Agenda item

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 future.

 

During the ensuing discussion Members agreed that, following the identified completion dates in October, 2016, a progress report be presented to the Committee in January, 2017 in respect of the Rhyl Coastal Defence Scheme.

 

RESOLVED – that the Corporate Governance Committee:-

 

(a)          receives and notes the Internal Audit report.

(b)          confirms the effective implementation of the Action Plan, within the agreed timescales, and

(c)          agrees that a progress report be presented to the January, 2017 meeting of the Committee.

     (SP, IB, LH to Action)