Minutes of Meeting of the Audit and Standards Committee held in Committee Room 3, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 30th November 2006 at 10.30 a.m
PRESENT:
Mr D W Briggs
Mr W Fernie
Mr M Macmillan Mr I MacDonald
Mr L Fraser
Mr W Clark
Officials in attendance:
Mr A Geddes, Director of Finance
Mr D Robertson, Head of Accounting
Mr G Munro, Head of Internal Audit and Risk Management
Mr N Rose, Principal Auditor, Internal Audit
Mr M Golembiewski, Auditor, Internal Audit
Mr N Campbell, Resources Manager (Children’s Services – Inverness Area), Social Work
Miss J MacLennan, Principal Administrator, Corporate Services
Also in attendance:
Mr R Clark, Audit Scotland
Mrs F Kordiak, Audit Scotland
Mr S Moodie, Highland Youth Voice
Mr D Briggs in the Chair
Business
1. Apologies for Absence
Apologies for absence were intimated on behalf of Mr A MacKay, Mr R J Lyon and Mr F D S Black.
2. Minutes of Meeting – 5 October 2006
There had been circulated for information the approved Minutes of Meeting held on Thursday, 5 October 2006 - which were NOTED.
3. The Highland Council – Report on the 2005/06 Audit
There had been circulated Report No. as-19-06.pdf dated 8th November 2006 by the Director of Finance which introduced and commented on the External Auditor’s Report to Members in respect of the Final Accounts for the financial year ended 31st March 2006.
In this regard, there had been circulated separately:
(i) Report on Audit of Accounts from the External Auditor (Audit Scotland); and
(ii) Highland Council – Statement of Accounts – Year Ended 31 March 2006.
During a summary of the External Auditor’s Report, it was confirmed that an unqualified opinion had been given on the Council’s financial statements for 2005/06 and it had been noted that corporate governance systems were in place and operated well within a sound control environment. Also, risk management arrangements were improving and were being embedded throughout the organisation.
In terms of the Best Value Audit of the Council which had been undertaken in 2005/06, the main conclusions had been that the current structure for local service delivery recognised the diverse nature of the area but failed to capitalise on all opportunities for service responsiveness and efficiency, local issues could predominate which resulted in the Council having too many priorities which were difficult to sustain and further improvements would require the continued efforts of Elected Members and Senior Managers combined with a more corporate approach to strategic development. In this regard, the Council had recently considered the key issues which were likely to influence service delivery, management and staffing in the long term and had approved a move towards three new operational management areas.
In respect of the Corporate Plan, 85% of actions and targets were on track with remedial action to be taken on the remaining targets. A clear commitment to the efficient government agenda had been shown and the Council had set a target of reducing management costs by 20% and other staffing costs by 5% to ensure an affordable organisational structure. In addition, all of the Council’s significant trading organisations (STOs) had met the statutory target to break even.
Finally, in regard to the outlook for future audits, the Council had sought to limit its exposure to the financial risk associated with equal pay claims by agreeing to offer payments to specific groups of employees as part of a compensation package. The planned implementation of single status had however been delayed pending discussions with the trade unions and costs could not be reliably estimated until a local agreement had been reached. Also, a high level revenue budget for 2007/08 had been set based on an indicative Council Tax rise of 2.5% and, whilst the Minister for Finance and Public Service Reform had indicated a willingness to consider cases made for extra funding, no firm commitment had been made and it had been reported that if such funding was not forthcoming then balancing measures would be required before setting the budget.
At this point, the Chairman confirmed that the Council had been required to submit unaudited financial statements to the Controller of Audit by 30 June 2006 with the target date for the issue of the audit certificate being 30 September 2006. Both deadlines had been achieved for 2005/06 and the Financial Accounts, incorporating all necessary audit adjustments, had been available from 4 October 2006. This represented a further improvement in the Accounts production process and it was agreed that the congratulations of the Committee should be conveyed to the staff concerned.
Following general discussion, the Committee otherwise NOTED the terms of the External Auditor’s Report, together with the Council’s response to the findings and the completed Action Plan, and the Statement of Accounts for the year ended 31st March 2006.
4. Internal Audit Reviews – Period – 22 September to 10 November 2006
There had been circulated Report No. as-20-06 dated 10th November 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:-
Civil Engineering and Capital Contracts – confirmed that the review had provided assurance that, with the exception of the process for selection of contractors to be invited to tender which was not considered to be sufficiently transparent, the procedures within the Council’s Contract Standing Orders were being followed. In addition, staff within the Project Design Unit had designed documents for use in the tendering procedures which further improved clarity throughout the process. There had been three recommendations arising from the review – one at Grade 2 and two at Grade 3 – which had been accepted by management with agreed actions to be implemented by 31st December 2006.
It was advised that the Council’s Contract Standing Orders were currently being reviewed by the Corporate Procurement Unit following the introduction of new EU Procurement Regulations. This was likely to affect the issues raised by the audit and as such the management agreed action provided an interim solution with further changes likely following the review. It was confirmed that any additional changes to procedures would be carried out in conjunction with the Corporate Procurement Unit.
Social Work – Children’s Centres – confirmed that overall it had been found that the financial systems could be relied upon but there were a number of areas where the systems had been found to be unsatisfactory, including the lack of a satisfactory audit trail in a number of the Centres where clothing or electrical items had been purchased for young people, the lack of standard financial procedures and the lack of maintenance of inventories in terms of the Council’s Financial Regulations. Overall, seventeen recommendations had been made – twelve at Grade 3 and five at Grade 2 – all of which had been agreed by management.
Housing – Supporting People – confirmed that the main findings of the review had been that there was no programme of spot checks on providers to ensure that they were providing the services for which they had been contracted and that there was no formal recording of review appraisals for service providers. Subsequently, controls had been introduced to ensure that only services which were provided were paid for and procedures had been put in place to identify potential savings which were reported to the Housing and Social Work Committee. Also, reviews of all providers were being undertaken with an overall appraisal of each review to ensure consistency. Two recommendations had been made – both at Grade 3 – one of which had already been completed with the other to be completed within a two month period.
TEC Services – Waste Disposal – confirmed that the main findings of the review included the absence of signatures on some weighbridge tickets, a lack of clarity over roles and responsibilities with regard to the recovery of debt and discrepancies between sundry debtor invoices and transaction reports.
Subsequently, the introduction of a new system for the capture of weighbridge transactions had greatly improved control over activity at the three Council sites used for waste tipping. The awarding of contract work had also been found to be in accordance with Council procedures and the payment of contractors in line with the terms and conditions of those contracts. Further, all income due for commercial tipping had been invoiced in the following month. Overall, three recommendations had been made – all at Grade 3 – which had been accepted by management and were due to be implemented within three months of the issue of the final report.
Following general discussion, the Committee otherwise NOTED the terms of the reports as circulated.
The meeting ended at 11.05am.