Minutes of Meeting of the Audit and Scrutiny Committee held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 11 June 2009 at 10.30 a.m.
Present:
Mrs J Urquhart , Mr D Mackay , Mr J Rosie, Mr R Greene , Dr A Sinclair , Mr P Cairns, Mr B Clark , Mr H Wood, Mr D Kerr , Mr K MacLeod , Mr I Brown, Mr J Ford, Mr A S Park, Mr L Fraser and Mr G Rimell .
Non-Members also present:
Mr G Farlow, Mr G Smith and Mr I Ross
Officials in Attendance:
Mr A Dodds, Chief Executive
Mr A Geddes, Depute Chief Executive
Ms M Morris, Assistant Chief Executive
Mr N Rose, Head of Internal Audit and Risk Management
Miss D Sutherland, Principal Auditor
Miss J MacLennan, Democratic Services Manager
Mrs R Daly, Committee Administrator
Also in attendance:
Ms K Jenks, Senior Auditor, Audit Scotland
Mrs J Urquhart 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 D Bremner, Mr A Rhind, Mr A Torrance, Ms A MacLean, Mr E Hunter, Mr J Gray, Mrs G Sinclair, Mr T Prag and Dr M E M Foxley.
2. Internal Audit Progress Report
There had been circulated Report No. AS-8-09 dated 27 May 2009 by the Head of Internal Audit and Risk Management which provided details of work in progress and other information relevant to the operation of the Internal Audit Section.
During a summary of the report, it was confirmed that no final reports had been issued since the last meeting due to the current vacancies within the Section and staff time being committed elsewhere, including Caithness Heat and Power, Irregularity/Fraud Investigations, ICT Re-procurement advice, etc. It was hoped that work on Caithness Heat and Power would be completed by the end of June. A number of Reviews were planned for the next meeting of the Committee, including Compliance with RIPSA, Corporate Governance, General Ledger and Procurement.
In terms of staffing, several applications had been received for the three vacant Auditor posts but only three of these met the essential attributes criteria. Interviews were to take place during the week commencing 15 June 2009. It was confirmed that one candidate had chosen to withdraw their application. Therefore, following the interviews it would be necessary to consider the options which may include either appointing a trainee or recruiting from an Agency.
In response to comments, it was confirmed that the salary levels were deemed suitable for the posts and had been assessed through the Job Evaluation process. If it proved necessary to appoint a trainee this would be done on the basis of the individual working towards a full audit qualification.
Following discussion, the Committee NOTED the terms of the report as circulated and the action being taken to recruit suitable Auditors.
3. Statement on Internal Control and Annual Report 2008/09
There had been circulated Report No. AS-9-09 dated 21 May 2009 by the Head of Internal Audit and Risk Management which confirmed that the Statement on Internal Control 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 Assurance Statement.
The Annual Report provided an overview of the Internal Audit Section’s activities during 2008/09 and considered the issues to be addressed during 2009/10.
During a summary of the report, and in relation to the Statement on Internal Control, it was confirmed that, on the basis of the work undertaken during the year, it was considered that the key systems operated in a sound manner and there had been no fundamental breakdown in control resulting in material discrepancy. During 2008/09, a total of 126 audit recommendations had been made but only 2 had been classified as Grade 1 - this demonstrated the significant control issues regarding the work concerned. Considerable action had been taken to address these two areas and would be reported to the Committee as follow-up audits in due course.
Following discussion, the Committee NOTED the terms of the Statement on Internal Control and the Annual Report for 2008/09 as circulated.
4. Risk Management Update
There had been circulated Report No. AS-10-09 dated 25 May 2009 by the Depute Chief Executive which provided an update on the progress in managing the Corporate and Cross Cutting Risks (CCCR).
During a summary of the report, it was confirmed that an updated extract from the Risk Register had been attached as Appendices 1 and 2 to the report and showed that a total of 10 risks were above the acceptable tolerance line and required to be managed. Twelve risks were below the tolerance line and required no additional action at the present time.
Changes above the tolerance line included risks which had a revised rating (such as the New Pay and Grading Scheme and the Carbon Management Plan) and new risks (such as Climate Change).
New risks below the tolerance line included the Corporate Improvement Programme, Caithness Heat & Power, the Best Value 2 Audit and Job Evaluation. These risks were managed through the development of action plans and were fed into overall Service Plans and Quarterly Performance Reviews.
It was confirmed that a further report would be provided in six months time in order to advise as to progress.
The Committee NOTED the terms of the report as circulated.
