28 March 2018: Audit Committee

A meeting of the Audit and Scrutiny Committee will take place in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Wednesday, 28 March 2018 at 10.30am.

Webcast Notice: This meeting will be filmed and broadcast over the Internet on the Highland Council website and will be archived and available for viewing for 12 months thereafter.

You are invited to attend the meeting and a note of the business to be considered is attached.

Yours faithfully

Stewart Fraser
Head of Corporate Governance 

Business

1. Apologies for Absence
Leisgeulan

2. Declarations of Interest
Foillseachaidhean Com-pàirt

Members are asked to consider whether they have an interest to declare in relation to any item on the agenda for this meeting. Any Member making a declaration of interest should indicate whether it is a financial or non-financial interest and include some information on the nature of the interest. Advice may be sought from Officers prior to the meeting taking place.

3. Good News Stories 
Naidheachdan Matha

The Committee is invited to note that Mr Josh Gallimore, Trainee Auditor, following successful completion of his final exams has become a Chartered Internal Auditor (CMIIA) with the Chartered Institute of Internal Auditors. Josh has since been appointed to the post of Assistant Auditor.

4. Internal Audit Reviews and Progress Report – 15 November 2017 - 16 March 2018    
Ath-bhreithneachaidhean In-sgrùdaidh agus Aithisg Adhartais

There is circulated Report No. AS/1/18 dated 19 March 2018 by the Corporate Audit Manager which provides details of the final reports issued since the date of the last meeting, work in progress and other information relevant to the operation of the Internal Audit Section as follows:-

• Care & Learning Service - PPP Schools Contracts – Review of Value for Money Arrangements (Substantial Assurance)
• Care & Learning Service - Out of Hours Social Work Service (Reasonable Assurance)
• Development & Infrastructure Service – Investigation into Missing School Meals Income at a Primary School (Limited Assurance)
• Community Services - Delivery of the Scottish Housing Quality Standard Programme within the HRA Capital Programme (Substantial Assurance)
• Community Services - Review of the Control of Overtime within Community Services (Reasonable Assurance)
• Development & Infrastructure Service - European Maritime and Fisheries Fund 2016/17 (Full Assurance)

The Committee is invited to consider the Final Reports referred to in Section 3.1 and to note the current work of the Internal Audit Section as outlined in Section 4 and progress against the Plan and the performance information as provided in Section 5 of the report.

5. Audit & Performance Remit & Priorities and Internal Audit Annual Plan 2018/19 
Raon-ughdarrais & Priomhachasan Sgrudaidh & Coileanaidh agus Plana Bliadhnail In-Sgrudaidh 2018/19 
       
There will follow Joint Report No. AS/2/18 by the Depute Chief Executive/Director of Corporate Resources and the Corporate Audit Manager. 

6. Six-Monthly Review of Corporate Risks     
Ath-Sgrùdaidh air Cunnartan Corporra
                                                                                                                                                         
There is circulated Report No. AS/3/18 dated 6 March 2018 by the Depute Chief Executive/Director of Corporate Resources.

The Committee is invited to:-

i.    scrutinise the Corporate Risk Register provided at Appendix 1 and consider the risk profile at Appendix 2; 
ii.   approve the revised Corporate Risk Strategy at Appendix 3;
iii.  note that six monthly reviews of the Corporate Risk Register will continue to be reported each March and September to this Committee; and
iv.  note that an Officer Group has been established on Corporate Risk Management.

7. External Audit Report     
Aithisgean Sgrùdaidh bhon Taobh A-muigh

There is circulated External Audit report prepared by the Council’s External Auditors (Grant Thornton) as follows:-

Highland Council - External Audit Plan for the financial year ending 31 March 2018. 

The Committee is invited to note the terms of the report as circulated.

Minutes of Meeting of the Audit and Scrutiny Committee held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Wednesday, 28 March 2018 at 10.30am.

