Agenda and draft minutes

No Members declared any personal or prejudicial interests in any business identified to be considered at the meeting.

 

No items were raised which in the opinion of the Chair, should be considered at the meeting as a matter of urgency pursuant to Section 100B(4) of the Local Government Act, 1972.

 

To receive the minutes of the Corporate Governance Committee meeting held on the 23^rd March, 2016.

The Minutes of a meeting of the Corporate Governance Committee held on the 23rd March, 2016.

 

Accuracy:- It was noted that Lay Member Mr Paul Whitham was in attendance at the meeting.

 

RESOLVED – that, subject to the above, the minutes be received and approved as a correct record.

 

To consider a report by the Corporate Director: Communities (copy enclosed) on the findings from the Test of Assurance (ToA) for joining Education and Children and Families services in Denbighshire County Council (DCC).

 

A report by the Corporate Director: Communities (CDC) had been circulated previously.

 

The CDC explained that the Committee had been requested to note the Test of Assurance report which presented findings from the Test of Assurance (ToA) for joining Education and Children and Families services in Denbighshire County Council (DCC).  The two services had been operating as a single service, Education and Children’s services, since January, 2016.

 

The report had been presented to the Committee for information and to offer assurance that the transition to the new service had been well managed and risks mitigated.  In September, 2014 the CEO communicated proposed changes to the Council’s organisation structure, including bringing together the Education Service and Children and Families Service to create a new service, Education and Children’s Services.  This had been compulsory in England for over a decade and had been increasingly common in Wales.

 

It had been agreed that a ToA be developed and carried out as part of the process of transition to the new organisation structure.  The ToA aimed to provide assurance that the Council’s statutory duties towards children and young people would be maintained and strengthened through the new organisation structure.  Repeating the ToA would offer assurance over time that the new service was compliant with statutory accountabilities.

 

It was explained by the CDC that the ToA provided assurance on:-

 

ü    meeting statutory duties of the Director of Social Services and Director of Education.

ü    delegated decisions and any associated risks and how these would be managed.

ü    strengths and areas for future focus for the new service in terms of meeting and exceeding statutory duties and maximising the potential of a combined Education and Children’s team.

ü    input into Legal and Democratic Service’s ongoing review of the Council’s Constitution, specifically around delegated accountabilities of key officers.

 

The key statutory instruments which had informed the development of the ToA had been listed in the ToA included as Appendix 1 to the report.

 

The Test of Assurance had consisted of the following:-

 

·                     Desk-top review and documentation of all statutory accountabilities

·                     Process of structured interviews with senior managers for Education and Children and Families Services and the Director, Communities

·                     Review of meetings attended by members of both management teams

·                     Review of the delegated decisions for both management teams

·                     Ongoing consultation with staff related to organisational changes

·                     Ongoing engagement with elected members, involving the two Lead Members and the Leader directly, and attendance at all MAGs in autumn 2015.

Key Findings/Actions had been included in the ToA in Appendix 1.

 

·      The organisation structure was revised and senior posts allocated, as indicated on page 4 of Appendix A.

·      Attendance at external meetings was reviewed and delegations agreed

·      Internal management meetings were reviewed and structure agreed

·      Delegated decisions were fed into the review by Legal Services, of the Council’s Constitution

·      The risks and mitigating actions had been identified and agreed.

The Equality Impact Assessment key findings included:-

 

·                     Overall some positive outcomes were being observed in relation to safeguarding children and young people.

·                     The collegiate working across the service should enable greater equality of opportunity for this vulnerable group

·                     There was potential risk to the management team from the additional workload entailed and the changes in management structure.  This would be reviewed on an ongoing basis through regular management meetings

 

Any risks and steps to mitigate them had been outlined in the Risk Register.

 

The CDC provided the following responses to questions presented by Members of the Committee:-

 

-               It was confirmed that the merging of the two services would not be perceived as a takeover by one service.  ...  view the full minutes text for item 5.

To receive a report and presentation from the Wales Audit Office (copy enclosed) on the Annual Improvement Report 2015/16.

