Meeting documents
Audit and Risk Management Committee
Thursday, 27th September 2007
Present
Chair
PM Southwood
Councillors
C Blakeley, SA Brown, S Foulkes, T Harney, GCJ Watt
Index to Minutes
- Minute 25 - DECLARATIONS OF INTEREST
- Minute 26 - MINUTES
- Minute 27 - FINAL ACCOUNTS AND GOVERNANCE
- Minute 28 - AUDIT COMMISSION PRESENTATION - REVIEW OF ELECTRICAL MAINTENANCE CONTRACT ARRANGEMENTS
- Minute 29 - STATEMENT OF ACCOUNTS
- Minute 30 - DATA QUALITY
- Minute 31 - COMPREHENSIVE PERFORMANCE ASSESSMENT - USE OF RESOURCES ACTION PLAN
- Minute 32 - CORPORATE RISK MANAGEMENT STRATEGY
- Minute 33 - REVIEW OF CORPORATE RISK REGISTER
- Minute 34 - CORPORATE RISK AND INSURANCE MANAGEMENT
- Minute 35 - CORPORATE GOVERNANCE
- Minute 36 - INTERNAL AUDIT CHARTER
- Minute 37 - INTERNAL AUDIT PERFORMANCE MANAGEMENT
- Minute 38 - INTERNAL AUDIT WORK - JUNE TO AUGUST 2007
- Minute 39 - OFFICE SECURITY
- Minute 40 - MUSEUM AND ART GALLERY SERVICE
- Minute 41 - LOCAL GOVERNMENT CHRONICLE (LGC) AWARDS 2007
- Minute 42 - TRAINING
Minute 25 - DECLARATIONS OF INTEREST
Minute Text :
Members were asked to consider whether they had personal or prejudicial interests in connection with any item(s) on this agenda and, if so, to declare them and state what they were. No such declarations were made.
Minute 26 - MINUTES
Minute Text :
Minute Decision :
Resolved - That the minutes of the meeting held on 28 June 2007, having been received or approved by the Council, be received.
Minute 27 - FINAL ACCOUNTS AND GOVERNANCE
Minute Text :
The District Auditor presented the Audit Commission Annual Governance Report. She apologised for the lateness of the completion of the Report but indicated that it was essential the information contained therein was accurate. It had been prepared in accordance with the Audit Commission's Code of Practice and the requirements of International Standards on Auditing and she outlined the key messages for Wirral. The Authority's processes for preparing the financial statements and supporting working papers were satisfactory and had improved during the year, resulting in the issue of an unqualified audit opinion. The one issue drawn to members attention in relation to the financial statements was with regard to reclassification in accounting for some reserves and provisions. There were no issues to be drawn to members attention in relation to the Authority's arrangements to secure economy, efficiency and effectiveness in its use of resources, and an unqualified conclusion on the use of resources had been issued.
Looking forward, the District Auditor commented that the Authority recognised the need to ensure that its revised Corporate Plan was finalised in time to influence service priorities and important decisions on resource allocations. In the face of a predicted budget shortfall of £25.5m in 2008/2009 and further £20m over the following two years, the Authority faced key decisions in relation to the services it wished to provide and how those services would be delivered. There were no issues to report under other auditing standards and the Statement on Internal Control had been prepared in accordance with CIPFA best practice, and was consistent with findings from the audit. She commented also upon the positive and constructive approach to the audit by the Authority's staff, and expressed appreciation for their assistance and co-operation.
The main recommendations brought to members attention were contained within an action plan and related to the need to -
• ensure the Authority's reserves and provisions were classified in accordance with appropriate accounting requirements;
• finalise the Corporate Plan and ensure it provided an effective strategic direction to the Authority, with clear service priorities that will be closely linked to service plans and resource allocations over the next three years; and
• finalise plans for delivering the Authority's Efficiency Plan targets. This should include a review of the Authority's approach to achieving its Efficiency Plan targets for 2008/2009 and beyond, having regard to the Council's future strategy for service provision.
