Agenda and minutes
Venue: Siambr Hywel Dda, Council Offices, Caernarfon, Gwynedd, LL55 1SH
Contact: Bethan Adams 01286 679020
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APOLOGIES To receive apologies for absence. Minutes: Councillors Dylan Fernley, Aled Wyn Jones, Berwyn Parry Jones, Charles
Wyn Jones and Peter Read. |
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DECLARATION OF PERSONAL INTEREST To receive any declaration of personal interest. Minutes: No declarations of personal interest were received from any members present. |
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URGENT ITEMS To note any items which are urgent business in the opinion of the Chairman so they may be considered. |
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MINUTES The Chairman shall propose that the minutes of the meetings of this
committee held on the undermentioned dates be signed as true records:- Minutes: The Chair signed
the minutes of the previous meetings of this committee held on 6 June and 22
June 2017, as a true record. |
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WALES AUDIT OFFICE - GWYNEDD COUNCIL AUDIT PLAN 2017 PDF 522 KB To submit the report of the external auditor. Minutes: The report was
presented by the Financial Audit Manager (Deloitte) and the Performance Audit
Leader (Wales Audit Office). Members were guided through the report, which detailed the WAO's audit
arrangements for 2017. The main audit risks and the work in relation to GwE’s grant income and expenditure were highlighted.
Attention was drawn to the performance audits carried out at a national level,
and those that were specific to Gwynedd. Members were given an opportunity to ask questions,
and the following responses were provided by the
officers: ·
It was believed that the
Council had received a repayment of a proportion of the WAO's 2015/16
performance audit work fee, and that a proportion of the fee for 2016/17 would
be returned; ·
The total fee for the financial and performance
audits for 2017/18 was £417,987; ·
The improvement audit and assessment work involved examining
the Council's actions on previous recommendations. A short-list of possible
recommendations would be discussed, before selecting those most relevant to the
Council; ·
In relation to the review from a service user
perspective, there would be further progress on the work undertaken in the
Local Government Study on addressing dependency and demand, and this project
would test the interface for service users in each authority. It was noted that
the selected groups would be ones which the Council had already engaged with,
and they would be chosen in relation to specific interests and age ranges; ·
In future there might be an opportunity to examine
the distribution of services in rural and urban areas. The review could include
similar groups, such as 50+ groups, from across the County from the perspective
of the service user. Agreement would be reached with the Council about the
groups to be included. The Financial
Audit Manager (Deloitte) noted that the Pension Fund's audit plan had been
drafted, but had not yet been translated, and the plan would be distributed
once it was available bilingually. The main financial audit risks to be
considered as part of the audit were highlighted, namely the risk that managers
would ignore regulations, the triennial valuation held last year and the
investments valuation. It was noted that the fee for this specific audit would
be approximately £34,000. The Head of
Finance Department noted that the Pension Fund had been valued last year, and
that Gwynedd's projections were among the most prudent on a Wales and British
level, and that the Government's like-to-like comparisons had confirmed that
there was no risk of over-stating the value of the Gwynedd Fund's assets. He
drew attention to the increase in the audit fee for the GwE
Joint Committee, and explained that the six councils had set their
contributions for the year, and that GwE would have
to fund the increase from within its budget. RESOLVED to accept the report. |
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STATEMENT OF ACCOUNTS 2016/17 PDF 112 KB To submit, for information, the statutory financial declarations (subject to audit) for 2016/17. Additional documents: Minutes: The Head of
Finance Department set out the background and context of the report. Attention
was drawn to the fact that unaudited draft accounts were being presented here
for information, with the final version to be submitted for the Committee's approval
at the meeting on 28 September 2017. The Senior Finance
Manager expanded upon their content and responded to members' general
enquiries. The Head of
Finance Department explained that the £51 million movement in pensions was a
movement on paper rather than a cash movement. He further explained that the
discount rate had reduced from 3.5% to 2.6%. He explained interest rates were
extremely low, and therefore as the true returns on bonds was low, the
associated discount rate was also low. He noted that the discount rate was used
to calculate the current value of the pensions to be paid out in future, and
subsequently the value of the sum to be paid out appeared to be higher. He
noted that regardless of the deficit, the Pension Fund's projections meant that
the deficit would be recouped over 20 years by the employer. It was noted that
it had been a good year for the Pension Fund; the assets had increased
substantially by 22% in 2016/17, and the value of the Fund as at 31 March 2017
was £1.8 billion. A member noted
that a table on page 51 of the agenda showed a substantial decrease in the
capital receipts in 2016/17 compared to 2015/16. In response, the Head of
Finance Department noted that the figure was based on how much property had
been sold during the year. He emphasised that this signified the timing of the
disposal of property, rather than less effective performance. In response to an
observation by a member about the reduction in the mortality assumptions in
relation to the pension costs, the Head of Finance Department noted that the actuary had undertaken detailed research into the
assumptions, and that the Council accepted the information. A member added that
this was contrary to what was heard about individuals' life spans, and asked
how frequently the assumptions were reviewed. In response, the Head of Finance
Department noted that the assumptions were reviewed as part of the triennial
actuarial valuation. A member enquired
about the impact of changing the pension age to 67. The Head of Finance
Department confirmed that the implications of the change to the pension age had
been included in the plan and the relevant assumptions when estimating the
value of the commitments. RESOLVED to accept and note the 2016/17 Statement of the Council’s Accounts (subject to an audit). |
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TREASURY MANAGEMENT 2016/17 PDF 447 KB To submit, for
information, the report of the Investment Manager on the results of the Council’s
actual borrowing and investment during the financial year that ended 31 March
2017. Minutes: The background and context of the report was presented by the Investment
Manager, in relation to the actual results of the Council's Treasury Management
during 2016/17, compared with the strategy established for that financial year.
