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, 29 November 2018 at 10.30am.

Present:
Mr G Mackenzie, Mr P Saggers, Mr R Balfour, Mr B Boyd, Mr R Bremner (by VC), Mr J Bruce, Miss J Campbell, Mr A Christie, Mr G Cruickshank, Mr L Fraser, Mr A Graham, Mr R Laird, Mr B Lobban (substitute), Mr D Louden, Mr S Mackie, Mrs A Maclean, Mr D Macpherson, Mr H Morrison (substitute), Mrs M Paterson, Ms M Smith

Non-Members also present:
Mr A Sinclair

Officials in Attendance:
Mr D Yule, Depute Chief Executive/Director of Corporate Resources
Mr S Fraser, Head of Corporate Governance
Mr A Summers, Head of Environmental and Amenity Services
Ms T Urry, Head of Roads and Transport
Mr B Porter, Head of Resources
Mr F Macdonald, Head of Property and Facilities Management
Mr K Forbes, Property Manager – Estates Management
Miss D Sutherland, Corporate Audit Manager
Ms E Johnston, Corporate Audit & Performance Manager
Ms S McKandie, Benefits & Welfare Manager
Ms N Wallace, Environment Manager
Mrs W Anderson, LEADER Programme Administrator
Mr B Cameron, Housing Policy & Investment Manager
Mr J Campbell, Senior Auditor
Mrs L Dunn, Principal Administrator
Ms A Macrae, Committee Administrator

Also in attendance:
Ms J Brown, Director Public Sector Assurance, Grant Thornton
Mr J Boyd, Senior Manager, Grant Thornton

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

Mr G Mackenzie in the Chair

1. Apologies for Absence
Leisgeulan

Apologies for absence were intimated on behalf of Mr G Adam, Mrs J Barclay, Mrs M Davidson, Mr C Fraser, Mr T Heggie and Mrs B McAllister. 

2. Declarations of Interest
Foillseachaidhean Com-pàirt

Item 3: Mr D Louden (non-financial)

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

Declaration of Interest – Mr D Louden declared a non-financial interest in this item as a member of the Inner Moray Firth Leader Group, but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that his interest did not preclude him from taking part in the discussion.

There was circulated Report No. AS/18/18 dated 19 November 2018 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.

The Development & Infrastructure Service’s Team was congratulated by the Chair on the audit opinion of ‘full assurance’ which had been achieved on the audit review of the Leader Programme 2017/18.  

In discussion, concern was expressed that a number of the high priority actions in Appendix 1 were listed as ‘not started’ and whether this was due to staffing issues within the Service. Specific reference was made to those actions relating to cyber security, review of EU funded schemes and review of local full fibre network. The Chair advised that this was a year long programme and that audits would commence as the year progressed.

The Corporate Audit Manager advised that since the preparation of the Plan a vacancy had arisen within the Team. Discussions were ongoing in regard to filling that post but it was likely this would have to be carried until the end of the financial year. Action was being taken to ensure the highest risk areas were covered and explanations were provided as to why the high priority audits mentioned had not yet commenced. There was a need to consider the best time to schedule audits, in terms of the Team’s workload throughout the year and to ensure Services were not subject to a number of audits at the same time. It was likely that some of the lowest risk audits may have to be removed from the Plan due to the vacant post.

Thereafter, reference was made to the potential to review the priority levels set out in Appendix 1 in the report where there was the opportunity to generate income, bearing in mind the Council’s focus on being more commercially minded. The Corporate Audit Manager advised that she would be content to undertake a review of priorities as part of the audit planning process for next year. 

Discussion then followed on the audit opinion of ‘reasonable assurance’ in relation to Rental Income. Concern was expressed at the slow progress being made towards the creation of a comprehensive asset register for the Council, the challenges this created for the budget setting process, and the need for this issue to be elevated to Executive Leadership Team level.  A further point was raised in relation to the potential to review the length of the Council’s leases.  In response, Members were provided with an update on the work being undertaken by the Asset Management Team to review the Council’s assets and on the opportunities to realise savings for the Council.          

Thereafter, the appointment of a Project Officer in respect of the former Janitorial houses, and the revenue the occupation of these properties would generate for the Council was welcomed. 

In response to a question it was confirmed that more detailed information would be provided to Mr D Louden outwith the meeting in relation to the number of inaccuracies within the K2 property system. Information was also sought and provided on the adequacy of and challenges with the K2 programme.

