The Performance Audit Manager presented the Wales Audit Office report on the Financial Resilience Assessment of the Council.  He stated that the Wales Audit Office believes that financial resilience is achieved when an authority has robust systems and processes to effectively manage its financial risks and opportunities and to secure a stable financial position. 

The Performance Audit Manager informed the Committee that the Wales Audit Office in its report had identified that the Council has:

·           an effective corporate framework for financial planning;

·           effective financial controls, financial management is generally strong and it has a good track record of spending to budget; and

·           a sound framework for reviewing and challenging financial performance through its Corporate Performance Assessment process and Section 151 Officer has a good track record for meeting financial targets.

He stated that the report had rated each of these elements, namely, Financial Planning; Financial Control and Financial Governance as Low Risk. 

The Performance Audit Manager reported whilst the Council faces some significant challenges, its current arrangements for achieving financial resilience are sound.  He stated that underpinning the Council’s ability to make cuts are many savings proposals and although the Wales Audit Office recognise the impact of changes to funding on service areas is considered by Council, the review conducted of the Savings Proposal forms suggests there is opportunity for more detailed documentation of this in the forms. 

He also stated that in relation to financial control, Directors are solely formally responsible for budgetary monitoring within their own Directorate, although informally this is delegated to Heads of Service, Group Managers and sometimes Service Managers.  However, this informal delegation is set to change in 2016-17, with the planned introduction of formally delegated financial management responsibilities at sub-Director level.  He stated that Collaborative Planning is a budget management software tool, when installed, allows Directorates to undertake more financial management activities improving their access to financial information as well as generating efficiencies within the Finance Department.  The Wales Audit Office recognises that having formally recognised financial management responsibilities helps effective financial management and it recommends that these changes are implemented as planned.      

The Performance Audit Manager informed the Committee that the Council must assess all potential cost-cutting opportunities and also Income Generation and Charging opportunities.  He stated that the Wales Audit Office review has highlighted that the Council does not currently have a strategic approach to Income Generation and Charging and is solely the responsibility of each individual Directorate.  The Council is working towards an Income Generation and Charging policy and establishing a new commercialisation group that will review fees and charges and the generation of income.  The review by the Wales Audit Office of Income Generation and Charging opportunities found that the Council does not have a strong strategic approach; however it has taken steps towards developing such a strategy.  The Wales Audit Office recognise that there is still scope for more detailed analysis and assessment of Income Generation and Charging opportunities and that substantial work will be required to fully exploit those opportunities.  Concern was expressed by the Committee at the recent loss of the Corporate Director Resources post and whether this would affect the ability of the Council to pursue Income Generation and Charging opportunities.  The Performance Audit Manager informed the Committee that the Wales Audit Office had discussed the agenda for change at the time it carried out the corporate assessment and he acknowledged that services will have fewer staff but with greater demands placed on them.  The Committee questioned who would adopt the strategic position formerly filled by the Corporate Director Resources.  The Performance Audit Manager informed the Committee that the Financial Resilience Assessment had been undertaken prior to the recent re-structure with the risk ratings based on the findings made by the Wales Audit Office at the time.  The Head of Finance informed the Committee that he welcomed that the Wales Audit Office had recognised the improvements made by the Council in relation to financial resilience.  He also recognised the strong position the Council is in, in relation to financial planning; control and governance.  He stated that the recent realignment of duties recognises the need to have capacity to drive forward the commercialisation of services which the Council manages.  The Head of Finance informed the Committee that the piece of work on the commercialisation of services had yet to commence and that the first phase of the project would be to look at the potential for the full cost recovery of fees and charges.  The second phase would be to look at the services provided by the Council where it does not currently make charges.  The third strand to the project would involve exploring opportunities of providing services to other public bodies. 

In response to a question from the Committee, the Performance Audit Manager informed that it was hoped to present the project brief for the next                      

Financial Resilience Assessment to the next meeting of this Committee with a view to completing the next assessment in Autumn. 

RESOLVED:           That the content of the WAO Report on the Council’s Financial Resilience Assessment 2015-16 be noted.