Details were provided on the economic background, the borrowing requirements
and debt management, investment activity and compliance with prudential
indicators. The Head of Finance Department noted that a briefing meeting would be
held for committee members on 24 January by Arlingclose,
the Council's Treasury Management Consultants, to discuss and explain the
Council's Treasury Management Strategy Statement for 2018/19. He explained that
the Committee, in its meeting on 8 February 2018, would make a recommendation
to the Full Council in relation to the Council's Treasury Management Strategy
Statement for 2018/19. A similar decision had been made in February/March 2016
in relation to the 2016/17 strategy, which was the subject of this paper. In response to a
question from a member regarding interim borrowing, the Investment Manager
noted that interim borrowing occurred only in exceptional circumstances for a
bridging period before money was received, and that the loan would only be for
a very short term. She further explained that it could occasionally be cheaper,
due to low interest rates, to borrow money for a short period rather than using
an overdraft. A member asked
whether it would be more prudent to use reserves than borrow money. In
response, the Head of Finance Department noted that the Council
"self-borrowed", rather than borrowing to serve assets, and that
decisions about borrowing were closer to the daily cash flow situation. He
explained that the situation in relation to the reserves was different, and
that long term loans were avoided. In response to an
observation by a member on the first sentence on page 158 of the agenda in the
context of the Council's Capital Financing Requirement (CFR), the Head of
Finance Department noted that the sentence should note that the need to invest
was increasing, and that borrowings were not sufficiently decreasing to address
the CFR. In response to
queries about setting prudential indicators, the Head of Finance Department
noted that organisations produced indicators which were particular to their
circumstances, and that organisations had differing levels of expectations and restrictions. It was confirmed that the Council's indicators
were in accordance with the CIPFA (Chartered Institute of Public Finance and
Accountancy) Code of Practice on Treasury Management. RESOLVED to accept the report for information. |
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WALES AUDIT OFFICE REPORT - GOOD GOVERNANCE WHEN DETERMINING SIGNIFICANT SERVICE CHANGES PDF 342 KB To submit the
report of the external auditor. Minutes: The report was
presented by the Performance Audit Leader (Wales Audit Office). He noted that
the report, examining the situation in Gwynedd in relation to governance when
determining significant service changes, was generally positive. He explained
that there had been a delay before the submission of the report to the
committee due to the local and general election periods. He noted that a report
on the national situation would be published before the autumn. He drew attention
to the conclusion that "...Gwynedd Council’s governance arrangements for
service change are sound and improving, better supporting effective decision-making.”
