To receive apologies for absence (to include reasons where appropriate) from Members/Officers

Apologies were received from the following Members/Officers:

Councillor D K Edwards                       -             Other Council Business

J Williams                                             -             Work Commitments

            Corporate Director – Resources          -             Other Council Business

            Head of Finance and ICT                    -             Personal

To receive declarations of personal and prejudicial interest (if any) from Members/Officers in accordance with the provisions of the Members’ Code of Conduct adopted by Council from 1 September 2014

The following Members declared a personal interest under Item 8 – Internal Audit’s Annual Report on Schools as they are School Governors:

            Councillor G W Davies MBE

            Councillor E Dodd

            Councillor M Reeves

            Councillor R E Young

To receive for approval the minutes of a meeting of the Audit Committee dated 20 November 2014

RESOLVED:         That the minutes of a meeting of the Audit Committee held on the 20^th November 2014 were approved as a true and accurate record. 

The Chief Accountant provided Members with an update on the dispute between the Authority and the contractor over the final costs of the Bridgend Resource Centre’s capital contract.  She was pleased to inform the Committee that this had now been resolved with the contractor, as confirmation had been received that they would not be challenging the Authority.  Therefore the financial settlement is £271k, and a earmark reserve had been put aside to cover this amount.

The Chief Accountant presented a report to update the Committee on the half year position for Treasury Management activities for 2014-15, attached at Appendix A and to highlight compliance with the Council’s treasury management policies and practices.  Also to present the proposed Treasury Management Strategy 2015-16 before it goes to Council in February for approval.

The reported that the main points for treasury management for the half year review 2014-15 were as follows:

·         The Council has complied with its legislative and regulatory requirements by presenting the Half Year report to Council in November 2014, and the first quarter monitoring report had gone to Cabinet;

·         No long or short term borrowing or debt rescheduling was undertaken during the first half of the year 14-15;

·         The Council had investments of £24.40m at the 30^th September with an average interest rate of 0.48%.  The current rate received from Central Government was only 0.25%, therefore the Council’s investments are out-performing the DMO rate;

·         The Investment Strategy was reviewed to enable increased flexibility in the changing financial market to increase potential investment opportunities available, whilst maintaining security;

·         The Council operated within its treasury limits and complied with its Treasury Management Practices.

The Chief Accountant informed members that the Council’s new banking contract with Barclays Bank commenced on the 5^th January 2015.  She then referred to Appendix B and reported the following main points for the proposed Treasury Management Strategy going forward 2015-16:

·         The Strategy would be presented to Council on the 25^th February 2015 for approval, within the Medium Term Financial Strategy;

·         It has been reviewed by Arlingclose, Treasury Management Advisors to the Council;

·         It sets the Economic Context and Interest Rates Forecast which assumes an average bank rate for 2015-16 of around 0.75%

·         The main change within the Strategy was within the Invest Strategy due to the imminent UK legislation which had resulted from two European Union directives.  The combined effect of those changes would leave public authorities and financial organisations as the only senior creditors likely to incur losses in a failing bank after July 2015;

·         Investments were historically placed in short term bank and building society unsecured deposits, and local and Central Government.  However, due to the aforementioned changes, the relative risk of these deposits would increase;

·         Arlingclose are to be invited to provide training before the end of the financial year, to both Members of the Audit Committee as well as the staff in the Finance Department, on the changes and also alternative investment options.

A Member asked whether the imminent changes would place a bigger reliance on the Council’s relationship with Arlingclose.

The Chief Accountant confirmed that it would as there was not the required expertise in-house and the Head of Finance & IT and the Finance Manager had already received training through Arlingclose within the last two months.  She reported that the Council had an active relationship and daily contact with staff at Arlingclose, who constantly updated staff on the credit ratings of banks and building societies.  ...  view the full minutes text for item 164.

The Insurance and Risk Management Officer presented a report to the Committee that explained the outcome of the Authority’s Annual Risk Assessment, attached at Appendix 1, which identified the main risks facing the Council, the likely impact of those risks on Council services and the wider County Borough, and also outlined what was being done to manage the risks and allocated responsibility to individuals for the Council’s response. 

