Agenda Document Pack - Audit and Scrutiny Panel - 31/10/2024
North Lanarkshire Council · 31 October 2024
Back to Audit and Scrutiny Panel — 31 October 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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22 October 2024 Members of the Audit and Scrutiny Panel Chief Executive’s Office Archie Aitken Chief Officer (Legal & Democratic) Civic Centre, Windmillhill Street, Motherwell ML1 1AB www.northlanarkshire.gov.uk Notice is given that a Meeting of the Audit and Scrutiny Panel is to be held in the Committee Room 4, Civic Centre, Windmillhill Street, Motherwell, ML1 1AB on Thursday, 31 October 2024 at 14:00 PM which you are requested to attend. The agenda of business is attached. Archie Aitken Chief Officer (Legal & Democratic) Members : Clerk Name: Karen Swan Clerk Telephone: 07919 730 272 Clerk Email: swank@northlan.gov.uk S Watson, B McCulloch, A Duffy-Lawson, M Hughes, J Hume, D Johnston, J Leckie, M McCulloch, J McLaren, C Quigley, G Robinson. Page 1 of 412
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Agenda 1 Declarations of Interest In Terms of the Ethical Standards In Public Life Etc. (Scotland) Act 2000 Audit Related Items 2 Annual Accounts 2023-24 - Letters of Representation Submit report by the Chief Officer (Finance) providing information on the Letter of Representation required to be submitted to Audit Scotland in respect of the Council's Annual Accounts and the Council's Charitable Trust Accounts for 2023/24. 7 - 18 3 Annual Accounts 2023-24 - External Auditors report to those charged with Governance on the 2023/24 Audit Submit report by the Chief Officer (Finance) outlining the external auditor's comments on specific matters arising from their audit of the financial statements for both the Council and the Charitable Trusts and Educational Endowments administered by the Council 19 - 42 4 Audit Scotland 2023/24 Annual Report Submit report by the Acting Chief Officer (Audit and Risk) attaching the Annual Audit Report (AAR) produced by the Council's appointed external auditors, Audit Scotland, in respect of the Audit of the Council for the year-ending 31 March 2024. 43 - 98 5 Annual Accounts 2023/24 (Audited) Submit report by the Chief Officer (Finance) presenting the Council's final 2023/24 Annual Accounts. 99 - 246 6 Progress Report on Duplicate Overtime Claims Submit report by the Chief Officer (People Resources) providing an update on the corrective actions agreed and being progressed in respect of Duplicate Overtime Claims. 247 - 268 7 Audit and Risk Related Items Action Log Submit report by Acting Chief Officer (Audit and Risk) allowing elected members to track implementation of outstanding requests and recommendations made by the Panel in respect of audit and risk-related items. 269 - 272 Page 3 of 412
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8 Internal Audit Strategy Submit report by Acting Chief Officer (Audit and Risk) seeking approval of the Internal Audit Strategy for 2024-25 to 2026-27. 273 - 286 9 Internal Audit Progress Report Submit report by Acting Chief Officer (Audit and Risk) providing an overview of Internal Audit activity and the results of Internal Audit outputs finalised since the last update to the Panel in August 2024. 287 - 330 10 Internal Audit Follow up of Actions Previously Agreed by Management Submit report by Acting Chief Officer (Audit and Risk) providing an update to the Panel on the results of Internal Audit's follow up work, reviewing the extent to which management have implemented actions previously committed to in response to External Audit recommendations made in the last two years. 331 - 346 11 National Fraud Initiative (NFI) Submit report by Acting Chief Officer (Audit and Risk) informing the Panel of the requirement for the Council to participate in the forthcoming National Fraud Initiative 2024. 347 - 358 12 Risk Management Update Submit report by Chief Officer (Audit and Risk) providing the Panel with an update on the developments and changes in relation to the Corporate Risk Register and other key risk management developments since the last update to the Panel in August 2024, with a particular focus on corporate risks for which a review was completed during the reporting period. 359 - 364 Scrutiny Related Items 13 Strategic Performance Framework - Performance Reporting Schedule Quartley Performance Assurance Review Submit report by the Chief Officer (Business and Digital) providing an update on the latest quarterly performance assurance review, undertaken on performance reports previously submitted to Council Committees during Cycle 3 of 2024. 365 - 394 Page 4 of 412
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14 Strategic Frameworks Annual Position Statement Submit report by the Chief Officer (Business and Digital) outlining the composite annual position with a high level summary and up to date position on the Strategic Frameworks considered by the Audit and Scrutiny Panel. 395 - 412 Page 5 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref EK/KS/FC Date 31/10/24 Annual Accounts 2023/24 – Letters of Representation From Elaine Kemp, Chief Officer (Finance) E-mail KempE@northlan.gov.uk Telephone 07939 280 601 1. Background 1.1 The Local Government (Scotland) Act 1973 requires all local authorities to appoint an officer who has responsibility for the administration of their financial affairs (known as the Section 95 Officer). 1.2 International Standards on Auditing (ISA580 Written Representations) require external audit to request a written representation from the accountable officer providing written assurance on aspects of the Council’s financial statements and Charitable Trust and Educational Trust Accounts including the judgements and estimates made in their preparation. 2. Report 2.1 The letters of representation have been signed in my capacity as Section 95 Officer for the Council and Trustee for the Charitable Trust and Educational Trust. A copy of both letters are attached. Executive Summary The purpose of this report is to provide Members with information on the Letter of Representation required to be submitted to Audit Scotland in respect of the Council’s Annual Accounts and the Council’s Charitable Trust Accounts for 2023/24. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Note the Letters of Representation provided to Audit Scotland The Plan for North Lanarkshire Priority All priorities Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning Programme of Work Statutory / corporate / service requirement Item 2 Page 7 of 412
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2.2 As in previous years, the letters set out the representations of management and confirms that the accounts are free from material misstatement. 2.3 During the course of the audit, a number of misstatements within the Council’s financial statements were identified which have been adjusted for the audited accounts where material. 2.4 A list of items that have arisen relating to the Council’s accounts and the Charitable Trust and Educational Trust accounts are contained within the External Audit Annual Audit Report which forms part of this meeting’s agenda. 3. Measures of success 3.1 N/A 4. Supporting documentation Appendix 1 North Lanarkshire Council Letter of Representation Appendix 2 Charitable Trusts and Educational Endowments Letter of Representation Elaine Kemp Chief Officer (Finance) Page 8 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Page 9 of 412
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 10 of 412
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Our Ref: Your Ref: Contact: Tel: E-mail: Date: EK/FC Elaine Kemp 01698 302408 Kempe@northlan.gov.uk John Boyd, Audit Director Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT Chief Executive’s Office Elaine Kemp Chief Officer (Finance) Civic Centre Windmillhill Street Motherwell ML1 1AB www.northlanarkshire.gov.uk Dear John, North Lanarkshire Council Annual Accounts 2023/24 1. This representation letter is provided about your audit of the annual accounts of North Lanarkshire Council and its group (hereafter referred to as North Lanarkshire Council) for the year ended 31 March 2024 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and have been properly prepared, and for expressing other opinions on the Remuneration Report, Management Commentary, and Annual Governance Statement. 2. I confirm to the best of my knowledge and belief and having made appropriate enquiries of the Chief Executive and Corporate Management Team, the following representations given to you in connection with your audit of North Lanarkshire Council’s annual accounts for the year ended 31 March 2024. General 3. North Lanarkshire Council and I have fulfilled our statutory responsibilities for the preparation of the 2023/24 annual accounts. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by North Lanarkshire Council have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. I am not aware of any uncorrected misstatements other than those reported by you. Financial Reporting Framework 5. The annual accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24 (2023/24 accounting code), and the requirements of the Local Government (Scotland) Act 1973, the Local Government in Scotland Act 2003, and The Local Authority Accounts (Scotland) Regulations 2014. Appendix 1 Page 11 of 412
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6. In accordance with the 2014 Regulations, I have ensured that the financial statements give a true and fair view of the financial position of North Lanarkshire Council at 31 March 2024 and the transactions for 2023/24. Accounting Policies and Estimates 7. All material accounting policies applied are as shown in the notes to the financial statements. The accounting policies are determined by the 2023/24 accounting code where applicable. Where the accounting code does not specifically apply, I have used judgement in developing and applying an accounting policy that results in information that is relevant and reliable. All accounting policies applied are appropriate to North Lanarkshire Council’s circumstances and have been consistently applied. 8. The significant assumptions used in making accounting estimates are reasonable and properly reflected in the financial statements. Judgements used in making estimates have been based on the latest available, reliable information. Estimates have been revised where there are changes in the circumstances on which the original estimate was based or as a result of new information or experience. Going Concern Basis of Accounting 9. I have assessed North Lanarkshire Council’s ability to continue to use the going concern basis of accounting and have concluded that it is appropriate. I am not aware of any material uncertainties that may cast significant doubt on North Lanarkshire Council’s ability to continue to adopt the going concern basis of accounting. Assets 10. Where a rolling programme of asset valuations has been used, I have satisfied myself that the carrying amount of assets at 31 March 2024 does not differ materially from that which would be determined if a revaluation had been carried out at that date. 11. I carried out an assessment at 31 March 2024 as to whether there is any indication that an asset may be impaired and have recognised any impairment losses identified. 12. I have provided you with all information of which I am aware regarding any valuation exercises carried out after 31 March 2024. 13. There are no plans or intentions that are likely to affect the carrying value or classification of the assets recognised within the financial statements. 14. Owned assets are free from any lien, encumbrance or charge except as disclosed in the financial statements. 15. The pension assumptions made by the actuary in the IAS 19 report for North Lanarkshire Council have been reviewed and I confirm that they are consistent with management's own view. The pension asset has been capped to reflect the asset ceiling as determined through IFRIC 14. I am satisfied that the assumptions applied in the calculation are consistent with management’s own view. Page 12 of 412
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Liabilities 16. All liabilities at 31 March 2024 of which I am aware have been reported in the financial statements. 17. Provisions have been recognised in the financial statements for all liabilities of uncertain timing or amount at 31 March 2024 of which I am aware where the conditions specified in the 2023/24 accounting code have been met. The amount recognised as a provision is the best estimate of the expenditure likely to be required to settle the obligation at 31 March 2024. Where the effect of the time value of money is material, the amount of the provision has been discounted to the present value of the expected payments. 18. Provisions recognised in previous years have been reviewed and adjusted, where appropriate, to reflect the best estimate at 31 March 2024 or to reflect material changes in the assumptions underlying the calculations of the cash flows. 19. The accrual recognised in the financial statements for annual leave untaken by 31 March 2024 has been estimated on a reasonable basis. 20. There are no plans or intentions that are likely to affect the carrying value or classification of the liabilities recognised in the financial statements. Contingent Liabilities 21. There are no significant contingent liabilities, other than those disclosed in Note 23 to the financial statements, arising either under formal agreement or through formal undertakings requiring disclosure in the accounts. All known contingent liabilities have been fully and properly disclosed in accordance with the 2023/24 accounting code and IAS 37. 22. With specific reference to equal pay claims I can confirm that it is not possible to quantify the contingent liability. Litigation and Claims 23. All known actual or possible legal claims have been disclosed to you and have been accounted for and disclosed in the financial statements in accordance with the 2023/24 accounting code. Fraud 24. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. 25. I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated because of fraud • any allegations of fraud or suspected fraud affecting the financial statements, and Page 13 of 412
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• fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Laws and Regulations 26. I have disclosed to you all known instances of non-compliance or suspected non- compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 27. All material transactions with related parties have been appropriately accounted for and disclosed in the financial statements in accordance with the 2023/24 accounting code. I have made available to you the identity of all the North Lanarkshire Council’s related parties and all the related party relationships and transactions of which I am aware. Remuneration Report 28. The Remuneration Report has been prepared in accordance with the Local Authority Accounts (Scotland) Regulations 2014, and all required information of which I am aware has been provided to you. Management Commentary 29. I confirm that the Management Commentary has been prepared in accordance with the statutory guidance and the information is consistent with the financial statements. Corporate Governance 30. I confirm that the North Lanarkshire Council has undertaken a review of the system of internal control during 2023/24 to establish the extent to which it complies with proper practices set out in the Delivering Good Governance in Local Government: Framework 2016. I have disclosed to you all deficiencies in internal control identified from this review or of which I am otherwise aware. 31. I confirm that the Annual Governance Statement has been prepared in accordance with the Delivering Good Governance in Local Government: Framework 2016 and the information is consistent with the financial statements. There have been no changes in the corporate governance arrangements or issues identified, since 31 March 2024, which require to be reflected. Group Accounts 32. I have identified all the other entities in which North Lanarkshire Council has a material interest and have classified and accounted for them in accordance with the 2023/24 accounting code. Any significant issues with the financial statements of group entities, including any qualified audit opinions, have been advised to you. Events Subsequent to the Date of the Balance Sheet 33. All events subsequent to 31 March 2024 for which the 2023/24 accounting code requires adjustment or disclosure have been adjusted or disclosed. Page 14 of 412
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Events Subsequent to the Date of the Balance Sheet 34. All events subsequent to 31 March 2024 have been adjusted or disclosed. Yours sincerely Elaine Kemp Chief Officer (Finance) Page 15 of 412
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Our Ref: Your Ref: Contact: Tel: E-mail: Date: EK/FC Elaine Kemp 01698 302408 Kempe@northlan.gov.uk Pauline Murray, Senior Audit Manager Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN Chief Executive’s Office Elaine Kemp Chief Officer (Finance) Civic Centre Windmillhill Street Motherwell ML1 1AB www.northlanarkshire.gov.uk Dear Pauline JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Annual Accounts 2023/24 1. This representation letter is provided about your audit of the annual accounts of JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Trust for the year ended 31 March 2024 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and have been properly prepared, and for expressing other opinions on the Remuneration Report, Management Commentary, and Annual Governance Statement. 2. I confirm to the best of my knowledge and belief and having made appropriate enquiries of the Chief Executive and Corporate Management Team, the following representations given to you in connection with your audit of your annual accounts for the year ended 31 March 2024. General 3. North Lanarkshire Council (as administering authority) and I have fulfilled our statutory responsibilities for the preparation of the 2023/24 annual accounts. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by the trusts have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. I am not aware of any uncorrected misstatements other than those reported by you. Financial Reporting Framework 5. The financial statements comply with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and the regulations 9(1), (2) and (3) of the Charities Accounts (Scotland) Regulations 2006. Appendix 2 Page 16 of 412
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6. Disclosure has been made in the financial statements of all matters necessary for them to properly present the receipts and payments and statement of balances of each registered charitable trust for the year ended 31 March 2024. Accounting Policies and Estimates 7. The annual accounts have been prepared on a receipts and payments basis in accordance with applicable regulations and the founding documents of the charitable trust. Fraud 8. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated because of fraud • any allegations of fraud or suspected fraud affecting the financial statements, and • fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Laws and Regulations 9. I have disclosed to you all known instances of non-compliance or suspected non- compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 10. I am not aware of any material transactions with related parties. Corporate Governance 11. The business of the charitable trust is recorded in the systems of North Lanarkshire Council. As section 95 officer for North Lanarkshire Council, I confirm that there are no issues or deficiencies in internal control that require to be disclosed within the annual accounts of the charitable trusts. Events Subsequent to the Date of the Balance Sheet 12. All events subsequent to 31 March 2024 have been adjusted or disclosed. Yours sincerely Elaine Kemp Chief Officer (Finance) for and on behalf of the trustees of JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Trust. Page 17 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref EK/KS/FC Date 31/10/24 Annual Accounts 2023/24 – External Auditor’s report to those charged with Governance on the 2023/24 Audit From Elaine Kemp, Chief Officer (Finance) E-mail KempE@northlan.gov.uk Telephone 07939 280 601 1. Background 1.1 The Audit Commission appoint external auditors to local authorities in order to carry out the audit of financial statements in accordance with International Standards on Auditing. 1.2 Recognising the importance of effective two-way communication in an audit of financial statements, the International Standards on Auditing (ISA260 Communication with those charged with governance) requires external auditors to communicate relevant matters relating to their audit of financial statements to those charged with governance. Such communications are required to be on a sufficiently prompt basis to enable those charged with governance to take appropriate action. 1.3 The objectives of the auditors are to: Executive Summary This report is presented to members to allow them to consider the external auditor’s comments on specific matters arising from their audit of the financial statements for both the Council and the Charitable Trusts and Educational Endowments administered by the Council. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Invite the external auditor to speak to their report and consider, as appropriate, the issues highlighted. The Plan for North Lanarkshire Priority All priorities Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning Programme of Work Statutory / corporate / service requirement Item 3 Page 19 of 412
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• Communicate clearly with those charged with governance the responsibilities of the auditor in relation to the financial statement audit and the scope and timing of the audit; • Obtain from those charged with governance, information relevant to the audit; • Provide those charged with governance with timely observations arising from the audit that are relevant to their responsibility to oversee the financial reporting process. This may include: a) Significant difficulties, if any, encountered during the audit; b) Material weaknesses, if any, in the design, implementation or operating effectiveness of financial systems relating to the accounts; c) Any unadjusted misstatements; d) Their views on the qualitative aspects of the Council’s accounting and financial reporting practices; e) Any unexpected modifications to the auditor’s report on the accounts; f) Any other relevant matters relating to the audit. • Promote effective two-way communication between the auditor and those charged with governance. 2. Report 2.1 The review of the 2023/24 accounts by Audit Scotland is now complete with the final version of the accounts forming part of this meeting’s agenda. 2.2 Following completion of their audit, Audit Scotland have produced reports to those charged with governance on the 2023/24 Audit for both North Lanarkshire Council, and North Lanarkshire Council Charitable Trust and Educational Endowments, copies of which are attached to this report. 2.3 A full Annual Report has been prepared by Audit Scotland and forms part of this meeting’s agenda. 3. Measures of success 3.1 N/A 4. Supporting documentation Appendix 1 Audit Scotland Report to Those Charged With Governance on the 2023/24 Audit – North Lanarkshire Council Appendix 2 Audit Scotland Report to Those Charged With Governance on the 2023/24 Audit – North Lanarkshire Council Charitable Trust and Educational Endowments Elaine Kemp Chief Officer (Finance) Page 20 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Page 21 of 412
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 22 of 412
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102 West Port Edinburgh EH3 9DN 8 Nelson Mandela Place Glasgow G2 1BT The Green House Beechwood Business Park North Inverness IV2 3BL T: 0131 625 1500 E: info@audit-scotland.gov.uk www.audit-scotland.gov.uk Audit and Scrutiny Panel 31 October 2024 North Lanarkshire Council Audit of 2023/24 annual accounts Independent auditor's report 1. My audit work on the 2023/24 annual accounts is now substantially complete. We anticipate being able to issue unmodified audit opinions in the independent auditor's report on 31 October 2024 (the proposed report is attached at Appendix A). Annual Audit Report 2. Under International Standards on Auditing in the UK, we report specific matters arising from the audit of the annual accounts to those charged with governance of North Lanarkshire Council in sufficient time to enable appropriate action. For North Lanarkshire Council, those charged with governance is the Audit and Scrutiny Panel. We present for the committee’s consideration my draft Annual Audit Report on the 2023/24 audit. The section headed "Significant findings and key audit matters" sets out the issues identified in respect of the annual accounts. 3. The report also sets out conclusions on the wider scope areas that frame public audit as set out in the Code of Audit Practice. 4. This report will be issued in final form after the audit of the annual accounts has been completed. Unadjusted misstatements 5. We also report to those charged with governance all unadjusted misstatements in the annual accounts which I have identified during the course of my audit, other than those of a trivial nature, and request that these misstatements be corrected. 6. If corrected, this would increase net expenditure by £1.9 million and decrease the net assets in the balance sheet by the same amount. Fraud, subsequent events, and compliance with laws and regulations 7. In presenting this report to the Audit and Scrutiny Panel I seek confirmation from those charged with governance of any instances of any actual, suspected, or alleged fraud; any subsequent events that have occurred since the date of the financial statements; or material non-compliance with laws and regulations affecting the entity that should be brought to my attention. Appendix 1 Page 23 of 412
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Representations from Section 95 Officer 8. As part of the completion of our audit, we are seeking written representations from the Section 95 Officer on aspects of the annual accounts, including the judgements and estimates made. 9. A draft letter of representation is attached at Appendix B. This should be signed and returned to us by the Section 95 Officer with the signed annual accounts prior to the independent auditor’s report being signed. Page 24 of 412
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Appendix A: Proposed Independent Auditor’s Report Independent auditor’s report to the members of North Lanarkshire Council and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the annual accounts of North Lanarkshire Council and its group for the year ended 31 March 2024 under Part VII of the Local Government (Scotland) Act 1973. The financial statements comprise the group and council only Comprehensive Income and Expenditure Statements, the group and council only Movement in Reserves Statements, the group and council only Balance Sheets, the group and council and council only Cash Flow Statements, the council only Housing Revenue Account Income and Expenditure Statement, the Council Tax Income Statement, the Non Domestic Rates Income Statement, the Sundry Accounts Statement and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24 (the 2023/24 Code). In my opinion the accompanying financial statements: • give a true and fair view of the state of affairs of the council and its group as at 31 March 2024 and of the income and expenditure of the council and its group for the year then ended; • have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2023/24 Code; and • have been prepared in accordance with the requirements of the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Accounts Commission on 2 December 2022. [My/Our] period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the council and its group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the council. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Conclusions relating to going concern basis of accounting I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Page 25 of 412
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Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the ability of the council and its group to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue. These conclusions are not intended to, nor do they, provide assurance on the current or future financial sustainability of the council and its group. However, I report on the council’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website. Risks of material misstatement I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon. Responsibilities of the Chief Officer (Finance) and Audit and Scrutiny Panel for the financial statements As explained more fully in the Statement of Responsibilities, the Chief Officer (Finance) is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Chief Officer (Finance) determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Chief Officer (Finance) is responsible for assessing the ability of the council and its group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there is an intention to discontinue the operations of the council and its group. The Audit and Scrutiny Panel is responsible for overseeing the financial reporting process. Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: • using my understanding of the local government sector to identify that the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003 are significant in the context of the council and its group; • inquiring of the Chief Officer (Finance) as to other laws or regulations that may be expected to have a fundamental effect on the operations of the council and its group; Page 26 of 412
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• inquiring of the Chief Officer (Finance) concerning the policies and procedures of the councils and its group regarding compliance with the applicable legal and regulatory framework; • discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and • considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which [my/our] procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the council’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Opinion prescribed by the Accounts Commission on the audited parts of the Remuneration Report I have audited the parts of the Remuneration Report described as audited. In my opinion, the audited parts of the Remuneration Report have been properly prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014. Other information The Chief Officer (Finance) is responsible for the other information in the annual accounts. The other information comprises the Management Commentary, Annual Governance Statement, Statement of Responsibilities and the unaudited parts of the Remuneration Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Management Commentary and Annual Governance Statement to the extent explicitly stated in the following opinions prescribed by the Accounts Commission. Page 27 of 412
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Opinions prescribed by the Accounts Commission on the Management Commentary and Annual Governance Statement In my opinion, based on the work undertaken in the course of the audit: • the information given in the Management Commentary for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with statutory guidance issued under the Local Government in Scotland Act 2003; and • the information given in the Annual Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Delivering Good Governance in Local Government: Framework (2016). Matters on which I am required to report by exception I am required by the Accounts Commission to report to you if, in my opinion: • adequate accounting records have not been kept; or • the financial statements and the audited parts of the Remuneration Report are not in agreement with the accounting records; or • I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Conclusions on wider scope responsibilities In addition to my responsibilities for the annual accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice, including those in respect of Best Value, are set out in my Annual Audit Report. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. John Boyd FCPFA Audit Director Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT Page 28 of 412
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Appendix B: Letter of Representation (ISA 580) John Boyd, Audit Director Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT Dear John North Lanarkshire Council Annual Accounts 2023/24 1. This representation letter is provided about your audit of the annual accounts of North Lanarkshire Council and its group (hereafter referred to as North Lanarkshire Council) for the year ended 31 March 2024 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and have been properly prepared, and for expressing other opinions on the Remuneration Report, Management Commentary, and Annual Governance Statement. 2. I confirm to the best of my knowledge and belief and having made appropriate enquiries of the Chief Executive and Corporate Management Team, the following representations given to you in connection with your audit of North Lanarkshire Council’s annual accounts for the year ended 31 March 2024. General 3. North Lanarkshire Council and I have fulfilled our statutory responsibilities for the preparation of the 2023/24 annual accounts. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by North Lanarkshire Council have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. I am not aware of any uncorrected misstatements other than those reported by you. Financial Reporting Framework 5. The annual accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24 (2023/24 accounting code), and the requirements of the Local Government (Scotland) Act 1973, the Local Government in Scotland Act 2003, and The Local Authority Accounts (Scotland) Regulations 2014. 6. In accordance with the 2014 Regulations, I have ensured that the financial statements give a true and fair view of the financial position of North Lanarkshire Council at 31 March 2024 and the transactions for 2023/24. Page 29 of 412
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Accounting Policies and Estimates 7. All material accounting policies applied are as shown in the notes to the financial statements. The accounting policies are determined by the 2023/24 accounting code where applicable. Where the accounting code does not specifically apply, I have used judgement in developing and applying an accounting policy that results in information that is relevant and reliable. All accounting policies applied are appropriate to North Lanarkshire Council’s circumstances and have been consistently applied. 8. The significant assumptions used in making accounting estimates are reasonable and properly reflected in the financial statements. Judgements used in making estimates have been based on the latest available, reliable information. Estimates have been revised where there are changes in the circumstances on which the original estimate was based or as a result of new information or experience. Going Concern Basis of Accounting 9. I have assessed North Lanarkshire Council’s ability to continue to use the going concern basis of accounting and have concluded that it is appropriate. I am not aware of any material uncertainties that may cast significant doubt on North Lanarkshire Council’s ability to continue to adopt the going concern basis of accounting. Assets 10. Where a rolling programme of asset valuations has been used, I have satisfied myself that the carrying amount of assets at 31 March 2024 does not differ materially from that which would be determined if a revaluation had been carried out at that date. 11. I carried out an assessment at 31 March 2024 as to whether there is any indication that an asset may be impaired and have recognised any impairment losses identified. 12. I have provided you with all information of which I am aware regarding any valuation exercises carried out after 31 March 2024. 13. There are no plans or intentions that are likely to affect the carrying value or classification of the assets recognised within the financial statements. 14. Owned assets are free from any lien, encumbrance or charge except as disclosed in the financial statements. 15. The pension assumptions made by the actuary in the IAS 19 report for North Lanarkshire Council have been reviewed and I confirm that they are consistent with management's own view. The pension asset has been capped to reflect the asset ceiling as determined through IFRIC 14. I am satisfied that the assumptions applied in the calculation are consistent with management’s own view. Liabilities 16. All liabilities at 31 March 2024 of which I am aware have been reported in the financial statements. 17. Provisions have been recognised in the financial statements for all liabilities of uncertain timing or amount at 31 March 2024 of which I am aware where the conditions specified in the 2023/24 accounting code have been met. The amount recognised as a provision is the best estimate of the expenditure likely to be required to settle the obligation at 31 March 2024. Page 30 of 412
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Where the effect of the time value of money is material, the amount of the provision has been discounted to the present value of the expected payments. 18. Provisions recognised in previous years have been reviewed and adjusted, where appropriate, to reflect the best estimate at 31 March 2024 or to reflect material changes in the assumptions underlying the calculations of the cash flows. 19. The accrual recognised in the financial statements for annual leave untaken by 31 March 2024 has been estimated on a reasonable basis. 20. There are no plans or intentions that are likely to affect the carrying value or classification of the liabilities recognised in the financial statements. Contingent Liabilities 21. There are no significant contingent liabilities, other than those disclosed in Note 23 to the financial statements, arising either under formal agreement or through formal undertakings requiring disclosure in the accounts. All known contingent liabilities have been fully and properly disclosed in accordance with the 2023/24 accounting code and IAS 37. 22. With specific reference to equal pay claims I can confirm that it is not possible to quantify the contingent liability. Litigation and Claims 23. All known actual or possible legal claims have been disclosed to you and have been accounted for and disclosed in the financial statements in accordance with the 2023/24 accounting code. Fraud 24. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. 25. I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated because of fraud • any allegations of fraud or suspected fraud affecting the financial statements, and • fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Laws and Regulations 26. I have disclosed to you all known instances of non-compliance or suspected non- compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 27. All material transactions with related parties have been appropriately accounted for and disclosed in the financial statements in accordance with the 2023/24 accounting code. I have Page 31 of 412
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made available to you the identity of all the North Lanarkshire Council’s related parties and all the related party relationships and transactions of which I am aware. Remuneration Report 28. The Remuneration Report has been prepared in accordance with the Local Authority Accounts (Scotland) Regulations 2014, and all required information of which I am aware has been provided to you. Management Commentary 29. I confirm that the Management Commentary has been prepared in accordance with the statutory guidance and the information is consistent with the financial statements. Corporate Governance 30. I confirm that the North Lanarkshire Council has undertaken a review of the system of internal control during 2023/24 to establish the extent to which it complies with proper practices set out in the Delivering Good Governance in Local Government: Framework 2016. I have disclosed to you all deficiencies in internal control identified from this review or of which I am otherwise aware. 31. I confirm that the Annual Governance Statement has been prepared in accordance with the Delivering Good Governance in Local Government: Framework 2016 and the information is consistent with the financial statements. There have been no changes in the corporate governance arrangements or issues identified, since 31 March 2024, which require to be reflected. Group Accounts 32. I have identified all the other entities in which North Lanarkshire Council has a material interest and have classified and accounted for them in accordance with the 2023/24 accounting code. Any significant issues with the financial statements of group entities, including any qualified audit opinions, have been advised to you. Events Subsequent to the Date of the Balance Sheet 33. All events subsequent to 31 March 2024 for which the 2023/24 accounting code requires adjustment or disclosure have been adjusted or disclosed. Yours sincerely Section 95 Officer Page 32 of 412
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102 West Port Edinburgh EH3 9DN T: 0131 625 1500 E: info@audit-scotland.gov.uk www.audit-scotland.gov.uk Audit and Scrutiny Panel 31 October 2024 JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Audit of 2023/24 annual accounts Independent auditor's report 1. Our audit work on the 2023/24 annual accounts is now substantially complete. Subject to receipt of a revised set of annual accounts for final review, we anticipate being able to issue unqualified audit opinions in the independent auditor's report on 31 October 2024 (the proposed reports are attached at Appendix A). Annual Audit Report 2. Under International Standards on Auditing in the UK, we report specific matters arising from the audit of the annual accounts to those charged with governance of a body in sufficient time to enable appropriate action. We present for the Audit and Scrutiny Panel’s consideration our draft Annual Audit Report on the 2023/24 audit. The section headed "Significant findings and key audit matters" sets out the issues identified in respect of the annual accounts. 3. The report also sets out conclusions on the wider scope areas that frame public audit as set out in the Code of Audit Practice. 4. This report will be issued in final form after the audit of the annual accounts has been completed. Unadjusted misstatements 5. We also report to those charged with governance all unadjusted misstatements in the annual accounts which we have identified during the course of our audit, other than those of a trivial nature, and request that these misstatements be corrected. Fraud, subsequent events, and compliance with laws and regulations 6. In presenting this report to the Audit and Scrutiny Panel we seek confirmation from those charged with governance of any instances of any actual, suspected, or alleged fraud; any subsequent events that have occurred since the date of the financial statements; or material non-compliance with laws and regulations affecting the entity that should be brought to our attention. Representations from Section 95 Officer 7. As part of the completion of our audit, we are seeking written representations from the Section 95 Officer on aspects of the annual accounts, including the judgements and estimates made. Appendix 2 Page 33 of 412
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8. A draft letter of representation is attached at Appendix B. This should be signed and returned to us by the Section 95 Officer with the signed annual accounts prior to the independent auditor’s report being signed. Page 34 of 412
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Appendix A: Proposed Independent Auditor’s Report Independent auditor’s report to the trustees of JC McNaught Poor Children’s Holiday Fund and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the statement of accounts of JC McNaught Poor Children’s Holiday Fund for the year ended 31 March 2024 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2024 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1),(2) and (3) of The Charities Accounts (Scotland) Regulations 2006. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I am independent of the charity in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Page 35 of 412
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Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: • using my understanding of the local government sector and charity sector to identify that the Local Government (Scotland) Act 1973, Charities and Trustee Investment (Scotland) Act 2005 and The Charities Accounts (Scotland) Regulations 2006 are significant in the context of the charity; • inquiring of the Trustees [add any other officer] as to other laws or regulations that may be expected to have a fundamental effect on the operations of the charity; • inquiring of the Trustees concerning the charity’s policies and procedures regarding compliance with the applicable legal and regulatory framework; • discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and • considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the charity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Other information The trustees are responsible for the other information in the statement of accounts. The other information comprises the Trustees’ Annual Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. Page 36 of 412
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My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinions prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with The Charity Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements are not in agreement with the accounting records; or • I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. Pauline Murray CPFA Senior Audit Manager Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN Pauline Murray is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 37 of 412
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Independent auditor’s report to the trustees of North Lanarkshire Council Educational Endowments and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the statement of accounts of North Lanarkshire Council Educational Endowments for the year ended 31 March 2024 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2024 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1),(2) and (3) of The Charities Accounts (Scotland) Regulations 2006. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I am independent of the charity in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: Page 38 of 412
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• using my understanding of the local government sector and charity sector to identify that the Local Government (Scotland) Act 1973, Charities and Trustee Investment (Scotland) Act 2005 and The Charities Accounts (Scotland) Regulations 2006 are significant in the context of the charity; • inquiring of the Trustees as to other laws or regulations that may be expected to have a fundamental effect on the operations of the charity; • inquiring of the Trustees concerning the charity’s policies and procedures regarding compliance with the applicable legal and regulatory framework; • discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and • considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the charity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Other information The trustees are responsible for the other information in the statement of accounts. The other information comprises the Trustees’ Annual Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinions prescribed by the Accounts Commission on the Trustees’ Annual Report Page 39 of 412
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In my opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with The Charity Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements are not in agreement with the accounting records; or • I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. Pauline Murray CPFA Senior Audit Manager Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN Pauline Murray is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 40 of 412
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Appendix B: Letter of Representation (ISA 580) Pauline Murray, Senior Audit Manager Audit Scotland 4th Floor 102 West Port Edinburgh Dear Pauline, JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Annual Accounts 2023/24 1. This representation letter is provided about your audit of the annual accounts of JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Trust for the year ended 31 March 2024 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and have been properly prepared, and for expressing other opinions on the Remuneration Report, Management Commentary, and Annual Governance Statement. 2. I confirm to the best of my knowledge and belief and having made appropriate enquiries of the Chief Executive and Corporate Management Team, the following representations given to you in connection with your audit of your annual accounts for the year ended 31 March 2024. General 3. North Lanarkshire Council (as administering authority) and I have fulfilled our statutory responsibilities for the preparation of the 2023/24 annual accounts. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by the trusts have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. I am not aware of any uncorrected misstatements other than those reported by you. Financial Reporting Framework 5. The financial statements comply with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and the regulations 9(1), (2) and (3) of the Charities Accounts (Scotland) Regulations 2006. 6. Disclosure has been made in the financial statements of all matters necessary for them to properly present the receipts and payments and statement of balances of each registered charitable trust for the year ended 31 March 2024. Accounting Policies and Estimates 7. The annual accounts have been prepared on a receipts and payments basis in accordance with applicable regulations and the founding documents of the charitable trust. Fraud 8. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. Page 41 of 412
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I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated because of fraud • any allegations of fraud or suspected fraud affecting the financial statements, and • fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Laws and Regulations 9. I have disclosed to you all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 10. I am not aware of any material transactions with related parties. Corporate Governance 11. The business of the charitable trust is recorded in the systems of North Lanarkshire Council. As section 95 officer for North Lanarkshire Council, I confirm that there are no issues or deficiencies in internal control that require to be disclosed within the annual accounts of the charitable trusts. Events Subsequent to the Date of the Balance Sheet 12. All events subsequent to 31 March 2024 have been adjusted or disclosed. Yours sincerely Elaine Kemp Chief Officer (Finance), North Lanarkshire Council, for and on behalf of the trustees of JC McNaught Poor Children’s Holiday Fund and North Lanarkshire Council Educational Endowments Trust. Page 42 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref PH/ASP/ExternalAudit ARR Date 31/10/24 Audit Scotland 2023-24 Annual Audit Report (AAR) From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Executive Summary The purpose of this report is to present to elected members the Annual Audit Report (AAR) produced by the Council’s appointed external auditors, Audit Scotland, in respect of the audit of the Council for the year-ending 31 March 2024. A copy of the external auditor’s Annual Audit Report is attached to this report at Appendix 1. Members should note that the report summarises the audit work done and presents the main findings arising from the audit. The report also contains audit recommendations and responses, including planned actions, which have been agreed by management. The external auditor will speak to the Panel about the above audit output at the meeting and highlight to members the work undertaken and any issues arising from their work that they wish to bring to the Panel’s attention. Recommendations The Panel is invited to: (a) invite the external auditor to speak to his report and to highlight to the Panel key messages arising from the audit; and (b) agree to monitor, through reports from Internal Audit, implementation by management of actions agreed in response to external audit’s recommendations. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Item 4 Page 43 of 412
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1. Background 1.1 The Accounts Commission have appointed Audit Scotland as the Council’s appointed external auditor. Expected outputs to be produced by the Council’s external auditors are outlined each year in their annual planning document. 1.2 The external auditor is required to annually prepare a report for members and the Controller of Audit summarising the audit work done and presenting the main findings arising from the audit. The report has been discussed and agreed with senior management. 2. Report Audit reviews completed in the period 2.1 The external auditors AAR (at Appendix 1) presents key matters arising from each of the main areas of work undertaken by the external auditor including the audit of the financial statements and issues relating to the Council’s financial management and financial sustainability, vision, leadership and governance, best value arrangements and the use of resources to improve outcomes. 2.2 The report also contains the external auditor’s audit opinion on the 2023-24 financial statements as well as a number of issues where action was required during the audit process and/or scope for further improvement exists. 2.3 Thew report contains a number of audit recommendations and management responses including planned actions, responsible officers and timescales. Progress implementing agreed actions will be monitored by Internal Audit and reported to future meetings of the Panel. 3. Measures of success 3.1 The Council is committed to delivering effective and efficient financial reporting and high standards of financial management and corporate governance which underpin the delivery of Council services and the achievement of planned outcomes and corporate priorities and ambitions. 3.2 Both Internal and External Audit report to the Audit and Scrutiny Panel on their assessment of the adequacy and effectiveness of the Council’s financial management and corporate governance arrangements. 4. Supporting documentation Appendix 1 Audit Scotland Annual Audit Report 2023-24 Paula Hendry, Acting Chief Officer (Audit and Risk) Page 44 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ Page 45 of 412
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If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Effective responses by management to the control issues and/or areas of improvement identified by External Audit will increase the likelihood of the Council achieving its ambitions by improving control frameworks and more effectively mitigating potential risks and threats to the achievement of planned outcomes. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 46 of 412
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Prepared for the Members of North Lanarkshire Council and the Controller of Audit October 2024 North Lanarkshire Council 2023/24 Annual Audit Report – DRAFT Page 47 of 412
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North Lanarkshire Council 2023/24 Annual Audit Report – DRAFT | 2 Page 48 of 412
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North Lanarkshire Council 2023/24 Annual Audit Report – DRAFT | 3 Contents Key messages 4 Introduction 6 1. Audit of 2023/24 annual accounts 8 2. Financial management 17 3. Financial sustainability 24 4. Best Value 29 5. Vision, leadership and governance 32 6. Use of resources to improve outcomes 35 Appendix 1. Action plan 2023/24 41 Appendix 2A. Summary of corrected misstatements 50 Appendix 2B. Summary of uncorrected misstatements 51 Page 49 of 412
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Key messages | 4 Key messages 2023/24 annual accounts 1 Audit opinions on the annual accounts of the council, its group and the two section 106 charities administered by the council are unmodified, i.e. the financial statements and related reports are free from material misstatement. Financial management 2 The Council continues to operate within its annual budget. While facing financial challenges through inflationary pressures on pay and non-pay costs as well as demand on services, the Council continues to demonstrate sound financial management maintaining general fund reserves in line with its Revenue Budget Strategy. 3 Continuity and security of IT operations remains an area of development and focus for the Council and there are key areas that could be strengthened. Financial sustainability 4 The Council has effective and appropriate arrangements in place to plan the use of its resources and continue to deliver services into the medium term. 5 Like many other local authorities, the Council faces significant financial challenges. The Council’s medium term financial plan projects a cumulative budget gap of £100.1 million over the five years to 2029/30. Best Value 6 The Council’s workforce planning approach is integrated with The Plan for North Lanarkshire, with a focus on developing the workforce of the wider North Lanarkshire area. 7 The Council is proactive in developing its workforce as well as that of the wider North Lanarkshire area. It has a range of initiatives to address recruitment challenges across key sectors such as social care and construction, including grow-your-own approaches. Vision, leadership and governance 8 The Council has a clear ambitious vision as detailed in The Plan for North Lanarkshire. Page 50 of 412
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Key messages | 5 9 Elected members and officers demonstrate a shared commitment to delivering the agreed strategic direction of the Council. Use of resources to improve outcomes 10 The Council has reported a mixed picture of performance with a trend of improvement in several areas whilst challenges remain. 11 Overall, the Council’s arrangements for the preparation and publication of Statutory performance information are adequate but improvements could be made in public performance reporting. 12 The Council’s significant trading operation did not comply with the statutory requirement to break even for the second year running. Page 51 of 412
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Introduction | 6 Introduction 1. This report summarises the findings from the 2023/24 annual audit of North Lanarkshire Council. The scope of the audit was set out in an Annual Audit Plan presented to the 26 February 2024 meeting of the Audit and Scrutiny Panel. This Annual Audit Report comprises: • significant matters arising from an audit of North Lanarkshire Council’s annual accounts • conclusions on North Lanarkshire Council’s performance in meeting its Best Value duties • conclusions on the following wider scope areas that frame public audit as set out in the Code of Audit Practice 2021: o Financial Management o Financial Sustainability o Vision, Leadership, and Governance o Use of Resources to Improve Outcomes. 2. This report is addressed to the members of North Lanarkshire Council and the Controller of Audit and will be published on Audit Scotland's website www.audit-scotland.gov.uk in due course. Audit appointment 3. John Boyd, has been appointed by the Accounts Commission as auditor of North Lanarkshire Council for the period from 2022/23 until 2026/27. 4. We would like to thank Councillors, Audit and Scrutiny Panel members, senior management, and other staff, particularly those in Finance, for their cooperation and assistance in this year’s audit and we look forward to working together constructively over the remainder of the five-year appointment. Responsibilities and reporting 5. North Lanarkshire Council has primary responsibility for ensuring the proper financial stewardship of public funds. This includes preparing annual accounts that are in accordance with proper accounting practices. The Council is also responsible for compliance with legislation, and putting arrangements in place for governance and propriety that enable it to successfully deliver its objectives. Page 52 of 412
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Introduction | 7 6. The responsibilities of the independent auditor are established by the Local Government (Scotland) Act 1973, the Code of Audit Practice 2021 and supplementary guidance, and International Standards on Auditing in the UK. 7. Weaknesses or risks identified are only those which have come to my attention during my team’s normal audit work and may not be all that exist. Communicating these does not absolve management of North Lanarkshire Council from its responsibility to address the issues raised and to maintain adequate systems of control. 8. This report contains an agreed action plan at Appendix 1. It sets out specific recommendations, the responsible officers, and dates for implementation. Auditor Independence 9. We can confirm that we comply with the Financial Reporting Council’s Ethical Standard. We can also confirm that my team and we have not undertaken any non-audit related services and therefore the 2023/24 audit fee of £643,986 as set out in our 2023/24 Annual Audit Plan remains unchanged. We are not aware of any relationships that could compromise our objectivity and independence. 10. The annual audit adds value to North Lanarkshire Council by: • identifying and providing insight on significant risks, and making clear and relevant recommendations • providing clear and focused conclusions on the appropriateness, effectiveness and impact of corporate governance, arrangements to ensure the best use of resources and financial sustainability. • sharing intelligence and good practice identified. Page 53 of 412
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1. Audit of 2023/24 annual accounts | 8 1. Audit of 2023/24 annual accounts Public bodies are required to prepare annual accounts comprising financial statements and other related reports. These are principal means of accounting for the stewardship public funds. Main judgements Audit opinions on the annual accounts of the council, its group and the two section 106 charities administered by the Council are unmodified. The management commentary, annual governance statement and remuneration report were all consistent with the financial statements and properly prepared in accordance with the relevant regulations and guidance. Audit opinions on the annual accounts are unmodified 11. The Council approved the annual accounts for North Lanarkshire Council and its group for the year ended 31 March 2024 on 31 October 2024 (TBC). As reported in the independent auditor’s report, in my opinion as the appointed auditor: • the financial statements give a true and fair view and were properly prepared in accordance with the financial reporting framework • the audited part of the remuneration report was prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014. • the management commentary and annual governance statement were consistent with the financial statements and properly prepared in accordance with the applicable requirements. Overall materiality was assessed on receipt of the unaudited annual accounts as £29.4 million 12. Broadly, the concept of materiality is applied by auditors to determine whether misstatements identified during the audit could reasonably be expected to influence the economic decisions of users of the financial statements, and hence impact their opinion set out in the independent auditor’s report. Auditors set a monetary threshold when considering materiality, although some issues may be considered material by their nature. It is ultimately a matter of the auditor’s professional judgement. Page 54 of 412
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1. Audit of 2023/24 annual accounts | 9 13. Our initial assessment of materiality was carried out during the risk assessment phase of the audit. This was reviewed and revised on receipt of the unaudited annual accounts and is summarised in Exhibit 1. Exhibit 1 Materiality values Materiality level Council Group Overall materiality £29.4 million £29.5 million Performance materiality £20.5 million £20.6 million Reporting threshold £1.47 million £1.50 million Source: Audit Scotland 14. The overall materiality threshold for the audit of the annual accounts of the Council was set with reference to gross expenditure, which was judged as the figure most relevant to the users of the financial statements. 15. Performance materiality is used by auditors when undertaking work on individual areas of the financial statements. It is a lower materiality threshold, set to reduce the probability of aggregated misstatements exceeding overall materiality. Performance materiality was set at 70 per cent of overall materiality, reflecting audit findings reported in prior year and risks identified at planning. 16. It is our responsibility to request that all misstatements, other than those below the reporting threshold, are corrected. The final decision on making the correction lies with those charged with governance. Significant findings and key audit matters 17. Under ISA (UK) 260, we communicate significant findings from the audit to the council, including our view about the qualitative aspects of the council’s accounting practices. 18. The Code of Audit Practice also requires me to highlight key audit matters, which are defined in ISA (UK) 701 as those matters judged to be of most significance. The significant findings including key audit matters, are summarised in Exhibit 2. Exhibit 2 Significant findings and key audit matters from the audit of the annual accounts Page 55 of 412
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1. Audit of 2023/24 annual accounts | 10 Issue Resolution 1. Replacement of assets Last year we reported how the Council does not hold each significant part (i.e. component) of an item of property, plant and equipment separately on its fixed asset register. This means there is a risk that assets could be overstated by not removing the replaced component when capital expenditure is incurred on a specific asset. As part of our audit work on additions in year of property, plant and equipment, we identified two items from a sample of 11 where capital expenditure was incurred for replacements or repair of existing assets. However, the risk is pervasive to any asset that has had subsequent spend after revaluation, and to Plant and Equipment which is not subject to revaluation. As at 31st March 2024, Plant and Equipment with a gross book value of £33.6 million had been fully depreciated. There is a risk that these assets are no longer in use and may have been replaced. Management were able to verify £6.9 million of these assets were still in use, but were unable to verify the remaining £26.7 million. We are satisfied that there is not a material misstatement in the value of Property, Plant and Equipment. We have confirmed that Management have undertaken a revaluation of land and buildings where there are material areas of subsequent expenditure (including council dwellings) and that revaluations will be undertaken in the following year. The other material asset category is Vehicles, Plant & Equipment. Officers have undertaken a review of assets held, focusing on those fully depreciated where there is increased likelihood of subsequent expenditure. While we are satisfied that the assets are free from material misstatement as at 31 March 2024, it is important that management establish a process to ensure assets replaced are appropriately removed from the asset register and accounted for as a disposal appropriately. Recommendation 1 (Refer Appendix 1, action plan) Source: Audit Scotland Our audit work responded to the risks of material misstatement we identified in the annual accounts 19. We have obtained audit assurances over the identified significant risks of material misstatement in the annual accounts. Exhibit 3 sets out the significant risks of material misstatement to the financial statements identified in my 2023/24 Annual Audit Plan. It also summarises the further audit procedures performed during the year to obtain assurances over these risks and the conclusions from the work completed. Exhibit 3 Significant risks of material misstatement in the annual accounts Audit risk Assurance procedure Results and conclusions 1. Risk of material misstatement due to fraud caused by management • Assess the design and implementation of controls over journal entry processing. Results: We found no instances of material misstatement due to fraud or Page 56 of 412
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1. Audit of 2023/24 annual accounts | 11 Audit risk Assurance procedure Results and conclusions override of controls As stated in ISA (UK) 240, management is in a unique position to perpetrate fraud because of management’s ability to override controls that otherwise appear to be operating effectively. • Make inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries and other adjustments. • Test journals and other adjustments at the year-end and post-closing entries and focus on significant risk areas. • Consider the need to test journal entries and other adjustments throughout the year where these are indicative of increased risk of management override. • Evaluate significant transactions outside the normal course of business. • Assess the adequacy of controls in place for identifying and disclosing related party relationship and transactions in the financial statements. • We will assess any changes to the methods and underlying assumptions used to prepare significant accounting estimates compared to the prior year. error caused by management override of controls. 2. Valuation of land and buildings The Council held land and buildings with a NBV of £2,815 million at 31 March 2023. There is a significant degree of subjectivity in the valuation of land and buildings. Valuations are based on specialist and management assumptions, and changes in these can result in material changes to valuations. Valuations should reflect conditions at 31 March 2024 • Review the information provided to the external valuer to assess for completeness and accuracy. • Evaluate the competence, capabilities, and objectivity of the professional valuer. • Obtain an understanding of the management’s involvement in the valuation process to ensure there is appropriate control and oversight of the valuation process. • Critically assess the approach North Lanarkshire Results: Assurance has been gained that there are no material misstatements in the carrying value of land and buildings. The Council acquired Cumbernauld shopping centre in June 2023. The property was revalued at 31 March 2024 at £6.8 million and included the use of perpetuity in the calculation despite plans to demolish the property. Going forward, the Council plans to value the property annually and include Page 57 of 412
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1. Audit of 2023/24 annual accounts | 12 Audit risk Assurance procedure Results and conclusions including those subject to valuation, those valued earlier in the year and those not re-valued. There is a risk that the carrying value of land and buildings does not reflect the current value as at 31 March 2024. Council has adopted to assess the risk that assets not subject to valuation are materially misstated and consider the robustness of that approach. • Challenge management’s assessment of why it considers that the land and buildings not revalued in 2023/24 are not materially misstated. We will critically assess the appropriateness of any assumptions. • Review the reconciliation between the financial ledger and the property asset register. • Critically assess the adequacy of North Lanarkshire Council’s disclosures regarding the assumptions in relation to the valuation of land and buildings. the impact of its planned winding down in the valuation. Source: Audit Scotland AAP 2023/24 Areas of audit focus 20. In addition, we identified areas of audit focus in our 2023/24 Annual Audit Plan where we considered there to be risks of material misstatement to the financial statements. These areas of specific audit focus were: 21. Pension valuation: the pension valuation due to the material value and significant assumptions used in the calculation. We utilised the work of PwC as auditor expert in assessing the reasonableness of the methodology used and assumptions made by the Council’s actuary, Hymans Robertson LLP, in arriving at the IAS 19 pension valuation as at 31 March 2024. 22. In accordance with IFRIC 14, the pension asset recognised within the financial statements was capped at the estimated future benefit to the council. We have reviewed the assumptions applied by the actuary in arriving at the asset ceiling cap and are satisfied that this is in accordance with IFRIC 14. The net pension asset recognised in 2023/24 was nil. The accounts also recognise a liability of £119.5 million in relation to unfunded liabilities on its balance sheet. Areas of further work Page 58 of 412
