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.

None

To receive for approval the minutes of the Committee of 16/07/2020

RESOLVED: That the minutes of the 16/07/2020 be approved as a true and accurate record subject to the addition of the following attendees: Gill Lewis, Josephine Williams, John Llewellyn

The Democratic Services Manager presented a report which updated Members on the Audit Committee Action Record.

He advised that the action record devised to assist the Committee in tracking decisions made by the Committee in the exercise of its functions. The action record was presented to the committee at every meeting. The up to date action record was attached at Appendix A of the report.

RESOLVED: That the Audit Committee noted the action record.

The Audit Wales (AW) representative presented a report which updated the Committee on the Financial and Performance Audit Work undertaken, and due to be undertaken, by Audit Wales during 2020-21.

The AW Representative explained that this item was brought to the Audit Committee at last month’s meeting and stated that, due to the summer recess and annual leave, there had not been significant developments since the last meeting.

The AW Representative explained that the 2019-20 performance audit work was drawing to a close by Autumn 2020. She stated that they would not be presenting the Annual Improvement Report as in the past, but there would be an amalgamation of reporting on performance and financial audit. She added that she would update the committee on the method of reporting when she had that information.

The AW Representative explained that the Assurance and Risk Assessment work for 2021 was still underway and that the Recovery Planning work had now begun, with her colleague having recently attended the Recovery Scrutiny Panel. She added that discussions were due to be had with relevant officers and the Chief Executive and Section 151 Officer regarding observations and potential future field work.

The AW Representative explained that with regards to the Financial Sustainability Phase 1 report, the national report was due to be published on the 1^st October 2020.

The AW Representative explained that with regards to the Digital Focus project, she had been in touch and was now awaiting a response from Officers to arrange a scoping meeting so that field work could begin and a project brief be drafted for the committee which was expected to be ready by Autumn 2020.

The AW Representative explained that she had added a summary of the recent publications to the report, with weblinks.

The Chairperson asked the Interim Chief Officer – Finance, Performance and Change with regards to the National Fraud Report what the arrangements were for addressing the findings and recommendations.

The Interim Chief Officer – Finance, Performance and Change explained that findings from the Annual Corporate Fraud Report later on the agenda would help to form a response to the National Fraud Report and suggested that a report be bought to Members at the next Audit Committee.

A Member asked if a report on mental health was due to be presented in light of the Covid-19 pandemic. The AW Representative stated she would provide an update to the next Audit Committee.

RESOLVED: That the Committee noted the Audit Wales Audit Committee Update at Appendix A of the report.

The Interim Chief Officer – Finance, Performance and Change presented a report which updated the Audit Committee on the changes to the Corporate Risk Assessment.

She explained that since the risk assessment was last presented to Audit Committee in January a lot had changed. The updated risk assessment was listed at Appendix A of the report and had been reviewed in consultation with Corporate Management Board (CMB) and the Senior Management Team (SMT). She added that it identified the main risks facing the Council, their link to the priority themes, the likely impact of these on Council services and the wider County Borough, identified what is being done to manage the risks and who is responsible for the Council’s response.

The Interim Chief Officer – Finance, Performance and Change pointed out a couple of instances in Appendix A whereby a number of dates needed amending:

• The heading of Appendix A was incorrect and should read August 2020.
• The date of review for Risk 2, 4 and 6 should read Oct 2020.

The Interim Chief Officer – Finance, Performance and Change explained that during the height of the Covid-19 pandemic, there were daily management meetings whereby risks relating to Covid-19 were identified and dealt with on a daily basis, and therefore were not added to the risk register. She explained that instead these were included in the weekly reports to the Gold meetings and this was thought to be sufficient reporting of the risks relating to Covid-19.

The Interim Chief Officer – Finance, Performance and Change explained that due to Covid-19, additional risks were added to the risk register to ensure thorough management of them throughout the pandemic with the hope that they will quickly drop off in due course. For example, risk 11, risk 12 and risk 13 were ongoing risks related to Covid-19 and would hopefully move off the risk register after in due course She added that this did not account for any new potential risks that we were not yet aware of as changing circumstances continue to unfold.