Thereafter, the Committee NOTED the:-
 
i.    final Reports referred to in Section 3.1of the report;
ii.   current work of the Internal Audit Section outlined at Section 4 of the report; and
iii.  performance information provided at Section 5 of the report.

4. Action Tracking Report
Aithisg a’ Leantainn Gnìomhachd

There was circulated Report No. AS/19/18 dated 21 November 2018 by the Corporate Audit Manager.

In discussion, the following main points were raised by Members:-

• the slippage on the review of the Burials and Cremations policy was extremely disappointing and information was sought and provided on the recruitment challenges which had delayed the appointment of the Burials and Cremation Officer;
• an explanation was sought and provided on the process for the retention, storage and disposal of historic paper records. It was confirmed that burial records would be stored in fire proof cabinets in Service Points;
• an assurance was sought and provided that there was flexibility to allow the advanced purchase of lairs given the demand from relatives and also given the financial implications for some families and undertakers. The Head of Environmental and Amenity Services advised this was only an issue where a  cemetery was reaching capacity and undertook to investigate a specific matter raised in the Dingwall and Seaforth Ward; 
• the implications of the review of the management rules for cemeteries in relation to having ornaments and memorabilia on lairs given the sensitivities around this issue;
• in relation to the statutory consultation to be carried out on the management rules for cemeteries, there was a need to better understand and manage the different expectations of communities across Highland relative to the Council’s policy and audits of performance; 
• in particular, the expectations of the public and Members in relation to grass cutting in cemeteries could not always be delivered within the available resources and therefore the need to consider other potential sources of funding if an enhanced level of maintenance was being sought; 
• concern was expressed at slippage on the high priority items set out in Appendix 3 to the report and particularly in relation to any slippage on the programme for bridge inspections. An assurance was provided that bridge inspections were being undertaken and performance reported to the Environment, Development and Infrastructure Committee. Reports to Local Committees would also be provided going forward;
• the potential to provide a pictorial representation at cemeteries in relation to the placement of ornaments to assist with grass cutting. The Head of Environmental and Amenity Services advised that he would investigate this matter further; and
• as a general point, the potential for a cost benefit analysis to be carried out on the savings generated from implementing the audit recommendations weighed against the cost of the extra resources required. 

The Committee NOTED the action tracking information provided including the revised target dates for the completion of outstanding actions.

5. Code of Corporate Governance
Còd Riaghladh Corporra

There was circulated Report No. AS/20/18 dated 15 November 2018 by the Head of Corporate Governance. 

In discussion, the following main points were raised by Members:-

• an explanation was sought and provided in regard to procedure where councillors had a complaint against each other in terms of it being dealt with internally and externally by the Standards Commission;
• confirmation was sought and provided that all reports to Council and Committees must include Gaelic impact assessments, and the list set out in the report was not definitive;  and
• the Chair provided confirmation that while there was a record of all the training which had taken place, historically Members attendance had not been recorded. However a system was now being put in place to ensure attendance was being monitored going forward. 

The Committee:-

i.   NOTED the progress on delivering the 2017/18 Code of Corporate Governance; and 
ii.  APPROVED the 2018/19 Code of Corporate Governance.

6. Corporate Complaints Progress
Adhartas Ghearanan Corporra

There was circulated Report No. AS/21/18 dated 20 November 2018 by the Depute Chief Executive/Director of Corporate Resources.

In discussion, the following main points were raised by Members:-

• an explanation was sought and provided on the spike in complaints in relation to land and property. Members were advised this was a broad category across the Council which for example included public toilets.  A piece of work was to be undertaken to review the recording of complaints under this category, so that it was more transparent; 
• the potential to separate out complaints which were operational issues and those which related to political or policy decisions of the Council. The Benefits and Welfare Manager undertook to investigate this matter further;
• clarification was sought on the reasons for the reduction in the overall number of complaints which had been received. This was mainly due to the new renewal process which had been put in place for garden waste bins and the weather conditions over the grass cutting season which had resulted in less maintenance being required;
• confirmation was sought and provided that there was a statutory process in place to ensure that when a complaint was closed the complainant was satisfied that it had been dealt with; and
• it was surprising that more complaints were not being made electronically.      

