Agendas, reports and minutes

Present:

Mr B Fernie, Dr D Alston, Mr R Balfour, Mr A Christie, Mr B Clark, Dr I Cockburn, Mr K Gowans, Mr J Gray (Substitute), Mr E Hunter, Ms L MacDonald, Mr N MacDonald, Mr A MacKinnon, Mr B Murphy, Mr A Rhind, Mr G Rimell, Mr J Rosie, Mr J Stone

Non-Member also present:

Mr T Prag  

Officials in Attendance:

Mr D Yule, Director of Finance
Mr N Rose, Head of Internal Audit and Risk Management
Miss D Sutherland, Audit and Risk Manager
Mr S Fraser, Head of Legal and Democratic Services
Mrs C McDiarmid, Head of Policy and Performance 
Mr R MacKenzie, Head of Support Services, ECS
Mr K Fox, ICT Operations Manager
Mr A Yates, Environmental Health Manager
Mr M Watters, Senior Web Development Officer
Ms K Lackie, Business Manager 
Miss J MacLennan, Democratic Services Manager
Miss J Green, Administrative Assistant

Also in attendance:

Mr S Boyle, Assistant Director, Audit Scotland

An asterisk in the margin denotes a recommendation to the Council. 
All decisions with no marking in the margin are delegated to Committee.

Mr B Fernie in the Chair

1.  Apologies for Absence
Leisgeulan

Apologies for absence were intimated on behalf of Mrs M Davidson (Chair), Mr D Bremner, Mrs C Caddick, Mr A Duffy (Substitute), Mr J Ford, Mr A Henderson, Mr D Hendry, Mr G MacKenzie, Ms G Ross and Ms K Stephen (Substitute).

2.  Declarations of Interest
Foillseachaidhean Com-pàirt

The Committee NOTED the following declarations of interest:-

Item 3(ii) – Mr T Prag, Mr B Fernie, Mr J Stone and Mr K Gowans (Non-financial)

3.  Internal Audit Reviews and Progress Report  
Ath-bhreithneachaidhean In-sgrùdaidh agus Aithisg Adhartais

There had been circulated Report No. AS/33/13 dated 8 November 2013 by the Head of Internal Audit and Risk Management which summarised the final reports issued since the date of the last meeting, together with details of work in progress and other information relevant to the operation of the Internal Audit Section.

In regard to the operation of the Internal Audit Section, planned work which was currently in progress and which would be the subject of a future report to Committee had been highlighted and it was confirmed that ten draft reports were in progress with two drafts reports having been issued.

During the period covered by the report, the Section had been involved in a variety of other work which included irregularity/fraud investigations, grant claims, Joint Board work and work for other organisations or Committees, advice, assurance and other work, the computer audit and work in relation to the Scrutiny Working Group.

Information was also provided on staffing resources, vacancies and progress against the Audit Plan. In this latter regard, it was confirmed that an addition to the Audit Plan had been Public Art in Inverness (Chief Executive’s Service) whilst deletions included Capital Contracts (Housing and Property), Realisation of Asset Management Savings and Benefits (Housing and Property), Capital Contracts (TEC Services), Web Content Management and Community Challenge Fund arrangements (both Chief Executive’s Service), Resource Link (Finance/Chief Executive’s Service) and Community Payback Orders (Health and Social Care).        

The final reports were presented as follows:-  

(i)  Chief Executive’s – Payments to Third Sector Organisations (Follow-Up)
(Limited Assurance)

The objectives of the review had been to ensure that requests for funding were processed through the Council's Single Grants process, service delivery contracts  were in place for all organisations who received funding of more than £50,000, Services ensured that services provided by third sector organisations met Corporate/Service objectives before funding was approved and that where the service delivery contracts/funding agreements required the submission of monitoring reports these were received on a regular basis and reviewed. 

In terms of the main findings, it was confirmed that considerable improvements had been made to establish a corporate grant register along with supporting guidance. However, some Services had failed to comply with this and as a result the audit objectives could not be achieved. In addition, some of the previous management agreed actions had not been implemented.  

In all, four recommendations had been made – one of which had been classified as high priority and three as medium priority – all of which were due to be completed by 31 March 2014.