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1. Audit of 2023/24 annual accounts | 13 23. As part of our risk assessment, we have also identified the following areas where further work would be performed. These are not risk of material misstatement to the primary financial statements but areas to be kept under review: 24. IFRS 16: from 1 April 2024, a new International Financial Reporting Standard, IFRS 16, will come into effect for Local Authorities. IFRS 16 introduces a new ‘Right of Use’ asset class to the balance sheet, and also recognises the corresponding lease liability. This applies to all leases – property, land, vehicles, plant and equipment. 25. This will change the way in which North Lanarkshire Council accounts for operating leases, including recognising assets and liabilities for the rights and obligations arising from leases previously classified as operating leases. 26. In terms of recognition exemptions, IFRS 16 provides two major recognition and measurement exemptions to reduce the reporting burden on entities; short- term leases and low value leases. CIPFA has mandated the application of the recognition exemption for short term leases meaning that a lease that, at the commencement date, has a lease term of 12 months or less is exempt from the accounting treatment under IFRS 16. 27. For low value leases the recognition exemption is optional. The Council as lessee may elect not to apply the accounting treatment under IFRS 16 to low value leases. It is a matter for individual authorities to set a local policy to define what low value is in practice. 28. Under IFRS 16 the initial measurement of the lease liability is recognised at the commencement date and measured as the present value of the lease payments that are not paid at that date using the: • interest rate implicit in the lease, or • lessee’s incremental borrowing rate (but only if the implicit rate cannot be readily determined) 29. IFRS 16 is a complex accounting standard and the Council utilised the services of Treasury advisors Arlingclose to calculate the impact of its implementation for service concession arrangements. 30. The expected impact of implementation of IFRS 16 is included in the disclosure notes in the accounts. It is estimated that its implementation will recognise a right of use of property assets and related liability of £1.7 million. In addition, the impact on the outstanding liability of leases and service concession arrangements relating to PPP schools, is estimated to increase liabilities of £86.4 million. 31. Valuation of infrastructure assets: the statutory override relating to valuation of infrastructure assets is due to end for the 2024/25 financial statements. On 24 June 2024, the Scottish Government published; Introduction - Local government finance circular 8/2024 - accounting for infrastructure assets: temporary statutory override - gov.scot (www.gov.scot). Page 59 of 412
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1. Audit of 2023/24 annual accounts | 14 32. Due to practical difficulties in applying component accounting for the recognition and derecognition of replaced components of infrastructure assets, most local authorities have been unable to comply with the requirement to assess the net book value of a replaced component of an infrastructure asset and have taken a network approach to the measurement of such assets, treating the amount of the replaced component as having no value. 33. A temporary statutory override was introduced in August 2022, applying to the 2022/23 and 2023/24 financial years, in order to allow time for the CIPFA LASAAC Local Authority Accounting Code Board to conclude the development of a permanent solution. 34. However, a permanent solution has not yet been agreed and CIPFA believe that this will continue be an area of enhanced scrutiny for local government auditors. The statutory guidance will therefore be extended by a further 12 months, until 31 March 2025. Recommendation 2 The Council should proactively work with CIPFA and the wider local government sector to arrive at appropriate solution for the implementation of accounting for infrastructure assets. 35. We kept these areas under review throughout our audit. Based on the findings of the audit procedures performed, we have detailed our conclusions above. 36. Service concession arrangements: We reviewed the accounting adjustments and disclosures within the financial statements with regards to the implementation of the statutory accounting treatment for Service Concession arrangement flexibilities as set out in Finance Circular 10/22. Audit work confirmed that it had been accounted for correctly. A review to identify any buildings containing Reinforced Autoclaved Aerated Concrete is ongoing 37. Reinforced Autoclaved Aerated Concrete (RAAC) was widely used in the construction of floors and roofs from the 1950s to early 1990s. Recent investigations have identified that leaks or water exposure could lead to the deterioration of RAAC planks. 38. The Scottish Government are working in partnership with the UK Government on research into the extent of the use of RAAC in public buildings and public bodies, including the Council, have been advised to check as a matter of urgency whether any buildings in their estates have roofs, floors, cladding or walls made of RAAC. 39. The Council is currently undertaking a survey across its property estate to identify the presence of RAAC. Last year we reported that three buildings were identified as containing RAAC and were written down to nil value (total prior Page 60 of 412
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1. Audit of 2023/24 annual accounts | 15 value of £10.4 million). The Council has confirmed that review of its corporate properties is complete with two further instances of RAAC identified. One of these properties has been written down to nil value, with the other being a leased building which is not held on the Council’s balance sheet. 40. An initial desktop analysis of its housing properties identified that up to 400 properties could potentially have RAAC as part of their construction. Further analysis has found 148 properties may have had RAAC used as part of their construction. This assessment is ongoing and includes inspections and checks with the Council’s appointed surveyors and structural engineers and direct liaison with any affected tenants. Remedial action has been taken in some properties but is not yet completed. 41. For those properties where RAAC was confirmed, the Council’s Valuer included them as nil value in lieu of structural surveys and remedial costs. In accordance with IAS 36, the Council is required to make a formal estimate of the recoverable amount of the asset, which is the higher of its net selling price and its value in use (i.e. the cost of providing the service potential provided by the asset). Recommendation 3 For those properties where RAAC has been identified, the Council should determine a more accurate measure of the level of impairment in line with the requirement of accounting standards. There were a number of non-material misstatements identified within the financial statements 42. A number of non-material misstatements totalling £32.4 million were identified in the financial statements which were corrected for, see Appendix 2A for details of these adjustments. Adjustments were processed to the financial statements and we concluded that further audit procedures were not required. The misstatements arose from issues that were isolated and identified in their entirety and therefore do not indicate further systemic error. 43. The audit team identified one misstatement relating to assets which have been disposed of but not written out of the fixed asset register, which was not corrected by management in the audited accounts. We considered the size, nature and circumstances leading to the uncorrected misstatement, and concluded that it was not material. Further details of the uncorrected misstatement is included in Appendix 2B. The unaudited annual accounts were received in line with the agreed audit timetable 44. The unaudited annual accounts were received in line with the agreed audit timetable on 28 June 2024. Page 61 of 412
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1. Audit of 2023/24 annual accounts | 16 45. Our original audit timetable included a target date for the delivery of our final outputs of September 2024. However, delays in commencing our audit work this year due to overruns on other audits, and the need to maintain the quality of our audit, led to a review of resource plans across all audits. We agreed a revised timetable with officers on the delivery of our audit fieldwork for completion by October 2024. Reasonable progress was made on prior year recommendations 46. North Lanarkshire Council has made reasonable progress in implementing the agreed prior year audit recommendations. For actions not yet implemented, revised responses and timescales have been agreed with management, and are set out in Appendix 1. Our audit opinions on Section 106 charities were unmodified 47. Due to the interaction of section 106 of the Local Government in Scotland Act 1973 with the charities legislation, a separate independent auditor's report is required for the statement of accounts of each registered charity where members of North Lanarkshire Council are sole trustees, irrespective of the size of the charity. 48. Our audit opinions on the Section 106 charities are unmodified. These covered the 2023/24 statement of accounts on North Lanarkshire Council Educational Endowments and the JC McNaught Poor Children’s Holiday Fund. The trustees of the JC McNaught Poor Children’s Holiday Fund should consider the future use of the trust 49. As the appointed auditors of the Section 106 charities administered by the Council, we are required to consider whether the funds held within the trusts are being used for the purposes intended. This includes reporting any inappropriate use of funds or prolonged lack of activity. 50. The trust has not made any payments in the last six years. The Council still aims to transfer to an Office of the Scottish Charity Regulator (OSCR) agreed beneficiary charity. The timescale for transfer is dependent on identifying a suitable beneficiary and subsequent approval by OSCR. There has been no progress for a number of years. 51. The Council should consider appointing an external trustee as this would remove the charity from the scope of section 106 and remove the audit requirement for charities below the de minimis. Page 62 of 412
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2. Financial management | 17 2. Financial management Financial management means having sound budgetary processes, and the ability to understand the financial environment and whether internal controls are operating effectively. Conclusion The Council continues to operate within its annual budget. While facing financial challenges through inflationary pressures on pay and non-pay costs as well as demand on services, the Council continues to demonstrate sound financial management maintaining general fund reserves in line with its Revenue Budget Strategy. Continuity and security of IT operations remains an area of development and focus for the Council and there are key areas that could be strengthened. The Council operated within budget in 2023/24 52. The Council approved its 2023/24 budget in February 2023. The budget was set at £978.6 million with net savings of £7.5 million. This included spend which is offset by ring fenced grants of £50.6 million and £7.7million of capital grant funding in lieu of pay award, resulting in a net expenditure position for monitoring purposes of £920.3 million. This was revised to a final budget of £928.3 million as a result of additional funding received in year primarily in relation to funding for pay deals, offset by a reduction in revenue funding due to a switch in funding between capital and revenue. 53. The Council reported a service underspend against budget of £17.4 million at provisional outturn. There were no significant under or overspends during 2023/24 at a service level. The Council’s Housing Revenue Account operated within budget 54. The Council is required by legislation to maintain a separate housing revenue account and to ensure that rents are set a level which will at least cover the costs of its social housing provision. 55. The Housing Revenue Account reported an in-year deficit of £9.5 million. This is largely a result of overspends in property costs of £6.9 million due to increased costs associated with repairs, void rent loss and ground maintenance costs. Furthermore, increased loan charge costs of £4.4 million reflecting the Page 63 of 412
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2. Financial management | 18 impact of higher interest rates have also contributed. These overspends are partially offset by a number of underspends. 56. The HRA balance of £16.8 million forms part of the General Fund. £13.4 million of this has been approved for specific purposes (see below) which leaves an unallocated balance of £3.4 million. • £1.3 million for Council Ambition • £9.1 million for loan charges • £1.7 million set aside for an approved contingency fund. The Council has appropriate budget setting and monitoring arrangements in place 57. The Council continues to balance its budget each year and maintains the level of reserves is in line with its Reserves Policy. 58. The Council monitors the budget position through the year by 4-weekly budget monitoring reports to the Business Management Team and quarterly reports taken to the service committees and the Finance and Resources Committee. 59. We reviewed budget monitoring reports throughout the year. The projected surplus increased as the year progressed. We concluded that budget monitoring reports provided an overall picture of the budget position at service level. The reports forecast the outturn position for the year and include good narrative explanations for significant variances against budget. This allowed both senior management and members to carry out effective scrutiny of the Council's finances. The level of General Fund reserves has increased over recent years, but much is already allocated to agreed future spending commitments 60. One of the key measures of the financial health of a body is the level of reserves held. The level of usable reserves held by the Council increased from £325.4 million in 2022/23 to £342.6 million in 2023/24. 61. The General Fund is the largest usable reserve and is used to support the delivery of services. Total General Fund reserves now stands at £283.9 million and includes £226.3 million earmarked for specific future spending commitments such as: • £70.0 million held for future contractual obligations for Public Private Partnership schools • £44.8 million for strategic capital investment programme • £17.9 million as a one-off mitigation for loans charges Page 64 of 412
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2. Financial management | 19 • £17.9 million for strategic workforce planning. 62. The Council also maintains a Change Management Fund of £19.4 million. This fund is used by the Council to support future budget pressures, one-off costs of approved savings and transformation initiatives. Therefore, its aim is to support financial planning in the medium to longer term. 63. The Council continues to hold a £8.0 million contingency within earmarked reserves. This is held to provide cover for unexpected expenditure and as a working balance to help cushion the impact of uneven cash flows. 64. Exhibit 5 provides an analysis of the General Fund and HRA over the last five years and shows the significant increase in reserves over the last three years due to surpluses. This is largely the result of Covid-19 funding in 2019/20 and 2021/22. Exhibit 5 Analysis of General Fund balance Source: North Lanarkshire Council Annual Accounts 2023/24 The Council achieved 99% of planned savings 65. The budget for 2023/24 included planned savings of £7.5 million. The Council achieved actual savings of £7.4 million against this target (99%). The shortfall was achieved through alternative savings. 66. Planned savings were achieved through: 8 22.9 40.7 47 38.240.4 93.9 195.5 202.8 245.7 1… 27.5 19.5 26.3 16.8 0 50 100 150 200 250 300 350 2019/20 2020/21 2021/22 2022/23 2023/24 £ million General Fund contingency/unallocated General Fund earmarked HRA Page 65 of 412
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2. Financial management | 20 • revising service operating models • introducing fees or charges for services • reducing levels of service provision • implementing efficiency measures. 67. The Council has a track record of delivering savings but given the scale of savings already delivered, its future financial plans are becoming increasingly challenging. 68. As illustrated in Exhibit 6, the Council has delivered total cumulative savings of £93.3 million since 2019/20 – £78.1 million of these have been planned savings. Exhibit 6 Savings – planned savings achieved and those met through alternatives Source: North Lanarkshire Council’s Annual Accounts 2019/20 to 2023/24 A new Strategic Investment Capital Programme was approved 69. Total capital expenditure in 2023/24 was £242.2 million which is an increase of £7.6 million since last year. 70. Although capital spend increased since last year, it is still lower than planned. This is due to a number of factors continuing to impact the 0 5 10 15 20 25 30 35 2019/20 2020/21 2021/22 2022/23 2023/24 £ million Planned savings achieved Savings met through alternatives Page 66 of 412
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2. Financial management | 21 construction industry including the availability of material and labour in addition to inflationary pressures. 71. The Council approved a new 5-year General Fund Strategic Capital Investment Programme in March 2024 which covers the period 2024/25 to 2028/29. The approved capital programme includes investment of £659.5 million planned over the five year period. 72. The Council’s Housing Revenue Account’s 30 year business plan includes forecast investment of £806 million in housing provision over the same 5-year period. This investment together with the General Fund investment, means almost £1.5 billion capital investment is planned over the next five years. Borrowing levels have increased significantly to support the capital programme 73. At 31 March 2024, long term borrowing stood at £590.6 million, an increase of £114.5 million on the 2023 level of £476.1 million. During the same period, short term borrowing also increased from £281.2 million to £288.9 million. 74. Total external debt, which includes the Council’s long-term liabilities, was within the authorised limit and operational boundary set in the Treasury Management Strategy. The current borrowing position complies with the Prudential Code, and the Council will continue to consider the affordability of future borrowing. North Lanarkshire Council has appropriate financial control arrangements in place 75. Our responsibilities under the Code of Audit Practice requires us to assess the system of internal control put in place by management. We seek to gain assurance that the Council: • has systems of recording and processing transactions which provide a sound basis for the preparation of the financial statements • has systems of internal control which provide an adequate means of preventing and detecting error, fraud, or corruption • complies with established policies, procedures, laws, and regulation. 76. From a review of the design and implementation of systems of internal control (including those relating to IT) relevant to our audit approach and testing of the operating effectiveness of specific key controls relating to journal workflows, we did not identify any significant internal control weaknesses which could affect North Lanarkshire Council’s ability to record, process, summarise, and report financial and other relevant data and result in a material misstatement in the financial statements. Page 67 of 412
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2. Financial management | 22 We identified a number of areas where IT arrangements could be strengthened 77. Audit work on the general IT environment considered the Council’s arrangements for: strategy and staffing, network structure and security, cyber security, Business Continuity Plans (BCP) and Disaster Recovery Plans (DRP) and system development and acquisition. 78. The capacity of the Council’s Business and Digital team remains challenging with vacancy rates of 20 per cent leading to skills gaps and workforce pressures in key areas. The Council has plans in place to grow the workforce, for example through a programme for school leavers and a modern apprenticeship programme but these will take time and the Council should ensure the current capacity of the Business and Digital team is sufficient. 79. Continuity and security of IT operations remains an area of development and focus for the Council. The Council has a two-pronged approach in place through Business Continuity and Disaster Recovery to manage IT Operations. All service Business Continuity Plans must detail how they will maintain critical service delivery in the event of ICT failures. High value systems are required to have dedicated ICT Disaster Recovery Plans. 80. Business and Digital continue to develop standards, processes, governance and toolkits to support services in assessing the criticality of their systems and preparing appropriate ICT Disaster Recovery plans and testing arrangements. Business Continuity planning is a key area of current focus for the Council. 81. There is an ongoing project, led by Business and Digital to support all services to document their IT systems, assess their business value/criticality, identify system owners and develop an ICT Business Continuity Plan, in line with Council requirements, that describe how and when priority activities will be recovered. 82. The Council has an overall corporate Business Continuity Plan which brings together the content in the individual service business continuity plans. The Corporate Business Continuity Plan is still in its infancy and has not yet been tested. The Council has a planned date for general testing of the Business Continuity arrangements, which will focus on a corporate risk and raise Business Continuity awareness Council wide. A clear timeline has also been set for both corporate and service level testing. 83. A Business Continuity Champion Group has been created with membership of two Business Continuity Plan champions from each service. Group members are responsible for co-ordinating the review, of Business Continuity Plans in their service and subsequently update. Group members also make requests that testing is carried out within their service. 84. It is important that business continuity planning and disaster recovery arrangements consider internal and external dependencies including suppliers. There are currently variations in the extent business continuity arrangements consider this. The Council acknowledges this is an area for further development and it is working with its services to ensure consistency. Page 68 of 412
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2. Financial management | 23 85. We also noted that the Council does not receive formal assurances regarding the IT control environment for systems which are externally hosted. We understand that work is already underway to address this through the Performance Optimisation sub-group of the Digital North Lanarkshire Programme of Work. Recommendation 4 The Council should ensure there is appropriate oversight of its continuity and security of IT operations, and ensure the necessary assurances are obtained for externally hosted systems. Standards of conduct and arrangements for the prevention and detection of fraud and error were appropriate 86. The Council is responsible for establishing arrangements for the prevention and detection of fraud, error and irregularities, bribery, and corruption. Furthermore, it is responsible for ensuring that its affairs are managed in accordance with proper standards of conduct by putting effective arrangements in place. 87. The Council has a range of established procedures for preventing and detecting fraud and irregularity including a whistleblowing policy, counter fraud strategy and codes of conduct for members and officers. We assessed these to ensure that they were appropriate, readily available to staff and are regularly reviewed to ensure they remain relevant and current. 88. We have concluded that the Council has appropriate arrangements in place for the prevention and detection of fraud and corruption. National Fraud Initiative 89. The National Fraud Initiative (NFI) is a counter-fraud exercise across the UK public sector which aims to prevent and detect fraud. The Council participates in this biennial exercise. The 2022/23 exercise concluded during the 2023/24 financial year and the final report was published in August 2024 The National Fraud Initiative in Scotland 2024 (audit.scot) 90. The value of outcomes from the NFI, recorded since the last report, total £21.5 million (up from the £14.9 million in 2022). The cumulative value of outcomes from the NFI in Scotland since participation started in 2006/07 now stands at around £180 million. 91. The Council continues to participate in the National Fraud Initiative (NFI). Internal Audit provided an update on progress of cases to the Audit and Scrutiny Panel in May 2024. Internal Audit reported that 86 per cent of matches had been reviewed, resulting in 640 errors with £90,210 savings identified. 92. The Council’s arrangements for investigating and reporting data matches identified by the NFI are satisfactory. Page 69 of 412
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3. Financial sustainability | 24 3. Financial sustainability Financial Sustainability means being able to meet the needs of the present without compromising the ability of future generations to meet their own needs. Conclusion The Council has effective and appropriate arrangements in place to plan the use of its resources and continue to deliver services into the medium term. Like many other local authorities, the Council faces significant financial challenges. The Council’s medium term financial plan projects a cumulative budget gap of £100.1 million over the five years to 2029/30. A medium term financial plan supports the Council in addressing significant financial challenges. The Council projects a cumulative budget gap of £100.1 million over the five years to 2029/30. 93. Exhibit 7 sets out the wider scope risks relating to Financial Sustainability identified in the 2023/24 Annual Audit Plan. It summarises the audit procedures performed during the year to obtain assurances over these risks and the conclusions from the work completed. Audit work has addressed the wider scope risks identified in the Annual Audit Plan Exhibit 7 Risks identified from my wider responsibility under the Code of Audit Practice Audit risk Assurance procedure Results and conclusions 1. Financial sustainability North Lanarkshire Council continues to operate in an increasingly complex and challenging environment where it aims to provide the best possible services within the resources available. Although a surplus position of £13.2 million is projected for • Review and evaluate the Council’s annual budget setting arrangements. • Review and evaluate of the Council’s budget monitoring arrangements. • Review and evaluate of the Council’s medium to long term financial planning. Results and conclusion: The Council’s updated medium term financial plan identified a gap of £62.0 million for the three years to 2027/28. The Council recognises the financial challenges facing the organisation. Its medium term financial plan supports the Page 70 of 412
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3. Financial sustainability | 25 Audit risk Assurance procedure Results and conclusions 2023/24, the Council has identified a gap of £29 million for the three years to 2026/27. Ongoing pressures in the capital programme also present a challenge to the Council through inflation and increased material costs. There is a risk that reprofiling of projects could impact on medium to longer terms service delivery plans. There is a risk that the Council does not have robust plans to identify and deliver the required savings to address the projected shortfall. • Ongoing review of the Council’s financial position and delivery of planned savings. Council in addressing these significant financial challenges. 2. Financial governance and decision making to achieve financial sustainability Officers have identified the level of savings which will be required in the three years to 2026/27 to address the projected funding gap. Savings plans will be developed to support delivery of these. In our Annual Audit Report for 2022/23, we noted that Council quickly reversed a significant decision undertaken by the Policy and Strategy Committee to close a number of leisure and community facilities to achieve a financial sustainable operating model. The original decision to close the facilities highlighted the significant challenges facing the Council and the reversal requires alternative areas of • Review and evaluate the Council’s annual budget setting arrangements and medium to long term financial planning. • Review and evaluate the Council’s processes to identify and monitor savings. • Ongoing review of papers and minutes. • Ongoing attendance at relevant Committees. Results and conclusion: The Council has a strong track record of delivering savings. The Council is currently projecting that £20.3 million of £21.7 million of approved savings are expected to be delivered within 2024/25. Page 71 of 412
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3. Financial sustainability | 26 Audit risk Assurance procedure Results and conclusions savings or disinvestment to be identified. There is a risk that the Council will not take the difficult decisions necessary to achieve financial sustainability. Where decisions are not taken or are later reversed, there is a risk that planned savings will not be achieved and this could impact on the financial resilience of the Council. 3. Impact on performance and service delivery resulting from achievement of financial sustainability A significant level of savings will be required over the next three financial years for North Lanarkshire Council to address the funding gaps identified. In our Best Value thematic report for 2023, we noted some positive trends in performance with challenges remaining in areas such as child poverty, unemployment and educational attainment. There is a risk that decisions undertaken to achieve savings will impact on service delivery and the Council’s ability to achieve the aims and objectives of the Plan for North Lanarkshire and the Programme of Work which supports this. • Review and evaluate performance monitoring arrangements and monitoring. • Review and evaluate the Council’s processes to identify and monitor savings. • Ongoing review of papers, minutes and media. • Ongoing attendance at relevant Committees. Results and conclusion: Performance monitoring reports in 2023/24 showed positive trends in a number of key economic and social indicators, while also noting that challenges remained in improving conditions and outcomes in other areas. The approved savings of £21.7 million by the Council in 2024/25 may increase short- term pressure on services which could impact on future delivery and performance. The Council should continue to monitor the impact of planned financial savings on the wider delivery and performance of its services. A medium term financial plan supports the Council in addressing significant financial challenges 94. The General Fund Revenue Budget for 2024/25 of £1,016.8 million was approved by the Council in February 2024. This included spend which is offset by ring fenced grants of £15.3 million, resulting in a net expenditure position for Page 72 of 412
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3. Financial sustainability | 27 monitoring purposes of £1,001.5 million. Further funding resulted in an overall budget of £1,010.7million for 2024/25. 95. A savings target of £21.7 million was approved as part of the budget setting process for 2024/25. Each Service area reports on the achievement of their savings within the relevant service monitoring report. Latest reports to the Finance and Resources Committee project that £20.2 million of these approved savings are expected to be delivered within 2024/25. This leaves an in-year gap of £1.4 million which is planned to be met through replacement savings. 96. In addition to cost efficiencies across different service areas, the achievement of these planned savings is being supported by the limited use of non-recurring savings associated with reduced employer pension contributions and the use of earmarked reserves in 2024/25. 97. An update to the medium term financial plan for the period 2025/26 to 2029/30 was approved by Committee in June 2024. The Council has also agreed a Revenue Budget Framework to manage the 2025/26 budget position. 98. The medium term financial plan is updated annually and forms the basis of the Council’s savings plans. The plan includes a range of risk-based outcomes which are presented over three scenarios: optimistic, envisaged and pessimistic. 99. The Council’s projections over the five years to 2029/30 forecast an envisaged cumulative budget gap of £100.1 million, as detailed in Exhibit 8. The envisaged cumulative budget gap over the next three years is £62.0 million. Exhibit 8 Envisaged budget gap 2025/26 to 2029/30 2025/26 2026/27 2027/28 2028/29 2029/30 Total Budget gap £’million £21.6 £21.3 £19.1 £19.4 £18.7 £100.1 Source: North Lanarkshire Council 5 Year Medium Term Financial Plan 2025/26 to 2029/30 & Revenue Budget Strategy 100. Through the Revenue Budget Strategy, the Council continues to review its suite of savings alongside ways to maximise income generation and minimising costs with the aim to generate further financial savings. 101. The Council recognises that it has the fourth lowest level of Council Tax across all Scottish local authorities. This has led to the Council undertaking an analysis of options in relation to a future Council Tax Strategy for North Lanarkshire. The results of this analysis have yet to be reported. Page 73 of 412
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3. Financial sustainability | 28 The Council is transitioning to a new leadership and operating model 102. The Council’s future operating model aims to have a great focus on communities through integrated service delivery and community led approaches. All services will undergo significant transformational change in order to achieve this. 103. Services across the Council are individually reviewing their future operating models. As part of this review, services are considering how to redesign delivery of their services in a way that best meets the needs of communities in the future. 104. As part of Best Value thematic work on workforce innovation, we reported how over 2024, Chief Officers are presenting workforce transition plans to the One Service Board. These set out how services will support the Council’s future operating model over the next three to five years, accounting for current and future workforce challenges, and emerging service priorities. The plans include an assessment of how services will utilise community hubs in the future, as a shift from traditional council assets. Page 74 of 412
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4. Best Value | 29 4. Best Value Councils have a statutory duty to make arrangements to secure continuous improvement in the performance of their functions. Conclusions The Council’s workforce planning approach is integrated with The Plan for North Lanarkshire, with a focus on developing the workforce of the wider North Lanarkshire area. The Council is proactive in developing its workforce as well as that of the wider North Lanarkshire area. It has a range of initiatives to address recruitment challenges across key sectors such as social care and construction, including grow-your-own approaches. Our follow up work of Best Value improvement recommendations from 2022/23 concluded that the Council has now addressed these recommendations. Best Value work in 2023/24 105. For 2023/24, the scope of Best Value work included conclusions on: • Workforce Innovation (2023/24 thematic work) • Council service performance improvement • Effectiveness of council performance reporting • Progress made against Best Value improvement actions made in previous years 106. As set out in the Code of Audit Practice 2021, Best Value audit is integrated with other wider-scope annual audit work. Therefore, in addition to the work set out in the remainder of this section, Best Value work has informed the content and conclusions set out in parts 3 to 6 of this Annual Audit Report. Workforce Innovation 107. Annual thematic Best Value work is set by the Accounts Commission. For the 2023/24 financial year, auditors were asked to focus on workforce innovation within the Council. The results of this work were reported to elected members at the Audit and Scrutiny Panel in August 2024. This report will be published on the Audit Scotland website soon. Page 75 of 412
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4. Best Value | 30 108. The key findings in this report are: • The Council’s workforce planning approach is integrated with The Plan for North Lanarkshire, with a focus on developing the workforce of the wider North Lanarkshire area. In December 2023 the Council published its ‘One Workforce’ report, a further iteration of the Workforce for the Future Strategy. It aligns with the Programme of Work 2023-28 and is supported by robust service workforce plans. The Council engages with staff and trade unions in developing its plans. Senior Officers carried out an extensive programme of staff roadshows in Summer 2024 to inform staff of the council’s strategic vision. There is opportunity for the Council to reflect on how it incorporates the views of staff and trade unions to support transparent decision making. • A refreshed Digital and IT Strategy was developed for 2024-2027, which supports the digital priority within the Programme of Work. The Council has made advancements in its digital agenda since the Covid- 19 pandemic, such as through the rollout of Microsoft365, and through innovative developments in education. The Council is yet to realise wider benefits. A core aim of the strategy is for North Lanarkshire to develop a skilled digital workforce. Work is underway to support this ambition. • The Council updated its smarter working and hybrid working policies in April 2024. The updated policy prescribe staff to work from an office for a greater proportion of time, compared with the previous requirements. As community hubs are rolled out, staff will increasingly work from hubs as an alternative to working from home where this supports service delivery. The Council monitors its hybrid working approach through ongoing feedback from managers. • The Council is proactive in developing its workforce as well as that of the wider North Lanarkshire area. It has a range of initiatives to address recruitment challenges across key sectors such as social care and construction, including grow-your-own approaches. The Council’s Brighter Futures programme supports development of the wider North Lanarkshire workforce, through employability and skills initiatives. Work is underway in key sectors such as digital and construction to address skills gaps across the wider labour market. There are strong linkages with education providers to support the council’s workforce ambitions. There are programmes in place to support succession planning. • The Council works across a range of partnerships to deliver services for communities. There is a partnership approach to workforce planning through the Health and Social Care Partnership, and the council works with other bodies through platforms such as the Glasgow City Region. Like most councils, the Council does not have any shared services with workforce implications at scale. The development of the community hubs will present further opportunities for collaborative working. The Council does not report on temporary and agency staffing numbers. There is room to include this in its published data. Page 76 of 412
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4. Best Value | 31 • The Council regularly monitors and reports against its workforce planning activity, to relevant committees and through updates against the Programme of Work. The Council reports against 28 health check indicators to monitor progress against its place-based vision. There is a strong emphasis on ongoing evaluation. This could be strengthened further through monitoring activity to distinguish between workforce planning for the Council, and that of the wider area. 109. The audit recommendations made in this report, with the management responses, are included in Appendix 1 of this report. Follow up of Best Value improvement recommendations from previous years 110. North Lanarkshire Council received a full Best Value Assurance report in May 2019. As part of our annual work programme, we followed up on agreed actions from that report. 111. At its meeting in June 2019, the Council agreed the eight recommendations within the Best Value Assurance Report. In 2022/23 we reported that for the last two recommendations, one was now complete and the other superseded and therefore we considered this closed. 112. Last year, the annual thematic Best Value work set by the Accounts Commission focussed on the councils’ leadership of the development of new local strategic priorities. We made three audit recommendations and good progress has been made by the Council. See Appendix 1 which reports all three recommendations have been implemented. Page 77 of 412
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5. Vision, leadership and governance | 32 5. Vision, leadership and governance Public sector bodies must have a clear vision and strategy and set priorities for improvement within this vision and strategy. They work together with partners and communities to improve outcomes and foster a culture of innovation. Conclusion The Council has a clear ambitious vision as detailed in The Plan for North Lanarkshire. Elected members and officers demonstrate a shared commitment to delivering the agreed strategic direction of the Council. The Council has a clear ambitious vision 113. The Council uses a placed based approach, working with partners to deliver its strategic vision ‘The Plan for North Lanarkshire’. This sets out a shared ambition to make ‘North Lanarkshire the place to Live, Learn, Work, Invest, and Visit.’ It is supported by a Programme of Work which was refreshed in March 2023, covering the period until 2028, and contains seven strategic priorities: • Transforming Places – an enhanced programme to accelerate transformation of town centres and communities. • Invest in North Lanarkshire – accelerated outcome delivery and investment via a more streamlined advisory service and aligned operating model and infrastructure plan. • Sustainable Futures – focus commitments to Net Zero Carbon and the associated energy solutions and investments required to make it a reality. • Resilient People – deliver whole family support locally, when families need it, in a way that addresses the impacts of poverty and reduces inequality. • Brighter Futures – support and improve educational attainment, employment opportunities, entrepreneurship, and volunteering. Page 78 of 412
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5. Vision, leadership and governance | 33 • Digital North Lanarkshire – develop a skilled digital workforce, promote an innovative, sustainable culture and be the digital leader for a transformed North Lanarkshire. • One Service – ensure services are delivered, regardless of owner, in a streamlined, efficient, and supportive model, with the overall vision of inclusive growth and prosperity for all. 114. A single integrated one council Delivery Plan which supports the refreshed Programme of Work reported to the Policy and Strategy Committee in March 2024. 115. During summer 2024, a programme of staff roadshows has taken place to inform staff of the Council’s strategic vision. The roadshows have received considerable investment, with 72 events held across 21 venues in North Lanarkshire. Over 2,200 staff attended the roadshows. The sessions were used to engage with staff on ambitions from The Plan for North Lanarkshire. Elected members and officers demonstrate a shared commitment to delivering the agreed strategic direction of the Council 116. Last year we reported that the Council had established a Financial Planning Advisory Group in 2023/24 which had cross party membership. The aim was to encourage cross party working to strengthen the budget setting process however this proved challenging. 117. Whilst the Financial Planning Advisory Group was disbanded, there was detailed work undertaken by Finance to support budget briefing sessions across the political parties. This led to four budgets being presented and a budget agreed. 118. Public finances are under significant pressure and as funding decreases and demand for services increases, councils face tough spending decisions. Elected members and senior officers demonstrate a shared commitment to delivering the agreed strategic direction of the Council. However, increasingly difficult choices will have to be made in identifying priorities, making decisions and setting budgets, which can increase tensions among members and between members and officers, affecting their ability to work together. Governance arrangements remain appropriate 119. Members and management of the Council are responsible for ensuring effective governance arrangements are in place, to ensure that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded. Effective governance arrangements also enable the Council to monitor how effectively it is using its resources. 120. The Council’s Strategic Governance Framework approved initially in 2020 and reviewed and updated annually thereafter, acts as the Council’s local code of governance. It is aligned to the national Delivering Good Governance in Local Page 79 of 412
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5. Vision, leadership and governance | 34 Government: Framework and is used to demonstrate the Council’s commitment to the principles of good governance. 121. The Council’s governance arrangements have been set out in the Annual Governance Statement in the annual accounts. We have reviewed these arrangements and concluded that they are appropriate. This is informed by our regular attendance at the Audit and Scrutiny Panel and review of Council and other committee papers as appropriate. 122. The Annual Governance Statement reports that “Apart from the whistleblowing allegations received by Audit Scotland regarding the existing Mears LLP housing and property maintenance contract, details of which were reported as part of the routine progress report at the May 2024 Panel, I am pleased to be able to report that there were no other weaknesses, material frauds or irregularities identified during 2023/24 that I require to bring to your attention.” 123. We received correspondence regarding the Council’s housing and property maintenance contract with Mears LLP. Internal Audit conducted a review into the allegations and key findings and conclusions arising from this work were reported in March 2024. 124. Concerns were raised by a whistleblower regarding Mears amending completion dates for work undertaken to ensure key performance targets set by the Council were met which over-stated performance. Other concerns raised included possible monetary loss to the Council and the over-stating of performance contributing to other potential bidders not engaging with the Enterprise Project tender process. 125. Internal Audit concluded that there was evidence of Mears staff changing completion dates for housing and corporate property repair jobs. Internal Audit also reported that it was satisfied that this had not resulted in any monetary loss to the Council. However Internal Audit’s report also found that there was significant scope for improvements in how the relevant Service were monitoring and overseeing performance under the existing contract. 126. The Council approved the new Enterprise contract in May 2024. This will see the joint venture cease. Further details on the timeline of the contract are included at paragraph 149. Page 80 of 412
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6. Use of resources to improve outcomes | 35 6. Use of resources to improve outcomes Public sector bodies need to make best use of their resources to meet stated outcomes and improvement objectives, through effective planning and working with strategic partners and communities. Conclusions The Council has reported a mixed picture of performance with a trend of improvement in several areas whilst challenges remain. Overall, the Council’s arrangements for the preparation and publication of Statutory performance information is adequate but improvements could be made in public performance reporting. The Council’s significant trading operation did not comply with the statutory requirement to break even for the second year running. The Council has a strategic performance framework in place 127. The Best Value: Revised Statutory Guidance 2020 also sets out that performance management arrangements should be in place to promote the effective use of the local authority’s resource, which includes effective performance reporting. 128. The Council measures the impact of how council activities improve services and outcomes for people and communities of North Lanarkshire through its Strategic Performance Framework. 129. The reporting of the Local Government Benchmarking Framework measures is integrated within the Strategic Performance Framework. This helps to ensure alignment of performance measures with The Plan for North Lanarkshire and Programme of Work, and also ensures that scrutiny of performance does not focus on a single performance indicator considered in isolation without a more complete picture of wider council performance throughout the year. 130. Since April 2024, the Council’s website hosts a new dashboard for LGBF measures which was launched by the Improvement Service in 2023. This provides an easy way to view a live picture of the most up-to-date performance Page 81 of 412
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6. Use of resources to improve outcomes | 36 for a benchmarking measure at a point in time. It also enables North Lanarkshire’s performance to be compared with other councils and the national average. This LGBF dashboard is being signposted in performance reports to service committees since June 2024. 131. The Council revised its performance reporting arrangements last year with the introduction of the Performance Reporting Schedule to support the Strategic Performance Framework. This includes Chief Officer reviews at service committees, corporate reporting, and service specific reporting. 132. In 2023/24, the Performance Reporting Schedule allowed the Audit and Scrutiny Panel to exercise its scrutiny role though making available information on Chief Officers six monthly performance reviews at service committees, service specific reporting to meet business and/or statutory obligations, and corporate reporting. 133. We note elected members undertook training earlier in the year aimed at raising awareness and roles and responsibilities in scrutinising performance. This was identified through the Audit and Scrutiny Panel’s self-evaluation in November 2023. The Council has reported a mixed picture of performance with a trend of improvement in several areas whilst challenges remain 134. The Best Value: Revised Statutory Guidance 2020 sets out that councils should be able to demonstrate a trend of improvement over time in delivering its strategic priorities. 135. The management commentary in the annual accounts reports a mixed picture of performance, with several areas demonstrating positive trends in performance whilst clear challenges remain. 136. There remains growth in the local economy and gross weekly pay for local residents continues to be higher than the national average. Significant increases in breastfeeding rates is another positive trend. 137. Performance remains challenging in a number of areas: • the proportion of children in poverty remains higher than the national average and there is disparity across North Lanarkshire’s communities. • there is improvement in educational attainment for all pupils gaining 5+ awards at level 6, as well as pupils living in the 20 per cent most deprived areas but there are no signs of this gap closing. • the position for latest business survival rates in North Lanarkshire varied with a decrease to 54 per cent from 58 per cent in the previous year. Overall, the Council’s arrangements for the preparation and publication of Statutory performance information is adequate Page 82 of 412
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6. Use of resources to improve outcomes | 37 but improvements could be made in public performance reporting 138. The Accounts Commission’s 2021 Statutory Performance Direction defines the performance information that councils must publish. The commission does not prescribe how councils should report this information but expects them to provide the public with fair, balanced, and engaging performance information. 139. The Accounts Commission Statutory Performance Information Direction (December 2021) requires a council to report its: • performance in improving local public services (including those provided with its partners and communities), and progress against agreed desired outcomes (SPI 1). • own assessment and audit, scrutiny and inspection body assessments of how it is performing against its duty of Best Value, and how it has responded to these assessments (SPI 2). 140. We have evaluated the Council’s arrangements for fulfilling the above requirements and concluded that overall, the Council complies with the Direction. However, the Council’s public performance reporting could be improved. The Council does not publish a summary of its performance which is easy for its citizens and communities to determine how well its services are performing and what action is needed to improve service performance. Recommendation 5 The Council should improve its public performance reporting to provide its citizens and communities with a clear summary of performance. The Council’s significant trading operation did not comply with the statutory requirement to break even for the second year running 141. Under the Local Government in Scotland Act (2003) the trading accounts of significant trading operations have a prescribed objective to break even over a rolling three year period. 142. The creation of a single combined Trading Account was approved in January 2014 to monitor and report the commercial trading activity of the council (currently includes Building Cleaning, Waste Management and Town Centre Activities). 143. The Council reported a deficit of £0.4 million over the three year period. This includes a technical accounting adjustment for IAS 19 Employee Benefits. Excluding these costs, the trading operation would have generated a three year surplus of £0.3 million. Page 83 of 412
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6. Use of resources to improve outcomes | 38 144. The adjustments for IAS 19 are made to comply with accounting standards. The pension adjustment values all future pension liabilities for employees at the balance sheet date as if these pension payments were to be made now. This does not reflect the projected pattern of when pensions will be paid. As a trading organisation, the STO results require to be reported including this adjustment. 145. The Council has updated its presentation of the Trading Account note in the 2023/24 annual accounts to reflect the cash and non-cash elements of Trading Account operations. The Council’s view is that the STO continues to represent best value. There has been delays in the Council submitting its Whole of Government Accounts return to Treasury 146. Whole of Government Accounts (WGA) is the consolidated financial statements for all components of government in the UK. Most public bodies are required to submit returns for the preparation of WGA. The returns are consolidated into WGA by HM Treasury who are responsible for the process. WGA is audited at a UK level by the National Audit Office (NAO). 147. Appointed auditors in Scotland are required by the Code of Audit Practice, as part of their audit appointment, to examine and report on WGA returns prepared by Scottish audited bodies. Auditors are required to report the results of their examination in an Assurance Statement. The examination and reporting process performed by auditors is therefore described as auditor assurance. 148. Treasury prescribe a threshold for auditor assurance. No examination is required for bodies, who are below the threshold. However, auditors are still required to partially complete the Assurance Statement and submit it to the NAO. We have been unable to complete this work due to management failing to submit its WGA return since 2021/22. North Lanarkshire – Enterprise Strategic Vehicle – Housing and Corporate Maintenance Improvement Contract 149. In 2018 the Council initiated its planning for an Enterprise Strategic Commercial Partnership (ESCP) concept with a plan to enter into a partnership to provide strategic advice and, delivery of asset maintenance services management and delivery of projects ancillary to the delivery of Core Services for 20 years (plus up to five years extension). Following market engagement, a procurement was launched April 2021, which subsequently attracted insufficient market interest to proceed and was discontinued. 150. In December 2021 the Council had approved a new delivery model. This moved away from a joint venture model with a proposed hybrid approach with a small number of strategic ‘best in class’ service providers on shorter contractual terms. The revised delivery model (the ‘Enterprise Project’) was different to that envisaged under the ESCP, and included undertaking three major public procurements, one of which to establish a contract for Housing and Corporate Maintenance and Improvement Services (the Housing and Corporate Contract). Page 84 of 412
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6. Use of resources to improve outcomes | 39 151. In the procurement of the Housing and Corporate Contract, while there was positive market engagement, there were limited responses to the tender with only a single selection stage response received. As the bidder satisfied the selection criteria, in December 2022 the Policy and Strategy Committee approved that the procurement should progress with one bidder (Mears Limited), with appropriate risk mitigation in place, to formal tender submission stage. 152. The Council took steps to ensure itself that the proposals continued to represent value for money in a single bidder scenario. This included the use of pricing benchmarks and a Should Cost Model (SCM) which is a means of providing a forecast of what a service, project or programme ‘should’ cost over its whole life to provide comparative information. 153. The Council commissioned an independent re-validation exercise of the service delivery model. This was to ensure that given the economic and financial changes since the initial option appraisal undertaken at the outset of the Housing and Corporate Contract Procurement, that this approach remained appropriate. In August 2023 the Council concluded that following the options revalidation exercise, along with consideration of risks, that the current procurement exercise remained appropriate. 154. The Council’s internal audit service provided independent assurance throughout the procurement process around the adequacy and effectiveness of the Council’s governance arrangements in respect of the project. In addition, in March 2024 Internal Audit provided assurance that the project continued to be managed in accordance with corporate expectations and in a manner consistent with good practice, and that management’s assessment of best value as a result of the single bidder scenario provided a reasonable basis to inform and support decision making. 155. The previous service provision arrangement with a joint venture with Mears LLP was due to expire in January 2024 and the Council had planned for the procurement process to have been completed by this date. However, the decision to award the contract was deferred until May 2024. 156. While the decision around the deferral was not formally minuted, we understand the decision was taken to ensure members were fully informed of the outcomes of Internal Audit investigation work into whistleblowing allegations received regarding the existing housing and property repairs contract arrangements. The Council extended the contract to June 2024 to enable the work to be completed. Following discussions at the Council meeting in March 2024, officers provided members with a summary of the procurement journey and internal assurances to members alongside the contract decision paper in May 2024. 157. The Council approved the award of the Housing and Corporate Contract to Mears Limited in May 2024 with services commencing from July 2024. The accounting implications of the new contract arrangement should be reflected in the 2024/25 Annual Accounts, including the implications of the end of the Joint Venture arrangements. We will consider the accounting treatment and implications of the contract as part of our 2024/25 annual audit. Page 85 of 412
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6. Use of resources to improve outcomes | 40 158. The Council has reflected throughout the process to learn opportunities for improvement, including those from the initial procurement stage to completion. As part of the reflection, the Council should consider whether the procurement summary document presented to members summarising the procurement journey and decisions reached to date could be a regular item for complex procurement exercises. We also identified minor opportunities around documentation throughout the process, particularly where these relate to papers that commercial sensitivities mean they are excluded from press/public or decisions taken to defer papers so that there is a historic record of these. Page 86 of 412
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Appendix 1. Action plan 2023/24 | 41 Appendix 1. Action plan 2023/24 2023/24 recommendations Issue/risk Recommendation Agreed management action/timing 1. Replacement of assets As part of our audit work on additions in year of property, plant and equipment, we identified two items from a sample of 11 where capital expenditure was incurred for replacements or repair of existing assets. Risk – There is a risk that assets could be overstated by not removing the replaced component when capital expenditure is incurred on a specific asset. Management should establish a process to ensure assets replaced are appropriately removed from the asset register and accounted for as a disposal appropriately. See Exhibit 2 Partially accepted In the absence of componentisation, it is unclear as to how we can put in place a process to remove the value of elements of assets which have been replaced. However we will commit to a review of expectations around componentisation with a view to future discussions with External Audit. Responsible officer: Chief Officer (Finance) Agreed date: June 2025 2. Statutory override The statutory override relating to valuation of infrastructure assets is due to end for the 2024/25 financial statements. Risk – A permanent solution has not yet been agreed and CIPFA believe that this will continue be an area of enhanced scrutiny for local government auditors. The Council should proactively work with CIPFA and the wider local government sector to arrive at appropriate solution for the implementation of accounting for infrastructure assets. Paragraph 34 Accepted The Council will work with CIPFA and the wider Local Government sector as appropriate to inform a decision on the accounting treatment for infrastructure assets. Responsible officer: Chief Officer (Finance) Agreed date: Ongoing 3. Reinforced autoclave aerated concrete (RAAC) For those properties where RAAC has been identified, the Council should determine a more accurate measure of Accepted Further engagement with the Council’s valuers is required Page 87 of 412
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Appendix 1. Action plan 2023/24 | 42 Issue/risk Recommendation Agreed management action/timing For those properties where RAAC was confirmed, the Council’s Valuer included them as nil value in lieu of structural surveys and remedial costs. Accounting Standards require a formal estimate of the recoverable amount of the asset. Risk – There is a risk that properties containing RAAC are not held at the correct value in the accounts. the level of impairment in line with the requirement of accounting standards. Paragraph 41 to determine an appropriate methodology, subject to full investigation being carried out to determine the extent of costs/remedial works required. Responsible officer: Chief Officer (Finance) and Chief Officer (Assets and Procurement) Agreed date: June 2025 4. Continuity and security of IT operations Business and Digital support services to develop appropriate ICT Disaster Recovery arrangements. Disaster recovery testing varies across systems and services. The Corporate Business Continuity Plan has not yet been tested. The Council does not receive formal assurances regarding the IT control environment for systems which are externally hosted. Risk – There is a risk that the Council does not have the required assurance over its IT operations. The Council should ensure there is appropriate oversight of its continuity and security of IT operations and ensure the necessary assurances are obtained for externally hosted systems Paragraph 77 Accepted Services will continue to own and manage their Business Continuity arrangements – with support and guidance from the Resilience Planning Team. Business Continuity testing framework has been implemented. It is recommended that Services test their plans annually and a corporate test will be arranged every 3 years. Responsible officer: Depute Chief Executive Agreed date: November 2026 Oversight of IT security and IT Disaster Recovery will continue to be managed through established corporate working groups and Service Management Teams. Development of assurances on externally hosted systems will be monitored through the established arrangements of the Digital North Lanarkshire Programme of Work. Responsible officer: Chief Officer (Business and Digital) Page 88 of 412
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Appendix 1. Action plan 2023/24 | 43 Issue/risk Recommendation Agreed management action/timing Agreed date: April 2025 5. Public performance reporting The Council does not publish a summary of its performance which is easy for its citizens and communities to determine how well its services are performing and what action is needed to improve service performance. Risk – North Lanarkshire’s citizens and communities cannot determine how the council is performing. The Council should improve its public performance reporting to provide its citizens and communities with a clear summary of performance. Paragraph 141 Accepted Following various programme of work reports to each committee cycle throughout the year, regular news articles and updates on delivery and performance are reported through the council’s website. With the Programme of Work to 2028 and its associated governance arrangements well established, work will be undertaken during 2025/26 to formally review and re- develop public performance reporting arrangements. Responsible officer: Chief Officer (Business and Digital)/ Chief Officer (Strategic Communication and Engagement) Agreed date: March 2026 2023/24 recommendations from the BV thematic report Issue/risk Recommendation Agreed management action/timing 4. Acting on staff engagement feedback The council engages with staff and trade unions via staff surveys, roadshows, and trade union forums. However, it is not always clear how the council utilises feedback in to council decisions and policies. As the council develops its staff engagement approach, it should ensure that as well as providing information to staff on council decisions, it also incorporates the views of staff and trade unions to support transparent decision making, and evidence how it is acting on findings from the Summer 2024 Roadshow sessions. Accepted There are several strands of work underway which will allow the council to progress this recommendation, including a refreshed staff survey and a review of trade union consultation arrangements. These will be taken forward along with the feedback from our 2024 Roadshow sessions to deliver an improved engagement approach. Page 89 of 412
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Appendix 1. Action plan 2023/24 | 44 Issue/risk Recommendation Agreed management action/timing Responsible officer: Fiona Whittaker, Chief Officer (People Resources) Agreed date: December 2025 5. Hybrid working policy Flexible and hybrid working policies are more structured in North Lanarkshire, relative to other councils and organisations. This may make the council a less attractive place to work, in the context of ongoing recruitment challenges. The council should continue to monitor the impact of its hybrid working approach. It should continually assess the impact of increasing the number of office days, in terms of performance, staff wellbeing, and recruitment and retention. Accepted The council will continue to monitor the impact of its permanent Hybrid Working Scheme, through both manager and staff surveys, and in terms of performance, recruitment and retention in hybrid roles. Responsible officer: Fiona Whittaker, Chief Officer (People Resources) Agreed date: January 2026 6. Temporary workforce The council does not report data on temporary, including agency staff, although it is held by services. The council should include data reporting on its temporary workforce as part of published workforce data, and once available it should include data on agency workers. Accepted Work is underway to implement a more centralised approach to reporting on and managing temporary workforce resources, including agency workers. This work will be fully progressed to improve future reporting. Responsible officer: Fiona Whittaker, Chief Officer (People Resources) Agreed date: December 2025 Follow-up of prior year AAR recommendations Issue/risk Recommendation and Agreed Action Progress b/f 1. Land and buildings valuations The Council values its land and buildings, with the The Council should continue to consider its approach to the valuation of land and buildings going forward and Work in progress Financial year 2023/24 is the first of the agreed five year rolling programme. The Page 90 of 412
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Appendix 1. Action plan 2023/24 | 45 Issue/risk Recommendation and Agreed Action Progress exception of council dwellings, at 1 April and not the 31 March year end. Given recent significant inflationary pressures on build cost rates there is an increasing risk of a material movement between the date of revaluation and 31 March. Risk – There is a risk that the current value of land and buildings does not reflect carrying value at 31 March. continue to ensure this is appropriate to assess whether asset values have moved materially in year and as at 31 March. The Council should work with its valuers to ensure valuations are in accordance with Accounting Code requirements. Appropriate scrutiny of the valuation work completed should be undertaken to ensure these are consistent with the Council’s records. Agreed action – The Council will continue to review its revaluation policy in line with code requirements and in conjunction with the professional valuers. This will take cognisance of the recommended actions from the Audit Scotland round table discussion including that ‘where the valuation exercise is carried out in-year but earlier than 31 March for reasons of expediency, any material changes in value in the interim should be adjusted for’. The Council will give full consideration to the practicalities of undertaking valuations at 31 March to ensure this will not impact the annual statutory requirement to submit the unaudited accounts by 30 June. The Council will also continue to assess whether there is a material difference between the carrying value in the fixed asset register and current value, and ensure the accounts are code compliant. Original date – June 2024 Council has worked with its valuers to revise its approach to the valuation of land and buildings. The Council now values a 20 per cent representative sample of asset classes each year with a valuation date of 31 January 2024. While this is a significant movement from prior year, the Council should consider its approach to the valuation of land and buildings going forward to ensure it is appropriate to assess whether asset values have moved materially in year and as at 31 March year end. The Council will continue to consider its approach to the valuation of land and buildings taking into account the requirements of the Code of Practice on Local Authority Accounting, alongside the practicalities and impact on the timely preparation of the annual accounts that any potential changes might have. Responsible officer: Chief Officer (Finance) Revised date: Ongoing Page 91 of 412
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Appendix 1. Action plan 2023/24 | 46 Issue/risk Recommendation and Agreed Action Progress b/f 2. Capital processes We identified a number of issues relating to capital processes. These included assets missing from the revaluation exercise. The process to identify impairments should be more robust to ensure all assets are fully considered. In addition, the way in which assets are held on the fixed asset register should be reviewed to ensure compliance with Code requirements in respect of componentisation. Risk – There is a risk that assets are not held at the correct value in the accounts. The Council should review a number of its capital processes to ensure the value of assets is correctly held in the accounts, including: • The Council should review the revaluations provided by its valuers to ensure all assets have been included. • The Council should review its capital impairment process to ensure it is robust enough to identify potential indicators of impairment across all assets. • The Council should also consider how assets are held on its fixed asset register to ensure compliance with the componentisation requirements of the Code. Agreed action – The Council will: • review the revaluation practices to ensure all relevant assets are incorporated • review the process of identifying impairments to ensure all assets are considered • review and consider how assets are held on its fixed asset register to ensure full compliance with the componentisation aspects of the code. Original date – June 2024 Work in progress The recommendation on componentisation has not been actioned, see Recommendation 1 above for further details. b/f 3. Significant trading operation Under the Local Government in Scotland Act (2003) the trading accounts of significant The Council should review the trading operation to examine the cost effectiveness of the service provided to ensure that it Work in progress The Council’s significant trading operation has not achieved a breakeven Page 92 of 412
