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Agenda and minutes

Venue: Siambr Hywel Dda, Council Offices, Caernarfon, Gwynedd, LL55 1SH

Contact: Bethan Adams  01286 679020

Items
No. Item

1.

APOLOGIES

To receive apologies for absence.

Minutes:

Councillors John Pughe Roberts and Gethin Glyn Williams.

2.

DECLARATION OF PERSONAL INTEREST

To receive any declaration of personal interest.

Minutes:

No declarations of personal interest were received from any members present.

3.

URGENT ITEMS

To note any items which are urgent business in the opinion of the Chairman so they may be considered.

4.

MINUTES pdf icon PDF 97 KB

The Chairman shall propose that the minutes of the meeting of this committee, held on 27 September 2018, be signed as a true record.

Minutes:

The Chair signed the minutes of the previous meeting of this Committee held on 27 September 2018, as a true record.

5.

FRAUD AND CORRUPTION: EXPRESS MOTORS pdf icon PDF 62 KB

To submit the report of the Senior Manager Revenues and Risk.

Minutes:

The Senior Revenue and Risk Manager set out the background and context of the report. It was reported that four defendants had been found guilty at Caernarfon Crown Court on 2nd October 2018, on charges of fraud involving claims for subsidies by Express Motors for running the concessionary fares scheme in Gwynedd.  A fifth defendant had pleaded guilty at an earlier hearing. It was noted that on 31 October 2018, all defendants had been sentenced at Mold Crown Court to prison for periods of between 12 months and seven and a half years. It was noted, as the matter had been subject to court proceedings, it had not been possible until now for the Committee to discuss the matter at a public meeting.

 

It was noted that the matter had been referred to Internal Audit by the Regulatory Department in 2014, within a few weeks of discovering fraud at the Bws Padarn company. It was explained that the matter had been referred due to the Department's concerns and furthermore they had received complaints from customers that bus travel cards were being swiped more than once (when stepping onto the bus and when leaving) for journeys made with Express Motors.

 

The Senior Manager explained that the Wayfarer system by Parkeon was the system used to record concessionary fare data for bus operators. It was noted that it was difficult to get the relevant data out of the system to gather evidence that could be discussed with the Monitoring Officer to see if there were grounds to refer the matter to the police. It was noted that it was not possible at the time to produce an exceptions report from the system, however this was now possible.

 

It was noted that risks remained with a great deal of money in question and the Council using the national system.

 

The Cabinet Member for Environment noted that he was not in his role at the time of the fraud, however, he was when the matter went to court. He emphasised what was important was what would be done from now on. He suggested that the situation perhaps highlighted that there was an over dependency on grants and Welsh Government understood this and was undertaking work to get to grips with the issue.

 

The Head of Environment Department explained that following the fraud discovered at Bws Padarn company that it appeared there was over-claiming of concessionary tickets from Express Motors company. He noted that the Internal Audit had investigated Express Motors before fraud was found at Bws Padarn, but there was no evidence. The fraud at Bws Padarn had highlighted the over-claiming at Express Motors, due to the expectation that the subsidy level for both companies would be fairly similar. He explained that it was difficult to extract data from the national system and therefore the Council had to pay a company to seek the  ...  view the full minutes text for item 5.

6.

REVENUE BUDGET 2018/19 - END OF AUGUST REVIEW pdf icon PDF 218 KB

To submit the report of the Head of Finance.

Additional documents:

Minutes:

The report was submitted by the Senior Finance Manager, who gave the context and elaborated on the contents of the report that had been submitted to Cabinet on 16 October 2018. She noted that the end of August review of the budgets indicated a mixed picture, however, specific actions were required for the Education Department, Children and Families Department together with the Highways and Municipal Departments to ensure control of their budgets by 31 March 2019.

 

Attention was drawn to the Cabinet's decision:

 

"To accept the report on the end of August 2018 review of the Revenue Budget and consider the latest financial situation regarding the budgets of each department/service.

·           To ask the Cabinet Members for Children, Education and Highways and Municipal services to ensure that the departments have a clear implementation plan to reduce the financial deficit and to discuss those plans with me so that I can be confident that they are reasonable.

·           Reimburse the Economy and Community Department £40k, which is the income loss resulting from the closure of the Arfon swimming pool over the summer.

·           Harvest (£1,904) of the net underspend on Corporate budgets, with (£40k) to be used to reimburse the Economy and Community Department for the income loss while the Arfon swimming pool was closed. With the remaining (£1,864) to be transferred to the Supporting the Financial Strategy Reserve to support the inevitable one-off pressure on the Council's budget.”