He highlighted the proposal for improvement, in order to reinforce the
Council's governance arrangements: "Scrutiny committees having the
opportunity to review and challenge service change business cases in a timely
manner before a final decision is made by Cabinet." He noted that the
Council had already expanded the role of scrutiny members with two scrutiny
members attending the Cabinet Members' performance challenge meetings. A member referred
to the Scrutiny Review Sub-group and asked whether the Sub-group could consider
the progress made in responding to the proposal for improvement. The Head of
Finance Department noted that the Council was acting on the proposal for
improvement and that he would confirm the situation regarding the Sub-group,
and inform the member. In response to an
observation by a member regarding monitoring good scrutiny, the Performance
Audit Leader (Wales Audit Office) noted that CIPFA provided guidance, and that
the Committee's remit and the Council's Constitution would be considered. It
was further explained that how scrutiny was evidenced would be monitored, by
examining Scrutiny Committee meetings to see the elements of challenging that
took place, the evidence submitted and the decision. RESOLVED to note and accept the report. |
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REPORT FROM THE CONTROLS IMPROVEMENT WORKING GROUP PDF 492 KB To submit the report of Councillor Angela Russell outlining the feedback from the meeting of the Working Group on 9 March 2017. Minutes: Submitted – the
report of Councillor Angela Russell on a meeting of the above-mentioned working
group held on 9 March 2017 to consider the audits that had received a category
C opinion, namely - a) Support Workers
(Derwen) b) Sales of Diesel c) YGC Overtime ch) Plas Gwilym Officers had been
invited to attend the meeting in order to discuss the matters that had arisen
from the audits and the work undertaken since the audit reports were published
in order to strengthen the internal regulations in question. It was noted that
no officers had been present in the working group's meeting to discuss the 'Plas Gwilym' audit. It was
explained that the Area Manager, North - Residential and Day-care, and Plas Gwilym's Manager were unable
to attend the Working Group meeting as they were holding interviews that could
not be re-arranged. It was noted that the officers had sent a written summary
of the steps taken to reduce the risks that had been highlighted in the report,
and that they received the Working Group's attention, in addition to the
evidence received from Plas Gwilym's
Manager. In relation to the
sales of diesel, a member asked whether it would be a good idea to change the
payment method to be card-only, in order to reduce the risk. In response, the
Audit Manager noted that customers paid with cash and that some were invoiced,
that receiving card payments would improve cash flow but that this was a matter
for the service. In response to a further observation, the Audit Manager noted
that the follow-up review would examine the usage level of the new arrangements
for card payments. A member noted
that she had raised a matter in the Local Joint Consultative Committee on 7
July 2017 on the need for contact between the officers that were presenting the
information to the Joint Committee and the internal audit officers where matters of concern arose. In response, the Audit Manager
said that she would welcome the opportunity to hold discussions with the
officers if any matters of concern arose when preparing the Internal Audit Plan
for the year. Members expressed
their concerns regarding staff turnover levels in residential homes and
recruitment problems in the field of care. It was proposed and seconded to ask
the Care Scrutiny Committee to consider the matter for scrutiny. RESOLVED: (i)
to accept the
report; (ii)
to ask the Care
Scrutiny Committee to consider scrutinising the levels of staff turnover in
residential homes and recruitment problems in the field of care. |
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INTERNAL AUDIT OUTPUT 1/4/17 - 30/6/17 PDF 416 KB To submit the report of the Audit Manager. Minutes: Submitted - the
report of the Audit Manager outlining Internal Audit’s work for the period. It
was noted that two reports on audits from the operational plan had been
completed, two reports on audits from the 2016/17 Audit Plan and one grant
audit. Each individual report was considered and, during the discussion,
reference was made to the following matters – Workers' Awareness of
the Whistle-blowing Policy In response to a member’s question, the Audit Manager explained that the
questionnaire had been sent to all Council office workers. The lay member noted that consideration should be given to the
whistle-blowing arrangements being administered by an external company. The lay member
asked about the whistle-blowing arrangements in schools and for volunteers. In
response, the Audit Manager noted that there was an individual policy for each
school and that there would be a separate audit. She noted that the Education
Department had a central policy that schools could amend for their use, and
that there were arrangements for reviewing the central policy. In relation to
volunteers, they were expected to be aware of the policy and they could be
included if an audit was held on field workers' awareness of the policy. In response to a question from the lay member on the Whistle-blowing
Contact Card as part of the induction pack, the Audit Manager explained that
the number of individuals who had received the card had decreased since the
previous audit and that it was a matter for the Corporate Support Department to
consider in relation to the promotion of the policy. It was noted that the
number of whistle-blowing cases was very low, which could either be a positive
or a negative reflection. Hafan's Direct Debits In response to a
member's observation about the fact that the audit had not received an opinion
category, the Audit Manager noted that this was because a review of Hafan's management was due to be carried out. She drew
attention to the fact that the service had committed to acting on the review of
business contingency arrangements to mitigate the risks that had been
highlighted during the audit. RESOLVED: (i) to accept the report on
the work of Internal Audit for the period from 1 April 2017 to 30 June 2017 and
to support the agreed actions that had already been submitted to the managers
of the relevant services; (ii)
that the members appointed to serve on the Controls