 

The WAO Representative (GB) (WAOR) introduced the report and explained that in future the report would be presented in a new format which would comprise of four reports covering:-

 

-               Financial Resilience

-               Arrangements for Transformation

-               Governance Arrangements

-               Risk Based Examination of Corporate Arrangements

 

He explained the report had been created on the Council’s own performance report based on work undertaken by other Regulators such as CSSIW, Estyn and the work of the WAO carried out during the year relating to scrutiny, governance and financial resilience and arrangements for alternative service providers.

 

With the aid of a PowerPoint presentation the WAOR provided an in-depth summary of each of the following areas within the WAO Annual Improvement Report 2015/16:-

 

·                     Performance Assessment Contributors

·                     Performance Assessment Findings

·                     Use of Resources

·                     Governance

·                     Overall conclusions

 

The WAOR explained that the overall conclusion had been that the Council had sound financial management and scrutiny arrangements, and continued to make progress in delivering improvements in most of its priority areas, and this had delivered a very positive message.

 

The Head of Business Improvement and Modernisation (HBIM) endorsed the view that overall the report had been very good.  However, he made reference to three areas where issues had been highlighted:-

 

-               CSSIW issues relating to Social Services:-

·                     Arrangements for the protection of vulnerable adults had been questioned with regard to the management of the process and the robustness of the procedures adopted.  While it had been noted that services users had not been placed at risk, arrangements had been introduced to address the concerns highlighted and these would be tested by CSSIW.  Members were informed that the national standards for the acceptance of referrals had now been adopted.

·                     It had been considered that the level of Domiciliary Care provision was satisfactory.  However, deliberation could be afforded to employing additional monitoring officers if the review, currently being undertaken, indicated such action.

 

-               Member attendance at Scrutiny meetings:-

·           The HLHRDS outlined the steps taken to address the concerns highlighted, which had been accepted.  He explained that structural amendments had been examined to assist with Member attendance at meetings, such as a review of the Constitution, the formation of a Working Group to examine time and location flexibility, use of substitute Members and the removal of other restrictions.

  

-               Financial Arrangements:-

·                     The HPPB explained that a number of successful alternative delivery models had been developed, and a corporate approach had been prepared to assess and approve the development with a view to understanding the respective costs and impacts.

·                     Reference was made to service income and the previous charging processes, and the development and introduction of a Corporate Register of Fees and Charges.  The HIA and SA acknowledged that improvements had been noted.

 

In response to a question from Mr P. Whitham, the HBIM confirmed that the areas of concern highlighted would be included in the respective Service Risk Registers.

 

Councillor J.A. Davies expressed her disappointment that although it had been stated that the scrutiny process was working well there were still concerns relating to the care agencies, and she questioned if there was a sufficient number of care agencies.  The HBIM explained that the concerns raised did not relate to the standard of care provided, but to the way in which the care agencies and the provision of domiciliary care arrangements were monitored and regulated.  The WAOR outlined the process adopted and areas examined when assessing the performance of scrutiny.

 

In reply to a question from the Chair in relation to the network of co-operative councils and the commissioning of co-operative models and the need for a long-term  ...  view the full minutes text for item 6.

To consider a report by Chief Finance Officer (copy enclosed) which set out a summary of the key outcomes from WAO’s certification work on the Council’s 2014/15 grants and returns.

 

A report by the Chief Finance officer (CFO) had been circulated previously.

 

Members were informed that a report entitled ‘Certification of Grants and Returns 2014-15 – Denbighshire County Council’ had been prepared by the Wales Audit Office (WAO) and circulated with the papers for the meeting.   The report set out a summary of the key outcomes from WAO’s certification work on the Council’s 2014/15 grants and returns.  The WAO had requested that the internal report be presented on an annual basis to the Corporate Governance Committee for information.

 

The WAO representative introduced the report which set out a summary of the key outcomes from WAO’s certification work on the Council’s 2014/15 grants and returns and was for the internal use of Denbighshire County Council. 