The Committee NOTED:-

i.   the Council’s six month performance for Stage 1 and Stage 2 complaints;
ii.  the decrease in the number of complaints received and also that the number of complaints continued to be a low volume within the context of the scale of the Council’s customer base and the scope of services provided; 
iii. the continued improvement in performance at Stage 1 and the ongoing work around Stage 2; and
iv.  that support officers continued participation in the Local Authority Complaint Handlers Network.

7. Lean Review of Internal Audit Process
Ath-sgrùdadh Lom air In-Sgrùdadh 

There was circulated Report No. AS/22/18 dated 30 October 2018 by the Depute Chief Executive/Director of Corporate Resources.

In discussion, a point was raised on the potential to quantify the level of savings Internal Audit generated for the Council and the opportunity for performance indicators to be introduced to capture this information. The Corporate Audit and Performance Manager advised that this issue was being considered and advised of the need to undertake a cost benefit analysis approach in relation to the burden capturing this information may place on officers across the Council.  

The Committee NOTED the successful completion of the Lean review of the internal audit process which has been conducted by staff in the Audit & Performance Team, Corporate Resources Service.  This has resulted in improved processes which will offer efficiencies in the way the Internal Audit Plan is delivered and benefit staff within the Team and across the Council.

8. Members Survey on the Effectiveness of Audit and Scrutiny Committee
Suirbhidh Bhall mu Èifeachdas na Comataidh Sgrùdaidh
    
There was circulated Report No. AS/23/18 dated 1 November 2018 by the Depute Chief Executive/Director of Corporate Resources.

The Chair advised that Members would be consulted on proposals to review the role and remit of the Committee and a discussion paper had been prepared by the Corporate Audit & Performance Manager.
This included a proposal to reduce the size of the Committee to give it more focus and provide for more effective scrutiny, in common with other similar scrutiny bodies in Scotland. The consultation would also include information on the political representation that would apply for the different scenarios proposed.

Members’ training was an important part of the review and concern was expressed at lack of take up of training opportunities which had been provided. The proposal was to identify training that was more appropriate to Members’ needs, including online training, and also to consider the most suitable time for that training to be rolled out.  The consultation paper also proposed there should be an increased focus on outcomes, and how these should be measured and monitored, rather than on the process. 

In response to questions, the Chair advised that deadline for comments on the consultation paper was the end of January 2019, and it was hoped to implement the outcome of the review after the Council recess next year. 

In discussion, Members welcomed the review and raised the following main points:-

• the survey would be undertaken on an annual basis and it would be helpful in future if Members could add textual comments to provide for a better understanding of their views;
• a key determinate of the length of meetings was Members engagement in scrutinising the papers presented; 
• support was expressed for the need to be more focused on performance and outcomes in addition to the governance around policy and procedure and the potential to derive more benefits from the range of corporate performance data collected annually;
• there was a need to consider how the Committee’s scrutiny role sat with the  current role of the strategic committees;
• the number of Members on the Committee reflected that the Council was a large organisation from a Scottish perspective and perhaps the attendances at Committee may be a more important consideration. However, it was recognised the size of the Committee was raised regularly in External Audit reports; 
• there would be benefit in considering best practice elsewhere with specific reference to how Parliamentary scrutiny committees conducted their business;
• the potential to draft in expertise from out with the Council to provide fresh new ideas and suggestions on improved ways of working. The Chair confirmed that lay membership was an option in the paper;
• the opportunity for more business to be held in private to allow for a more full and frank discussion at the Committee and the need for further advice to be taken on this matter; and
• the proposal to undertake the survey on annual basis would allow for benchmarking in terms of whether the review was making a difference going forward.

The Committee:- 

i.   AGREED that the survey be conducted annually;
ii.  AGREED to the development of online learning resources for Members on their role in scrutiny; and
iii. NOTED the Committee Chair and Vice-Chair’s intent to review the role and remit of Committee.
    
9. External Audit Update Report 
Aithisg às Ùr air Sgrùdadh on Taobh A-muigh

There was circulated an External Audit update report provided by the Council’s External Auditors (Grant Thornton). 

In presenting the report, the External Auditor highlighted the timeline for the Account Commission’s Best Value Assurance report. This report sought to provide the Commission with assurance on the Council’s statutory duty to deliver Best Value, including follow up of the Council’s previous report in 2010.  

Thereafter, Members were advised that it was not anticipated the introduction of IFRS9: Financial Instruments would have a material impact on the Council’s budget. This was a complex area and further work was being undertaken on the implications.  

The Committee NOTED the terms of the report.

The meeting ended at 12.15pm.