(ii)  Corporate – Governance of Arms Length External Organisations
(Reasonable Assurance)

Declarations of Interest – Mr T Prag, Mr B Fernie, Mr J Stone and Mr K Gowans declared non-financial interests in this item as Board Members of Highland Opportunity Limited (Mr Prag also declaring in relation to Eden Court Highlands) but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that their interests did not preclude their involvement in the discussion.

The objectives of the review had been to examine how well the Council ensured that effective governance and accountability was maintained through arms length external organisations using the checklists appended to the Audit Scotland report.

In terms of the main findings, it was confirmed that the Council’s larger arms length organisations (High Life Highland, Eden Court and Caledonia Community Leisure Limited) had well developed governance arrangements in place and largely complied with the best practice guidance referred to in the Audit Scotland report. There was, however, scope to improve the Council’s oversight of arms length organisations, particularly in relation to those that had been set up a number of years previously, in order to ensure compliance with current guidance.   

In all, nine recommendations had been made – six which had been classified as high priority and three as medium priority.

During discussion, Members stressed the importance of complying with best practice as identified by Audit Scotland in regard to the appointment of Council Members to external organisations (and particularly those organisations that were expected to carry out services on the Council’s behalf). In this regard, it was AGREED that, in future, the needs and requirements of each organisation should be established from the outset and the main criteria in terms of appointment should be the skill set, expertise and qualifications which an appointee could be expected to bring to the organisation.    

(iii)  Chief Executive’s – Corporate Governance Arrangements 2012/13
(Reasonable Assurance)

The objectives of the review had been to ensure that the Council had adequate corporate governance arrangements in place, in particular that there was an appropriate framework in place which complied with best practice as set out in CIPFA/SOLACE guidance, the actions required to demonstrate and/or improve governance arrangements had been clearly identified together with the Responsible Officers and target dates and any actions not completed by the end of the year had been identified.

In this regard, it was advised that the agreed actions arising from the previous audit report on Corporate Governance which had been issued on 27 August 2012 had been satisfactorily implemented by management.    

In terms of the main findings, it was confirmed that a number of reported issues related to the fact that full implementation of the Performance and Risk Management System (PRMS) had only been concluded in January 2013. Use of this system by all Services in accordance with the guidance issued by the Chief Executive’s Service would enable a final position on progress with the actions from the Code of Corporate Governance to be extracted and verified as part of the audit process. In this regard, the system included a standard template for Service Quarterly Performance Reviews which incorporated all required information, including actions from the Code of Corporate Governance and Internal and External audit reports and if utilised would ensure that progress in achieving these actions was reported upon and monitored.     

In all, four recommendations had been made – all of which had been classified as medium priority and were due to be implemented by 31 December 2013.

(iv)  Planning and Development – AXIS 4 European Fisheries Funding Project
(Reasonable Assurance)

The objectives of the review had been to ensure that the obligations in the Service Level Agreement had been adhered to by Council Officers and the projects funded by the Highland European Fisheries Fund Axis 4 Programme complied with the requirements of the Service Level Agreement.  

In terms of the main findings, it was confirmed that the Programme was assessing project eligibility correctly. However, the procedures and processes needed to be better documented to provide control and assurance that projects would continue to be processed correctly, particularly as claims and any problems arose as the projects progressed.   

In all, six recommendations had been made – all of which had been classified as medium priority and had either been completed or were due to be completed by the end of the year.

(v)  Education, Culture and Sport – Internet Use - Curriculum
(Substantial Assurance)

The objectives of the review had been to ensure that there were appropriate policies and training for curriculum users on acceptable internet use, filtering processes were flexible to ensure users could access information they needed whilst still providing sufficient controls to protect users from emerging threats, security risks and unacceptable content, schools internet use was logged and maintained in the event of further investigations required and such internet use was also monitored on an ongoing basis. Also, where unacceptable usage or breach of security was suspected this was acted upon promptly.   

In terms of the main findings, it was confirmed that the review had found a proactive and professionally led approach to security for internet use by the Council. The high level Council ICT ECS Strategy included a strategic action plan to support schools to meet the Scottish Government’s five ‘ICT in Education’ objectives and the Modernising Government Agenda and had been defined with a range of partners grouped in three key area – Curriculum and Training, Management Information and e-Safety. The Curriculum Internet Services had also been found to be progressing forwards to meet increasing demands for Highland schools to prepare children and young people for the future with ICT skills.        

