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 13 June 2019 at 10.30am.

Present:
Mr C Fraser, Mr L Fraser, Mr T Heggie, Mr D Louden, Mrs A MacLean, Mr D Macpherson, Mrs B McAllister, Mr H Morrison, Mr G MacKenzie, Mr P Saggers, Mr R Balfour, Mrs J Barclay, Mr B Boyd, Mr J Bruce, Mr A Christie, Mr G Cruickshank, and Mrs M Davidson.

Non-Members also present:

Mr Jim McGillivray (v/c) 

Officials in Attendance:

Ms D Manson, Chief Executive
Mr E Foster, Head of Corporate Finance
Mr S Fraser, Head of Corporate Governance
Ms E Johnston, Corporate Audit & Performance Manager
Ms K Lackie, Business Manager
Ms S McKandie, Acting Head of Revenues and Customer Services
Miss D Sutherland, Corporate Audit Manager
Mr J Campbell, Senior Auditor 
Miss J Maclennan, Principal Administrator
Miss C Maragh, Committee Administrator

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, Mr R Bremner, Miss J Campbell, Mrs H Carmichael, Mr R Laird, Mr S Mackie, Mrs M Paterson and Ms M Smith. 

2. Declarations of Interest
Foillseachaidhean Com-pàirt

There were no declarations of interest.

3. Appointments to Sub-Committee, Working Groups etc                               
Cur an Dreuchd gu Fo-Chomataidhean, Buidhnean-obrach is eile

Members recalled that, at the last Audit and Scrutiny Committee on 27 March 2019, it was agreed that the Committee would be represented on the City Region Deal Monitoring Group.

In this regard, the Committee AGREED to be represented on this Group by Mr P Saggers, Mr B Boyd and Mrs M Paterson.

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

There had been circulated Report No. AS/6/19 dated 4 June 2019 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. 

In relation to progress against the 2018/19 audit plan, the following comments were made:-

• end dates for audit reports would be welcomed, namely the Provision of Early Learning and Childcare Services and the Review of Self-service Payroll Process, both of which had been in progress for some time;
• a significant number of audits had either been deferred or cancelled and disappointment was expressed that the service reduction agreed as part of the budget process was a significant cause for this.  However, the Chairman assured Members that one of the vacancies carried by the Internal Audit Section had been advertised and interviews would shortly take place.  There was a staffing level in the Section which had to be maintained and it was essential that the Section was given adequate resources to carry out their role;
• clarification was sought, and received, as to who provided client feedback; and
• fraud investigations could take up a significant amount of time and many of these instances could not have been predicted when drawing up the audit plan.

The final reports were then presented as follows:-   

(i)     Corporate Resources Service – Financial Assessments (Substantial assurance) – no issues raised at the meeting.

(ii)    Care & Learning Service – Investigation into fraudulent expenditure claims in Social Work office, System Weaknesses Report (Limited Assurance)

During discussion, Members raised the following issues:-

• the importance of petty cash was highlighted and it was essential that all receipts were recorded correctly.  The report before Members showed that processes were now all in place to ensure good practise was being followed;
• sanctions should be taken where it was apparent the correct procedures had not been followed; and
• the Chairman reminded Members that it had previously been agreed that reports receiving Limited Assurance would trigger Member involvement.  However, as this particular matter was currently under investigation and there were potential prosecutions, this would not take place in this instance.

(iii)    Corporate Resources Service – Continuous Auditing Exercises (Reasonable Assurance) 

During discussion, Members raised the following issues:-

• the audit had found that there was a lack of corporate instruction on how to use Integra effectively and, consequently, an easy to use guide was to be provided.  So that Members too could have a greater understanding and to increase awareness a Briefing was requested;
• concern was expressed that no credit checks were undertaken for amounts over £10,000; 
• there had been a big increase in the amount of Council debt which had been written off and, while these would have been done in accordance with the rules, this formed a significant part of the Council’s deficit.  The Committee noted that these write-offs were fully provided for in the Council’s accounts via the bad debt provision;
• it seemed unusual for staff to be able to authorise payments to themselves through Integra;
• tenders would normally be included on the Public Contract Scotland Tender list but clarification was sought, and received, as to when there would be exceptions from this and reasons why Services might purchase items off contract; and
• clarification was sought, and received, about the use of fuel cards.  

Thereafter, the Committee:-

(i)     NOTED final Reports referred to in Section 3.1 of the report; 
(ii)    NOTED current work of the Internal Audit Section outlined at section 4 of the report and performance information provided at section 5; and
(iii)   AGREED for a Briefing to all Members be provided on the use Integra finance system.

5. Action Tracking Report     
Aithisg a’ Leantainn Gnìomhachd

There had been circulated Report No. AS/7/19 dated 4 June 2019 by the Corporate Audit Manager.

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

• the Chairman clarified that there were 5 recommendations arising from the Repairs and Maintenance – Care and Learning Properties Report and not 561 as detailed in the report;
• it was suggested that instead of using the term “cleared” it might be more appropriate to report when recommendations had been completed;
• it would be useful if the date when recommendations were revised was included together with a brief explanation of the impact where remedial action was still outstanding.  For example, the review of IT controls surrounding payments to creditors would have a huge impact given the training that would be involved throughout the Council to ensure data input was fully understood;
• in looking to reduce the use of purchase cards, the move to Card Controllers having to provide a business case for each card was welcomed.  In this regard, clarification was sought, and received, as to why building maintenance had the largest spend on purchase cards and how it was proposed to ensure proper use was made of the Council’s stores systems; and 
• in the future it was suggested the Committee could have a more proactive approach and that the action tracking could report issues before breaches occurred.