The Chairperson thanked the Interim Chief Officer – Finance, Performance and Change and her team for all the hard work managing the situation.

A Member asked for an update on the cash flow and associated risks and how quickly the Welsh Government had been providing money during the Covid-19 pandemic.

The Interim Chief Officer – Finance, Performance and Change explained that with regards to income, this was coming from a multitude of sources and the Council had been claiming from Welsh Government on a monthly basis for additional costs due to Covid and almost three quarters had already been refunded. She added that there had been no cash flow problems.

The Interim Deputy Head of Finance commented on the cash flow risk stating that there were still outstanding payments being made with regards to the Business Grants and although the scheme had now closed, there were outstanding claims that still required information from the valuation office before we could  ...  view the full minutes text for item 201.

The Interim Group Manager – Chief Accountant presented a report which updated the Audit Committee on the outturn position for treasury management activities, the Treasury Management Indicators for 2019-20 and highlighted compliance with the Council’s policies and practices before they are reported to Cabinet and Council.

The Interim Group Manager – Chief Accountant explained that the Audit Committee has been nominated to be responsible for ensuring effective scrutiny of the Treasury Management Strategy (TMS) and activities. During the 2019-20 financial year, Audit Committee received the Annual Treasury Management Outturn Report 2018-19 in June 2019, the Half Year Treasury Management Report 2019-20 in November 2019 and the TMS 2020-21 in January 2020. Further background was listed at section 3 of the report.

The Interim Group Manager – Chief Accountant explained that the Council’s treasury management advisors were Arlingclose. The current services provided to the Council included:

• advice and guidance on relevant policies, strategies and reports

• advice on investment decisions

• notification of credit ratings and changes

• other information on credit quality

• advice on debt management decisions

• accounting advice

• reports on treasury performance

• forecasts of interest rates

• training courses

Following a recent tender process, the contract for Arlingclose had been renewed for a period of 4 years, until August 2024 which allowed a continued positive relationship with them and to benefit from their knowledge of the Council and the financial position.

The Interim Group Manager – Chief Accountant explained that 2019-20 had been a challenging year with Brexit and more recently the Covid-19 pandemic. This had seen changes in interest rates and inflation rates. Further economic context was provided at 4.1 of the report.

The Interim Group Manager – Chief Accountant explained that a summary of the treasury management activities for 2019-20 was shown in Appendix A of the report. The Council’s external debt and investment position for 1 April 2019 to 31 March 2020 was shown in Table 1 and more detail was provided in section 3, Borrowing Strategy and Outturn, and section 4, Investment Strategy and Outturn.

He reported that no long term borrowing was taken out in 2019-20 and no debt rescheduling was undertaken as there were no significant savings to be made, however, the loan portfolio will be reviewed during 2020-21.

Favourable cash flows have provided surplus funds for investment and the balance on investments at 31 March 2020 was £30 million, with an average interest rate of 0.82%. This was an increase in investments outstanding from the start of the financial year where investments were £27.4 million (average interest rate 0.94%). Table 2 in Appendix A details the movement of the investments by counterparty types and shows the average balances, interest received, original duration and interest rates for 2019-20.

The Interim Group Manager – Chief Accountant outlined key points in Appendix A of the report which included:

• External Debt and Investment Position
• Borrowing Strategy and Outturn for 1 April 2019 to 31 March 2020
• Investment Strategy and Outturn 1  ...  view the full minutes text for item 202.

The Interim Group Manager - Chief Accountant submitted the final Statement of Accounts for 2019-20, which was now due to be certified by the external auditors, Audit Wales, and the associated Letter of Representation of the Council.  He stated that Audit Wales will update the Committee on their main findings from the audit, summarise the audit work carried out in respect of the 2019-20 financial year, and present their Audit of Financial Statements Report, which required the appointed auditor to report those key findings to those charged with governance.

