• Agenda

Minutes of Meeting of the Audit and Standards Committee held in Committee Room 3, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 24^th August 2006 at 10.30a.m

 

 

Non-Members also present:

Mr G M Smith

 

Officials in attendance:

Mr A Geddes, Director of Finance

Mr J D Rennilson, Director of Planning and Development (Item 3v)

Mr G Munro, Head of Internal Audit and Risk Management

Mr H Fraser, Head of Support Services, Education, Culture and Sport Service (Item 3viii)

Mr N Rose, Principal Auditor, Internal Audit

Mrs E Kirkham, Principal Staffing Resources Officer, ECS Service (Item 3viii)

Miss L MacLean, Audit Assistant, Internal Audit

Miss J MacLennan, Principal Administrator, Corporate Services

 

Also in attendance:

Mr R Clark, Audit Scotland

Mrs F Kordiak, Audit Scotland

 

Mr D Briggs in the Chair

 

Business

 

1.      Apologies for Absence

 

There were no apologies for absence.

 

2.      Minutes of Meeting – 15 June 2006

 

There had been circulated for information the approved Minutes of Meeting of the Committee held on 15 June 2006.  - which were NOTED.

 

3.      Internal Audit Reviews – Period – 3 June to 11 August 2006

 

There had been circulated Report No. AS-13-06 dated 15 August 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. There had also been circulated copies of the full background reports in relation to Planning and Development - Processing of Planning Applications and Education, Culture and Sport – Staffing Unit.

 

(i) Education, Culture and Sport – The Bridge – Procedural Report

 

Declaration of Interest – Mr M Macmillan declared a non-pecuniary interest in this item as a member of his family was employed at The Bridge and left the room.

 

It was confirmed that the review had highlighted a number of areas where the Council’s Financial Regulations were not being fully complied with and that there had been a significant level of basic errors which could have been easily identified prior to authorisation of transactions had a robust system for checking and authorisation been in place. In all, eleven recommendations had been made – all of which had been assessed as Grade 3 and were due to be implemented by October 2006.

 

Following discussion, it was AGREED that copies of the report should be forwarded to the Manager of the Wick District Heating Scheme, and other similar projects within the Highland area, for information.

 

(ii) Procurement – confirmed that the Council did not yet have in place a fully operational Corporate Procurement activity. In particular, there needed to be an overarching Procurement Strategy or Policy which would give context for the various developments in procurement, namely Pecos, strategically sourced projects and the use of a Council contracts list. A number of areas had been identified where improvements were required within Pecos and it was also considered that the profile of the Council contract list needed to be raised. In all, five recommendations had been made – one at Grade 1 and four at Grade 3 – of which were due to be implemented by September 2006.

 

Following discussion, it was NOTED that the Director of Finance would present a formal strategy paper on issues relating to Procurement to the Council by the end of the year.        

 

(iii) Aggregate Broadband Procurement Project – confirmed that generally claims had been well administered with all expenditure coded to a specific ledger code and all original invoices easily accessible. There had only been limited guidance from the Scottish Executive and, whilst there had been problems with the first claims in that they had not been certified by the Director of Finance and recoverable VAT claimed, these problems had now been resolved. It was considered that if regular reconciliations were performed then this would enhance the audit trail and ensure that all eligible expenditure had been claimed. In all, one recommendation had been made – at Grade 3 – which had been actioned immediately.        

 

(iv) Transport, Environmental and Community Services – Cyclical and Structural Maintenance – confirmed that the review objectives had been to ensure that the programme of re-surfacing/overlay was targeting the poorest parts of the network by reference to the Road Condition Survey, the selection of contractors was based on a financial assessment and that the actual rates paid reflected the tendered schedule of rates, there was management and control of cyclical maintenance work, job control cards and timesheets were properly completed, submitted and controlled and plant utilisation was monitored to determine that levels of plant held was optimum. Overall it was considered that the systems of control and monitoring in place were adequate and that progress was being made in targeting resources according to need. However, there were still areas remaining which required action and six recommendations had been made – two at Grade 1, one at Grade 2 and three at Grade 3 – all of which were due to be implemented within three months of the issue of the final report. 

 

(v) Planning and Development – Processing of Planning Applications – confirmed that the audit had been undertaken as part of the annual plan for 2005/06 and although the focus of the audit had been on Inverness Area, practices in other areas had also been reviewed for comparison purposes. Overall, it had been considered that the internal controls in relation to planning applications were generally satisfactory. However, there had been a number of instances when the Planning Committee had gone against the recommendations of Planning Officers, particularly in relation to housing development applications in respect of the hinterland, and it was suggested that if Committee decisions were more closely monitored and reported, trends could be established in order to gain a better understanding of the situation for both Members and Officers and to determine whether policies should be reviewed. The results of monitoring would also help to inform the development of future Local Plans. A total of four recommendations had been made – two at Grade 2 and two at Grade 3 – and these had been addressed by June 2006.

 

During detailed discussion, concern was expressed at the percentage of recommendations from Planning Officers which had been overturned by Members although it was noted that the numbers and percentages had declined between 2004/05 and 2005/06. It was suggested that greater clarity should be given in the ‘material considerations’ put forward by Members in justifying departure from the development plan. It was also stressed that it was important to ensure that any decisions made contrary to the Planning Officers’ recommendations were justified in planning terms and clearly documented in the minutes of the meeting.          

