Agenda item

To receive a report from the Monitoring Officer regarding the Terms of Reference of Governance and Audit Committee (copy attached).

 

 

The Corporate Director: Governance and Business introduced the Governance and Audit Committee Terms of Reference report (previously circulated) to see the Committee’s recommendation of the adoption of amended terms of reference for the Committee.

 

At the request of the Committee, the terms of reference had been reviewed.  They were updated in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) guidance.

 

The previous terms of reference had reflected the statutory functions of the Committee as set out in the Local Government (Wales) Measure and subsequently amended by the Local Government and Elections Act.  They had not been a comprehensive terms of reference and did not reflect the importance of the role of the Committee within the council structure.  The Chair had proposed some changes based upon the model.

 

A meeting had taken place with the s151 Officer, Chief Internal Auditor and Chair and Vice Chair of the Committee to look at the draft terms of reference.

 

Under the new terms of reference, there was a section at the beginning of the document which set out the statement of purpose of the Governance and Audit Committee.  As well as setting out the statutory requirements placed the Committee in its context as an important part of the Council’s governance. 

 

CIPFA’s sub headings were then followed for the terms of reference.

 

Key points - Financial affairs – suggested terms of reference from CIPFA referred to mainly the financial statements but they did not necessarily reflect the statutory provision in the Local Government (Wales) Measure which referred to reviewing and scrutinising financial affairs.  The Welsh Government had produced statutory guidance regarding the operation of Governance and Audit Committees and they were keen to point out there should be a demarcation between the role of the Governance and Audit Committee and the role of Scrutiny.  The Guidance suggested that the Governance and Audit Committee should be ensuring there were robust processes and controls in respect of the council’s financial affairs, the way it set budgets, the way it monitored spending etc.    Scrutiny regarding spending decisions was for the Scrutiny Committees of the Council and the Constitution of the council should demarcate those.

 

Under the first bullet point of Financial Affairs the terms of reference stated “to obtain assurance that the Council has effective and robust processes in place to identify, assess and manage risks and pressures, and a realistic and achievable strategy for setting balanced budgets, with any concerns arising properly raised with the responsible officers, members or auditors as necessary”.    This was not in the CIPFA model but the terms of reference had been enhanced in our model document.

 

The sections under Governance, Risk, Control and Performance – the Chair had requested Strategic Planning approved the second bullet point regarding the risk management processes.  It was confirmed colleagues in Strategic Planning agreed that was their understanding of their interaction with the Committee and had approved the wording.

 

Strategic Planning did respond in relation to the draft Annual Performance Self-Assessment (fourth bullet point) that the Committee was to receive the Council’s draft Annual Performance Self-Assessment report and, if necessary, make any recommendations for changes to the council. 

 

The fifth bullet point stated “to receive the Council’s finalised Annual Self-Assessment report for the respective financial year”.   The draft Self-Assessment report was brought to the Committee but not the final Self-Assessment report.  The view of the Corporate Director was that the bullet point needed to stay in the terms of reference.  In future, the Local Government and Elections (Wales) Act 2021 required that the Governance and Audit Committee comment on the draft Self-Assessment, that Council approve the final Self-Assessment, but if the Governance and Audit Committee made recommendations regarding changes to the draft which were not adopted by Council, Council should explain why.  The legislation stated that the final Self-Assessment report be made available to the Governance and Audit Committee.  The Final Self-Assessment would not be presented at Governance and Audit Committee if Council had not adopted any recommendations made for an explanation as to why that decision had been made.   If the final Self-Assessment report and the Governance and Audit recommendations were approved by Council the final report would be presented to Governance and Audit Committee for information.

 

The Local Government (Wales) Measure did state that as well as the statutory requirements placed upon the Governance and Audit Committee, the Council could determine that other matters be determined by the Committee.   On page 85 of the pack there was a heading “Responsibilities in respect of the Council’s Constitution” as the Governance and Audit Committee dealt with issues referred to the Council’s Constitution.

 

Responsibilities in respect of Indemnities – this was not a statutory requirement of the Governance and Audit Committee but the terms of reference related to the Local Authority’s Indemnity for Members and Officers (Wales) Order 2006.   Officers and Members who were the subject of litigation in respect of activities arising outside their duties could look to the Council for an indemnity in respect of the costs dealing with the proceedings.  In addition, Members could request an indemnity in respect of legal costs in relation to code of conduct proceedings brought by the Ombudsman to the Standards Committee or the Adjudication Panel for Wales.  If prosecuted or taken to a code of conduct proceeding and convicted or sanctioned, then the monies would have to be repaid.  

 

If the terms of reference report were to be approved, it would then be presented at the Council meeting in May 2024.

 

At this point, the Chair offered his gratitude to the Corporate Director for all the work done with the report.

 

During discussions, the following points were raised –

·         A question had been raised that if the new terms of reference were in place would the items on the Agenda be covered by it.  It was confirmed that a piece of work was required to be carried out on the forward work programme.  The past three years of Agendas would be assessed to map out the items the Committee was receiving under the new terms of reference to see if there were any gaps.  Also the time the Committee has would be looked into and how the forward work programme could be structured to have a more even spread of business across the year together with what would be substantive items and what could be taken as information reports.  Scrutiny Committees limit the Agenda to no more than four substantive items to enable meaningful discussion within an appropriate timescale.   That may not always be possible for Governance and Audit Committee but looking to concentrate on items which come under the terms of reference.

·         Within the terms of reference, it stated the Committee may require any Member or Officer to attend before it to answer questions and may invite other persons to attend meetings of this Committee.   There may be an occasion where, for example, a Chair of Governors, or a contractor could be invited to attend a meeting but it was felt the terms of reference did not cover those people.  It was confirmed that people who work for the Local Authority or elected Members were compelled to attend but could not compel people who did not work for the Local Authority to attend to answer questions.  An example was given as Scrutiny Committee invited outside bodies to attend and usually they were able to attend.

·         Regarding Local Authorities who had issued Section 114 reports, there had been criticism of the failure of the Governance and Audit Committee to adequately review and monitor what had been happening in those Local Authorities.  It was suggested to include specific reference to the Section 114 implications in the terms of reference so they were addressed proactively by the Governance and Audit Committee and it was felt this would strengthen the terms of reference.  Officers confirmed they would take the query away and look at it with regards to the terms of reference but were cautious about putting too much detail in the terms of reference.

·         there were references to revenues and budgets but possibly insufficient, specific reference to Capital management decisions and the link therefore into treasury management in the terms of reference.  Would need to see capital strategy and capital management decisions linked as part of the purview of the Governance and Audit Committee. 

·         membership of the Committee.  It was stated membership of 9 with  6 Councillors politically balanced and Councillors may not be a Chair of Council or a Cabinet Member.   It was understood that a Cabinet member could be a member of Governance and Audit Committee as long as that Cabinet Member was not Chair or Vice Chair.    The wording did not reflect that   There was an opportunity politically the Lead Member for Finance regularly attends Governance and Audit Committee and the administration may at some point in time to allocate and suggest that the Lead Member for Finance is one of the non Chair and Vice Chair members of the Governance and Audit Committee.  It was confirmed that Cabinet members were permitted to be a member of the Governance and Audit Committee but Council had taken the decision not have Cabinet members on the Governance and Audit Committee.

·         It was agreed terms of reference for Scrutiny Committees were due a review.  The issue would be put forward to Scrutiny Chairs and Vice Chairs Group. 

 

The terms of reference document was a living document and could be amended at any time.

 

RESOLVED that, subject to the above, and further approval by the Chair and Vice Chair, the terms of reference be approved and put forward to Full Council.