Meeting documents

Audit Committee
Tuesday, 27th September, 2016 9.30 am

Date: Tuesday 27th September 2016 Time: 9.30 a.m. Place: Council Chamber, Civic Centre, Ebbw Vale

Please note: all Minutes are subject to approval at the next Meeting

PresentAndWithReport toReport of
Item/Resolution Status Action

Apologies for absence were received from:-

Councillors C. Meredith, D. Rowberry and Derwyn Owen (WAO).


No declarations of interest or dispensations were reported.

Report (197K/bytes)

The minutes of the meeting held on the 28th June, 2016 were submitted, whereupon:-

Councillor C. Meredith reported that his attendance had been omitted from the minutes.

RESOLVED, subject to the foregoing, that the minutes be accepted as a true record of proceedings.

Report (64K/bytes)

The action sheet arising from the meeting held on the 28th June, 2016 was submitted, whereupon:-

Audit Committee - Members' grant donations

The Head of Financial Services confirmed that the application forms included questions in relation to the intended use of the grant. In terms of advertising grants on the Council's website, there was no progress to report.

She confirmed that requests to confirm receipt of grants was continuing, and the rate of response had increased slightly with e.mails now being accepted.

She referred to the cost implications of sending letters informing of the award of grant prior to the cheque being sent, and confirmed that e.mail addresses were now being gathered from organisations in order to send notification of award, followed by formal letter and cheque.

Members also requested that a condition be attached to the grant which required organisations to provide evidence of what the grant had been used for, and the Officer confirmed that this would be considered as part of the terms and conditions of the grant offer moving forward.

RESOLVED, subject to the foregoing, that the action sheet be noted.

Report (176K/bytes)

The minutes of the special meeting held on 26th July, 2016 were submitted.

RESOLVED that the minutes be accepted as a true record of proceedings.

Report (76K/bytes)

The action sheet arising from the special meeting held on 26th July, 2016 was submitted, whereupon:-

Wales Audit Office Human Resources 2012 Review - Progress Follow-Up Review (workforce information etc.)

The Head of Financial Services reported that colleagues had advised that they are currently looking to see what information could be provided from HR/ Payroll system (ITrent). In terms of organisation charts, she confirmed that packs would be compiled and sent out to Members in due course.

The Chair of the Democratic Services Committee confirmed that this was being dealt with, and a draft document would come to Committee prior to it being sent out to Members.

RESOLVED, subject to the foregoing, that the action sheet be noted.

Report (99K/bytes)
Appex (2M/bytes)

Consideration was given to report of the Corporate Support Manager.

The Head of Legal & Corporate Compliance presented the report which outlined the Council's performance with regard to complaints to the Public Services Ombudsman for Wales.

The Officer went through the report and highlighted points contained therein. It was a positive report and concluded that the Council's performance was above that of the average Council. The consistently low number of complaints to the Public Services Ombudsman every year demonstrated that the Council's corporate complaints process was operating effectively.

She referred to the increase in complaints about Environment and Environmental Health, and said this could be attributed in part to a change in Council policy with regard to waste and recycling collection, and the bedding in of this change. However, none of these complaints were taken to the investigation stage.

A brief discussion ensued when the Officer clarified points raised by Members.

A Member referred to section 4.1 of the report, which referred to the proposal in the draft Public Services Ombudsman of Wales Bill to accept oral complaints, and said that this would more than likely increase the amount of Code of Conduct complaints against Members. He said when a Member received a complaint against them it was a very unsettling time with very little recourse until they were formally informed that there was no case to answer.

The Head of Legal & Corporate Compliance said the historical spike in Code of Conduct complaints against Members, particularly in the run-up to local elections, had been referred to in the Ombudsman report, and last year the Ombudsman introduced a public interest test to manage such complaints, including far more emphasis on the use of the Local Resolution Protocol to resolve matters.

RESOLVED that the report be accepted and the information contained therein be acknowledged.

Report (120K/bytes)
Appendix (5M/bytes)

Consideration was given to report of the Chief Finance Officer.

The Chief Accountant Corporate Services presented the 2015/2016 Statement of Accounts for approval. The Accounts were presented in accordance with the Accounts and Audit (Wales) Regulations 2014, which required a set of Accounts to be fully prepared, approved and published by the end of September (with or without an opinion by the External Auditor). In accordance with the Local Government (Wales) Measure 2011, consideration and approval of the Authority's Accounts was the responsibility of the Audit Committee.