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Appendix 1. Action plan 2023/24 | 47 Issue/risk Recommendation and Agreed Action Progress trading operations have a prescribed objective to break even over a rolling three year period. The Council’s trading operation reported a deficit of £0.1 million over the three year period. continues to represent best value for the Council. Agreed action – As currently presented the Trading Account shows a rolling three year deficit. However, this performance incorporates non-cash adjustments for Employee Benefits. Following the same accounting treatment as Council, these costs would be reversed back out resulting in a cumulative three year surplus being reported, demonstrating continued value for money in the operation of the Council's Trading Account. The Council will seek to amend the presentation of the Trading Account note for 2023/24 annual accounts to reflect the cash and non-cash elements of the Trading Account operations. Original date – June 2024 triennial position, reporting a deficit of £0.4 million. The Council has revised the presentation in the annual accounts to show that, excluding technical pensions adjustments, the trading operation would have generated a three year surplus of £0.3 million. The Council’s view is that this demonstrates its continued value for money. Follow-up of prior year BV thematic recommendations Issue/risk Recommendation and Agreed Action Progress b/f 1. Involvement of members in strategic planning Reflecting the roles and responsibilities detailed within the Strategic Policy Framework, reviews of the Programme of Work are officer led. For the new Programme of work to 2028, members had the opportunity to review proposals to ensure The Council should look to improve its existing processes for engaging elected members on the overall strategic planning process. Agreed action – As part of its scheduled annual review, we will refresh the narrative presently contained within the Strategic Implemented The annual update to the Strategic Policy Framework and its supporting guidance was amended to reflect the critical role in terms of engagement with Elected Members in respect of the Council’s strategies, policies, and plans. Page 93 of 412
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Appendix 1. Action plan 2023/24 | 48 Issue/risk Recommendation and Agreed Action Progress alignment with previously approved strategies and also had final approval. However the process was heavily officer led. Risk – There is a risk that the strategic priorities do not reflect local need. Policy Framework in respect of elected members’ strategic planning role and will thereafter emphasise through the CMT and Community Co- ordinator role the importance of engaging elected members on the strategic elements of the integrated Programme of Work Delivery Plan. Elected member role in strategic planning to also be clearly documented in the developing Programme of Work Governance Framework. Original date – 30 September 2024 b/f 2. Engagement with communities The Council is proactive in engaging with a wide range of communities but it is currently unable to show how successful the range of engagement activity is to demonstrate it is listening to feedback. Risk – There is a risk that strategic priorities agreed do not reflect local needs. The Council should consider how it measures the level of engagement with communities and equalities groups. Agreed action – This will be aligned with actions arising from new communication strategy to be considered by council in March 2024. The strategy will also define what is meant by seldom-heard communities and groups. Original date – March 2024 Implemented The Communications and Engagement Strategy approved in June 2024 documents that for community partnership and engagement, the Council will report annually in June to the Communities Committee about the number of individuals and community organisations participating in the delivery of the local outcome improvement plans. The Strategy also includes details of how the Council will measure its engagement with equalities groups and those whose voices are at risk of being seldom-heard. b/f 3. Elected members training and development programme The Council refreshed its induction programme with consultation with elected members but it was so poorly The Council should work with members to understand the reasons for the poor attendance to ensure its training and development programme is fit for purpose. Agreed action – Implemented The results from the survey sent to elected members have now been incorporated into the Elected Members Development Programme. Page 94 of 412
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Appendix 1. Action plan 2023/24 | 49 Issue/risk Recommendation and Agreed Action Progress attended by members that it was cancelled as a result. Risk – There is a risk that the elected members do not have the skills and knowledge to undertake their role. The number of attendees at development sessions has been low, however there has been a slight increase in numbers attending recent events. The Talent & OD team will continue to communicate regularly with Political Group Business Managers to encourage discussions around training, low attendance, and engagement to be included on business meeting agendas. A survey will be sent to all Elected Members to help identify any restrictions and reasons for low attendance. Development of the Elected Members area on LearnNL will continue, with all development session recordings and presentation slides being uploaded for members to access at any time. A monthly communication is sent to all Elected Members with direct links to new recorded sessions. Original date – November 2023 Elected Members sessions have continued on Teams to ensure it attracts maximum attendance and are accessible to all members. The Council has reported good attendance for these sessions. Page 95 of 412
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Appendix 2A. Summary of corrected misstatements | 50 Appendix 2A. Summary of corrected misstatements We report all corrected misstatements in the annual report and accounts that are individually greater than our reporting threshold of £1.47 million. The table below summarises misstatements that were noted during our audit and were corrected in the financial statements. Narrative Account areas Comprehensive Income and Expenditure Statement Balance Sheet Accounting Misstatements Dr Cr Dr Cr £’000 £’000 £’000 £’000 1. Allocation of capital grant income between HRA and general fund HRA income 11,000 Non-service specific cost income 9,000 Taxation and non-specific grant income 20,000 2. HRA assets completed transfer from assets under construction and subsequent revaluation NCA – assets under construction 8,854 Expenditure 6,595 Revaluation Reserve 2,259 3. Cumbernauld town centre downward revaluation NCA – Other land & buildings 3,525 Expenditure 3,525 Page 96 of 412
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Appendix 2B. Summary of uncorrected misstatements | 51 Appendix 2B. Summary of uncorrected misstatements We report all uncorrected misstatements in the annual report and accounts that are individually greater than our reporting threshold of £1.47 million. The table below summarises uncorrected misstatements that were noted during our audit testing and were not corrected in the financial statements. Cumulatively these errors are below our performance materiality level as explained in Exhibit 1. We are satisfied that these errors do not have a material impact on the financial statements. Narrative Account areas Comprehensive Income and Expenditure Statement Balance Sheet Accounting Misstatements Dr Cr Dr Cr £’000 £’000 £’000 £’000 1. Assets disposed of but not written out of the fixed asset register NCA – other land & buildings 1,904 CIES 1,031 NCA – accumulated depreciation 873 Page 97 of 412
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Appendix 2B. Summary of uncorrected misstatements | 52 North Lanarkshire Council Draft 2023/24 Annual Audit Report Audit Scotland’s published material is available for download on the website in a number of formats. For information on our accessibility principles, please visit: www.audit-scotland.gov.uk/accessibility For the latest news follow us on social media or subscribe to our email alerts. Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit-scotland.gov.uk www.audit-scotland.gov.uk AS.4.0 Page 98 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref EK/KS/FC Date 31/10/24 Annual Accounts 2023/24 (Audited) From Elaine Kemp, Chief Officer (Finance) E-mail KempE@northlan.gov.uk Telephone 07939 280 601 1. Background 1.1 The Local Authority Accounts (Scotland) Regulations 2014 require the Council to prepare an annual Statement of Accounts in accordance with proper accounting practices. These regulations also required that, as committee of the authority whose remit includes audit or governance functions, the Audit and Scrutiny Panel meet to consider the audited annual accounts with the aim to approve these for signature and to publish these by 31st October immediately following the financial year to which they relate. 1.2 The Audit Commission appoint external auditors to local authorities in order to carry out the audit of financial statements in accordance with International Standards on Auditing. Executive Summary The purpose of this report is to present the Council’s final 2023/24 Annual Accounts and provide Members with the background on the need to consider matters raised by Audit Scotland in respect of their examination of the accounts. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Note the contents of this report (2) Approve the attached final accounts for signing; and (3) Consider the relevant matters raised by the external auditor at the Panel meeting of 31 October 2024 The Plan for North Lanarkshire Priority All priorities Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning Programme of Work Statutory / corporate / service requirement Item 5 Page 99 of 412
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2. Report 2.1 The review of the 2023/24 accounts by Audit Scotland is now complete with the final version of the accounts attached to this report. 2.2 Following consideration of the accounts at this meeting, a copy of the final accounts will be signed electronically by Council officers and the Audit Director and submitted to Audit Scotland. 2.3 A full Annual Report has been prepared by Audit Scotland and forms part of this meeting’s agenda. 3. Measures of success 3.1 N/A 4. Supporting documentation Appendix 1 Audited Annual Accounts 2023/24 Elaine Kemp Chief Officer (Finance) Page 100 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Page 101 of 412
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 102 of 412
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ANNUAL ACCOUNTS 2023-2024 Appendix 1 Page 103 of 412
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Annual Accounts 2023/24 Contents Management Commentary 1 Statement of Accounts Comprehensive Income and Expenditure Statement 18 Balance Sheet 19 Movements in Reserves Statement 20 Cash Flow Statement 22 Notes to the Accounts 1 Accounting Policies 23 2 Expenditure and Funding Analysis 34 3 Accounting Standards that have been Issued but not yet Adopted 36 4 Critical Judgements in Applying Accounting Policies 36 5 Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty 37 6 Events After the Balance Sheet Date 37 7 Restatement 38 8 Other Operating Expenditure 38 9 Financing and Investment Income and Expenditure 38 10 Taxation and Non-Specific Grant Income 38 11 Grant Income 39 12 Agency Services 40 13 Property, Plant and Equipment 41 14 Heritage Assets 44 15 Intangible Assets 45 16 Long-Term Debtors 45 17 Financial Instruments 46 18 Inventories 55 19 Short-Term Debtors 55 20 Cash and Cash Equivalents 55 21 Short-Term Creditors 56 22 Provisions 56 23 Contingent Assets and Liabilities 56 24 Leases 57 25 Public Private Partnerships and Similar Contracts 58 26 Pension Costs 60 27 Usable Reserves 65 28 Unusable Reserves 67 Page 105 of 412
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Annual Accounts 2023/24 Contents 29 Capital Commitments 70 30 Capital Expenditure and Capital Financing 71 31 Adjustments to Usable Reserves Permitted by Accounting Standards 72 32 Adjustments to the statutory repayment of debt for service concession arrangements 73 33 Adjustments between Accounting Basis and Funding Basis under Regulations 74 34 Transfers to/from Statutory Reserves 76 35 Reconciliation of Comprehensive Income and Expenditure Statement to Cash Flow Operating Activities 77 36 Reconciliation of Financing Activities to Balance Sheet 77 37 External Audit Costs 77 38 Statutory Trading Operations 78 39 Related Parties 78 Housing Revenue Account 81 Council Tax Income Statement 82 Non Domestic Rates Income Statement 83 Sundry Accounts Statement 84 Group Comprehensive Income and Expenditure Statement 85 Group Balance Sheet 86 Movements in Group Reserves Statement 87 Group Cash Flow Statement 89 Notes to the Group Accounts 1 Disclosure of Interest in Other Entities 90 2 Group Structure 90 3 Combining Entities 92 4 Changes to Group Structure 92 5 Principal Place of Business 92 6 Reconciliation Statements 92 7 Further Details on Consolidation 94 8 Interests in Other Entities 97 Remuneration Report 98 Statement of Responsibilities 108 Annual Governance Statement 109 Independent Auditors Report 132 Glossary of Terms 136 Page 106 of 412
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Annual Accounts 2023/24 Management Commentary - 1 - Introduction North Lanarkshire is Scotland’s fourth largest local authority area by population. It is ideally situated in the heart of Scotland with first-rate connectivity to the rest of Scotland, the UK, and the world. As the fifth most densely populated council area, North Lanarkshire is divided into 21 wards which are represented by 77 elected members. The Council is the main provider of services to a population of 340,930 residents and those who come to Live, Learn, Work, Invest and Visit. Political Composition and Council Structure The Council was overseen by 77 elected members at the balance sheet date. The political composition of the elected members for North Lanarkshire Council is shown below: The Local Government elections held in May 2022 and subsequent meeting of the Council led to a change in Council leadership from a minority Labour administration to a minority Scottish National Party (SNP) administration. However, following the leader’s resignation in July 2022, a new leadership team was elected, resulting in the return of a Labour administration. At the Council meeting of 11 August 2022 Councillor Logue was appointed as Leader of the Council. At a subsequent Council meeting on 15 August 2022, it was agreed that Councillor Duffy be appointed as Provost, and Councillor Burgess as Depute Provost. Councillor Roarty was appointed Depute Leader of the Council at the Council meeting of 22 June 2023. Further information on the political composition of the Council, Committee membership and Councillors is available on the Council’s website. The Council’s reporting structure during 2023/24 is illustrated in the diagram below and is reflected in the Financial Statements. Page 107 of 412
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Annual Accounts 2023/24 Management Commentary - 2 - The vision for North Lanarkshire to be a place of inclusive growth and prosperity for all that brings equal benefits and a fairer distribution of wealth to all North Lanarkshire’s people and communities was founded on the evidence presented in the report, A Shared Ambition for North Lanarkshire, approved at Committee in September 2018. This report also set out the operating framework required for the Council to enhance the alignment of, and synergies between, strategic and operational functions in order to successfully deliver on the vision which was thereafter formalised through approval of The Plan for North Lanarkshire in February 2019. At that time the Council’s operating framework was realigned to group service functions around relationships with communities and the key stages of a person’s life. The Council’s operating framework as established in September 2018 is illustrated in the diagram below. Since then, structural realignments have continued to enable The Plan for North Lanarkshire’s narrative to become consistently embedded in everyday service delivery activities as well as strategic and financial decision making, strategy and policy development, and corporate governance approaches across the Council. Approved at Committee in December 2020, the delivering for communities report further strengthened the focus on local communities and ensured the structure of the Council’s senior management team fully reflected the model established through the nine Community Boards. Since then, an annual governance review of the Council’s operating framework (reported to Committee in December 2022 and December 2023) has focussed on the incremental structural refinements required to ensure ongoing alignment of vision, plan, governance, and operations in order to safeguard the sustainability of the organisation’s capacity, ensure already challenged resources are maximised, and further strengthen the development and delivery of solutions through an integrated council and community approach. Creating single council operations, single Chief Officer portfolios, and single service accountability have underpinned approved structural refinements and changes to date have included: • The formalisation of Chief Officer titles (from Head of Service) and a realignment of Chief Officer reporting lines (under the Depute Chief Executive) to ensure a more balanced senior management team. This oversight by the Depute Chief Executive of the services within both education, children, and families and Page 108 of 412
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Annual Accounts 2023/24 Management Commentary - 3 - enterprise and communities provide important opportunities to capitalise on existing synergies and ensure effective use of resources and economies of scale. • Creating a single place based operation to move attention upstream of service delivery and focus on creating local place based conditions that support inclusive and green growth and enable people to thrive. • Strengthening a single service approach to housing to improve the multi-dimensional health, economic, and social benefits for tenants and residents. • Establishing a single front-line community operation (that comprises a resource base on similar working terms and conditions), allowing for greater integration and collaboration in terms of working practices and supporting appropriate consideration of synergies and economies of scale. Financial Performance Overview The Annual Accounts demonstrate the stewardship of the public funds with which the Council is entrusted. The financial statements represent the financial position of North Lanarkshire Council as at 31 March 2024. They have been compiled in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom which is based on International Financial Reporting Standards (IFRS), which is a set of accounting standards developed by the independent International Accounting Standards Board (IASB) in order to provide a global framework and general guidance to allow organisations to prepare and disclose financial statements. The Accounts also reflect the requirements of accounting and statutory guidance set by the Government. Comprehensive Income and Expenditure Statement (CIES) The CIES (page 18) sets out the day-to-day operational expenditure incurred by each Council service and the level of income received to support that service provision. It includes cash payments made in the provision of services and payments to employees, and non-cash expenditure including depreciation and accrued expenditure representing the cost of goods or services received by the authority by 31 March, for which payment has not yet been made. It also reflects all sources of income received, and accrued in the year representing income due as at 31 March but not yet received. The CIES shows the accounting position before statutory adjustments are applied. It analyses income and expenditure in line with the organisational structure against which performance has been monitored throughout the year. There is a Net Cost of Services of £1,060.101m and other corporate charges totalling £67.345m. These were funded by Taxation and Non-Specific Grant Income (including Council Tax, General Revenue Grant and Non Domestic Rates) of £967.501m. This resulted in an accounting deficit on the provision of services for the year of £159.945m. Other net costs not related to the provision of services totalling £86.069m is also reported, resulting in the Total Comprehensive Income and Expenditure for the year showing a deficit of £246.014m. This is an increase of £193.192m from the deficit position reported in 2022/23, primarily due to an increase in the actuarial valuation of the Council’s share of pension scheme assets. Movement in Reserves Statement (MiRS) The MiRS statement (page 20) shows the movement in year on both usable and unusable reserves held by the Council, as a result of the Council’s performance, accounting adjustments and statutory adjustments. Reserves represent the authority’s net worth and show its spending power. The key figure in the Accounts is the General Fund balance. The credit balance in the General Fund is the excess of income over expenditure in the revenue account, after adjusting for movements to and from reserves and other non-cash items such as depreciation. When account is taken of those items excluded from the Comprehensive Income and Expenditure Statement, the overall surplus on the General Fund Account for the year is £34.021m. The net General Fund surplus for the year has been added to the surplus of £249.872m brought forward from 2022/23 resulting in an overall surplus to be carried forward into 2024/25 of £283.893m. This balance has increased over recent years largely due to proactive management within the Council to maximise reserves to support future budget challenges and to help ensure the delivery of Council services is financially sustainable. Page 109 of 412
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Annual Accounts 2023/24 Management Commentary - 4 - The overall balance is represented by: £m Earmarked for Service Expenditure 226.331 Change Management Fund 19.358 Contingency 8.000 Unallocated 30.204 Total General Fund Balance 283.893 Expenditure and Funding Analysis The Expenditure and Funding Analysis (Note 2 page 34) shows how expenditure is incurred and funded from resources (government grants, housing rents, Council Tax and Non-Domestic Rates) in comparison with those resources consumed or earned by the Council in accordance with generally accepted accounting practices. It also shows how this expenditure is allocated across Council Services. Income and expenditure accounted for under generally accepted accounting practice is presented more fully in the Comprehensive Income and Expenditure Statement. Housing Revenue Account The Council is required by statute to maintain a separate Housing Revenue Account, as distinct from the General Fund Revenue Account. The movements in the Housing Revenue Account are outlined in the Movement in Reserves Statement (page 20), with the Housing Revenue Account financial statements detailed on page 81. These reflect transactions linked to managing the Council’s housing stock. The account shows an in-year deficit of £9.498m, which when added to the 2022/23 balance brought forward results in a cumulative surplus of £16.820m, shown within the Council’s Usable Reserves. Of this surplus, £11.675m has been approved for specific purposes primarily Loan Charges of £9.072m and Council Ambition of £1.306m. In addition, there is an approved £1.742m contingency fund, which leaves an unallocated balance of £3.403m. Capital Account Details of Capital Expenditure and Capital Financing are shown on page 71. Total gross expenditure for Housing and General Fund Services amounted to £242.221m. This was funded as summarised below: £m Sale of Council Assets 1.454 Contributions from Revenue Budgets 21.898 Capital Grants and Other Income 74.178 Loans Fund Advances 144.691 242.221 The 2023/24 increase to loans fund advances of £144.691m was funded primarily from a combination of internal cash balances/reserves, short-term borrowing and long-term borrowing from the Public Works Loan Board (PWLB). A revised Strategic Capital Investment Programme for 2021/22 to 2025/26 was developed by the Council’s Strategic Capital Delivery Group and plan approved by the Policy and Strategic Committee in March 2021. Financial year 2023/24 was the third year of the Council’s approved programme, with the 2023/24 annual update taken to the Policy and Strategy Committee in March 2023. During 2023/24 the Council’s Strategic Capital Investment Programme continued to face a number of delivery challenges linked to the wider economic climate and the availability of materials and labour, and inflationary pressures. These resulted in reduced capacity for external contractors to deliver projects within previously assumed timelines, and increased material costs. The overall impact meant that lower than anticipated expenditure, and resultant borrowing was incurred with the programme delivery reprofiled across the remainder of the five year capital planning period. In March 2024, the Council approved a new Strategic Capital Investment Programme for the 5-year period from 2024/25 to 2028/29, with record levels of capital investment of £660m planned over the next five years as the Page 110 of 412
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Annual Accounts 2023/24 Management Commentary - 5 - Council continues the delivery of its long-term place shaping transformation of North Lanarkshire’s towns and communities. Alongside record levels of investment in the Council’s housing provision through the Housing Revenue Account, this represents potential investment of just under £1.5bn in North Lanarkshire’s town and communities. Strategic Capital Investment Programme 2024/25 to 2028/29 Cash Flow Statement The Council’s cash and cash equivalents reported a net decrease of £27.305m during 2023/24 (page 22). This incorporates a net cash inflow from operating activities of £42.975m, a net cash outflow in investing activities of £180.695m and a net cash inflow from financing activities of £110.415m. In addition, a further non-cash adjustments of £0.043m in respect of accrued interest is reflected, resulting in a closing cash and cash equivalents balance of £48.289m on the balance sheet, which is a total reduction of £27.262m during 2023/24. Long-Term Borrowing The Council’s annual borrowing strategy is outlined within the Treasury Management Strategy. The strategy considers the affordability of the capital financing requirement per the capital investment plan developed to deliver on The Plan for North Lanarkshire. The Council’s Treasury Strategy and Treasury and Prudential Indicator limits for 2023/24 were approved by the Finance and Resources Committee on 1 March 2023. These facilitate the decision-making processes in support of the Council’s capital investment and borrowing strategies. Significant capital investment was initiated through the arrangements available within the Prudential System for Capital Finance. During 2023/24 the approach to borrowing was in line with the approved strategy, with the Council taking advantage of long-term and temporary (short-term) borrowing available at competitive rates supplemented by internal cash balances to support principal repayments, daily revenue account requirements and the capital financing requirement. The strategy adopted reflected interest rate forecasts, management of carrying costs and the retention of cash balances at appropriate levels, managing the associated investment, interest and liquidity risk. Further details on the Council’s future capital investment plans, treasury management (borrowings and investments), prudential indicators and loans fund liabilities is contained within the Treasury Management Strategy document. Pension Assets and Liabilities The IAS19 calculation (pages 60 to 65) for employers participating in the Strathclyde Pension Fund is based on a snapshot valuation as at 31 March 2024. The value of the pension fund is fully assessed every three years with annual estimates made between assessments. A range of factors are taken into account each time, such as inflation and life expectancy. Therefore, annual estimates of fund values and future pension payments can vary from year to year. The triennial review applied to 2023/24 took place as at 31 March 2020 with no change to the employer’s contribution which remained at 19.3%. The 31 March 2023 valuation has subsequently been completed with the latest funding position as at 31 March 2023 showing 147% compared to the previous triennial review position at March 2020 of 106%. As a result, new employer contribution rates have been agreed at 6.5% in 2024/25 and 2025/26, and 17.5% from 2026/27. The improvement is as a result of better than anticipated investment returns on the fund’s assets and changes in future inflation expectations. The net pension assets or liabilities show the overall surplus in the pension fund after paying retirement benefits, or any underlying commitments that the Council has in the long run to pay retirement benefits. The Council’s fund continues to remain in a net asset position due to higher than anticipated return on investments. However, the accounting standard imposes a limit on the maximum amount of surplus which can be recognised. The Council’s actuaries have calculated that the surplus in relation to funded plans of £858.492m and the asset ceiling, based on the remaining future working lifetime of staff and the present value of accruing service cost less value of cash contributions is nil, therefore an asset ceiling adjustment of £858.492m has been applied. As a result, the net pension asset held on the Council’s balance sheet in relation to funded plans is nil. In addition to this, a net pension liability of £119.490m is held on the Council’s balance sheet in relation to unfunded liabilities. Further detail on this can be found in note 26 on page 60. After reflecting updated assumptions on a number of variables by the pension actuaries. the movement in the Council’s fund is made up of the estimated fair value of the fund's assets which has increased by £238.919m as shown in note 26.3 and the estimated fair value of future liabilities which has increased by £154.672m as shown in Note 26.2, which together with an increase in the ceiling adjustment of £137.411m as shown in note 26.4 results in a net increase in pension liabilities being recognised of £53.164m. Page 111 of 412
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Annual Accounts 2023/24 Management Commentary - 6 - Group Accounts The Council has a controlling interest in a number of companies and a minority interest in joint ventures. The Code of Practice on Local Authority Accounting requires, where significant, the Council to include summary Group Accounts within the Annual Accounts, showing the financial position of the Council and its subsidiaries plus the investments in associates and interests in joint ventures as a single economic entity. After consolidation the Group balance sheet shows net assets of £2,011.643m as at 31 March 2024, an increase of £175.595m on the single entity position, representing the Council’s share of the net assets of these entities. Further detailed information on the Group performance, along with the summarised group financial statements, is available on pages 85 to 97. A brief summary of in year activity in respect of Council Arm’s Length External Organisations (Council companies and joint venture companies) is provided below: Routes to Work Ltd continues to operate under a Service Level Agreement to support key parts of the Council’s employability programmes including No One Left Behind, North Lanarkshire’s Working, Working Matters & Working for Families. The organisation provides a range of free employability services to North Lanarkshire residents, specialising in supporting unemployed residents and helping residents access vocational training. This has been a transition year for employability programmes with the end of EU funds and the introduction of the UK Shared Prosperity Fund in 2023. Amey Public Services (APS) LLP continued to successfully deliver its contractual obligations and meeting the Council’s service delivery expectations during 2023/24 including but not limited to the carriageway resurfacing and active travel programmes, provision of the winter service delivery, gully cleaning and delivery of the LED replacement programmes. The contract ended on 30 September 2024, with the company no longer providing services to the Council after this date. Work to wind up the company is ongoing and may extend beyond the 2024/25 financial year. MEARS Scotland LLP continued to deliver all services within the contract. To ensure continuity of service and enable anticipated inclusion of housing and corporate property maintenance within the North Lanarkshire Council on expiry of the existing contract on 21 January 2024, an extension was granted for up to 6 months. The contract with Mears LLP expired on 30 June 2024 with the company no longer providing services to the Council after this date. Work to wind up the company is ongoing and may extend beyond the 2024/25 financial year. North Lanarkshire Properties (NLP) LLP continue to operate in a challenging environment as a result of the current economic climate. The company are experiencing supply chain labour shortages and construction inflationary pressures. During 2023/24, NLP partnered with NLP Growth Team to develop the existing Braidhurst Industrial Site in Motherwell, which will, include the upgrading to the existing industrial units within the site. The NLP loan facility agreement with Barclays Bank ceased on 31 October 2023 and a new funding arrangement was agreed on this date for the remaining balance. Fusion Assets Ltd has continued with its development plans primarily utilising Vacant & Derelict Land Fund funding, Regeneration Capital Grant funding, private sector funding and internal resources to progress current and future developments. In addition, company activity included the letting of all remaining units at Gartcosh Business Park, the acquisition and completion of initial enabling works of Plot 1 of Ravenscraig Industrial Park, the completion of a second building at Link Park, and the completion of enabling works at Condor Park, Eurocentral. Equal Pay The Council has previously recognised the need to provide for on-going commitments arising from equal pay compensation claims. The provision is reviewed annually with consideration given to the scale and scope of any risk and uncertainties. The 2023/24 opening provision value of £4.975m comprised of £4.856m in relation to General Fund and £0.119m for HRA. Total claims paid out during 2023/24 equated to £0.006m in total. The existing level of provision was assessed and concluded to be reasonable to cover the remaining outstanding claims and the expected pension cost for previously settled claims. Note 22 on page 55 provides the detail of the 2023/24 closing provision for Equal Pay of £4.969m. Page 112 of 412
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Annual Accounts 2023/24 Management Commentary - 7 - The Plan for North Lanarkshire and Programme of Work The Plan for North Lanarkshire sets the long-term strategic direction for the Council, partners, and other stakeholders and, most importantly, for each unique community and the people who live, learn, work, invest, and visit within North Lanarkshire. It communicates the vision for inclusive growth and prosperity for all to bring equal benefits and a fairer distribution of wealth across all local communities. The vision in The Plan for North Lanarkshire was shaped by the area’s demographic, social, and economic profile which at the time showed a positive picture in terms of economic growth, inward investment, employment, and educational attainment, but still unacceptably high levels of deprivation and child poverty and clear areas of inequity and inequality. This meant that not all North Lanarkshire’s people were sharing equally in the improving picture, and there was an element of social exclusion across some towns and communities. As the delivery vehicle for The Plan for North Lanarkshire, the Programme of Work enables a recurring, dynamic, and cohesive approach to realising the shared ambition. It enables delivery of the vision to be informed by a strategic planning process that is framed within the context of the local demographic, social, and economic profile that shaped The Plan for North Lanarkshire, as well as the latest national policy changes and developments. This process also ensures a more targeted approach to establishing the programmes, projects, and activities required to achieve the intended outcomes. The strategic planning process included an annual update of the Strategic Policy Framework (most recently approved in March 2024) to ensure that strategy and policy continue to remain connected to delivery. The clear ambitious vision in The Plan for North Lanarkshire was recognised by the Best Value auditors in their new national thematic approach which considered the effectiveness of the leadership of the development of the Council’s strategic priorities. In their Thematic Report (which was presented to Committee in December 2023) the auditors noted that the vision has been driven by effective leadership and was supported by a range of performance indicators and reporting arrangements. The report concludes positively on the Council’s approach to citizen and community engagement and recognises the Council’s commitment to reducing inequalities and tackling poverty. It also comments positively on the alignment of strategic and operational delivery plans (with the Council’s financial, asset, and digital plans), the collaborative working between Elected Members and officers, and the Council’s approach to self-evaluation which supports continuous improvement. The extent of this external validation to the one place one plan one council approach, and the ongoing leadership and long-term commitment to The Plan for North Lanarkshire, demonstrates the very solid foundations which are now in place across the organisation to support and escalate the pace and depth of change that is critical to realise the successful delivery of the new Programme of Work to 2028. This is further evidenced by the extent of achievements which have been realised through the Programme of Work to date. Reported to Committee in March 2024 these achievements (summarised below) demonstrate the extent to which the Council has focussed efforts on delivering the priorities approved by the Policy and Strategy Committee in order to improve, change, and deliver services that improve the lives of local people. • New hubs are in place at the heart of local communities to support a much wider offering to people and communities with more direct access to the services they need and access to earlier, more responsive, and more integrated whole family support. • The range and affordability of homes has increased through the provision of high-quality housing. • Environmental enhancements delivered to support added benefits to general health and wellbeing, social inclusion, physical and mental health, and public access. • Transformations to town centres are starting to reshape North Lanarkshire to provide modern, attractive, and multi-use centres fit for local people today and in the future. • Job creation has expanded by accelerating and attracting investment to create more and new business opportunities. • Pathways developed and skills and knowledge enhanced to smooth the transition to further education, training, or employment. • This is all supported by more joined up transport links, an enhanced digital infrastructure, and a network of more active travel routes for pedestrians and cyclists, all of which are boosting the local economy and securing improved opportunities and outcomes for employment, education, housing, and leisure, and creating a place where people want to Live, Learn, Work, Invest, and Visit. Fulfilling the commitment made by the senior management team in March 2022, the development process for the fifth iteration of the Programme of Work reflected a significant change in approach compared to previous years. The longer-term approach set out in the Programme of Work to 2028 (which was approved in March 2023) reflected the need to reframe the Programme of Work in line with the latest North Lanarkshire context to ensure a heightened and more strategic focus on not only sustaining local economic and community Page 113 of 412
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Annual Accounts 2023/24 Management Commentary - 8 - improvements to date, but also on ensuring a more targeted approach to improving social conditions and outcomes. The Programme of Work to 2028 comprises seven priorities (summarised below) for which a single integrated council wide Delivery Plan was established in March 2024: Transforming places - to plan and co-ordinate public and private sector investment to deliver transformational change across town centres and local communities at pace to attract more people to live, learn, work, invest, and visit within North Lanarkshire. Invest in North Lanarkshire - to support and accelerate investment in North Lanarkshire, and the Council’s own investment programme, through a collaborative and streamlined advisory service to help grow and sustain the economy and transform communities. Sustainable Futures - to focus commitments to net zero carbon and climate resilience and the associated energy solutions and investments required to make it a reality. Brighter Futures - to support and improve educational attainment, employment opportunities, entrepreneurship, and volunteering and prepare young people and the wider community for the future through education, voluntary work, and enterprise by giving them the skills, knowledge, and confidence to successfully transition to further education, training, or employment. Resilient people - to deliver whole family support locally, when families need it, in a way that addresses the impact of poverty and reduces inequality, providing an integrated approach (working with partners) to an earlier and more effective response to need. These five front facing Programme of Work priorities are supported by two priorities which are key to enabling their delivery: Digital North Lanarkshire - to develop a skilled digital workforce, promote an innovative sustainable culture, and be the digital leader for a transformed North Lanarkshire. This programme is a key enabler in delivering the other programme of work priorities and driving economic growth as well as transforming the education and abilities of learners of all ages. One Service - to ensure services are delivered, regardless of owner, in a streamlined, efficient, and supportive model. This programme is a key enabler in delivering the other priorities and ensuring the Council delivers services (regardless of structures or the alignment of functions) in line with the overall vision of inclusive growth and prosperity for all. Strategy and Performance Key to evaluating the success of The Plan for North Lanarkshire and assessing delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately aligned, planned, guided, implemented, monitored, and governed) are six inter-related strategic frameworks that aim to maintain a corporate one council approach across the organisation (these are listed below). To ensure these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work, all are on a regular review and refresh programme. • Strategic Policy Framework • Strategic Governance Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities Page 114 of 412
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Annual Accounts 2023/24 Management Commentary - 9 - At a strategic level, The Plan for North Lanarkshire is supported by a suite of health check performance indicators that collectively provide the context for North Lanarkshire as a place. By providing the local demographic, social, and economic profile these indicators were key to shaping the long-term vision set out in The Plan for North Lanarkshire, and they have continued to provide a robust, consistent, and independent way of assessing progress since then. The suite of indicators also play an important role in informing the strategic planning process through the Programme of Work. The most recent data published can be found in the following report to Committee in March 2024: Strategic Performance Framework - the North Lanarkshire context. This highlights both the successes experienced across North Lanarkshire as well as the challenges that remain. Successes: • Last year’s annual performance update reported that, for the first time ever, the gross weekly pay for local residents was higher than the national average. This position continues in the latest data in this year’s update which shows the gross weekly pay for North Lanarkshire’s residents has reached £705.70 in 2023 compared to £702.40 nationally; a difference of £3.30 per week. Gross weekly pay in North Lanarkshire has increased 7% (£47.80 per week) over the year. The gap in hourly pay for males and females has significantly narrowed over the period of The Plan for North Lanarkshire (from £2.36 to £1.22 per hour), with this gap now being narrower than it is nationally. • The number of working age people claiming employment related benefits has continued the gradual downward trend that was first experienced towards the end of 2020 and is now lower than pre-pandemic levels. Latest figures show 7,320 claimants in North Lanarkshire, while this is only a 7% decrease from the December 2019 claimant count of 7,890 it does not reflect the impact of the pandemic years when claimant counts were 14,195 as at December 2020 and 9,580 as at December 2021. The current claimant rate in North Lanarkshire is 3.3% which is a decrease from pre-pandemic levels of 3.6% in 2019; the national average is 3% down from 3.2% over the same period. • The proportion of the working age population who are economically active has shown signs of improvement for the last four consecutive quarters in a row, reaching 75%, the highest position for the last three years after much fluctuation. This represents 171,100 residents economically active in North Lanarkshire, this is an increase from March 2020 (170,700) albeit figures have not yet returned to the pre-pandemic level in 2019 (174,000). • Prior to the pandemic, North Lanarkshire had one of the strongest and fastest growing economies in Scotland, with significant growth over the last 10 years with an increase in the number of businesses per head of population and jobs safeguarded through a range of support to businesses. Recent figures show the local economy continues to grow with North Lanarkshire’s growth rate increasing significantly from the previous year. • Latest figures show a significant improvement in breastfeeding with 30.4% of babies in North Lanarkshire breastfed at the 6-8 week review and getting the best start in life. This is an improvement from the previous year (26.6%) and The Plan for North Lanarkshire baseline of 23.1% in 2017/18. • The change in total recorded crime shows a small increase from the previous year of 0.6% compared to a 1% increase nationally. Notwithstanding the impact of the pandemic on the number of recorded crimes, this remains a positive position in that the number of crimes in North Lanarkshire recorded by the police has not returned to pre-pandemic levels and remains lower than The Plan for North Lanarkshire baseline. Challenges: • While improvements had been noted in a reduction in the proportion of children in poverty over the period of The Plan for North Lanarkshire, the latest figures show a reversal in this respect with rates now reaching 26.6%. While this change in trend is in line with the national average, it remains a concern as almost one in four children in North Lanarkshire are living in poverty. This is higher than the national average of just over one in five children. Of particular concern is the disparity across North Lanarkshire’s communities. • While the proportion and number of the working age population who are economically active has shown encouraging signs of improvement, the deep dive in this respect shows that there remains 45,000 people who are currently recorded as being economically inactive and not wanting a job (an increase from 36,800 pre-pandemic in 2019). These are in the main 37% long term-sick, 30% students, 10% looking after family / home, and 10% retired. 81% are recorded as not wanting a job. Following varying trends, a significant increase can be seen in the number of students over the period of The Plan for North Lanarkshire (from 13,100 to 16,700), as well as those long-term sick (from 15,800 to 20,600). • An ongoing downward trend had previously been experienced up to 2020/21 in terms of a reduction in the number of the working age population with no qualifications (to 12.8%, which was around 27,600 people). The latest figures show a reversal of this trend to 18.6% in 2021/22 which equates to 40,100 of North Lanarkshire’s working age population in a situation that restricts their ability to access developing employment opportunities. This significant change was examined in more detail at source, and nothing was found to be impacting on the data other than perhaps the size of the sample in the survey. However, to Page 115 of 412
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Annual Accounts 2023/24 Management Commentary - 10 - ensure ongoing accuracy in reporting the data for this indicator this will continue to be examined and monitored. • While there is ongoing improvement in terms of educational attainment for all pupils gaining 5+ awards at level 6, as well as pupils living in the 20% most deprived areas, the gap in attainment in this respect is not showing any significant signs of narrowing. • The deep dive into the latest business survival rates in North Lanarkshire shows a varying position and a decrease to 54% from 58% in the previous year, albeit this trend does follow the national average. The deep dive into this data shows that the early years of implementing The Plan for North Lanarkshire was impacted by the pandemic. However, active businesses in North Lanarkshire still remains high though as the latest figures show 7,920 businesses, an increase over the period of The Plan for North Lanarkshire from 7,885. In addition, over the period of The Plan for North Lanarkshire, the number of abroad-owned registered private sector businesses in North Lanarkshire has increased from 310 in 2018 to 385 in 2023. This inward investment had a positive impact on Scottish employment, adding around 1,100 jobs. Performance Overview The Accounts Commission defines requirements for reporting performance information under the Local Government Act 1992 in terms of improving local services and local outcomes and demonstrating Best Value. Developed by the Improvement Service at the request of the Society of Local Authority Chief Executives and Senior Managers (SOLACE), the Local Government Benchmarking Framework (LGBF) provides a suite of high- level performance indicators, comparable across other councils, that are designed to help inform improvements to services and outcomes. In this respect the latest results available for the Council have been incorporated into the Chief Officer’s Strategic Performance Framework reports to committee from 2023 onwards. The 2023/24 performance information will not be available publicly until later in the year, however past performance results can be accessed through the LGBF website. This online information also includes comparisons of the Council’s performance with the national average and with similar councils. In 2022/23, areas where North Lanarkshire was among the top performing council in Scotland, and performance achieved shows continuous improvement, are noted below. • 21% of A class roads (i.e. major and strategic roads) on the Council’s network require to be considered for maintenance treatment; performance in this area over the years has remained consistently lower than the national average (27%) and that of similar councils (24%). • The average number of working days taken to complete non-emergency repairs in council housing stock (just under 7 days) continues to remain lower than the national average of just under 10 days. • 99% of North Lanarkshire’s properties receive superfast broadband, compared to an average of 95.5% nationally. • There are 94.5% of children being looked after by the Council who are cared for in their local community (as opposed to residential care), compared to an average of 89.2% nationally. The gross cost of children looked after in a community setting in North Lanarkshire (per child per week) is the lowest in Scotland. • Less than 8% of looked after children in North Lanarkshire have experienced more than one placement in the last year (compared to 17.2% on average nationally). This reflects the Council’s commitment to maintaining the need to secure and maintain attachments in care planning. • 30% of council spend on social work is for self-directed support that gives people, who require social care support, more choice and control over how their support needs will be met. Latest results follow a year on year trend in improvement and are considerably higher than the national average of 8.7%. North Lanarkshire has remained the top performing council in this indicator for the last four years. During 2023/24 the Council continued to implement a structured programme of self-evaluation to underpin the duty to secure continuous improvement in line with the well-established Strategic Self-Evaluation Framework arrangements. This programme included a review of the Audit and Scrutiny Panel and how effectively it is discharging its role and a review of Partnership / Community Board effectiveness in line with their role in improving outcomes for local people and communities. Improvement plans were identified through this process and actions are in the progress of being implemented, with delivery scheduled to be completed during 2024/25. In response to the Council’s ambition to achieve net zero earlier than the national target of 2045, the Council developed its Climate Plan ACT 2030. The achievement of the current targets contained within the Plan will see successive annual emission reductions, enabling the Council to reduce its footprint by 52.2% from its 2015/16 baseline i.e. a reduction of 61,141 carbon tonnes equivalent (tCO2e) by 2025/26. It is hoped that through the development of the route map, action plan and in setting policy the Council will achieve net-zero emissions by 2030. In the most recent reporting, the Council’s carbon-equivalent footprint was reported as 61,909 tCO2e Page 116 of 412
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Annual Accounts 2023/24 Management Commentary - 11 - against a target of 64,733 tCO2e. This corresponds to a reduction of 1.4% from the previous year, and an overall reduction of 47.1% from the baseline year. Risk Management Risk management forms an important element of the Council’s corporate governance arrangements and is underpinned by the Risk Management Strategy. The Corporate Management Team receive regular reports on the Corporate Risk Register as well as updates on wider risk management arrangements. The Corporate Risk Register contains: • Risks with potential impacts which could significantly impair the organisation’s ability to achieve its corporate priorities; • Those significant risks which are corporate in nature and which typically will require corporate leadership and direction to control and/or manage; and • Service level risks with potentially significant impacts which have been proposed for escalation to the corporate risk register because they may be either cross-cutting, impacting several areas of the organisation or, because of interdependencies, require more strategic leadership focus. Within the Risk Register, there are seven overarching primary risk categories: First Line Risk Management in Services and Divisions Second Line Risk Management function Third Line Independent assurance Internal Audit Three Lines of Risk Management/Defence Page 117 of 412
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Annual Accounts 2023/24 Management Commentary - 12 - The Corporate Risk Register is reflective of the what the Council is seeking to achieve at a strategic level and as such a range of potential risks are highlighted within it. Current risks include: • Home support service delivery/sustainability - Failure to provide adequate levels of home support to service users. • Information Security and Information Governance – Not managed securely or that information governance is ineffective, potentially leading to service disruption, breach, fines, legal action and/or adverse media coverage and reputational damage. • Public Protection – Non-compliance with legal requirement to ensure adequate public protection, any failures could result in death and serious physical or mental harm to children and adults. • Human resources (workforce planning) - Not ensuring Council has sufficient number of capable and motivated staff to provide the full range of services required at present and in the future. • Health and Safety – Failure to comply with the Health and Safety at Work Act 1974 and associated legislation protecting the health, safety and welfare of our employees, service users and anyone else who can be affected by the Council’s activities; this includes Scottish Fire and Rescue Service changing their fire alarm call out attendance which impacts on certain Council properties. • Engagement and Consultation with Communities– The Council may fail to appropriately engage and consult with communities, partners and stakeholders in the shaping and delivery of services. • Financial Sustainability – In the face of demographic and legislative change, and significant cost pressures due to central government funding not keeping pace with cost pressures, the Council is unable to adequately fund and plan resources to meet service delivery and deliver against its corporate ambitions. • Climate Change - Council fails to positively contribute to the protection and development of a sustainable environment. Senior managers consider specific risks within the Corporate Risk Register in detail to assess the adequacy and effectiveness of current controls and to ensure the Council has reduced and/or mitigated the risk to an acceptable level. Reports on the management of individual key corporate risks and on risk management arrangements more generally across the organisation are also submitted regularly to elected members on the Council’s Audit and Scrutiny Panel. The corporate risk register is formally reviewed on an annual basis to ensure completeness and continuing relevance and alignment to the Council’s strategic objectives. The register is monitored throughout the year to ensure it reflects any new or emerging risks. Financial Strategy Revenue Resources Budget Strategy In line with the Strategic Policy Framework the Council has an overarching Financial Strategy, which sets out the framework for future decision making on the allocation of all available resources to ensure it is fully integrated with The Plan for North Lanarkshire objectives. The Revenue Budget Strategy is integral to the Financial Strategy to ensure robust governance in financial planning, facilitating a more strategic approach to budgets setting, associated savings options and to ensure the Council remains financially sustainable. The key principles of the strategy are fully embedded in the Council’s financial planning arrangements. Financial Planning This Council remains committed to taking a strategic and longer-term approach to financial planning and budget setting to ensure the Council remains financially sustainable. However, applying this strategy remains challenging particularly due to the absence of multi-year funding settlements and the ongoing challenging economic and financial environment, which presents new and additional challenges and risks on the Council’s finances over an extended planning period. The volatile political landscape at both a UK and Scottish Government level will also likely have implications for national budgets with potential for reprioritisation of resources within both current and future spending plans. Such volatility increases the risk of an adverse impact on the Council’s Medium Term Financial Plan, and therefore service delivery and financial sustainability. As such, the Council continues to consider that a 5 year plan is reasonable and appropriate for financial planning purposes. An update to the Medium Term Financial Plan for the period 2025/26 to 2029/30, was approved by Committee on 6 June 2024. This plan reflects the 2024/25 approved budget position as the new baseline, and updates financial planning assumptions, mainly in relation to future funding and increased cost pressures arising from pay and non-pay inflation. A range of risk-based outcomes continue to be modelled, highlighting optimistic, Page 118 of 412
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Annual Accounts 2023/24 Management Commentary - 13 - envisaged and pessimistic scenarios. Reflecting on most recent economic forecasts and the envisaged downward trajectory for inflation towards the Governments’ longer-term target of 2%, it is anticipated that the more material adverse impacts of non-pay inflation including increased energy costs, experienced in more recent years, will not be so prevalent over the term of this plan. However, whilst the envisaged scenario remains the most appropriate for planning purposes, the budget gap range across the potential scenarios demonstrate the volatility and the extent of the fluctuation possible over the period of the plan. The report on the updated Medium Term Financial Plan also incorporated an update on the implementation of the key principles of the Revenue Budget Strategy, which have continued to underpin decision making, ensuring elected members have information to assist them in making robust and financially sustainable decisions in setting a balanced budget. A review to consider further development of the key principles has also been undertaken to ensure the Council continues to develop strategic, robust and sustainable solutions, to manage the longer-term financial challenges. In addition, a Revenue Budget Framework to manage the 2025/26 budget position has been agreed. The updated principles of the Revenue Budget Strategy continue to recognise that the financial pressures facing the Council means Councillors are required to make difficult decisions to manage these challenges, requiring effective political leadership and communications. Recognising the extent of the uncertainties, the financial plan will be subject to ongoing review, with an update reported in future financial outlooks, as outlined in the Revenue Budget Framework. Financial Sustainability In further recognition of future challenges facing the Council a key principle of the Revenue Budget Strategy is that consideration be given to the planned, sustainable use of available balances, where it is prudent and affordable to do so. To address this commitment, the Council’s Reserves Policy ensures that available balances are managed and utilised in accordance with effective governance principles and continue to support financial plans which are affordable and sustainable. A contingency fund is held for unforeseen future events as well as to ensure stability of cash flow management. The level of contingency remains at £8m as approved as part of the 2024/25 budget setting, and this level continues to be considered appropriate. A full analysis of general fund reserves is presented at Note 27.1 on page 65. The general fund unallocated reserves will be available to support future budget challenges. The following chart illustrates the significant value of savings already achieved over the past 5 years. For 2023/24, the budget incorporated £7.486m of net savings. Services achieved total savings of £7.418m against this target (99%), with the shortfall of £0.068m also achieved through alternative savings. This has been achieved through various means, including revising service operating models, implementing efficiency measures, reducing levels of service provision in some areas, and introducing or increasing fees and charges for others. The scale of savings already delivered by the Council over a number of years make it more challenging to deliver future savings to close the significant budget gaps forecast in the latest Medium Term Financial Plan. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 £000s £000s £000s £000s £000s 2019/20 2020/21 2021/22 2022/23 2023/24 Savings Achieved £000's In Year Savings £000's Cumulative Savings £000's Page 119 of 412
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Annual Accounts 2023/24 Management Commentary - 14 - Treasury Management The Council’s Treasury Management team is responsible for ensuring there is sufficient cash to meet revenue commitments and capital investment plans, whilst also managing investments and the refinancing of historic debt reaching maturity. During the year, a suite of techniques and tools are adopted, sourcing treasury management data, forecasts and market statistics, to assist with decision making, and developing a borrowing strategy to maximise interest cost efficiencies. This includes robust cash flow management and forecasting, balance sheet analysis, weekly PWLB loan rate and interest rate trend analysis, debt maturity profiling and debt rescheduling. These techniques combined enable the Council to time its borrowing and take advantage of opportunities that may arise to achieve beneficial borrowing rates, thus minimising interest rate risk. In line with recent years, the strategy adopted has primarily been to use internal cash balances where possible whilst undertaking short-term and long-term borrowing, as required, and on advice from the Council’s Treasury Management advisors, particularly while interest rates remain high relative to levels previously experienced over a number years. Local Government Finance Circular 10/22 – Finance Leases and Service Concessions Arrangements, provides a temporary statutory override to the Code which allows Local Authorities to utilise a short-term financial flexibility with regard to the calculation of the statutory repayment of debt (principal element). This flexibility could only be applied in either 2022/23 or 2023/24 financial years, and could be applied either retrospectively or prospectively, with the annual charge for principal repayments calculated in accordance over the useful life of the asset(s), instead of linking to the contractual arrangements. The Council applied this flexibility in 2023/24, with a one-off retrospective benefit to General Fund of £44.600m. Provisions for future benefits and increased debt repayments have been incorporated in modelling forecast repayments. Capital Strategy The publication of the revised Prudential Code for Capital Finance in Local Authorities 2021 requires the Council to produce a Capital Strategy to ensure the Council takes capital expenditure and investment decisions in line with the Council’s priorities, service objectives and properly takes account of stewardship, value for money, prudence, sustainability and affordability. Therefore, the Capital Strategy forms part of the Council’s integrated approach to corporate resource planning which is included in the Council’s overarching Financial Strategy, aligning with other Corporate Policies and Plans informing the capital investment process. These facilitate the development of robust capital investment proposals and ensure resources are aligned with The Plan for North Lanarkshire, the Corporate Asset Management Plan, and the Medium Term Financial Plan, whilst ensuring delivery of best value, and compliance with Financial Regulations. Following the approval of the Council’s renewed Programme of Work to 2028 and previous commitments to review capital programme delivery, at its meeting in October 2022 Policy and Strategy Committee endorsed the development of a new five-year capital plan to commence from 2024/25. The Policy and Strategy Committee in March 2024 approved record levels of capital investment of £660m over the period 2024/25 to 2028/29 as the Council continues the delivery of its long-term place shaping transformation of North Lanarkshire’s towns and communities. Alongside record levels of investment in the Council’s housing provision through the Housing Revenue Account, this represents potential investment of £1.465bn in North Lanarkshire’s town and communities. Revenue Expenditure and Income Revenue Expenditure is the day-to-day expenditure incurred by the Council in providing services to the public including employee costs, property repairs and maintenance, office expenses, payments to other agencies, and the cost of financing capital expenditure. This expenditure is partly funded by the Scottish Government Grant which is broken down into three parts namely General Revenue Grant, Non Domestic Rates Pool Income and Specific Grants. Local Government is informed of its annual funding through the Local Government Finance Settlement. In 2023/24, the Council was allocated general funding as follows: • General Revenue Grant Funding (£622.417m): Government grant, allocated based on Grant Aided Expenditure (GAE) calculations, using a suite of indicators such as population to base it on relative need; • Non-Domestic Rates Pool Income (NDR) (£121.640m): Collected locally but pooled centrally, the Council’s share is determined by a distribution from the National Pool. The Council also received additional grants through the Local Government Finance Settlement for specific purposes including: Early Years Expansion (£35.310m); Pupil Equity Fund (£9.682m); and Offenders/ Criminal Justice Social Work (£5.353m). In addition, the Council receives grants out-with the settlement and these are disclosed within the accounts (Note 11, page 38). In addition to these sources of income, the Council is able to generate income through direct charges for certain services such as Council House rents. Page 120 of 412
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Annual Accounts 2023/24 Management Commentary - 15 - Council Tax Council Tax is the system of local taxation which also part funds services provided by local authorities. Introduced in 1993, the rate of tax payable is based on the value of residential property. In setting the 2023/24 budget, the Council decided to increase Council Tax by 5%, resulting in a Band D charge of £1,320.78. The total net Council Tax income accounted for within the Comprehensive Income and Expenditure Statement for 2023/24 is £138.528m. The Council Tax Income Statement for the year is provided on page 82 and provides the details of the calculation of the Council’s Council Tax base and the charge per dwelling for each Council Tax Band. Budget Setting, Monitoring and Reporting Councils are required, under Section 93 of the Local Government Finance Act 1992, to set a balanced budget each year. The starting point for determining the revenue budget is the base budget from the previous year, updated to take account of the financial planning implications identified through the Medium Term Financial Plan, including assumptions in relation to: Employee and Other Cost Pressures; Strategic Priorities; and Directed Expenditure. Available resources are estimated based on the Local Government Finance Settlement, Council Tax base and use of reserve balances. When combined, the need for additional savings to balance the budget may be required. In financial year 2023/24, the Council approved the proposed General Fund Revenue Budget of £978.624m (inc. specific grants of £50.586m), net of savings of £7.486m, on 23 February 2023. The approved budget was further updated throughout 2023/24 to take account of Scottish Government redeterminations/ additional funding made available including additional directed funding pay deals, for Adult Social Care, Free School Meal Expansion monies, Local Heat and Energy Efficiency Strategy funding and additional DHP funding, offset by a reallocation of Scottish Child Payments Grant to agency managed grants, resulting in a final budget of £978.844m. The 2023/24 budget has been closely monitored through the management and budgetary processes which are embedded within the Council’s existing financial governance arrangements. The Provisional Outturn position reported to Corporate Management Team anticipated a combined surplus of £13.234m on the General Fund and HRA, against the amended budget. The position reported that £9.279m on the general fund should be earmarked as a one-off solution, to help smooth the impact of forecast variances in respect of loan charge costs, reducing the combined surplus to £3.955m. There are a number of factors contributing to this position including the impact of higher interest rates on the cost of new borrowings, previously approved one-off debt re-profiling savings, and the increased forecast cost of use of balances in lieu of borrowing. The movement to final outturn position reported per the Movement in Reserves Statement is illustrated in the table below; Budget 2023/24 Provisional Outturn 2023/24 (Under)/ Overspend £m £m £m Education, Children and Families 529.162 528.332 (0.830) Enterprise & Communities 159.550 157.215 (2.335) Chief Executives & Other Corporate Services 88.554 82.646 (5.908) Social Work (non Integrated) 196.550 196.550 - HRA - 4.423 4.423 Financing Costs & Other Budgetary Issues (45.558) (54.142) (8.584) Total Expenditure (Provisional Outturn) 928.258 915.024 (13.234) Sources of Funding 928.258 928.258 - (Surplus)/Deficit (Provisional Outturn) (13.234) Use of Earmarked Reserves 77.152 Addition to Earmarked Reserves; Capital Investment – Service Concession Flexibility (44.800) Other Additions to Earmarked Reserves (46.470) Other net GF/HRA Movements & Use of Reserves 2.829 Movement on General Fund and HRA Services (24.523) Page 121 of 412