The Leader of the Council indicated that progress was being made in relation to achieving compliance with the recommendations, and he envisaged the availability of the Corporate Plan for the next meeting of the Committee. Work was also in progress in relation to plans for delivery of the Efficiency Plan targets. In response to a comment from a member, the District Auditor indicated that in view of the scale of savings required, there was a risk that the traditional approach of allocating savings targets pro-rata across departments would not deliver the required targets and the Authority should consider the scope for a more fundamental review of what services it wished to provide, to what extent and how those services would be delivered. This would require a clear commitment by members and officers to make difficult decisions about what services would be provided from 1 April 2008 and thereafter.
Minute Decision :
Resolved -
(1) That the Annual Governance Report be noted and thanks of the Committee be accorded to the District Auditor for her detailed presentation.
(2) That the Committee regrets the lateness of the Audit Commission report. (4:2)
(3) That regular progress reports be presented to the Committee with regard to achieving compliance with the recommendations contained within the action plan in the Annual Governance Report.
Minute 28 - AUDIT COMMISSION PRESENTATION - REVIEW OF ELECTRICAL MAINTENANCE CONTRACT ARRANGEMENTS
Minute Text :
The District Auditor presented an Audit Summary Report dated July 2007 upon a Review of Electrical Maintenance Contract Arrangements, which had been undertaken following representations that had been received in relation to a number of alleged issues associated with the selection of contractors to carry out electrical maintenance contract work, and arrangements for processing this type of work. The overall arrangements for the tender process included good practice in a number of important aspects and the approach of consulting and involving Central Procurement and Internal Audit from the outset was considered to be important in the development of a process that complied with Council objectives and met legal requirements. The District Auditor highlighted the areas in which it was considered that arrangements could be strengthened, and made the following recommendations, which were contained within an action plan that had been agreed with relevant Council officers -
(i) To ensure that arrangements for informing potential tenderers are consistently applied including, where appropriate, advertising in the local press.
(ii) To ensure ongoing management arrangements for Schedule of Rates contracts provide a sufficient check that invoicing details are in line with agreed contract terms.
(iii) To keep under revlew the nature of jobs that are likely to arise from electrical repairs to public buildings and ensure the schedule of rates is amended promptly.
(iv) To consider the need to establish formal back up arrangements to call upon a reserve contractor in the event of the current contractor failing to meet the terms and conditions of the contract. Trigger points should also be set, at which point back up arrangements should be activated.
(v) To issue periodic reminders to local suppliers explaining the significance of and process for registering for all categories of work on Constructionline.
(vi) To issue periodic reminders to schools outside the FM SLA to ensure they comply with Contract Procedure Rules in the selection of contractors and ensure contractors are checked to provide assurance that they meet necessary financial and technical criteria. Checks should also be incorporated in IA visits to such secondary schools.
The Leader of the Council was pleased that the arrangements for the tender process included good practice in a number of important aspects and expressed the view that compliance with the recommendations contained within the action plan should encourage the employment of local people.
Minute Decision :
Resolved -
(1) That the report be noted.
(2) That compliance with the agreed action plan be monitored and a further report be presented to this Committee if the recommendations of the District Auditor are not implemented within agreed timescales.
Minute 29 - STATEMENT OF ACCOUNTS
Minute Text :
Further to minute 21 (28 June 2007) the Director of Finance reported that the findings of the District Auditor in relation to the audit of the Statement of Accounts had been reported within the Annual Governance Report (see minute 27 ante). In response to a comment from a member, the Director apologised for the lateness of the provision of documentation. He commented that as the Statement of Accounts was inexorably linked to the District Auditors Annual Governance Report it could not be completed until that document was made available. He set out a number of amendments to the financial statements that had been requested by and agreed with the District Auditor in relation to the Balance Sheet, the Income and Expenditure Account and the Cash Flow Statement. None of the amendments had any impact on the financial position of the Council and, once approved, the District Auditor had indicated that she would again issue an unqualified opinion and state that the accounts presented fairly the financial position of the Council at 31 March 2007. The Auditor’s report was incorporated within the final Statement and enabled the accounts to be agreed before the statutory deadline of 30 September 2007. The Director indicated that the Statement of Accounts was a specific area assessed within the CPA Use of Resources, which included the quality and timeliness of the accounts, supporting working papers and documentation.
