Minutes of Meeting of the Audit and Scrutiny Committee held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 17 April 2008 at 10.30 a.m.
Present:
Dr D Alston, Mr J Gray, Mrs L Munro, Mr G Smith, Mrs J Urquhart, Mr R Greene, Dr A Sinclair, Mr M Finlayson, Mr A Rhind, Ms A MacLean, Mr E Hunter, Mr B Clark, Mr J MacDonald, Mr P Cairns, Mr D Kerr, Mr D Henderson, Mr A Torrance, Mr I Brown, Mr J Ford, Mr R Wynd, Mr L Fraser, Mr S Park, Mr T Prag
Non-Members also present:
Mr J Rosie, Mr D Bremner, Mr R Durham
Officials in Attendance:
Mr A Dodds, Chief Executive, Mr A Geddes, Depute Chief Executive and Director of Finance, Ms M Morris, Assistant Chief Executive, Mr S Barron, Director of Housing and Property, Mr N Rose, Interim Head of Internal Audit and Risk Management, Mrs C McDiarmid, Head of Policy and Performance, Mr B Alexander, Head of Children’s Services, Mr E Boyd, Principal Engineer, Energy and Sustainability, Mr B Tinker, Principal Contracts Officer, Finance Service, Miss D Sutherland, Acting Principal Auditor, Mrs K Lackie, Business Support Manager, Miss J MacLennan, Principal Administrator, Mrs R Daly, Committee Administrator
Also in attendance:
Ms F Mitchell-Knight, Assistant Director of Audit Services, Audit Scotland, Mr R Clark, Senior Audit Manager, Audit Scotland
Dr D Alston in the Chair
Business
An asterisk in the margin denotes a recommendation to the Council. All decisions with no marking in the margin are delegated to the Committee.
1. Apologies for Absence
Apologies for absence were intimated on behalf of Mr M Rattray.
2. Internal Audit Reviews
There had been circulated Report No. AS-05-08 dated 4 March 2008 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 –
The Committee NOTED the terms of the report as circulated.
The Committee also NOTED as follows –
i. Energy Management – the forward plan indicating progress on achieving
the target of increasing installed capacity of renewable energy
equipment by a minimum of 4,000kW would be available in August; and
ii. that an Internal Audit Report on the Common Good Fund had been
drafted which addressed the issue of ensuring that all rental income was
collected in accordance with the agreed leases and it was envisaged that
this report would be submitted to the next meeting of the Committee.
The Committee also AGREED to extend their congratulations to members of staff who had recently been successful in Audit examinations.
3. External Audit Reviews
There had been circulated Report No. AS-06-08 dated 7 April 2008 by the Depute Chief Executive and Director of Finance which contained three reports from the Council’s External Auditors (Audit Scotland). Mr R Clark, Senior Audit Manager, Audit Scotland, made a presentation to the Committee on the three reports as follows -
a) Priorities and Risk Framework 2007/08
It was confirmed that the Priorities and Risk Framework (PRF) was a national tool to help plan the risk-based audits of local government in Scotland which focused on the key initiatives and priorities facing clients as well as the main risks to their achievement. It also helped to ensure audit work was properly focused and took account of sector specific national priorities and risks and enabled the delivery of an integrated audit across Scotland which addressed the priorities and risks of local government from a top down (national) and bottom up (local) perspective.
The report presented Audit Scotland’s key findings in relation to political governance, community planning & partnership working, performance management, financial planning, workforce management, and procuring and managing assets.
In relation to training for Members, it was confirmed that some training was compulsory and other training was voluntary. There would, however, be a requirement to publish Members’ training in future. A survey inviting Members to indicate their training needs had been issued recently and the results would be analysed and addressed.
Following discussion, the Committee NOTED the terms of the report as circulated.
b) Annual Audit Plan 2007/08
A summary of the planned annual audit activity included an audit of the financial statements and provision of an audit opinion, reporting of the findings of the audit risk assessment process in a Strategic Audit Risk Analysis, review and assessment of governance and performance arrangements and provision of an opinion on a number of grant claims and the whole of government accounts.
The three main responsibilities of both the External Auditor and the Council were detailed, together with the audit issues and risks in relation to financial management, accounts presentation and disclosure and trading operations.