He reported that the unaudited Statement of Accounts 2019-20 was signed by the responsible financial officer on 30 June 2020 and presented to the Audit Committee on 16 July 2020 for noting.  He stated that during the intervening period the external audit had taken place, resulting

in amendments being made to the financial statements noted below:

• Comprehensive Income and Expenditure Statement – to correct the treatment of an asset disposal between Cost of Services and Other Operating Expenditure.
• Balance Sheet – increase in assets to represent the return of a care home to Council ownership.

Neither of these adjustments had an impact on the Council Fund.

He reported that a number of notes were amended that did not affect the financial position of the Council, which are detailed within the Auditor’s Report.  He stated that the audited Statement of Accounts 2019-20 are required to be signed by the Chief Financial Officer and the Chair of the Audit Committee by 15 September, as presenting a ‘true and fair view’ of the financial position of the Council as at 31 March 2020.

He also reported that Audit Wales have substantially completed their audit work and the Statement of Accounts are due to be signed by the Auditor General for Wales on 14 September 2020, subject to Audit Committee approval of the accounts.  The Council Fund and Earmarked Reserves balances as at 31 March 2020, as presented to the Audit Committee in June 2020, have not changed.  He stated that one recommendation had been raised following the audit, compared to nine the previous year.  The recommendation is in relation to the oversight of the Council’s Fixed Asset Register in that the Council should strengthen its controls in relation to the Asset Register by undertaking regular reviews of access and use of the system.  He reassured the Committee, that annual checks are undertaken

through ensuring opening balances in the current year match closing balances the prior year as part of the annual Statement of Accounts Closing process, and additions and disposals match transactions within the core accounting system.  He stated that reviews will be undertaken during the year to ensure the continued integrity of the data held within the Asset Register to provide additional assurance in line with the recommendation.

The Audit Wales representative informed the Committee that it had discharged its requirements and intended to issue an unqualified audit certificate, confirming that they present a true and fair view and are properly prepared.  He  ...  view the full minutes text for item 203.

The Interim Group Manager Chief Accountant submitted the Appointed Auditor’s Annual Audit Letter 2019-20 for Porthcawl Harbour. 

He reported that the Appointed Auditor intended to issue an unqualified audit certificate, confirming that they present a true and fair view of the Harbour’s financial position and transactions.  He stated that the letter also confirms that the Appointed Auditor is satisfied that there were no

misstatements found in the Annual Return and no other matters affecting their audit opinion.  He informed the Committee that it was anticipated that the Appointed Auditor will formally certify that the audit of the accounts has been completed, on 14 September 2020.

RESOLVED:            That the Committee noted the Annual Audit Letter 2019-20. 

The Audit Client Manager Internal Audit presented the Annual Internal Audit Risk Based Plan for 2020-21.

She reported that in line with the Public Sector Internal Audit Standards, the Head of Internal Audit must establish risk-based plans to determine the priorities of the internal audit activity, consistent with the organisation’s goals.  She stated that in order to develop the risk-based plan, the Head of Internal Audit consults with senior management and the board and obtains an understanding of the organisation’s strategies, key business objectives, associated risks and risk management processes.  The Head of Internal Audit must review and adjust the plan, as necessary, in response to changes in the organisation’s business, risks, operations, programmes, systems and controls.

The Audit Client Manager reported that the draft audit plan for 2020-21 was due to be presented to Audit Committee in April 2020 however the COVID19 outbreak delayed the planning process as significant new risks and ways of working had to be considered to inform the Plan.  She informed the Committee that urgent decisions were made in March 2020 in relation to how Council services would need to operate in light of the pandemic and emergency arrangements were put in place around decision making and governance in case they were needed and normal Council and Committee meetings were suspended.  She stated that to maintain continuity of service wherever possible, the Council moved extremely quickly to equip as many of its office-based staff with mobile technology to enable homeworking within a very short timescale.  Where roles for staff diminished because of reduced volumes of work or services not being delivered, opportunities

for temporary redeployment were actively sought and implemented.