Present:
Mr R Laird, Mr P Saggers, Mr G Adam, Mr R Balfour, Mrs J Barclay, Mr B Boyd, Mr R Bremner (via VC), Mr J Bruce, Ms C Caddick (Substitute), Miss J Campbell, Mrs H Carmichael, Mr G Cruickshank, Mrs M Davidson, Mr C Fraser, Mr L Fraser, Mr T Heggie, Mr D Louden, Mrs L MacDonald (Substitute), Mr D MacKay, Mr S Mackie, Mr D Macpherson, Mrs B McAllister, Mrs M Paterson, Ms K Stephen 

Non-Members also present:
Mr K Gowans, Mr A Jarvie, Mr B Lobban, Mr A Rhind

Officials in Attendance:
Mr D Yule, Depute Chief Executive/Director of Corporate Resources
Mr B Porter, Head of Resources, Care and Learning
Ms S Barrie, Programme Manager (Property)
Ms N Wallace, Environment Manager 
Ms E Johnston, Corporate Audit & Performance Manager
Dr S Carr, Corporate Performance Manager
Miss J MacLennan, Democratic Services Manager
Ms C Maragh, Committee Administrator

Also in attendance:
Ms J Brown, Director, Public Sector Assurance, Grant Thornton
Mr J Boyd, Senior Manager, Grant Thornton  

An asterisk in the margin denotes a recommendation to the Council.  
All decisions with no marking in the margin are delegated to Committee.

Mr R Laird in the Chair

1. Apologies for Absence
Leisgeulan

Apologies for absence were intimated on behalf of Mr A Christie, Mr G MacKenzie and Ms M Smith.

2. Declarations of Interest
Foillseachaidhean Com-pàirt

There were no declarations of interest at the meeting.

3. Good News Stories
Naidheachdan Matha

It was noted that Mr Josh Gallimore (Trainee Auditor), following successful completion of his final exams, had become a Chartered Internal Auditor (CMIIA) with the Chartered Institute of Internal Auditors and had since been appointed to the post of Assistant Auditor.

Following the formal presentation of the Certificate by the Chair, the Committee otherwise NOTED the position and conveyed their congratulations to Mr Gallimore accordingly.   

4. Internal Audit Reviews and Progress Report – 15 November 2017 - 16 March 2018
Ath-bhreithneachaidhean In-sgrùdaidh agus Aithisg Adhartais

There had been circulated Report No AS/1/18 dated 19 March 2018 by the Corporate Audit Manager which provided details of the final reports issued since the date of the last meeting, work in progress and other information relevant to the operation of the Internal Audit Section.

In this regard, and with specific reference to corporate fraud activity and investigations, it was confirmed that the main activity during the quarter had been investigating the allegation of misuse of staff resources, plant, materials and equipment.

Also, following receipt of a report which had been considered by Dundee City Council’s Scrutiny Committee, a review of the IT controls surrounding the payments to creditors had been undertaken and this had provided assurance that the Highland Council’s controls were more robust (although there was still some scope for improvement and this would be addressed in a future report).

It was also noted that the Corporate Audit Manager was a member of the team working on the redesign review of trade services and in addition was working with Police Scotland to host a course in Headquarters on 3-4 May 2018 on the subject of preventing serious and organised crime against the Council.

Finally, it was further noted that a LEAN review of the Internal Audit process was currently being undertaken.        

The final reports were then presented as follows:-

• Care & Learning Service – PPP Schools Contracts – Review of Value for Money Arrangements (Substantial Assurance) – no issues raised at the meeting.
• Care & Learning Service – Out of Hours Social Work Service (Reasonable Assurance) – during discussion, further information was sought and received in terms of the review of call handling (current and desired levels of service) and it was confirmed that this process was ongoing with NHS Highland and in the meantime the Out of Hours Team were continuing to cover all calls as normal.

Also, in relation to a query on the finding that there had not been a Mental Health Officer (MHO) on duty for 22 out of 237 shifts, it was confirmed that every member of staff was trained as an MHO in terms of the crucial importance of this role. However, on those limited occasions when it had not been possible for an MHO to be available, this role had been covered by other members of staff and to date this had not caused any issues.   

• Development & Infrastructure Service – Investigation into Missing School Meals Income at a Primary School (Limited Assurance) – during discussion, the references in the report for reconciliations to be carried out more frequently in order to enable any issues to be identified and addressed promptly were welcomed.

