Agendas, reports and minutes

Minutes of Meeting of the Audit and Scrutiny Committee held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 23 November 2017 at 10.30am.

Present:
Mr R Laird, Mr P Saggers, Mr G Adam, Mr R Balfour, Mr A Baxter, Mr B Boyd, Mr R Bremner (on VC), Miss J Campbell, Mrs H Carmichael, Mr G Cruickshank, Mrs M Davidson, Mr C Fraser, Mr L Fraser, Mr K Gowans, Mr D Louden, Mr G MacKenzie, Mr S Mackie, Mr D Macpherson, Mrs B McAllister, Mr J McGillivray, Mrs M Paterson, Ms M Smith

Non-Members also present:
Mrs J Barclay     

Officials in Attendance:
Mr D Yule, Depute Chief Executive/Director of Corporate Resources
Mr B Porter, Head of Resources, Care and Learning
Mr S Fraser, Head of Corporate Governance
Ms S Barrie, Programme Manager (Property)
Ms N Wallace, Environment Manager 
Mrs S McKandie, Benefits and Welfare Manager 
Ms E Johnston, Corporate Audit & Performance Manager
Miss D Sutherland, Corporate Audit Manager
Dr S Carr, Corporate Performance Manager
Miss J MacLennan, Democratic Services Manager
Mr A MacInnes, Administrative Assistant, Corporate Governance

Also in attendance:
Mr A Ross, Senior Strategic Risk Management Consultant, Zurich Municipal  

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

Mr R Laird in the Chair

1. Apologies for Absence
Leisgeulan

Apologies for absence were intimated on behalf of Mr J Bruce, Mr A Christie and Ms K Stephen.

2. Declarations of Interest
Foillseachaidhean Com-pàirt

Item 4(iii) - Mr D Louden and Mr R Bremner (both Non-Financial)

3. Review of Corporate Risk Register
Ath-sgrudadh Clar Cunnairt Chroporra

There had been circulated Report No. AS/15/17 dated 30 October 2017 by the Depute Chief Executive/Director of Corporate Resources.

In this connection, a Presentation was undertaken at the meeting by Mr A Ross, Senior Strategic Risk Management Consultant, Zurich Municipal, on Corporate Risk Management during which he highlighted the importance of various issues associated with the risk management process and the need for Elected Members and Officers to have different perspectives on this within the Council. 

In this regard, it was confirmed that Elected Members had a crucial role in challenging both internal and external risks in relation to decision making, not least in terms of scrutinising the nature of controls in place and their effectiveness.

Above all, the Council had to ensure that it was ‘risk aware’ and that a culture of discussion, linked with openness and transparency, was encouraged at all times.   

During discussion, clarification was sought as to why the following risks were now being removed from the Corporate Risk Register - THC 36 (if the Council does not address and manage the impact of changes arising from the Welfare Reform Act this will be to the detriment of our communities) and THC 41 (if communities do not develop the capacity to participate in services and become more resilient and/or the Council is unable to match their expectations, then the objectives of the Council’s Programme and its budget assumptions will not be met).

In response, it was confirmed that THC 36 was currently the focus of work within Corporate Resources and the Service Risk Register would be reviewed in January. In this regard, mitigation of the effects of the Welfare Reform Act across the Highlands was a high priority and as such consideration would be given at that time as to whether this particular risk needed to be escalated from the Service Risk Register to the Corporate Risk Register. 

In regard to THC 41, it was noted that this was currently being managed through the Redesign Board process and specifically through the measures being considered/implemented in relation to localism. 

In regard to CR3.2 (Education Governance: We will lobby for positive changes to the proposals for Education Governance, including through the Northern Alliance and CoSLA), it was agreed that further consideration would be given to including more detail on what was considered to be a substantive future risk for the Council.

During further discussion, it was suggested that discussion should be undertaken with Senior Officers in terms of adding a risk to the Corporate Risk Register in relation to the changes anticipated within the Council over the next few years and the measures to be taken to ensure that a clear vision was in place for the future delivery of services. In this respect, a focus on Capital Budget cost control on an ongoing basis would also be crucial.

In summary, the Chair confirmed that the focus on issues related to Corporate and Service Risk Registers was ongoing and as such any Member could raise additional issues of concern with him and with the Corporate Performance Manager at any time.      
     
Thereafter, and having thanked Mr Ross for his attendance at the meeting, the Committee NOTED the refreshed Corporate Risk Register which had been provided as Appendix 1 to the report and the risk profile at Appendix 2.

The Committee also NOTED that six monthly reviews of the Corporate Risk Register would continue to be reported each March and September and that an Officer Group had been established on corporate risk management.  

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

There had been circulated Report No AS/16/17 dated 14 November 2017 by the Corporate Audit Manager 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.

At this point, it was noted that Mr Josh Gallimore, Trainee Auditor, had recently been awarded his Chartered Internal Auditor qualification and that this Certificate would be formally presented to him at a future meeting.    

In relation to the work of the Internal Audit Section, it was noted that audit work had been undertaken on behalf of the Valuation Joint Board and for Western Isles Council, and for HiTRANS for the SPARA 2020 project.

In terms of Corporate Fraud activity, three new referrals had been received regarding potential misuse of staff resources, plant, materials and equipment and these investigations were ongoing, with the indications being that one of these was likely to be a significant investigation. In this regard, it was confirmed that if this pattern of referrals continued, it might impact on completion of the 2017/18 audit plan if it was necessary to divert audit staff from planned work to assist with fraud investigations. However, any such changes would be reported back to the Committee.

In addition to the Progress against the 2017/18 Audit Plan and Performance Information which had been provided within the report, and with specific reference to the performance information for Quarters 1 and 2, it was noted that the support of the Chief Executive in obtaining a timely response to draft audit reports had resulted in all being provided within the specified timescales and this was welcomed.                