In all, seven recommendations had been made – all of which had been classified as medium priority. In this respect, three actions had been agreed and fully completed during the audit period. The remaining actions had agreed implementation dates ranging from one month to one starting in April 2015 at the commencement of the new ICT contract.

Thereafter, the Committee otherwise NOTED the current work of the Internal Audit Section as detailed in the report (including the adjustments to the Audit Plan for 2013/14 as detailed) and the final reports issued since the date of the last meeting.

4.  Food Standards Agency Audit of Shellfish Sampling Activities – July 2013
Sgrùdadh leis a’ Bhuidhinn Inbhean-bìdh mu Ghnìomhachd Shamplachaidh air Maorach – Iuchar 2013

There had been circulated Report No. AS-34-13 (179kb pdf) dated 7 November 2013 by the Director of Transport, Environmental and Community Services which provided an update on the findings of the Food Standards Agency (FSA) audit of Shellfish Sampling Activities provided by the Council’s Environmental Health team which had been attached as Annex A to the report and which had been carried out in July 2013

In this regard, it was confirmed that in general the FSA were satisfied with the operational plan and procedures which had been put in place and that in almost all cases the Authority was completing sampling in accordance with the protocol and contract.

One area of good practice which had been specifically identified was the Environmental Health Scheme of Authorisation which had been found to follow Agency Guidance and was well designed, comprehensive and applied appropriately.

Minor areas which required action had included training records not fully in accordance with FSA guidelines, update training required for some Officers on shellfish enforcement procedures, temperature monitoring of storage refrigerators/freezers not recorded in accordance with internal procedure and the need for further publicity when enforcement action was taken regarding the closure of shellfish harvesting areas.         

The Committee NOTED the Food Standards Agency Audit report and the Action Plan as circulated.

5.  Scottish Information Commissioner's Annual Report 2012/13 – Freedom of Information Compliance 
Aithisg Bhliadhnail 2012/13 bho Choimiseanair an Fiosrachaidh Albannaich - Gèilleadh Saorsa Fiosrachaidh

There had been circulated Report No. AS-35-13 (45kb pdf) dated 10 November 2013 by the Assistant Chief Executive which confirmed that the Scottish Information Commissioner had published her Annual Report for 2012/13 on 1 October 2013.

In this respect, information published in respect of Highland Council was highlighted together with action on the completion of the Freedom of Information action plan which had been agreed with the Commissioner in 2011.

A summary of the Council’s compliance with the legislation and details of appeals taken up with the Commissioner was also provided.

The Committee NOTED:-

i.    that the Scottish Information Commissioner had closed her assessment of
      the Highland Council; 
ii.    that the Council had completed the Action Plan resulting from the 
      Commissioner’s audit;
iii.   the Council’s performance in complying with the legislation and the steps
      taken to continue to improve this performance;
iv.   the statistics in relation to appeals to the Scottish Information
      Commissioner regarding the Council’s handling of requests; and
v.    the details of the decision notices issued by the Scottish Information
      Commissioner regarding the Council’s responses to requests during
      2011/12 and 2012/13 as detailed in the report.

6.  Scottish Public Services Ombudsman Reports  
Aithisgean Ombudsman Seirbheisean Poblach na h-Alba

a) Scottish Public Services Ombudsman Update Report, Cases Received September - November 2013

There had been circulated Report No. AS-36-13 (26kb pdf) dated 6 November 2013 by the Chief Executive which set out the number and types of complaint about the Highland Council which had been determined by the Office of the Scottish Public Services Ombudsman (SPSO) in the period from September to November 2013.

In this regard, it was confirmed that the SPSO reports could be accessed and read in full on the SPSO website

During a summary of the report, it was confirmed that there had been three cases determined by the Ombudsman, all concerning planning matters, and none had been upheld. 

The Committee NOTED the details of the report as circulated.

b) Annual Report of Scottish Public Service Ombudsman Cases received by the Council 2012/13

There had been circulated Report No. AS-37-13 (184kb pdf) dated 7 November 2013 by the Chief Executive which set out the number and types of complaint against the Council which had been referred to the Office of the Scottish Public Sector Ombudsman (SPSO) and the subsequent judgement in the cases where the SPSO had concluded his inquiry in 2012/13.