 

The report summarised the key findings and recommendations arising from this work, and indicated that the Council had adequate arrangements in place for the production and submission of the 2014/15 grant claims.  The main adjustment identified related to the Housing Revenue Account Subsidy.  The CA confirmed that the amendment of £78,791 had been identified by Welsh Government after the claim was initially signed off by the WAO.  As indicated in the report this figure related to the 2013/14 claim and therefore was a timing issue between financial years and did not result in a loss of subsidy to the Council.

 

It was explained that Grant Funding was vital in funding expenditure in areas such as education and schools, highways and the environment and regeneration.  The WAO report helped to give assurance that there were adequate arrangements in place within the Council to administer the grant process. 

 

The WAO Representative provided background detail to the recommendations arising from the work undertaken which related to R1 on Page 12 of the report, the Flying Start Revenue Grant (FSRG), and R2 which recommended that the Council must ensure that all staff with responsibility for opening and appraising tenders and subsequently awarding contracts, fully comply with the Council’s Contract Procedure Rules.  The CA provided details of the changes to the regulations in relation to the FSRG, and referred to the difficulties encountered in obtaining written confirmation of verbal agreements received from Welsh Government.  It was agreed that steps taken to address the problem would be monitored and the outcome presented to the Committee.  Concerns were expressed by Members of the Committee regarding the failure to locate the signed copy of the respective contract.  The CA provided confirmation that with regard to R2, a new set of Contract Procurement Rules and forms had been introduced, together with, an extensive training programme. 

 

Details of the fees for work undertaken by the WAO in respect of the certification of grants and returns for 2014-15 had been included in the report, and were an existing budget commitment for the Authority.  The WAO report on the Council’s grants and returns was for internal use by the Council in order to help focus on any areas of risk or weakness.  The report concluded that Council had adequate arrangements in place, and recommendations and comments had been reviewed and acted upon where possible.

 

Following further discussion the Committee expressed the view that the implementation of the new Contract Procedure and Procurement Rules, and extensive training programme, would assist in addressing the concerns which had been identified and noted by the Committee. 

 

RESOLVED – that, subject to the above, the Corporate Governance Committee receive the report and note the recommendation by the WAO.

     (RW, SG to Action)

 

To consider a report by the Chief Finance Officer (copy enclosed) which provides an update on the process to deliver the revenue budget for 2017/18.

 

 

A report by the Chief Finance Officer (CFO), which provided an update on the process to deliver the revenue budget for 2017/18, had been circulated previously.

 

Councillor J. Thompson-Hill, assisted by Chief Accountant (CA), provided a detailed summary of the report.  At its previous meeting the Committee expressed the view that the budget process should have more Member engagement at an early stage, and the following amendments to the budget timetable were agreed:-

·                     To take the paper on the proposed budget process to Group Leaders on the 4^th April.

·                     To add a further update to a Council Briefing agenda scheduled for 6^th June 2016.

 

The proposed budget process had been discussed at the Group Leaders meeting on the 4^th April.  Initial feedback had been positive and Group Leaders had been given the opportunity to further discuss the proposals with colleagues and feedback comments by 15^th April.  It was confirmed there had been no further feedback.

 

A revised budget process had been included as Appendix 1 and the key assumptions and principles Informing Development of MTFP had been outlined in the report.  The Budget Timetable summarised the following four stages of the budget process:-

 

1)            Define and develop the process

2)            Identify initial proposals

3)            Consult on and finalise proposals

4)            Final approval stages

 

All stages allowed for consultation and engagement with the relevant stakeholders.  Based on current assumptions there was a forecast budget gap for 2017/18 of £4.4m.  Previous reports had highlighted in detail the significant consultation process undertaken to deliver the 2015/16 and 2016/17 budgets.

 

Appendix 1 summarised the proposed budget process for 2017/18 and highlighted the key consultation periods during the four stages of the process.  Specific proposals would require further consultations with specific stakeholders which would be identified by services in the proposal templates.