The Director commented also upon a number of challenges presented to the Council on completion of the accounts for 2006/2007 and he indicated that Cabinet agreement to the strengthening of the Financial Services Division during the year had assisted in meeting those challenges. The District Auditor had recognised the progress that had been made and the Director commented that in seeking to improve the standards of documentation and evidence for the Statement of Accounts, as well as in financial management and control, the Finance Department would continue to work with the Audit Commission.
Minute Decision :
Resolved - That the Statement of Accounts for 2006/2007 be approved.
Minute 30 - DATA QUALITY
Minute Text :
Further to minute 9 (28 June 2007) the Head of Policy reported that since the last meeting of the Committee, the draft Data Quality Policy had been circulated to members prior to its consideration by the Chief Officers Management Team. The purpose of the policy was to outline the approach to improving data quality across the Authority and he indicated that the Audit and Risk Management Committee provided the overview function to examine whether the Authority had sufficient systems in place to ensure data quality, and that the required actions had been taken following both internal and external audits. He indicated that the overall objective in ensuring good data quality was to make certain that all information produced was -
• accurate enough for its purpose;
• valid for the intended purpose;
• reliable enough for its purpose;
• timely enough for its purpose;
• relevant to the purpose; and
• complete enough for the purpose.
Minute Decision :
Resolved - That the report be noted.
Minute 31 - COMPREHENSIVE PERFORMANCE ASSESSMENT - USE OF RESOURCES ACTION PLAN
Minute Text :
Further to minute 11 (28 June 2007) the Director of Finance reported that the Use of Resources (UoR) Assessment covered a wide range of corporate activities beyond financial areas and was concerned with how the inspected body used its resources at a corporate level. The key lines of enquiry and the UoR action plan covered a range of areas and disciplines, which affected all departments within the Authority and the Director provided a summary of progress made in relation to Financial Reporting, Financial Management, Financial Standing, Internal Control, and Value for Money.
Minute Decision :
Resolved - That the progress in delivering the Use of Resources Action Plan be noted.
Minute 32 - CORPORATE RISK MANAGEMENT STRATEGY
Minute Text :
The Director of Finance reported that the effective management of risk was recognised as an essential feature of a well-run organisation and was particularly important at a time when the Authority was making substantial changes in the drive to improve services. A review of the approach to managing risks recognised the advances made by the Authority but highlighted a number of areas where improvements could be made. Measures to address those areas were incorporated into the revised Risk Management Strategy and the Director outlined the principal changes. He commented that although the revised strategy set the intentions and provided a broad framework, its successful implementation would require adherence to the systems and processes that would underpin the approach. Whilst many were already in place others would need to be enhanced or introduced and the strategy document showed the actions planned over the next 12 months to assist with its implementation.
Minute Decision :
Resolved -
(1) That the revised Corporate Risk Management Strategy be approved.
(2) That Members who could not be present at previous Risk Management training sessions be requested to attend the event planned for later in the year.
(3) That the training event be referred to the Members Training Steering Group for inclusion in the 2007/2008 programme.
Minute 33 - REVIEW OF CORPORATE RISK REGISTER
Minute Text :
The Director of Finance reported that risks on the Corporate Register reflected those issues which had the greatest potential to prevent or frustrate achievement of Council Corporate Objectives as set out in the current Corporate Plan. The corporate risks influenced individual departmental plans and the allocation of resources, and success in managing those risks was a key element of overall performance. He commented that twelve risks appeared on the existing register and he referred to work recently undertaken by Chief Officers with the Risk and Insurance Officer to review those issues. The exercise resulted in a revised schedule of risks, which was the initial stage in the formulation of a new Risk Register.