The planned key outputs included a strategic audit risk analysis, report to Audit and Scrutiny Committee in terms of ISA 260, independent auditor’s report on the financial statements and an annual report to the Members and the Controller of Audit.
During discussion, and in relation to community planning, it was confirmed that discussions were ongoing with the Council’s main partners in regard to arrangements for delivery of Single Outcome Agreements as directed by the Scottish Government. Feedback from the Scottish Government was expected shortly, including the proposed formal external auditing arrangements, and this would be reported to the next meeting of the Council. In addition, the draft Single Outcome Agreement would be submitted to the Council meetings on 8 May and 26 June for final approval.
It was also confirmed that a report would be submitted to an early meeting of the Resources Committee which would provide information on how the Council proposed to address an underspend of £12.5m on the Capital Programme.
Following further general discussion, the Committee otherwise NOTED the terms of the report as circulated.
c) Strategic Audit Risk Analysis
In terms of the findings from the Strategic Audit Risk Assessment of Highland Council, the strategic risk themes for the following three years were detailed, together with the key points, intermediate risks and priorities and the longer-term considerations in relation to supporting political governance, adopting a strategic framework to deliver change, sustainability and efficient use of resources, using performance management to drive service improvement, working with communities and partners and creating a modern and streamlined workforce.
In this regard, Audit Scotland would be reporting, as appropriate, throughout the year in relation to the Council’s achievement of its efficiency agenda and intended to include this in the report to Members which would be issued in November/December 2008.
In relation to Single Outcome Agreements, it was confirmed that the Council and its partners were preparing the Agreement one year in advance of the Scottish Office requirement. As such, the draft Agreement would be submitted to the Council meeting on 8 May 2008 with the final version being submitted to the next meeting on 26 June 2008. This would allow feedback from Members with the Agreement being put in place during the financial year 2007/08.
Following general discussion, the Committee otherwise NOTED the terms of the report as circulated.
4. Tactical Plan 2008/09
There had been circulated Report No. AS-07-08 dated 4 April 2008 by the Head of Internal Audit and Risk Management which provided details of the Internal Audit Section’s Tactical Plan for the financial year 2008/09.
It was confirmed that the CIPFA Code of Practice for Internal Audit required the Head of Internal Audit and Risk Management to prepare a risk based audit plan which outlined the assignments to be carried out, their respective priorities and the estimated resources needed. The Code also stated that the plan should be fixed for a period of no longer than one year.
The report detailed the activities which made up the 2008/09 Tactical Plan and the planned audits, their risk score, the scope of the audit and the number of days allocated.
Following discussion, the Committee NOTED the Tactical Plan for 2008/09 as circulated.
5. Risk Management Update
There had been circulated Report No. AS-08-08 dated 7 April 2008 by the Head of Internal Audit and Risk Management which provided an update on the Corporate and Cross Cutting Risks.
It was confirmed that, at the meeting held on 21 February 2008, the Committee had noted an update on the Corporate & Cross Cutting Risks (CCCR) and had agreed that this subject should become a standing item on future agendas with further clarification being provided on the roles of Service Committees, as well as the Audit and Scrutiny Committee, in terms of how major risks would be reported and monitored in the future.
During a summary of the Senior Management process for reviewing Corporate & Cross Cutting Risks, it was confirmed that the review was scheduled to take place prior to Services reviewing risks as part of their Service Plans and the budget setting process. In this regard, it had recently been agreed that a two monthly review would be performed by the Weekly Business Meeting with each Director providing an update on individual risks. In addition, Service Committees would address risks throughout the year and would be made aware of any significant changes in the risk register as part of this process.
Following further general discussion, the Committee otherwise NOTED the terms of the report as circulated.
It was also AGREED that an update on Corporate and Cross Cutting Risks would be reported to the Audit & Scrutiny Committee on a six-monthly basis.
6. Scottish Public Sector Ombudsman Inquiries into Complaints Against the Highland Council – Annual Report
There had been circulated Report No. AS-09-08 dated 7 April 2008 by the Chief Executive which set out the number and type of complaints against the Council which had been referred to the Office of the Scottish Public Sector Ombudsman (SPSO) in the preceding year and the subsequent judgement in the cases where the SPSO had concluded its investigation.
Following discussion, the Committee NOTED the terms of the report as circulated.
The meeting ended at 11.55 a.m.