Agenda item

To consider a report by the Head of Internal Audit (copy enclosed) which provides an update on Internal Audit’s latest progress in terms of its service delivery, assurance provision, reviews completed, performance and effectiveness in driving improvement.

 

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

 

The AM introduced the report on the latest progress of the Internal Audit Service in terms of its service delivery, assurance provision, reviews completed, performance and effectiveness in driving improvement.

 

The report provided an update in respect of:-

 

·                         delivery of the Assurance Plan for 2013/14

·                         recent Internal Audit reports issued

·                         management’s response to issues raised

·                         Internal Audit’s performance

 

The AM explained that Appendix 1 provided a breakdown of work undertaken by Internal Audit during 2013/14, compared to the Internal Audit Strategy.  It included assurance scores and number of issues raised for the completed reviews, definitions used to form our audit assurance and the ratings used to assess the risk-levels for issues raised.

 

The following reports issued since September, 2013 had been circulated:-

 

-               Settlement Agreements

-               Deputy for Finance (Court of Protection)

-               Ysgol Brynhyfryd, Ruthin

 

Executive Summary Reports and Action Plans had been appended to the report for further information.

 

Management’s response to issues raised by Internal Audit had been summarised and most Internal Audit reports identified risks and control weaknesses.  These had been rated as critical, major or moderate risk and management agreed actions to address the risks, including responsibilities and timescales.  All instances were reported where management had failed to respond to follow up work, or where they exceed the agreed implementation date by more than three months.  The Committee would decide if further action was required.

 

Information pertaining to reports which had been followed up had been included in the report.  The AM confirmed that a further breakdown of all issues followed up had been detailed in the report, as requested at a previous meeting.  No responses had been received to three Action Plan follow ups requested on the 1^st October, 2013.  Reminders had been issued on the 23^rd October, but responses had not been received in time for the progress report.  However, the AM advised that confirmation of progress to date had been received in all cases following the report deadline.  Details pertaining to Internal Audit Performance had been included in the report with added detail provided in respect of the percentage of essential assurance work, as previously requested.

 

The AM provided a summary of each of the reports circulated:-

 

(i)            Settlement Agreement:- 

 

Members were informed that in undertaking an analysis of salary payments for 2012/13, as part of the financial assurance testing, six payments had been identified as settlement agreements.  Work undertaken had involved analysing case files and considering the overall process to ensure that:-

 

·                     the Council had a formal policy /code of practice and procedures for dealing with ‘settlement agreements’;

·                     such agreements were formally considered and approved, based on a robust business case;

·                     relevant advice was sought in all cases; and

·                     all settlements made during 2012/13 were reasonable and valid.

 

The Corporate Director: Economic and Community Ambition (CD:ECA) referred to the ACAS Code and emphasised that settlement agreements’ were a recognised method of dealing with employment issues, in both the private and public sectors, and were not perceived as a replacement for good management practice.  It was explained that the agreements had been utilised appropriately and generally applied as a last resort.  Members were informed that the Internal Audit Review had been very helpful and had identified a requirement to formalise the arrangements for initiating and approving settlement agreements.   Figures quoted in the press would have included contractual payments which employees would be entitled to regardless of a settlement agreement, and it was explained that it would be misleading to refer to a “settlement agreement” as a “gagging order”. 

 

Audit Opinion had identified the need for the Council to formalise its arrangements for dealing with ‘settlement agreements’.  There was currently no formal policy for dealing with cases and no formal procedures to follow to ensure consistency, fairness and openness and to provide an approved business case for each agreement.  Three major issues had been raised in the Action Plan which required discussion and agreement prior to the Council entering into further negotiations of any settlement agreements’.  A copy of the Action Plan had been included and a summary of the issues, and judgements made prior to agreeing a settlement, was provided by the CD:ECA, who welcomed the recommendations in the report.  The AM confirmed that work on producing the report had commenced prior to the publication of an article on settlement agreements in the press.