He advised that a Risk Assessment had been developed in consultation with Corporate Directors, Business Managers and Senior Management Teams, and had gone to the Corporate Management Board (CMB) in December 2014.  A summary of the residual risk scores was contained in Appendix 2 and the Corporate Risk Management Policy was attached at Appendix 3.  He advised that the Risk Assessment was reviewed quarterly alongside reports to CMB, covering the changes throughout the year.

The Insurance and Risk Management Officer took Members through the list of risks and reported that Welfare Reform was affecting Wales more than England, with social housing tenants having had their benefits reduced by 20.4%, as opposed to 19% in England and 15.3% in Scotland.  The report highlighted increased poverty amongst social housing tenants as a result of the rising cost of food, fuel and utilities.  He reported that 50% of those people surveyed were in greater debt and the level had risen by a quarter since the introduction of the bedroom tax with those who were in rent arrears up by 23% and referrals to food banks had increased by 48%.

A Member asked how the earmarked reserve would be used.

The Chief Accountant advised that it would be used for any pressures facing the Council as a result of Welfare Reform and there was a further sum to help the more vulnerable in society.

The Insurance and Risk Management Officer then referred to the second risk which was “using resource effectively” and reported that during the coming year the Council is required to make savings of £11.25m which included an increase in Council Tax of 4.8%.  The total amount of savings required over the following three years is £37.6m, making a total of £48.8m over the next four years and built into that amount is an assumed increase in Council Tax of 4.9% per annum.  Directorates are expected to make savings of 8.6% for 2015-16, which include retendering for Learner Transport, Waste Management, Health and Social Care, Cultural Services, Regulatory Services, Youth Offending, as well as staff restructures as the staffing spend currently accounted for 69% of the budget.

One Member questioned the £200k pump priming to establish core staff capability to deliver the programme, and asked whether this would mean paying twice if staff were seconded from another department within the Authority.

The Chief Accountant advised that pump priming had been used to fund a core team of Project Managers and a specific Project Accountant to assist in delivering projects such as collaboration and outsourcing of certain areas.  The Project Managers have been appointed on  ...  view the full minutes text for item 165.

The Corporate Director - Resources submitted a report, that summarised for Committee the actions and information requests made by the Audit Committee at its last scheduled meeting.

This was detailed in paragraph 4.1 of the report, and the Chief Internal Auditor explained that a report on the topic so highlighted would appear later in the meeting as an agenda item.

RESOLVED:            That the Committee noted the report and awaits further progress reports as confirmed above, at its next meeting.

The Chief Internal Auditor presented a report to summarise for Members the findings of the audits recently completed by the Internal Audit Shared Service.  Details of the audits were included in the report, attached at Appendix A and she highlighted for Members some of the areas of concern.

She advised that Management were currently in discussions with the Trade Unions to implement a corporate expenses policy.  This was the result of incidents where it was found that duplicate claims had been made.  Action had now been taken to provide staff with more training and the ITC department were putting a system in place to flag up any repeat claims.

She reported that the Loan Worker system was working effectively, but as there were only a limited number of staff using it a programme had been set up to raise the system’s profile.  The system would also be included in the Council’s Community Plan. 

The Chief Internal Auditor reported that the audit review on Benefits – Free School Meals had identified that there was no policy in place to govern the process.  However it had now been confirmed that discussions were being held with the Legal Department to formulate a protocol.

RESOLVED:       That the Committee gave due consideration to the completed audits referred to in Appendix A to the report.

The Chief Internal Auditor presented a report which summarised the findings made by Internal Audit in relation to school based audits conducted in 2013/14 attached at Appendix A.  She informed Members that a total of 24 audit visits were carried out including four secondary schools, 16 primary schools and two infant schools.  Also included were a junior school which was closing and a comprehensive school, previously audited in 2012/13 but due to amalgamation and split site, two audit areas were outstanding.