 

The aim of the budget process was outlined in the report and the uncertainty over the level of financial settlements in recent years had made financial planning even more challenging.  The revenue settlement for 2016/17 had been better than anticipated but there was still a lack of any meaningful financial planning indications for the future.  It was hoped that this would be addressed following the elections in May, 2016, and that the proposed budget process for 2017/18 would help deliver a balanced budget and enable the Council to take account of key funding assumptions, service pressures, levels of cash reserves and the levels of fees and charges within the Council.

 

The Chair informed the Committee that he was pleased with the proposal to increase in Member involvement, and he stressed the importance of Members attendance at the budget meetings.

 

RESOLVED – that the Corporate Governance Committee receives and notes the contents of the report on the latest update.

      (RW, SG to Action)

 

To consider a report by the Head of Internal Audit (copy enclosed) on the adequacy and effectiveness of the Council’s framework of governance, risk and control during the year that informs the ‘annual governance statement’.

 

A report by the Head of Internal Audit (HIA) had been circulated previously.

 

The HIA introduced the report which provided details of the Internal Audit Annual Report for 2015-16.  It provided the HIA’s overall opinion on the adequacy and effectiveness of the Council’s framework of governance, risk and control during the year which informed the ‘Annual Governance Statement’.

 

The Public Sector Internal Audit Standards (PSIAS) required the ‘Chief Audit Executive’ to deliver an annual internal audit opinion and report which the organisation could utilise to inform its governance statement.

 

The Internal Audit Report 2015-16, Appendix 1, indicated:-

 

·                     that the Head of Internal Audit had provided ‘medium assurance’ on the overall adequacy and effectiveness of the Council’s internal control environment, including its arrangements for governance and risk management;

·                     there were no qualifications attached to the Head of Internal Audit’s ‘opinion’;

·                     the level of work that Internal Audit carried out to arrive at this overall ‘opinion’;

·                     how Internal Audit complied with the PSIAS; and

·                     a summary of Internal Audit’s performance during the year.

           

The HIA referred to the 29 audit opinions issued during the year and confirmed that the 7 identified in the low assurance category would be monitored.  He provided details of the external assessment process to be undertaken on Internal Audits compliance with PSIAS which would be reported to the Committee.

 

Members were informed that the Risk Management project had not been completed to draft report stage.  However, the project was in progress and would be completed early in 2016/17.

 

The Chair identified a number of possible trends within specific areas and highlighted the need to monitor and address these issues and areas.  In response to concerns raised by Mr P. Whitham regarding the increase in the percentage of opinions identified in the low assurance category, the HIA explained that no specific theme could be identified for the increase but this would be monitored.  He also confirmed that the definition for the categorisation of opinions would also be examined.        

 

Following further discussion, it was:-

 

RESOLVED – that the Head of Internal Audit’s Annual Report and overall ‘opinion’ be received and noted.

     (IB to Action)

 

To consider a report by the Head of Internal Audit (copy enclosed) on the Internal Audit Annual Assurance Plan for 2016-17.

 

A report by the Head of Internal Audit (HIA), which provided details of the Internal Audit Annual Assurance Plan for 2016-17, had been circulated previously.

 

The Plan provided details of the proposed Internal Audit projects for the year which would allow the HIA to provide an ‘opinion’ on the adequacy and effectiveness of the Council’s framework of governance, risk and control during the year.  The Public Sector Internal Audit Standards (PSIAS) required the ‘Chief Audit Executive’ to develop a risk-based Internal Audit Plan which took into account the requirement to deliver an annual internal audit opinion and report which the organisation could use to inform its Governance Statement.

 

The Plan, Appendix 1, provided background to the internal audit service as well as its proposed plan of work for the year based on an assessment of risk and consultation with services.  The proposed plan of work would allow the HIA to provide an overall ‘opinion’ in his annual report for 2016-17, and the Committee would receive regular information reports on progress with delivery of the Plan.  The HIA had met Management Teams of all services to discuss proposed Internal Audit work.

 

It was explained that failure to deliver an adequate level of internal audit may mean that the HIA could not provide an annual ‘opinion’ on the adequacy and effectiveness of the Council’s framework of governance, risk and control during the year.  This would potentially lead to a significant governance issue being raised in the Council’s ‘annual governance statement’ at the end of the financial year.