The management of risks would be undertaken by officers through the Corporate Improvement Group, which would undertake an initial analysis and review the risks in the light of progress. Chief Officers and the Cabinet would receive regular updates on progress, and this Committee would receive updates through the Risk and Insurance Performance Reports. Subsequent reports would set out progress in the development of the register and the prioritisation of risks and the Director commented that it was intended to involve members more directly in the review process.
Minute Decision :
Resolved -
(1) That the list of corporate risks be noted.
(2) That regular more detailed progress reports be presented to future meetings of the Committee.
Minute 34 - CORPORATE RISK AND INSURANCE MANAGEMENT
Minute Text :
The Director of Finance reported upon progress made in corporate risk and insurance management against the objectives for those services, and anticipated developments in the coming months. Further to minute 24 (28 June 2007) the Director was pleased to report that the Risk and Insurance Team entry in the 2007 ALARM awards was successful in its category at the national awards on 2 July 2007 and he displayed the trophy that had been awarded for the innovative risk based approach to managing liability claims, introduced over the last three years. ALARM was the principal body for risk management in the public sector and the awards carried prestige within the sector.
Minute Decision :
Resolved -
(1) That the report be noted.
(2) That the congratulations of the Committee be accorded to those members of staff working in the Risk and Insurance Team for their success at the ALARM awards.
Minute 35 - CORPORATE GOVERNANCE
Minute Text :
The Director of Finance provided a summary of the CIPFA/SOLACE guidance 'Delivering Good Governance in Local Government Framework' published in July 2007, which replaced previous guidance and required local authorities to undertake specific actions and have in place principles that should underpin the governance of each local government body from 2007/2008. He commented that the guidance was intended to ensure that the Council complied with the Framework and accordingly the statutory requirements of the Accounts and Audit Regulations 2006. The Director set out six core principles identified within the Framework developed by the Independent Commission on Good Governance in Public Services and supported by the Department for Communities and Local Government (DCLG) and CIFPA, which should underpin the governance of each local government body. Authorities were urged to test the effectiveness of their structures against the core principles and were required to prepare and publish an annual Governance Statement in accordance with the Framework from 2007/2008 and for the Statement on Internal Control to be subsumed within this as there was no longer a requirement to prepare a separate statement. He reported that the Internal Audit Section would be undertaking extensive work during the year to review the existing arrangements to provide sufficient evidence to support the production of the Annual Governance Statement. Regular update reports would be provided for Chief Officers as appropriate and the process would be overseen by the Corporate Governance Group, chaired by the Chief Executive.
Minute Decision :
Resolved -
(1) That the report be noted.
(2) That regular updates be presented to this Committee via the Internal Audit Update report.
(3) That the member development required by the Framework be referred to the Member Training Steering Group.
Minute 36 - INTERNAL AUDIT CHARTER
Minute Text :
The Director of Finance reported that an Internal Audit Charter was a statement of the purpose, responsibility and powers of an internal audit section and the reason for having such a charter was that internal audit needed authority to act outside its own boundaries in all parts of the Council to provide management with independent assurance that risks were being managed and controls were operating effectively. Further to minute 10 (28 June 2007) the Director reported that the Internal Audit Charter had been reviewed and amended to take account of -
• recommendations of the Audit Commission following the review of Internal Audit;
• developments affecting Internal Audit including the establishment of the Audit and Risk Management Committee; and
• provisions of the CIPFA 2006 Code of Practice for Internal Audit.
He commented that the rights of Internal Audit’s access to partner organisations, authority to obtain information from such bodies and access rights to information held by third parties (eg contract information) was specified in the Charter and should be included in contracts and partnership agreements.
Minute Decision :
Resolved -
(1) That the Internal Audit Charter be approved.