She explained that it was not just about visiting schools, but looking at certain areas from a corporate perspective as well and ensuring that schools are complying with the Welsh Government Regulations; that clear action plans are in place to address any deficits and to ascertain whether they are spending any surplus monies in accordance with the action plan they have produced..  In September 2010 the School Funding (Wales) Regulations came into force which gave local authorities the power to direct spend and claw back monies held by schools where surplus budgets exceed £50k.  She referred Members to paragraph 4.3 of the report which provided a complete list of areas which could be covered during an audit visit at both primary and secondary schools.

The Chief Internal Auditor reported a change in Government systems in relation to how safeguarding checks are processed and notified.  A new system, Disclosure and Barring Service (DBS) has been introduced to replace the CRB checks, which has better control and will address any weaknesses identified in schools.

The Chief Internal Auditor concluded by reporting that 77% of schools audited achieved substantial assurance and 23% had achieved reasonable assurance.

RESOLVED:         That the Committee gave due consideration to the Internal Audit annual report on schools to ensure that all aspects of their core functions are being adequately reported.

The Chief Internal Auditor presented a report to update the Committee on the actual Internal Audit performance against the last nine months (April 2014 to December 2014) compared with the annual Audit Plan which had provided for a total of 1,310 productive days to cover the period April 2014 to March 2015.  A summary of audits commenced and completed during the period April to December 2014 were attached at Appendices A and B.

She reported that up until recently the Section had sustained a high level of coverage of the Plan for the nine months.  However, 99% of BCBC’s plan was actually completed, with a total of 976 productive days being achieved.  She explained that performance had dropped due to long term sickness absence and maternity leave, as well as another member of staff having left the Authority, as well as three vacant posts all of which was now impacting on the service.  A member of staff who had been on long term sickness absence had returned to work but only on a phased return.  The Section was struggling and although it had managed over the last months, not having the resources in place had started to show and would continue up to the end of the financial year.  The three vacant posts were currently being advertised for the third time.  She advised that the Authority would only be charged for the number of days delivered which meant there would be a small budget saving as they had not completed the prescribed number of days.

The Chief Internal Auditor informed Members that the two trainees were doing well and one had just passed her second examination.  The other trainee was also doing well studying to become a computer auditor and was working through an extremely complex training programme.

She stressed that despite staffing problems, it had not affected her being in a position to provide the Annual Opinion report, possibly in May, and the report would be based on the work of the Section. 

She concluded by informing Members that she would call a special meeting of the Committee should it transpire that the next round of recruitment proved to be unsuccessful, so that Members would be made aware of the impact this would have.

RESOLVED:         That Members gave due consideration to the Internal Audit Outturn Report and appendices covering the period April 2014 to December 2014 to ensure that all aspects of their core functions were being adequately reported.

The Chief Internal Auditor presented a report for the approval of the proposed Forward Work Programme for 2014-2015, attached at Appendix A.

RESOLVED:         The Committee considered and approved the Forward Work Programme for 2014-15.

The report relating to the following item is not for publication as it contains exempt information as defined in Paragraph 14 of Part 4 and Paragraph 21 of Part 5 of Schedule 12A of the Local Government Act 1972, as amended by the Local Government (Access to Information) (Variation) (Wales) Order 2007.

RESOLVED:         That under Section 100A (4) of the Local Government Act 1972 the public be excluded from the meeting for the following items of business because of the likelihood that, if members of the public were present during this item there would be disclosure to them of exempt information of the description specified in paragraph 18 of Part 4 of Schedule 12A and paragraph 21 of part 5 of Schedule 12A of the said Act:

Minute No:      Summary of Item:

155                  Confidential minutes of the previous meeting of the Audit Committee dated the 20^th November 2014.

156      Material and Energy Recovery Centre (MREC) and South West Wales Regional Anaerobic Digestion Procurement.

To consider any other items(s) of business in respect of which notice has been given in accordance with Rule 4 of the Council Procedure Rules and which the person presiding at the meeting is of the opinion should by reason of special circumstances be transacted at the meeting as a matter of urgency.

To receive for approval the confidential minutes of a meeting of the Audit Committee dated 20 November 2014