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Annual Accounts 2023/24 Management Commentary - 16 - The Council’s accounts also include spend in relation to the Social Work Integrated Joint Board (IJB). However, any difference between funding received and expenditure incurred is held as a creditor or debtor to the IJB, therefore, does not contribute to the Movement on General Fund and HRA Services. At Provisional Outturn, a surplus of £3.331m was reported. This combined with use of earmarked reserves totalling £9.265m resulted in a net reduction in the IJB creditor of £5.934m. Financial Controls and Procedures Reference is made to the Council’s Section 95 Officer with regards responsibility for ensuring that proper controls and procedures are in place to safeguard the Council’s assets. In this respect, the Section 95 Officer has provided the Chief Executive with a statement of the effectiveness of internal financial controls within the Authority. This assurance is contained within the Annual Governance Statement on pages 109 to 131. 2024/25 Budget The Council approved a composite General Fund Revenue budget of £1,016.750m for 2024/25 at a Council meeting on the 15 February 2024 which includes £3.501m use of balances to manage the implementation of approved savings. In setting the 2024/25 budget, the Council agreed to implement the Scottish Government’s Council Tax freeze to make use of the additional funding. In addition, £8.000m continues to be provided as a contingency fund, £19.358m for Change Management and a further £226.331m earmarked to fund specific future commitments, which leaves a general unallocated balance of £30.204m. See details below: 2024/25 Earmarked Funds £m £m Change Management Fund 19.358 Schools Future Contractual Obligations 60.968 Strategic Capital Investment Programme 44.800 Loans Charges – One-off Mitigation 17.905 Strategic Workforce Planning 17.902 Refugee Resettlement Programmes 8.324 2024/25 – 2026/27 Budget One-off Use of Balances 8.119 Temporary Accommodation 8.038 Early Years & Childcare Expansion 5.213 One Workforce Grading Pressures 5.000 Whole Family Wellbeing 4.417 Unmanaged burdens within Education, Children & Families 4.234 Balances held by Schools under Devolved School Management 2.655 Mobilisation of Strategic Contracts 2.179 Pupil Equity Fund 2.153 Shared Prosperity Grants 1.753 Business Gateway and Business Recovery 1.697 Economic Recovery 1.519 Winter Reserve 1.500 Teacher Induction Scheme Support 1.302 Digital NL 1.222 Temporary Teachers 0.823 Other Earmarked Funds 24.608 226.331 Contingency Fund 8.000 Unallocated Balance 30.204 General Fund Surplus as at 31 March 2024 283.893 Key Challenges and Pressures Facing Local Government Long-term underfunding of Scottish Local Government is widely reported with Audit Scotland’s most recent report on Local Government Budgets 2024/25 published in May 2024, Briefing: Local government budgets 2024/25 (audit.scot) recognising the significant challenges facing Local Authorities. The report acknowledges that whilst revenue funding has increased in both cash and real terms from the initial 2023/24 Scottish Budget, it remains constrained as most of the funding is directed at delivering Scottish Government priorities and agreed Page 122 of 412
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Annual Accounts 2023/24 Management Commentary - 17 - pay deals. The report shows that Scotland’s councils faced a collective gap of over half a billion pounds (£585 million) when setting their 2024/25 budgets, with additional challenges forecast over the medium term. The reality right now has never been more challenging. The effect of years of real-terms cuts to core budgets have been compounded by additional policy commitments and less flexibility in how we allocate as a result of increasing directed budgets. This makes the ability to take local decisions on most of our budget, almost impossible. The Accounts Commission’s report reinforces the severe challenges Scotland’s Councils face in trying to balance the books. Local Authorities and COSLA Leaders continue to call for a financially sustainable solution to the long-term issue of the underfunding, in order to protect the essential front-line services for our communities. Acknowledgements Thank you to elected members of North Lanarkshire Council and colleagues across the Council, all of whose efforts have contributed to the completion of these accounts. Elaine Kemp CPFA Des Murray Councillor James Logue Chief Officer (Finance) Chief Executive Council Leader Page 123 of 412
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Annual Accounts 2023/24 Comprehensive Income and Expenditure Statement - 18 - This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Local authorities raise taxation to cover expenditure in accordance with regulations, and this is different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. 2022/23 2023/24 Gross Expenditure Gross Income Net Expenditure Note Gross Expenditure Gross Income Net Expenditure £000 £000 £000 £000 £000 £000 611,712 (104,535) 507,177 Education, Children & Families 639,633 (102,262) 537,371 221,344 (56,402) 164,942 Enterprise & Communities 230,773 (61,657) 169,116 2,914 (2,914) - Trading Operations - - - 168,047 (85,851) 82,196 Chief Executives & Other Corporate Services 173,910 (89,197) 84,713 188,616 - 188,616 Adult Health & Social Care (Non- Integrated) 197,186 - 197,186 252,648 (239,203) 13,445 Adult Health & Social Care (Integrated) 260,914 (263,858) (2,944) 112,401 (142,639) (30,238) Housing Revenue Account 233,533 (151,437) 82,096 (558) (633) (1,191) Non Service-Specific Costs 2,071 (9,508) (7,437) 1,557,124 (632,177) 924,947 Net Cost of Services 1,738,020 (677,919) 1,060,101 - 7,672 7,672 Other Operating Expenditure 8 - 15,342 15,342 130,003 (80,045) 49,958 Financing and Investment Income and Expenditure 9 195,730 (143,727) 52,003 - (945,408) (945,408) Taxation and Non-specific Grant Income 10 - (967,501) (967,501) 37,169 (Surplus) or Deficit on the Provision of Services 159,945 Items that will not be reclassified to the (Surplus) or Deficit on the Provision of Services 171,560 (Surplus) or deficit on the revaluation of non current assets 28 33,335 (155,907) Re-measurement of the net defined Pension Asset/(Liability) 26 52,734 15,653 Other Comprehensive Income and Expenditure 86,069 52,822 Total Comprehensive Income and Expenditure 246,014 Page 124 of 412
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Annual Accounts 2023/24 Balance Sheet - 19 - The Balance Sheet is a snapshot of the value at the reporting date of the assets and liabilities recognised by the Council. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Reserve may only be used to fund capital expenditure or repay loan charges). The second category of reserves are those that the Council is not able to use to provide services. This category of reserve includes reserves that hold unrealised gains or losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’. 2022/23 2023/24 £000 Note £000 £000 Property, Plant and Equipment 13,14 1,257,571 Council Dwellings 1,207,367 1,341,925 Other Land and Buildings 1,351,782 41,559 Vehicles, Plant and Equipment 52,278 265,123 Infrastructure Assets 278,721 15,809 Community Assets 16,229 17,685 Surplus Assets 18,203 140,049 Assets Under Construction 107,092 3,031,672 Intangible Assets 15 74 Software Licences 49 10,781 Software/Solution Development 10,103 8,035 Intangibles Under Development 6,313 16,465 1,328 Long-Term Debtors 16 2,459 1,148 Long-Term Investments 17 1,124 53,178 Other Long-Term Assets (Pensions) 26 - 3,154,265 Long-Term Assets 3,051,720 92 Short-Term Investments 17 94 1,674 Inventories 18 1,865 117,779 Short-Term Debtors (net of impairment) 19 109,945 75,551 Cash and Cash Equivalents 20 48,289 195,096 Current Assets 160,193 (281,225) Short-Term Borrowing 17 (288,917) (211,253) Short-Term Creditors 21 (204,573) (12,277) Short-Term Provisions 22 (12,089) (7,304) Short-Term Finance Lease Liabilities 24.1,25.3 (8,204) (512,059) Current Liabilities (513,783) (476,130) Long-Term Borrowing 17 (590,605) - Long-Term Provisions 22 (586) (159,606) Other Long-Term Liabilities (Finance Leases) 24.1,25.3 (151,401) (119,504) Other Long-Term Liabilities (Pensions) 26 (119,490) (755,240) Long-Term Liabilities (862,082) 2,082,062 Net Assets 1,836,048 Usable Reserves 249,872 General Fund Reserve 283,893 26,318 Housing Revenue Account Balance 16,820 2,608 Capital Fund 2,951 17,109 Repairs and Renewals Fund 20,763 13,000 Insurance Fund 11,000 16,466 Capital Grants Unapplied Account 7,204 325,373 Total Usable Reserves 27 342,631 1,756,689 Unusable Reserves 28 1,493,417 2,082,062 Total Reserves 1,836,048 The unaudited accounts were issued on 27 June 2024 and the audited financial statements were authorised for issue on Elaine Kemp, CPFA Chief Officer (Finance) Page 125 of 412
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Annual Accounts 2023/24 Movement in Reserves Statement - 20 - This statement shows the movement in the year on the different reserves held by the Council, analysed into Usable Reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the Council’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting. The Net Increase or Decrease before Transfers to Other Statutory Reserves shows the statutory General Fund Balance and Housing Revenue Account before any discretionary transfers to and from the other statutory reserves of the Council. Year Ended 31 March 2024 Usable Reserves Unusable Reserves Total Reserves General Fund Housing Revenue Account Capital Fund Repairs & Renewals Fund Insurance Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 £000 £000 £000 Balance at 31 March 2023 249,872 26,318 2,608 17,109 13,000 - 16,466 1,756,689 2,082,062 Movement in Reserves during 2023/24 Surplus / (Deficit) on Provision of Services (68,362) (91,583) - - - - - - (159,945) Other Comprehensive Income and Expenditure - - - - - - - (86,069) (86,069) Total Comprehensive Income and Expenditure (68,362) (91,583) - - - - - (86,069) (246,014) Adjustment to usable reserves permitted by Accounting Standards (Note 31) 35,198 2,935 - - - - - (38,133) - Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (Note 32) 49,087 - - - - - - (49,087) - Adjustments between Accounting Basis and Funding Basis under Regulations (Note 33) (10,991) 89,893 20,000 - - 343 (9,262) (89,983) - Net Increase / (Decrease) before Transfers to Other Statutory Reserves 4,932 1,245 20,000 - - 343 (9,262) (263,272) (246,014) Transfers to and from Other Statutory Reserves (Note 34) 29,089 (10,743) (19,657) 3,654 (2,000) (343) - - - Increase / (Decrease) in the Year 34,021 (9,498) 343 3,654 (2,000) - (9,262) (263,272) (246,014) Balance at 31 March 2024 Carried Forward 283,893 16,820 2,951 20,763 11,000 - 7,204 1,493,417 1,836,048 Page 126 of 412
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Annual Accounts 2023/24 Movement in Reserves Statement - 21 - Comparative Figures for Year ended 31 March 2023 Usable Reserves Unusable Reserves Total Reserves General Fund Housing Revenue Account Capital Fund Repairs & Renewals Fund Insurance Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 £000 £000 £000 Balance as at 31 March 2022 236,264 19,496 396 13,755 13,000 - 7,124 1,844,849 2,134,884 Movement in Reserves during 2022/23 Surplus / (Deficit) on Provision of Services (74,563) 37,395 - - - - - - (37,168) Other Comprehensive Income and Expenditure - - - - - - - (15,653) (15,653) Total Comprehensive Income and Expenditure (74,563) 37,395 - - - - - (15,653) (52,822) Adjustment to usable reserves permitted by Accounting Standards (Note 31) (36,262) 172 - - - - - 36,090 - Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (Note 32) - - - - - - - - - Adjustments between Accounting Basis and Funding Basis under Regulations (Note 33) 117,538 (20,496) - - - 2,212 9,342 (108,596) - Net Increase / (Decrease) before Transfers to Other Statutory Reserves 6,713 17,071 - - - 2,212 9,342 (88,160) (52,822) Transfers to and from Other Statutory Reserves (Note 34) 6,895 (10,249) 2,212 3,354 - (2,212) - - - Increase / (Decrease) in the Year 13,608 6,822 2,212 3,354 - - 9,342 (88,160) (52,822) Balance at 31 March 2023 Carried Forward 249,872 26,318 2,608 17,109 13,000 - 16,466 1,756,689 2,082,062 Page 127 of 412
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Annual Accounts 2023/24 Cash Flow Statement - 22 - The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Council are funded by way of taxation and grant income or from the recipients of services provided by the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Council. 2022/23 2023/24 £000 Note £000 £000 OPERATING ACTIVITIES Cash Inflows: 92,212 Rents (after rebates) 94,344 134,905 Council Tax receipts 137,862 615,601 Revenue Support Grant 623,499 77,572 111,742 DWP grants for Housing Benefits Non Domestic Rates Receipts 73,788 121,635 85,907 Other government grants 110,307 38,447 Cash received for goods and services 41,213 93,674 Other operating cash receipts 147,552 1,378 Interest received 2,914 633 Transfer from CLNL - 1,252,071 1,353,114 Cash Outflows: (624,892) Cash paid to and on behalf of employees (701,335) (476,991) Other operating cash payments (517,260) (32,799) Housing Benefit paid out (32,142) (15,738) Precepts paid (18,682) (40,124) Interest Paid (40,720) (1,190,544) (1,310,139) 61,527 Net Cash Inflow / (Outflow) from Operating Activities 35 42,975 INVESTING ACTIVITIES Cash Inflows: 3,223 Sale of non-current assets 1,797 74,324 Capital grants received 56,856 8,277 Other capital cash receipts 10,754 18 Proceeds from Investments redeemed 20 85,842 69,427 Cash Outflows: (244,711) Purchase of non-current assets (250,122) - Long- term Investments - - Investment in Subsidiary - (244,711) (250,122) (158,869) Net Cash Inflow / (Outflow) from Investing Activities (180,695) (97,342) Net Cash Inflow / (Outflow) before Financing Activities 36 (137,720) FINANCING ACTIVITIES Cash Inflows: 345,499 New Loans Raised 418,300 345,499 418,300 Cash Outflows: (279,930) Repayments of amounts borrowed (300,581) (7,049) Capital payments of finance leases (7,304) (286,979) (307,885) 58,520 Net Cash Inflow / (Outflow) from Financing Activities 36 110,415 (38,822) Net Increase / (Decrease) in cash and cash equivalents 36 (27,305) 114,256 Cash and Cash Equivalents at the beginning of the year 36 75,551 117 Increase / (Decrease) Non-cash in cash equivalents 36 43 75,551 Cash and Cash Equivalents at the end of the year 36 48,289 Page 128 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 23 - 1. Accounting Policies General Principles The Statement of Accounts summarises the Council’s transactions for the 2023/24 financial year and its position at the year-end of 31 March 2024. The Council is required to prepare an annual Statement of Accounts by the Local Authority Accounts (Scotland) Regulations 2014; Section 12 of the Local Government in Scotland Act 2003 requires these to be prepared in accordance with proper accounting practices. These practices comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 12 of the 2003 Act. The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. The accounts have been prepared on a going concern basis. Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: • Revenue from the sale of goods is recognised when the Council transfers the significant risks and rewards of ownership to the purchaser and it is probable that economic benefits or service potential associated with the transaction will flow to the Council; • Revenue from the provision of services is recognised when the Council can measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the Council; • Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet; • Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made; • Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract; • Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. Prior Period Adjustments, Changes in Accounting Policies, Estimates and Errors Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or where the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in the prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. Redemption of Debt A Loans Fund has been established and all loans raised are paid into this Fund. Advances are made to Services to finance capital expenditure and these are repaid by application of The Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016. The schedule of Premiums and Discounts held at 31 March 2007 was transferred to the Financial Instruments Adjustment Account on 1 April 2007 and have been designated as statutory premiums and discounts under statutory guidance issued by the Scottish Government (Section 12 (2) b of the Local Government in Scotland Act 2003). This schedule is used to determine the annual charge to the General Fund and reflects annual charging schedules held at 31 March 2007. All charges are managed by movements to and from the Financial Instruments Adjustment Account and the Movement in Reserves Statement (MiRS). Page 129 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 24 - From 1 April 2007, costs associated with debt restructuring (Premiums and Discounts) are charged directly to the Comprehensive Income and Expenditure Statement in the year of extinguishment in accordance with accounting regulations. In line with the statutory guidance stated above, all premiums and discounts arising from an extinguishment have been deferred and charged to the General Fund over a period greater than one year. Any discount or premium incurred for restructuring exercises deemed a modification has been reflected in the carrying amount of the loan. External Interest Payable, Interest Receivable and Investment Income External interest has been calculated and charged to the Comprehensive Income and Expenditure Statement on an amortised cost basis over the life of the loan with the interest expense being recognised on a level yield / interest rate basis. For the majority of loans, this represents the interest amount payable for the year per the loan agreement. For those loans with a stepped interest rate feature, this results in a difference between the coupon rate and the amount charged to the Comprehensive Income and Expenditure Statement. For interest payable on all loans held at 31 March 2007, the net charge to the General Fund has been adjusted to reverse this differential. This is in line with statutory guidance issued by the Scottish Government (Section 12 (2) b of the Local Government in Scotland Act 2003). The Financial Instruments Adjustment Account (FIAA) has been credited / debited with the difference between the actual amount due in the year and the effective interest rate over the life of the loan. The Council manages its investments in accordance with the Local Government Investments (Scotland) Regulations 2010, including the preparation of an Annual Investment Strategy. The amount disclosed for interest receivable and investment income is based on the amount receivable per the contractual terms of the financial assets. Capital Expenditure Charged to Revenue Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current assets during the year: • depreciation attributable to the assets used by the relevant service; • revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off; • amortisation of intangible assets attributable to the service. The Council is not required to raise Council Tax to fund depreciation, revaluation and impairment losses or amortisation. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement. Depreciation, revaluation and impairment losses and amortisation are therefore replaced by the contribution in the General Fund Balance by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that: • the Council will comply with the conditions attached to the payments, and • the grants or contributions will be received. Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset in the form of the grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor. Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-specific Grant Income and Expenditure (non- ringfenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement. Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement (MiRS). Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure. Page 130 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 25 - Property, Plant and Equipment Non-current assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. a) Recognition Expenditure on the acquisition, creation or enhancement of property, plant and equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (i.e. repairs and maintenance) is charged as an expense when it is incurred. The Council operates a £10,000 de-minimis when recognising expenditure on property, plant and equipment. b) Measurement Non-current assets are initially measured at cost, comprising: • the purchase price; • any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management The Council does not capitalise borrowing costs incurred whilst non-current assets are under construction. The cost of non-current assets acquired other than by purchase is deemed to be its fair value, unless the acquisition does not have commercial substance (i.e. it will not lead to a variation in the cash flows of the Council). In the latter case, where an asset is acquired via an exchange, the cost of the acquisition is the carrying amount of the asset given up by the Council. Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-specific Grant Income and Expenditure line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Account. Where gains are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement. Non-current assets are then carried in the Balance Sheet using the following measurement bases: Property, Plant and Equipment: Council Dwellings Existing Use Value for Social Housing using the Beacon approach (adjusted vacant possession in accordance with LASAAC guidance) Other Land & Buildings Current value, determined as the amount that would be paid for the assets in its be existing use. Where there is no market- based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of current value Vehicles, Plant & Equipment Depreciated Historical Cost as a proxy for current value Infrastructure Assets Depreciated Historical Cost Community Assets Historical Cost Surplus Assets Measure for their economic benefit at fair value. Fair value is the price that would be received to see an asset in an orderly transaction between market participants at the measure date. Assets Under Construction Historical Cost Investment Properties Measure for their economic benefit at fair value. Fair value is the price that would be received to see an asset in an orderly transaction between market participants at the measure date. Heritage Assets Historical Cost / Insurance Value Non-current assets included in the Balance Sheet at current value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their current value at the year-end, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Surplus or Deficit on the Provision of Services where they arise from the reversal of a loss previously charged to a service. Page 131 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 26 - Where decreases in value are identified, they are accounted for as follows: • where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains); • where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. It should be noted that only vehicles purchased by the Council are reported. Vehicles used by the Council through Operational Leases are not included. There were no material Heritage Assets held by the Council as at 31 March 2024. c) Depreciation The Council employed the following depreciation policy for each class of non-current asset held during the year: Property, Plant and Equipment: Council Dwellings Depreciated on a straight line basis up to 40 years Other Land & Buildings No depreciation on land, buildings depreciated on a straight line basis up to 60 years Vehicles, Plant & Equipment Depreciated on a straight line basis up to 30 years Infrastructure Assets Depreciated on a straight line basis up to 40 years Community Assets No depreciation Surplus Assets (Land) No depreciation Surplus Assets (Other) Depreciated on a straight line basis up to 60 years Assets Under Construction No depreciation Investment Properties No depreciation Heritage Assets No depreciation The Council does not depreciate its non-current assets in the year of acquisition, charging a full year’s depreciation on disposal. The Council does not provide for depreciation on land or community assets with the exception of landfill sites, which are depreciated over their useful life. d) Impairment Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall. Where impairment losses are identified, they are accounted for as follows: • where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains); • where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. e) Disposal and Non-current Assets Held for Sale When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an asset held for sale. The asset is revalued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any losses previously recognised in the Surplus or Deficit on Provision of Services. Depreciation is not charged on assets held for sale. Page 132 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 27 - If assets no longer meet the criteria to be classified as assets held for sale, they are reclassified back to non- current assets and valued at the lower of their carrying amount before they were classified as held for sale; adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as held for sale, and their recoverable amount at the date of the decision not to sell. Assets that are to be abandoned or scrapped are not reclassified as assets held for sale. When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether property, plant and equipment or assets held for sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account. f) Charges Made to Revenue A combination of depreciation and any relevant impairment is charged to Services for the use of assets based upon their fair value rather than the financing costs of the level of debt outstanding on these assets, following the CIPFA guidelines on Capital Accounting. The charge made to the Housing Revenue Account is an amount equivalent to the statutory capital financing charges. Investment Properties Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale. Heritage Assets The Council’s collections are held within the stores at Summerlee Museum of Scottish Industrial Life and North Lanarkshire Heritage Centre. The most significant of the collections are the Industrial and Social History items, however the Museums Service also has a number of smaller collections including Archaeology, Numismatics, Natural History, Ethnography and Art Collections. The Council’s policy for Heritage Assets follows the recognition and measurement treatment, including the treatment of revaluation gains and losses, set out within the accounting policy for Property, Plant and Equipment. Heritage Assets, where possible, should be measured at valuation. However, in circumstances where this is not practicable the asset will be measured at historical cost less any accumulated depreciation, amortisation and impairment. For the current financial year on the grounds of materiality, it has not been considered appropriate to show Heritage Assets separately on the face of the Council’s Balance Sheet but to continue to include these within Community Assets under the Property, Plant and Equipment category. Where valuation or cost information is not available and Heritage Assets have not been recognised as a result, further information is provided in the notes to the accounts. Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (for example software development costs) is capitalised when it is expected that it will bring benefits to the Council for more than 12 months. Intangible assets are measured initially at cost. Such assets are not revalued as the fair value of the assets held cannot be determined by reference to an active market. The depreciable amount of an intangible asset is amortised on a straight line basis over its expected useful life and charged to the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The useful life of these assets is deemed to be up to 15 years. In line with the Council’s accounting policy on Depreciation, no amortisation is charged in the year of purchase with a full years charge in the year of disposal. Leases IAS17 Leases is the standard under which leases are recognised. Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases. Finance Leases The asset is accounted for on the Balance Sheet under Property, Plant and Equipment. a. a charge for the acquisition of the interest in the property, plant or equipment is applied to write down the lease liability; Page 133 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 28 - b. a finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement) is applied. Finance leases are accounted for using the policies applied generally to non-current assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life. Operating Leases Leases that do not meet the definition of finance leases are accounted for as operating leases. Rentals paid under operating leases are charged to the appropriate Service account in the Comprehensive Income and Expenditure Statement as an expense of the Services benefitting from use of the leased item over the lease term. Impairment of Financial Assets In determining the impairment of its financial assets measured at amortised cost and those measured at fair value through other comprehensive income, the Council adopts the requirements of IFRS9 Financial Instruments in assessing expected credit losses and accounting for impairment. One of the objectives of this standard is the principle of applying impairment to financial assets which are part of a business model that includes contractual cashflows. Impairment losses are calculated to reflect the expectation that the future cashflows might not take place because the borrower could default on the obligations. The level of credit risk is assessed to identify the credit losses particularly where risk has increased significantly since initial recognition. Credit loss in relation to a financial instrument represents cash shortfalls measured by the difference between the net present value of all contractual cashflows that are due to the Council in accordance with the contract for the instrument and the net present value of all the cashflows the Council expects to receive discounted at the original effective interest rate. Losses are measured in one of three ways: • Lifetime expected credit losses: the expected credit losses that result from all possible default events over the expected life of a financial instrument; • 12-month expected credit losses: the portion of lifetime expected credit losses that represent the losses that result from default events that are possible within the next financial year; • Cumulative changes in lifetime expected credit losses since initial recognition: the change in lifetime credit losses (positive or negative) over those that were included in the estimated cashflows on initial recognition. The Council also consider impairment allowances for instruments which are not financial assets i.e. loan commitments and financial guarantees. The Council has adopted the simplified approach for trade receivables and house rent receivables under which impairment losses are automatically based on lifetime expected credit losses, removing the need to consider changes in credit risk since initial recognition and the possibility that the appropriate measure should be 12-month expected credit losses. The Council carries out an annual assessment of the impact of adopting the full accounting treatment for expected credit losses, and on the grounds of materiality, generally does not recognise expected credit losses on financial assets excluding trade receivables which were subject to a separate assessment in the Comprehensive Income and Expenditure Account and accordingly has not adjusted the carrying amount per the Balance Sheet which represents the gross amortised cost of the financial asset. For Trade Receivables the Council carries out an assessment of lifetime credit annually and has accounted for impairment losses within the Comprehensive Income and Expenditure Account and accordingly has adjusted the carrying amount for short-term debtors amount in the Balance Sheet. Legal Charges Over Properties As part of its service provision, the Council may decide to provide a rechargeable service to clients, with the recovery of the costs incurred being deferred by virtue of placing a charging order on the recipient’s property. Due to the legal nature of such arrangements and on the grounds of materiality, in the past the Council has not accounted for the recovery of such sums due until they were realised, i.e. when the charging order was enforced. Where the Council considers these sums to be material the income has been accrued to the relevant Service and recognised on the Balance Sheet as a Long-Term Debtor. Page 134 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 29 - Soft Loans Long-Term Debtors include recorded amounts payable from service users receiving Social Care for which a charging order has been placed on the recipient’s property as a method of recovering the debt. For the advances the Council is charging interest at less than the market rate applicable for similar advances and as such these balances are notionally recognised as soft loans. When soft loans are made, a loss is recorded in the Comprehensive Income and Expenditure Statement (debited to the appropriate service) for the present value of the interest that will be foregone over the life of the instrument, resulting in a lower amortised cost than the outstanding principal. Interest is credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement at a marginally higher effective rate of interest than the rate receivable from recipients, with the difference serving to increase the amortised cost of the loan in the Balance Sheet. Subject to the exception below, the Council has assessed the impact of adopting the full accounting treatment for soft loans held on this basis, and on the grounds of materiality, has decided not to recognise notional losses on soft loans in the Comprehensive Income and Expenditure Account and accordingly to adjust the long-term debtor balance stated within the Balance Sheet. Inventory Inventory has been valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Both average cost and individual cost bases are used for valuing stock at year end. Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Council’s cash management arrangements. Provisions Provisions are made where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. For instance, the Council may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation. Provisions are generally charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement when the Council has an obligation. These are measured at the best estimate, as at the balance sheet date, of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year – where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the Council settles the obligation. Contingent Liabilities A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Contingent Asset A contingent asset arises where an event has taken place that gives the Council a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential. Page 135 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 30 - Financial Instruments Financial Liabilities and Financial Assets are carried at amortised cost in the Balance Sheet unless otherwise stated. In the event the Financial Asset does not meet the criteria to be shown at amortised cost, it will be shown as fair value through profit and loss or if a qualifying asset, as fair value through other comprehensive income. Fair Value at amortised cost, ignoring impairment, represents the carrying amount on initial recognition plus the interest taken to the Comprehensive Income and Expenditure Statement less the cash paid or received for both interest and principal. In accordance with IFRS9 Financial Instruments, in 2023/24, the Council adopted fair value at amortised cost where cashflows were solely payments of principal and interest and the Council’s business model was to collect those cashflows. For qualifying assets borrowing costs directly attributable to the acquisition, construction or production have been capitalised and form part of the cost of the asset. The Council has accounting reserves to account for the restatement of financial instruments to an amortised cost or fair value basis. The Financial Instruments Adjustment Account is a balancing account to allow for differences in statutory requirements and proper accounting practice for financial liabilities and financial assets. Reserves Reserves are split between Usable and Unusable Reserves in the Balance Sheet. Usable Reserves include the General Fund and Housing Revenue Account. Unusable Reserves are kept in order to manage accounting processes for non-current assets, financial instruments and retirement benefits. Insurance Fund The Council operates an Insurance Fund to make provision for outstanding claims and events. Note 27 to the Accounts provides further information on movements in the Insurance Fund. Repairs & Renewals Fund The Council operates a Repairs & Renewals Fund which is earmarked for improvements to Council facilities. Note 27 to the Accounts provides further information on movements in the Repairs & Renewals Fund. Capital Fund The Council operates a Capital Fund where receipts from the sale of assets can be directed and utilised for financing capital expenditure and loans fund repayments. In addition, Local Government Finance Circular 6/2023 provides a temporary amendment for the 2023/24 financial year to allow transfer of a specific element of the General Capital Grant to the Capital Fund in order that it may be used to provide funding for the principal element of both General Fund and HRA Loans repayments. Capital Receipts Reserve The regulations covering capital receipts generated from the sale of assets allow the proceeds to be used to fund capital expenditure and are available to support further capital investment. Capital Grants Unapplied Account Capital Grants Unapplied Account is used to hold grant received but not yet utilised. This will be shown as part of the Usable Reserves on the Balance Sheet. Revaluation Reserve The Revaluation Reserve records the accumulated gains on non-current assets held by the Council arising from increases in value, as a result of inflation or other factors, since 1 April 2007. Whilst gains arising from revaluations increase the net worth of the Council they would only result in an increase in spending power if the relevant asset is sold and a capital receipt is generated. Capital Adjustment Account The Capital Adjustment Account represents timing differences between the amount of the historical cost of non- current assets that has been consumed and the amount that has been financed in accordance with statutory requirements. Pension Reserve The Pension Reserve arises from the IAS19 Employee Benefits accounting disclosure requirements and represents the difference between accounting for pensions and the funding of pension costs from taxation in line with the statutory requirements. It is equal to the reported Pension Liability which recognises the Council's share of the net funding position on the Strathclyde Pension Fund as projected at 31 March 2024. Page 136 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 31 - The Council applies IAS19 and, as a result, quoted securities held as assets by the Strathclyde Pension Fund in the defined benefit scheme are valued at bid price rather than mid-market value. Employee Benefits a) Benefits Payable During Employment Short-term employee benefits are those due to be settled wholly within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits (e.g. cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Council. An accrual is made for the cost of holiday entitlements (annual leave only) earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the current accounting year. The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement to the Employee Statutory Adjustment Account so that holiday entitlements are charged to revenue in the financial year in which the holiday absence occurs. b) Termination Benefits Termination benefits are amounts payable as a result of a decision by the Council to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept voluntary redundancy in exchange for those benefits and are charged on an accruals basis to the appropriate service segment or, where applicable, to a corporate service segment at the earlier of when the Council can no longer withdraw the offer of those benefits or when the Council recognises costs for a restructuring. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund Balance to be charged with the amount payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. c) Post Employment Benefits As part of the terms and conditions of employment the Council offers retirement benefits to its employees. The Council participates in two separate pension schemes, one exclusive to teachers and the other open to all other employees. • The Scottish Teachers’ Superannuation Scheme, administered by the Scottish Public Pensions Agency • The Local Government Pension Scheme, administered by Strathclyde Pension Fund Both of these schemes provide members with ‘defined benefits’ i.e. retirement lump sums and pensions earned as employees work for the Council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot ordinarily be identified specifically to the Council. The scheme is therefore accounted for as if it were a defined contribution scheme and no liability for future payments of benefits is recognised in the Balance Sheet. The Education, Children and Families expenditure line within the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to teachers’ pensions in the year. d) The Local Government Pension Scheme The Local Government Pension Scheme (LGPS) is accounted for as a ‘defined benefits’ scheme: • The liabilities of the Strathclyde Pension Fund attributable to the Council are included in the Balance Sheet on an actuarial basis using the ‘projected credit unit method’ i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc. and projections of future earnings for current employees; • Liabilities are discounted to their value at current prices using a discount rate of 4.8%. The discount rate used by the appointed actuaries to place a value on the liability is based on Corporate bond yields on high quality bonds and recognises the weighted average duration of the benefit obligation for the Council; Page 137 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 32 - • The assets of the Strathclyde Pension Fund attributable to North Lanarkshire Council are included in the Balance Sheet at their fair value at current bid prices for securities, estimated fair value for unquoted securities and market price for property. The change in the net pensions liability is analysed into the following cost components, comprising: • Current service cost – the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked; • Past service cost – the increase in liabilities as a result of a scheme amendment or curtailment whose effect relates to years of service earned in earlier years – debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement; • Net interest on the net defined benefit liability (asset), i.e. net interest expense for the Council – the change during the period in the net defined benefit liability (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement – this is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability (asset) at the beginning of the period – taking into account any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payments; and • Remeasurements, comprising the return on plan assets – excluding amounts included in net interest on the net defined benefit liability (asset) – charged to the Pensions Reserve as Other Comprehensive Income and Expenditure. In relation to retirement benefits, Scottish Government regulations require the General Fund balance to be charged with the amount payable by the Council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement (MiRS) this means that there are appropriations to and from the Pensions Reserve to remove the notional charges and credits for retirement benefits and replace them with charges for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. Private Finance Initiatives (PFI) and Similar Contracts PFI and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor. As the Council is deemed to control the services that are provided under its PFI schemes, and as ownership of the property, plant and equipment will pass to the Council at the end of the contracts for no additional charge, the Council carries the assets used under the contracts on its Balance Sheet as part of property, plant and equipment. The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as property, plant and equipment owned by the Council. The amounts payable to the PFI operators each year are analysed into five elements: • Fair value of the services received during the year – debited to the relevant service in the Comprehensive Income and Expenditure Statement; • Finance cost – an interest charge on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The accounting treatment of the PFI for the provision of school buildings, maintenance and other facilities is in accordance with recognised accounting standards including IAS17 Financial Instruments: Recognition and Measurement and IFRIC 12 Service Concession Arrangements; • Contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement; • Payment towards liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease); • Lifecycle replacement costs – proportion of the amounts payable is posted to the Balance Sheet as a prepayment and then recognised as additions to property, plant and equipment when the relevant works are eventually carried out. Page 138 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 33 - The Council has exercised the Service Concessions flexibility made through Financial Circular 10/2022 (Finance Leases and Service Concession Arrangements), with the statutory repayment of principal elements of the lease component of service concession arrangements being made over the estimated asset lives (up to 50 years), as opposed to the period of the contract. Payments made to operators remain unchanged, with differences between the actual amounts paid to the operator towards liability under the contracts and the principal repayments recognised through the Comprehensive Income and Expenditure Statement being held in the Capital Adjustment Account. Revenue Expenditure Funded from Capital under Statute Expenditure incurred during the year that may be capitalised under statutory provisions but that does not result in the creation of a non-current asset has been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of Council Tax. Value Added Tax Generally, Value Added Tax is excluded from Income and Expenditure as all VAT collected is payable to HMRC while the majority of VAT paid is recoverable from HMRC. In the circumstance when the Council cannot fully recover VAT paid, this is included within service expenditure to the extent that it is irrecoverable from HMRC. Re-measurement of the net defined benefit liability Re-measurements or actuarial gains and losses arise through experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred), and the effects of changes in actuarial assumptions. All actuarial gains and losses have been recognised in Other Comprehensive Income and Expenditure within the Comprehensive Income and Expenditure Statement. Events after the Reporting Date Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified: • those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events; • those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect. Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. Page 139 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 34 - 2. Expenditure and Funding Analysis 2.1. The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants, rents, Council Tax and non-domestic rates) by local authorities in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices. It also shows how this expenditure is allocated for decision making purposes between the Council’s services. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement. *The split of this balance between General Fund and the HRA is shown within the Movement in Reserves Statement. 2.2. Adjustments from General Fund to Comprehensive Income and Expenditure Statement 2022/23 2023/24 Net Expenditure Chargeable to the General Fund and HRA Balances Adjustments from General Fund to CIES (Note 2.2) Net Expenditure in the Comprehensive Income and Expenditure Statement Net Expenditure Chargeable to the General Fund and HRA Balances Adjustments from General Fund to CIES (Note 2.2) Net Expenditure in the Comprehensive Income and Expenditure Statement £000 £000 £000 £000 £000 £000 433,256 73,922 507,178 Education, Children & Families 439,534 97,837 537,371 133,989 30,954 164,942 Enterprise & Communities 139,204 29,912 165,116 54 (54) - Trading Accounts - - - 69,994 12,202 82,196 Chief Executives & Other Corporate Services 76,685 8,028 84,713 185,759 2,857 188,616 Adult Health & Social Care (Non-Integrated) 194,970 2,216 197,186 (506) 13,951 13,445 Adult Health & Social Care (Integrated) 58 (3,002) (2,944) (30,803) 565 (30,238) Housing Revenue Account (23,345) 105,441 82,096 2,888 (4,080) (1,192) Other Segments (1,502) (5,935) (7,437) 794,630 130,317 924,947 Net Cost of Services 825,604 234,497 1,060,101 (818,413) (69,366) (887,779) Other Income and Expenditure (831,781) (68,375) (900,156) (23,783) 60,951 37,168 (Surplus) or Deficit on the Provision of Services (6,177) 166,122 159,945 (255,760) Opening General Fund and HRA Balance (276,190) (23,783) Less/Plus (Surplus) or Deficit on General Fund and HRA Balance in Year (6,177) 3,353 Transfers to/(from) other statutory reserves 18,346 (276,190) Closing General Fund and HRA Balance at 31 March* (300,713) 2023/24 Adjustments for Capital Purposes1 Net Change for the Pensions Adjustments2 Other Differences3 Total Adjustments Education & Families 97,951 1,119 (1,233) 97,837 Enterprise & Communities 30,081 806 (975) 29,912 Trading Accounts - - - - Chief Executives & Other Corporate Services 7,769 404 (145) 8,028 Adult Health & Social Care (Non-Integrated) 2,216 - - 2,216 Adult Health & Social Care (Integrated) (2,922) 705 (785) (3,002) Housing Revenue Account 105,497 227 (283) 105,441 Other Segments - (5,935) - (5,935) Net Cost of Services 240,592 (2,674) (3,421) 234,497 Other Income and Expenditure (69,585) 3,104 (1,894) (68,375) Surplus or Deficit 171,007 430 (5,315) 166,122 Page 140 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 35 - 2022/23 Adjustments for Capital Purposes1 Net Change for the Pensions Adjustments2 Other Differences3 Total Adjustments Education & Families 48,775 22,518 2,628 73,921 Enterprise & Communities 15,657 16,070 (773) 30,954 Trading Accounts - - (54) (54) Chief Executives & Other Corporate Services 4,257 7,686 259 12,202 Adult Health & Social Care (Non-Integrated) 2,857 - - 2,857 Adult Health & Social Care (Integrated) - 13,924 27 13,951 Housing Revenue Account (4,053) 4,621 (2) 566 Other Segments - (4,080) - (4,080) Net Cost of Services 67,493 60,739 2,085 130,317 Other Income and Expenditure (80,113) 5,339 5,408 (69,366) Surplus or Deficit (12,620) 66,078 7,493 60,951 1 Adjustments for capital purposes – this column adds in depreciation, amortisation and impairment and revaluation gains and losses in the services line, and for: • Other operating expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets. • Financing and investment income and expenditure – the statutory charges for capital financing i.e. Minimum Revenue Provision and other revenue contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. • Taxation and non-specific grant income and expenditure – capital grants are adjusted for income not chargeable under generally accepted accounting practices. Revenue grants are adjusted from those receivable in the year to those receivable without conditions or for which conditions were satisfied throughout the year. The Taxation and Non Specific Grant Income and Expenditure line is credited with capital grants receivable in the year without conditions or for which conditions were satisfied in the year. 2 Net change for the removal of pension contributions and the addition of IAS19 Employee Benefits pension related expenditure and income: • For services this represents the removal of the employer pension contributions made by the Council as allowed by statute and the replacement with current service costs and past service costs. • For Financing and investment income and expenditure the net interest on the defined benefit liability is charged to the CIES. 3 Other differences between amounts debited/credited to the Comprehensive Income and Expenditure Statement and amounts payable/receivable to be recognised under statute: • For services this represents the accrual made for the cost of holiday/leave entitlements earned by employees but not taken before the year-end which employees can carry forward into the next financial year. These require to be included within the Net cost of Services under generally accepted accounting practices, however are not chargeable to the General Fund. • For Financing and investment income and expenditure the other differences column recognises adjustments to the General Fund for the timing differences for premiums and discounts. Page 141 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 36 - 3. Accounting Standards that have been Issued but not yet Adopted The Code requires the Council to disclose information about accounting changes that will be required by new accounting standards in the 2023/24 Code due to be adopted in future years and the possible impact. IFRS16 Leases is due to be implemented no later than 1 April 2024, with the Council implementing from this date. It is estimated that this will result in recognition of a right of use of property assets and related liability of £1.712m. In addition, implementation of IFRS16 will have an impact on the outstanding liability of leases and service concession arrangements relating to PPP schools, with an estimated increase in liabilities of £86.4m. In addition, the following list provides details of further standards issued but not yet adopted which have an effective implementation date on or after 1 April 2024. It is not anticipated that these will have a material impact on the Council. • Amendments to IAS 8 (issued in February 2021) – Definition of Accounting Estimates. • Amendments to IAS 1 and IFRS Practice Statement 2 (issued in February 2021) Disclosure of Accounting Policies • Amendments to IAS 12 (issued in May 2021) – Deferred Tax relating to Assets and Liabilities arising from a Single Transaction. • Amendments to IFRS 3 (issued in May 2020) – Updating a Reference to the Conceptual Framework. 4. Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are: • The Council holds contracts for the provision of educational establishments and for the Clyde Valley Waste Recycling Plant. The nature of these contracts has been examined and the Council considers that it controls the services provided under the agreements. Therefore the accounting policies for PPP schemes and similar arrangements have been applied with the assets under the contracts included within Property, Plant and Equipment on the Council's Balance Sheet. Further details are shown in Note 25: Public Private Partnerships and Similar Contracts. Page 142 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 37 - 5. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty The Statement of Accounts contains estimated figures that are based on assumptions made by the Council about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Council’s Balance Sheet at 31 March 2024 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows: Item Uncertainties Effect if Actual Results Differ from Assumptions Property, Plant and Equipment Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the Council will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to assets. Consideration has been given as to whether the values of all other land and buildings assets, regardless of whether or not they were subject to valuation during the year, have materially changed, to ensure that the balance sheet shows a fair representation of the position as at 31 March 2024. Valuations include estimations including in relation to market values and rebuild costs. Discussions with the Council’s surveyors indicated that valuations may be subject to an acceptable valuation sensitivity range of up to 15%. A review of the asset valuations undertaken indicated that there is no material change in carrying values for most asset classes. If the useful life of assets is reduced, depreciation increases and the carrying amount of the assets falls. It is estimated that the annual depreciation charge for property, plant and equipment would increase by £10.712m for every year that useful lives had to be reduced. A 15% change in the value of the Council’s Property, Plant and Equipment would result in a movement on the Council’s balance sheet of £456.548m. Net Pension Asset/(Liability) Estimation of the net asset/(liability) to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. The Council is engaged with Hymans Robertson via Strathclyde Pension Fund to provide the Council with expert advice about the assumptions to be applied. The effects on the net pensions asset/(liability) can have a material effect on the Council’s Net Worth. The Council’s actuaries have calculated that the surplus in the defined benefit plan is £739.002m consisting of a £858.492m net asset in relation to funded plans, offset by £119.490m of unfunded liabilities, however accounting standards require the net asset to be limited to the present value of any future economic benefits which is valued at nil. As result, an asset ceiling adjustment applied of £858.492m was applied in 2023/24, therefore a decrease of at least 100% on the surplus in the defined benefit plan would be required to reduce the net pension asset held on the balance sheet. 6. Events After the Balance Sheet Date The Chief Officer (Finance) issued the Audited Statement of Accounts on 31 October 2024. The Council entered into a new contractual arrangement with Mears Limited to provide Housing and Corporate maintenance and improvement services. The contract has an initial period of eight years with contract extensions available, at the Council’s discretion, to a maximum contract duration of twelve years. The estimated upper financial limit of the contract, over the maximum duration of the contract, including contingency, is £1,800 million. Service delivery under the new contract commenced on 1 July 2024. This replaces the previous contractual arrangement whereby these services were provided to the Council by its Joint Venture company Mears Scotland LLP, which will be wound down in due course. Page 143 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 38 - In addition, the Council entered into a new contractual arrangement with Hochtief PPP Solutions GmbH to provide Roads and Infrastructure maintenance and improvement services. The contract has an initial period of eight years with contract extensions available, at the Council’s discretion, to a maximum contract duration of twelve years. The estimated upper financial limit of the contract, over the maximum duration of the contract, including contingency, is £450 million. Service delivery under the new contract commenced on 1 October 2024. This replaces the previous contractual arrangement whereby these services were provided to the Council by its Joint Venture company Amey Public Services LLP, which will be wound down in due course. No adjustments were required to the financial statements in respect of these events. There have been no other material events since the Balance Sheet date. 7. Restatement There are no restatements of the 2022/23 figures within the core financial statements or notes to the accounts. 8. Other Operating Expenditure 2022/23 2023/24 £000 £000 (Gains) or losses on disposal of non-current assets 7,672 15,342 Total 7,672 15,342 9. Financing and Investment Income and Expenditure 2022/23 2023/24 Expenditure Income Expenditure Income £000 £000 £000 £000 Interest Payable and similar charges 46,314 - 59,404 - Interest receivable and similar income - (5,879) - (15,664) Pensions interest income on plan assets - (73,948) - (127,938) Pension interest cost on defined benefit obligation 78,982 - 131,026 - Surpluses on Trading Undertaking not included in Net Cost of Services 473 (121) 173 - Financial Guarantee - (97) 825 (125) Impairment of Financial Assets 4,234 - 4,303 - Total 130,003 (80,045) 195,730 (143,727) Financial Guarantee income relates to financial guarantees, underwriting the debt service costs of NLP LLP’s original loan of £45.000m to the lender, and new loan facility of £30.000m with a premium payable to the Council by NLP LLP for providing this guarantee. For further details refer to Provisions: Financial Guarantee section within Note 17. 10. Taxation and Non-Specific Grant Income 2022/23 2023/24 £000 £000 Income from Council Tax (130,267) (138,528) Distribution from Non-Domestic Rates pool (111,737) (121,640) General Revenue Grant (615,619) (622,417) Recognised capital grants and contributions (87,785) (84,916) Total (945,408) (967,501) It should be noted that the General Revenue Grant recognised in the CIES has been adjusted from that shown in Local Government Finance Circular 2/2024 to reflect proper accounting practice. Income not included in the circular has been accrued of £1.329m in relation to the final 2023/24 Discretionary Housing Payment claim, and £1.344m in relation to Scottish Government contribution to the 2023/24 pay award. In addition, income received in relation to the final 2022/23 Discretionary Housing Payment claim exceeded that accrued by £0.135m. Page 144 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 39 - 11. Grant Income The Council credited the following grants and contributions to the Comprehensive Income and Expenditure Statement 2022/23 2023/24 £000 £000 Credited to Comprehensive Income and Expenditure Statement General Revenue Grant 615,619 622,417 Distribution from Non-Domestic Rates pool 111,737 121,640 Capital - Scottish Government General Grant 25,180 42,799 Capital - Scottish Government Other Grants 58,400 37,117 Capital – Other Grants 4,205 5,000 Total 815,141 828,973 Credited to Services Housing Benefit 78,158 77,682 1140 Hours Early Years 34,842 35,310 Pupil Equity Fund 9,682 9,682 Scottish Attainment Challenge 7,482 6,002 Offenders / Criminal Justice Grant 6,704 6,709 City Deal 3rd Party 8,740 5,639 No One Left Behind 1,059 4,877 Scotland’s Schools for the Future 4,773 4,778 Shared Prosperity Fund 209 4,625 Vacant and Derelict Land Fund 1,389 3,685 Resettlement Programmes 7,339 2,589 SG Main Capital Grant - 3rd Party Write Offs 1,722 2,424 Home Energy Efficient Programme 209 1,652 RCGF Grant - 1,474 Children & Young People’s Mental Health 1,177 940 European Structural Fund 1,224 563 UK Renewal Fund 1,415 - Young Person’s Guarantee 1,046 - Other Miscellaneous Grants and Contributions 8,971 9,169 Total 176,141 177,800 Balances included within the Other Miscellaneous Grants and Contributions line is reviewed annually on the basis of value therefore the prior year disclosures may differ from the audited 2022/23 annual accounts. Page 145 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 40 - 12. Agency Services The Council bills and collects domestic water and sewerage charges on behalf of Scottish Water along with its own Council Tax. During 2023/24 the Council collected and paid over £57.892m (2022/23 £55.737m) and received £1.302m (2022/23 £1.137m) for providing this service. In addition, the Council has been asked by Scottish Government to administer a number of grant schemes on their behalf to a wide range of recipients; most notably the Costs of Living and Child Bridging Payment. The Council made payments of £0.001m (£25.576m in 2022/23), with a net creditor of £0.013m shown on the Council’s balance sheet in relation to reimbursement outstanding as at 31st March 2024 (£0.004m net debtor as at 31st March 2023). Further detail is shown in the table below. Net Debtor/ (Creditor) at 31 March 2022 Payments Made in 2022/23 Funding Received in 2022/23 Net Debtor/ (Creditor) at 31 March 2023 Payments Made in 2023/24 Funding Received in 2023/24 Net Debtor/ (Creditor) at 31 March 2024 £000 £000 £000 £000 £000 £000 £000 Cost of Living - 18,635 (18,635) - (3) - (3) Business Grant Scheme 72 - (72) - - - - Retail, Hospitality Top Up Support (1,128) 43 1,085 - - - - Child Bridging Payment (35) 5,455 (5,433) (13) 4 - (9) Taxi and Private Hire Vehicle Driver Support 1,405 275 (1,680) - - - - Self Isolation 783 1,063 (1,846) - - (1) (1) Other (875) 105 779 9 - (9) - Total Provisions 222 25,576 (25,802) (4) 1 (10) (13) Page 146 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 41 - 13. Property, Plant and Equipment 13.1. Movement on Balances in 2023/24 Council Dwellings Other Land & Buildings Vehicles , Plant & Equip Community Assets Surplus Assets AUC Total Infra- structure Total Property, Plant & Equipment £000 £000 £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2023 1,257,571 1,437,388 103,296 15,809 17,839 140,049 2,971,952 Additions 75,088 26,962 15,567 870 - 102,670 221,157 19,543 240,700 Revaluation increases/(decreases) recognised in the revaluation Reserve (70,605) (17,169) 3,821 (47) 328 - (83,672) - (83,672) Revaluation increases/(decreases) recognised in the surplus/deficit on the provision of services (103,412) (23,029) (281) - - (332) (127,054) (17) (127,071) Derecognition – disposals (15,805) (85) (2,161) - (1,235) - (19,286) - (19,286) Assets reclassified (to)/from assets under construction (AUC) 64,530 59,817 3,417 67 - (136,595) (8,764) 8,764 - Assets reclassified (to)/from Intangible Assets [see Note 15] - - - - - 1,300 1,300 - 1,300 Assets classified (t)/from held for sale - (1,652) - - 1,652 - - - - Other movements in cost or valuation - (306) 306 (470) - - (470) 470 - At 31 March 2024 1,207,367 1,481,926 123,965 16,229 18,584 107,092 2,955,163 Accumulated Depreciation and Impairment At 1 April 2023 - 95,463 61,737 - 154 - 157,354 Depreciation charge 31,439 59,222 12,385 - 15 - 103,061 15,162 118,223 Depreciation written out to the revaluation reserve (31,439) (12,846) (26) - - - (44,311) - (44,311) Depreciation written out to the surplus/deficit on the provision of services - (11,483) (261) - - - (11,377) - (11,377) Impairment losses/(reversal) recognised in the revaluation reserve - - - - - - - - - Impairment losses/(reversal) recognised in the surplus/deficit on the provision of services - - - - - - - - - Derecognition - disposals - - (2,147) - - - (2,147) - (2,147) Other movements in depreciation and impairment - (212) - - 212 - - - - At 31 March 2024 - 130,144 71,688 - 381 - 202,213 Net Book Value At 31 March 2024 1,207,367 1,351,782 52,277 16,229 18,203 107,092 2,752,950 278,721 3,031,671 At 31 March 2023 1,257,571 1,341,925 41,559 15,809 17,685 140,049 2,814,598 265,123 3,079,721 Page 147 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 42 - The Scottish Government issued Finance Circular 9/2022 in relation to Infrastructure Assets which sets out two statutory overrides in relation to these assets. The Council are invoking both of the statutory overrides permitted by this guidance and as a result have excluded the reporting of gross book value or accumulated depreciation amounts for infrastructure assets for accounting periods commencing 1 April 2021 until 31 March 2024, and to account for the derecognition of any replaced part of an infrastructure asset at nil value. 13.2. Movement on Balances in 2022/23 Council Dwellings Other Land & Buildings Vehicles , Plant & Equip Community Assets Surplus Assets AUC Total Infra- structure Total Property, Plant & Equipment Nature of Asset Holding at 31 March 2024 Owned 1,207,367 1,079,862 52,277 16,229 18,203 107,092 2,481,030 278,721 2,759,751 Finance Lease - - - - - - - - - PPP - 271,920 - - - - 271,920 - 271,920 Council Dwellings Other Land & Buildings Vehicles , Plant & Equip Community Assets Surplus Assets AUC Total Infra- structure Total Property, Plant & Equipment £000 £000 £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2022 1,300,167 1,480,320 97,592 15,854 22,322 70,780 2,987,035 Additions 72,734 24,011 5,670 225 - 107,495 210,135 17,333 227,468 Revaluation increases/(decreases) recognised in the revaluation reserve (129,297) (74,003) (18) (270) (3,542) - (207,130) - (207,130) Revaluation increases/(decreases) recognised in the surplus/deficit on the provision of services 11,673 (14,057) - - (941) (556) (3,881) - (3,881) Derecognition – disposals (10,743) (1,303) (1,272) - - - (13,318) - (13,318) Assets reclassified (to)/from assets under construction (AUC) 13,037 22,420 1,324 - - (37,373) (592) 592 - Assets reclassified (to)/from Intangible Assets [see Note 15] - - - - - (297) (297) - (297) At 31 March 2023 1,257,571 1,437,388 103,296 15,809 17,839 140,049 2,971,952 Accumulated Depreciation and Impairment At 1 April 2022 8,365 46,712 50,904 - 138 - 106,119 Depreciation charge 31,791 51,112 12,080 - 16 - 94,999 15,362 110,361 Depreciation written out to the revaluation reserve (40,156) 2,344 25 - - - (37,787) - (37,787) Depreciation written out to the surplus/deficit on the provision of services - (13,791) - - - - (13,791) - (13,791) Impairment losses/(reversal) recognised in the revaluation reserve - 2,374 - - - - 2,374 - 2,374 Impairment losses/(reversal) recognised in the surplus/deficit on the provision of services - 8,016 - - - - 8,016 - 8,016 Derecognition - disposals - (1,303) (1,272) - - - (2,575) - (2,575) At 31 March 2023 - 95,463 61,737 - 154 - 157,354 Page 148 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 43 - 13.3. Valuation of Non-Current Assets The following statement shows the progress of the Council’s rolling programme for the revaluation of non-current assets. The properties were valued by the Council’s registered valuers within external advisors BNP Paribas in conjunction with the Council’s Asset and Procurement Solutions, in accordance with the Statement of Asset Valuation Practice and Guidance Notes of the Royal Institute of Chartered Surveyors. Council Dwellings Other Land & Buildings Vehicles, Plant & Equipment Community Assets Surplus Assets Assets Under Construction Total £000 £000 £000 £000 £000 £000 £000 Value at historical cost - 62,637 47,816 13,482 15 107,092 231,042 Valued at current value plus additions less depreciation as at: 31 March 2024 1,207,367 364,176 3,361 303 - - 1,575,207 31 March 2023 - 750,115 - - 3,308 - 753,423 31 March 2022 - 54,738 835 - 540 - 56,113 31 March 2021 - 96,118 232 112 11,907 - 108,369 31 March 2020 - 23,998 33 2,332 2.432 - 28,795 Total Value as at 31 March 2024 1,207,367 1,351,782 52,277 16,229 18,202 107,092 2,752,950 The Council previously operated a rolling five-year revaluation programme which ended in 2022/23. The Council has therefore agreed a new asset valuation programme from 2023/24 onwards, and in doing so has considered the latest developments in respect of valuations. This resulted in a new valuation programme methodology incorporating all asset classes to be undertaken, with a representative programme of 20% of each asset category to be formally revalued. In subsequent years, valuation programmes will be determined to ensure all assets are formally valued at least once in a rolling 5-year period. In addition, Council Dwellings will be formally revalued each year. . Discussions with the Council’s surveyors indicated that valuations may be subject to an acceptable valuation sensitivity range of up to 15%. All formal valuations were undertaken based on 31 January 2024 valuation date, with exception of Council Dwellings which was based on 31 March 2024 valuation date. A review was undertaken to assess whether the value of all other land and buildings assets, regardless of whether or not they were subject to valuation during the year, had materially changed, to ensure that the balance sheet shows a fair representation of the position as at 31 March 2024 Council Dwellings Other Land & Buildings Vehicles , Plant & Equip Community Assets Surplus Assets AUC Total Infra- structure Total Property, Plant & Equipment Net Book Value At 31 March 2023 1,257,571 1,341,925 41,559 15,809 17,685 140,049 2,814,598 265,123 3,079,721 At 31 March 2022 1,291,802 1,433,608 46,688 15,854 22,184 70,780 2,880,916 262,561 3,143,477 Nature of Asset Holding at 31 March 2023 Owned 1,257,571 1,065,497 41,559 15,809 17,685 140,049 2,538,170 265,123 2,803,293 Finance Lease - - - - - - - - - PPP - 276,428 - - - - 276,428 - 276,428 Page 149 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 44 - 14. Heritage Assets The Council recognises that there are a number of assets that could be categorised as a Heritage Asset, however due to materiality these have remained within the Community Assets and Infrastructure Assets classification within Property, Plant and Equipment on the Balance Sheet. A summary of the collections are shown in the table below: Collection No. In Collection Value £000 Civic Regalia 1 29 Museum Exhibits 1 9 Paintings 6 59 Sculptures 1 39 Total 9 136 During the year, the insurance value of Civic Regalia was valued at £0.029m (£0.025m 2022/23), an upward valuation of £0.004m. A review of Paintings resulted in a valuation of £0.089m (£0.139m 2022/23), a downward valuation of £0.050m. Both of these valuation movements have been reflected within the financial statements and subsequent notes. The Museum Exhibits, Paintings and Civic Regalia are included within Community Assets on the Balance Sheet, whilst the sculpture is included within Infrastructure Assets. As well as the recognised Heritage Assets, the Museum Service and Archive collections also hold items that are of significant interest to the local area however are not significant in terms of value. A summary of these items include: Industrial History Collection Includes industrial objects ranging from large individual plant to small hand tools and ephemera with an emphasis on local iron, steel, coal and engineering industries. Social History Comprises of a comprehensive range of artefacts, textiles and ephemera which relate to the domestic, community, personal and working lives of North Lanarkshire during the 19th and 20th centuries. North Lanarkshire Archive Documents the transformation of North Lanarkshire from an agriculture and manufacturing area to a heavy industry area. Other Collections Other smaller collections include: Archaeology Focuses predominantly on local prehistoric, Roman and medieval finds, including burial urns and pottery shards. Natural History Represented by a small number of rocks, fossils and local materials and specimens Numismatics Comprises of a range of medals; Roman, medieval and contemporary coinage; Scottish trade tokens and miners’ tallies. Ethnographic Victorian artefacts from Africa, Polynesia and East Asia. Art Ranges from portraits of civic dignitaries and local figures to landscapes, historical views and works illustrating aspects of daily life. Page 150 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 45 - 15. Intangible Assets The Council accounts for software licences and software development costs as intangible assets. There are no internally generated intangible assets. 