He said meeting the statutory requirements in relation to the annual Accounts was important in terms of demonstrating that the Authority had the appropriate governance arrangements in place to manage the reporting of its strategic financial affairs, and a clear audit opinion indicated that the Statement of Accounts presented was a 'true and fair view' of the Council's financial position as at 31st March 2016.

As required by the Accounts and Audit Regulations, the Accounts had been available for public inspection for a period of 4 weeks, 25th July, 2016 to 19th August, 2016 inclusive. During this time no requests for information or inspection were received, and the Authority was not aware of any objections being raised with the Wales Audit Office.

He confirmed that the Wales Audit Office had completed their audit of the Accounts and he was happy to report that, subject to approval by Committee, the Council anticipated being issued a clear unqualified audit opinion.

He reminded Members that at the Audit Committee in June he indicated that the UK vote to leave the European Union had been considered, and although there was considerable uncertainty at that time, the decision would not have an impact on the 2015/2016 Accounts. Additional disclosures have now been included in the Statement of Accounts to confirm this position and to consider the potential impact for future years.

The most significant financial implications of any changes made to the Statement of Accounts as a result of the Audit process are outlined in section 5. There had been one material adjustment, relating to the revaluation of school assets, and one non-material adjustment relating to the removal of internal creditor balances.

In addition, there have been a number of amendments to information included in the disclosure notes. However, these changes did not substantially distort the figures reported in the Draft Statement of Accounts considered by Audit Committee in June 2016, and changes to disclosures have often been made to clarify or enhance the information provided.

He said in summary the impact on the Accounts was as follows:

- The balance of the Council Fund General Reserve remained unchanged at 6.072m;

- Provisions have reduced by 0.432m as a result of the reclassification of the waste recycling provision;

- Creditors have been reduced by 0.312m due to the elimination of balances held with cheque-book schools; and

- Earmarked reserves have increased by 0.744m.

The net book value of non-current assets had reduced by 4.287m, largely due to an adjustment to the revaluation of schools. Subsequently the Capital Adjustment Account has increased by 3.754m and the Revaluation Reserve by 0.533m.

The Officer said none of the adjustments have had an impact on the Authority's 'Bottom-Line'.

He advised that the procedures and processes used in preparing the Statement of Accounts continued to be refined, embedding and consolidating systems introduced in previous years and updated to reflect changes to legislation, accounting standards and codes of practice.

Future years would require further changes to reporting obligations, e.g. the 2016/2017 Accounts would include material changes as a result of the implementation of new accounting requirements for the Highways Network Asset.

In addition, Welsh Government had concluded an initial consultation in respect of proposed changes to the statutory timetable for the closure of Accounts, with the intention of bringing forward the date of publication, and it was anticipated that amendments to statutory deadlines would take effect from 2018/2019.

He concluded that the Chief Finance Officer would like to take the opportunity to thank the Accountancy & Financial Planning Division and colleagues across the Authority for their continued dedication and professional commitment, which had again ensured that the Council was able to meet the prescribed target.

On consideration of the report, the Annual Governance Statement and the Auditor's Report, it was proposed that the Accounts are approved by the Audit Committee under the delegated authority of the Council.

A Member referred to the proposed closure of Accounts being brought forward, and the implications for the Council.

The Officer confirmed that work was underway with the Wales Audit Office and other Local Authorities on this. It was intended to move the 2018/19 closure of Accounts from September to July, and hopefully is would be achieved without any loss of quality or information.

In response to a question raised by a Member regarding insurance of the Ebbw Vale Sports Centre, the Officer explained that whilst the Sports Centre service was run by Aneurin Leisure Trust, the building was owned by the Council and therefore was covered by the Council's insurance. As the Council has a contract with the Trust for them to provide the service at the Sports Centre, failure to undertake the works would have prevented the Trust from operating their service.

Members commended the report, and the Chair thanked the Department for their excellent work in preparing the Statement of Accounts.

RESOLVED that the report be accepted and the Audit Committee approve the Accounts under the delegated authority of the Council.

report (110K/bytes)
Appex (209K/bytes)

Consideration was given to report of the Head of Internal Audit.