The final reports were then presented as follows:-

(i) Development & Infrastructure Service – Renewable Heat Incentive Income Scheme – follow-up (Full Assurance)

(No issues raised at the meeting).

(ii) Care & Learning/Development & Infrastructure Services – Cromarty Primary School – Review of Extension & Refurbishment Project (Limited Assurance)

During discussion, Members raised the following issues:-

• it was noted that there had been a very difficult set of circumstances surrounding this project but lessons had been learned. It also had to be highlighted that this particular project pre-dated the very thorough review of project management processes which had subsequently been undertaken (and which had resulted in new procedures being implemented);
• in terms of the duty of care to get the best value for money, there was real concern about the level of overspend on this particular project and whether there could be similar situations elsewhere in the Highlands which had the potential to lead to cumulative deficiencies;
• the issues had been raised initially by Local Members and there was concern that they might not have been identified otherwise;
• it was felt that more care and scrutiny should have been in place as this project progressed, including adequate contingency arrangements;
• in relation to due diligence, clarification was required in regard to when the Chief Executive had been made aware of the significant overspend situation in regard to this project;
• there appeared to have been non-accountability across a range of aspects of the project and this raised serious concerns for the budget process;
• it was hoped that there could be confidence that the new processes and procedures in place for project management would ensure that this situation was not repeated;
• more clarity/detail was required in terms of the exact nature of the level of overspend on this project;
• whilst welcoming the actions identified in the Action Plan, there was also a real need for a focus on workforce planning to ensure that the Council retained staff who were highly trained and able to provide a high level of oversight and management in relation to such projects in future;
• it had to be highlighted that, following investigation, it had not been possible to confirm responsibility for the circumstances which had led to the wall collapsing during this project;
• the amount of overspend on this project (which had originally had a ‘fixed’ price) was a real concern, not least in terms of public perception;
• consideration should be given to making changes to contract wording in future to include reference to action which could be taken in the event of damage incurred/extra work required/additional costs which could not have been determined at the outset;
• confirmation that all tendering opportunities were now advertised and monitored by the Programme Board for Major Projects was noted;
• one of the most important recommendations within the Action Plan was that in future full cognisance should be taken of an entire project site, including the surrounding perimeter walls, to ensure that the whole site was captured under the risk assessment process;
• it would be imperative to closely monitor future projects to ensure that improvements were being implemented and having the desired effect and Elected Members had an important scrutiny role in this regard;
• it should be noted that the Environment, Development & Infrastructure Committee received regular monitoring reports for all projects over £4m;
• lessons had to be learned across the Highlands in order to avoid previous project failings, such as those incurred in the Ben Wyvis project, with specific reference being made to current works being undertaken at Inverness High School which were being very closely monitored by Local Members;
• it was essential that in future all staff involved in project management/implementation were fully aware of their responsibilities and specific remits; and
• in terms of communication on future projects, a single point of contact for Elected Members was vital.                            

Declarations of Interest – Mr D Louden and Mr R Bremner declared non-financial interests in the following item (iii) on the basis of connections to the Inner Moray Firth and Caithness LEADER Programmes respectively 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 them from taking part in the discussion. 

(iii) Development & Infrastructure Service – Leader Programme 2016/17 (Substantial Assurance)

(No issues raised at the meeting).

Thereafter, the Committee otherwise NOTED the Final Reports as detailed and the current work of the Internal Audit Section. 

5. Action Tracking Report 
Aithisg a’ Leantainn Gniomhachd

There had been circulated Report No. AS/17/17 dated 13 November 2017 by the Corporate Audit Manager.

The Committee NOTED the action tracking information provided within the report as circulated. 

6. Code of Corporate Governance
Cod Riaghladh Corporra

There had been circulated Report No. AS/18/17 dated 5 October 2017 by the Head of Corporate Governance.

During discussion, and with specific reference to a Whistle Blowing Policy being in place and reviewed regularly, it was hoped that a focus on this area of work could be provided alongside issues related to fraud activity within the Audit Plan in future.

In relation to a request for further detail on current data sharing arrangements with NHS Highland, it was confirmed that specific information in this regard could be sought from the Corporate Resources and Care & Learning Services within the Council.  

Thereafter, the Committee otherwise NOTED the progress on delivering the 2016/17 Code of Corporate Governance and the 2017/18 Code as circulated. 

7. Corporate Complaints Process Report 
Aithisg Ghearanan Corporra

There had been circulated Report No. AS/19/17 dated 14 November 2017 by the Depute Chief Executive/Director of Corporate Resources.

The Committee NOTED the Council’s performance for Stage 1 and Stage 2 complaints and recognised that the number of complaints received was a low volume within the context of the scale of the Council’s customer base and the scope of services provided.

The Committee also AGREED to support the continued participation of Officers in the Local Authority Complaint Handlers Network and that a review of the questions relating to complaints should be undertaken within the Council’s Annual Survey of Performance and Attitudes as detailed in Paragraph 7.6 of the report.

It was further NOTED that the LEAN review of the Corporate Complaints process was ongoing.  

8.  Annual Report of Scottish Public Service (SPSO) Cases determined in 2016/17
Cuisean Ombudsman Sheirbheisean Poblach na h-Alba a Fhuaireadh leis a’ Chomhairle – Aithisg as Ur

There had been circulated Report No. AS/20/17 dated 13 November 2107 by the Chief Executive.

The Committee NOTED the outcomes of the SPSO cases and that actions had been taken in response to the Ombudsman’s recommendations and all of the cases had now been closed. 

The meeting ended at 11.35am.