During a summary of the report, it was confirmed that, in 2012/13, the SPSO had recorded 61 complaints about the Council as compared to 67 in the previous year. In terms of the outcome of complaints, the SPSO had determined 12 cases and out of these half had not been upheld. Whilst this represented a small increase in upheld complaints on the previous year, the longer term trend was improving with the number of fully upheld cases still in decline. In addition, the Council’s performance in 2012/13 was 3.1% lower than the sector average but this had reduced from 5.6% in the previous year.

Specific details in relation to upheld/partially upheld complaints had also been provided within the report.    

The Committee otherwise NOTED the details of the report as circulated.

7.  External Audit Report     
Aithisgean Sgrùdaidh bhon Taobh A-muigh

There had been circulated Report No. AS-38-13 (1511kb pdf) by the Council’s External Auditors (Audit Scotland) which highlighted one external audit report issued since the last meeting, namely the Highland Council’s Annual Report on the 2012/13 Audit.

During a summary of the Annual Report, it was confirmed that an unqualified opinion had been given that the Financial Statements of the Highland Council for 2012/13 had provided a true and fair view of the state of affairs of the Council as at 31 March 2013 and of the income and expenditure for the year then ended. Also, the Council’s six statutory trading organisations had made aggregate surpluses in the three years to 31 March 2013 and had met the statutory requirement to break even over the three year rolling period.

Assurance was also provided that the Council had effective governance arrangements in place and that the performance management framework was robust and integrated with service planning and delivery.

In terms of the financial outlook for public spending for the period 2013/14 to 2018/19 which remained challenging, it was advised that the Council had been proactive in preparing a 5 Year Financial Plan and identifying the savings required to be achieved to reflect reduced local government settlements.

During discussion, Members welcomed the extremely positive report, particularly in view of the future challenging financial period.       

Thereafter, the Committee NOTED the terms of the report as circulated.

It was also AGREED that the Director of Finance would circulate further information to Members of the Committee to highlight future changes in relation to the preparation of capital accounting entries and improvements to the final accounts preparation and audit process which were currently the subject of discussion with Audit Scotland. 

8.  Caithness Heat and Power – Update Report 
Teas is Cumhachd Ghallaibh – Aithisg Às Ùr

There had been circulated Report No. AS-39-13 (43kb pdf) dated 4 November 2013 by the Director of Finance which provided updated expenditure figures in relation to Caithness Heat and Power, details of the known on going risk remaining with the Council, confirmation that Audit Scotland had undertaken a Follow Up statutory audit on the Council’s involvement with Caithness Heat and Power for consideration at an Accounts Commission meeting on 12 December 2013 and the governance arrangements agreed with Audit Scotland for responding to their report and the Accounts Commission findings.

During a summary of the report, and following clarification that an update would be provided for the full Council in March 2014 (as opposed to February as had been stated in the report), it was confirmed that, as the project had been in a stable position for over a year, it was felt that the significance of a number of risks had now reduced and it was therefore a reasonable time to update the costs incurred on Caithness Heat and Power by the Council.

In this regard, it was advised that as at September 2013 the Council had incurred net expenditure of £11.5m which was a reduction of £3.9m on the previously reported figures. This reduction was mainly down to the removal of the provision to repay grants of £2.9m and the lower than expected cost of reinstatement which had been due to a smaller number of properties requiring reinstatement works. However, the expenditure figures did not include the cost of Senior Officers working on the project and there was still approximately £0.2m of outstanding debt due from former Caithness Heat and Power customers which was currently being pursued and if recovered would be offset against the advances cost of £5.3m which would reduce the total cost accordingly.

Information was also provided in regard to the ongoing risks remaining with the Council, the Audit Scotland Report and the governance arrangements for dealing with both that Report and the Accounts Commission findings.

Thereafter, the Committee NOTED:-

(i)    the amount of expenditure incurred by the Council on Caithness Heat
       and Power and the variances from previously reported figures;
(ii)   the known on going risk carried by the Council;
(iii)   that a follow up statutory audit report on Caithness Heat and Power had
       been prepared by Audit Scotland;
(iv)   that the follow up statutory report would be published on 4 December
       and a copy issued to all Members of the Council;
(v)   that the follow up statutory report would be considered at the
       Accounts Commission meeting on 12 December;
(vi)   the procedure and timetable on governance for dealing with the report
       and findings; and
(vii)  that the issue of recovering the amounts outstanding from Caithness
       Heat and Power customers remained ongoing.       

The meeting ended at 11.10am.