 

The HIA explained that the service structure had changed, as indicated on Page 2 of the report, and he provided details of the planned areas of work, particular reference to work in respect of payments to Social Services providers and the monitoring of contract arrangements within various services.   Other areas of work to be included in future would encompass corporate anti-fraud and corruption assurance, which had been identified as a risk area in the public sector.  In response to a question from Councillor J.A. Davies, the HIA outlined the monitoring provision with regard to the CAB and contracts relating to private care agencies.

 

In response to questions from Mr P. Whitham the HIA explained:-

 

-               Third party payments would be subject to compliance with CPR’s.

-               There was currently no contingency arrangements in place to deal with Corporate Anti-fraud and Corruption Assurance issues.  However, any misdemeanours would be addressed and investigated appropriately, and details of the process for dealing with such instances was provided by the HLHRDS.

-               The working arrangements and process for dealing with the Welsh Government 6^th Form Funding/PLASC.

 

In reply to a question from the Chair, the HIA confirmed that there was currently no capacity or scope to acquire any additional external paid work.

 

RESOLVED – that the Corporate Governance Committee endorses the Internal Audit Annual Assurance Plan 2016-17, Appendix 1 to the report.

     (IB to Action)

 

To consider a report by the Head of Internal Audit (copy enclosed) which provides the draft self-assessment report on the Council’s governance and improvement arrangements for 2015/16.

 

A report by the Head of Internal Audit (HIA), which provided the draft self-assessment report on the Council’s governance and improvement arrangements for 2015/16, had been circulated previously.

 

The report provided the draft self-assessment report on the Council’s governance and improvement arrangements for 2015/16, and afforded the Committee the opportunity to comment on the first draft of the ‘Annual Governance Statement’.

 

The Annual Governance and Improvement Statement 2015/16 included a self-assessment of the Council’s governance arrangements and displayed areas of improvement during the previous financial year.  It highlighted any weaknesses in an Action Plan which the Committee would monitor to ensure implementation of the necessary improvements.

It was explained that this was an early draft which was a work in progress and had areas which still need to be added and finalised.  The agreed final version would be signed by the Chief Executive and Leader by the 30^th June, 2016, and then presented to the Corporate Governance Committee with the Statement of Accounts.

 

Confirmation was provided that CET had been consulted on the draft Statement and no comments had been received.  It was explained that if the Governance Improvement Plan was not implemented, weaknesses would remain in the Council’s governance arrangements, which could lead to:-

 

•              adverse regulatory reports;

•              poor use of public money;

•              failure to improve key corporate and service areas;

•              loss of stakeholder confidence; and

•              an adverse impact on the Council’s reputation.

 

Mr P. Whitham explained that taking into consideration the value and volume of procurement transactions, and the extensive planned training programme, reference should be made to this in the Governance Improvement Action Plan to demonstrate that the process was being implemented and monitored.  The HIA agreed with a request that the Draft Annual Governance Statement be presented to the July, 2016 meeting of County Council.

 

During the ensuing discussion it was agreed by the Committee that the Governance Improvement Action include ongoing improvements in Corporate Procurement.

 

RESOLVED – that the Corporate Governance Committee:-

 

(a)          receives and notes the report.

(b)          requests that the Draft Annual Governance Statement be presented to the July, 2016 meeting of County Council, and

(c)          agrees that the Governance Improvement Action include ongoing improvements in Corporate Procurement.

    (IB to Action)

 

To consider a report by the Head of Internal Audit (copy enclosed) on the recent Internal Audit report on the Coastal Defence project that received a ‘Low’ assurance rating.

 

A report by the Head of Internal Audit (HIA), which detailed the recent Internal Audit report on the Coastal Defence project that received a ‘Low’ assurance rating, had been circulated previously.