(2) That the Director of Corporate Services arrange for all contracts and partnership agreements to include appropriate clauses to enable Internal Audit to have right of access to information and staff.
Minute 37 - INTERNAL AUDIT PERFORMANCE MANAGEMENT
Minute Text :
The Director of Finance reported that following the introduction of the new CIPFA Code of Practice for Internal Audit in Local Government and a recent review of the Internal Audit service by the Audit Commission a number of indicators for regularly measuring the performance of the internal audit service had been implemented to enhance those already in use. The Chair advised members that she had arranged to meet with the Director in order to assess the appropriateness of the indicators to evaluate performance, and requested that any comments from members be directed to her at the earliest opportunity.
Minute Decision :
Resolved - That, subject to comments from members, the introduction of the new performance indicators for Internal Audit be agreed, in line with the Audit Commission recommendation.
Minute 38 - INTERNAL AUDIT WORK - JUNE TO AUGUST 2007
Minute Text :
The Director of Finance reported that in order to assist in effective corporate governance and fulfil statutory requirements, the Internal Audit Section of the Finance Department reviewed management and service delivery arrangements within the Council as well as financial control systems. Work areas were selected for review on the basis of risks as assessed by Internal Audit in consultation with Chief Officers and Managers. He summarised the work undertaken between June and August 2007 and commented that during the period, 42 reports had been produced containing 74 high and 69 medium priority recommendations. He provided an analysis of the recommendations and commented that management had agreed to implement them all within a satisfactory timescale. He reported also upon significant aspects of current work and indicated that follow up work would evaluate progress and would be reported to future meetings of the Committee.
Minute Decision :
Resolved - That the report be noted.
Minute 39 - OFFICE SECURITY
Minute Text :
Further to minute 18 (28 June 2007) the Deputy Chief Executive/Director of Corporate Services reported upon the current situation with regard to compliance with the recommendations contained within an internal audit report to evaluate the adequacy of building security arrangements in operation at all of the major office complexes. All of the recommendations were being addressed within agreed timescales and the Director proposed to report upon continued progress to future meetings of the Committee.
Minute Decision :
Resolved - That the report be noted and a further report be presented to this Committee at the earliest possible opportunity.
Minute 40 - MUSEUM AND ART GALLERY SERVICE
Minute Text :
Further to minute 19 (28 June 2007) the Director of Regeneration presented a report which aimed to bring members up to date with the actions taken following the Internal Audit of the Museum and Art Gallery Service in January 2007.
Minute Decision :
Resolved - That in view of the late submission of the report, consideration of this matter be deferred to the next meeting of the Committee.
Minute 41 - LOCAL GOVERNMENT CHRONICLE (LGC) AWARDS 2007
Minute Text :
The Director of Finance reported that he proposed to submit an entry for the Risk Management Award at Local Government Chronicle (LGC) Awards 2007. He commented that the awards were intended to celebrate the highest levels of achievement in the world of local government and the awards ceremony for shortlisted entries was to take place on 5 November 2007 at the Dorchester Hotel in London. He requested that members give consideration to attendance at the awards ceremony if the authority was shortlisted. There was no charge for entering the awards competition or for attendance at the awards ceremony, and the cost of travel to London and overnight accommodation for those attending could be met from within the existing budget provision.
Minute Decision :
Resolved - That should Wirral be shortlisted for an award, attendance of spokespersons at the LGC Awards Ceremony on 5 November 2007 be agreed and referred to the Cabinet for approval of duty.
Minute 42 - TRAINING
Minute Text :
The Director of Finance reported that CIPFA guidance recommended that members of an Audit Committee should receive specific training in their role and responsibilities as members of that Committee. Accordingly, a course had been arranged over two training sessions, the first on either 31 October or 6 November and the second on either 11 or 13 December 2007. The Chair stressed the importance of training and requested members to advise her as to which dates they proposed to attend.
Minute Decision :
Resolved - That the provision of a training course along the lines proposed by the Director of Finance be approved.
(Minutes Published: 5 October 2007)