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

6. Internal Audit Annual Report 2018/2019     
Aithisg Bhliadhnail In-Sgrùdaidh 2018/2019

There had been circulated Report No. AS/8/19 dated 31 May 2019 by the Corporate Audit Manager. 

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

• whilst it was acknowledged that tenancy fraud investigations were ongoing and, in 2018/19, 6 houses had been recovered, additional information was sought, and provided, as to the nature of this type of fraud;
• following four years of limited assurance on the audit regarding the Carbon Reduction Commitment Energy Efficiency Scheme, a statement from the Service was sought as to how it proposed to record and monitor the Council’s carbon reduction and to provide assurance to Members;
• clarification was sought as to what was involved with the Climate Change Levy;
• assurance was sought that developer contributions were being charged at the new rate.  The Chair pointed out that this was a matter than needed to be addressed with the Planning and Development Service directly; and 
• cash payments and petty cash often led to errors and fraud and perhaps  a wider review of the Council’s procedures was necessary to remove the opportunity for fraud and/or poor practice;

The Committee:-

i.     NOTED the content of the report and the audit opinion provided; and
ii.    AGREED a Briefing to all Members be provided as to what the Climate Change Levy would involve.

7. Council Governance Review      
Ath-sgrùdadh Riaghlachais Comhairle

There had been circulated Report No. AS/9/19 dated 30 May 2019 by the Corporate Audit & Performance Manager. 

Thereafter, the Committee:-

i.     AGREED the proposals set out in paragraph 3.1 of the report for submission to Highland Council on 27 June 2019 for approval to implement from 19 September 2019; the next scheduled Audit & Scrutiny Committee;
ii.    NOTED that further work is required to develop core competencies and training and this will require further engagement with Members as part of a wider programme of training and development; and
iii.   NOTED that a further Member seminar has been arranged later in June 2019 which will help to inform the above proposals prior to their submission to Highland Council for approval.

8. Code of Corporate Governance      
Còd Riaghladh Corporra

There had been circulated Report No. AS/10/19 dated 3 June 2019 by the Head of Corporate Governance. 

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

• the monthly budget briefings for all Members was welcomed.  However, this seemed to focus mainly on the revenue budget and information was sought as to the progress made in relation to the Capital budget.  It was important that this received the same amount of attention and projects were at the “shovel ready” stage.  In response the Council Leader reminded Members that the 10 year Capital Programme had been agreed in March 2018  but the next monthly budget briefing would be reflecting on it; and
• one of the core principles of the Framework and Guidance was to ensure openness and comprehensive stakeholder engagement but there was still a lot of work to do to encourage community engagement and for the public to attend meetings of the Community Planning Partnerships.  In this regard, it was also important to encourage representatives attending Council meetings to speak up at meetings where their specific area of expertise was being discussed.  In reply, the Chairman said the latter issue was being explored by the Council’s Governance Review Group.  

Thereafter, the Committee:-

i.     NOTED the progress on delivering the 2018/19 Code of Corporate Governance
ii.    APPROVED the 2019/20 Code of Corporate Governance

9. Commissioner For Ethical Standards in Public Life/Standards Commission: Councillors’ Code of Conduct – Investigation into Complaints        
Coimiseanair airson Inbhean Beusail ann am Beatha Phoblaich/Coimisean nan Inbhean: Còd Giùlain nan Comhairlichean – Sgrùdadh Ghearanan 

There had been circulated Report No. AS/11/19 dated 3 June 2019 by the Head of Corporate Governance. 

The Committee NOTED that, in respect of the complaints against Highland Council Members, concluded during 2018/19, the Commissioner had found there to have no breaches of the Code of Conduct.

10. Corporate Complaints Process Report      
Aithisg Ghearanan Corporra

There had been circulated Report No. AS/12/19 dated 30 May 2019 by the Depute Chief Executive and Director of Corporate Resources.  

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

• the marked improvement in terms of performance around complaints was welcomed and the skills of the customer service assistants were acknowledged;
• the redesign work carried out on the Council website page “How to Make a Complaint” had made a considerable contribution to reducing the number of complaints received as it had enabled customers to quickly and easily navigate to the relevant process for their purposes;
• although Community Services had a high number of complaints this was because it had many of the services accessed by the public.  In this regard, it was highlighted that many complaints were in relation to decisions taken by Councillors but which Community Services had had to implement and tribute was paid to the staff and the Director for the manner in which these had been handled; and
• whilst every effort was made to address complaints there were always going to be incidents where members of the public remained unsatisfied.  In such instances, it was important to consider what was, and what was not, reasonable for the Council to do.

Thereafter, the Committee NOTED:-

i.     the Council’s continued improving annual performance for Stage 1 (+2.8%) and Stage 2 (+0.9%) complaints; 
ii.    the Council’s continued improved performance since 2017, +15% for Stage 1 and +18.4% at Stage 2;
iii.   that 65% of complaints were received via a digital channel (website and email) supporting the corporate digital agenda;
iv.    that the number of complaints received is a low volume at 1% within the context of the scale of the Council’s customer base and the scope of services provided;
v.     officers continued participation in the Local Authority Complaint Handlers Network; 
vi.    the positive contribution the cross-Service Complaint’s Co-ordinators group is making to national policy/guidance set by the SPSO;
vii.   the positive impact the cross-Service Complaints Co-ordinators’ group is having on the improving performance within Services and the Council’s overall performance; and 
viii.  the implementation of the outcomes from the LEAN review. 

11. Scottish Public Service Ombudsman Cases Received by the Council –      
Update Report    
Cùisean Ombudsman Sheirbheisean Poblach na h-Alba a Fhuaireadh leis a’ Chomhairle – Aithisg as Ùr

There had been circulated Report No. AS/13/19 dated 3 June 2019 by the Chief Executive.

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

The meeting ended at 12 noon.