2022/23 2023/24 Software Licences Software Development Costs Intangibles Under Development Total Software Licences Software Development Costs Intangibles Under Development Total £000 £000 £000 £000 £000 £000 £000 £000 Balance at 1st April 99 2,981 9,038 12,118 74 10,781 8,035 18,890 Additions in year - - 7,142 7,142 - 47 1,475 1,522 Transfers 8,442 (8,145) 297 - 1,897 (3,197) (1,300) Amortisation (25) (642) - (667) (25) (2,622) - (2,647) Balance at 31st March 74 10,781 8,035 18,890 49 10,103 6,313 16,465 Represented by: Gross Carrying Amount 123 11,735 8,035 19,893 123 13,679 6,313 20,115 Accumulated amortisation (49) (954) - (1,003) (74) (3,576) - (3,650) Balance at 31st March 74 10,781 8,035 18,890 49 10,103 6,313 16,465 At 31 March 2024, the Council had contractual capital commitments of £0.280m in respect of the acquisition of intangible assets. 16. Long-Term Debtors 2022/23 2023/24 £000 £000 Balance at the start of the year 1,519 1,328 Recorded debt 74 1,019 Bad debt provision (265) 112 Balance at the end of the year 1,328 2,459 For further details refer to Soft Loans and Provisions: Financial Guarantee section within Note 17. Page 151 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 46 - 17. Financial Instruments 17.1. Types of Financial Instrument The total investments, borrowing and long-term liabilities disclosed in the balance sheet are made up of the following categories of financial instruments: Long-Term Short-Term At 31 March 2023 At 31 March 2024 At 31 March 2023 At 31 March 2024 Financial Liabilities £000 £000 £000 £000 Borrowings at amortised cost: - Principal sum borrowed 476,130 590,605 273,087 276,332 - Accrued Interest - - 6,157 10,631 - EIR Adjustments - - 1,981 1,954 Total Borrowings 476,130 590,605 281,225 288,917 Other Long-term Liabilities at amortised cost: - Finance leases 1,289 1,056 218 233 - PPP and similar arrangements 158,317 150,346 7,086 7,971 Total Other Long-term Liabilities 159,606 151,402 7,304 8,204 Trade payables - - 176,901 177,941 Included in Creditors* - - 176,901 177,941 Financial guarantees - 586 55 169 Included in Provisions - 586 55 169 Total Financial Liabilities 635,736 742,593 465,485 475,231 Financial Assets: At amortised cost : - Principal Sum Invested 1,148 1,124 57,062 7,944 - Accrued Interest - - 61 18 Total financial assets at amortised cost 1,148 1,124 57,123 7,962 At fair value through profit & loss : - Principal Sum Invested - - 18,060 39,920 - Accrued Interest - - 90 175 Total financial assets at fair value - - 18,150 40,095 Trade receivables - - 68,542 71,037 Included in Debtors ** - - 68,542 71,037 Total Financial Assets 1,148 1,124 143,815 119,094 * The creditors amount quoted within the table above represents ‘trade creditors, other entities and individuals’ included within Note 21. **The debtors amount quoted within the table includes ‘trade debtors, other entities and individuals’ included within Note 19 and is shown net. The total short-term borrowing includes £42.095m (2023: £36.753m) representing accrued interest, effective interest rate adjustments and principal repayments due within 12 months on long-term borrowing. This includes long-term debt related to Public Work Loans Board (PWLB) loans (£35.277m principal and £3.961 accrued interest), market loans (£0.655m accrued interest and £1.954m EIR adjustments) and Salix interest free loans (£0.248m principal). The remaining sums due for repayment in the short-term category relate to temporary borrowings. The Financial Assets short-term category shown at amortised cost which are investments held for a period of less than one year, include bank current accounts / call accounts and investments with UK Treasury with no adjustment having been made to the amortised cost to reflect expected credit losses. This is based on an analysis of the type of assets held which are considered to have a low risk of default with reference to historic default data published by credit rating agencies. The financial assets are held on a short-term basis, primarily overnight, thus reducing the Page 152 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 47 - impact of any longer-term potential adverse changes in economic and business conditions that may reduce the ability of the borrower to fulfil the obligations. At the balance sheet date, based on the credit ratings of the financial institutions in which the funds are held, it is recognised that the borrower has a strong capacity to meet the contractual cashflow obligations in the near future. As there has been no significant increase in credit risk since initial recognition, an assessment of potential 12-month credit loss was carried out and based on the aforementioned assumptions and materiality no adjustment for credit losses has been made. For Financial Assets held at fair value through profit and loss, a calculation of expected credit loss is not required as the value stated, by its very nature, will include an adjustment for credit loss allowances. Financial Assets classified as fair value through profit and loss represent funds held in Money Market Funds, with the fair value deemed to be a close approximation to the principal sum invested, due to the margins in which these funds operate and therefore the amount shown has not been adjusted for a gain or loss on the principal sum invested. Those Financial Assets measured at amortised cost or fair value through profit and loss shown within short-term, where appropriate, are included within the Cash and Cash Equivalents (Note 20). Financial Assets held at amortised cost also include the Council’s investment in subordinated debt for two of its school projects delivered via the South West Hubco model, with the overall balance invested of £1.219m outstanding, shown as £1.124m long-term and £0.094m short-term. This ‘hubco’ is a special purpose vehicle set up for the purposes of ring-fencing individual Design, Build, Finance and Maintain (DBFM) projects under Scotland’s Schools for the Future national investment programme. The balance shown has not been adjusted to reflect a 12-month credit loss allowance, as due to the nature of the investment and the Council’s interest in the underlying asset, there is a low risk of default with any adjustment, after assessment, having been deemed to be immaterial. This assessment takes into account the level of income for the ‘hubco’ being relatively stable, with the revenue to meet the commitments, primarily due under a long-term contract with the Council. The assessment considered the probability of no default; probability of default up to 6 months; and probability of default up to one year with an estimation of a loss given default and the probability of each combination of events occurring for the cashflows due. The Council adopts the simplified approach for trade/rents receivables under which impairment losses are automatically based on lifetime expected credit losses, removing the need to consider changes in credit risk since initial recognition and the possibility that appropriate measure should be 12-month expected credit losses. To arrive at the expected credit loss for trade receivables an analysis was carried out by examining previous repayment patterns considering the different time horizons over which the debt remained unpaid but did not default, adopting this approach to measure the probability of default. Despite changing the measurement basis there was no material difference between the previous bad debt provisions and the amount arrived at using the expected credit loss approach. Page 153 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 48 - Income, Expense, Gains and Losses on Financial Instruments The gains and losses recognised in the Comprehensive Income and Expenditure Statement and Movement in Reserves Statement in relation to financial instruments are made up as follows: 31 March 2023 31 March 2024 Financial Liabilities Financial Assets Financial Liabilities Financial Assets Measured at amortised cost Measured at amortised cost Measured at FV through Profit and Loss Total Measured at amortised cost Measured at amortised cost Measured at FV through Profit and Loss Total £000 £000 £000 £000 £000 £000 £000 £000 Interest Expenses (25,850) - - (25,850) (44,572) - - (44,572) PPP Unitary Charge Interest (13,566) - - (13,566) (14,725) - - (14,725) Finance Lease Interest (124) - - (124) (107) - - (107) Loss on Derecognition (6,774) - - (6,774) - - - - Financial Guarantee Premium - - - - (825) - - (825) Impairment of Financial Assets - (4,234) - (4,234) - (4,303) - (4,303) Total Expense (46,314) (4,234) - (50,548) (60,229) (4,303) - (64,532) Interest Income - 5,675 207 5,882 - 15,180 484 15,664 Financial Guarantee Premium - 97 - 97 - 125 - 125 Total Income - 5,772 207 5,979 - 15,305 484 15,789 Net (Loss) / Gain for the year (46,314) 1,538 207 (44,569) (60,229) 11,002 484 (48,743) Notional gains and losses on ‘Soft Loans’ are not considered material and accordingly are not recognised in the Comprehensive Income and Expenditure Statement. The impairment of financial assets relates to the loss on trade receivables/rents receivables written off in the year whilst as stated above, the Council has made no adjustments to reflect expected credit losses based on materiality and an assessment of likelihood of default for its other financial assets measured at amortised cost. Therefore, the table above includes the loss recognised in the Comprehensive Income and Expenditure Statement in respect of lifetime credit losses. 17.2. Fair Value of Assets and Liabilities Carried at Amortised Cost Where the fair value is deemed to be different from the amortised cost as presented within balance sheet for both Financial Liabilities and Financial Assets the fair value amount is shown in the following table. The principal amount shown in the table represents the actual value of the monies receivable or debt payable not arising from any adjustments whilst the carrying amount reflects the amortised cost including accrued interest up to and including the valuation date. Page 154 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 49 - 31 March 2023 31 March 2024 Fair Value Level Principal Amount Carrying Amount Fair Value Amount Principal Amount Carrying Amount Fair Value Amount Financial Liabilities £000 £000 £000 £000 £000 £000 PWLB Debt 2 449,233 452,280 411,657 568,401 572,362 538,945 Non PWLB Debt 2 299,984 305,075 303,183 298,536 307,160 305,626 Financial Guarantee 3 55 55 55 755 755 755 Finance Leases 2 1,507 1,507 1,608 1,289 1,289 1,381 PPP and similar arrangements 2 165,402 165,402 162,101 158,316 158,316 158,938 Creditors1 - 176,901 176,901 176,901 177,941 177,941 177,941 Total Financial Liabilities 1,093,082 1,101,220 1,055,505 1,205,238 1,217,823 1,183,586 Financial Assets At Amortised Cost 2 58,210 58,271 58,271 9,068 9,086 9,086 At Fair Value through Profit and Loss 1 18,060 18,150 18,150 39,920 40,095 40,095 Debtors2 - 68,542 68,542 68,542 71,037 71,037 71,037 Total Financial Assets 144,812 144,963 144,963 120,025 120,218 120,218 1 The creditors amount quoted within the table above represents ‘trade creditors, other entities and individuals’ included within Note 21. 2 The debtors amount quoted within the table includes ‘trade debtors, other entities and individuals’ included within Note 19. The fair value of a financial instrument is the price that would be received when selling an asset, or the price that would be paid when transferring a liability, to another market participant in an arms-length transaction. Where liabilities are held as an asset by another party, such as the Council’s borrowing, the fair value is estimated from the holder’s perspective. Financial instruments, except those classified at amortised cost, are carried in the Balance Sheet at fair value which is taken from the market price. Financial instruments classified at amortised cost are carried in the Balance Sheet at their amortised cost. Their fair values disclosed below have been estimated by calculating the net present value of the remaining contractual cash flows at 31st March 2024, using the following methods and assumptions: • Loans borrowed by the Council have been valued by discounting the contractual cash flows over the whole life of the instrument at the appropriate market rate for local authority loans. • Discount rates for “Lender’s Option Borrower’s Option” (LOBO) loans have been reduced to reflect the value of the embedded options. The size of the reduction has been calculated using proprietary software. • The fair values of other long-term loans and investments have been discounted at the market rates for similar instruments with similar remaining terms to maturity on 31st March 2024. • The fair values of financial guarantees have been estimated based on the likelihood of the guarantees being called and the likely payments to be made. • The fair values of finance lease assets and liabilities and of PFI scheme liabilities have been calculated by discounting the contractual cash flows (excluding non-lease elements) at the appropriate AA-rated corporate bond yield. • No early repayment or impairment is recognised for any financial instrument. • The fair value of short-term instruments, including trade payables and receivables, is assumed to approximate to the carrying amount given the low interest rate environment. • For financial assets classified as fair value through profit and loss, these represent funds held in Money Market Funds which are carried in the balance sheet at fair value. These funds being invested in low volatility NAV funds. Page 155 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 50 - • The financial assets shown at amortised cost as current, are due to mature in less than one year and for these balances it has been assumed that the carrying amount will represent a reasonable approximation to fair value. This approach has also been applied to the financial assets shown at amortised cost and original cost and categorised as long-term, given the size and nature of the investment under consideration with any differential likely to be immaterial. The interest rate swap used to calculate the local authority margin is determined from two sources: Up to 5 years: the rates available to borrowers in the local authority loan market on 31 March 2024 sourced from brokers active in this market. Over 5 years: the yields on actively traded local authority bonds, of which the majority are issued by Transport for London as quoted by Bloomberg on 31 March 2024. Where applicable fair values are shown in the table above split by their level in the fair value hierarchy: - Level 1: fair value is only derived from quoted prices in active markets for identical assets or liabilities e.g. bond prices. - Level 2: fair value is calculated from inputs other than quoted prices in active markets that are observable for the asset or liability e.g. interest rates or yields for similar instruments. - Level 3: fair value is determined using unobservable inputs e.g. non-market data such as cash flow forecasts or estimated credit worthiness. 17.3. Nature and Extent of Risks arising from Financial Instruments Treasury Management activity by its very nature exposes the Council to a variety of financial risks with the Council's overall risk management procedures focusing on the unpredictability of financial markets and implementing restrictions to minimise these risks. The procedures for risk management are set out through a legal framework in the Local Government in Scotland Act 2003 and the associated regulations. In accordance with the Council's financial regulations, the Council has adopted the CIPFA’s Code of Practice (the Code) on Treasury Management in the Public Services and Prudential Code for Capital Finance in Local Authorities, both revised in December 2021 including the key principles within Section 4, formally adopting the clauses within Section 5 and the suggested treasury management policy statement within Section 6. The Council regards the successful identification, monitoring and management of risk to be the prime criteria by which the effectiveness of its treasury management activities will be measured. Accordingly, the analysis and reporting of treasury management activities focuses on their risk implications for the organisation. It acknowledges that effective treasury management will provide support towards the achievement of its business and service objectives. It is therefore committed to the principles of achieving value for money in treasury management, and to employing suitable performance measurement techniques, within the context of effective risk management. The Council has in place suitable treasury management practices (TMPs), setting out the manner in which the Council will seek to achieve those policies and objectives, prescribing how it will manage and control those activities. These TMPs are a requirement of the Code of Practice within Section 7 and are implemented by the Council’s Treasury Management team and are reviewed regularly. The Council manages its risk in the following ways: • by formally adopting the requirements of the Code of Practice; • by approving annually in advance prudential indicators for the following three years, limiting: o The Council’s overall borrowing (Authorised Limit and Operational Boundary); o Its maximum and minimum exposures with regard to the Maturity Structure of its Debt. These items are reported within the Council’s Annual Treasury Management Strategy which is approved by the Council prior to the commencement of each financial year. This report outlines the approach to managing risk in relation to the Council’s financial instrument exposure for the year ahead. The Council will monitor its interest rate exposure by monitoring the proportion of fixed interest rate costs to variable interest costs to identify if there are any potential risks if interest rates were to move significantly upwards. The Council will also monitor debt maturity profile, the spend profile of the capital programme and also continue to adopt a prudent approach to use of internal balances in lieu of future long-term borrowing i.e. monitor under borrowing position. The economic outlook and interest rate forecast will supplement this on-going review of interest rate exposure. Actual performance is monitored on a quarterly basis with any significant variation from the strategy reported to Members. In line with the recommendations of the Code of Practice, a mid-year review is carried out and an Annual Treasury Report on the year’s activity is submitted to members once the final accounts are complete and the outturn prudential indicators for 2023/24 have been calculated. Page 156 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 51 - Credit Risk • Credit risk – the possibility that the counterparty to a financial asset will fail to meet its contractual obligations, causing a loss to the Council. Credit risk arises from the short-term depositing of surplus funds to banks, building societies and other local authorities, as well as credit exposures to the Council’s customers including house rents and external debtors. The credit risk relates to the possibility that these other parties might fail to pay the amounts due to the Council. The Council manages its investments in accordance with the Local Government Investments (Scotland) Regulations 2010, including the preparation of an Annual Investment Strategy. The Council’s principal investment criteria, stipulated within the 2023/24 Treasury Management Strategy, prescribed that short-term deposits can be made with banks, building societies and local authorities based on a Lowest Common Denominator (LCD) approach. This allows the selection of counterparties that must meet a pre- determined credit-rating level to which monetary and time limits can then be applied. Therefore, the counterparty is assessed by its weakest set of ratings, rather than its strongest. The Council utilises the research of the world’s foremost providers of independent credit ratings (Fitch, Moody’s and Standard & Poor’s). These ratings are monitored by the Council's Treasury Management team and procedures are in place with the Council’s Treasury advisers to ensure that the Council is notified immediately of any negative/positive movements which will affect the Council’s counterparty list. The Council also has a HM Treasury backed Debt Management Account Deposit facility. During 2023/24 the Council's Investment Strategy was robust, with sufficient options available to spread deposits over a wide range and category of financial institutions with due consideration given to country, group and sector exposure of the Council's investments. Whilst the above criteria rely primarily on the application of credit ratings to provide a pool of appropriate counterparties the Council supplemented this by accessing other market information. This additional market information is applied to compare the relative security of differing investment counterparties and included credit default swap prices, quality financial press commentary, share prices, annual reports, and statements to the financial market including the stock market. The Council does not generally allow credit for its external debtors or house rents receivable. The past due amount can be analysed by age as follows: 31 March 2023 31 March 2024 House Rents etc Receivable Central Government Grants External Debtor Accounts Due House Rents etc Receivable Central Government Grants External Debtor Accounts Due £000 £000 £000 £000 £000 £000 Less than three months 7,103 15,462 5,942 8,818 23,228 4,113 Three to six months 1,619 888 1,628 417 Six to twelve months 2,121 621 2,158 725 More than one year 2,479 5,175 2,523 4,102 Debt Outstanding 13,322 15,462 12,626 15,127 23,228 9,357 Expected Credit Losses (9,896) - (2,726) (11,293) - (2,657) Average allowance for Expected Credit Loss (%) 74.3% 0% 21.6% 74.7% 0% 28.4% Total Debtors 3,426 15,462 9,900 3,834 23,228 6,700 The table above excludes prepayments and VAT recoverable whilst also excluding amounts relating to Council Tax, Non-Domestic Rates and Community Charge as these are deemed to be statutory debts not arising from contracts. Central Government Grants and External Debtors Accounts due are included within Note 19 Short-Term Debtors as part of the total debtors due. Loss allowances on trade receivables have been calculated with reference to the Council’s historic experience of default, adjusted to reflect current and forecast economic conditions. The average percentage allowance for expected credit losses are shown in the table above. Provisions: Financial Guarantee In 2013/14 the Council agreed to provide North Lanarkshire Properties LLP (NLP LLP) with a financial guarantee, underwriting the debt service costs of the NLP LLP loan of £45.000m to the lender, up to a limit of 80% of the total debt service costs. The Council considered the likelihood of the guarantee being called as minimal. In recognition of this financial guarantee the Council made an initial provision of £1.114m which has now been fully redeemed. Page 157 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 52 - During 2023/24, the Council agreed to provide a new financial guarantee to NLP LLP as part of re-financing arrangements undertaken by NLP LLP, with the Council providing similar underwriting of debt service costs, up to a limit of 80% of the total debt service, costs of the new long-term loan facility of £30.000m. The Council considers the likelihood of the guarantee being called as minimal, however the Council, in recognition of this financial guarantee has decided to make a provision of £0.825m. The financial guarantee was assessed under IFRS9 Financial Instruments and has been valued at the amount initially recognised (i.e. fair value) less any cumulative amount of income /amortisation recognised. An alternative measurement basis is available based on the IFRS9 Expected Credit Loss Allowance, with the value recognised within the accounts reflecting the higher of these two valuation bases. The Council has agreed with NLP LLP that the premium payable to the Council for providing this new guarantee will be paid in annual instalments on a fair value basis over the term of the loan, with £0.070m charged during 2023/24. The Council has therefore included a long-term debtor of £0.586m and a short-term debtor of £0.169m within the Balance Sheet to reflect this arrangement. Soft Loans The Council has recognised an amount receivable of £1.873m within Long-Term Debtors (2022/23 – £1.328m), representing the amounts due from service users receiving social care for which a charging order has been placed on the recipient’s property as a method of recovering the debt, with a total of £2.927m of amounts recoverable (2022/23 - £2.494m) adjusted to reflect an expected credit loss allowance of £1.054m (2022/23 - £1.166m). The expected credit loss calculation is based on an assessment of likelihood of default and no default based on past historical default levels and other information available including the property subject to the charging order being on the market for sale at the balance sheet date or alternatively where the balance outstanding exceeds the value of the property subject to the charging order. The Council offer a small number of properties at below market rents to assist in the economic regeneration and development of the area and to support key Council objectives, however these are not considered to be of sufficient size to meet the Council’s materiality reporting level. Liquidity Risk • Liquidity risk – the possibility that the Council might not have funds available to make contractual payments on time. The Council has ready access to borrowings from the Money Markets to cover any day-to-day cash flow need, and whilst the PWLB provides access to longer term funds, it also acts as a lender of last resort to Councils (although it will not provide funding to a Council whose action is unlawful). The Council is also required to provide a balanced budget through the Local Government Finance Act 1992, which ensures sufficient monies are raised to cover annual expenditure. There is therefore no significant risk that it will be unable to raise finance to meet its commitments under financial instruments. The Council manages its liquidity position through the risk management procedures above. This includes the setting and approval of the Council's Annual Treasury Management Strategy incorporating Prudential Indicators limiting the Council’s maximum and minimum exposures with regard to the maturity structure of its debt. The Council also has in place robust cash flow procedures as required by the Code of Practice, maintaining liquid short-term deposits of at least £3.000m if required at short notice. Re-financing and Maturity Risk • Re-financing risk – the possibility that the Council might require to renew a financial instrument on maturity at disadvantageous interest rates or terms. The Council maintains a significant debt and investment portfolio. Whilst the cash flow procedures above are considered against the refinancing risk procedures, longer term risk to the Council relates primarily to managing the exposure to replacing financial instruments as they mature. The approved prudential indicator limit for the maturity structure of debt is the key parameter used to address this risk. The Council approved Treasury Management Strategy, including the setting and approval of prudential indicators, addresses the main risks and the Treasury Management Team addresses the operational risks within the approved parameters. This includes: • monitoring the maturity profile of financial liabilities and amending the profile through either new borrowing or the re-scheduling of the existing debt; and • monitoring the maturity profile of short-term investments to ensure sufficient liquidity is available for the Council’s day-to-day cash flow needs. Page 158 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 53 - The maturity analysis of financial liabilities incorporating PWLB and Non PWLB Debt based on principal outstanding is as follows: At 31 March 2023 At 31 March 2024 £000 £000 Less than one year 273,087 276,332 Between one and two years 21,004 36,900 Between two and seven years 99,636 163,024 Between seven and fifteen years 136,176 185,566 More than fifteen years 219,314 205,115 Total 749,217 866,937 It should be noted that the debt maturity profile above includes principal outstanding for LOBO (Lender’s Option Borrower’s Option) loans based on their maturity date as opposed to the potential maturity date in the year where options or calls exist. A LOBO is called when the lender exercises its right to amend the interest rate on the loan at which point the Council can accept the revised terms or reject them and repay the loan. The Council currently has a £3.000m exposure to LOBO loans, all of which have a call date falling within less than one year. The interest rates on the LOBO loans held range from 10.625% to 10.937% and based on the current and the forecast interest rates the likelihood of these loans being called has been assessed as minimal. In the event that the call option were to be exercised, the default position will be the repayment of the LOBO without penalty with the associated treasury risks (refinancing/interest rate/liquidity) managed in line with the borrowing strategy for other maturing debt. The £3.0m is a vanilla type LOBOs where the lender has the option to impose a higher interest rate on certain dates with the Council having the option to repay. The maturity analysis for financial liabilities in relation to Finance Lease and PPP arrangements are shown within Notes 24.1 and 25.3 respectively. All trade and other payables are due to be paid in less than one year and external debtors (net of expected credit losses) are not shown in the table above. At the 31 March 2024, the Council as permitted by its investment strategy, as outlined within section 17.1, has a total investment of £1.219m in subordinated debt in relation to two school projects. The first investment taken out in 2015/16 in relation to Greenfaulds High School as a Design, Build, Finance and Maintain (DBFM) project in partnership with hub South West Scotland Ltd. The new school partially opened in 2016/17 with the addition of a Multi-Use Games Area with completion of the final phase in July 2017 with a balance due of £0.872m at 31 March 2024 which includes accrued interest due of £0.044m with the balance of £0.828m repayable on an annuity basis over 25 years from the initial recognition date. In June 2017, the Council entered into a second subordinated debt agreement in relation to Cumbernauld Academy, as a Design, Build, Finance and Maintain (DBFM) project, in partnership with Hub SW Cumbernauld DBFM Co Ltd. The new school opened in 2019/20 with the final phase completed in August 2020 with the outstanding balance due of £0.347m at 31 March 2024 which includes accrued interest due of £0.017m with the balance of £0.329m repayable on an annuity basis over 25 years from the initial recognition date. Due to the size and nature of the investment and the investor relationship between the Council and the ‘hubco’, both these investments are considered to have a minimum impact upon the credit risk profile for the Council. Market Risk • Market risk - the possibility that an unplanned financial loss might arise for the Council because of changes in market variables such as interest rates, prices and foreign exchange rates. Market Risk – Interest Rates The Council is exposed risk in terms of its exposure to interest rate movements on its borrowings and investments. Movements in interest rates have a complex impact on the Council, depending on how variable and fixed interest rates move across differing financial instrument periods. For instance, a rise in variable and fixed interest rates would have the following effects: • borrowings at variable rates – the interest expense charged to the Comprehensive Income and Expenditure Statement will rise; • borrowings at fixed rates – the fair value of the borrowing liabilities will fall; • investments at variable rates – the interest income credited to the Comprehensive Income and Expenditure Statement will rise; and • investments at fixed rates – the fair value of the assets will fall. Page 159 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 54 - Borrowings are not carried at fair value on the balance sheet, so nominal gains and losses on fixed rate borrowings would not impact on the Comprehensive Income and Expenditure Statement or Movement in Reserves Statement. However, changes in interest payable and receivable on variable rate borrowings and investments will be posted to the Comprehensive Income and Expenditure Statement and affect the General Fund Balance, subject to influences from Government grants. The Council has a number of strategies for managing interest rate risk. The annual Treasury Management Strategy draws together the Council’s prudential and treasury indicators and its expected treasury operations, including an expectation of interest rate movements. The Council will monitor its interest rate exposure by the local indicator shown in the tables below. To monitor its interest rate exposure, the proportion of fixed interest rate costs to variable interest costs is monitored on a quarterly basis to identify if there are any potential risks if interest rates were to move significantly upwards. The risk of interest rate loss is partially mitigated by the government grant payable on financing costs. However, the correlation between a 1% movement and the potential change in grant levels is not readily identifiable due to the complexity of the grant allocation methodology adopted within the Local Government Settlement. Therefore, the impact on government grants receivable has been excluded from the table below. If all interest rates had been 1% higher with all other variables held constant the financial effect would be: £000 Increase in interest payable on variable rate borrowings 30 Increase in interest receivable on variable short-term investments (616) Overall Impact on Comprehensive Income and Expenditure Statement (586) Share of Overall impact debited to the HRA (244) If all interest rates had been 1% lower with all other variables held constant the financial effect would be: £000 Decrease in interest payable on variable rate borrowings (30) Decrease in interest receivable on variable short-term investments 535 Overall Impact on Comprehensive Income and Expenditure Statement 505 Share of Overall impact debited to the HRA 210 In terms of the impact on the fair value of fixed rate borrowings/liabilities this would have no impact upon the Comprehensive Income and Expenditure Statement or Movement in Reserves Statement. Per the assumptions and adopting the same methodology as used in 17.2 Fair Value of Assets and Liabilities carried at Amortised Cost, a 1% increase and decrease in the prevailing swap rates and inter authority margins would have the following implications in terms of the fair value. Where a reduction of 1% would result in a rate less than zero being applied, the fair value has been calculated using a negligible redemption rate of 0.001%. +1% -1% £000 £000 Total Movements in Fair Value of Fixed Rate Borrowings (47,409) 56,427 For Financial assets shown at amortised cost it has been assumed that the carrying amount will represent a reasonable approximation to fair value thus the impact on the fair value of investments and subsequent impact on the Movement in Reserves Statement as a result of an increase in the interest rate of 1% has not been included within the table above. Market Risk – Prices The Council has an interest in a number of Subsidiary and Associate Companies along with Joint Ventures. Information as to the role of the Council in respect of these interests is provided within Note 2 to the Group Accounts. For each of these interests the Council will account for its share of assets, liabilities, and trading surplus or deficit within the Group Accounts dependant on the specific nature of the relationship in line with proper accounting practice. As the shareholdings have arisen in the acquisition of specific interests, the Council is not in a position to limit its exposure to price movements by diversifying its portfolio. Instead, it may only acquire shareholdings in return for “open book” arrangements with the company concerned. The Council manages the risk in this area by exerting influence within the limits of its holdings and monitoring factors that might cause a fall in the value of specific shareholdings. Page 160 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 55 - 18. Inventories The Council holds stocks of consumable materials such as fuel and catering supplies. The movements in the year can be summarised as follows: 2022/23 2023/24 £000 £000 Opening Balance at 1 April 2,529 1,675 Purchases 14,377 15,767 Donations - - Recognised as an expense in the year (15,211) (15,577) Write Off Balances (20) - Closing Balance at 31 March 1,675 1,865 19. Short-Term Debtors The Short-Term Debtors balance consists primarily of debts in respect of Council Tax, External Debtors Accounts and other Sundry Debtors. This can be summarised as follows: 2022/23 2023/24 £000 £000 £000 £000 Central Government Bodies 35,211 23,463 Other Local Authorities 2,126 1,626 NHS Bodies 3,050 2,227 Public Corporations and Trading Funds 6 14 Trade Debtors, Other Entities and Individuals 67,129 71,037 Provision for Expected Credit Losses (4,402) (4,098) House Rents Receivable: Rents Receivable 13,321 15,127 Less Expected Credit Losses (9,896) 3,425 (11,293) 3,834 Arrears in Local Taxation: Council Tax 118,885 123,692 Less Provision (107,920) 10,965 (112,259) 11,433 NNDR Statutory Addition 5,500 5,889 Less Provision (5,231) 269 (5,480) 409 Total Debtors 117,779 109,945 20. Cash and Cash Equivalents 2022/23 2023/24 £000 £000 Cash held by the Council 370 326 Bank current accounts / call accounts 57,031 7,868 Money Market Funds 18,150 40,095 Net Cash and Cash Equivalents 75,551 48,289 Page 161 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 56 - 21. Short-Term Creditors The Short-Term Creditors balance consists primarily of amounts due in respect of payroll costs, payovers to HMRC and other sundry creditors. This can be summarised as follows: 2022/23 2023/24 £000 £000 Central Government (3,572) (1,222) Other local authorities (2,206) (2,069) NHS Bodies (2,010) (2,250) Public Corporations and Trading Companies (1,349) (709) Trade Creditors, Other Entities and Individuals (178,314) (177,941) Short-term compensated absences (1) (23,803) (20,382) Total Creditors (211,254) (204,573) (1) For the notional accrued cost of benefits employees receive as part of their contract of employment, entitlement to which is built up as they work for the Council. The balance relates to holiday entitlement. 22. Provisions (1) The Council has previously recognised the need to provide for on-going commitments arising from equal pay compensation claims. The provision is reviewed annually with consideration given to the scale and scope of any risk and uncertainties. (2) A provision is recognised for the future costs associated with the restoration of closed landfill sites. Anticipated costs are estimated by expert advisors on a three-yearly basis with the most recent review being undertaken in 2021/22. (3) Refer to Provisions: Financial Guarantee note within Note 17 Financial Instruments 23. Contingent Assets and Liabilities Contingent assets represent items that at 31 March 2024 are not recognised in the Council’s Annual Accounts because there is significant uncertainty at that date as to the likelihood that the Council will receive payments in respect of them. Contingent liabilities represent items that at 31 March 2024 are not recognised in the Council’s Annual Accounts because there is significant uncertainty at that date as to the necessity of the Council to make payments in respect of them. A number of legal actions have been brought against the Council in respect of Equal Pay. Notification has also been received of a number of other cases that are not yet subject to Court action but which may result in subsequent litigation. Due to the wide variety and nature of the claims and the uncertainty of any potential liability, no value has been attributed to these claims in the financial statements. The Council has received notification of a number of legal claims in respect of contract disputes. Due to the wide variety and nature of the claims and the uncertainty of any potential liability, no value has been attributed to these claims in the financial statements. On 20 July 2020, a Written Ministerial Statement (WMS) was issued in relation to survivor benefits for Public Service Pensions. The 2017 Supreme Court ruling in Walker vs Innospec, along with subsequent amendments entitled same-sex survivors pension benefits to take account of the member’s service from 6 April 1987. On 30th June 2020, the Goodwin Tribunal ruled that this should also apply to male survivors of opposite-sex marriages. The Goodwin Tribunal was in relation to the Teachers’ Pension Scheme, however the WMS confirmed that this difference in Balance at 31 March 2022 Additional Provisions Made in 2022/23 Amounts Used in 2022/23 Balance at 31 March 2023 Additional Provisions Made in 2023/24 Amounts Used in 2023/24 Balance at 31 March 2024 £000 £000 £000 £000 £000 £000 £000 Equal Pay (1) 5,048 - (73) 4,975 - (6) 4,969 Landfill (2) 7,493 - (246) 7,247 - (296) 6,951 Financial Guarantee (3) 152 - (97) 55 825 (125) 755 Total Provisions 12,693 - (416) 12,277 825 (427) 12,675 Page 162 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 57 - treatment would also need to be remedied in other public sector pension schemes. Whilst there is still uncertainty surrounding the potential remedy, the Council’s actuaries carried out some approximate analysis and concluded that the impact of the judgement is likely to be very small and therefore have not accounted for this within their calculations. This could have a financial impact on future years’ costs, however given the uncertainty no provision has been made in the Accounts. The Limitation (Childhood Abuse) (Scotland) Act 2017 which came into force in October 2017 removed the time bar for survivors of historical child abuse to make a claim for compensation in the civil courts. On 23 April 2021 the Redress for Survivors (Historical Child Abuse in Care) (Scotland) Act 2021 received Royal Assent. The Act introduces a scheme to make financial payments to survivors of historical child abuse in care in Scotland and sets out that Scottish Ministers must establish a list of organisations who have agreed to make a fair and meaningful contribution towards the funding of the redress payments. In return, survivors who accept a redress payment agree not to take legal action against these organisations or the Scottish Government. The Council makes a contribution to this scheme through a deduction from the General Revenue Grant, however despite the existence of the scheme, there is still potential for redress to be sought via legal action against the Council. Potential claim volume and values cannot be quantified at this time therefore no financial provision has been made. A Fatal Accident Inquiry into the death of a child is underway with the Council being named as an interested party. A number of preliminary hearings have been held, with the substantive FAI hearing held in September 2024, and a further procedural hearing held in October 2024. The final decision from the enquiry has not yet been issued. The purpose of the Inquiry is not to determine liability, however the likelihood or value of any potential legal action against the Council cannot be determined at this time, therefore no provision has been made in the Accounts. The Council is unaware of any other material contingent asset or liability as at 31 March 2024. 24. Leases 24.1. Council as a Lessee – Finance Leases The balance held on Property, Plant and Equipment for the remaining overcladding programme is included within the HRA Council Dwellings valuation, and computer equipment was transferred as part of the CLNL Insourcing is included within Vehicles, Plant & Equipment valuation however this was settled early during 2023/24. The Council is committed to making minimum payments under these leases comprising settlement of the long-term liability for the interest in the asset acquired by the Council and finance costs that will be payable by the Council in future years while the liability remains outstanding. The minimum lease payments are made up of the following amounts: 2022/23 2023/24 £000 £000 Finance lease liabilities Current 218 233 Non-current 1,289 1,056 Finance costs payable in future years 387 280 Minimum lease payments 1,894 1,569 The minimum lease payments will be payable over the following periods: Minimum Lease Payments Finance Lease Liabilities 2022/23 2023/24 2022/23 2023/24 £000 £000 £000 £000 Not later than one year 325 325 218 233 Later than one year and not later than five years 1,299 1,244 1,038 1,056 Later than five years 270 - 252 - Total 1,894 1,569 1,508 1,289 24.2. Council as a Lessee – Operating Leases The Council leases various properties as a tenant on a variety of lease terms that are accounted for as operating leases. The rentals payable in 2023/24 were £3.616m (2022/2023 £3.286m). The Council also leases various vehicles, plant and equipment on lease terms that are typically between one and five years. The rentals payable in 2023/24 were £0.298m (2022/23 £0.580m). Rental charges for operating leases have been included in the Page 163 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 58 - Comprehensive Income and Expenditure Statement. The future minimum lease payments under non-cancellable leases in future years are as follows: Operational Buildings Vehicles, Plant & Equipment 2022/23 2023/24 2022/23 2023/24 £000 £000 £000 £000 Not later than one year 660 611 161 53 Later than one year and not later than five years 2,008 1,800 53 - Later than five years 386 92 - - Total 3,054 2,503 214 53 The Council no longer sub-lets operational buildings therefore no minimum lease payments are expected to be received in 2023/24 (2022/23 £0.017m). 24.3. Council as a Lessor – Operating Leases The Council leases out property under operating leases for the purposes of economic development to provide suitable affordable accommodation for local businesses. These arrangements are accounted for as operating leases. The rental income receivable in 2023/24 was £1.430m (2022/23 £1.166m) and is included in the Comprehensive Income and Expenditure Statement. The rents receivable under non-cancellable leases in future years are shown in the table below. Future Rental Income Receivable 2022/23 2023/24 £000 £000 Within one year 885 2,371 Later than one year and not later than five years 1,459 3,892 Later than five years and not later than ten years 1,743 2,679 Later than ten years and not later than fifty years 12,096 12,894 Later than 50 years 7,783 7,501 Total 23,966 29,337 25. Public Private Partnerships and Similar Contracts In June 2005, the Council entered into a Public Private Partnership for the provision and maintenance of school and community buildings. The agreement has provided 17 purpose-built facilities consisting of 3 secondary schools, 7 stand-alone primary schools, and 7 primary school joint campus facilities. When the agreement ends on 31 March 2037 responsibility for maintenance and operation transfers back to the Council. However, the Council will only have to budget for routine maintenance for the first five years following expiry of the agreement because the contract contains provisions that require the contractor to ensure that the buildings are in a condition to require no replacement of any significant building element over these five years. In 2016/17, a further addition to the Council’s school portfolio was the replacement of Greenfaulds High School as a Design, Build, Finance and Maintain (DBFM) project in partnership with Hub South West Scotland Ltd. The school was fully functional by the end of 2017/18. In 2019/20, a further addition to the Council’s school portfolio was the Cumbernauld Academy Design, Build, Finance and Maintain (DBFM) project in partnership with Hub SW Cumbernauld DBFM Co Ltd. Phase 1 and Phase 2a were completed in July 2019 and February 2020, with Phase 2b being completed in August 2020. The Council has a 40% share in the contract for waste recycling which utilises the waste materials recovery facility at Bargeddie with residual waste then processed at a thermal treatment in Dunbar. North Lanarkshire is lead authority and contracted with Viridor, with four other councils tied into the contract through an Inter Authority Agreement. The Council has exercised the Service Concessions flexibility made through Financial Circular 10/2022 (Finance Leases and Service Concession Arrangements), with the statutory repayment of principal elements of the lease component of service concession arrangements being made over the estimated asset lives (up to 50 years), as opposed to the period of the contract. Payments made to operators remain unchanged, with differences between the actual amounts paid to the operator towards liability under the contracts and the principal repayments recognised through the Comprehensive Income and Expenditure Statement being held in the Capital Adjustment Account. Further details are disclosed in Note 30. Page 164 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 59 - 25.1. Property, Plant and Equipment The assets used to provide services at the schools, along with the Council’s share of the Clyde Valley Waste Plant, are recognised on the Council’s Balance Sheet. Movements in value over the year are as follows: 2022/23 2023/24 £000 £000 Opening Net Book Value 282,100 276,428 Additions - - Disposals - - Depreciation charge for the year (5,672) (5,310) Revaluations in year - 802 Closing Net Book Value 276,428 271,920 25.2. Remaining Payments Under The Agreements The Council makes an agreed payment each year which is increased by inflation and can be reduced if the provider fails to meet availability and performance standards in any year, but which is otherwise fixed. Payments remaining to be made under the contracts at 31 March 2024 including an adjustment for inflation and excluding any estimation of availability and performance deductions are as follows: Future payments for services (including lifecycle maintenance) Repayment of liability Finance interest Total £000 £000 £000 £000 Payable within one year 22,070 7,971 16,520 46,561 Payable within two to five years 93,324 35,816 67,446 196,586 Payable within six to ten years 144,684 48,377 80,069 273,130 Payable within eleven to fifteen years 122,065 44,904 53,883 220,852 Payable within sixteen to twenty years 76,535 19,931 5,175 101,641 Payable within twenty-one to twenty-five years 10,695 1,317 457 12,469 Total 469,373 158,316 223,550 851,239 25.3. Liabilities from PPP Arrangements and Similar Contracts Although the payments to the providers are described as unitary payments, they have been calculated to compensate the provider for the fair value of the services they provide, and the capital expenditure incurred, plus the interest payable whilst the capital expenditure remains to be reimbursed. The liability outstanding to pay to the providers for the capital expenditure (the outstanding finance lease obligation) is as follows: 2022/23 2023/24 £000 £000 Balance outstanding at the start of the year (172,194) (165,402) Additions during the year - - Payments during the year 6,792 7,086 Balance outstanding at year-end (165,402) (158,316) Included in Balance Sheet Current (7,086) (7,971) Non-current (158,316) (150,345) Page 165 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 60 - 26. Pension Costs As part of the terms and conditions of employment of its officers and other employees, the Council offers retirement benefits. Although these benefits will not actually be payable until an employee retires, the Council has to disclose a commitment to make the payments at the time that employees earn their future entitlement. The Council participates in two pension schemes: • The Strathclyde Pension Fund Local Government Pension Scheme is administered by Glasgow City Council in accordance with the Local Government Pension Scheme (Scotland) (Administration) Regulations 1998. This is a defined benefit scheme, meaning that the Council and employees pay contributions into the fund, calculated at a level intended to balance the pension liabilities with investment assets. • The Teachers' Pension Scheme is currently administered by the Scottish Public Pensions Agency, an Executive Agency of the Scottish Government. It provides teachers with defined benefits upon their retirement, and the Council contributes towards the costs by making contributions based on a percentage of members' pensionable salaries. However, as the Scheme is not able to identify each body's share of the underlying liabilities on a consistent and reasonable basis, the pension costs are accounted for as if it were a defined contribution scheme. The principal risks to the authority of the scheme are the longevity assumptions, statutory changes to the scheme, changes to inflation, bond yields and the performance of the equity investments held by the scheme. These are mitigated to a certain extent by the Scottish Government requirements to charge to the General Fund the amounts due by statute as described in the accounting policies note. Property and Private equity comprise £932m of total NLC assets in the pension fund of £2.9bn (32%). These assets are valued at Level 3 of the Fair Value hierarchy, meaning they are valued using unobservable inputs and are therefore more volatile in nature. High UK corporate bonds yields, has resulted in high accounting discount rates which place a significantly lower value on the pension obligations similar to last year’s accounts, with the fund assets being in excess of the obligations resulting in a net asset in relation to funded plans. IAS 19 Employee Benefits requires that where there is a surplus position, this should be measured at the lower of the surplus in the defined benefit plan and the asset ceiling, where the asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions to future contributions. The Council’s actuaries have calculated that the surplus in relation to funded plans of £858.492m and the asset ceiling, based on the remaining future working lifetime of staff and the present value of accruing service cost less value of cash contributions is nil, therefore an asset ceiling adjustment of £858.492m has been applied. As a result, the net pension asset held on the Council’s balance sheet in relation to funded plans is nil. In addition to this, a net pension liability of £119.490m is held on the Council’s balance sheet in relation to unfunded liabilities. In 2023/24, the Council paid £44.031m (£40.300m in 2022/23) to the Scottish Public Pensions Agency in respect of teachers' retirement benefits, representing an employer contribution of 23.0%. In addition, the Council is responsible for all pension payments relating to previously awarded added years. In 2023/24, these amounted to £5.530m (£5.127m for 2022/23). Page 166 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 61 - 26.1. Transactions relating to retirement benefits The Council recognises the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge required to be made against Council Tax is based on the cash payable in the year. Consequently, the real cost of retirement benefits is reversed out of the General Fund in the Movement in Reserves Statement. The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance / Housing Revenue Account via the Movement in Reserves Statement: 26.2. Assets and Liabilities in Relation to Post Employment Benefits A reconciliation of the Council’s share of the present value of Strathclyde Pension Fund’s liabilities are as follows: 2022/23 2023/24 £000 £000 Opening balance at 1 April (2,892,704) (2,043,325) Current service cost (117,143) (60,272) Interest cost (78,982) (96,775) Contributions from scheme participants (15,585) (16,866) Remeasurement (gains) and losses: Actuarial gains/losses arising from changes in demographic assumptions 22,673 30,790 Actuarial gains/losses arising from changes in financial assumptions 1,107,351 75,856 Actuarial gains/losses arising from changes in other experience (136,089) (176,592) Past service cost including gains/losses on curtailment (3,494) (2,268) Benefits paid 70,648 91,455 Closing Balance at 31 March (2,043,325) (2,197,997) 2022/23 2023/24 £000 £000 Comprehensive Income and Expenditure Statement (CIES) Included within Net Cost of Service within CIES: • Current service cost 117,143 60,272 • Past service cost/(gain) including curtailments 3,494 2,268 120,637 62,540 Included within Financing and Investment Income & Expenditure in CIES: • Net interest expense 5,034 3,088 5,034 3,088 Total Post-employment Benefit charged to Surplus or Deficit on the Provision of Services 125,671 65,628 Other Post-employment Benefits charged to the CIES: Re-measurement of the net defined benefit liability (155,907) 52,734 Total Post-employment Benefits charged to the CIES (30,236) 118,362 Less Employer’s contributions payable to pension scheme (59,594) (65,198) Movement in Pension Reserve (89,830) 53,164 Page 167 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 62 - A reconciliation of the Council’s share of the fair value of Strathclyde Pension Fund’s assets is as follows: 2022/23 2023/24 £000 £000 Opening balance at 1 April 2,736,548 2,698,080 Interest income 73,948 127,938 Return on assets (116,947) 138,014 Contributions from employer 52,020 56,995 Contributions from scheme participants 15,585 16,866 Contributions in respect of Unfunded Benefits 7,574 8,203 Benefits paid (70,648) (91,455) Effect of settlements - - Actuarial gains/losses arising from changes in other experience - (17,642) Closing Balance at 31 March 2,698,080 2,936,999 The net value of the scheme assets and liabilities is a net asset of £739.002m, however following the application of the asset ceiling of £858.492m as noted above, the net pension liability shown on the Council’s balance sheet is £119.490m consisting of a net pension asset of Nil in relation to funded plans, together with a pension liability of £119.490m in relation to unfunded liabilities. The net asset restriction is calculated based on the remaining future working lifetime of active staff and the present value of accruing service cost less value of cash contributions. 26.3. Local Government Pension Scheme assets The Council’s share of the Pension Fund’s assets at 31 March is as follows: 2022/23 2023/24 £000 £000 Cash and cash equivalents 51,114 54,444 Equity instruments (by industry type) • Consumer 121,040 135,681 • Manufacturing 150,447 169,260 • Energy utilities 13,505 26,638 • Financial institutions 57,439 84,306 • Health and care 95,974 78,396 • Information technology 93,302 99,545 Sub-total equity 531,707 593,826 Bonds (by sector) • Corporate 1 - Sub-total bonds 1 - Property 222,455 230,935 Private equity 663,156 701,182 Other investment funds • Equities 894,121 1,012,840 • Bonds 311,160 342,602 • Commodities 1,053 1,170 • Infrastructure 17,326 - • Other 5,989 - Sub-total other investment funds 1,229,649 1,356,612 Derivatives (2) - Total assets 2,698,080 2,936,999 Page 168 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 63 - 26.4. Reconciliation of Present Value of the Defined Benefit obligation and the Fair Value of Planned Assets to the Balance Sheet The present value of unfunded liabilities comprises approximately £36.326m, £71.700m and £11.464m in respect of LGPS, Teachers' and Pre-LGR unfunded pensions. For unfunded liabilities as at 31 March 2024, it is assumed that all unfunded pensions are payable for the remainder of the member’s life. 26.5. Fund History Triennial valuations provide one basis for assessing the overall position of funds (funding basis). Actuaries also prepare a valuation at 31st March each year on an accounting basis (IAS19 basis). This approach uses a lower discount rate for long-term liabilities and this tends to produce a more cautious result. The graph below shows the underlying commitments that the Council has to pay in retirement benefits on an accounting basis. The net liability after the applied asset ceiling, has a substantial impact on the net worth of the Council as recorded in the balance sheet, however the most recent triennial valuation as at March 2023 shows a funding position of 147% therefore it is expected that future contributions will be sufficient to meet the liabilities. As a result, the Strathclyde Pension Fund Committee agreed employer contributions should reduce to 6.5% in 2024/25 & 2025/26 before increasing to 17.5% in 2026/27. 26.6. Basis for Estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The Strathclyde Pension Fund assets and liabilities have been assessed by Hymans Robertson, an independent firm of actuaries. Estimates for the fund are based on the latest valuation of the scheme as at 31 March 2024. 2022/23 2023/24 £000 £000 Fair Value of Employer Assets 2,698,080 2,936,999 Present Value of Funded Liabilities (1,923,821) (2,078,507) Net (under)/Overfunding in Funded Plans 774,259 858,492 Present Value of Unfunded Liabilities (119,504) (119,490) Net Asset/(Liability) 654,755 739,002 Amount in Balance Sheet: Liabilities (2,043,325) (2,197,997) Assets 2,698,080 2,936,999 Asset Ceiling Adjustment (721,081) (858,492) Net Asset/(Liability) (66,326) (119,490) Balance Sheet presentation: Other Long-Term Assets (Pensions) 53,178 - Other Long-Term Liabilities (Pensions) (119,504) (119,490) Net Asset/(Liability) (66,326) (119,490) Page 169 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 64 - 2022/23 2023/24 Mortality Assumptions: Longevity at 65 for current pensioners: • Men 19.3 19.3 • Women 22.2 22.1 Longevity at 65 for future pensioners: • Men 20.5 20.2 • Women 24.2 23.8 Rate of increase in salaries 3.65% 3.50% Rate of increase in pensions 2.95% 2.80% Discount Rate 4.75% 4.80% The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set out in the table above. The sensitivity analyses below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period and that the assumption analysed changes while all the other assumptions remain constant. The methods and types of assumptions used in preparing the sensitivity analysis below did not change from those used in the previous period. Approximate Monetary Amount £000 Approximate % Increase to Employer Liability Rate of increase in salaries (increase by 0.1%) 5,560 0% Rate of increase in pensions (increase by 0.1%) 32,057 1% Rate for discounting scheme liabilities (decrease by 0.1%) 1 Year increase in the member life expectancy 37,026 87,920 2% 4% The principal demographic assumption is the longevity assumption (i.e. member life expectancy). For sensitivity purposes, we estimate that a one year increase in life expectancy would approximately increase the Employer’s Defined Benefit Obligation by around 4%. In practice the actual cost of a one year increase in life expectancy will depend on the structure of the revised assumption (i.e. if improvements to survival rates predominantly apply at younger or older ages). Asset and Liability Matching Strategy The main fund (Fund 1) of Strathclyde Pension Fund does not have an asset and liability matching strategy as this is used mainly by mature funds. The Fund does match, to the extent possible, the types of assets invested to the liabilities in the defined benefit obligation. As is required by the pensions and investment regulations, the suitability of various types of investment has been considered, as has the need to diversify investments to reduce the risk of 700,000 1,200,000 1,700,000 2,200,000 2,700,000 3,200,000 £'000 Year Fair value of employer assets as at 31st March Page 170 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 65 - being invested in too narrow a range. A large proportion of the assets relate to equities (78%) and bonds (12%). The comparative year’s figures are 77% and 12%. The scheme also invests in properties (8%) and cash (2%), with comparative year’s figures of 8% and 10% and other 1% Impact on Council’s Cash Flow The objectives of the Fund are to keep employers’ contributions at as constant a rate as possible. The Fund has agreed a strategy to achieve a funding rate of 100% in the long-term. The total contributions expected to be made by the Council to Strathclyde Pension Fund in the year to March 2025 is £18.567m. The weighted average duration, i.e. the time until payment of all expected future discounted cashflows, of the defined benefit obligation for Fund members is 16 years. The contributions paid by the employer are set by the fund actuary at each triennial valuation (the most recent being as at 31 March 2023), or at any other time as instructed to do so by the administering authority. The contributions payable over the period to 31 March 2024 are set out in the Rates and Adjustments certificate. As indicated above, as a result of the most recent triennial valuation employer contributions remained at 19.3% for 2023/24, but will reduce to 6.5% in 2024/25 & 2025/26 before increasing to 17.5% in 2026/27. The Scheme is a multi-employer defined benefit plan and employers’ contributions have been determined so that employee and employer rates are standard across all participating Local Authorities. 27. Usable Reserves Movements in the Council’s usable reserves are detailed in the Movement in Reserves Statement with further explanatory information about the movements included in Notes 31 and 32. 27.1. General Fund Balance Balance at 31 March 2023 Transfers Out Transfers in Balance at 31 March 2024 £000 £000 £000 £000 Earmarked General Fund Reserves Change Management Fund 28,115 (13,257) 4,500 19,358 Schools Future Contractual Obligations 56,683 - 4,285 60,968 Strategic Capital Investment Programme - - 44,800 44,800 Loans Charges 5,000 - 12,905 17,905 Strategic Workforce Planning 13,000 - 4,902 17,902 Refugee Resettlement Programmes 5,699 (2,256) 4,881 8,324 2023/24 – 2026/27 Budget One-off Investment 21,075 (17,675) 4,719 8,119 Temporary Accommodation 9,288 (1,250) - 8,038 Contingency Fund 8,000 - - 8,000 Early Years & Childcare Expansion 7,312 (2,605) 506 5,213 One Workforce Grading Pressures - - 5,000 5,000 Whole Family Wellbeing 2,584 (513) 2,346 4,417 Unmanaged burdens within Education, Children & Families 4,755 (4,023) 3,502 4,234 Balances held by Schools under Devolved School Management 3,724 (3,724) 2,655 2,655 Mobilisation of Strategic Contracts 1,225 (366) 1,320 2,179 Pupil Equity Fund 3,851 (3,851) 2,153 2,153 Shared Prosperity Grants - - 1,753 1,753 Business Gateway and Business Recovery 1,379 (22) 340 1,697 Economic Recovery 3,554 (2,035) - 1,519 Winter Reserve 1,500 - - 1,500 Teacher Induction Scheme Support - - 1,302 1,302 Digital NL 1,960 (738) - 1,222 Temporary Teachers 10,928 (10,105) - 823 Non-Pay Inflation Mitigation 4,902 (4,902) - - Other Earmarked Funds 16,311 (7,980) 16,277 24,608 Total Earmarked 210,845 (75,302) 118,146 253,689 Unallocated Balance 39,027 (8,823) - 30,204 Total General Fund Balance 249,872 (84,125) 118,146 283,893 Balances included within the Other Earmarked Funds line is reviewed annually on the basis of value therefore the prior year disclosures may differ from the audited 2022/23 annual accounts. Page 171 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 66 - 27.2. HRA Balance Balance at 31 March 2023 Transfers Out Transfers in Balance at 31 March 2024 £000 £000 £000 £000 Earmarked HRA Balance Welfare Changes and Financial Insecurity 610 (610) - - Ambition 4,385 (3,079) - 1,306 HRA Capital Programme (Energy Efficiency) 2,500 (2,500) - - Contingency Fund 1,470 - 272 1,742 Loan Charges - (4,423) 13,495 9,072 Other 2,339 (4,726) 3,684 1,297 Total Earmarked 11,304 (15,338) 17,451 13,417 Unallocated/Held for Risks and Uncertainties 15,014 (14,371) 2,760 3,403 Total HRA Balance 26,318 16,820 27.3. Capital Grants Unapplied Account The Capital Grants Unapplied Account is used to hold grant received but not yet utilised. 2022/23 2023/24 £000 £000 Opening Balance at 1 April 7,124 16,466 Capital grants received in the year but unapplied 15,014 6,039 Capital grants received in previous years now applied (5,672) (15,301) Closing Balance at 31 March 16,466 7,204 27.4. Repairs and Renewals Fund The Repairs and Renewals Fund represents a resource to fund crematorium equipment replacement and recognises the prepayments for lifecycle replacement costs for PPP schools. 2022/23 2023/24 £000 £000 Opening Balance at 1 April 13,755 17,109 Transfers in year (see Note 34) 3,354 3,654 Closing Balance at 31 March 17,109 20,763 27.5. Capital Fund The Council operates a Capital Fund where receipts from the sale of assets can be directed and utilised for financing capital expenditure and loans fund repayments. In addition, Local Government Finance Circular 6/2023 provides a temporary amendment for the 2023/24 financial year to allow transfer of a specific element of the General Capital Grant to the Capital Fund in order that it may be used to provide funding for the principal element of both General Fund and HRA Loans repayments. 2022/23 2023/24 £000 £000 Opening Balance at 1 April 396 2,608 Amounts expended on principal repayments - (20,000) Transfer from Capital Receipts Reserve 2,212 343 Transfer of General Capital Grants - 20,000 Closing Balance at 31 March 2,608 2,951 Page 172 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 67 - 27.6. Insurance Fund The Insurance Fund represents a resource to make provision for outstanding claims and events. 2022/23 2023/24 £000 £000 Opening Balance at 1 April 13,000 13,000 Amounts expended on claims settlements (3,714) (4,078) Contributions to / from Insurance Fund 3,714 2,078 Closing Balance at 31 March 13,000 11,000 27.7. Capital Receipts Reserve The Capital Receipts Reserve represents the value of receipts arising from the disposal of non-current assets that can be used to finance capital investment. 2022/23 2023/24 £000 £000 Opening Balance at 1 April - - Capital receipts received in the year 3,224 1,797 Amount applied to finance new capital investment (1,012) (1,454) Amount transferred to Capital Fund (2,212) (343) Closing Balance at 31 March - - 28. Unusable Reserves The total for Unusable Reserves in the Balance Sheet is made up of the following reserves: 2022/23 2023/24 £000 £000 Revaluation Reserve 603,687 521,945 Capital Adjustment Account 1,275,342 1,141,658 Financial Instruments Adjustment Account (32,210) (30,316) Pensions Reserve (66,326) (119,490) Employee Statutory Adjustment Account (23,804) (20,380) Total Unusable Reserves 1,756,689 1,493,417 28.1. Revaluation Reserve The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are: • revalued downwards or impaired and the gains are lost • used in the provision of services and the gains are consumed through depreciation, or • disposed of and the gains are realised. The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account. Page 173 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 68 - 28.2. Capital Adjustment Account The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition, construction and enhancement. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date that the Revaluation Reserve was created to hold such gains. Note 32 provides details of the source of all the transactions posted to the Account, with the exception of the adjusting amounts written out of the Revaluation Reserve which are detailed in note 28.1 above. 2022/23 2023/24 £000 £000 Opening Balance at 1 April 1,308,411 1,275,342 Items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement: • Charges for depreciation and impairment of non-current assets (145,228) (204,088) • Net book value of non-current assets written off on disposal or sale (10,896) (17,139) Adjusting amounts written out of the Revaluation Reserve 1,957 10,273 Net transfer to Capital Grants Unapplied Account (9,343) 9,262 Capital financing applied in the year: • Use of Capital Receipts Reserve to finance new capital expenditure 1,012 1,454 • Capital grants and contributions credited to the Comprehensive Income and Expenditure Statement that have been applied to capital financing 87,786 64,916 • Statutory provision for the financing of capital investment charged against the General Fund and HRA balances (Loans Fund repayments) • Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility 6,995 - 28,828 (49,087) • Capital expenditure charged against the General Fund and HRA balances 34,648 21,898 Closing Balance at 31 March 1,275,342 1,141,658 28.3. Financial Instruments Adjustment Account The Financial Instruments Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for bearing losses or benefiting from gains per statutory provisions. 2022/23 2023/24 £000 £000 Opening Balance at 1 April 741,113 603,687 Upward revaluation of assets 57,412 26,399 Downward revaluation of assets and impairment losses not charged to the Surplus / Deficit on Provision of Services (228,972) (59,734) Surplus / Deficit on revaluation of non-current assets not posted to the Surplus / Deficit on Provision of Services (171,560) (33,335) Difference between fair value depreciation and historical cost depreciation 36,090 (38,133) Accumulated gains on assets sold (1,957) (10,273) Closing Balance at 31 March 603,687 521,945 Page 174 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 69 - 2022/23 2023/24 £000 £000 Balance at 1 April (26,803) (32,210) Premium for Early Settlement of Borrowing Premiums / Discounts Annual Write-Off (7,292) 1,867 - 1,867 Re-measurement of LOBO loans 18 27 Balance at 31 March (32,210) (30,316) 28.4. Pensions Reserve The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions. The Council accounts for post employment benefits in relation to the Local Government Pension Scheme in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Council makes employer’s contributions to pensions funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantial shortfall between the benefits earned by past and current employees and the resources the Council has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid. 2022/23 2023/24 £000 £000 Balance at 1 April (156,156) (66,326) Re-measurement of net defined pension liability 155,907 (52,734) Reversal of items relating to retirement benefits debited or credited to the Surplus / Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement (125,671) (65,628) Employers’ pensions contributions paid to Strathclyde Pension Fund 59,594 65,198 Balance at 31 March (66,326) (119,490) 28.5. Employee Statutory Adjustment Account The Employee Statutory Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account. 