Minutes of Meeting of the Audit and Standards Committee held in Committee Room 3, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 20^th April 2006 at 10.30 a.m

 

 

Non-Member also present:

 

Mrs G McCreath

 

Officials in attendance:

 

Mr G Munro, Head of Internal Audit and Risk Management

Ms R Pieroni, Head of Committee Services

Mr B Williams, Head of Corporate Finance

Mr G McCaig, Head of Business Support, Housing and Social Work

Mr N Rose, Principal Auditor, Internal Audit

Miss L MacKay, Auditor

Miss J MacLennan, Principal Administrator, Corporate Services

 

Also in attendance:

 

Mr R Scott, Audit Scotland

Mr J Convery, Audit Scotland

Mr D W Briggs in the Chair

 

Business

 

1. Apology for Absence

 

An apology for absence was intimated on behalf of Mr A MacKay.
 
2. Minutes of Previous Meeting – 16 February 2006

 

There had been circulated for information the Minutes of Meeting of the Committee held on 16 February 2006 – which were NOTED.
 

3. Internal Audit Reviews - Period – 27 January to 31 March 2006

 

There had been circulated Report No. AS/5/06 dated 3rd April 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.

 

Speaking to the report, the Head of Internal Audit and Risk Management highlighted the reviews which had been undertaken as follows:-

 

Community Ownership Project – confirmed that an approved Project Plan was in place against which progress was regularly monitored as well as a Staff Communication and Consultation Plan. A further Plan was to be developed in relation to Communication with Tenants. A Project Board was also in place although it had still to define its remit. Overall, the project had been well planned and progress was being closely monitored and reported in order to ensure that the ballot took place and, if applicable, the transfer was completed on target. There had been one recommendation made with a prioritisation classification of 2.  

 

Lochaber Area – Heating Oil Contract – confirmed that the packaging of the Equipment and Adaptations installations had been inefficient, ineffective and uneconomical. Also, no clear and consistent specification had been issued and there had been a reliance on the ‘good faith’ of the contractors concerned due to an absence of inspections. Although elements of the installation work had been subject to Building Regulations, warrants had either not been obtained or had been granted without the performance of appropriate checks. It had also been noted that there had been no qualified or experienced Building Services Inspectors at the time when the works had been commissioned. Overall, a substantial number of shortcomings had been identified which had resulted in the need for remedial works at all the properties concerned. However, measures had now been identified to ensure that there was no recurrence of the problems which had been identified.     

 

Risk Management – confirmed that there was no framework for identification of the risks affecting the Council’s business objectives on an ongoing basis and no corporate risk register containing all of the risks identified by Service Management teams. There was also no clear link between the Service Risk Registers, Management Action Plans, Service Plans, Service Goals and the Corporate Plan. In addition, there were inconsistencies in both the way in which risks were recorded and linked to plans and in the level to which the process had permeated across different Services. Overall, twelve recommendations had been made to address areas of concern – two at Grade 1, three at Grade 2 and seven at Grade 3 – and it had been recommended that all should be addressed within the following six month period.

 

Following discussion, it was AGREED that a short presentation should be made to the next meeting to update Members on the strategy adopted by the Council in Risk Management.  

 

Capital Budgetary Control – confirmed that it had been found that, after initial agreement of the budget, adjustments to budgets had not been highlighted in the narrative part of the monitoring report. Also, all reports focused on the current year and no reference or summary was presented at the conclusion of a major capital project. In addition, monitoring statements were not presented to every Service Committee. Overall, four recommendations had been made – one at Grade 1 and three at Grade 3 – all of which were due to be implemented with the following twelve month period.

 

Highland Opportunity Ltd – confirmed that, although the procedural guidance stated that personal references should be taken up in respect of loan applications, this was not always the case. Also, where the loan was for less than £5,000, it could be approved by delegated powers but it had been found that there was not always formal authorisation on file in this regard. Overall, two recommendations had been made – one at Grade 3 and one at Grade 2 – both of which had been implemented by 31 March 2006.                       

 

Income and Recovery (Manual Receipting etc) – confirmed that overall there were good income manual receipting procedures but these were being undermined by poor holiday cover and the distances between those involved in processing income onto the Oracle system. As a result, problems were also being caused with the reconciliation process at Headquarters. Three recommendations had been made – all at Grade 3 – which were to be addressed by the Oracle 11i project team during the development of the new package and completed by April 2006.