5. External Audit Review – Strategic Audit Risk Analysis 2008/09
There had been circulated Report No. AS-11-09 dated 18 May 2009 by the Depute Chief Executive which presented the Strategic Audit Risk Analysis 2008-09 as published by the Council’s External Auditors (Audit Scotland).
During a summary of the report, it was confirmed that the Strategic Audit Risk Analysis (SARA) set out the findings from Audit Scotland’s review of the strategic risks facing the Council which would be used to prioritise the audit activity to be undertaken in the current audit year and to identify areas for ongoing review in future years. Although Audit Scotland’s analysis was updated annually, many risks remained from year to year and the risk analysis therefore covered a rolling three year period.
The key priorities and risks identified within the analysis included addressing Internal Audit’s findings on the Caithness Heat & Power project, the introduction of Personal Development Plans for Members and using these as the basis for determining appropriate training and development opportunities, ensuring that Internal Audit’s coverage was sufficient to provide assurance to management of the adequacy of internal control systems, progressing the Pathfinder North and NOSLA shared services projects, managing pressures in the budget arising from the concordat with the Scottish Government and the current economic climate, etc.
Audit Scotland had stated that the risks which had been identified presented significant challenges for the Council but that the Council already had action plans in place to address many of the risks which had been identified. Progress would be monitored over the coming years against the areas which had been identified and significant matters which arose on an exception basis would be reported.
The SARA document detailed the approach to be adopted by Audit Scotland throughout the year. The Priorities and Risks Framework highlighted the key national risks within local government and produced the basic framework for considering the Council’s activities. Audit Scotland would consider the national risks at a local level together with risks specific to the Highland Council. While the Annual Audit Plan mostly covered financial risks, SARA detailed the strategic areas for Highland Council during the coming year.
During discussion, Members commented that, as it was a key priority to introduce Personal Development Plans (PDPs) for Members, it was hoped that the timescales which had been identified for completion could be met. In response, it was confirmed that PDPs and training requirements for Members were to be taken forward as a matter or priority over the coming year and training records maintained in this regard. As part of this arrangement, consideration would also be given to any new training requirements when Committee memberships changed.
It was also confirmed that a report was to be submitted to the next meeting of the Council on 25 June 2009 which would address the new Planning regulations and the requirement for mandatory training for all Members. Similar training would also apply for Licensing and Recruitment processes.
In relation to partnership working arrangements, it was considered that there was a need to ensure that properly defined and quantifiable outcomes were established and that there was clarity in terms of aims and outcomes as they formed a vital aspect of effective partnership working.
The Committee otherwise NOTED the terms of the report as circulated.
6. Code of Corporate Governance
There had been circulated Report No. AS-12-09 dated 28 May 2009 by the Assistant Chief Executive which provided information on progress with the actions agreed in the Local Code of Corporate Governance for 2008/09 and detailed the actions which could appear in the Code for 2009/10.
During a summary of the report, it was confirmed that the Code of Corporate Governance had been prepared on an annual basis since 2002 and the tactical plans of the Internal Audit section included a review of the Council’s compliance with the Code. In addition, the Council’s arrangements in relation to Corporate Governance were examined by Audit Scotland.
In 2008, CIPFA and SOLACE had published a revised Guidance Note for Scottish Authorities – Delivering Good Governance in Local Government (2007) – which provided updated guidance on implementing the framework and provided an important development to enable Local Authorities to review effectiveness and identify continuing improvements in its governance arrangements.
It was confirmed that the Code would be of particular importance to the Council in the current year as it had been identified as a Pathfinder Authority in respect of Best Value 2 (BV2) and Audit Scotland and the Regulators were now embarking on a second round of inspections and would be in Highland in the autumn. BV2 involved a greater emphasis on self assessment and this would feed into the corporate governance framework. In this regard, there was to be a presentation at the next meeting of the Council in relation to the BV2 audit process.
During discussion, a number of Members commented on the current arrangements at Ward Forum meetings and it was suggested that there was a need for more engagement with the public and improved feedback in terms of issues raised. It was acknowledged that some Ward Forums worked very well and provided a very effective means of community consultation but this was not always the case.
In response, the Chief Executive confirmed that he had attended a number of Ward Forum meetings across the Highlands with the Convener and they had appeared to work very well and had been well attended. Relevant agenda setting was crucial in encouraging public involvement and members of the public were entitled to receive full information and clear feedback whenever requested. There should also be updates provided on issues raised at previous meetings.
Thereafter, the Committee NOTED progress on the actions for 2008/09 and AGREED the actions proposed for the 2009/10 Code of Corporate Governance.
The meeting ended at 11.35 a.m.