2022/23 2023/24 £000 £000 Balance at 1 April (21,717) (23,804) Settlement or cancellation of accrual made at the end of the preceding year 21,717 23,804 Amounts accrued at the end of the current year (23,804) (20,380) Balance at 31 March (23,804) (20,380) Page 175 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 70 - 29. Capital Commitments At 31 March 2024, the Council was contractually committed to the following significant capital works. £000 HRA – New Build Programme 17,326 HRA – Heating 16,400 HRA – Roofing & Render 13,500 HRA – Bathrooms 4,000 HRA – Kitchens 3,500 HRA – Windows and Doors 7,000 HRA – Tower Strategy 4,660 HRA – Lead Pipe 250 HRA – Community Care 1,410 HRA – Security & DE Systems 1,250 HRA – Estate Regeneration 300 HRA – Fire Safety 1,400 HRA – Major Repairs 3,443 HRA – Rewiring 1,650 HRA – Overcladding 500 HRA – RAAC Remediation 700 HRA – General 100 School Alterations and Upgrades 7,697 Leisure Alterations and Upgrades 447 Redevelopment and Office Upgrades 165 Other Projects 89 Schools Modernisation 38,582 City Deal 7,673 Regeneration Capital Grant Fund 4,043 Place Based Improvement Programme 683 Other Regeneration Projects 205 Digital NL 328 Road Operations-Lighting 81 Road Operations-Roads/Bridges 8,101 Environmental Improvements 30 Flood Alleviation 83 Country Parks Upgrades 349 Biodiversity/Nature Trails 250 Play Areas 1,447 Parking Initiatives 125 Fleet Vehicles & Equipment 4,002 Page 176 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 71 - 30. Capital Expenditure and Capital Financing The total amount of capital expenditure incurred in the year is shown in the table below (including the assets acquired under finance leases and PPP, or similar contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Council, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of capital expenditure incurred historically by the Council that has yet to be financed. The CFR is analysed in the bottom part of this note. 2022/23 2023/24 £000 £000 Net Book Value of Property, Plant & Equipment 3,143,477 3,079,721 Intangible Assets 12,118 18,890 Capital Adjustment Account (1,308,411) (1,275,342) Revaluation Reserve (741,113) (603,687) Opening capital financing requirement 1,106,071 1,219,582 Capital investment Property, plant and equipment 227,468 240,699 Intangible assets 7,141 1,522 Sources of Finance Capital Receipts (1,012) (1,454) Government Grants and Other Contributions (78,443) (74,178) Direct revenue contributions (34,648) (21,898) Repayment of loans fund advances (6,995) (28,827) Service Concessions – PPP principal repayment flexibilities - 49,087 Closing capital financing requirement 1,219,582 1,384,533 Explanations of movements in year Increase in underlying need to borrow 113,511 115,864 Assets acquired under PPP contracts - 49,087 Increase / (decrease) in capital financing requirement 113,511 164,951 During 2023/2024, the Council has exercised the Service Concessions flexibility through Financial Circular 10/2022 (Finance Leases and Service Concession Arrangements). This allows the Council to amend statutory repayment of principal elements of the lease component of service concession arrangements over the estimated asset lives instead of the contractual period. The value of this deferral is £49.087m benefit to the General Fund, consisting of retrospective elements of £44.600m of repayments relating to period ending 2022/23, and £4.487m relating to 2023/24. The cumulative value of the liability charged to the General Fund prior to applying the permitted flexibility was £75.078m, the revised cumulative value of the liability charged to the General Fund in adopting the permitted flexibility is £25.991m and the balance of funds released to the General Fund as a result of applying this flexibility is £49.087m. Page 177 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 72 - 31. Adjustment to Usable Reserves Permitted by Accounting Standards This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are available to the Authority to meet future capital and revenue expenditure as permitted by accounting standards. 2023/24 Usable Reserves Movement in Unusable Reserves General Fund Housing Revenue Account Capital Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 Adjustments primarily involving the Revaluation Reserve: Reversal of items debited or credited to the CI&E Statement: Charges for depreciation and impairment of non-current assets (35,198) (2,935) - - - 38,133 Total Adjustments (35,198) (2,935) - - - 38,133 2022/23 Usable Reserves Movement in Unusable Reserves General Fund Housing Revenue Account Capital Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 Adjustments primarily involving the Revaluation Reserve: Reversal of items debited or credited to the CI&E Statement: Charges for depreciation and impairment of non-current assets (36,262) 172 - - - 36,090 Total Adjustments (36,262) 172 - - - 36,090 Page 178 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 73 - 32. Adjustment to the Statutory Repayment of Debt for Service Concession Arrangements This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are available to the Authority to meet future capital and revenue expenditure as permitted by accounting standards. 2023/24 Usable Reserves Movement in Unusable Reserves General Fund Housing Revenue Account Capital Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account: Reversal of items debited or credited to the CI&E Statement: Permitted flexibility to the statutory repayment of debt for service concession arrangements 49,087 - - - - (49,087) Total Adjustments 49,087 - - - - (49,087) During 2023/2024, the Council has exercised the Service Concessions flexibility through Financial Circular 10/2022 (Finance Leases and Service Concession Arrangements) to amend statutory repayment of principal elements of the lease component of Service Concession arrangements over the estimated asset lives instead of contractual period. The value of this deferral is £49.087m benefit to the General Fund, consisting of retrospective elements of £44.600m of repayments relating to period ending 2022/23, and £4.487m relating to 2023/24. This is the first year of application of this flexibility and as such there are no prior comparators to be shown. Page 179 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 74 - 33. Adjustments between Accounting Basis and Funding Basis under Regulations This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Authority to meet future capital and revenue expenditure. 2023/24 Usable Reserves Movement in Unusable Reserves General Fund Housing Revenue Account Capital Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account: Reversal of items debited or credited to the CI&E Statement: Charges for depreciation and impairment of non-current assets 71,983 132,105 - - - (204,088) Capital grants and contributions applied (57,484) (27,432) 20,000 - (9,262) 74,178 Amounts written off as part of gain/loss on disposal 1,334 15,805 - - - (17,139) Statutory provision for the financing of capital investment (17,086) (11,742) - - - 28,828 Capital expenditure funded from current revenue (4,097) (17,801) - - - 21,898 Adjustments primarily involving the capital receipts reserve or capital fund: Transfer of capital receipts credited to CIES as part of gain or loss on disposal (1,797) - - 1,797 - - Use of capital receipts to finance new capital expenditure - - - (1,454) - 1,454 Adjustment primarily involving the Financial Instruments Adjustment Account: Movements recognised under statutory provisions relating to Financial Instruments (1,105) (789) - - - 1,894 Adjustments primarily relating to the Pensions Reserve: Reversal of items relating to retirement benefits charged to the CI&E Statement 61,083 4,545 - - - (65,628) Employer’s pensions contributions and direct payments to pensioners payable in the year (60,683) (4,515) - - - 65,198 Adjustment primarily involving the Employee Statutory Adjustment Account: Amount by which remuneration charged to the CI&E on an accruals basis is different from remuneration chargeable in accordance with statutory requirements (3,139) (283) - - - 3,422 Total Adjustments (10,991) 89,893 20,000 343 (9,262) (89,983) Page 180 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 75 - 2022/23 Usable Reserves Movement in Unusable Reserves General Fund Housing Revenue Account Capital Fund Capital Receipts Reserve Capital Grants Unapplied Account £000 £000 £000 £000 £000 £000 Adjustments primarily involving the Capital Adjustment Account: Reversal of items debited or credited to the CI&E Statement: Charges for depreciation and impairment of non-current assets 125,170 20,058 - - - (145,228) Capital grants and contributions applied (54,144) (33,642) - - 9,342 78,444 Amounts written off as part of gain/loss on disposal 423 10,459 14 (10,896) Statutory provision for the financing of capital investment (6,792) (203) - - - 6,995 Capital expenditure funded from current revenue (10,594) (24,054) - - - 34,648 Adjustments primarily involving the capital receipts reserve or capital fund: Transfer of capital receipts credited to CIES as part of gain or loss on disposal (3,210) - 3,210 - Use of capital receipts/capital fund to finance new capital expenditure (1,012) 1,012 Adjustment primary involving the Financial Instruments Adjustment Account: Movements recognised under statutory provisions relating to Financial Instruments 3,208 2,200 - - - (5,408) Adjustments primarily relating to the Pensions Reserve: Reversal of items relating to retirement benefits charged to the CI&E Statement 116,754 8,917 - - - (125,671) Employer’s pensions contributions and direct payments to pensioners payable in the year (55,365) (4,229) - - - 59,594 Adjustment primarily involving the Employee Statutory Adjustment Account: Amount by which remuneration charged to the CI&E on an accruals basis is different from remuneration chargeable in accordance with statutory requirements 2,088 (2) - - - (2,086) Total Adjustments 117,538 (20,496) - 2,212 9,342 (108,596) Page 181 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 76 - 34. Transfers to/from Statutory Reserves This note sets out the amounts set aside from the General Fund statutory reserves to provide financing for future expenditure plans and the amounts transferred back to meet General Fund expenditure in 2023/24. Figures for 2022/23 are provided in an additional table for comparison purposes: 2023/24 Transfers to / (from) General Fund Transfers (from) / to Other Statutory Reserves HRA Capital Fund Repairs & Renewals Fund Insurance Fund Capital Receipts Reserve £000 £000 £000 £000 £000 £000 Contributions to Repairs & Renewals Fund from General Fund (3,654) - - 3,654 - - Contributions to Insurance Fund (2,084) - - - 2,084 - Amounts expended on claims settlements 4,084 - - - (4,084) - HRA Contribution to General Fund 21,743 (21,743) - - - - Contribution to Capital Fund - - 343 - - (343) Amounts Expended on principal repayments 9,000 11,000 (20,000) - - - Total Adjustments 29,089 (10,743) (19,657) 3,654 (2,000) (343) 2022/23 Transfers to / (from) General Fund Transfers (from) / to Other Statutory Reserves HRA Capital Fund Repairs & Renewals Fund Insurance Fund Capital Receipts Reserve £000 £000 £000 £000 £000 £000 Contributions to Repairs & Renewals Fund from General Fund (3,354) - - 3,354 - - Contributions to Insurance Fund (1,898) (1,816) - - 3,714 - Amounts expended on claims settlements 1,898 1,816 - - (3,714) - HRA Contribution to General Fund 10,249 (10,249) - - - - Contribution to Capital Fund - - 2,212 - - (2,212) Total Adjustments 6,895 (10,249) 2,212 3,354 - (2,212) Page 182 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 77 - 35. Reconciliation of 2023/24 Comprehensive Income and Expenditure Statement to Cash Flow Operating Activities £000 £000 Surplus / (Deficit) on the Provision of Services (159,945) Non-Cash Transactions Items Relating to Loans Fund 4,406 Adjustment relating to Provisions 399 Adjustment relating to Non Domestic Rates (5) Adjustment relating to Capital Items 200,685 Adjustment relating to Pensions Reserve 430 205,915 Items on an Accruals Basis Increase in Inventories (191) Decrease in Debtors 6,533 Decrease in Creditors (9,337) (2,995) Net Cash Inflow from Operating Activities 42,975 36. Reconciliation of Financing Activities to Balance Sheet Balance at 31 March 2023 Cash Flow Non-Cash Balance at 31 March 2024 Cash and Cash Equivalents 75,551 (27,305) 43 48,289 75,551 (27,305) 43 48,289 Financing Activities: Borrowing short-term 281,225 (1,200) 8,892 288,917 Borrowing long-term 476,130 118,919 (4,444) 590,605 Finance leases short-term 7,304 (7,304) 8,204 8,204 Finance leases long-term 159,605 - (8,204) 151,401 924,264 110,415 4,448 1,039,127 Total cash outflow from financing activities 110,415 Total cash inflow before financing activities (137,720) Non-Cash includes the movement in accrued interest due and receivable and the reclassification of borrowing and leasing liabilities from long-term to short–term (due to be paid in less than 12 months). 37. External Audit Costs North Lanarkshire Council incurred the following fees relating to external audit inspection: 2022/23 2023/24 £000 £000 Agreed fee for the year 608 644 Total 608 644 The external audit costs include a fee of £4,186 (£4,186 2022/23) in relation to the audit of the Council’s Charitable Trusts. Page 183 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 78 - 38. Statutory Trading Operations Trading Operations were established following the introduction of the Local Government in Scotland Act 2003 which requires each significant trading operation to break even on a three year rolling programme. The Council’s Trading Operation is required to operate in a commercial environment and balance their budget by generating income from fees and charges to other organisations. The net deficit arising from the ordinary operation of the Trading Operation in 2023/24 is £0.168m. The financial results for the last three years of the Trading Operation can be summarised as follows: Turnover Expenditure (Surplus)/ Deficit Adjustments from the CIES to General Fund Net Expenditure Chargeable to the General Fund £000 £000 £000 £000 £000 Trading Operation 2021/22 (2,938) 3,014 76 (402) (326) 2022/23 (3,014) 3,165 151 (251) (100) 2023/24 (3,064) 3,232 168 (16) 152 (Surplus) / Deficit over 3 years (9,016) 9,411 395 (669) (274) Over the three year period the overall deficit totals £0.395m. However, this incorporates IAS19 Employee Benefits adjustments totalling £0.669m which cannot be incorporated into charges to customers. Excluding the IAS19 adjustments the Trading Operation would have generated a three year surplus of £0.274m. The creation of a single combined Trading Account was approved in January 2014 to monitor and report the commercial trading activity of the Council, which currently consist of Building Cleaning, Waste Management and Town Centre Activities. The Building Cleaning arm of the Trading operation provides a comprehensive cleaning service to external businesses and service partners across approximately 37 building locations, with an overall staffing complement of 227 staff (77.22 FTE). Some of these locations also receive a janitor/cleaning service. The operation delivers cleaning services on behalf of Equans to schools in the Education 2010 project. The Waste Solutions arm of the trading operation provides refuse collection and disposal services for approximately 900 traders. The service is provided by 10 staff (10 FTE). Each trader is offered a multiple of collection frequencies and types. We are working towards the full implementation of the requirements of the Waste (Scotland) Regulations, 2012, and multiple services are now being offered to commercial organisations to ensure they operate within the terms of the legislation. A full seven day suite of services is also possible, and the service provides advice on waste reduction and reuse as a first response rather than recycling. The Town Centre Activities arm of the trading operation provides CCTV and Alarm monitoring to 5 external clients covering the geographical areas of North Lanarkshire and beyond. The services are provided to Retail Parks, Shopping Centres, Town Centres, Business Centres, Industrial Units and Yards. The function is carried out within the Community Safety Team with a management fee levied to the Trading Activity for the cost incurred. Each arm of the trading operation is also fully accredited from Investors in People, and has successfully retained the relevant accreditations. 39. Related Parties The Council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Council. Related party transactions have been undertaken at arm's length. Central and Scottish Government Central Government has effective control over the general operations of the Council providing the statutory framework within which the Council operates as well as providing the majority of funding in the form of grants. Details of government grants received can be found in Note 11. Joint Boards The Council is represented on a number of joint boards which are ‘Section 106’ independent public bodies formed by Act of Parliament. These bodies are Strathclyde Partnership for Transport, Strathclyde Concessionary Travel Scheme and Lanarkshire Valuation Joint Board. All local government functions that relate to these bodies have Page 184 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 79 - been delegated from the constituent Councils that comprise the area of each Board. The members of each Board are elected Councillors and appointed by the Councils in proportions specified in the legislation. The Council has no shares, nor ownership of any of these Boards. Nevertheless, these Boards are included within the Council's Group Accounts under the wider definition of an "associate" as the Council is represented on the Board and participate in policy-making processes. The Council's share of each Board's net assets is calculated on its respective percentage share of the aggregate contributions made by the constituent Councils. Local government legislation provides that local authorities have an obligation to meet the expenditure of the Joint Boards of which they are a constituent member. As a consequence, the added liabilities from the pension deficits are fully incorporated within the Group Accounts. Funding provided is as follows: 2022/23 2023/24 £000 £000 Strathclyde Partnership for Transport 5,425 5,528 Strathclyde Concessionary Travel Scheme 572 583 Lanarkshire Valuation Joint Board 2,103 2,004 In addition Strathclyde Pension Fund is considered a related party of the Council as they represent a post- employment defined benefit plan for the benefit of employees. The following transactions are included within the Council’s Financial Statements: 2022/23 2023/24 Income Expenditure Income Expenditure £000 £000 £000 £000 Strathclyde Pension Fund - 76,012 - 89,083 2022/23 2023/24 Debtor Creditor Debtor Creditor £000 £000 £000 £000 Strathclyde Pension Fund - 9,049 - 10,927 Companies Controlled or Significantly Influenced by the Council The Council has entered into a number of transactions under joint venture, subsidiary, associate and other external trading arrangements. 2022/23 2023/24 Income Expenditure Income Expenditure £000 £000 £000 £000 Amey Public Services LLP 37 18,807 175 19,819 Fusion Assets Ltd 251 1,310 209 3,736 Mears Scotland LLP 3,588 65,839 3,616 66,203 North Lanarkshire Integration Joint Board 181,912 185,759 200,900 194,966 North Lanarkshire Municipal Bank Ltd 72 100 - - NL Properties Routes to Work 1,863 46 525 3,569 3,114 48 595 4,145 Outstanding balances for each of these entities are as follows: 2022/23 2023/24 Debtor Creditor Debtor Creditor £000 £000 £000 £000 Amey Public Services LLP 59 1,212 164 1,511 Fusion Assets Ltd 48 - 53 - Mears Scotland LLP 843 470 812 573 North Lanarkshire Integration Joint Board - 35,767 - 24,805 North Lanarkshire Municipal Bank Ltd NL Properties - 1,294 - 15 - 2,411 - 26 Routes to Work 11 - 3 - Page 185 of 412
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Annual Accounts 2023/24 Notes to the Accounts - 80 - Following closure of North Lanarkshire Municipal Bank Ltd in September 2022, the Council’s financial statements show no debtor or creditor balances for the Bank. However, customer balances that had not been withdrawn were transferred to an account held by North Lanarkshire Council. These balances do not represent assets available to the Council and as such have been excluded from the balance sheet presented within these accounts. The amount held in respect of this as at 31 March 2024 was £0.424m (£0.457m in 2022/23). The Council is also represented on the Boards of various companies detailed below that have no share capital. Company Name Status Function Environmental Key Fund Limited by guarantee (financial risk not material to Coauncil) Provide grants to community organisations undertaking environmental projects. Scotland Excel Joint committee formed under Local Govt Act 1973 Not-for-profit procurement organisation serving Local Authorities and related organisations across Scotland. Glasgow and the Clyde Valley Strategic Development Planning Authority Joint committee formed under Local Govt Act 1973 Partnership of 8 local authorities working together on strategic development planning matters. Glasgow and the Clyde Valley City Deal Cabinet Joint committee formed under Local Govt Act 1973 Partnership of 8 local authorities oversee the delivery of the City Deal programme. Clyde Valley Learning and Development Project Joint Committee Joint committee formed under Local Govt Act 1973 Partnership of 8 local authorities to establish and deliver a number of shared approaches to training, learning and development. Dunbartonshire Educational Trust Scheme 1962 Registered charity Charitable trust providing grants for further/higher education for those who live in the old county area of Dumbarton. SEEMIS Group Plc Limited liability partnership Provides education management information software to local authorities across Scotland. Stirlingshire Educational Trust Registered charity Charitable trust providing grants for education for those who live in the old county area of Stirling. Business Loans Scotland Limited by guarantee (financial risk not material to Council) Provides pan-Scotland loan funding to businesses. Continuing Education Gateway/ Gateway Shared Services Consortium of local authorities Gateway Shared Services is a consortium of 10 Local Authorities in the West of Scotland to further the provision of careers and educational guidance services. West of Scotland European Forum Joint committee formed under Local Govt Act 1973 Develops positive links between the communities of the region and the institutions of the European Union. Page 186 of 412
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Annual Accounts 2023/24 Housing Revenue Account - 81 - The HRA reflects the statutory requirement to account separately for local authority housing provision, as defined in the Housing (Scotland) Act 1987. The Income and Expenditure Statement reports the net cost for the year and shows how these costs were funded from rents and other income. Income and Expenditure Statement 2022/23 2023/24 2023/24 £000 £000 £000 140,499 Dwelling Rent Income 149,258 1,081 Non-Dwelling Rent Income 1,134 1,059 Other Income 1,045 142,639 Total Income 151,437 55,046 Repairs and Maintenance 64,349 36,594 Supervision and Management 33,192 31,905 Depreciation 31,464 (11,673) Revaluations 103,576 529 Other Expenditure 952 112,401 Total Expenditure 233,533 (30,238) Net (Surplus)/Deficit of HRA Services per Income and Expenditure Account 82,096 408 HRA Service Share of Corporate and Democratic Core 404 (289) HRA Share of other amounts included in the whole authority Net Cost of Services but not specifically allocated to specific services (411) (30,119) Net (Surplus)/Deficit of HRA Services 82,089 10,459 Gains or Losses on disposal of non-current asset 15,805 13,387 Interest Payable (Including Amortisation of Premiums) 19,127 (207) Interest and Investment Income (484) 2,370 Impairment of Financial Assets 2,264 357 Net Interest on the Net Defined Benefit Liability/Asset 214 (33,642) Recognition of Capital Grant (27,432) (37,395) (Surplus)/Deficit for the year on HRA Services 91,583 1.1. Statement of Movement on the Housing Revenue Account Balance 2022/23 2023/24 2023/24 £000 £000 £000 (19,496) Balance on the HRA at the end of the previous year (26,318) (37,395) (Surplus) / Deficit for the year on the HRA Income and Expenditure Statement 91,583 (173) Adjustment to usable reserves permitted by Accounting Standards (see Note 31) (2,935) 20,497 Adjustments between accounting basis and funding basis under regulations (see Note 33) (89,893) 10,249 Transfer (to) and from other statutory reserves (see Note 34) 10,743 9,498 (26,318) Balance on the HRA at the end of the current year (16,820) 1.2. Housing Stock The Council’s housing stock at 31 March 2024 was 36,581 (36,593 at 31 March 2023) in the following categories: House Numbers 2022/23 Property Types House Numbers 2023/24 302 1 Apartment 302 6,585 2 Apartment 6,501 18,883 3 Apartment 18,886 9,751 4 Apartment 9,815 1,039 5 Apartment 1,044 33 Other 33 36,593 Total 36,581 1.3. Rent Arrears Current rent arrears outstanding as at 31 March 2024 amounted to £4.849m. This represented 3.25% of rents paid during the year (the comparative figures for the 2022/23 year were £5.411m and 3.91% respectively). 1.4. Impairment of Financial Assets The expected credit losses at 31 March 2024 amounted to £8.129m (£7.636m as at 31 March 2023). 1.5. Void Rents The level of income lost from unlet Council Dwellings during 2023/24 amounted to £1.426m (2022/23 £1.255m). Page 187 of 412
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Annual Accounts 2023/24 Council Tax Income Statement - 82 - The Council Tax Income Statement shows the gross income raised from Council Taxes levied and deductions made under Statute. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement. 2022/23 2023/24 £000 £000 Gross Council Tax levied and contributions in lieu 184,958 195,743 Adjustments for prior years Council Tax (2,518) (1,652) Adjusted for: Council Tax Benefits (Net of Government Grants) Council Tax Reduction Scheme - (24,383) - (25,915) Other discounts and reductions (22,242) (23,788) Provision for Non-collection (5,548) (5,860) Net Council Tax Income per the Comprehensive Income and Expenditure Account 130,267 138,528 1. Nature of the Council Tax Charge The charge for each household is based upon the valuation banding to which the dwelling is allocated by the Assessor. Each dwelling in the Council area is placed into one of 8 valuation bands (A to H). The charge per Council Tax Band is calculated as a proportion of Band D, with lower valued properties paying less, and higher valued properties paying more. These proportions are determined by the Local Government Finance Act 1992. The Council Tax bill is reduced by 25% where a dwelling has only one occupant or by 10% for long-term empty properties and second homes, and under certain circumstances a 50% reduction can be awarded. Properties that have been empty for one year and over may be subject to a 100% levy. The property bandings are adjusted where the property is occupied by disabled persons and total exemptions are available for certain categories of occupants. No prompt payment discounts are offered on any properties. Charges in respect of water and waste water are the responsibility of Scottish Water. The Council collects total monies and makes a precept payment to the Water Authority. 2. The Calculation of the Council Tax Base The Valuation Bands for the Council Tax can be analysed as follows: No. of Dwellings No. of Exemptions Disabled Relief Discounts 25% Discounts 50% Total Dwellings Ratio to Band D Band D Equivalent Band A 52,502 2,548 (46) 7,149 405 42,446 0.66 28,294 Band B 38,084 941 1 4,280 323 32,540 0.77 25,306 Band C 20,509 421 8 2,081 158 17,840 0.88 15,856 Band D 18,291 185 (61) 1,394 99 16,674 1 16,674 Band E 17,524 130 44 848 97 16,405 1.31 21,554 Band F 10,491 47 95 336 34 9,980 1.63 16,217 Band G 3,163 22 53 97 11 2,979 1.96 5,835 Band H 170 3 1 5 0 161 2.45 394 Total 130,130 Provision for non-collection 4,229 Council Tax Base 125,901 3. The Council Tax Charge The charge for each band for 2023/24 was as follows: £ per Dwelling Band A 880.52 Band B 1,027.27 Band C 1,174.03 Band D 1,320.78 Band E 1,735.36 Band F 2,146.27 Band G 2,586.53 Band H 3,235.91 Page 188 of 412
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Annual Accounts 2023/24 Non Domestic Rates Income Statement - 83 - The Non-Domestic Rates Income Statement is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Non-Domestic Rate Account. The statement shows the gross income from the rates and deductions made under statute. The net income is paid to the Scottish Government as a contribution to the national non-domestic rate pool, where it is pooled nationally, and re-distributed back to local authorities. 2022/23 2023/24 £000 £000 Gross rates levied and contributions in lieu 146,982 155,513 Less: Reliefs and other deductions (26,385) (26,143) Payments of interest - - Provision of bad and doubtful debts (3,618) (3,881) Net Non Domestic Rate Income 116,979 125,489 Adjustment to previous years’ NNDR (6,009) (2,388) Contribution to Non Domestic Rates 110,970 123,101 Distribution from Non Domestic Rate Pool 111,737 121,640 Adjustment for the years prior to the introduction of the pool - - Income credited to the Comprehensive Income and Expenditure Statement 111,737 121,640 1. Net Rateable Value Calculation National Non Domestic Rates is a property based tax. It is based on the rateable value of a non-domestic (business) property, multiplied by a poundage set nationally by Scottish Ministers, less any relief to which a ratepayer may be eligible. The poundage rate for 2023/24 is 49.8p for properties with a rateable value not greater than £51,000. The Intermediate Property Rate of 51.1p (1.3p supplement on the poundage) applies for properties with a rateable value between £51,001 and £95,000, and the Higher Property Rate of 52.4p (2.6p supplement on the poundage) is payable on properties with a rateable value greater than £95,000. There are numerous relief packages available aimed at supporting the commercial property market to recover from the COVID-19 pandemic along with the need to promote green recovery and net zero emissions. These include Fresh Start Relief, Business Growth Accelerator, 100% Day Nursery Relief for standalone nurseries, as well as maintaining prior initiatives such as Small Business Bonus Scheme, Empty Property Relief, Disabled Rates Relief. Analysis of Rateable Values as at 1 April 2023 Number of Subjects Rateable Value £000 Industrial and Freight 3,276 110,462 Commercial Subjects Shops (inc. Restaurants) 2,594 62,497 Offices 2,109 34,063 Hotels, Boarding Houses etc. 34 3,365 Others 1,214 26,916 Miscellaneous and Formula Valued Subjects 1,276 65,951 Total 10,503 303,254 Page 189 of 412
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Annual Accounts 2023/24 Sundry Accounts Statement - 84 - The Council administers 31 Educational and 24 Sundry Trusts and Endowments as trustees. These trust funds do not represent assets available to the Council and as such have been excluded from the Balance Sheet of the Council. The summary of the balances held on these Trusts is detailed below. There is one Charitable Trust remaining, which the Council aims to transfer to an Office of the Scottish Charity Regulator (OSCR) agreed beneficiary charity. The timescale for transfer is dependent on identifying a suitable beneficiary and subsequent approval by OSCR. The principal Funds are the Lanarkshire Education Trust at £0.178m and the Marshall (Education) Trust at £0.592m, which were established under the Education Endowments (Scotland) Acts 1928 to 1935 to provide opportunities for educational advancement. These Funds are administered by a joint committee with South Lanarkshire Council and the individual funds are subject to separate audit arrangements. However, they have been considered in overall terms in the context of those materiality levels which apply to the Council's Financial Statements. The market value of all of the Educational Trusts Investments as at 31 March 2024 was £0.959m (£0.979m at 31 March 2023) and is shown at book value on the balance sheet £0.032m (£0.032m 2022/23). Summary Income and Expenditure Account 2022/23 2023/24 £000 £000 Education Trust Funds: Income Interest on Investments, etc. 43 74 Expenditure Grants, Prizes, Awards, etc. (29) (34) Surplus / (Deficit) for the year 14 40 Other Sundry Trust Funds: Income Interest on Investments - 1 Expenditure Grants, Prizes, Awards, etc. - - Surplus / (Deficit) for the year - 1 Balance Sheet at 31 March 2024 2022/23 2023/24 2023/24 £000 £000 £000 Investments 32 Education Trust Funds 32 1 Sundry Trust Funds 1 33 33 740 Advances to Council Loans Fund 781 79 Current Assets 83 852 Net Assets 897 Education Trust Funds 32 Capital 32 745 Revenue 786 777 818 Sundry Trust Funds 1 Capital 1 74 Revenue 78 75 79 852 Total Reserves 897 Page 190 of 412
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Annual Accounts 2023/24 Group Comprehensive Income and Expenditure Statement - 85 - This statement shows the accounting cost in the year of providing Council and subsidiary services and its share of the results of associates and joint ventures in accordance with International Financial Reporting Standards, rather than the amount to be funded from taxation. Local authorities raise taxation to cover expenditure in accordance with regulations, and this is different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. 2022/23 2023/24 Gross Expenditure Gross Income Net Expenditure Gross Expenditure Gross Income Net Expenditure £000 £000 £000 £000 £000 £000 611,712 (104,534) 507,178 Education & Families 639,633 (102,262) 537,371 221,344 (56,402) 164,942 Enterprise & Communities 230,773 (61,657) 169,116 2,914 (2,914) - Trading Operations - - - 168,047 (85,851) 82,196 Chief Executives & Other Corporate Services 173,910 (89,197) 84,713 188,616 - 188,616 Adult Health & Social Care (Non-Integrated) 197,186 - 197,186 252,648 (239,203) 13,445 Adult Health & Social Care (Integrated) 260,914 (263,858) (2,944) 112,401 (142,639) (30,238) Housing Revenue Account 233,533 (151,437) 82,096 (558) (633) (1,191) Non Service-Specific Costs 2,071 (9,508) (7,437) 1,790 (4,933) (3,143) Subsidiaries 3,718 (7,079) (3,361) 1,558,914 (637,110) 921,805 Net Cost of Services 1,741,738 (684,998) 1,056,740 - 7,672 7,672 Other Operating Expenditure - 15,342 15,342 131,757 (80,231) 51,526 Financing and Investment Income and Expenditure 197,725 (144,192) 53,533 - (945,408) (945,408) Taxation and Non-specific Grant Income - (967,501) (967,501) 35,595 (Surplus) or Deficit on the Provision of Services 158,114 8,484 Associates and Joint Ventures accounted for on an Equity Basis 3,790 44,079 Group (Surplus) or Deficit 161,904 Items that will not be reclassified to the (Surplus) or Deficit on the Provision of Services 171,560 (Surplus) or deficit on the revaluation of non current assets 33,335 (155,907) Re-measurement of the net defined Liability 52,809 2,781 Share of Other Comprehensive Income and Expenditure of Associates and Joint Ventures 1,041 18,434 Other Comprehensive Income and Expenditure 87,185 62,513 Total Comprehensive Income and Expenditure 249,089 Page 191 of 412
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Annual Accounts 2023/24 Group Balance Sheet - 86 - The Balance Sheet is a snapshot of the value at the reporting date of the assets and liabilities recognised by the Council, its subsidiaries and its share of the net assets or liabilities of its associates and joint ventures. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council and its subsidiaries. The net investment in associates and joint ventures is matched by its share of the reserves of the associates (i.e. Group Reserves). 31 March 2023 31 March 2024 £000 £000 £000 Property, Plant and Equipment 1,257,571 Council Dwellings 1,207,367 1,341,924 Other Land and Buildings 1,351,782 41,559 Vehicles, Plant and Equipment 52,278 265,123 Infrastructure Assets 278,721 15,809 Community Assets 16,229 17,685 Surplus Assets 18,203 140,049 Assets Under Construction 107,092 3,031,672 Intangible Assets 74 Software Licences 49 10,781 8,035 Software/Solution Development Intangibles Under Development 10,103 6,313 16,465 70,399 Investment Property 76,141 124,314 2,188 1,328 Investments in Associates and Joint Ventures 117,561 Long-Term Investments Long-Term Debtors 2,164 2,459 53,178 Other Long-Term Assets (Pensions) - 3,350,018 Long-Term Assets 3,246,462 92 Short-Term Investments 94 4,558 Inventories 5,479 118,209 Short-Term Debtors (net of impairment) 109,769 87,433 Cash and Cash Equivalents 57,613 210,292 Current Assets 172,955 (282,320) Short-Term Borrowing (289,417) (213,032) Short-Term Creditors (206,455) (12,380) Short-Term Provisions (12,241) (7,304) - Short-Term Finance Lease Liabilities Revenue Grant Receipts in Advance (8,204) - (515,036) Current Liabilities (516,317) (508,721) Long-Term Borrowing (619,980) - Long-Term Provisions (586) - Liabilities in Associates and Joint Ventures - (159,606) Other Long-Term Liabilities (Finance Leases) (151,401) (119,504) Other Long-Term Liabilities (Pensions) (119,490) (787,831) Long-Term Liabilities (891,457) 2,257,443 Net Assets 2,011,643 Usable Reserves 249,872 General Fund Reserve 283,893 26,318 Housing Revenue Account Balance 16,820 2,608 Capital Fund 2,951 16,466 Capital Grants Unapplied Accounts 7,204 13,000 Insurance Fund 11,000 17,109 Repairs and Renewals Fund 20,763 325,373 Total Usable Reserves 342,631 1,756,689 Unusable Reserves 1,493,417 175,380 Group Reserves 175,595 2,257,443 Total Reserves 2,011,643 The unaudited accounts were issued on 27 June 2024. Elaine Kemp, CPFA Chief Officer (Finance) Page 192 of 412
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Annual Accounts 2023/24 Movement in Group Reserves Statement - 87 - This statement shows the movement in the year on the different reserves held by the Council and its subsidiaries plus its share of the reserves of associates and joint ventures. The Council’s reserves are analysed into Usable Reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Council’s share of the reserves of associates and joint ventures is an unusable reserve and cannot be used to fund expenditure or reduce taxation. Year Ended 31 March 2024 Usable Reserves Unusable Reserves Total Reserves of the Council Council Subsidiaries Council’s Share of Reserves of Associates and Joint Ventures Total Reserves General Fund Housing Revenue Account Other Statutory Reserves £000 £000 £000 £000 £000 £000 £000 £000 Balance at 31 March 2023 249,872 26,318 49,183 1,756,689 2,082,062 51,067 124,313 2,257,443 Adjustments to opening balances to reflect audited accounts - - - - - 5,211 (804) 4,407 Adjustments to opening balances to reflect use of IAS28 in Joint Ventures - - - - - - (1,117) (1,117) Revised Balance at 31 March 2023 249,872 26,318 49,183 1,756,689 2,082,062 56,278 122,392 2,260,732 Movement in Reserves during 2023/24 Surplus / (Deficit) on Provision of Services (68,362) (91,583) - - (159,945) 1,831 (3,790) (161,904) Other Comprehensive Income and Expenditure - - - (86,069) (86,069) (75) (1,041) (87,185) Total Comprehensive Income and Expenditure (68,362) (91,583) - (86,069) (246,014) 1,756 (4,831) (249,089) Adjustment to usable reserves permitted by Accounting Standards 35,198 2,935 - (38,133) - - - - Adjustments between Accounting Basis and Funding Basis under Regulations 49,087 - - (49,087) - - - - Adjustments between Accounting Basis and Funding Basis under Regulations (10,991) 89,893 11,081 (89,983) - - - - Net Increase or Decrease before Transfers to Other Statutory Reserves 4,932 1,245 11,081 (263,272) (246,014) 1,756 (4,831) (249,089) Transfers to and from Other Statutory Reserves 29,089 (10,743) (18,346) - - - - - Increase or Decrease in the Year 34,021 (9,498) (7,265) (263,272) (246,014) 1,756 (4,831) (249,089) Balance at 31 March 2024 Carried Forward 283,893 16,820 41,918 1,493,417 1,836,048 58,034 117,561 2,011,643 IAS 28 Investments in Associates and Joint Ventures requires that where NLC’s share of an associate or joint venture’s liabilities exceed its share in their assets, the body is excluded from the group statements. In 2022/23, both Amey and Mears made a surplus, however Amey are now reporting a loss and have been excluded from the group statements for 2023/24. Page 193 of 412
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Annual Accounts 2023/24 Movement in Group Reserves Statement - 88 - Year Ended 31 March 2023 Usable Reserves Unusable Reserves Total Reserves of the Council Council Subsidiaries Council’s Share of Reserves of Associates and Joint Ventures Total Reserves General Fund Housing Revenue Account Other Statutory Reserves £000 £000 £000 £000 £000 £000 £000 £000 Balance at 31 March 2022 Adjustments to opening balances to reflect audited accounts 236,264 - 19,496 - 34,275 - 1,844,848 - 2,134,883 - 48,672 820 135,580 (2) 2,319,135 818 Revised Balance at 31 March 2022 236,264 19,496 34,275 1,844,848 2,134,883 49,492 135,578 2,319,953 Movement in Reserves during 2022/23 Surplus / (Deficit) on Provision of Services (74,563) 37,395 - - (37,168) 1,575 (8,484) (44,077) Other Comprehensive Income and Expenditure - - - (15,653) (15,653) - (2,781) (18,434) Total Comprehensive Income and Expenditure (74,563) 37,395 - (15,653) (52,822) 1,575 (11,265) (62,511) Adjustment to useable reserves permitted by Accounting Standards (36,262) 172 - 36,090 - - - - Adjustments between Accounting Basis and Funding Basis under Regulations 117,538 (20,496) 11,554 (108,596) - - - - Net Increase or Decrease before Transfers to Other Statutory Reserves 6,713 17,071 11,554 (88,159) (52,822) 1,575 (11,265) (62,511) Transfers to and from Other Statutory Reserves 6,895 (10,249) 3,354 - - - - - Increase or Decrease in the Year 13,608 6,822 14,908 (88,160) (52,822) 1,575 (11,265) (62,511) Balance at 31 March 2023 Carried Forward 249,872 26,318 49,183 1,756,689 2,082,062 51,067 124,313 2,257,443 Page 194 of 412
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Annual Accounts 2023/24 Group Cash Flow Statement - 89 - The Group Cash Flow Statement shows the changes in cash and cash equivalents of the Council and its subsidiaries during the reporting period. 2022/23 2023/24 2023/24 £000 £000 £000 61,260 Net Cash Inflow / (Outflow) from Operating Activities 40,417 INVESTING ACTIVITIES Cash Inflows: 3,765 Sale of non-current assets 1,797 74,324 Capital grants received 56,856 8,277 Other capital receipts 10,754 18 Investments redeemed 20 86,384 69,427 Cash Outflows: (244,768) - - Purchase of non-current assets Long-term investment Investment in subsidiary (250,122) - - (158,384) Net Cash Inflow / (Outflow) from Investing Activities (180,695) FINANCING ACTIVITIES Cash Inflows: 345,499 New loans raised 418,300 - Net Agency Grants - 345,499 418,300 Cash Outflows: (279,930) Repayments of amounts borrowed (300,581) - Donation - (7,049) - Capital payments of finance leases Net Agency Grants (7,304) - (286,979) (307,885) 58,520 Net Cash Inflow / (Outflow) from Financing Activities 110,415 (38,604) Net Increase / (Decrease) in cash and cash equivalents (29,863) 125,920 Cash and Cash Equivalents at the beginning of the year 87,433 (38,604) Net Increase / (Decrease) in cash and cash equivalents (29,863) 117 Increase / (Decrease) Non-cash in cash equivalents 43 87,433 Cash and Cash Equivalents at the end of the year 57,613 Group Comprehensive Income and Expenditure Statement to Cash Flow Operating Activities The following table reconciles the surplus/(deficit) on provision of services in the Group Comprehensive Income and Expenditure Statement to the Net Outflow from Operative Activities in the Group Cash Flow Statement above. £000 £000 Surplus/(Deficit) on the Provision of Services (147,371) Non-Cash Transactions Items Relating to Loans Fund 4,405 Adjustment relating to Provisions 302 Adjustment relating to Capital items 190,297 Adjustment relating to National Non-Domestic Rates (5) Adjustment relating to Pension Reserve 355 195,354 Items on an Accruals Basis Increase in Inventories (613) Decrease in Debtors 7,067 Increase in Creditors (14,020) (7,566) Net Cash Inflow from Operating Activities 40,417 Page 195 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 90 - 1. Disclosure of Interest in Other Entities The Code of Practice on Local Authority Accounting requires local authorities to consider their interests in all types of entities including private companies and joint ventures. The Group Accounts are the financial statements of the Council and its subsidiaries, plus the investments in associates and interests in joint ventures presented as a single economic entity. The Council has adopted a materiality threshold of £250,000 in considering the basis of incorporation of these entities within the Group Accounting Statements. 2. Group Structure The Council has interests in subsidiaries, associates and joint ventures. The table below explains the relationship each class of entity has with the Council: Relationship with the Council Subsidiary Companies: Entity controlled by the Council. Council has 100% interest in its subsidiaries. Associate Companies: Entity over which the Council has significant influence. North Lanarkshire Council has significant influence over the financial and operating policies of its associates but has no shares or ownership of any of these organisations which are entirely independent of the Council under law and taxation. Joint Ventures: Joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. North Lanarkshire Council owns a share in each of its joint venture companies. The diagram overleaf illustrates the Council’s group structure: Page 196 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 91 - North Lanarkshire Council Subsidiary Companies Regeneration Fusion Assets Limited North Lanarkshire Properties LLP Joint Ventures Road and Lighting Maintenance Amey Public Services LLP Housing and Property Maintenance Mears Scotland LLP Associate Companies Strathclyde Concessionary Travel Joint Board Strathclyde Partnership for Transport Electoral and Local Taxation Register Lanarkshire Valuation Joint Board Employment Support Routes to Work Limited Consolidated into the Group Accounts on an equity basis (33% share) Consolidated into the Group Accounts on line by line basis (100%) Consolidated into the Group Accounts by equity method under wider definition of associate. Council holds less than 20% of voting rights that is normally presumed to confer significant influence but consolidated as Council has representation on the board and thus participate in the policy-making process. Consolidated into the Group Accounts by equity method as Council has significant influence over the companies by having over 20% of voting rights in each entity. Health and Social Care North Lanarkshire Integration Joint Board Consolidated into the Group Accounts on an equity basis (50% share) Dunbartonshire Educational Trust Scheme 1962 Not consolidated into the Group Accounts on the grounds of materiality – below £0.250m (25% of voting rights) Page 197 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 92 - 3. Combining Entities As detailed in the diagram above, the Council has an interest in a number of subsidiary and associate companies along with joint ventures. The accounting period for most entities is 31 March 2024 with the only exceptions being in respect of Amey Public Services LLP and Mears Scotland LLP which report to 31 December 2023. The reason for this variation in reporting period is due to these companies aligning their own accounting periods with the annual contractual period with the Council. 4. Changes to Group Structure There were no changes to the group structure during 2023-24, however work is ongoing to wind up both Amey Public Services LLP and Mears Scotland LLP following the end of their contracts with the Council’s on 30 September 2024 and 30 June 2024 respectively. 5. Principal Place of Business The principal place of business for each group entity is detailed in the table below. The United Kingdom is the country of incorporation for all entities. Fusion Assets Ltd Chapel Street, Airdrie, ML6 6GX North Lanarkshire Properties LLP Civic Centre, Windmillhill Street, Motherwell, ML1 1AB Amey Public Services LLP The Sherard Building, Edmund Hally Road, Oxford, OX4 4DQ Mears Scotland LLP Ellismuir Way, Tannochside Business Park, Uddingston, G71 5PW Strathclyde Concessionary Travel Scheme Joint Board 131 St Vincent Street, Glasgow, G2 5JF Strathclyde Partnership for Transport 131 St Vincent Street, Glasgow, G2 5JF Lanarkshire Valuation Joint Board North Stand, Cadzow Avenue, Hamilton, ML3 0LU Routes to Work Limited 168/170 Main Street, Bellshill, Lanarkshire, ML4 1AE North Lanarkshire Integration Joint Board Kirklands Hospital, Fallside Road, Bothwell, Lanarkshire, G71 8BB 6. Reconciliation Statements The following statements reconcile the Council’s Comprehensive Income and Expenditure Statement and Balance Sheet to the Group Comprehensive Income and Expenditure Statement and Balance Sheet. 6.1 Council Comprehensive Income and Expenditure Statement to Group Comprehensive Income and Expenditure Statement 2022/23 2023/24 £000 £000 52,822 Total Comprehensive Income and Expenditure on the Council's Comprehensive Income and Expenditure Statement 234,035 (Surplus)/Deficit arising from other entities included in the Group Accounts (1,575) Subsidiaries (1,926) (1,087) Associates (5,866) 9,571 Joint Ventures 9,656 Other Comprehensive (Income) and Expenditure - Subsidiaries 75 2,781 Associates 1,041 62,513 Group total Comprehensive Income and Expenditure for the year 237,015 Page 198 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 93 - 6.2 Council Balance Sheet to Group Balance Sheet 31 March 2023 31 March 2024 £000 £000 2,082,062 Net Assets on Council Balance Sheet 1,848,026 Long Term Assets in Group Balance Sheet 74,159 Investments in Associates 78,244 50,155 Investments in Joint Ventures 39,317 71,439 Subsidiary Non Current Assets 77,181 Current Assets 15,196 Subsidiaries 12,762 Current Liabilities (2,978) Subsidiaries (2,439) Long Term Liabilities - Associates - (32,591) Subsidiaries (29,375) 2,257,443 Net Assets on Group Balance Sheet 2,023,716 2,082,062 Total Reserves on Council Balance Sheet 1,848,026 Group Income and Expenditure and Other Reserves 50,155 Joint Ventures 39,317 74,159 Associates 78,244 51,066 Subsidiaries 58,129 2,257,443 Total Reserves on Group Balance Sheet 2,023,716 Page 199 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 94 - 7. Further Details on Consolidation Further information in respect of Companies consolidated within the Group Accounts above can be summarised as follows:- 7.1 Subsidiaries The following table has a more detailed breakdown of the figures included for Subsidiary Companies in the Group Comprehensive Income and Expenditure. The figures below also include the adjustments made to the Council’s Balance Sheet on consolidating the Council’s subsidiaries into the Group Accounts. 2022/23 2023/24 Fusion Assets Ltd North Lanarkshire Properties LLP Fusion Assets Ltd North Lanarkshire Properties LLP £'000 £000 £'000 £000 Comprehensive Income and Expenditure Statement Surplus/ (Deficit) on Provision of Service (99) 1,674 777 1,149 Other Comprehensive Income and Expenditure - - - (75) Balance Sheet Non-Current Assets 3,035 68,404 3,235 73,946 Current Assets Inventories 2,884 - 3,614 - Short-Term Debtors 648 (218) 569 (745) Cash and Cash Equivalents 2,716 9,166 2,236 7,088 Current Liabilities Short-Term Creditors (159) (1,724) (303) (1,636) Short-Term Borrowing - (1,095) - (500) Long Term Liabilities Long Term Borrowing - (32,591) - (29,375) Deferred Income - - - - Capital Grants Received in Advance - - - - Pensions - - - - Reserves Income and Expenditure (7,636) (18,487) (7,568) (18,818) General Fund - - - - Pension - (207) - (132) Revaluation Reserve (394) (23,248) (594) (29,827) Other (1,094) - (1,189) (1) Page 200 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 95 - 7.2 Joint Ventures The table below illustrates the Council’s payments to its Joint Ventures. 2023/24 Council Payments to Entity % of Entity's Annual Turnover £000 % Amey Public Services LLP 19,819 91.28 Mears Scotland LLP 63,866 100 NL Integration Joint Board 194,966 24.66 The following disclosures are required for Amey Public Services LLP, Mears Scotland LLP and NL Integration Joint Board because the Council holds more than 20% of the voting rights in each entity. 2022/23 2023/24 Amey Public Services LLP Mears Scotland LLP NL Integration Joint Board Amey Public Services LLP Mears Scotland LLP NL Integration Joint Board £000 £000 £000 £000 £000 £000 Comprehensive Income and Expenditure Statement Gross Income 21,056 59,163 715,467 21,713 63,866 790,688 Net Profit/ (Loss) before Taxation 393 3,309 (21,506) (286) 4,671 (24,422) Taxation - - - - - - Net Profit/ (Loss) after Taxation 393 3,309 (21,056) (286) 4,671 (24,422) Balance Sheet Non-Current Assets 342 24 - 83 32 - Current Assets 3.307 17,877 97,946 3.474 18,891 75,524 Liabilities due within one year (3,049) (13,321) - (3,491) (9,991) - Liabilities due after more than one year (152) (687) - - (333) - Net Pension Asset - - - - - - Provision for Liabilities - - - - - - Capital and Revenue Reserves (448) (3,893) (97,946) (66) (8,599) (75,524) IAS 28 Investments in Associates and Joint Ventures requires that where NLC’s share of an associate or joint venture’s liabilities exceed its share in their assets, the body is excluded from the group statements. In 2022/23, both Amey and Mears made a surplus, however Amey are now reporting a loss and have been excluded from the group statements for 2023/24. Page 201 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 96 - 7.3 Associates The table below illustrates the Council’s contribution to its Associates and debtor/creditor balances relating to Associates included in the Council’s Balance Sheet. 2023/24 Council Payments to Entity % of Entity's Annual Turnover Council Share of Net Assets/ (Liabilities) £000 % £000 Strathclyde Concessionary Travel Scheme Joint Board 583 13.20 719 Strathclyde Partnership for Transport 5,528 4.59 76,221 Lanarkshire Valuation Joint Board 2,005 49.20 763 Routes to Work Limited 4,145 94.14 541 The following disclosures are required for Lanarkshire Valuation Board and Routes to Work Limited because the Council holds 20% or more of the voting rights in the entity. 2022/23 2023/24 Routes to Work Ltd. Lanarkshire Valuation Joint Board Routes to Work Ltd. Lanarkshire Valuation Joint Board £000 £000 £000 £000 Comprehensive Income and Expenditure Statement Gross Income 4,368 4,237 4,403 4,075 Net Surplus / (Deficit) 107 (266) 119 757 Balance Sheet Non-Current Assets 1 424 (1) 113 Current Assets 1,178 1,914 1,937 2,098 Liabilities due within one year (256) (267) (933) (193) Long-Term Liabilities 16 - - - Retirement Benefit Asset / (Liabilities) - - 1,702 (493) Accumulating Compensated Absences - 74 - 70 Capital, Revenue & Pension Reserves (939) (2,145) (2,705) (1,595) 7.4 Annual Accounts The Annual Accounts of the Council’s Associates are subject to independent audit and are available from the addresses below. Strathclyde Concessionary Travel Scheme Joint Board Treasurer to Strathclyde Concessionary Travel Scheme, Strathclyde Partnership for Transport, Consort House, 12 West George Street, Glasgow, G2 1HN Strathclyde Partnership for Transport Treasurer to Strathclyde Partnership for Transport, Consort House, 12 West George Street, Glasgow, G2 1HN Lanarkshire Valuation Joint Board Treasurer to Lanarkshire Valuation Joint Board, Council Offices, Almada Street, Hamilton, ML3 0AB Routes to Work Limited 168/170 Main Street, Bellshill, Lanarkshire, ML4 1AE Page 202 of 412
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Annual Accounts 2023/24 Notes to the Group Accounts - 97 - 8. Interests in Other Entities There are 10 related companies that have been identified as being relevant for group purposes as illustrated by the flowchart on page 89. Of these only one is considered out with the scope of the group: Dunbartonshire Educational Trust Scheme 1962 is a charitable trust which provides grants for further/higher education for those who live in the old county area of Dumbarton. The Council has 25% voting rights on the Board however on the grounds of materiality it has not been consolidated as part of the group. Page 203 of 412
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Annual Accounts 2023/24 Remuneration Report - 98 - Introduction The Remuneration Report has been prepared in accordance with the Local Authority Accounts (Scotland) Regulations 2014. These Regulations require disclosures about the remuneration and pension benefits of Senior Councillors, Senior Employees and Senior Employees of Council subsidiary bodies whose remuneration is £150,000 or more. All information included in sections 2 to 5 in this Remuneration Report have been audited by the Council’s appointed auditor, Audit Scotland. The other sections of this Remuneration Report have been reviewed by Audit Scotland to ensure they are consistent with the Financial Statements. Arrangements for Remuneration The remuneration of Councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No. 2007/183) as amended most recently by the Local Governance (Scotland) Act 2004 (Remuneration) Amendment Regulations 2022 (SSI 2022/18). The Regulations provide for the grading of Councillors for the purposes of remuneration arrangements, as either the Leader of the Council, the Provost, Senior Councillors or Councillors. The Leader of the Council and the Provost cannot be the same person for the purposes of payment of remuneration. A Senior Councillor is a Councillor who holds a significant position of responsibility in the Council’s political management structure. When determining the level of remuneration for Councillors, the Scottish Ministers consider the recommendations of the Scottish Local Authority Remuneration Committee (SLARC). SLARC was established under the provisions of the Local Governance (Scotland) Act 2004 to advise Scottish Ministers on the remuneration (including pensions), allowances and expenses incurred by local authority Councillors in accordance with criteria specified by Scottish Ministers. The maximum salary that can be paid to the Leader of the Council is set out in the Regulations as £46,902. For 2023/24 the salary for the Leader of North Lanarkshire Council was £46,706. The Regulations permit the Council to remunerate one Provost with a maximum salary of £35,177. For 2023/24 the salary for the Provost of North Lanarkshire Council was £35,027. The Regulations also set out the remuneration that may be paid to Senior Councillors and the total number of Senior Councillors the Council may have. The maximum yearly amount that may be paid to a Senior Councillor is 75 per cent of the total yearly amount payable to the Leader of the Council. The maximum yearly amount the Council could remunerate all of its Senior Councillors for 2023/24 was £525,141. The Council is able to exercise local flexibility in the determination of the precise number of Senior Councillors and their salary within these maximum limits. The total remuneration paid to Senior Councillors (excluding the Leader of the Council and Provost) was £515,334 in 2023/24. The Regulations also permit the Council to pay contributions or other payments as required to the Local Government Pension Scheme in respect of those Councillors who elect to become Councillor members of the pension scheme. In addition to the Senior Councillors of the Council, the Regulations also set out the remuneration payable to Councillors with the responsibility of a Convener or Vice-Convener of a Joint Board such as the Lanarkshire Joint Valuation Board. The Regulations require the remuneration to be paid by the Council of which the Convener or Vice-Convener is a member. The Council is also required to pay any pension contributions arising from the Convener or Vice-Convener being a member of the Local Government Pension Scheme. The Council is reimbursed by the Joint Board for any additional remuneration paid to the member from being a Convener or Vice- Convener of a Joint Board. The salary levels of Senior Employees are set by reference to national arrangements as well as local decisions on management structures and their associated remuneration levels. The Scottish Joint Negotiating Committee for Local Authorities Services (Chief Officials) sets the salary levels for the Chief Executives of Scottish Local Authorities and also sets out the spinal column salary points for Chief Officers which local authorities can utilise in setting the salary levels for posts within their authority. There are no other benefits included in the remuneration package for Senior Employees. With the exception of Trade Unions Facility Time, all information disclosed in the following tables in this Remuneration Report are subject to audit. The other sections of the Remuneration Report are subject to review by external audit to ensure that they are consistent with the financial statements. Page 204 of 412
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Annual Accounts 2023/24 Remuneration Report - 99 - 1. Trade Unions (Facility Time Publication Requirements) Regulations 2017 In addition to the regulations governing Senior Employees and Councillors, the Trade Union (Facility Time Publication Requirements) Regulations 2017, which apply from 1 April 2017, require public sector employers to collect and publish a range of information on trade union facility time in respect of their employees who are Trade Union Representatives. The following information has been taken from the payroll reporting system provided by the Employee Service Centre. Number of employees who were relevant union officials during the relevant period FTE employee number 69 64.11 Percentage of time spent on facility time – the number of employees who were relevant trade union officials during the year as a percentage of their working hours spent on facility time. Percentage of time Number of representatives 0% 26 1-50% 41 51-99% 0 100% 2 Percentage of the total pay bill spent on facility time Total cost of facility time (£) 163,395 Total pay bill (£) 675,231,888 Percentage of the total pay bill spent on facility time 0.02% Hours used on Facility Time 4,782 Page 205 of 412
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Annual Accounts 2023/24 Remuneration Report - 100 - 2. General Disclosure by Pay Band The following table is for actual remuneration paid to the employee, which includes salary and compensation for loss of employment made in the year. Any starters or leavers in the year are recorded in the remuneration band which matches their actual remuneration for the year. Remuneration Bands (£) 2022/23 2023/24 Officers Teachers Total Officers Teachers Total 50,000 - 54,999 194 203 397 277 352 629 55,000 - 59,999 85 228 313 147 226 373 60,000 - 64,999 45 151 196 64 133 197 65,000 - 69,999 25 111 136 33 156 189 70,000 - 74,999 20 58 78 19 92 111 75,000 - 79,999 1 16 17 26 41 67 80,000 - 84,999 1 8 9 7 21 28 85,000 - 89,999 2 3 5 - 7 7 90,000 - 94,999 1 7 8 1 7 8 95,000 - 99,999 3 1 4 2 5 7 100,000 - 104,999 1 2 3 - 2 2 105,000 - 109,999 14 - 14 - 3 3 110,000 - 114,999 1 - 1 13 - 13 120,000 - 124,999 - - - 1 - 1 130,000 - 134,999 - - - 1 - 1 140,000 - 144,999 1 - 1 - - - 145,000 - 149,999 - - - 1 - 1 180,000 - 184,999 1 - 1 - - - 190,000 - 194,999 - - - 1 - 1 395 788 1,183 593 1,045 1,638 Page 206 of 412
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Annual Accounts 2023/24 Remuneration Report - 101 - 3. Remuneration The following tables provide details of the remuneration paid to the Council’s Senior Councillors and Senior Employees. The term remuneration means gross salary, fees and bonuses, allowances and expenses, and compensation for the loss of employment. It excludes pension contributions made by the Council. Pension contributions made to the person’s pension are disclosed as part of the pension benefits disclosure. a. Remuneration of Senior Councillors Councillor Name Responsibility 2022/23 Total Remuneration 2023/24 Total Remuneration £ £ James Logue Leader of the Council 38,123 46,706 Paul Kelly Louise Roarty Depute Leader of the Council (Until 22nd June 23) Depute Leader of the Council (From 22nd June 23) Business Manager (Until 22nd June 23) 24,950 22,426 9,796 34,368 Kenneth Duffy Provost 22,699 35,027 Bob Burgess Depute Provost 16,917 29,840 Tracy Carragher Leader of the SNP Group 24,674 29,705 Tom Fisher Business Manager (From 22nd June 23) Convener of Finance & Resources Committee 21,488 32,953 Martin McCulloch Convener of Adult Care and Social Work Committee 15,717 29,705 Nicky Shevlin Convener of Planning Committee 19,758 29,705 John McLaren Convener of Regulatory Committee 19,758 29,705 Sophia Coyle Chair of the Licensing Board 19,552 29,705 Kevin Docherty Convener of Local Review Body 15,717 29,705 Angela Campbell Convener of Education, Children & Families Committee (From 25th August 22 to 28th March 24) 21,488 32,135 Michael McBride Convener of Education, Children & Families Committee (From 28th March 24) - 327 Ayeshah Khan Convener of Enterprise, Growth & Fair Work Committee (From 25th August 22 to 22nd June 23) 15,717 8,230 Alex McVey Convener of Enterprise, Growth & Fair Work Committee (From 22nd June 23) Convener of Lanarkshire Joint Valuation Board (Until 5th May 22) 349 21,475 Heather Brannan- McVey Convener of Housing Committee (From 25th August to 22nd June 23) 22,426 9,137 Michael McPake Convener of Housing Committee (From 22nd June 23) Convener of Environment & Climate Change Committee (Until 5th May 22) 4,042 29,404 Helen Loughran Convener of Environment & Climate Change Committee 15,717 32,047 Alexander Watson Convener of Audit & Scrutiny Panel 20,535 29,705 Kenneth Stevenson Convener of Communities Committee 17,447 32,953 Geraldine Woods Convener of Wellbeing and Tackling Poverty Committee 15,717 29,705 James Reddin Depute Convener of Lanarkshire Joint Valuation Board 4,363 5,029 Total 399,580 597,067 Note 1. Senior Councillor means a Leader of the Council, a Civic Head or a Senior Councillor, all as defined by regulation of the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007(3). 2. The remuneration disclosed in the table above reflects actual amounts paid for service as Senior Councillors and does not include any remuneration which relates to previous or subsequent appointment with the Council. 3. The full-time equivalent salaries for 2023/24 were as follows: Leader £46,902, Depute Leader & Provost £35,177, Depute Provost £29,917, Business Manager, Convenor of Finance & Resources, Housing, Communities, Environment & Climate Change and Education, Children & Families Committees £33,179, Convenor of Audit & Scrutiny Panel £29,917, all other Senior Councillors £29,917 (£45,669, £34,254, £31,028, £32,000 and £28,827 for 22/23 respectively). Page 207 of 412
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Annual Accounts 2023/24 Remuneration Report - 102 - 4. No Councillor received any remuneration from a subsidiary as a representative of the Council. The Council does not have any influence on remunerations awarded by subsidiaries. 5. The Joint Boards have an arrangement to reimburse the Council for the additional costs arising from a Councillor being a Convener, Vice-Convener or Depute Convener of the Board. The disclosures made in this report are limited to the amounts paid to the Council by the Board for remuneration and does not reflect the full value of the remuneration that may be paid to the Councillor. The following Councillors served on Joint Boards during 2023/24: • Councillor J Reddin was the Depute Convener of the Lanarkshire Joint Valuation Board from 27th June 22 and the Council was reimbursed £5,029 for 2023/24 (£4,363 for 2022/23). b. Remuneration of Councillors The Council paid the following Remuneration to all Councillors (including the Senior Councillors above) during the year. Type of Remuneration 2022/23 2023/24 £ £ Salaries 1,703,414 1,762,664 Expenses 26,939 27,113 Total 1,730,353 1,789,777 Note: The annual return of Councillors’ Remuneration for 2023/24 is available for any member of the public to view on the Council’s website at www.northlanarkshire.gov.uk. Please follow the link on the Council’s website as follows: Councillor Remuneration 2023/24 Page 208 of 412
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Annual Accounts 2023/24 Remuneration Report - 103 - c. Remuneration of Council Senior Employees Name Post Title 2022/23 2023/24 Total Remuneration Salaries, fees and allowances Compensation for loss of office Total Remuneration £ £ £ £ Desmond Murray Chief Executive 183,634 193,136 - 193,136 Derek Brown Depute Chief Executive (Until 3rd September 2023) 141,984 62,966 - 62,966 Andrew McPherson Depute Chief Executive (From 4th September 2023) - 85,801 - 88,546 Elaine Kemp Chief Officer (Finance) (Section 95 Officer) 104,485 115,896 - 115,896 Katrina Hassell Chief Officer (Business & Digital) 104,420 115,713 - 115,713 Fiona Whittaker Chief Officer (People Resources) 104,085 115,716 - 115,716 Stephen Penman Chief Officer (Strategic Communication & Engagement) 107,785 116,986 - 116,986 Ross McGuffie Chief Officer (Health and Social Care) 112,098 124,425 - 124,425 Alison Gordon Chief Social Work Officer (Education Families Justice and Integrated Practice) 104,074 114,469 - 114,469 Archie Aitken Chief Officer (Legal and Democratic) 107,785 116,986 - 116,986 Ken Adamson Chief Officer (Audit & Risk) 92,067 103,038 - 103,038 Total 1,162,417 1,265,132 - 1,265,132 1. Total remuneration disclosed relates to salary, fees and allowances and compensation for loss of employment. 2. The 2023/24 remuneration in the table above includes election payments: Desmond Murray £438 (2022/23 £6,893) Elaine Kemp £180 (2022/23 £400), Katrina Hassell £0 (2022/23 £400), Stephen Penman £1,270 (2022/23 £3,700), Archie Aitken £1,270 (2022/23 £3,700) and Ken Adamson £350 (2022/23 £200). d. Remuneration of Council’s Subsidiary Bodies Senior Employees Name Post Title 2022/23 2023/24 Total Remuneration Salaries, fees and allowances Compensation for loss of office Total Remuneration £ £ £ £ Kenneth McDonald Murray Collins Surveying and Technical Manager, North Lanarkshire Properties (Until 10th November 23) Managing Director, Fusion Assets 47,051 76,245 33,723 83,914 - - 33,723 83,914 Total 123,296 117,637 - 117,637 1. Total remuneration disclosed relates to salary, fees and allowances and compensation for loss of employment. 2. The Council has no influence over the remuneration provided by subsidiaries. Page 209 of 412
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Annual Accounts 2023/24 Remuneration Report - 104 - 4. Pension Benefits The term pension benefits covers in-year pension contributions for the employee or Councillor by the Council and the named person’s accrued pension benefits at the reporting date. All Senior Councillors and Senior Employees shown in tables a) and b) below are entitled to join the Local Government Pension Scheme (LGPS). The LGPS is a defined benefit statutory scheme, administered in accordance with the Local Government Pension Scheme Regulations 2014. For most people, for service up to 31 March 2009, the annual pension is calculated by dividing their final pay by 80 (60 for service after 31 March 2009) and multiplying this by their total membership. Pensions payable are increased annually in line with changes in the Consumer Price Index (CPI). The lump sum, which is automatically paid when the person retires for service up to 31 March 2009, is three times their annual pension and is tax-free. There is no automatic lump sum for service after 31 March 2009. From 1 April 2015, the LGPS moved to a career average pension scheme at a rate of 1/49th of the amount of pensionable pay received in the scheme that year. A member’s contribution depends on their full-time equivalent pay and is payable in the financial year ended 31 March 2024 at the rate on the following bands of pay: Band Range Contribution Rate 1 On earnings up to and including £25,300 5.50% 2 On earnings above £25,301 and up to £31,000 7.25% 3 On earnings above £31,001 and up to £42,500 8.50% 4 On earnings above £42,501 and up to £56,600 9.50% 5 On earnings above £56,601 12.00% The pension entitlements for Senior Councillors, Senior Employees of the Council and Subsidiary Bodies for the year to 31 March 2024 are shown in the tables below, together with the contribution made by the Council or the Subsidiary Body during the year. Page 210 of 412
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Annual Accounts 2023/24 Remuneration Report - 105 - a. Pension Benefits of Senior Councillors The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their total local government service and not just their current appointment. Councillor Name In-year pension contributions Accrued pension benefits For year to 31 March 2023 For year to 31 March 2024 As at 31 March 2023 Movement In Year As at 31 March 2024 £ £ £000 £000 £000 James Logue 7,732 9,032 Pension Lump Sum 12 3 3 1 15 4 Paul Kelly 5,836 4,466 Pension Lump Sum 9 2 1 - 10 2 Louise Roarty - 5,749 Pension Lump Sum - - 1 - 1 - Kenneth Duffy 5,639 6,825 Pension Lump Sum 3 - 1 - 4 - Bob Burgess - - Pension Lump Sum 2 - -2 - - - Tracy Carragher 5,592 5,749 Pension Lump Sum 2 - 1 - 3 - Tom Fisher 5,372 6,377 Pension Lump Sum 3 - 1 - 4 - Martin McCulloch 4,878 5,749 Pension Lump Sum 2 - 2 - 4 - Nicky Shevlin 4,991 5,749 Pension Lump Sum 8 2 1 - 9 2 John McLaren 4,991 5,749 Pension Lump Sum 5 - 2 - 7 - Sophia Coyle 5,111 5,749 Pension Lump Sum 6 2 2 - 8 2 Kevin Docherty 4,878 5,749 Pension Lump Sum 4 - 1 - 5 - Angela Campbell 5,372 6,377 Pension Lump Sum 3 - 1 - 4 - Michael McBride - 3,871 Pension Lump Sum - - 1 - 1 - Ayeshah Khan 4,609 4,244 Pension Lump Sum 1 - - - 1 - Alex McVey 3,834 5,376 Pension Lump Sum 3 - 1 - 4 - Heather Brannan- McVey 5,461 4,372 Pension Lump Sum 6 - 2 - 8 - Michael McPake 3,880 5,876 Pension Lump Sum 6 - 1 - 7 - Helen Loughran 4,878 6,249 Pension Lump Sum 1 - 1 - 2 - Alexander Watson 5,080 5,749 Pension Lump Sum 3 - 1 - 4 - Kenneth Stevenson 5,259 6,377 Pension Lump Sum 2 - 2 - 4 - Geraldine Woods 4,878 5,749 Pension Lump Sum 2 - 1 - 3 - James Reddin 4,335 5,527 Pension Lump Sum 2 - 1 - 3 - Total 102,606 126,710 94 27 121 Page 211 of 412
