had been also been a lack of segregation of duties and authorisation of returns. Overall, it had been concluded that there was a lack of current and comprehensive guidance relating to the management of school meals income and, in particular, to the role of the school representative in authorising the returns.
Planning and Development Service – Dry Stone Dyking – confirmed that the main findings had revealed breaches of Contract Standing Orders which had resulted in a contractor being paid a full contract price in advance of the majority of work being undertaken on a particular contract. Although various attempts had been made to ensure that the contractor completed the work, it had eventually been necessary to employ the Council’s own Dyker to undertake the remainder of the work. The cost of this had been established and the original contractor invoiced accordingly. A response had been received from the Planning & Development Service on all the main breaches which had been identified and had provided detailed information as to the circumstances of the contract and stressed that there had been no deliberate intention of circumventing Contract Standing Orders. Since 2001, when the contract concerned had been awarded, various procedures and protocols had been introduced to prevent any similar recurrence. Also, a recent audit review of contract procedures within the Planning & Development Service had shown that this activity was now being performed in a proper and controlled manner and in accordance with best practice.
The Committee NOTED the terms of the reports as circulated.
It was also AGREED as follows:-
(i) TEC Services – Recycling – a Risk Assessment exercise should be
undertaken in relation to the Pilot Kerbside Recycling Scheme and,
specifically, in relation to the lifting and carrying of containers for waste
paper – with a report to the TEC Services Committee thereafter if
necessary; and
(ii) ECS Service - Primary School Meals Income – there was a need for the
ECS Service to find an appropriate and clear solution to the issues
surrounding the management of school meals income and, in particular,
the role of school representatives in authorising returns.
5. Internal Audit Reports 2003/2004/2005 – Follow Up
There had been circulated Report No. AS-19-05 dated by the Head of Internal Audit and Risk Management which summarised the progress made in implementing the recommendations contained in Internal Audit reports issued between April 2003 and December 2004.
During a summary of the report, it was confirmed that, in general, appropriate action had been taken by management to address audit recommendations. Where agreed action had not been taken, this had essentially been due to reasons which fell under categories such as action not being due to be implemented as at the date of the follow-up, action being dependant on other actions and/or system changes, action superseded by alternative actions, etc. In terms of ‘outstanding’ action, it was confirmed that these would be revisited during the next planned review.
Following discussion, the Committee NOTED the terms of the report as circulated.
6. External Audit Reviews
There had been circulated Report No. AS-20-05 dated 18th November 2005 by the Director of Finance which contained a report from the Council’s External Auditors (Audit Scotland) as follows –
Prudential Code and Asset Management
During a summary of the report, it was confirmed that, in terms of the findings, overall the Council had satisfactory arrangements in place to calculate and approve the 2004/05 prudential indicators although the following further work was required before it fully complied with the requirements –
- a systematic approach had yet to be developed and formally documented
for monitoring performance against the full range of prudential indicators
agreed by the Council;
- further work was required to enable the Council to demonstrate that it was
complying with the accounting definition of capital expenditure as contained
in the ‘Code of Practice on Local Authority Accounting in the United
Kingdom: A Statement of Recommended Practice’;
- asset management plans (at both corporate and service level) required to
be prepared for all of the Council’s assets and used to inform the capital
planning process to ensure that capital expenditure was prioritised in line
with corporate need; and
- guidance on option appraisal required to be prepared to ensure a consistent
approach to the assessment of capital projects and to demonstrate value
for money in the use of resources.
The Committee NOTED the terms of the report as circulated.
7. Internal Audit Performance Monitoring Report
Period – 1 April to 30 September 2005
There had been circulated Report No. AS-21-05 dated 1st November 2005 by the Head of Internal Audit and Risk Management which provided information on the actual Audit activity against the year 2005/06 Tactical Plan for the half year period to 1 October 2005.
During a summary of the report, the Available Resources, Contingency Balance and Variances were highlighted. It was also confirmed that, at this time, the report from the time management system had indicated that there were few major areas where overviews had overrun or where major activity had been demanded but not met from the contingency available. It was therefore expected that the majority of reviews indicated on the Tactical Plan for 2005/06 would be met.
The Committee NOTED the terms of the report as circulated.
8. Draft Financial Regulations
There had been circulated Report No. AS-22-05 dated 17th November 2005 by the Head of Internal Audit and Risk Management which provided information on the revision of the document entitled “The Highland Council – Financial Regulations”.
During a summary of the report, it was confirmed that the Draft Regulations detailed the responsibilities of the Director of Finance who had been appointed as the ‘Proper Officer’ in terms of the Act along with those of the Chief Executive and Service Directors. The document had been structured into three sections – Overview, Financial Management and Financial Governance.
Following discussion, the Committee NOTED the terms of the report as circulated.
It was AGREED that the Regulations should be re-circulated to staff in order that they could be made fully aware of the contents.
It was also AGREED that the Head of Internal Audit and Risk Management should update specific sections of the Regulations as and when necessary.
9. Annual Report on Ombudsman Complaints 2004/05
There had been circulated Report No. AS/23/05 dated 22nd November 2005 by the Chief Executive which advised of the number, nature and outcome of the Ombudsman complaints against the Highland Council in 2004/05 and commented on the content of the Scottish Public Services Ombudsman’s Annual Report for 2004/05.
During a summary of the report, it was confirmed that there had been 78 new enquiries and complaints against the Highland Council in 2004/05 which was only two more than in the previous year. This compared to a considerable increase in overall enquiries and complaints for Scotland as a whole which had risen from 1099 in 2003/04 to 1464 in 2004/05.
Enquiries and complaints against local government remained the largest caseload for the Ombudsman’s Office at 61% of the overall total. However, at 1464 enquiries and complaints, this remained a small number when compared to the extent of Council operations.
The Ombudsman had identified two common and recurring themes in the complaints which had been received - poor communication and the way in which organisations first responded to complaints (which set the tone for what happened next and whether the complaint could be resolved easily and quickly). In this regard, she had stressed the importance of front line staff who were crucial in the delivery of high quality public services.
Following discussion, the Committee NOTED the terms of the report as circulated.
It was also AGREED that Members should be kept informed of complaints which had been settled by local agreement.
10. Standards Commission for Scotland – Annual Report 2004/05
There had been circulated Report No. AS/24/05 dated 23rd November 2005 by the Director of Corporate Services which presented the Standards Commission’s Annual Report and Accounts for 2004/05 for information.
The Committee NOTED the terms of the report as circulated, together with the contents of the Annual Report and Accounts for 2004/05.
The meeting ended at 12.05pm.