 

The HIA explained that the Committee received an Internal Audit Progress report for each meeting which included details of Internal Audit reports issued.  These were normally ‘High’ or ‘Medium’ assurance reports.  However, when a ‘Low’ or ‘No’ assurance rating report was issued the Committee received the report, as part of its agenda, to ensure that it was fully aware of the position and were afforded the opportunity to discuss the improvements to be implemented with the relevant manager.  The full Internal Audit report had been included as Appendix 1.

 

The Senior Auditor explained that the complex audit which had been undertaken had focused mainly on the procurement aspect of the project.   A contract audit checklist had been developed with the involvement of the Collaborative Procurement Service that covered the following areas:-

 

·                                   Governance

·                                   Pre-tendering

·                                   Financing

·                                   Tendering

·                                   Management of the Contract

The SA confirmed that the remit had not been to comment on the success of the West Rhyl Coastal Defence Phase 3 scheme, and it was explained that this was the first project to be reviewed using the checklist.    She referred to the following issues and areas highlighted in the Action Pan, Appendix 1, which included:-

 

-               The need to take into account the history of the programme of work, which included Phases 1 and 2, and two tenders having increased the complexity of the audit.

-               The unavailability of written confirmation of WG’s timescale to complete the flood defence work, which had been completed retrospectively at the conclusion of the review.

-               Contract documentation with the main contractor having been unobtainable until August, 2015.   

-               Corporate issues having been highlighted in respect of the role of finance, procurement and legal issues.

 

The Head of Highways and Environmental Services (HHES) provided the following information pertaining to the project:-

 

-               Denbighshire had worked closely with Welsh Government to protect a significant number of homes on a reasonable and inexpensive budget utilising an innovative solution to address the problems being encountered.

-               Details were provided of the materials utilised which had been specified by Denbighshire.

-               The programme of work had been undertaken in three large manageable phases.  Work had commenced in West Rhyl, and not Splash Point, as Phases 1 and 2 had been identified as high risk areas.

-                 Confirmation was provided that although a Trunk Road Agency framework was utilised, they were not involved in the procurement process 

-               The work carried out in East Rhyl had been an interim scheme to provide protection for the area, and a much larger scheme would be undertaken.

-               Details pertaining to the tender process were provided, particular reference was made to the acceptance and signing of contracts.  Members were informed that procurement was now undertaken electronically and it was highlighted that the timing aspect of the process was critical in relation to the commencement of the works.

 

The HLHRDS outlined the importance and timing aspect of the documentation process, and it was confirmed that although letters of intent were still utilised they were not a substitute for a formal contract.  The HLHRDS explained that it was important to ensure that work did not commence on site prior to the completion of the electronic procurement process. 

 

The Programme Manager Procurement (PMP) provided an assurance that the revised CPR’s would address the issues of concerns raised, and the HLHRDS that the early involvement of Legal and Procurement Services would be pivotal in the  ...  view the full minutes text for item 12.

To consider a verbal report by the Head of Legal HR and Democratic Services on the feedback on Corporate Equality meetings.

 

The Head of Legal HR and Democratic Services (HLHRDS) informed Members that the Corporate Equalities Group had met and considered issues pertaining to the Wellbeing of Future Generations Act and the Draft Equalities Strategy.

 

RESOLVED – that the report be received and the position noted.

     (GW to Action)

 

To consider the Committee’s forward work programme (copy enclosed).

The Corporate Governance Committee’s Forward Work Programme (FWP) (previously circulated) was presented for consideration.

 

The Committee confirmed the Corporate Governance Committee Forward Work Programme subject to the inclusion of the following reports:-

 

15^th June, 2016:-.

 

-               The Update on Financial Regulation Report be included in the Forward Work Programme for June, 2016    

 

28^th September, 2016:-

 

-               The Corporate Safeguarding Update Report be included in the Forward Work Programme for September, 2016.

-               The Fleet Management Update Report be included in the Forward Work Programme for September, 2016.

 

The HLHRDS agreed to liaise with the Head of Business, Improvement and Modernisation regarding the submission of a report to the Committee on the Residents Survey.

 

RESOLVED – that, subject to the above, the Committee approves the Forward Work Programme.

       (CIW to Action)

 

Meeting ended at 12.40 p.m.