Improvement Working Group at the meeting of the Committee on 6 June to also
consider the audits that have received a category ‘C’ opinion in this period; (iii) that it was the
responsibility of any member unable to attend the Working Group to arrange a
substitute. |
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INTERNAL AUDIT PLAN 2017/18 PDF 449 KB To submit the report of the Audit Manager on the progress made on the 2017/18 Internal Audit Plan. Minutes: The report of the
Audit Manager was submitted, providing an update on the current situation in
terms of completing the 2017/18 internal audit plan. It was reported that up to 30 June
2017 the Internal Audit Unit had completed 3.33% of the plan, and that 2 of the
60 audits in the 2017/18 plan had been released in a finalised version. It was
explained that one reason for the lower performance than the quarterly target
was due to staff recruitment difficulties. The staffing level throughout the
quarter had reduced by a level that corresponded to two full-time auditors. It
was added that two new staff members had started during April and had been
receiving their necessary training during this period. It was noted that there
were steps in place to resolve the situation and that specific audits had been
designated to the auditors. In response to an enquiry by a member
regarding the reasons for the recruitment difficulties, the Audit Manager noted
that one of the reasons was the Senior Auditor salary scale, with nearby
councils designating a higher salary for the post. She added that she was of
the view that the salary did not reflect the duties and responsibilities of the
post. The lay member noted that the Senior
Auditor's salary scale should be reviewed. She added that the staffing levels
to deliver the internal auditing work was a cause for concern in other councils
in the area, with some councils purchasing staff hours from other
councils. Members expressed their concerns in
relation to the risk of not delivering the internal auditing work in accordance
with the 2017/18 plan, and the need to review the Senior Auditor's salary
scale. In response, the Head of Finance Department noted that he would arrange
an assessment to examine whether the salary scale was fit for purpose, and
would ask the Audit Manager to review the job description, and ask the
Corporate Support Department to re-evaluate the salary scale. RESOLVED to accept and note the contents of the report as an update of progress against the 2017/18 audit plan. |
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INTERNAL AUDIT CHARTER PDF 312 KB To submit the report of the Audit Manager. Additional documents: Minutes: The Head of
Internal Audit presented the Internal Audit Charter to the Committee, which had
been produced in accordance with the requirements of the Public Sector Internal
Audit Standards 2013 (amended April 2017). Members were guided through the
Charter, and their attention was drawn to the purpose of the Internal Audit
Service: "To give
confidence to the citizen and the Council on the Council’s control environment
and governance arrangements through independent and objective reporting to the
Head of Finance and the Audit and Governance Committee." She explained that, the Audit and Governance Committee was referred to
as the "Board" and "Audit Committee" in the document and
that she as the Audit Manager acted as the "Chief Audit Executive" in
accordance with the terminology in the Standards. She highlighted
that one of the major changes in the Charter was that the Audit Manager
reported directly to the Senior Revenue and Risk Manager, who was accountable
to the Head of Finance Department. The change reflected the working arrangements. She drew attention to the fact that Internal Audit, after an appropriate
period, would conduct follow-up testing to ensure that what was agreed with the
Services was acted upon, regardless of the audit’s opinion category. This
reflected the move towards encouraging managers' ownership of the agreed steps. The Head of
Finance Department noted that the move towards encouraging managers' and
officers' ownership of the steps had been welcomed and praised by himself and
the Chief Executive. A member noted that the Charter was clear and commendable. The member
asked how the Audit Manager would report if it was considered that there was a
lack of resources to complete the work. In response, the Audit Manager noted
that any lack of resources would be highlighted in the progress reports
submitted to the Committee. She added that if action was required, she would
hold discussions with the Senior Revenue and Risk Manager and the Head of
Finance Department. The lay Member
referred to paragraph 10.1 under the heading 'Internal Audit Resource
Requirements', and the need to strengthen the paragraph. In response, the Audit
Manager noted that she would add a clause stating that in the event of
insufficient resources the matter would be referred to the Committee. A member noted
that he appreciated the process of discussing and agreeing upon actions with
managers to encourage their ownership of the solutions. RESOLVED to approve the Internal Audit Charter. |
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INTERNAL AUDIT QUALITY ASSURANCE AND IMPROVEMENT PROGRAMME PDF 358 KB To submit the report of the Audit Manager. Minutes: The Head of Internal Audit presented the report, and noted that the
Public Sector Internal Audit Standards, and associated CIPFA Local Government
Application Note, required the Audit Manager (the "chief audit
executive" in the Standard's terminology) to develop and maintain a
quality assurance and improvement programme to encompass all aspects of
internal audit activities. She noted that she
had conducted an internal self-assessment and had discussed the outcomes with
the Senior Revenue and Risk Manager, and had agreed upon the actions to be
included in the Quality Assurance and Improvement Programme where there were
instances of partial compliance or non-compliance with the Standards. Attention
was drawn to the Quality Assurance and Improvement Programme included as an
appendix to the report. It was explained
that the external assessment of Gwynedd Council's Internal Audit Service had
been planned to be conducted in autumn 2017 by Carmarthenshire County Council's
chief audit executive and that the results of the external assessment would be
submitted to the Committee. The Audit Manager informed the Committee that she
would be undertaking Denbighshire County Council's external assessment in
spring 2018. RESOLVED to approve the Internal Audit Quality Assurance and Improvement Programme. |