The Head of Financial Services advised that the Council has a statutory obligation under the Accounts and Audit (Wales) Regulations 2014 to produce an Annual Governance Statement (AGS), which explains how the Council has complied with its Code of Corporate Governance.

The AGS sets out how the Council has met its responsibilities for ensuring that its business is conducted in accordance with the law and proper standards, and how it ensures that public money is safeguarded, properly accounted for and used economically, efficiently and effectively.

In line with WG guidance the AGS is presented with the SoA to ensure the AGS is consistent with the financial statements.

She advised that the final AGS attached to the report has been amended slightly from the version considered by the Committee in June 2016 to reflect changes that have occurred up to September and after considering comments made by WAO however no significant amendments have been made between draft and final.

The officer concluded by requesting the Committee to consider the final version of the AGS, challenge the contents to ensure it is consistent with Members knowledge and understanding of the issues affecting the Council and subsequently agree the contents of the AGS and its suitability for publication.

RESOLVED that the report be accepted and the Audit Committee agree the contents of the Annual Governance Statement and its fitness for publication.

Report (31K/bytes)
Audit of Financial Statements 2015-2016 (386K/bytes)

Consideration was given to report of the Wales Audit Office.

At the invitation of the Chair, the Wales Audit Office representative presented the Audit of Financial Statements Report 2015-2016. He said the draft financial statements for the year ended 31st March, 2016 were received by the Wales Audit Office on the 23rd June, 2016 which was ahead of the statutory deadline, and the audit work had now been substantially completed.

He then went through the report and highlighted points contained therein. He said it was the Auditor General's intention to issue an unqualified audit report on the financial statements, once a Letter of Representation was received based on that set out in Appendix 1.

He said during the course of the audit, a number of matters both qualitative and quantitative was considered relating to the accounts, and there were no issues arising in these areas this year, i.e:

- No concerns about the qualitative aspects of the Council's accounting practices and financial reporting;

- The Wales Audit Office did not encounter any significant difficulties during the audit;

- There were no significant matters discussed and corresponded upon with management which needed to be reported to you;

- There were no other matters significant to the oversight of the financial reporting process that we needed to report to you;

- No material weaknesses in the Council's internal controls were identified; and

- There were no other matters specifically required by auditing standards to be communicated to those charged with governance.

In terms of the audit he said it was a significant effort for both parties and the work could not be underestimated. He said the quality of the Council's draft accounts was very good.

He concluded that the accounts were due to be signed off on Friday following which a signed copy would be presented back to the Council on receipt of a Letter of Representation.

RESOLVED that the Wales Audit Office be acknowledged.

Report (382K/bytes)
Appendix (282K/bytes)

Consideration was given to report of the Wales Audit Office.

The Head of Financial Services presented the report which outlined the outcome of the Financial Resilience Assessment of the Council undertaken by the Wales Audit Office and published in April 2016, and also provided details of the Council's response.

The Officer went through the report and highlighted points contained therein. The overall conclusion on the Council's financial resilience was that the Council's financial resilience arrangements continued to improve in the face of some significant financial challenges, but it's financial planning arrangements could be further improved in some key areas.

The Officer said the Council demonstrated that over the past 12-18 months, it had strengthened many of its processes feeding into financial planning, financial control and financial governance.

However, the Council would continue to develop its processes, using best practice where identified to ensure financial policies and procedures remained fit for purpose.

The WAO representative confirmed that the report had also been submitted the Corporate Overview Scrutiny Committee in June. He said this was the second report of the ongoing review of financial resilience of the Council, and focussed on the results of the WAO's work with the Council. He said a National Report had been published on 18th August, 2016 which highlighted some key recommendations for Local Authorities, some of which related to the recommendations identified in Blaenau Gwent.

He said Blaenau Gwent's journey had been huge over the last few years in terms of financial statutory recommendations, and there had been significant improvement in its financial management arrangements.

However, this was not underestimating the challenges faced by all Local Authorities as there was still significant savings to be achieved. He said the key was to ensure robust financial governance arrangements and planning moving forward.

He said the recommendations focussed on the Council developing fully costed savings plans for the future which underpin its medium term financial plan, which should outline the level at which it intended to maintain its General Reserve. The Council should also ensure that savings plans are sufficiently detailed to ensure Members are clear on what the plans are intended to deliver, and that they can be scrutinised appropriately throughout the year.

RESOLVED that the Wales Audit Office report and the Council's response be acknowledged.