To submit the report of the Audit Manager.
Submitted - the report of the Audit Manager outlining the Internal Audit section’s work for the period. It was noted that 19 reports on audits from the action plan had been completed. Attention was drawn in terms of follow-on audits, that acceptable action had been taken on 94.48% of the agreed steps, namely 154 out of 163. It was highlighted that no response had been received to requests to receive information and evidence from the relevant Units/Services on the progress of actions for the following audits:
· Small holdings (3 actions)
· Arrangements for Children who are Leaving Care (1 action)
· Recycling Targets (5 actions)
It was noted that after receiving information, the reports of the audits below had been released in final form:
· Care and Support (Children) Plans under Part 4 SSA (Wales) 2014 (Children and Families)
· Flood Management (Gwynedd Consultancy)
A member referred to the lack of response from Units/Services to requests for information and evidence. The member noted that the attention of the relevant Cabinet Members should be drawn to this or that the relevant officers should be summoned to the Committee. In response, the Audit Manager stated that if the Committee wished, the relevant officers could be summoned before the Controls Improvement Working Group. It was proposed to call the relevant officers to the audits before the Controls Improvement Working Group. A member noted that the relevant Cabinet Members should be called before the Working Group as well. The Audit Manager confirmed that a date had been determined for a meeting of the Controls Improvement Working Group where a discussion would be held on audits referred to the Working Group at the Committee's previous meeting. The proposal was seconded, a vote was taken on the proposal and it was carried.
Consideration was given to the reports individually and during the discussion, reference was made to the following main matters -
Whistleblowing Policy - Gwynedd Schools
A number of members noted their disappointment that 34% of the schools had not replied to confirm that the schools had a current policy in place and that it had been adopted formally by the Governing Body, and that every member of staff had easy access to the policy, considering the importance of the policy.
In response, the Audit Manager noted that the percentage of the schools that had responded was quite good. She noted that the fact that some schools had not replied did not mean that the policy had not been adopted. She explained that the Education Department had committed to re-send the Whistleblowing Policy template to the schools that did not use the current version and to those that had not responded. She noted that since the audit had been completed, that confirmation had been received from additional schools noting that the Governing Body had adopted the policy.
A member noted that the policy was very important in the context of schools and although schools had adopted the policy, staff's understanding of the policy was another matter. In response, the Audit Manager explained that the purpose of the investigation was to ensure that the current policy had been adopted by school Governing Bodies, staff awareness of the policy was not included within the scope of the audit, although it was a matter to consider in the context of risk.
A member emphasised that it was important to receive confirmation from all schools that the current policy was adopted when follow-up work was done by the Internal Audit Service.
Employment Status - GwE
A member drew attention to the fact that GwE, following the audit, had identified eight individuals from a sample of 12 where the status of their employment needed to be changed. The member added that there appeared to be a problem, considering the size of the sample. The member enquired whether the Controls Improvement Working Group should consider the audit.
In response, the Head of Finance Department explained that there was a questionnaire on HMRC's website to help employers to identify the employment status of individuals as employed or self-employed, in accordance with the 'IR35: Countering avoidance in the Provision of Personal Services' taxation rules. He elaborated that the questions could be interpreted to give different answers and that discussions had been held with GwE. He explained that the matter had been addressed by the GwE Joint-Committee with GwE officers acting with support from Council officers. He noted that the matter had been considered at the appropriate forum.
A member noted that he was happy that the matter had been addressed at the appropriate forum but the Committee needed to receive information after the follow-up work of the Internal Audit Service. In response, the Audit Manager noted that if there would be a lack of action, a report would be submitted to the Committee and the matter would be referred to the GwE Joint-Committee.
A member highlighted that an individual's employment status depended on the work done and that the rules could be arbitrary and difficult to interpret. A member added that if an individual worked for an organisation on a permanent basis, they should be on the payroll.
Purchasing Equipment Through the School
A member referred to a case where a school had purchased three iPhones on behalf of staff members by means of a loan arrangement, noting that it was a case of taking advantage of the VAT savings scheme. In response, the Audit Manager explained that the audit was a responsive audit following a referral from the Education Department's Finance Unit in relation to a case in one school and that the audit attempted to establish how widespread the practice was, in discussions with a Value Added Tax expert. She elaborated that there were clear guidelines and that it was appropriate for the school to sell goods on to pupils so that they could save on the VAT element, provided that the goods were to be used regularly in the classroom and that these goods included portable musical instruments and devices such as iPads. She noted that sales to teachers and other staff did not comply with HMRC rules. She confirmed that this had only been identified in this specific case, and that it was not a common practice across Gwynedd schools.
The Audit Manager confirmed that the Gambling Policy Statement had been adopted by the Full Council at its meeting on 7 March 2019.
Maintenance – Property
A member noted that the Property Maintenance Unit had gone through the Vanguard process and that it was disappointing that duplicate payments had been processed. The member asked whether the payments were substantial.
In response, the Audit Manager noted that she was unable to confirm the exact amounts. She explained that a concern had been raised during the audit in terms of a lack of distribution of duties within processes and an explanation had been given, noting that as a result of Ffordd Gwynedd, they would not implement distribution of duties within their processes. She elaborated that the Unit was striving to restrict the procedure in terms of processing and paying invoices by only using the Techforge interface in the future, in order to avoid the risk of duplicate payments. She noted that some distribution of duties was now taking place, and individuals who only had administrator rights had permission to establish new contractors on the system for payment.
In response to an enquiry by a member about choosing a sample, the Audit Manager noted that the way in which a sample was chosen varied for audits. She elaborated that in relation to the audit in question noting that transactions and invoices were considered, information was extracted from the financial ledger and attention was given to trends and substantial payments.
A member asked whether the training on Cyber Security was also relevant to members. In response, the Audit Manager noted that the Information Technology Service had published videos that highlighted the cyber risks to staff on the Council's intranet. The Head of Finance Department noted that he was of the opinion that the training on cyber security was relevant for members, and that he would look into the matter with a view to offering access to the videos.
Children - Out-of-County Placements
In response to a member’s observation, the Audit Manager noted that Social Services visited children who were placed out-of-county with care plans, risk assessments and support in place.
She highlighted that the costs of children's placements remained high. The member asked about any action being taken to reduce the costs. In response, the Audit Manager noted that expenditure on out-of-county placements contributed to the overspend in the Children and Supporting Families Department. She elaborated that overspending in this field was not unique to Gwynedd. She explained that it had been highlighted, as part of the audit, that the field was eligible to be on the Department's risk register, and the Council's corporate risk register. She noted that confirmation had been received that the field was now included on the risk register.
A member noted that the Communities Scrutiny Committee had addressed the waste enforcement field and that consideration should be given to referring the audit to the attention of the Scrutiny Committee. In response, the Head of Finance Department noted that the audit could be referred to the Communities Scrutiny Committee; however, the work programme and matters to consider was a matter for the Scrutiny Committee.
(i) to accept the report on the work of the Internal Audit for the period of 4 February 2019 to 31 March 2019 and to support the agreed actions that have already been submitted to the managers of the relevant services;
(ii) to call the officers and relevant Cabinet Members involved with the follow-up audit, listed below, before the Controls Improvement Working Group:
Ø Arrangements for Children who are Leaving Care
Ø Recycling Targets
(iii) that the members appointed to serve on the Controls Improvement Working Group at the meeting of the Committee on 14 February, along with Councillor Berwyn Parry Jones and Sharon Warnes (substitute), serve on the Working Group;
(iv) to refer the Street Enforcement audit to the Communities Scrutiny Committee for consideration.