Minutes of Meeting of the Audit and Standards Committee held in Committee Room 3, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 15th June 2006 at 10.30 a.m
Mr D W Briggs
Mr W Fernie
Mr A MacKay
Mr M Macmillan Mr R J Lyon
Mr L Fraser
Mr F D S Black
Non-Member also present:
Mr G M Smith
Officials in attendance:
Mr A Dodds, Director of Corporate Services
Mr G Munro, Head of Internal Audit and Risk Management
Mr D Robertson, Head of Accounting
Mr P Maylin, Income and Recovery Manager
Ms A MacKay, Insurance Manager
Mr D Moreton, Senior Auditor
Miss L MacLean, Audit Assistant
Miss J MacLennan, Principal Administrator, Corporate Services
Also in attendance:
Mr R Clark, Audit Scotland
Mr D Briggs in the Chair
Prior to the commencement of the formal business, and in light of recent reports in the local press, the Chairman confirmed that the Head of Internal Audit was currently undertaking a formal investigation into the alleged misuse of Council vehicles.
The position was NOTED.
1. Apologies for Absence
Apologies for absence were intimated on behalf of Mr I MacDonald and Mr W Clark.
2. Minutes of Meeting – 20 April 2006
There had been circulated for information the approved Minutes of Meeting held on Thursday, 20 April 2006 - which were NOTED.
It was also AGREED that the outstanding report on issues relating to Planning and the Countryside should be submitted to the next meeting.
The Committee AGREED to consider the item on Local Code of Corporate Governance at this point in the meeting.
3. Local Code of Corporate Governance
There had been circulated Report No.AS-12-06 dated 7th June 2006 by the Director of Corporate Services which provided information on progress with the Local Code of Corporate Governance for 2005/06 and suggested themes which could appear in the Code for 2006/07.
During a summary of the report, it was confirmed that a number of themes which had been included in previous Codes and which had a date for action in 2006/07 had been rolled forward, together with the themes which had not been concluded by the target date in 2005/06. A number of themes were to be reviewed annually and new themes, which had now been identified as corporate priorities and would assist in ensuring good governance of the Council’s business, had also been included in the Code for 2006/07.
The Committee NOTED progress on actions for 2005/06 and that any actions which were behind schedule would be addressed as a priority.
The Committee also AGREED the actions proposed for the 2006/07 Code of Corporate Governance as detailed in the report.
4. Presentation – Risk Management
The Head of Audit and Risk Management gave a presentation at the meeting on the strategy adopted by the Council in terms of Risk Management. Included in the presentation was the definition of Strategic Risk Management and it was confirmed that benefits included the achieving of objectives, becoming less risk averse through the understanding of risks, improving assessment of business opportunities, focusing on outcomes and not processes, improving performance, demonstrating a commitment to continuous improvement and enabling better governance. In terms of the overall Corporate Governance Framework, it was stressed that authorities needed to establish and maintain a systematic strategy, framework and process for managing risk and have in place effective risk management systems, including systems of internal control and an internal audit function. Identification, analysis and profiling of risks were all key aspects of the strategy, together with action planning.
Following general discussion, the position was NOTED.
5. Internal Audit Reviews – Period 1 April to 2 June 2006
There had been circulated Report No.AS-9-06 dated 2 June 2006 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 - as follows:-
Central Systems – Debtors – confirmed that a number of issues which had been identified at previous audits remained unresolved, including the significant number of invoices raised for less than £20, gaps in debtor invoice numbers and no date of supply being recorded. The audit had also uncovered a number of nil value invoices being raised, incomplete invoices not being entirely cleared out and key trigger points for follow-up/additional action on debts not being pursued at an early date. In value terms, approximately £107,000 of all invoices had been in dispute since 2004 with the oldest dating back to 1996. As a result, eleven recommendations had been made - three at Grade 1, two at Grade 2 and six at Grade 3 – all of which were to be implemented by the end of October 2006.
Following discussion, during which a number of Members expressed concern at the number of issues which remained unresolved following the previous audit, it was AGREED that a further follow-up report should be submitted to a future meeting as early as possible after the October implementation date.
Central Systems - Community Charge – confirmed that there had been very little proactive work done on recovering Community Charge debt since August 2002 mainly due to the prioritisation on Council Tax. Individual Community Charge records on the now largely inactive Radius computer system required in each case to be checked in detail before further enforcement action against defaulters could take place although there were now plans to verify the data and allocate more staff time to collect the outstanding debt. In addition, the data cleansing exercise had not been concluded despite assurances given to the Resources Committee in 2003 that work on this task had commenced. In all, two recommendations had been made – one at Grade 1 and one at Grade 3 – both of which would be addressed on an ongoing basis.
Central Systems - Treasury Management – confirmed that the Treasury Service had good internal controls and procedures in place and, as a result, there had been no findings requiring corrective action as a result of the audit review.
Revenue Budgetary Control – confirmed that the audit had been performed during a period of transition from one Financial Ledger system to another but the majority of budget holders had indicated that they had not received sufficient training or guidance. Although a Corporate Finance Training Module had been developed and delivered to around 40 staff, it had been temporarily suspended for the transitional period although it was hoped that training would be combined with guidance on the implementation of Oracle 11i and would address this issue. It was also considered important that consistency and clarity were provided in the treatment and reporting of variances and changes to budgets. In all, three recommendations had been made – two at Grade 3 and one at Grade 2 – all of which were due to be implemented by October 2006.
Payroll Section – Information Processing – confirmed that the work done by the Payroll Section was generally accurate and efficient although small errors had been found in the authorisation of a timesheet and it was considered that processes and procedures should be reiterated to staff in order to prevent their re-occurrence in the future. In this regard, one recommendation had been made at Grade 3.
The Committee otherwise NOTED the terms of the report as circulated.
6. Internal Audit – Annual Report 2005/06
There had been circulated Report No. AS-10-06 dated 19 May 2006 by the Head of Internal Audit and Risk Management which included an assessment of the adequacy, reliability and effectiveness of the Council’s system of internal financial control and provided information for the Council’s Corporate Governance Assurance Statement. The report also contained a summary of the work undertaken by the Internal Audit Section during the year and an assessment of the future.
During a summary of the report, it was confirmed that the year 2005/06 had been a ‘settling in’ year in terms of the benefits of the changed structure and personnel which had been introduced in the previous year. Discussions had also been undertaken with clients in terms of risks and review planning and through various development groups. A high level of customer satisfaction had been indicated through feedback from the Client Questionnaire process and the high level of unplanned activity indicated a willingness on the part of clients to include the Internal Audit Section as part of their processes for addressing areas of concern.
The Committee NOTED the terms of the report as circulated.
7. Highland Council Pension Fund – Monitoring of Retirements
There had been circulated Report No.AS-11-06 dated 17 May 2006 by the Head of Internal Audit and Risk Management which provided information in relation to retirements from Scheduled and Admitted Bodies participating in the Highland Council Pension Fund for the year ended 31 March 2006.
It was confirmed that the total number of retirements (all employers) had increased between 2004/05 and 2005/06 by 22 (from 162 to 184) although there had been no increase in terms of the Council’s own employees. The number of retirements due to redundancy/efficiency had increased by 6 (from 3 to 9) although retirements due to ill health had reduced by 6 (from 42 to 36).
Following general discussion, the Committee NOTED the terms of the report as circulated.
The meeting ended at 12.05pm.