 

Social Work – Duplicate Payment – confirmed that a review had established that there had been three contributory factors surrounding an overpayment to a Day Centre, namely all grant payments to Voluntary Organisations were being paid centrally from Headquarters for the first time, an invoice had been sent to the Area Social Work Office from the Centre when this had not been required and the Team Leader had failed to scrutinise the payment request details sufficiently prior to authorising the payment. It was however considered that this had been a one-off occurrence which, if the recommended action was taken, should not happen again. Overall, four recommendations had been made – two at Grade 2, one at Grade 3 and one at Grade 4 – all of which had been accepted by management and were due to be fully implemented by April 2006.          

 

Following general discussion, the Committee otherwise NOTED the terms of the report as circulated.      
 
4. External Audit Reviews

 

There had been circulated Report No. AS/6/06 dated 4th April 2006 by the Director of Finance which contained reports from the Council’s External Auditors (Audit Scotland) as follows :-

 

Financial Strategy
Following the Public Pound

 

The report detailed the recommendations made in the activities reviewed and included an Action Plan which had been agreed by the relevant Service Managers.

 

In regard to Financial Strategy, it was confirmed that overall the Council had well developed procedures in place, particularly in regard to budgetary control mechanisms, Member involvement in the Budget Working Group, effective treasury management procedures and useable reserves and balances. Key areas where it was considered that arrangements could be improved included linking resource allocation to Council priorities within the Corporate Plan and Service/Operational Plans, developing a systematic approach to ensure that the Council’s financial performance and strategy was integrated with wider performance management, progressing medium and long term revenue and capital planning in line with the approach approved by the Budget Working Group and ensuring that asset management plans for all of the Council’s assets showed that investment decisions were soundly based.

 

Following discussion, it was AGREED that, in relation to the recommendation to introduce a structured programme of staff development and training on financial issues, specific consideration should be given to including Members where appropriate.

 

It was also AGREED that, in relation to the recommendation for the preparation of an asset management plan for all services, specific consideration should be given to the inclusion of information in relation to the Council’s land assets in terms of possible future financial advantage from land sales, etc.          

 

In regard to Following the Public Pound, it was confirmed that overall the Council had effective arrangements in place, including an approved Voluntary Sector Policy, Corporate Guidance, standard Service Level Agreements, clear separation of duties between officers and a right of access to key records etc for External Audit. Areas for improvement included the need to maintain a corporate register of all support provided to arms length external organisations (ALEOs), use of existing policies on the community use of school buildings and sub market leases in the development of a corporate policy on non- cash support for ALEOs, introduction of a formal corporate risk assessment process for service departments to apply before entering into funding arrangements with ALEOs, the issue of further guidance on the monitoring of financial and operational performance for significant funding arrangements and confirmation that appropriate insurance cover and indemnity arrangements were in place in order to safeguard Members and Officers from potential risks in their dealings with external bodies.     

 

Thereafter, the Committee otherwise NOTED the terms of the report as circulated.     
 
5. Tactical Audit Plan 2006/07

 

There had been circulated Report No. AS/7/06 dated 5th April 2006 by the Head of Internal Audit and Risk Management which contained details of the annual review which had been undertaken during January and February in order to revise Audit Plans for the financial year 2006/07. In accordance with best practice, the previous 3 year ‘Strategic’ plan had been replaced with an annual ‘Tactical’ plan which reflected the current and future pace of change within the authority and was the result of needs assessment undertaken with the support of Service Directors, including consideration of the current Risk Assessment methodology adopted by the Council. 

 

The Committee NOTED the terms of the report as circulated. 
 

6. Standards Commission: Councillors' Code of Conduct: Investigations into Complaints

There had been circulated Report No. AS/8/06 dated 12th April 2006 by the Director of Corporate Services which advised of complaints received by the Standards Commission during the period August 2005 to March 2006 in relation to alleged breaches of the Councillors’ Code of Conduct by four Members of Highland Council and of the outcome of the Standards Commission’s investigations into these complaints.

 

During a summary of the report, it was confirmed that, in respect of the complaints dealt with over the period, the Standards Commission had made no findings of breach of the Code of Conduct and there were no cases outstanding at the present time.     

 

During discussion, a number of Members questioned the wording within Section 2 of the Code whereby it was stated that Councillors “must respect all other Councillors and all Council employees…” and it was suggested that this would be better phrased in terms of “respect must be shown to all other Councillors…”. Members were also of the view that the requirement to show respect should be extended to cover other individuals present at any meeting where the Councillor was representing the Council. 

 

It was AGREED that Officers should ask the Standards Commission whether there was likely to be an opportunity for further consultation on the Code of Conduct in the future which would enable these points to be made.          

 

The meeting ended at 11.40 a.m.