 

During the ensuing discussion, officers and the Cabinet Member for Finance responded to members' enquiries as follows:

·        That the Arfon swimming pool was closed for ten weeks over the summer to enable adaptations to be undertaken. In fairness to Byw'n Iach Cyf, who will be responsible for the healthy living centres from April 2019 onwards, the Economy and Community Department would be reimbursed for the income loss;

·        Agree with the members' observations, the overspend position in terms of transport in the Education Department was unacceptable. A meeting took place with the relevant officers together with the Chief Executive to discuss this issue and it also received attention at the Cabinet meeting on 16 October 2018. The overspend in the departments linked to the services that are associated with the most vulnerable people and in this case the overspend was for transporting children to Ysgol Hafod Lon. The department was asked to consider alternative ways of transporting pupils by perhaps paying parents rather than using a taxi with a requirement for an escort to be present;

·        That the Cabinet consider the overspend in terms of transport in the Education Department and challenge the Cabinet Member for Education and the officers. It was necessary to change the system and it would be very difficult to solve the overspend by supporting the existing system;

·        Encourage members to attend one of the four workshops at the start of December regarding savings and the financial position;

·        It was estimated that there would be £2.9 million income in terms of the Council Tax Premium Scheme at  ...  view the full minutes text for item 6.

7.

CAPITAL PROGRAMME 2018/19 - END OF AUGUST REVIEW pdf icon PDF 215 KB

To submit the report of the Head of Finance.

Additional documents:

Minutes:

Submitted - the report of the Head of Finance Department noting, in accordance with the requirements of the Local Government (Wales) Measure 2011, that the Audit and Governance Committee was expected to scrutinise some financial matters including budget monitoring reports, where appropriate.

 

The Senior Finance Manager set out the context and elaborated on the contents of the report submitted to Cabinet on 16 October 2018. She noted that there was an increase of £25.227 million in the budget for the three-year capital programme since the opening budget position. It was explained that firm plans were in place to invest approximately £28.6m in 2018/19, with £6.9m (24%) of it funded by attracting specific grants. Attention was drawn to the Cabinet's decision.

 

RESOLVED to note the situation and the relevant risks in the context of the Council’s capital programme.

8.

SAVINGS OVERVIEW: PROGRESS REPORT ON REALISING SAVING SCHEMES pdf icon PDF 199 KB

To submit the report of the Head of Finance.

Additional documents:

Minutes:

The report of the Head of Finance Department was submitted which reported on the latest situation on realising the saving schemes.

 

The Senior Finance Manager set the context and elaborated on the contents of the report submitted to Cabinet on 16 October 2018. She noted that it was heartening to report that £23m of the total of over £24m of savings plans for the period 2015/16 - 2017/18, namely 95%, had been achieved with only a little slippage with the rest. 

 

She drew attention that 11 of the 26 savings schemes had been realised in full or in part, and it was encouraging that only two schemes were anticipated to slip. It was confirmed that in financial terms, the forecasts indicated that over 80% of the savings had been realised.

 

In response to a question from a member regarding deferring the transfer of the leisure facilities provision to Byw'n Iach Cyf, the Senior Revenue and Risk Manager stated that the original timetable for transfer was too ambitious, considering the required detailed legal preparatory work. The intention to transfer the provision to Byw'n Iach Cyf on 1 April 2019 in accordance with the timetable was confirmed.

 

RESOLVED to note the situation and the relevant risks in the context of the savings overview.

9.

TREASURY MANAGEMENT 2018/19 - MID YEAR REVIEW pdf icon PDF 448 KB

To submit, for information, the report of the Head of Finance on the Council’s actual borrowing and investment during the current financial year.

Minutes:

The Head of Finance Department set out the background and context of the report on treasury management activitiy for the current year. He confirmed that during the six months between 1 April and 30 September 2018, the Council’s borrowing activity had remained within the restrictions originally set and there were no banks where the Council had deposited money that failed to repay.

 

He drew attention to the comparatively high interest loans taken in the 1980s that were coming to an end. It was noted that the Council for some time "self-borrowed", rather than borrowed from others, and it was necessary to look at what loans to take in the mid or longer term, however, it was intended to have loans for short terms until the start of April 2019.  

 

It was noted that a training session for Committee members would take place on 16 January 2019, where guidance would be given by Arlingclose Company, the Council's Treasury Management Consultants. It was noted that this would be a golden opportunity to discuss and explain the Council's Treasury Management Strategy for 2019/20, before the Committee recommend the Full Council to approve the strategy. 

 

A member noted that Manchester Council invested in the community, rather than outside the area. The member added that with three main rivers in Gwynedd there was an opportunity to invest in electricity generating schemes, therefore why did the Council not invest in such schemes. In response, the Head of Finance Department explained that Manchester Council's Pension Fund had invested in the housing market, whilst it was the treasury management that was in question here, and the Council's situation was more limited. He elaborated that the regulations in England had more freedom, and recently similar Welsh Government regulations had been relaxed. He added that investment in infrastructure was more suitable for the Pension Fund. It was noted that safe opportunities to invest in Gwynedd were more limited.