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Annual Accounts 2023/24 Remuneration Report - 106 - b. Pension Benefits of Council Senior Employees Name In-year pension contributions Accrued pension benefits For year to 31 March 2023 For year to 31 March 2024 As at 31 March 2023 Movement in Year As at 31 March 2024 £ £ £000 £000 £000 Desmond Murray 35,343 36,838 Pension Lump Sum 64 65 9 4 73 69 Derek Brown (Until 3rd September 23) 27,731 - Pension Lump Sum 22 - 3 - 25 - Andrew McPherson (From 4th September 23) - 25,922 Pension Lump Sum 47 62 16 24 63 86 Elaine Kemp 20,346 21,986 Pension Lump Sum 42 56 6 4 48 60 Katrina Hassell 20,344 21,986 Pension Lump Sum 52 85 7 7 59 92 Fiona Whittaker 20,346 21,986 Pension Lump Sum 11 - 3 - 14 - Stephen Penman 20,344 21,986 Pension Lump Sum 26 - 5 - 31 - Ross McGuffie 21,903 23,640 Pension Lump Sum 12 - 4 - 16 - Alison Gordon 19,429 22,901 Pension Lump Sum 36 29 5 2 41 31 Archie Aitken 20,346 21,986 Pension Lump Sum 49 69 7 6 56 75 Ken Adamson 18,007 19,513 Pension Lump Sum 42 64 6 5 48 69 Total 224,139 238,744 833 123 956 1. Prior year pension contributions are included for all Senior Officers which include prior appointments. 2. The Local Government (Discretionary Payments and Injury Benefits) (Scotland) Regulations 1998 make provision for authorities to make discretionary payments to local government employees to pay compensation for premature retirement. c. Pension Benefits of Council’s Subsidiary Bodies Senior Employees Name In-year pension contributions Accrued pension benefits For year to 31 March 2023 For year to 31 March 2024 As at 31 March 2023 Movement in Year As at 31 March 2024 £ £ £000 £000 £000 Kenneth McDonald (Until 10th November 23) 9,067 - Pension Lump Sum 3 - 5 - 8 - Murray Collins 25,081 27,117 Pension Lump Sum - - - - - - Total 34,148 27,117 3 5 8 5. Exit Packages North Lanarkshire Council terminated the contracts of a number of employees in 2022/23 and 2023/24 as part of a series of workforce change exercises which gave rise to voluntary severance agreements. Exit package costs in the tables below have been allocated across the following four areas: • Redundancy Lump Sums, representing the amount that North Lanarkshire Council pays to the individual in a one-off lump sum in accordance with the Council’s severance policy and Payments In-lieu of Notice, representing the amount that North Lanarkshire Council pays to an individual for a period of notice that the individual is not required to work. • Compensated Added Years (CAY) Lump Sum, representing the amount that North Lanarkshire Council pays to the individual in a one-off lump sum, according to the CAY awarded. Page 212 of 412
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Annual Accounts 2023/24 Remuneration Report - 107 - • Strain Costs, representing the amount which North Lanarkshire Council is required to pay to the pension fund because the employee has retired before the assumed retirement age which would result in a shortfall in contributions up to the assumed retirement age. • An estimate of the total exit package costs that may potentially be incurred by North Lanarkshire Council up until the age at which the relevant employees are assumed to cease being members of the pension scheme as required by the Local Authority Accounts (Scotland) Regulations 2014: Exit Packages 2023/24 Banding Employees Total Exit Package Costs Redundancy Lump Sums CAY Lump Sums Strain Costs Estimated CAY Liabilities No. £000 £000 £000 £000 £000 £0-£20,000 46 573 - 4 - 577 £20,001-£40,000 72 1,938 - 149 - 2,087 £40,001-£60,000 37 1,429 - 306 - 1,735 £60,001-£80,000 20 739 13 530 102 1,384 £80,001-£100,000 22 576 38 976 391 1,981 £100,001-£150,000 38 1,061 129 2,175 1,298 4,663 £150,001-£200,000 20 564 74 1,711 1,059 3,408 £200,001-£250,000 6 107 35 643 560 1,345 £250,001-£300,000 1 30 12 136 104 282 262 7,017 301 6,630 3,514 17,462 Comparative Exit Packages 2022/23 Banding Employees Total Exit Package Costs Redundancy Lump Sums CAY Lump Sums Strain Costs Estimated CAY Liabilities No. £000 £000 £000 £000 £000 £0-£20,000 6 56 6 - - 62 £20,001-£40,000 6 171 2 9 18 200 £40,001-£60,000 2 28 4 41 31 104 £60,001-£80,000 6 250 1 166 - 417 £80,001-£100,000 3 42 14 238 - 294 £100,001-£150,000 3 46 17 169 116 348 £150,001-£200,000 2 60 10 209 73 352 £250,001-£300,000 - - - - - - 28 653 54 832 238 1,777 Des Murray Councillor James Logue Chief Executive Council Leader Page 213 of 412
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Annual Accounts 2023/24 Statement of Responsibilities - 108 - The Authority’s Responsibilities The Authority is required to: • make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. The Chief Officer (Finance) has been designated as that officer within North Lanarkshire Council • manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets • ensure the Annual Accounts are prepared in accordance with legislation (The Local Authority Accounts (Scotland) Regulations 2014) and so far as is compatible with that legislation, in accordance with proper accounting practices (section 12 of the Local Government in Scotland Act 2003) • approve the Annual Accounts for signature Signed on behalf of North Lanarkshire Council Councillor James Logue Council Leader The Chief Officer (Finance) Responsibilities The Chief Officer (Finance) is responsible for the preparation of the Authority's statement of accounts in accordance with proper practices as set out in the CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this statement of accounts the Chief Officer (Finance) has: • selected suitable accounting policies and then applied them consistently • made judgements and estimates that were reasonable and prudent • complied with legislation • complied with the Code of Practice on Local Authority Accounting in the United Kingdom (in so far as it is compatible with legislation) The Chief Officer (Finance) has also: • kept proper accounting records which were up to date • taken reasonable steps for the prevention and detection of fraud and other irregularities Statement of Accounts The Statement of Accounts presents a true and fair view of the financial position of the Council and its Group as at 31 March 2024, and its income and expenditure for the year ended 31 March 2024. Elaine Kemp, CPFA Chief Officer (Finance) Page 214 of 412
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- 109 - Annual Governance Statement 2023/24 1. Purpose 1.1 The council is required to produce an Annual Governance Statement in line with the Local Authority Accounts (Scotland) Regulations 2014: • Regulation 5(2) requires an authority to conduct a review at least once in each financial year of the effectiveness of its system of internal control. • Regulation 5(3) states that the findings from the review at 5(2) “must be considered at a meeting either of the local authority or of a committee of the local authority whose remit includes audit or governance functions”. • Regulation 5(4) requires that for a local authority in Scotland the statement is an annual governance statement. • Regulation 5(5) states that the annual governance statement must be signed by the Chief Executive and Leader of the Council. 1.2 The Annual Governance Statement is required to outline the council’s governance arrangements for the last financial year and demonstrate how the council complies with the principles of good governance. The principles of good governance in the public sector are defined by the International Framework: Good Governance in the Public Sector which was jointly developed by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the International Federation of Accountants (IFAC). The International Framework offers the definition that: “Governance comprises the arrangements put in place to ensure that the intended outcomes for stakeholders are defined and achieved.” 1.3 The fundamental function of good governance is to ensure that governing bodies (and individuals working for public sector entities) achieve their intended outcomes while acting in the public interest at all times. Acting in the public interest implies primary consideration of the benefits for society, which should result in positive outcomes for service users and other stakeholders, and requires: A. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. B. Ensuring openness and comprehensive stakeholder engagement. In addition to the overarching requirements for acting in the public interest (as noted in principles A. and B. above), achieving good governance also requires effective arrangements for: C. Defining outcomes in terms of sustainable economic, social, and environmental benefits. D. Determining the interventions necessary to optimise the achievement of the intended outcomes. E. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. F. Managing risks and performance through robust internal control and strong public financial management. G. Implementing good principles in transparency, reporting, and audit, to deliver effective accountability. 1.4 The principles in the International Framework have been interpreted for the local government environment. This is set out in the Delivering Good Governance in Local Government: Framework (2016) and accompanying Guidance Notes for Scottish Local Authorities (2016) which was published by CIPFA in association with the Society of Local Authority Chief Executives Page 215 of 412
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- 110 - (SOLACE): • The Delivering Good Governance in Local Government: Framework details the 7 principles within the International Framework along with a set of 21 supporting sub-principles and 91 examples of behaviours and actions which CIPFA consider demonstrate good governance. 1.5 In practice, governance comprises the combination of structures, strategies, policies, plans, frameworks, systems, processes, rules, codes, procedures, cultures, and values that are used to direct, control, and manage a local authority’s operations and activities. This includes political, economic, social, environmental, legal, and administrative structures and processes, and other arrangements, as encapsulated in the principles defined in the Delivering Good Governance in Local Government: Framework. These define roles and responsibilities and accountabilities and establish mechanisms to enable a local authority to pursue its vision effectively and ensure that the vision is underpinned with control and the management of risk. The list of items referred to in this paragraph are hereinafter referred to as elements and mechanisms. Through these elements and mechanisms the overall aim is for the council to ensure: • Resources are directed in accordance with agreed policy and according to priorities, and in line with corporate project management procedures. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in achieving defined outcomes for service users and local communities. 1.6 The purpose of the Annual Governance Statement is therefore to report publicly on the extent to which the council’s arrangements are consistent with the principles in the Delivering Good Governance in Local Government: Framework. This includes how the effectiveness of the governance arrangements have been monitored and evaluated over the previous year, and any planned changes for the year ahead. 1.7 The Annual Governance Statement set out in this document therefore comprises the following sections: • Section 2: Scope of responsibility - to ensure that there is a sound system of governance in place. • Section 3: The local context - which takes into account the economic, societal and environmental aspects within which the council operates and the improvements made in this respect to drive forward achievement of the organisation’s strategic objectives. • Section 4: Annual review - to assess the effectiveness of the council’s governance arrangements and system of internal control through 11 sources of assurance that incorporate improvements from current and previous years issues. • Section 5: Certification of assurance - on the level of assurance that the governance arrangements provide. 2. Scope of responsibility - to ensure that there is a sound system of governance in place 2.1 North Lanarkshire Council is committed to ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded, properly accounted for, and used economically, efficiently, and effectively. 2.2 As such, the council has adopted the principles and requirements of the Delivering Good Governance in Local Government: Framework (2016) and accompanying Guidance Notes for Scottish Local Authorities (2016) in order to ensure its governance arrangements remain sound and the highest standards continue to be met. 2.3 The council is required, in line with the Delivering Good Governance in Local Government: Framework, to test its governance arrangements (local code) against these principles by: • Maintaining an up to date local code of governance that takes into account the environment within which it operates and includes arrangements for ensuring ongoing effectiveness. • Reviewing existing governance arrangements once a year to ensure that the local code Page 216 of 412
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- 111 - operates effectively in practice. • Reporting publicly on compliance on an annual basis, including how the governance arrangements have been monitored for effectiveness in the year and identifying planned changes. 2.4 As such, the council has: a) Set out its local code of governance in the Strategic Governance Framework. The Strategic Governance Framework was initially approved by the Audit and Scrutiny Panel in February 2020 and has been subject to an annual review and refresh process annually thereafter. The Strategic Governance Framework sets out the elements and mechanisms which form the council’s local code of governance, and which demonstrate North Lanarkshire Council’s commitment to the principles of good governance. b) A well-established assessment process which reviews the council’s governance arrangements and systems of internal controls on an annual basis. This assessment - which provides the evidence that informs the Annual Governance Statement - aims to: • Ensure the council can demonstrate ongoing compliance with the principles in the Delivering Good Governance in Local Government: Framework and that the governance arrangements operate effectively in practice. • Identify any improvement actions and/or future planned developments required in relation to the council’s key governance arrangements and continuous improvement activity. c) A well-established annual process that enables Chief Officers and Elected Members to discharge their duties through their specific responsibilities for determining and implementing the council’s governance arrangements, ensuring the local code (the Strategic Governance Framework) is reviewed and assessed on an annual basis, identifying any improvement actions and/or future planned developments required in relation to key governance arrangements to ensure continuous improvement, and ensuring that the outputs from the annual assessment are reported publicly (to the Audit and Scrutiny Panel and through the council’s website). 2.5 The council also has a duty under the Local Government in Scotland Act 2003 to demonstrate Best Value by securing continuous improvement in performance. Good governance is central to meeting Best Value obligations as effective governance and accountability arrangements, with openness and transparency in decision-making, schemes of delegation, and effective reporting of performance are essential for taking informed decisions and ensuring effective scrutiny of performance and stewardship of resources. 2.6 As the council has a controlling interest in a number of companies and a minority interest in joint ventures, the Code of Practice on Local Authority Accounting requires (where significant) the summary Group Accounts to be included within the Annual Accounts, showing the financial position of the council and its subsidiaries plus the investments in associates and interests in joint ventures as a single economic entity. As such, the Annual Governance Statement also covers the organisations consolidated in the council’s Group Accounts. 3. The local context - which takes into account the economic, societal, and environmental aspects within which the council operates and the improvements in this respect to drive forward achievement of the organisation’s strategic objectives. 3.1 The Plan for North Lanarkshire sets the long-term strategic direction for the council, partners, and other stakeholders and, most importantly, for each unique local community and the people who live, learn, work, invest, and visit within North Lanarkshire. It’s a Plan with a shared ambition of inclusive growth and prosperity for all and a fairer distribution of wealth across all local communities. The Plan provides a very clear and compelling narrative for the shared ambition which the council (and partners) are working towards, a narrative that has become well embedded throughout the strategic management, financial decision making, strategy and policy development, corporate governance approaches, and service delivery across the organisation. Page 217 of 412
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- 112 - 3.2 The vision was shaped by the area’s demographic, social, and economic profile which at the time showed a positive picture in terms of economic growth, inward investment, employment, and educational attainment, but still unacceptably high levels of deprivation and child poverty and clear areas of inequity and inequality. This meant that not all North Lanarkshire’s people were sharing equally in the improving picture, and there was an element of social exclusion across some towns and communities. A suite of 28 high level health check indicators was therefore identified to collectively provide the context for North Lanarkshire as a place. Since The Plan for North Lanarkshire was established in 2019, these indicators have continued to provide a robust, consistent, and independent way of assessing progress. The most recent results were reviewed by the Policy and Strategy Committee in March 2024, this reported that 50% of the indicators show improvement over the period of The Plan for North Lanarkshire and, as such, the suite of indicators continue to play an important role in informing the strategic planning process through the Programme of Work. 3.3 As the delivery vehicle for the shared ambition, the Programme of Work provides a roadmap for work across council services and with partners and has been instrumental in stabilising the strategic direction of the council, while allowing for appropriate flexibility in the operational delivery of many complex inter-connected programmes, projects, and plans to ensure a dedicated focus on improvement, change, and delivering services that improve the lives of local people. An annual review process enables a recurring and dynamic approach to realising the shared ambition and has ensured that the Programme of Work has continued to remain current, relevant, and deliverable. This also enables delivery of the long-term vision to be informed by a process that is framed within the context of the local demographic, social, and economic profile that shaped The Plan for North Lanarkshire, as well as the latest national policy changes and developments. This process also ensures a targeted and cohesive approach to establishing the programmes, projects, and activities required to achieve the intended outcomes. 3.4 The fifth iteration of the Programme of Work (to 2028) was approved in March 2023. This longer- term approach reflected the need to reframe the Programme of Work in line with the latest North Lanarkshire context presented through the suite of 28 health check indicators. This evidence base shows positive trends in a number of key economic indicators (such as gross weekly pay, people claiming employment related benefits, and growth in North Lanarkshire’s economy), as well as significant improvements in educational attainment for all pupils gaining 5+ awards at level 6 and for pupils living in the 20% most deprived areas, leavers achieving a positive post school destination, and school exclusion rates. These trends were considered particularly significant given the extent of the impact of the pandemic that is evident in certain indicators. However, the trends also show that challenges remain, reiterating the need for a new approach to the development of the fifth iteration of the Programme of Work. This was considered crucial to ensure a heightened and more strategic focus on not only sustaining the economic and community aspects, but also on ensuring a more targeted approach to improving social conditions and outcomes. 3.5 While 2023/24 may have seen a more stable year for council operations compared to recent years, recovery from pandemic changed the landscape within which The Plan for North Lanarkshire requires to be delivered. The impact of inflationary pressures (such as rising contract costs, availability of suppliers and service providers, increasing costs and availability of supply chain materials, and escalating energy prices) has also had implications on the ability of the council to maintain a seamless approach to delivering services and progressing capital programmes that seek to mitigate against the range of different and complex economic, social, and health issues that exist. Locally, inflationary pressures created significant cost of living implications for the people and communities of North Lanarkshire, exacerbating conditions for those in the most vulnerable situations. As such, this backdrop was critical in informing development of the delivery priorities in the Programme of Work to 2028. 3.6 The Programme of Work to 2028 approved in March 2023 was followed by a supporting single integrated one council Delivery Plan reported to the Policy and Strategy Committee in March 2024. This is underpinned by a governance framework which sets out, inter alia, roles and responsibilities, alignment across other corporate processes, and the corresponding monitoring, reporting, internal controls, and quality assurance arrangements. Page 218 of 412
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- 113 - 3.7 Programme of Work achievements to date (reported to the Policy and Strategy Committee in March each year) highlight developments that are key to creating the economic, social, and community conditions that will enable local people and communities (and the place that is North Lanarkshire) to thrive. These focus on the investment made to establish the solid foundations required to support the place based ambition and show how the one place one plan one council approach and ongoing leadership and commitment to the Programme of Work are making a difference: • New hubs are in place at the heart of local communities to support a much wider offering to people and communities with more direct access to the services they need and access to earlier, more responsive, and more integrated whole family support. • The range and affordability of homes has been increased through the provision of high- quality housing. • Environmental enhancements have been delivered to support added benefits to general health and wellbeing, social inclusion, physical and mental health, and public access. • Transformations to town centres are starting to reshape North Lanarkshire to provide modern, attractive, and multi-use centres fit for local people today and in the future. • Job creation has been expanded by accelerating and attracting investment to create more and new business opportunities. • Pathways have been built and skills and knowledge enhanced to smooth the transition to further education, training, or employment. • This is all supported by more joined up transport links, an enhanced digital infrastructure, and a network of more active travel routes for pedestrians and cyclists, all of which are boosting the local economy and securing improved opportunities and outcomes for employment, education, housing, and leisure, and creating a place where people want to Live, Learn, Work, Invest, and Visit. 3.8 The council’s commitment made in 2022 - for itself and the area of North Lanarkshire - in respect of achieving net zero through the Action on Climate Together Plan, aims to further support delivery of the place based ambition and an update on this was reported to the Environment and Climate Change Committee in February 2024. 3.9 The role of Elected Members is key to ensuring the continuing and long-term commitment to delivering The Plan for North Lanarkshire through the Programme of Work and ensuring strategic oversight through the Policy and Strategy Committee in terms of its ongoing development, co- ordination, and monitoring. To support this role, the Policy and Strategy Committee maintain oversight of the following in relation to the Programme of Work: • An annual review process - to ensure the council continues to (a) be able to adapt the Delivery Plan to changing circumstances, (b) absorb the impact of major unpredictable situations in order to keep plans relevant and the timescales therein realistic, and (c) assess incremental changes and impacts arising from updates to the results for the 28 Health Check Indicators. • Three related annual reports - that look back at the achievements to date, that review the current North Lanarkshire context through the 28 Health Check Indicators, and that look forward at future plans (following the annual review process). These are presented to the Policy and Strategy Committee in cycle 1 each year. • Six monthly interim reporting - to enable the Policy and Strategy Committee to maintain their strategic oversight and monitoring role for The Plan for North Lanarkshire. 3.10 Sitting alongside the Programme of Work - as a key aspect of the council’s strategic planning framework - is the Strategic Policy Framework. This specifies the hierarchy of strategies, policies, and plans which underpin delivery of the long-term vision set out in The Plan for North Lanarkshire and ensures that strategy and policy remain connected to delivery in order to collectively facilitate a co-ordinated approach to identifying the resources and working practices needed to support delivery of the long-term vision. Through a structured approach, the Strategic Policy Framework aims to ensure that strategies, policies, and plans are formulated, developed, implemented, monitored, and reviewed in a consistent and transparent manner across the council. The annual update to the Strategic Policy Framework was approved by the Policy and Strategy Committee in March 2024. The supporting review programme ensures each of the Page 219 of 412
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- 114 - strategies, policies, and plans are up to date, reviewed and updated at an appropriate interval, and reported to the relevant committee. A guidance document accompanies the Strategic Policy Framework to support the development and monitoring processes for strategies, policies, and plans, and ensure ongoing openness and engagement through stakeholder consultation. • An improvement planned for 2024/25 is to undertake a lite touch assessment on all strategies, policies, and plans updated during the year to ascertain compliance with the Strategic Policy Framework guidance. The outputs from this assessment will be built into the annual position statement update to the Audit and Scrutiny Panel in line with their role to provide an “independent review of the council's governance, risk management, performance, and control frameworks”. This will also support implementation of the improvement action identified by Audit Scotland in their Best Value thematic work which states that “the council should look to improve its existing processes for engaging Elected Members on the overall strategic planning process”. 3.11 Key to evaluating the success of The Plan for North Lanarkshire and assessing delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall vision is appropriately aligned, planned, guided, implemented, monitored, and governed) are six inter- related corporate frameworks that aim to maintain a corporate one council approach across the organisation: • Strategic Policy Framework • Strategic Governance Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities 3.12 To ensure these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work, all are on a regular review and refresh programme. This also helps the council to ensure it is proactive in responding to social, economic, and environmental trends and changes in legislation and governance, as well as the broad range of national policy changes and new developments. Updates in respect of these frameworks are captured in the Strategic Governance Framework review programme each year. This includes the following: Strategic Self-Evaluation Framework • Aligned to the seven themes in the national Best Value guidance, the council’s Strategic Self- Evaluation Framework is framed around three questions (How well are we doing? How do we know? and How can we do better?) and supported by a rolling review programme. This approach provides a regular mechanism to assess the council’s functions and activities and identify areas for improvement through a single strategy for improvement that (a) is in line with the Best Value duty to secure continuous improvement, and (b) ensures self-evaluation is undertaken within the context of fulfilling the vision set out in The Plan for North Lanarkshire. • The Strategic Self-Evaluation Framework is reviewed and refreshed annually. The update in October 2022 introduced a corporate approach to Options Appraisal - while the use of options appraisal was already widespread across the council, a corporate approach was formalised at this time to ensure that the outcomes from such exercises continue to provide the relevant assurances that service provision is efficient and effective and represents value for money, and that decisions made remain consistent with the strategic direction for the council, as set out in The Plan for North Lanarkshire. • Minor changes to the latest update to the Strategic Self-Evaluation Framework and rolling review programme in February 2024 ensured ongoing alignment with the new national approach to auditing Best Value through thematic audit work as well as ongoing compliance with Best Value guidance in terms of the council using self-evaluation to identify areas for improvement. • Since the Strategic Self-Evaluation Framework and rolling review programme was formally established (and approved by the Audit and Scrutiny Panel) in 2021, nine self-evaluation exercises have been undertaken. A summary of each exercise has been included in previous year’s Annual Governance Statements and an annual monitoring process is in place to capture the status of implementing the improvement actions arising from each self-Page 220 of 412
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- 115 - evaluation exercise: - The nine self-evaluation exercises resulted in areas for improvement being identified and captured in supporting improvement plans. In general, these aimed to further strengthen existing arrangements, rather than address any significant issue in terms of effectiveness. - The improvement actions arising from the 2023 self-evaluations (in terms of the Audit and Scrutiny Panel and how effectively it is discharging its role, and of Partnership / Community Board effectiveness in line with their role in improving outcomes for local people and communities) are in the process of being delivered and are scheduled to be completed during 2024/25. - The remaining improvement actions from the Data Governance Board self-evaluation undertaken in 2021 have been integrated within the senior information risk owner annual performance and assurance process for implementation and monitoring. • A self-evaluation scheduled to be undertaken in 2025 aims to support the governance arrangements for the Programme of Work to 2028 and will focus on the operation of the supporting Strategic Boards following their implementation in 2023 to ensure they are effective in supporting delivery of the council’s long-term vision in The Plan for North Lanarkshire. Project Management Framework • A review and refresh of the council’s project management model in 2022 was supported by a self-evaluation exercise. This was required to ensure the council’s arrangements remained fit for purpose and able to effectively support delivery of The Plan for North Lanarkshire and followed recommendations arising from Internal Audit reports on managing strategic change and the governance of capital projects. The review was also considered necessary in light of the changes in the council’s operating environment since the implementation of the model in 2018. These changes had led to a rapid evolution of programmes and projects across the council, as well as increasing complexities in the delivery of many of these, and a growing need for good governance and good project management to set up and deliver a wider range of projects at pace and scale (particularly during the pandemic), and ensure these are well- directed, delivered to time, cost, and quality targets, and provide the expected benefits and improved local outcomes. • To support the review, a group was established comprising officers from across council services with practical on the ground experience of project management in both construction and non-construction projects. Following work to collate and analyse the information collected through the review, five themes on areas for improvement consistently emerged. Three of the areas for improvement related to the development of the refreshed Project Management Framework which was completed and published across the council in December 2022. • One area for improvement related to ongoing training, staff learning and development, and awareness raising in line with the refreshed Framework for which a programme was launched council wide in March 2023. A series of full day training courses (aimed at employees with no project management experience, new to the council, or for those who required a refresher) and half day training courses (aimed at employees with some project management experience, or for those who are currently responsible for delivering on council projects) has continued throughout 2023 and is in place to the end of 2024. The remaining area for improvement relates to enhancing opportunities for more collaboration, sharing, and learning for which a Yammer site has been established for further development and roll out later in 2024. • Delivery of The Plan for North Lanarkshire is subject to a set of Quality Assurance arrangements in line with the corporate Project Management Framework. These arrangements have been aligned to the governance supporting the new Programme of Work to 2028 to ensure the council can (a) demonstrate compliance with the Project Management Framework, and (b) monitor delivery of projects and activities supporting the Programme of Work. • The review programme to assess compliance with the Project Management Framework was finalised and implemented during 2023 with an overview of the results and findings arising following the analysis of the completed baseline self-assessment forms informing the improvement plan and next steps in order to progress the areas for improvement identified through the review programme during 2024. Page 221 of 412
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- 116 - • As good practice recommends that a council’s audit and scrutiny committee play an important role in providing independent assurances about the delivery of major programmes and projects, a report to the Audit and Scrutiny Panel in February 2024 provided an initial overview in this respect in advance of future assurance reports that will support Elected Member oversight in terms of the quality assurance process and review programme for the Project Management Framework. Strategic Performance Framework • The Strategic Performance Framework is supported by a Performance Reporting Schedule which sets out the performance reporting, monitoring, review, and scrutiny arrangements for The Plan for North Lanarkshire by way of a reporting schedule and set of non-negotiable standards. During 2023/24, information regarding items on the Performance Reporting Schedule (i.e. Chief Officers six monthly performance reviews at service committees, service specific reporting to meet business and/or statutory obligations, and corporate reporting) was made available to the Audit and Scrutiny Panel through quarterly performance assurance reports in order to support the Panel’s scrutiny and strategic oversight role. • Since its implementation the Performance Reporting Schedule has been regularly reviewed and updated. The latest update, reported to the Audit and Scrutiny Panel in February 2024, differs to previous years in that it also incorporates Programme of Work performance management and progress monitoring. This follows work to update the Strategic Performance Framework and develop Delivery Plans and performance measures for each of the seven Programme of Work priorities, while ensuring further alignment and formalisation of the corporate arrangements that support monitoring and governance of The Plan for North Lanarkshire. • During 2023 there were 83 performance reports produced in line with the Performance Reporting Schedule. A very small number of reports did not make the scheduled reporting cycle, but clear rationales were provided by way of explanation that were found to be logical and sensible, and an agreement was reached on an appropriate subsequent reporting cycle. It should be noted that as the Reporting Schedule is developed only once a year as at a moment in time, it is expected that national changes or changes in local operating contexts and priorities may have an impact on subsequent reporting requirements and dates. • During 2023/24, Chief Officers’ six-monthly reports in line with the Strategic Performance Framework followed the standard template. This ensured that all reports consistently (a) set out the current context within which the service is operating, (b) highlighted areas of good performance that could be evidenced in the accompanying data, and (c) provided a summary of areas of performance requiring improvement along with narrative that gives an explanation for the level of performance achieved and summarises the remedial action implemented (or to be implemented) to bring performance back on track. Moving forward, reports will be required to demonstrate that the loop has been closed in terms of implementation and monitoring of both improvement actions and subsequent performance levels. This is required to provide a clear evidence trail that demonstrates continuous improvement in performance in line with the requirements of Best Value. • The extent of the action undertaken by each audience when reviewing and scrutinising the performance information before them has been varied. Moving forward, the ask of the audience reading the report will be specifically (and appropriately) referenced in performance reports to service committees moving forward. This practice is already in place for Audit and Scrutiny Panel reports for the scrutiny function of the Panel. Specific training to be held in 2024, in relation to the scrutiny of performance, will further complement awareness raising and roles and responsibilities (as identified through the Audit and Scrutiny Panel’s self-evaluation in November 2023). • Reporting of the Local Government Benchmarking Framework (LGBF) measures were integrated into the Strategic Performance Framework when it was initially approved. This ensured appropriate alignment to The Plan for North Lanarkshire and Programme of Work, and also ensured that scrutiny did not focus on a single performance indicator which rarely provides a complete picture of performance when considered in isolation. This meant that during 2023/24 LGBF measures were integrated into reports to service committees alongside the wider suite of measures within each Chief Officers’ area of responsibility. This approach will continue to ensure that reports contain a suite of all relevant performance indicators in order to provide a complete picture of performance. The council’s website hosts a new dashboard for LGBF measures which was launched by the Improvement Service in 2023. Page 222 of 412
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- 117 - This provides an easy way to view a live picture of the most up to date performance for a benchmarking measure as at a point in time. It also enables North Lanarkshire’s performance to be compared with other local authorities and the national average. Moving forward, this dashboard will be signposted in performance reports to service committees. 4. Annual review - to assess the effectiveness of the council’s governance arrangements and system of internal control through 11 sources of assurance that incorporate improvements from current and previous years issues. Sources of assurance 4.1 As noted in paragraph 2.3 above, the annual review process is an important aspect of the work undertaken each year to assess the effectiveness of the council’s governance arrangements and systems of internal control and establish the evidence base to inform the Annual Governance Statement. As such, various elements and mechanisms, and roles and responsibilities, play a key role in this process. These sources of assurance are listed below: 1) Compliance with the CIPFA Position Statement: Audit Committees in Local Authorities (2018). 2) Compliance with the CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). 3) Compliance with the CIPFA Statement on the role of the Chief Financial Officer in Local Government (2016). 4) Compliance with the CIPFA Code of Practice on Managing the Risk of Fraud and Corruption (2014). 5) Compliance with the Public Sector Internal Audit Standards (PSIAS). 6) Chief Officers year end good governance assurance certificates and checklists. 7) Arm’s length external organisations (ALEOs) year end good governance assurance certificates and checklists. 8) Annual review and update of the local code of governance review programme (i.e. the Strategic Governance Framework). 9) The Annual Audit Report (AAR) process undertaken by the external auditors, together with the national approach to auditing Best Value through thematic audit work. 10) Findings from other audit, scrutiny, or inspection bodies in relation to service specific assessments. 11) The role of the council’s senior management team structure of meetings in respect of good governance, assurance, and continuous improvement. Assessment of assurance 4.2 Each of the assurance sources listed in paragraph 4.1 has undergone a review and assessment process to ensure the information reported in the Annual Governance Statement reflects the most up to date position and provides the relevant assurances in respect of the council’s governance arrangements and system of internal control. A summary of these assurance assessments is noted in paragraph 4.3 below at points (1) to (11). 4.3 While individually each of these 11 sources of assurance are supported by separate processes and arrangements, collectively the provide an evidence base that is aligned in support of the one council approach that underpins implementation of The Plan for North Lanarkshire. As such, where improvements have been made during the year, or found to be required moving forward, these are highlighted within each item. 1) Compliance with the CIPFA Position Statement: Audit Committees in Local Authorities (2018). In this respect the activities and functions of the council’s Audit and Scrutiny Panel are required to reflect the standards set out in the CIPFA Statement. The Strategic Governance Framework sets out the evidence in this respect and confirms that during 2023/24 the purpose of the Audit and Scrutiny Panel, as set out in the Scheme of Administration (March 2024), reflects the standards set out in the CIPFA Statement in that its role is to “provide independent assurance to the council and those charged with governance on the Page 223 of 412
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- 118 - adequacy of the council's risk management framework and internal control environment”. The Scheme of Administration confirms that the Audit and Scrutiny Panel is responsible for “providing an independent review of the council's governance, risk management, performance, and control frameworks, and overseeing the financial reporting and annual governance processes. It oversees the council's internal and external audit arrangements, helping to ensure efficient and effective assurance arrangements are in place. It also undertakes the scrutiny function within the council’s governance framework and undertakes in-depth examination of particular areas of policy and/or service delivery with a view to making recommendations for improvement.” The Scheme of Administration also sets out the Audit and Scrutiny Panel’s specific duties in relation to the Annual Governance Statement which is to “review the Annual Governance Statement prior to approval and consider whether it properly reflects the risk environment and supporting assurances, taking in to account Internal Audit’s opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control.” During 2023/24, the Audit and Scrutiny Panel held its meetings as scheduled once every cycle, with a special meeting held at the end of June 2023 and the end of October 2023 to support the council in discharging its duties in respect of the year end Annual Accounts. A summary of agenda items considered by the Audit and Scrutiny Panel during the year is contained in the extract below. Summary of Audit and Scrutiny Panel agenda items during 2023/24 • Internal Audit - four progress reports following 21 audits which resulted in 62 recommendations, four follow up reports of actions previously agreed by management in response to audit recommendations, a range of follow up in-depth reports from Chief Officers in relation to audits (mandatory training, pre-employment checks, debt recovery, equality audit progress, use of teaching supply staff, and school funds and school trips), an update on the National Fraud Initiative, two reports in relation to Accounts Commission publications (the annual local government overview and local government financial bulletin), the Internal Audit annual plan, and the Internal Audit annual report and audit opinion. • Risk management - four risk management updates in respect of the Corporate Risk Register, with one report providing the updated Corporate Risk Register for 2023/24 and another report advising of a new approach to include a summary of key service risks from service risk registers to enable Elected Members to have sight of those risks with the highest residual risk scores, and one risk deep dive into raising educational attainment and closing the attainment gap. • Financial management - one report in relation to the unaudited Annual Accounts for 2022/23 and one in relation to the audited Annual Accounts for 2022/23. • External audit - with reports in relation to the Audit Scotland annual audit plan, the council’s Annual Audit Report (AAR) and accompanying year end statements, and an outcome report from the Best Value thematic audit. • Scrutiny - four reports arising from Panel member led scrutiny (in relation to supported businesses, provision of a payment solution for laundries in towers, compensation for compulsory purchase orders, and housing refurbishments), four quarterly performance assurance review reports providing a composite summary of all performance reports considered by the council committees in the previous cycle, two reports providing an assurance update in terms of the governance, financial governance, and risk management arrangements within each arm’s length external organisation (ALEO), an annual performance report in complaints handling, two updates in relation to the scrutiny work programme, an update on the new national approach to auditing Best Value, and five reports providing an update in relation to aspects of the frameworks supporting The Plan for North Lanarkshire and Programme of Work (the Strategic Governance Framework, Strategic Self- Evaluation Framework, Project Management Framework and future quality assurance role of the Panel, Performance Reporting Schedule, and the corresponding Annual Position Statement for the frameworks), and the Annual Governance Statement. A self-evaluation of the Audit and Scrutiny Panel was undertaken in 2023 and the resultant outcome report and improvement plan was approved by the Panel in November 2023. This followed an Internal Audit review in 2021 which recommended that the Audit and Scrutiny Panel should, in line with good practice, periodically undertake a self-evaluation of how effectively it is discharging its role. The improvement plan set out two areas for improvement for implementation during 2024 in Page 224 of 412
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- 119 - relation to (i) formally establishing a regular face to face learning and development programme for the Audit and Scrutiny Panel to ensure members of the Panel have the appropriate skills and knowledge and (where required) access to relevant training and resources to effectively undertake their role, and (ii) ensuring the Audit and Scrutiny Panel continues to effectively discharge its duties and can demonstrate that it adds value to the organisation. The improvement plan also noted that the Audit and Scrutiny Panel agreed to continue to evaluate the effectiveness of the Panel in discharging its duties - in line with the principles set out in CIPFAs Position Statement: Audit Committees in Local Authorities (2018), the supporting Audit Committees Practical Guidance for Local Authorities (2018) document, and the Best Value Guidance (2020) - initially through an annual self-evaluation exercise, with the frequency of follow up self-evaluations to be determined by the extent of improvements required following the 2024 self-evaluation exercise. In December 2023, the Council meeting formally agreed one of the improvement actions in respect of amending the governance arrangements and removing the scope for substitute members to attend Audit and Scrutiny Panel meetings given the importance of Panel members having appropriate training, knowledge, and understanding and recognising the role that consistency in involvement has in terms of ensuring ongoing Panel effectiveness. This improvement action aims to ensure that Members attending Panel meetings have appropriate training, knowledge, and understanding of the work of the Panel and that this is enhanced over time through ongoing and consistent involvement in the Panel’s business. 2) Compliance with the CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). To enable the Acting Chief Officer (Audit and Risk) to fulfil the role in this respect, the council’s senior management team is required to ensure they “set out how the framework of assurance supports the Annual Governance Statement and identify internal audit’s role within it”. This assurance is provided through the Strategic Governance Framework which sets out the role of Internal Audit and depicts in a diagram the steps in the annual review process which informs the content of the Annual Governance Statement. The Strategic Governance Framework undergoes a review and refresh exercise each year to ensure it remains up to date in reflecting the council’s governance arrangements and it is reviewed and endorsed annually by the council’s senior management team. In line with the CIPFA statement, the Acting Chief Officer (Audit and Risk) has also provided an annual opinion for 2023/24 on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control” through the Internal Audit annual report. In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Audit Charter, the council’s senior management team (through both the Business Management Team and Corporate Management Team) considered and noted the Internal Audit annual report 2023/24 and annual opinion from the Acting Chief Officer (Audit and Risk) on 30th May 2024 and 7th June 2024 respectively. The Internal Audit annual report 2023/24 states that the annual Internal Audit opinion is unqualified and offers a generally positive view of the council’s governance and internal control arrangements. More specifically the Internal Audit annual report 2023/24 states that it is the opinion of the Acting Chief Officer (Audit and Risk) that “reasonable assurance can be placed on the adequacy and effectiveness of the council’s framework of governance, risk management, and internal control for the year ended 31st March 2024”. The CIPFA Statement considers the annual opinion from Internal Audit to be the most important output and one of the main sources of objective assurance that the Chief Executive and the council’s senior management team has to support the Annual Governance Statement. The annual Internal Audit opinion is set out in more detail in paragraph 4.3 (5) below. During 2023/24, an External Quality Assurance Review (EQAR) of the council’s Internal Audit function assessed compliance with the Public Sector Internal Audit Standards (PSIAS). An important element of the PSIAS is a requirement for an independent EQAR to be conducted at Page 225 of 412
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- 120 - least once every five years and reported to key stakeholders including senior management and an audit committee; the results of the latest EQAR were reported to the Audit and Scrutiny Panel in May 2024. This includes an action plan with findings, responses, and planned actions that have been agreed by Internal Audit management for implementation during 2024/25. 3) Compliance with the CIPFA Statement on the role of the Chief Financial Officer in Local Government (2016). It is specified in this CIPFA Statement that the Annual Governance Statement is required to “address the authority’s arrangements for financial and internal control and for managing risk”. This is addressed through the annual audit opinion provided by the Acting Chief Officer (Audit and Risk), referenced in paragraph 4.3 (2) above. In this respect the annual opinion of the Acting Chief Officer (Audit and Risk) has reported in the Internal Audit annual report 2023/24 that their work “suggests that, despite the ongoing significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council.” The extent of the council’s compliance in this respect (and the role of the Chief Financial Officer therein) is further demonstrated through the self-evaluation exercise (undertaken in 2022/23) which concluded that the council’s financial management practices comply with all aspects of the CIPFA Financial Management Code. The self-evaluation also confirmed that the council’s Chief Financial Officer operates in a way that is consistent with the CIPFA Statement. The improvement actions identified through this self-evaluation (to ensure future budget engagement exercises with the public and external stakeholders are more focussed so that consultation around budget setting is more meaningful, and to develop robust training for stakeholders to help build capacity, knowledge, and accountability for financial provision across the council) were fully implemented by the end of 2022/23. More recently, the external auditors Annual Audit Report (AAR) in October 2023 has continued to report positively on the council’s approach to financial management and financial sustainability. 4) Compliance with the CIPFA Code of Practice on Managing the Risk of Fraud and Corruption (2014). This statement looks for compliance in terms of developing a strategy and identifying the risks. The Strategic Governance Framework sets out the evidence in this respect and shows that the council has a number of policies and procedures in place which are kept under review and regularly updated as required. The key policies and procedures are listed below: • Counter Fraud Policy - following a review of the council’s anti-fraud arrangements, an updated Counter Fraud Policy was approved by the Policy and Strategy Committee in September 2023. This sets out the council’s expectations (that extend to all individuals and organisations with whom it deals) in terms of acting honestly and with integrity and in safeguarding public resources. • National Fraud Initiative (NFI) - the council actively seeks to detect fraudulent activity through participating in the NFI, this is a comprehensive data matching exercise between public bodies to highlight potential frauds and errors. Internal Audit plan and co-ordinate the submission of data and investigation of matches identified. The latest report in respect of the progress made in the follow up of matches was reported Audit and Scrutiny Panel in May 2024. • Whistleblowing Procedure - an annual review process is in place in respect of the use of the procedure and to identify any amendments required to the procedure. An updated Whistleblowing Procedure was approved by the Policy and Strategy Committee in March 2023, and the outcome of the latest annual review is scheduled to be reported to Committee in June 2024. • Gifts and Hospitality and Conflicts of Interest procedures for employees - guidance in this respect was incorporated into the Employee Code of Conduct in 2018. Since then, a process has been in place whereby Chief Officers are required to submit their up to date Service Registers annually (as part of the Chief Officer’s Assurance Certificate and Checklist process) for independent review and reporting to the council’s senior management team. E-mail announcements (in April 2024) reminded all employees of their obligations in respect of Page 226 of 412
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- 121 - conflicts of interest and gifts and hospitality; this also provided links to the supporting guidance and employee declaration forms. The 2023/24 review of Registers found no significant trends or issues of concern that required to be reported to the senior management team. • Employee Code of Conduct - the latest update was approved in March 2021. Findings reported in May 2023 from an Internal Audit corporate governance review show an update was underway and due to be completed by October 2023. Work is now currently underway with Chief Officers to review and update the content of the existing council Code of Conduct with a view to seeking approval of the revised policy at Committee in cycle 3 of 2024. • Code of Conduct for Chief Officers - the latest update in this respect was approved by the Policy and Strategy Committee in June 2023. The Code of Conduct for Chief Officers provides a framework within which Chief Officers of the council are expected to undertake their duties in a manner which meets the required standards for good governance. • Councillors Code of Conduct - this is approved by the Scottish Parliament and issued by Scottish Ministers. The Standards Commission for Scotland is responsible for the enforcement of the code of conduct. It also has responsibility for issuing guidance to assist local authorities and councillors about the code of conduct and also for hearing complaints about a councillor. The latest code and relevant guidance was published in December 2021 and was shared with new and returning Elected members following the local government elections in May 2022 with training provided on the content; this Code of Conduct available from the council’s website. • Information Security Policy - the latest update in this respect was approved by the Policy and Strategy Committee in June 2023. The Information Security Policy, which includes cyber security, aims to protect the council’s information systems and physical assets including supporting processes, networks, and equipment. As a biennial policy this is next scheduled to be updated in 2025. • Cyber security - a review and assessment was undertaken in 2023 through a structured format (using templates and guidance created by the National Audit Office, National Cyber Security Centre (NCSC), and the Scottish Government). This assessment - categorised as reasonable assurance - determined the council has robust and effective information governance arrangements, duly recognises the risks associated with cyber security threats, and operates practices commensurate with the good practice recommended by bodies such as the National Audit Office. The outcome report from this assessment was submitted to the Audit and Scrutiny Panel in February 2023. • Risk Management - the identification of risks is carried out in line with the council’s Risk Management Strategy (which was updated in March 2023) and through the risk for serious organised crime, fraud, and corruption which sits within the Corporate Risk Register. The Chief Officer (Legal and Democratic) - the council’s Monitoring Officer - is the identified lead for this specific risk. The CIPFA statement also requires responsibility to be acknowledged. In this respect the Internal Audit annual report 2023/24 from the Acting Chief Officer (Audit and Risk) specifies that Internal Audit “has responsibility for investigating, as appropriate, alleged frauds and irregularities brought to our attention in accordance with the council’s counter fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Chief Officer with recommendations made which are designed to address any weaknesses identified. Such work is reported to the Panel, as appropriate, in line with the approved Internal Audit reporting protocol which forms part of the Internal Audit Charter.” The Internal Audit annual report 2023/24 from the Acting Chief Officer (Audit and Risk) has confirmed that “Audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. Apart from the whistleblowing allegations received by Audit Scotland regarding the existing Mears LLP housing and property maintenance contract, details of which were reported as part of the routine progress report at the May 2024 Panel, I am pleased to be able to report that there were no other weaknesses, material frauds or irregularities identified during 2023/24 that I require to bring to your attention.” As reflected in the Internal Audit annual report 2023/24, the weaknesses noted above were reported to the Audit and Scrutiny Panel in May 2024. The audit report in this respect lists the issues arising, key findings, and conclusions. It also sets out five recommendations for action which are accompanied by the agreed management response in terms of the next steps, Page 227 of 412
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- 122 - responsibilities, and deadlines. 5) Compliance with the Public Sector Internal Audit Standards (PSIAS). This requires the Chief Officer (Audit and Risk) to provide the Audit and Scrutiny Panel (and the Chief Executive and the council’s senior management team) with an annual summary of the work undertaken by Internal Audit and an annual independent opinion on the council’s corporate governance, risk management, and internal control arrangements. The independent and objective assurances provided by Internal Audit are designed to add value and improve the council’s operations. This in turn helps the council accomplish its strategic ambitions by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of the council’s risk management, internal control, and governance processes. The council’s internal audit arrangements are consistent with the CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). Internal Audit activity is planned to enable an independent opinion to be given by the Chief Officer (Audit and Risk) on the adequacy and effectiveness of internal controls within the council, including the systems designed to achieve the strategic ambitions of the council and those that manage the material risks faced by the council. It is noted, however, that the presence of an effective internal audit function contributes towards, but is not a substitute for, effective control. It is primarily the responsibility of line management to establish internal controls so that council activities are conducted in an efficient and well-ordered manner, to ensure that management policies and directives are adhered to and that assets and records are safeguarded. In Internal Audit annual report for 2023/24, the Acting Chief Officer (Audit and Risk) provides an overview of the activities of the Internal Audit section for the year 2023/24. This included highlights of issues arising from Internal Audit activity during the year and an extract in this respect is set out in the table below. Extract from the Internal Audit annual report for 2023/24, May 2024 In the Internal Audit annual report for 2023/24, presented to the Chief Executive and both the Business Management Team and Corporate Management Team in May and June 2024 respectively, the Acting Chief Officer (Audit and Risk) provided an overview of Internal Audit activity against the 2023/24 Annual Plan and includes details of when each assignment was reported to the Audit and Scrutiny Panel (where not yet formally reported, status and expected dates are given). Key issues arising from Internal Audit outputs are highlighted in the Internal Audit Progress report tabled at each meeting of the Panel. In the Internal Audit annual report for 2023/24, the Acting Chief Officer (Audit and Risk) also highlights issues arising from Internal Audit activity during the year; an extract from this report is noted below. a) A small number of audit assignments were reported during 2023/24 which offered only limited assurance. In all cases, management committed to a range of relevant improvement actions, some of which have already been completed, and we will continue to monitor progress on these issues during 2024/25 to provide senior management and the Panel with further assurance that relevant key controls are operating effectively. b) In addition, it is worth highlighting our work on the procurement and single bidder risk mitigation aspects of the Housing and Corporate Repairs contract award processes, which contains a non-standard audit conclusion because of the scope and nature of that work. Our report concluded that the governance arrangements in place for the Enterprise Project were adequate and appeared robust, and that the project was being managed in line with corporate expectations in a manner consistent with good practice. However, we identified the need for management to ensure a comprehensive and objective performance management framework is established with supplier performance assessed using clear, objective, and meaningful metrics supported by an adequately resourced, balanced contract management team with an appropriate range of skills. c) Overall, I am satisfied that the council’s internal control and governance arrangements remained adequate and appropriately robust throughout 2023/24. d) The results from our detailed work examining the council’s corporate governance arrangements suggest that compliance with the requirements of the corporate governance framework adopted Page 228 of 412
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- 123 - by the council continued to be generally positive with no significant weaknesses or areas of concern highlighted. e) Our work also suggests that, despite the ongoing significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council. f) Audit investigations of suspected fraud and/or irregularities are reported to the [Audit and Scrutiny] Panel in line with the agreed Internal Audit reporting protocol. Apart from the whistleblowing allegations received by Audit Scotland regarding the existing Mears LLP housing and property maintenance contract, details of which were reported as part of the routine progress report at the May 2024 [Audit and Scrutiny] Panel, I am pleased to be able to report that there were no other weaknesses, material frauds or irregularities identified during 2023/24 that I require to bring to your attention. g) Our report detailing the findings and conclusions arising from our work on the whistleblowing allegations received by Audit Scotland contained several recommendations designed to address the identified weaknesses and to seek to ensure that any future contract management and oversight arrangements are more robust. Many of the recommendations in this report are broadly consistent with, or cover similar aspects to, those raised at b) above. In response to both reports, management have committed to a range of detailed improvement actions, and we will monitor progress on these issues during 2024/25. h) Although there are no issues that require me to qualify my annual opinion, there are a small number of areas that I would wish to highlight, and which will continue to be the focus of future audit coverage: • Given the key role effective contract and supplier management plays in ensuring that the council can deliver against its operational and strategic ambitions, we will undertake early and ongoing work, as necessary, to provide assurance on the adequacy and effectiveness of the council’s management arrangements surrounding the mobilisation and implementation of new contract management arrangements for both recently approved contracts awarded via the Enterprise Project. With regards the new housing and corporate property maintenance contract, this will also involve specific, detailed follow-up of agreed actions arising from the investigation report on the Audit Scotland whistleblowing allegations. • The last year has seen the development of new internal governance structures designed to ensure the delivery, co-ordination, direction, and oversight of planned activities for the refreshed Programme of Work to 2028. These developments have also incorporated progression of an audit action, that has been outstanding for some time, around the council failing to report progress on key projects and programme of work activities in a single place which would better allow stakeholders to exercise more effective monitoring, oversight, and scrutiny and to better hold senior management to account. Internal Audit will undertake specific work in the year ahead regarding the implementation and effectiveness of these arrangements now they are operational. • In last year’s annual report, it was commented that, in recent years, we had identified several areas in respect of the council’s arrangements for paying staff, where controls were inadequate or not operating as intended, which meant that at that time it was assessed that risks in this area remained high. Although some management action has been taken in the last 12 months to begin to address these issues, my assessment in this area remains the same, and as such, this will be subject to further audit coverage in 2024/25. • In a number of areas, in recent years, Internal Audit reports have provided management with information on failures to comply with expected controls, procedures or guidance that should reasonably have been identifiable at an earlier stage if line management’s own arrangements were more robust. Given the irregular and/or cyclical nature of Internal Audit’s coverage and in accordance with the Three Lines of Defence Model, we will again this year continue to challenge management across the range of our planned audit work about how they themselves routinely gain assurance on compliance and the effectiveness of identified key controls. Traditionally, the Annual Governance Statement outlines issues identified during the Internal Audit programme of work for the previous year (2022/23) and includes an update providing details of the actions taken to address each issue. In the annual opinion provided by the Chief Officer (Audit and Risk) for 2022/23, there were no issues that required the Chief Officer to qualify their opinion. A small number of areas were highlighted which were noted would continue to be the focus of future audit coverage during 2023/24. As such, the extract from the Internal Audit annual report for 2023/24 sets out the latest position in this respect. 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- 124 - 6) Chief Officers year end good governance assurance certificates and checklists. This requires Chief Officers to review various aspects within their service areas and advise of any specific issues which require to be identified in the Annual Governance Statement. Through this process Chief Officers have reviewed the effectiveness of governance arrangements during the year within their area of responsibility by completing a Certificate of Assurance and updating a 73 point Checklist to support the preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2024. Following a review of the 14 certificates and checklists completed for 2023/24, Chief Officers have confirmed corporate governance arrangements and financial controls in their area of responsibility have been, and are, working well and there are (in their opinion) no significant matters arising which would require to be raised specifically in the Annual Governance Statement. Following recommendations from an Internal Audit review of corporate governance in 2023, the process to obtain the relevant assurances from Chief Officers was reviewed and refreshed in advance of the 2023/24 year end process. This resulted in the following improvements being implemented: • Each of the 73 points (questions) was reviewed and updated (where required) to ensure clear alignment to one or more of the principles and/or sub principles in the CIPFA Framework. This approach supported the information that already exists in the Strategic Governance Framework Review Programme by ensuring the questions that are asked in the Checklist do not duplicate information that can already be obtained from other existing sources and/or processes. Where appropriate for added context, alignment to the governance and accountability theme in the national Best Value guidance (2020) was also reflected. • For each question there is now a clear differentiation between (a) asking for a tangible item that can clearly be evidenced (e.g. documents, plans, procedures, etc), and (b) asking for an opinion that will require supplementary context to substantiate its point (i.e. asking if something is systematically deployed across a service or is operating effectively). For questions in respect of (a) the evidence that a tangible item exists was not (in the main) required be submitted as part of the annual Checklist process. The onus is on each Chief Officer to ensure that this evidence is readily available and can be produced should it be requested at a later date for any specific purpose or audience. • Where it is appropriate to do so, questions follow certain aspects of a self-evaluation type structure, i.e. they ask if there is an approach in place, and/or if an approach has been systematically deployed and implemented in all relevant areas of the council and understood by all, and/or if the approach and its deployment are regularly reviewed to assess effectiveness. In addition, Chief Officers were asked two specific questions in relation to improvements within their area of service which sought (a) their opinion if the recommendations from the work of others (internal audit, external auditors, and external audit and inspection bodies, etc) had informed positive improvement(s) within their service, and (b) if all improvement / corrective actions recommended through the work of others had been implemented / acted upon within their service. The review of the 14 checklists completed for 2023/24 showed that where there had been recommendations made Chief Officers responded positively in respect of both of these aspects. It should be noted though that not all improvement / corrective actions had yet been implemented as they were not yet scheduled to be so and while it was considered that recommendations made from the work of others are in the main helpful in addressing areas for improvement within the service, there are a small number of examples whereby corrective actions could have a negative impact on the resources required for small gain. 7) Arm’s length external organisations (ALEOs) year end good governance assurance certificates and checklists. This requires the Chief Executive or Senior Representative of each ALEO to review various aspects within their service areas and advise of any specific issues which require to be identified in the Annual Governance Statement. Through this process the council’s five arm’s length external organisations (ALEOs) have also reviewed the effectiveness of governance arrangements during the year within their organisation by completing a Certificate of Assurance and updating a 70 point Checklist to support the Page 230 of 412