The Audit Client Manager reported that because of the significant changes to the way the Council was and is operating it has been necessary to re-evaluate the original draft plan to develop a revised Risk Based Plan for 2020-21.  She stated that the items identified in the original plan following the various consultation meetings held in January to March 2020 (prior to COVID 19) were included as a basis for this revised plan alongside an assessment of risk at that time.  An updated assessment of risk because of COVID 19 has also been undertaken. 

The Audit Client Manager informed the Committee that there will be a different emphasis due to the impact of COVID; risks arising from COVID, availability of audit and service staff and challenges arising from the remote ways of working.  She stated that the revised plan is also more flexible than usual to be able to respond to changing circumstances and events that may occur such as a second wave/outbreaks, ability to access staff and evidence or requests to respond to new issues that may emerge.  Internal Audit work will be undertaken remotely using video conferencing and digital solutions as a basis for meetings and sharing documents and data.

The Audit Client Manager reported that the proposed plan will offer sufficient coverage to be able to provide an opinion at the end  ...  view the full minutes text for item 205.

The Audit Client Manager presented the joint report of the Interim Chief Officer – Finance, Performance and Change & the Head of the Regional Internal Audit Service on the Annual Corporate Fraud Report 2019-20.  The report provided the Committee with details of the actions undertaken in respect of counter fraud during 2019/20 including an update on the National Fraud Initiative (NFI) Exercise.

The Audit Client Manager reported on the arrangements in place for managing the risks of fraud with the aim of prevention, detection and subsequent investigation and reporting of fraud.  She stated that the Council sets high standards for both Members and Officers in the operation and administration of the Council's affairs and has always dealt with any allegations or suspicions of fraud, bribery and corruption promptly.  The Council has in place policies, procedures, and reporting mechanisms to prevent, detect and report on fraud, bribery and corruption, which include the Fraud Strategy and Framework, a Whistleblowing Policy, ICT Code of Conduct and the Anti-Fraud and Bribery Policy.  The Fraud Strategy and Framework 2018/19 to 2020/21 continues to underpin the Council's commitment to prevent all forms of fraud, bribery and corruption, whether it be attempted externally or from within.

The Audit Client Manager summarised the counter fraud work undertaken within the Authority during 2019/20.  She stated that the Council’s Fraud Strategy and Framework includes reactive and proactive work with the proactive work included in an action plan which sets out the developments the Council is undertaking to improve its resilience to fraud and corruption and she outlined the progress made against the action plan.  A Fraud Prevention e-learning module has been developed and rolled out to staff, fraud information is being updated and being made available to staff on the intranet and a more detailed fraud risk assessment process is being developed that will link to the corporate risk management process. 

The Audit Client Manager also reported on details of the last data matching exercise which was based on data extracted in September 2018, wherein a total of 484 frauds or errors had been identified equating to £41,700 of recoverable funds which are mostly council tax or housing benefit related. She stated that the next data matching exercise will commence in 2020/21, data is to be extracted in October 2020 and the new matches will be returned in January 2021.  She also provided the Committee with detail of the internal counter fraud work undertaken by Internal Audit and the Council’s Fraud Investigator including internal investigations and council tax reduction investigations.  She stated that joint working was also undertaken during 2019/20 with Bridgend CBC working with the Single Fraud Investigation Service on any appropriate benefit investigations and working in partnership with Portsmouth City Council to undertake blue badge enforcement action.  Local networking is also in place which has enabled intelligence to be shared particularly in respect of new scams since the outbreak of COVID-19. 

A member of the Committee commented on the need for the framework which was last considered by the  ...  view the full minutes text for item 206.

The Interim Deputy Head of Finance sought approval for the proposed Updated Forward Work Programme for 2020-21 and highlighted the core functions of an effective Audit Committee.

She highlighted the items scheduled to be presented at the Committee’s next meeting on 12 November 2020 and requested the Committee endorse this schedule, confirm the list of people they would like to invite for each item (if appropriate), and indicate whether any additional information or research is required.

RESOLVED:            That Members considered and approved the proposed Forward Work Programme for 2020-21.  

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.

There were no urgent items.