 

In response to a member’s observation regarding the table ‘Principal Sums Invested for Periods Longer than 364 days’ on page 57 on the agenda, the Investment Manager explained that the table indicated the maximum sums that can be invested. She elaborated that the maximum sums in terms of investment for a period of two or three years was less, compared to investments for a period of a year.

 

RESOLVED to accept the report for information.

10.

INTERNAL AUDIT OUTPUT 17/9/18 - 16/11/18 pdf icon PDF 156 KB

To submit the report of the Audit Manager.

Minutes:

Submitted - the report of the Audit Manager outlining the Internal Audit section’s work for the period. It was noted that 8 reports on audits from the action plan had been completed. Attention was drawn in terms of follow-up audits, that acceptable action had been taken on 58.28% of the agreed steps, namely 95 out of 163.

 

Consideration was given to each individual report and during the discussion reference was made to the following main matters –

 

Council Tax Refunds

 

In response to an enquiry by a member regarding the higher risk of fraud under the new arrangements to pay refunds via BACS, the Audit Manager noted that the audit had received a high level of assurance and officers were investigating producing purposeful reports to undertake checks, and that compensatory controls had been established.

 

Leisure Centres

 

A member asked if Internal Audit would continue to undertake audits of leisure centres once the provision of leisure facilities had transferred to Byw'n Iach Cyf. In response, the Senior Manager - Revenue and Risk noted that the transfer agreement, that had not yet been signed, noted that Internal Audit would provide the service to the company. 

 

In response to a member’s observation, the Audit Manager explained that an action plan with a timetable for the relevant service would be presented, with a follow-up being completed to consider progress. She elaborated that a clear improvement had been seen in leisure centre arrangements. Until recently, audit of leisure centres would receive opinion C (under the previous system) with many action points. It was noted that the action points were now 2 or 3 and Plas Silyn Leisure Centre had received opinion A in 2017.

 

In response to a question from a member if it was possible for the company to select who would undertake audits, the Senior Revenue and Risk Manager explained that there was a break clause if the company was of the opinion that the service provided by Internal Audit was not to the expected standard. It was noted that it would be the company's Board of Governors who would receive audit reports from Internal Audit from April 2019 onwards, as Byw'n Iach Cyf was a company at an arm's length from the Council. The Council would continue to need assurance about the company's governance arrangements, but the Head of Economy and Community would be the main contact. He elaborated that Internal Audit was seeking to ensure that the company started on a firm foundation and it would be useful to complete the follow-up work on leisure centres before the end of March 2019.

 

A member noted that leisure centre audits highlighted the lack of commercial thinking, in order for the new company to be successful staff would have to be armed to enable them to operate commercially.

 

A member asked if it was possible for the audits to continue to be presented to the Committee following transfer to Byw'n Iach Cyf. In response, a member noted that he was Chair  ...  view the full minutes text for item 10.

11.

INTERNAL AUDIT PLAN 2018/19 pdf icon PDF 118 KB

To submit the report of the Audit Manager on the progress made on the 2018/19 Internal Audit Plan.

Minutes:

The report of the Audit Manager was submitted, providing an update on the current situation in terms of completing the 2018/19 internal audit plan.

 

It was reported that the Internal Audit Service up to 16 November 2018 had completed 37.29% of the plan, with 22 of the 59 audits in the 2018/19 plan released in a finalised version. Attention was drawn to the amendments to the Plan.

 

RESOLVED to accept and note the contents of the report as an update of progress against the 2018/19 audit plan.

12.

SELF-ASSESSMENT OF THE EFFECTIVENESS OF THE AUDIT AND GOVERNANCE COMMITTEE pdf icon PDF 97 KB

To submit the report of the Senior Manager Revenues and Risk.

Minutes:

Submitted - the report of the Senior Manager - Revenue and Risk stating the results of the Self-assessment of Good Practice, using CIPFA assessment guidelines that took place in a workshop on 5 November 2018, together with the action plan to improve compliance with statutory and good practice requirements of professional bodies. 

 

Members present at the workshop were asked to confirm that the report was a fair reflection of the discussion that took place.

 

In response to a comment by a member regarding the Committee submitting a formal annual report to the Full Council rather than an exceptions report only, the Head of Finance explained, that the conclusion in the workshop was that the work of the Committee would be included in the Annual Scrutiny Report and an exceptions report would be submitted by the Committee to the Full Council, if required.

 

A member referred to the Annual Governance Statement and noted that there should be a reference to the work of the Committee and its role in terms of governance. In response, the Senior Manager - Revenue and Risk noted that it was intended to strengthen the link with the Governance Arrangements Assessment Group and to submit more regular reports on the Group's work to the Committee.

 

RESOLVED to accept the contents of the report as a basis for an action plan for the further development of the Committee and request an update in follow-up meetings on the progress against the actions.