 

Confirmation was provided that there was no specific reason for the increase in settlements during 2012/13, other than the complexities of employer and employee relationships.  The CD:ECA explained that there were no trends relating to specific Departments, and that the number of settlements relating to staff in schools correlated to the percentage of staff employed in the Education Service.  She also referred to the added dimension of the role of School Governing Bodies with regard to the management of schools.  Members were informed that a Support Officer had been appointed to provide assistance to School Governing Bodies, together with, the provision of additional training, and Finance and HR officers had been appointed to school clusters to provide advice and assist with the management process.  The Chair requested that information be provided regarding work currently being undertaken in respect of training on employment issues. 

 

The CD:ECA emphasised the importance of good management in HR practice, and suggested that a review of training provision for Governing Bodies be undertaken.  Councillor M.L. Holland, whilst accepting the difficulties involved, made reference to the possible utilisation of performance appraisals in the Education Service.

 

Mr P. Whitham referred to the reputational risk to the Council and suggested that consideration be afforded to the publication, in the public domain, of improvements in the audit report.  The HLDS explained that the audit report proposed the adoption of a formal policy and procedure, to be applied across the Council, which could be presented to the Committee when formulated.

 

During the ensuing discussion, Members agreed that Committee receive a further report, including a copy of the draft policy and procedures, in January, 2014.  The Chair also requested that a report on employment issues, the implementation of the HR strategy in school clusters and the provision of training for School Governing Bodies also be presented to the meeting of the Committee in January, 2014.

 

(ii)          Deputy for Finance (Court of Protection), and

(iii)      Ysgol Brynhyfryd, Ruthin:-

 

The AM confirmed that both reports had been very positive and the Committee received and noted the contents therein.

 

Members of the Committee had previously requested that they be afforded the opportunity to discuss any audit reports with an orange or red assurance rating, low or no assurance, issued after the deadline for the Committee reports.  The report on Procurement of Construction Services, issued on the 29^th October, 2013, was circulated at the meeting.

 

(iv)  Procurement of Construction Services:-

 

The HFA introduced the report and explained that the review of the Procurement of Construction Services had been undertaken at the request of the HFA to assess the existing processes for spending on construction work and to identify opportunities for efficiencies.  Due to significant changes, which included the increased involvement of external bodies such as Welsh Government, the current Procurement Strategy required updating to integrate with the development of the Economic Development Strategy.  He outlined the timescales for the work being undertaken and confirmed that the scope of the review had covered the procurement strategy, roles and responsibilities, policies and procedures, approved lists and tendering and contractor selection.  The importance of liaising with the respective Directorates was emphasised to ensure consistency across the Council when coordinating the various contracts.

 

In response to concerns raised by Councillor P.C. Duffy, the Property Manager explained that there was no mechanism in place to restrict schools from engaging contractors of their choice to undertake work on their respective sites.  The HFA confirmed that schools were responsible for managing their own budgets and outlined the difficulties encountered in relation to delegation and schools.  The Acting Strategic Procurement Manager and Construction Design and Management Coordinator had attended a school finance managers meeting to outline liability and procurement procedures with regard to schools undertaking the services of contractors.  Details of the roles and remit of school finance and business managers, in relation to school clusters, were summarised for Mr P. Whitham.

 

In response to a question from the Chair, the Senior Auditor confirmed that a follow up report on the Procurement of Construction Services would be undertaken in February, 2014, and a progress report could be submitted to the March, 2014 meeting of the Committee.

 

Following further discussion, it was:-

 

RESOLVED – that Corporate Governance Committee:-

 

(a)          notes Internal Audit’s progress and performance to date in 2013/14.

(b)          receives and notes the recent Internal Audit reports issued and follow ups carried out.

(c)          requests a progress report on Settlement Agreements, including a copy of the draft policy and procedures, be presented to the Committee in January, 2014, together with, the inclusion of information in respect of employment issues, the implementation of the HR strategy in school clusters and details of the provision of training for Schools and their respective Governing Bodies, and

(d)          agrees that a progress report be submitted to the March, 2014 meeting of the Committee in respect of Procurement of Construction Services.

     (PM, IB, BS and LL to Action)