 

It was therefore AGREED that in future, and in order to ensure fairness and consistency, the situation should be monitored and any problem areas identified and addressed.

 

It was also AGREED that a copy of the report should be forwarded for consideration by Area Planning Committees.              

 

(vi) Education, Culture and Sport – Education Maintenance Allowances – confirmed that, from the sample of payments examined, it appeared that there was a high degree of accuracy. However, an overriding concern had been the reliance on one person – the EMA Co-ordinator – to administer the scheme from start to finish which was unsatisfactory in terms of the control requirements of Financial Regulations and also questioned the ability to effectively administer the scheme in the absence of the Co-ordinator. Several issues had been identified where compliance and efficiency in processing the scheme could be improved and a total of twelve recommendations had been made – one at Grade 1, four at Grade 2, six at Grade 3 and one at Grade 4 – all of which had been accepted by management and were due to be implemented by April 2007.        

 

(vii) Implementation of Oracle Financials (Computer Audit) – confirmed that the Finance and Transport, Environmental and Community Services project teams had put in considerable effort to get the system live in a very short implementation timescale. In terms of the areas covered in the audit, the fact that the table level audit trail was now operational was a significant improvement over the previous version. In all, the report had made two recommendations at Grade 3 – both of which had been accepted by management and were due to be implemented by the end of September 2006.  

 

(viii) Education, Culture and Sport – Staffing Unit – confirmed that the Staffing Unit had succeeded in establishing a centralised service within eighteen months which had consolidated the work and practices of the previous six different locations. It was acknowledged that the administration of the appointment of teaching staff had undergone significant change and that development would continue with the implementation of the new Recruitment and Selection Guidance. However, the main findings of the review had indicated a number of shortcomings/risks which required attention to enable assurance that sufficient vetting and audit trails were in place for each appointment. The Principal Staffing Resources Officer had stated that she had already identified many of the issues raised in the review and was currently working with Personnel on further streamlining practices and procedures. It was acknowledged that it would take time for all the relevant staff in the Education, Culture and Sport Service to complete the training and the implementation of the necessary procedures for teaching staff would have to be approved by the Local Negotiating Council for Teachers (LNCT). In all, a total of twenty recommendations had been made – four at Grade 1, ten at Grade 2, four at Grade 3 and two at Grade 4. Whilst the recommendations had been accepted by management, no action was to be taken on one of the recommendations at Grade 4. Corrective action for the remaining recommendations was due to be implemented by August 2007.

 

Following detailed discussion, during which a number of Members expressed concern regarding issues which had been highlighted in the report in regard to recruitment procedures, it was confirmed that the Staffing Unit with the Education, Culture and Sport Service had been set up in close liaison with the Personnel Service of the Council and as a result of ‘best value’ reviews into ‘high risk’ areas of recruitment where it was recognised that the highest level of scrutiny was required. At the time of the audit, a number of the issues identified had been the responsibility of the General Teaching Council although this responsibility had subsequently transferred to Local Authorities and was now being addressed. Although it was accepted that initially there had been some diversity in terms of practice within different Areas of the Council, this had now been regularised and training was currently being ‘rolled out’ across the Service with priority being given to Head Teachers in the first instance.

 

Following further discussion, it was AGREED that a ‘follow-up’ audit should be undertaken and reported to the Committee and consideration given to ensuring that the Council was fulfilling its statutory requirements in terms of new legislation.                            

 

(ix) Payroll – Travel and Subsistence – confirmed that it had been found that travel and subsistence claims were being appropriately dealt with by members of the Payroll Section. Improvements were required in regard to the new guidelines stipulated by H M Revenue and Customs in regard to VAT records on fuel receipts as currently there was only a 50% uptake by employees and the importance of submitting valid receipts with claim forms was to be reiterated to all Services whose staff should ensure that the Travel and Subsistence form had been correctly completed and authorised before submission. As part of the authorisation process, relevant attachments were also to be checked. In all, two recommendations had been made – one at Grade 3 and one at Grade 1 – both of which were due to be evaluated and implemented by November 2006.            

 

The Committee otherwise NOTED the terms of the reports as circulated.

 

4.  External Audit Reviews

 

There had been circulated Report No. AS-14-06 dated 16 August 2006 by the Director of Finance which contained report from the Council’s External Auditors (Audit Scotland) as follows;

 

Efficiency Government – Position Statement – confirmed that overall the Council was demonstrating a commitment to the Efficient Government agenda in that the Chief Executive had overall responsibility for the area and progress was regularly reported to Elected Members. The Budget Working Group had also been charged with further developing the Council’s efficiency and budget strategies to ensure that sustainable efficiencies were identified. It had been estimated that the Council would achieve efficiency gains of at least £13.229m over the three year period commencing 2005/06 and cashable savings were expected to exceed the target set by the Scottish Executive. Efficiencies were to be found internally through the budget process, a review of political and managerial structures, business process improvement, procurement of goods and services and through joint working with other public sector bodies.

 

In terms of the Risk Summary and Action Plan, it was confirmed that the Council was developing a comprehensive performance management information system which would draw on the new tools for linking performance against targets in the Corporate Plan and Service Plans, the quarterly performance review which looked at performance comprehensively across Services and the new information for the budget which would link activities and performance to budgets/cost centres. It had also been agreed that the Council required better information on unit costs.          

 

The Committee NOTED the terms of the report as circulated.        

 

The meeting ended at 1.00pm.