Also, it was suggested that a report should be presented to a future meeting of the Corporate Resources Committee on possible alternatives to cash handling, including contactless systems, pre-payment cards, etc in order to improve on current arrangements and also to protect staff.   

• Community Services – Delivery of the Scottish Housing Quality Standard Programme within the HRA Capital Programme (Substantial Assurance) – during discussion, it was noted that all Council houses currently met the SAP 2009 criteria as detailed in the report.
• Community Services – Review of the Control of Overtime within Community Services (Reasonable Assurance) – during discussion, and in response to a query, it was confirmed that there were no proposals to discontinue burials at weekends. There were also no proposals to close Recycling Centres at weekends as a cost saving.

Also, in regard to reviewing the format and layout of worksheets in order to match overtime to specific activities, it was confirmed that the target date for completion of this action had now been brought forward from 30 September 2018 to 1 April 2018.   

• Development & Infrastructure Service – European Maritime and Fisheries Fund 2016/17 (Full Assurance) – no issues raised at the meeting.     

Thereafter, the Committee otherwise NOTED the Final Reports as detailed, the current work of the Internal Audit Section and progress against the Plan and the performance information as provided in Section 5 of the report. 

5. Audit & Performance Remit & Priorities and Internal Audit Plan 2018/19 
Raon-ughdarrais & Priomhachasan Sgrudaidh & Coileanaidh agus Plana Bliadhnail In-Sgrudaidh 2081/19

There had been circulated Report No. AS/2/18 dated 1 March 2018 by the Depute Chief Executive/Director of Corporate Resources and the Corporate Audit Manager.

During discussion, and in response to a query on target dates for the audits which had been listed in the report, it was confirmed that high level/critical audits were prioritised over the year and liaison undertaken with relevant staff in terms of timescales for other individual audits. Also, an update was provided on individual audits for each Committee meeting.

It was also suggested that the Chair should liaise with the Chair of the Care, Learning and Housing Committee in terms of allocating a higher priority if possible to the audit on the Provision of Early Learning and Childcare Services.    

Thereafter, the Committee NOTED the remit and priorities of the Audit & Performance Team as detailed in the report and APPROVED the Internal Audit Plan for 2018/19.

It was also AGREED that the Chair would discuss the proposed audit of the Provision of Early Learning and Childcare Services with the Chair of the Care, Learning & Housing Committee with a view to changing the priority status of this particular audit if necessary and that the Committee would be updated accordingly following that discussion.  

6. Six Monthly Review of Corporate Risks
Ath-Sgrudaidh air Cunnaran Corporra

There had been circulated Report No. AS/3/18 dated 6 March 2018 by the Depute Chief Executive/Director of Corporate Resources.

The Committee NOTED the Corporate Risk Register provided at Appendix 1 and the risk profile at Appendix 2 and APPROVED the revised Corporate Risk Strategy which had been circulated as Appendix 3 to the report.

The Committee also NOTED that six monthly reviews of the Corporate Risk Register would continue to be reported each March and September and that an Officer Group had been established on Corporate Risk Management.
  
7. External Audit Report 
Aithisgean Sgrudaidh bhon Taobh A-muigh

There had been circulated External Audit report prepared by the Council’s External Auditors (Grant Thornton) as follows:- 

Highland Council – External Audit Plan for the financial year ending 31 March 2018.

During a summary of the report, the overarching principles of the audit, the audit approach and materiality, the risk based methodology and the wider scope audit were highlighted, along with information on the key audit deliverables and the audit team, fees and independence, fraud, respective responsibilities and communication of audit matters to those charged with governance.  

During discussion, and with specific reference to the wider scope audit and in particular financial sustainability and management, it was confirmed that discussion would continue with the Council in this regard, including a review of the financial plans in place, budgetary processes, the control environment and internal controls.

Information was also sought and provided in relation to the current arrangements around the pension benefits payable and the valuation of land and buildings during which it was confirmed that there were not considered to be any underlying concerns. 

Thereafter, the Committee otherwise NOTED the terms of the report as circulated.  

The meeting ended at 11.16am.