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- 125 - preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2024. In this respect, the Chief Executive or Senior Representative for each of the ALEOs has confirmed corporate governance arrangements and financial controls in their organisation have been, and are, working well and there are (in their opinion) no significant matters arising which would require to be raised specifically in the council’s Annual Governance Statement. The exception to this, is the matter in relation to the whistleblowing allegations received by Audit Scotland already covered in the Internal Audit annual report in paragraph 4.3 (5) above. The improvements made to the Chief Officer year end Checklist noted in paragraph 4.3 (6) above, were also implemented for the ALEOs checklist. In line with previous years good practice, six monthly reporting continued during 2023/24 to provide the Audit and Scrutiny Panel with oversight and assurance of governance, financial governance, and risk management arrangements within each ALEO. 8) Annual review and update of the local code of governance review programme (i.e. the Strategic Governance Framework). The council’s local code of governance has been developed taking into account the local environment within which the council operates which is set out above. It brings the principles of good governance together with legislative requirements and management processes by which the council is directed and controlled and through which it is accountable to, engages with, and leads the local community. This aims to ensure the council is able to effectively pursue the long-term ambition set out in The Plan for North Lanarkshire, while ensuring this is underpinned with control and the management of risk, and: • Resources are directed in accordance with agreed policies and according to priorities and in line with corporate project management procedures. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in achieving defined outcomes for service users and local communities. The council’s local code of governance is set out in the Strategic Governance Framework which is one of six inter-related strategic frameworks that aim to maintain a corporate one council approach across the organisation. These frameworks are key to evaluating the success of The Plan for North Lanarkshire and assessing delivery of the Programme of Work, while ensuring each stage of delivery towards achieving the overall vision is appropriately aligned, planned, guided, implemented, monitored, and governed. As such, the Strategic Governance Framework: • Gathers together all existing governance arrangements into a list of elements and mechanisms that demonstrates the council’s compliance with the 7 principles, 21 sub principles, and 91 behaviours and actions contained within the CIPFA Framework. By collating all existing elements and mechanisms (produced by the respective Chief Officer) into the one local code for annual review, assessment, assurance, and reporting purposes, the Strategic Governance Framework and its Review Programme provides an efficient mechanism through which the annual review can be undertaken. This also ensures appropriate oversight and governance of The Plan for North Lanarkshire and supporting Programme of Work and enables the council to monitor the delivery of its ambitions while ensuring arrangements for corporate governance, risk management, and internal financial controls are sound. A summary of the current position regarding the elements and mechanisms in the Strategic Governance Framework review programme is set out in the table below. • Sets out the role of the Chief Officers and senior management team, Elected Members, and the Audit and Scrutiny Panel who are responsible for determining and implementing the council’s governance arrangements, ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance, and identifying any improvement actions and/or future planned developments required in relation to the council’s key governance Page 231 of 412
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- 126 - arrangements and continuous improvement activity. • Comprises a diagram that depicts the steps in the annual review process which ensures that the council’s governance arrangements are regularly assessed for ongoing effectiveness within the context of The Plan for North Lanarkshire and provides evidence to inform the content of the Annual Governance Statement. • Remains under review through the annual review process whereby each of the elements and mechanisms in the review programme are examined and updated as required to reflect the relevant documentation and hyperlinks, as well as the review timeframe, and date of next update. • Is supported by an annual assessment of the current position of the elements and mechanisms in the review programme to ensure they remain timely and effective in supporting delivery of The Plan for North Lanarkshire. This involves assigning a corresponding RAG status to provide a method by which to identify and prioritise items requiring to be reviewed and updated further. The latest position following the 2023/24 year end review identified no Red elements or mechanisms, two Amber, and the rest were Green. For the two assessed as Amber (i.e. Employee Code of Conduct and employee engagement and wellbeing), there is a commitment by the respective Chief Officer to ensure an update is undertaken during 2024/25. Extract summarising the current position regarding the elements and mechanisms in the Strategic Governance Framework review programme • The council’s long-term strategic ambition and priorities in The Plan for North Lanarkshire and ensuring the vision therein - for inclusive growth and prosperity for all (to bring equal benefits and a fairer distribution of wealth to all North Lanarkshire’s people and communities) - is embedded throughout policy statements agreed by the council, as well as strategic and financial decision making, strategy and policy development, everyday service delivery activities, and corporate governance approaches across the organisation. • Six inter-related strategic frameworks (Policy, Governance, Performance, Self- Evaluation, Project Management, and Demonstrating Improved Outcomes for Communities) which ensure a one council corporate approach to evaluating the success of The Plan for North Lanarkshire and assessing delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately aligned, planned, guided, implemented, monitored, and governed). To ensure these frameworks remain fit for purpose, and aligned to The Plan for North Lanarkshire and Programme of Work, all are on a regular review and refresh programme. • A strategic planning process through the Programme of Work which is framed within the context of the local demographic, social, and economic profile that shaped The Plan for North Lanarkshire. While stabilising the strategic direction of the council, the Programme of Work allows for appropriate flexibility in the operational delivery of many complex inter-connected programmes, projects, and plans to ensure a dedicated focus on improvement change, and delivering services that improve the lives of local people. A supporting governance framework and annual review process enables a recurring, dynamic, and cohesive approach to the ongoing development of the Programme of Work and ensures it remains current, relevant, and deliverable. • A Strategic Policy Framework which sits beside the Programme of Work in the strategic planning process to ensure that strategy and policy remain connected to delivery in order to collectively facilitate a co-ordinated approach to identifying the resources and working practices needed to support delivery of the long-term vision. • Standing Orders that allow the council to delegate decision making to committees, sub- committees, or officers and which set out the rules that apply to the running and operation of council and committee meetings. • A Scheme of Administration which clearly sets out functions, terms of reference, and powers of the council and its committees and sub-committees and which is aligned to the organisational structure to facilitate decision making in line with the council’s strategy. • A Scheme of Delegation to Officers which sets out the functions delegated to the Chief Officers of the council, including reference to any Officer listed as being provided with a delegation is, de facto, deemed to hold a politically restricted post (in accordance with legislation). • Financial Regulations and a Scheme of Financial Delegation which, as an integral part of the council’s framework of internal financial controls, are designed to ensure effective stewardship of council funds. Compliance with these regulations ensures that public Page 232 of 412
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- 127 - money is safeguarded and properly accounted for, and all financial transactions are undertaken in a manner which demonstrates openness, transparency, and integrity. The Financial Regulations form a key part of the overarching Financial Strategy and the corporate governance arrangements of the council. • The Financial Strategy which is the overarching framework that establishes the financial strategies and policies to ensure effective financial governance, planning, and management and, as such, sets out the responsibility for safeguarding public funds within the council. It also sets out the role and responsibilities of the Chief Financial Officer, in line with the corresponding CIPFA Statement (2016). The strategies and policies covered by the Financial Strategy include the Capital Strategy, Treasury Management Strategy, Revenue Budget Strategy, the Medium-Term Financial Plan, and the Financial Regulations and Scheme of Financial Delegation. • A Risk Management Strategy which sets out a clear direction for how the council will identify, assess, and manage the risks faced in providing high quality public services and delivering The Plan for North Lanarkshire. The strategy is intended to ensure that the council is risk aware rather than risk averse and that the management of risk is embedded in the council’s policies, procedures, culture, and practices. It is designed to ensure that key decisions are taken with an understanding of risks and their effective control. • Risk management arrangements which form an important element of good corporate governance and are designed to ensure that the council operates systematic and logical processes for managing risks within a comprehensive framework, ensuring that identified risks are managed consistently, effectively, efficiently, and coherently across the organisation. These arrangements include maintenance of a Corporate Risk Register, Service Risk Registers, Project Risk Registers, and regular oversight of the council’s risk management arrangements and management of key corporate risks by the Audit and Scrutiny Panel and Corporate Management Team, and other governing bodies as required. • Codes of Conduct for Elected Members, Chief Officers, and Employees which provide frameworks within which individuals are expected to undertake their duties in a manner which meets the required standards for good governance. This includes ensuring declarations of interests, and declarations for conflicts of interest and gifts and hospitality, are appropriately (and regularly) made and published. • Ensuring legislative obligations are fulfilled through the statutory officer roles, i.e. the posts of head of paid service, monitoring officer, chief financial officer (section 95 officer), and the chief social work officer. • A Counter Fraud Policy which sets out the council’s expectations (that extends to all individuals and organisations with whom it deals) in terms of acting honestly and with integrity and in safeguarding public resources. • A Whistleblowing Procedure (Public Interests Disclosure) which provides a mechanism for employees of the council, and other workers within the council, to report a concern about serious wrongdoing within the council and to do so with security and in confidence. • A senior management team structure which comprises a Business Management Team (to monitor the efficient and effective operation of the council and ensure pursuit of the long-term vision set out in The Plan for North Lanarkshire is underpinned with the relevant assurances and controls in terms of corporate governance, risk management, and financial management), and a Corporate Management Team (to ensure strategic oversight, direction, and a one council approach in terms of delivery of the vision through the Programme of Work. This is supported by a meetings structure comprising service Senior Management Teams focussing on the operational delivery of service remits, and an Operational Management Team to cascade the context, deliverables, and accountabilities and ensure consistency of message in terms of the long-term vision and day to day delivery through the Programme of Work. All Chief Officers are members of the Corporate Management Team; this includes those Chief Officers who hold a statutory officer role. • An Audit and Scrutiny Panel whose activities and functions comply with the standards set out in CIPFA’s Position Statement: Audit Committees in Local Authorities (2018), and whose purpose is to provide independent assurance to the council and those charged with governance on the adequacy of the council's risk management framework and internal control environment. • A Strategic Performance Framework which sets out performance measurement at three levels in order to collectively provide an overview of performance (over time and compared to targets) to help understand the impact of council activities on improving services and outcomes for the people and communities of North Lanarkshire. These measures also allow for day to day activities, and progress towards achieving the long- Page 233 of 412
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- 128 - term vision set out in The Plan for North Lanarkshire, to be regularly monitored, reported, assessed, and scrutinised. • Formal reporting arrangements through an annual Performance Reporting Schedule that comprises Chief Officer reviews at service committees and service specific reporting to meet both business and statutory obligations and which is underpinned by five non- negotiable standards that support regular performance assurance reviews. • Comprehensive revenue budget and capital expenditure guidelines, with well- established processes and systems to ensure regular monitoring and reporting, as well as oversight and scrutiny through the council’s senior management team structure of meetings and Elected Members at committee. • A range of programme and project Boards and working groups aligned to the delivery and governance requirements for specific Programme of Work items, e.g. Strategic Capital Delivery Group, six Strategic Programme of Work Boards, Hub Delivery Programme Board, and Data Governance Board. • An Information Governance Policy Framework, comprising policies in terms of records and information management, data protection, information handling and classification, information risk, information security, and payment card industry data security to ensure proper recording of information, appropriate access to that information including by the public, and compliance with legislation. • An Information Security Policy which includes cyber security and aims to protect the council’s information systems and physical assets including supporting processes, networks, and equipment. This is essential to ensure the council can continue to operate and successfully deliver its functions, while finding the right balance between the benefits and risks to the processing of information. • Publicly available complaints and freedom of information procedures with management, monitoring, and performance reporting arrangements. • A range of employment and other policies, and associated guidance documents and forms, which promote and support ethical behaviour and standards of conduct by employees. An employee Performance Review and Development (PRD) process and access to a range of training and development programmes and opportunities through LearnNL for both employees and Elected Members. • Strategic Workforce Plans, supported by service specific workforce plans, which identify the actions required to address workforce gaps and set out detailed service level actions to address the risks and issues facing the current workforce and identify the gaps in terms of fulfilling service provision and delivering on priorities and the long-term vision now and in the future. • Independent and objective assurances provided by Internal Audit whose function is designed to add value and improve the council’s operations. The Internal Audit function operates within the Public Sector Internal Audit Standards (PSIAS) and the council’s Internal Audit Charter. The service undertakes an annual programme of work approved by the Audit and Scrutiny Panel which is based on the Internal Audit Annual Plan. This plan is risk based and is periodically updated to reflect evolving issues and changes. • Independent and objective assurances provided by the external auditors through the Annual Audit Report (AAR) process and other audit, inspection, and regulatory bodies. The annual review and update of the Strategic Governance Framework is reviewed and endorsed each year by the council’s senior management team (through both the Business Management Team and Corporate Management Team) in line with their respective governance, strategic oversight, assurance, and continuous improvement roles in respect of the council’s governance arrangements and delivery of The Plan for North Lanarkshire. The annual assessment process in place through the Strategic Governance Framework and its accompanying review programme has been recognised as an area of good practice in the latest two annual Internal Audits on Corporate Governance. • In May 2023 it was cited that there are “formal and generally robust arrangements in place to ensure that such reviews are undertaken on an annual basis”. • This audit also reported on the assessment of the council’s local code against the Delivering Good Governance in Local Government: Framework and found that this process was “generally robust”. The findings also noted that the assessment had indicated a “high level of compliance with the Corporate Governance framework, which was broadly consistent with Internal Audit’s assessment of Principles C and D”. More recently, the Internal Audit annual report 2023/24 and annual opinion from the Acting Chief Page 234 of 412
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- 129 - Officer (Audit and Risk) concludes that “The results from our detailed work examining the council’s corporate governance arrangements suggest that compliance with the requirements of the corporate governance framework adopted by the council continued to be generally positive with no significant weaknesses or areas of concern highlighted.” 9) The Annual Audit Report (AAR) process undertaken by the external auditors, together with the national approach to auditing Best Value through thematic audit work. Published in May 2019, the North Lanarkshire BVAR comprised eight recommendations for action by the council. Various updates have been provided to committee since and the external auditors Annual Audit Report (AAR) has provided updates every year in terms of completed recommendations. The Annual Audit Report (AAR) in October 2023 reported that all eight recommendations had been fully implemented and were now complete. The outcome report following the introduction of the new national approach to auditing Best Value in 2023 through thematic audit work (on the leadership of the development of new local strategic priorities) was reported to the Audit and Scrutiny Panel in October 2023 and the Policy and Strategy Committee in 2023. This recognised the clear ambitious vision in The Plan for North Lanarkshire and found that the vision has been driven by effective leadership and is supported by a range of performance indicators and performance reporting arrangements. The report concludes positively on the council’s approach to citizen and community engagement and recognises the council’s commitment to reducing inequalities and tackling poverty. The report also comments positively on the alignment of strategic and operational delivery plans (with the council’s financial, asset, and digital plans), the collaborative working between Elected Members and officers, and the council’s approach to self-evaluation which supports continuous improvement. The outcome report following the Best Value thematic audit work contained a small number of audit recommendations and management responses, including planned actions, responsible officers, and timescales. Progress in terms of implementing these actions is monitored by Internal Audit and reported to the Audit and Scrutiny Panel. • The council should look to improve its existing processes for engaging elected members on the overall strategic planning process. • The council should consider how it measures the level of engagement with communities and equalities groups. • The council should work with members to understand the reasons for the poor attendance to ensure its training and development programme is fit for purpose. The external auditors latest Annual Audit Report (AAR), reported to the Audit and Scrutiny Panel in October 2023 presented key matters arising from each of the main areas of work undertaken by the external auditor. This included the audit of the financial statements and issues relating to the council’s financial management and financial sustainability, vision leadership and governance, best value arrangements, and the use of resources to improve outcomes. The report contained the external auditor’s audit opinion on the 2022/23 financial statements as well as a number of issues where action was required during the audit process and/or scope for further improvement existed. The report also contained a small number of audit recommendations and management responses, including planned actions, responsible officers, and timescales. Progress in terms of implementing these actions is monitored by Internal Audit and reported to the Audit and Scrutiny Panel. 10) Findings from other audit, scrutiny, or inspection bodies in relation to service specific assessments. A dedicated page on the council’s website provides a central location for reporting on findings and recommendations from all national audits and inspections. This continues to be kept up to date as and when new reports become available nationally. Inspection reports published during 2023/24 include the following: • Progress visit to evaluate the effectiveness of the community learning and development partnerships’ approach to self-evaluation and planning for improvement, and consider progress made against identified priorities in their community learning and development plans - February 2024. Inspectors noted that no further action was required following this inspection Page 235 of 412
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- 130 - and also identified some aspects of effective practice that the council were asked to share with HMIe to support practitioners elsewhere. The report suggests some minor areas of potential improvement which will be taken into consideration when reviewing and updating the community learning and development plan in 2025. • Joint inspection of services for children and young people at risk of harm in North Lanarkshire community planning partnership led by the Care Inspectorate in collaboration with Education Scotland, Health Improvement Scotland, and His Majesty’s Inspectorate of Constabulary in Scotland - October 2023. As there were no specific recommendations made by inspectors based on their assessment that the partnership had not already identified and were acting on, the recommendations were incorporated into the Child Protection Committee business and improvement plan and will be monitored through this Committee accordingly. • Annual assurance statement produced for the Scottish Housing Regulator (SHR) to demonstrate the council meets all legal obligations associated with housing and homelessness services, equality and human rights, and tenant and resident safety - August 2023. As per the SHR’s requirements the Annual Assurance Statement for 2022/23 was signed off by the Housing Committee in August 2023. 11) The role of the council’s senior management team structure of meetings in respect of good governance, assurance, and continuous improvement. The council recognises that a crucial aspect in delivering good governance is the way that it is applied. The ethos of good governance cannot be achieved by structures, rules, and procedures alone. Effectively, good governance needs to be embedded within the council and its culture and the need for, and value of, good governance must be explicit. As such, any references that require to be made to any one of the frameworks supporting The Plan for North Lanarkshire references them all together for completeness and to raise awareness of the role of good governance in delivering the strategic ambition. The role of, and need for, good governance is also reiterated in the Guidance accompanying the Report Template which requires to be used for all council internal reporting purposes. Following implementation of a single integrated corporate forum for all Chief Officers in April 2021, a subsequent self-evaluation exercise in 2022 to review the effectiveness of the revised arrangements, concluded there was a clear vision and effective leadership with a sound approach that provides clear direction and several aspects of the new arrangements were highlighted as working well. The combination of responding to and recovering from the pandemic while resuming business as usual activities at pace - had however intensified the volume of business that required to be discussed by the senior management team of the council which - along with the impact of workforce pressures, industrial action, inflationary pressures, the cost of living, external financial pressures, and large scale public sector reform - significantly added to the agenda and to the risks facing the council. For this reason, new arrangements in respect of the council’s senior management team and supporting structure of meetings were developed and implemented from January 2023. This comprises four aspects, as follows: • A Business Management Team whose role is “To monitor the efficient and effective operation of the council” and to secure the relevant assurances that “the council is able to effectively pursue the long-term ambition set out in The Plan for North Lanarkshire by ensuring this is underpinned with the relevant assurances and controls in terms of corporate governance [including performance, legal, and hr matters], risk management, and financial management. This means the Business Management Team role is that of assurance, not directing or monitoring delivery unless the ongoing assessment of assurance requires improvement in this respect. A four weekly Business Management Team meeting is held which comprises standing agenda items for finance, governance, risk, performance, and human resources and further demonstrates the ongoing commitment to ensuring corporate governance arrangements are in place and remain effective. • The Chief Executive, Depute Chief Executive, Section 95 Officer, and Monitoring Officer are members of the Business Management Team as well as the Chief Officers of Audit and Risk, Business and Digital, People Resources, and Strategic Communications and Engagement. • A Corporate Management Team whose role is “To consider the strategic context and environment within which the council is operating, understand the position of the organisation, Page 236 of 412
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- 131 - and consider the future direction. To consider the implementation of strategic decisions at a council wide level and the impact on the delivery of The Plan for North Lanarkshire and Programme of Work. To agree the one council approach required in order to deliver on the council’s priorities (in partnership where required) in line with the strategic direction and monitor the delivery of the Programme of Work.” This means the Corporate Management Team role has a focus on improvement over time in delivering the council’s strategic priorities through the Programme of Work. • The Chief Executive, Depute Chief Executive, and all other Chief Officers are members of the Corporate Management Team. Both the Business Management Team and the Corporate Management Team input to the annual Strategic Governance Framework review process and to the review of the evidence that informs the Annual Governance Statement (with a view to ensuring the council’s governance arrangements and systems of internal controls remain effective) and to identify any improvement activity or future developments required to support continuous improvement. This ongoing commitment from the Business Management Team and the Corporate Management Team ensures that good governance is supported from the top of the organisation. • Four Service Management Teams (SMTs) - the annual governance update report in December 2023 reiterated the four service groupings which were originally established in September 2018, and which have continued to operate effectively since, i.e. Chief Executive’s services, Enterprise and Communities, Education and Families, and Adult Health and Social Care. • The focus for these four SMTs is therefore to manage the operational delivery of service remits. They are also required to consider the implementation of strategic and corporate decisions at a service and/or service grouping level and to consider the context within which the service / service grouping is operating and ensure decisions made in terms of operational delivery are in line with good governance and support the successful delivery of the Programme of Work and The Plan for North Lanarkshire. • Operational Management Team - formally established in April 2021, this forum comprises all senior managers and head teachers across the council. It operates under the principles of engage, develop, support, and inform to connect managers and enable them to strengthen and support their teams to deliver on the Programme of Work in line with The Plan for North Lanarkshire. This forum aims to provide a collaborative forum for discussions on the practical aspects of delivering the Programme of Work. This group is not a decision making body; it is an information sharing forum. Its focus is on providing opportunities to share and discuss significant strategic and corporate developments with the wider operational management team environment across the council. 5. Certification 5.1 In compliance with the Delivering Good Governance in Local Government: Framework (2016) the council has systems in place to review and improve the governance and internal control environment throughout the year. Issues for action have been identified and implementation will be monitored and reported as part of the next annual review. 5.2 It is our opinion that reasonable assurance can be placed upon the adequacy and effectiveness of North Lanarkshire Council and its Group systems of governance. The annual review process has demonstrated sufficient evidence that the council’s corporate governance arrangements have operated effectively, and the council and its group companies comply with the relevant corporate governance principles in all significant respects. 5.3 Having considered all the principles, I am satisfied that the organisation has adopted a response that is appropriate for its fraud and corruption risks and commits to maintain its vigilance to tackle fraud. Chief Executive Leader of the Council Page 237 of 412
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- 132 - Independent auditor’s report to the members of North Lanarkshire Council and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the annual accounts of North Lanarkshire Council and its group for the year ended 31 March 2024 under Part VII of the Local Government (Scotland) Act 1973. The financial statements comprise the group and council only Comprehensive Income and Expenditure Statements, the group and council only Movement in Reserves Statements, the group and council only Balance Sheets, the group and council and council only Cash Flow Statements, the council only Housing Revenue Account Income and Expenditure Statement, the Council Tax Income Statement, the Non Domestic Rates Income Statement, the Sundry Accounts Statement and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24 (the 2023/24 Code). In my opinion the accompanying financial statements: • give a true and fair view of the state of affairs of the council and its group as at 31 March 2024 and of the income and expenditure of the council and its group for the year then ended; • have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2023/24 Code; and • have been prepared in accordance with the requirements of the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Accounts Commission on 2 December 2022. My period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the council and its group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the council. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Conclusions relating to going concern basis of accounting I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the ability of the council and its group to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue. These conclusions are not intended to, nor do they, provide assurance on the current or future financial sustainability of the council and its group. However, I report on the council’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website. Page 238 of 412
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- 133 - Risks of material misstatement I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon. Responsibilities of the Chief Officer (Finance) and Audit and Scrutiny Panel for the financial statements As explained more fully in the Statement of Responsibilities, the Chief Officer (Finance) is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Chief Officer (Finance) determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Chief Officer (Finance) is responsible for assessing the ability of the council and its group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there is an intention to discontinue the operations of the council and its group. The Audit and Scrutiny Panel is responsible for overseeing the financial reporting process. Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: • using my understanding of the local government sector to identify that the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003 are significant in the context of the council and its group; • inquiring of the Chief Officer (Finance) as to other laws or regulations that may be expected to have a fundamental effect on the operations of the council and its group; • inquiring of the Chief Officer (Finance) concerning the policies and procedures of the councils and its group regarding compliance with the applicable legal and regulatory framework; • discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and • considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the council’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors Page 239 of 412
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- 134 - such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Opinion prescribed by the Accounts Commission on the audited parts of the Remuneration Report I have audited the parts of the Remuneration Report described as audited. In my opinion, the audited parts of the Remuneration Report have been properly prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014. Other information The Chief Officer (Finance) is responsible for the other information in the annual accounts. The other information comprises the Management Commentary, Annual Governance Statement, Statement of Responsibilities and the unaudited parts of the Remuneration Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Management Commentary and Annual Governance Statement to the extent explicitly stated in the following opinions prescribed by the Accounts Commission. Opinions prescribed by the Accounts Commission on the Management Commentary and Annual Governance Statement In my opinion, based on the work undertaken in the course of the audit: • the information given in the Management Commentary for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with statutory guidance issued under the Local Government in Scotland Act 2003; and • the information given in the Annual Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Delivering Good Governance in Local Government: Framework (2016). Matters on which I am required to report by exception I am required by the Accounts Commission to report to you if, in my opinion: • adequate accounting records have not been kept; or • the financial statements and the audited parts of the Remuneration Report are not in agreement with the accounting records; or Page 240 of 412
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- 135 - • I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Conclusions on wider scope responsibilities In addition to my responsibilities for the annual accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice, including those in respect of Best Value, are set out in my Annual Audit Report. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. John Boyd FCPFA Audit Director Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT Page 241 of 412
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Annual Accounts 2023/24 Glossary of Terms - 136 - Whilst much of the terminology used in this report is intended to be self-explanatory, the following additional definitions and interpretation of terms may be of assistance. Accruals The concept that income and expenditure are recognised as they are earned or incurred, not as money is received or paid. Actuarial Gains and Losses (Pensions) For a defined benefit pension scheme, the changes in actuarial deficits or surpluses that arise because events have not coincided with the actuarial assumptions made for the last valuation (experience gains and losses) or the actuarial assumptions have changed. Asset Ceiling Adjustment (Pensions) This limits the Pension Surplus recognised in the Annual Accounts to comply with relevant Accounting Standards Associates These are entities (other than a subsidiary or a joint venture) in which the Council has a participating interest or over whose operating and financial policies the Council is able to exercise significant influence. Capital Adjustment Account The Capital Adjustment Account represents timing differences between the amount of the historical cost of non- current assets that has been consumed and the amount that has been financed in accordance with statutory requirements. Capital Expenditure Expenditure on the acquisition of a non-current asset, which will be used in providing services beyond the current accounting period, or expenditure which adds to and not merely maintains the value of an existing non-current asset. Capital Financing Funds raised to pay for capital expenditure. There are various methods of financing capital expenditure including borrowing, leasing, capital receipts and grants, and revenue funding. Capital Receipt The proceeds from the disposal of land or other non-current assets. Capital Receipts Reserve The Capital Receipts Reserve represents the capital receipts available to finance capital expenditure in future years after setting aside the statutory amounts for the repayment of external loans. Community Assets Assets that the Council intends to hold in perpetuity, that have no determinable useful life and that may have restrictions on their disposal. Examples of community assets are municipal parks. Contingent Liability A contingent liability is either: • A possible obligation arising from past events whose existent will be confirmed only by the occurrence of one or more uncertain events not wholly within the Council’s control; or • A present obligation arising from past events where it is not probable that a transfer of economic benefits will be required, or the amount of the obligation cannot be measured with sufficient reliability. Corporate and Democratic Core The Corporate and Democratic Core comprises all activities which local authorities engage in specifically because they are elected multi-purpose authorities. The cost of these activities are thus over and above those which would be incurred by a series of independent, single purpose, nominated bodies managing the same service. Defined Benefit Pension Scheme Pension schemes in which the benefits received by the participants are independent of the contributions paid and are not directly related to the investments of the scheme. Page 242 of 412
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Annual Accounts 2023/24 Glossary of Terms - 137 - Depreciation The measure of the cost of wearing out, consumption or other reduction in the useful economic life of the Council’s non-current assets during the accounting period, whether from use, the passage of time or obsolescence through technical or other changes. Exceptional Items Material items which drive from events or transactions that fall within the ordinary activities of the Council and which need to be disclosed separately by virtue of their size or incidence to give fair presentation of the accounts. Extinguishment Extinguishment relates to financial liabilities and occurs when the Council’s legal obligations end, either through the cancellation or expiry of the obligations or through payment being made to settle the amount owed by the Council. Fair Value The fair value of an asset is the price at which it could be exchanged in an arm’s length transaction, less where applicable, any grants receivable towards the purchase or use of the asset. Finance Lease A lease that transfers substantially all the risks and rewards of ownership of a non-current asset to the lessee. Financial Instruments Adjustment Account The Financial Instruments Adjustment Account is a balancing account to allow for differences in statutory requirements and proper accounting practices for borrowing and lending. This account is a technical accounting presentation and is not available for distribution. Heritage Asset A tangible or intangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. Impairment A reduction in the value of a non-current asset to below its carrying amount on the Balance Sheet. Infrastructure Assets Non-current assets belonging to the Council that cannot be transferred or sold, on which expenditure is only recoverable by the continued use of the asset created. Examples are highways, footpaths and bridges. Intangible Asset Non-current asset belonging to the Council which lacks physical substance. Examples include computer software, licensing agreements, patents and copyrights. Inventories Items of raw materials and stores a Council has procured and holds in expectation of future use. Examples are consumable stores, raw materials and products and services in intermediate stages of completion Joint Venture An entity in which the Council has an interest on a long-term basis and is jointly controlled by the Council and one or more entities under a contractual or other binding agreement. Liability A liability is where the Council owes payment to an individual or another organisation. A current liability is an amount which will become payable or could be called in within the next accounting period e.g. creditors or cash overdrawn. A non-current liability is an amount which by arrangement is payable beyond the next year at some point in the future or to be paid off by an annual sum over a period of time. Non Distributed Costs These are overheads for which no user now benefits and as such are not apportioned to services. National Non Domestic Rates Pool All non domestic rates collected by local authorities are remitted to the national pool and thereafter distributed to Councils by the Scottish Government. Operating Lease A lease where the ownership of the non-current asset remains with the lessor. Page 243 of 412
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Annual Accounts 2023/24 Glossary of Terms - 138 - Past Service Cost (Pensions) For a defined benefit scheme, the increase in the present value of the scheme liabilities relating to employee service in prior periods arising in the current period as a result of the introduction of, or improvement to retirement benefits. Pension Reserve This represents the difference between accounting for pension costs in line with UK Accounting Standards and the funding of pension costs from taxation in line with statutory requirements and is equal to the change in the pension liability, i.e. the commitment to provide retirement benefits. Provision An amount put aside in the accounts for future liabilities or losses which are certain to very likely to occur but the amounts or dates of when they will arise are uncertain. Public Works Loan Board (PWLB) A Central Government Agency, which provides loans for one year and above to Councils at interest rates only marginally higher than those at which the Government can borrow itself. Rateable Value The annual assumed rental of a hereditament, which is used for national non-domestic rates purposes. Remuneration All sums paid to or receivable by an employee and sums due by way of expenses allowances (as far as these sums are chargeable to UK income tax) and the money value of any other benefits received other than in cash. Reserves The accumulation of surpluses, deficits and appropriation over past years. Reserves of a revenue nature are available and can be spent or earmarked at the discretion of the Council. Some capital reserves such as the Capital Adjustment Account and Revaluation Reserve cannot be used to meet current expenditure. Subsidiary An entity which the Council wholly or partly controls. Trust Funds Funds administered by the Council for such purposes as prizes, charities and specific projects. Page 244 of 412
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This document can be made available in a range of languages and formats, including large print, braille, audio, electronic and accessible formats. To make a request, please contact Corporate Communications at: corporatecommunications@northlan.gov.uk ’S urrainn dhuinn an sgrìobhaidh seo a chur ann an diofar chànanan agus chruthan, a’ gabhail a-steach clò mòr, braille, cruth claisneachd agus cruthan dealanach agus ruigsinneach. Gus iarrtas a dhèanamh, cuir fios gu Conaltradh Corporra aig: corporatecommunications@northlan.gov.uk Niniejszy dokument można otrzymać w wielu różnych językach i formatach, w tym również dużym drukiem, alfabetem Braille’a, w wersji dźwiękowej, elektronicznej i w innych dostępnych formatach. Prośby należy składać na ręce zespołu ds. komunikacji drogą elektroniczną na adres: corporatecommunications@northlan.gov.uk 此文件可以多种不同语言和格式提供，包括大字体、点字、音频、电子和易读格式。 如想提出请求，请联系企业传讯部：corporatecommunications@northlan.gov.uk ۔ ہے سکتا جا ایکیا ہمافر یمیں ںتورصو ئیسار بلقا روا نکار ٹ یلیکٹرا ،وی�ڈآ ، ی�بر ،فوحر ےبڑ لبشمو ںتورصو روا ںنوباز مختلف کو ر�ی�وستاد سا corporatecommunications@northlan.gov.uk : ی ئیں �مافر بطہار پر سا سے ر����ش�ی�کی���و یکمیو ٹ ی�رپورکا یلیے کے ستاخورد مکر ہابر CC_2023_00145 Produced by NORTH LANARKSHIRE COUNCIL Chief Executive’s Office Civic Centre Windmillhill Road Motherwell ML1 1AB e. annualaccounts@northlan.gov.uk NORTHLANARKSHIRE.GOV.UK Page 246 of 412
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North Lanarkshire Council Report Audit & Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref FW/GQ/LC Date 31/10/24 Overtime Duplicate Claims – Progress Update From Fiona Whittaker, Chief Officer (People Resources) E-mail Whittakerf@northlan.gov.uk Telephone 07973 728628 Executive Summary Following ongoing commitments set out in the recent follow up audit report entitled Payroll: Follow Up Of Overtime Duplicate Payments, which was shared with Business Management Team in August and discussed again in September in follow up report from the Service, this report provides Audit & Scrutiny Panel with an update on the position with respect to the corrective audit actions agreed and now being progressed. The original duplicate claims audit paper highlighted several incorrectly approved duplicate claims within a sample taken across the Council. It should be noted that was exclusively for claims which are processed through the iTrent system, and the issue was found to have originated from a lack of core control system functionality to prevent duplicate claims from occurring within the Time and Expenses module. As an interim control measure, and to ensure that no further duplicate claims were paid to employees, significant work has been undertaken by the Employee Service Centre (ESC) to operate a robust process which identifies and reports on all duplicate payments, so that these are deleted out of the system before pay runs. This approach is manual and very resource intensive, but it has been effective in preventing any further duplicate claims as confirmed within the most recent follow up audit report. To enable the implementation of a sustainable long-term system led solution to this issue, detailed work has now been undertaken with MHR, the Council’s iTrent provider, to scope the necessary systems development work that if implemented would ensure that no further duplicate claims can be processed by the system. It should be noted that this work may require full bespoke development of a solution, and will take time to implement and test, as well as incurring cost. The full likely costs for development and implementation of an MHR led solution are included within the paper for approval. It is worth highlighting that manual work to catch and report on duplicate claims carried out by the People Resources Service has also been beneficial, in that it has provided valuable additional insight into areas of the Council where managers appear to be repeatedly approving duplicate claims, without sufficient checking of the information which is being submitted. As this is an important first line of defence in any process of this type, and a key requirement within the financial regulations which apply to managers, it is clear there are opportunities for us to strengthen our approach to manager training and compliance with Item 6 Page 247 of 412
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1. Background Duplicate Claims 1.1 Duplicate claims are direct matches where two or more claims are submitted with the same start and end date, start and end time and the same rate of pay. They can also be overlaps where two or more claims are created that straddle across similar start and end dates, similar start and end times and with the same rate of pay. 1.2 Duplicate claims can also be claims where an employee has the same start and end date, the same start and end time, but a different rate of pay. For instance, one claim could have ‘plain time’ and another claim could have ‘time and a half or double time’ and an employee clearly cannot work across the same date and time duration on different rates. Scale of the problem 1.3 Appendix 1 sets out duplicate claim overpayment figures broken down by service for both active employees and leavers. These represent the level of overpayments across a two-year historical back period prior to the implementation of the interim control process in May 2023. The overall figure for duplicate claim overpayments during this time amounts to circa £156K, so around £78K per year. 1.4 As can be seen from the data, the largest instance of duplicate payments over the two year historical period was seen within the Active and Creative Communities service and specifically in relation to casual worker payments. Work has already been undertaken with the managers in this service to improve levels of compliance, but we are still seeing instances of managers approving duplicate claims without checking in this service. both the regulations and our core processes, and the report contains several measures we are now proposing to undertake in this regard. Recommendations It is requested that Audit & Scrutiny Panel: (1) Note the significant work undertaken within the People Resources Service to implement an effective interim control solution which has prevented the payment of duplicate claims. (2) Note the costs, progress and further work required to establish a longer-term system solution to prevent duplicate claims occurring at source. (3) Note the agreed approach for recovery of historical overpayments and the associated challenges which will arise from progressing this. (4) Approve the strengthend approach to holding managers accountable going forward for repeated breach of the Time and Expenses approvals process. The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (23) Build a workforce for the future capable of delivering on our priorities and shared ambition Page 248 of 412
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Interim control measures 1.5 It should be noted that under the current system functionality in iTrent, when managers seek to process a submitted claim, basic checks are carried out by the system, and if the claim is suspected to be duplicate, the system will flag a cautionary message across the top of the screen of the system in red, asking the manager to look to see if an original claim has previously been entered and approved, either in the current pay period or in a past pay period. This cautionary message is fully visible. 1.6 To approve the duplicate claim, a manager must ignore the message which tells them they are potentially dealing with a duplicate claim and process it without further checking or indeed challenge to the employee. 1.7 Through the work we have now undertaken, it has become clear that there continue to be managers taking this approach and ignoring the flagged message, whether it be a symptom of general poor managerial practice, or the pressures of time constraints is not clear. Either way ignoring the message has historically resulted in a duplicate claim being paid to the employee, and there are currently no negative consequences for a manager who processes a duplicate Time and Expenses claim in this way. 1.8 Following the highlighting of this issue in the audit report, and to prevent these duplicate claims being paid, the ESC put in place a robust interim process for duplicate claims in each pay run in May 2023, with the key steps set out below and a in a detailed process map attached in appendix 2. 1.9 Since this time, and on a regular basis before any pay runs are processed, the ESC’s audit and compliance team will run a report to identify all duplicate claims within the same pay runs submitted and then approved by managers within the system. 1.10 This report looks at exact date, time, no of hours and pay element entered for the employee and approved by the line manager. It is filtered to highlight all the many variations of duplicates highlighted above. When the duplicates are verified, the team delete one of the entries and the original is retained. 1.11 The team’s next step is to e-mail both the employee and the manager of the incorrect claim and make them aware that a deletion has taken place and the reason for this deletion. 1.12 To date we have had a handful of challenges when staff or managers are told we will delete the duplicate claim. In these instances, the team will explain to either the employee or the manager that the second claim was a duplicate and evidence is given; taking the manager back to view the original claim within the system where required. Once this has been shown and explained, the manager/employee is usually content with the deletion. 1.13 Additionally, on a regular basis, a full summary of duplicate claims deleted is circulated to the senior management team for each service. This offers visibility of the potential losses that the Council could face per pay run and the financial risk mitigated due to Page 249 of 412
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these claims being identified and deleted from the system prior to pay running. Summaries are distributed to senior management following every pay run. Please see appendix 3 for an example summary. 1.14 As the system is not currently set up to block the approval of the claim, and we are now tracking all duplicate claims, there continue to be a concerningly high number of claims being submitted this way by managers across the services, with some services having a higher prevalence than others. This can be seen from the data in appendix 3. 1.15 Although this process is described as the ‘interim process’ by colleagues in Audit, Audit & Scrutiny Panel should be reassured that the arrangement has been in place and working effectively since May 2023, and it has been confirmed in our most recent follow up audit that no overpayments have taken place since its inception. 1.16 It is worth noting that the level of manual intervention across all pay runs was never resourced within the ESC team and it has placed additional pressures on an already very busy team. The process is coordinated by a team of three employees who are carrying out this work across 50% of their working week for each pay run and are required to incur overtime to enable them to take on these duties in addition to their normal work. 1.17 With regards to manager compliance, the Employment and Policy team and the HR Business Partner team are now also engaging with employees, managers and, at times, Chief Officers, to share the details of who (across both managers and employees) are continuing to make the same duplicate claims each pay run. 1.18 With levels of non-compliance now being regularly identified, and managers continuing to approve unchecked claims, the People Resources senior management team are now also proposing to implement additional steps to address this issue, including a consideration of more punitive corrective action to be applied in certain instances. 1.19 This includes a letter which goes to managers who are continually approving incorrect duplicate claims. This letter highlights the fact that the Chief Officer for the Service will be notified if incorrect approvals of claims continue to occur. It also clarifies the possibility of disciplinary action, up to and including removal of ‘authorised signatory’ and the initiation of a disciplinary process. Appendix 4 contains a copy of the proposed initial Corrective Action Letter. 1.20 It should be noted that linked to historical and more recent duplicate claims, there are no employees or managers as yet within the Disciplinary Procedure for duplicate claims, however two employees are currently at investigation stage. 1.21 We expect that further support and training for managers will also be required to address this difficult issue, and the People Resources team are currently identifying ways to further enhance manager compliance, including clearer manager guides and other supports. A wider Managers Toolkit is also being rolled out with a view of informing managers on best practice on the topic of claims approvals as well as other managerial actions. learnnl: My Learning Dashboard - Programs (learningpool.com) 2. Report Page 250 of 412
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Long Term Solution (systemised approach) 2.1 In order to explore a longer-term system solution, the ESC team has been provided with a system demonstration of the Paid Time module within the iTrent system. This module is not included in our current functionality, and has the intelligence to identify duplicate claims, containing the same times, dates, payroll elements, and number of hours entered and to stop either the employee from saving on these records or the line manager from approving these records, therefore avoiding a duplicate claim situation. Importantly, the Paid Time module will alter the warning system message that we currently have to an error message and will prevent any input of duplicate claims being circumnavigated. 2.2 The paid time module will attract a licence fee which is £70,103.49 for 16,000 employees or £49,837.27 for the current 8,000 employees on the employee (MySelf) and manager self-service (MyTeam) time and expenses modules. This represents the ongoing cost of utilising the module itself and would be a recurring increase in revenue budget each year. 2.3 Additionally, there will be a one-off development cost of circa £22K, as detailed in appendix 5 - costings break down from MHR. The covers the number of consultancy days estimated with 15 development days and 3 project management days support, making a total of 18 days consultancy. It should be noted that there would be no difference in the development time for 8,000 employees compared to 16,000. 2.4 It should be noted that moving forward with the Paid Time Module, as with any other system development, would still require the scoping of our requirements, followed by the development and full testing of this functionality before we can agree to step down the current interim process in place. This will include running both processes in parallel for a period to time to ensure that the system solution is in fact working. We estimate that this could take 6-9 months to complete from starting the work. 2.5 Following discussion at BMT and given the costs involved with the potential i-Trent solution, the Chief Officer, People Resources and the Chief Officer, Business Solutions will explore whether an internal digital solution could be explored to automate the current manual checking process. This will be explored over the next few months with a further report to be brought to EAGG to consider a final solution. Recovery of overpayments (for Active Employees & Leavers) 2.6 It should be emphasised that no duplicate claim overpayments have been paid out to active employees or leavers since the interim process was put in place in May 2023. To support the recovery of historical overpayments, the ESC have now carried out an analysis of the costs of duplicate claims retrospectively for two years prior to this date, and the total cost amounts to £155,500.82 for all services. 2.7 Following further analysis and discussion with BMT the agreed approach to the recovery of historical overpayments is set out below with consideration of all associated risks. Recovery for active employees 2.8 The method of recovery for active employees is through payroll deductions, and this is a clear contractual agreement for all employees. As part of our current process, all current employees with any type of payroll debt receive a letter from the ESC with a breakdown Page 251 of 412
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of monies owned, detailing a repayment arrangement, and an example of this is shown in appendix 6 - employees Letter for Monies Owed. 2.9 It should be noted however that many of the identified active employees with duplicate claims are from the supply and casual staffing pools, particularly within Active and Creative Communities. These types of employees tend not to work on a regular basis, which means that they do not have regular payroll payments into their bank account to allow us to recover quickly. Our current rules for casual employees dictate that if they have not earned within a six-month period, they are purged from the system and if this occurs, they will then be treated as leavers. 2.10 We are also aware that a significant number of the casual employees impacted are students, or young people who may not be in a financial position to easily settle their debts. They also tend to be on lower pay scales within our structure and it may transpire that we do not have the opportunity to recover any monies owed from this group. 2.11 Additionally, it should be noted that this type of recovery tends to generate direct engagement with Elected Members who are often approached by staff on the basis that the recovery of the monies is unfair, and Elected Members are frequently asked to intervene on the staff member’s behalf to seek for the funds to be written off. 2.12 Given that these overpayments can be considered to be largely not the fault of the employee, there is also a risk that recoveries are interpreted as “unlawful salary deductions” and current staff faced with this issue may seek to engage with their trade unions for support in taking action of this kind. 2.13 Considering all of the above BMT have approved the recovery of monies from all existing staff, for all overpayments in line with normal Council policies and procedures. Due to the nature of casual employees BMT have agreed not to recover monies from these staff. Recovery for leavers 2.14 The process for recovering monies from leavers is less straightforward than for current employees and it requires the involvement of several departments within the Council. This includes Payroll, Debtors, and Legal, if the recovery is deemed to be viable to pursue through the courts. 2.15 For recent leavers, the ESC will always attempt to recover monies at point of final salary as per their contract and Schedule A, however, if this is not ‘affordable’ and at the risk of placing the employee in a hardship situation, then a discussion can be had to put a repayment plan in place. 2.16 For legacy leavers, where the debt has been owed for some time, or where the leaver has not engaged with the ESC at point of or after leaving, and we have not been able to recover the funds, their case will be passed to our Debtors Team in Finance who then attempt to pursue the debt through other means, such as debt recovery, dunning, further repayment plans and court proceedings. 2.17 The Debt Recovery Team will always continue to pursue debt, irrespective of the value, however when this pursual has been exhausted and no payment has been forthcoming, the debt is passed back to the Service that the employee worked within. It is for the Service to decide if any recovery is achievable and whether to move to legal channels. If the Service does not believe that any recovery is achievable, they need to contact the Debt Recovery Team to inform them to write off the debt / invoice. Page 252 of 412
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2.18 It should be noted that for values less than £300, Legal will not proceed with the debt recovery through the court system and the debt/invoice will be written off. Debts of less than £300 are seen as cost prohibitive. 2.19 Given the considerations above, the timescales involved and the fact that most overpayments are less than the £300 threshold, BMT has agreed not to pursue overpayments for any staff who have left the Council. This is in line with Finance existing policy for the recovery of debt under £300. Considerations and next steps 2.20 Whilst it is recognised that that a lack of true controls within the i-Trent system has enabled the payment of duplicate claims incorrectly, it is also clear that there are issues around manager practice and accountability for properly processing these types of claims to staff. In addition exploring the development of a systems solution, this area will be a key focus going forward and managers and employees will be held to account where they are found to be repeatedly processing duplicate claims. 2.21 As outlined above, when the system solution has been fully developed, People Resources will also set out an action plan, as requested by our internal Audit colleagues on how we plan to transition from the interim approach to a longer term and more stable systems approach, including the parallel running of these processes until full confidence in the new system solution can be established. 3. Measures of Success 3.1 Managers are no longer able to override the system to approve duplicate claims. 3.3 A robust systems-based solution is implemented to allow the removal of the interim process and associated staffing burdens. 3.4 Where possible, historical overpayments are recovered in line with exiting policy. 3.5 The control environment for the payment of time and expenses if found to be robust. 4. Supporting Documentation • Appendix 1 - Breakdown of Overpayment Figures by Service across 2 years • Appendix 2 - Business Process Map • Appendix 3 - Illustration of Summary on Duplicate Claims being stopped and deleted by A&C Team. Monetary values have also now been added to this summary. Based on the interim process and gives a clear indication of the overpayments that have been stopped prior to the pay run. • Appendix 4 - Corrective Action Letter • Appendix 5 - MHR Costings Breakdown for the Paid Time Module • Appendix 6 - Employees Letter from Payroll for Monies Owed • Appendix 7 - Ex Employees Letter from Payroll for Monies Owed Page 253 of 412
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Fiona Whittaker Chief Officer (People Resources) Page 254 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Recovery process discussed and we will update Finance on the CMT’s decision around recovering historical overpayments for both legacy leavers and active employees. Dependant of the decision taken, impact will be financial, and the cost of the overpayments is illustrated in the attachment provided by the ESC's Payroll & Pension Team. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☒ No ☐ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The People Resources team will be required to strengthen our overpayments and recoveries protocol, with more accountability applied to managers, including corrective action for managers who may continue to make regular errors in approving duplicate claims. 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation? Yes ☒ No ☐ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? There is a requirement to discuss any future recoveries and debt to be pursued with our Legal colleagues, due to any possible risk connected to case law relating to what may be interpreted as ‘unlawful salary deductions / recovery’ (for active employees only). Employees faced with this may engage with Unions, who in turn will look to case law for recognised reasons for their affected members not to pay against this recovery. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Page 255 of 412
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Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Engagement has taken place with MHR, our system provider and we have received a demonstration of the Paid Time module in July 2024. This module has functionality that will prevent the approval and payment of duplicate claims processed via employee self-service (ESS/Myself) and authorised line manager self-service (MSS/Myteam). Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Although there is a connection to a risk, the nature of short- and long-term approaches will mitigate the risk in the future. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. Page 256 of 412
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5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 257 of 412
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Appendix 1 Breakdown of Historical Overpayment Figures by departmental form name: Enterprise & Communities Used by - Active Creative Communities Page 258 of 412
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Used by - Facilities Support Services - Janitors Used by - Facilities Support Services - Infrastructure Page 259 of 412
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Used by - Facilities Support Services - Catering & Cleaning Used by - Enterprise & Housing Page 260 of 412
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Used by - Chief Executives Used by - Adult Health & Social Care Page 261 of 412
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Used by - Education & Families - Active Schools Used by - Education & Families Page 262 of 412
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Appendix 2 Process Map of Short Term Approach Page 263 of 412
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Appendix 3 Example of Summary of Duplicate Claims Deleted before Pay Run Appendix 4 Corrective Action Letter Page 264 of 412
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Appendix 5 Costings for MHR Paid Time Module For 8,000 employees For 16,000 employees Page 265 of 412
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Appendix 6 Letter Regarding Recovery from Payroll & Pensions Team (Active Employees) Page 266 of 412
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Appendix 7 Letter Regarding Recovery from Payroll & Pensions Team (Ex Employees) Page 267 of 412
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North Lanarkshire Council Report Audit & Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref PH/ASP/ALOct24 Date 31/10/24 Audit and risk related items: Action log From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Paula Hendry Acting Chief Officer (Audit and Risk) Executive Summary The purpose of this report is to allow elected members to track implementation of outstanding requests and recommendations made by the Panel in respect of audit and risk- related items. The attached log (at Appendix 1) records those audit and risk-related requests and recommendations made by the Panel and when these were addressed and/or are expected to be addressed. Any actions that have previously been reported as complete and noted by the Panel have been removed from the log. Recommendations The Panel is invited to note the report. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Item 7 Page 269 of 412
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Appendix 1 Audit and risk related items: Outstanding action log Requests or agreed action Status August 2024 1. Request a further report be brought back by management to a future meeting outlining: (a) the suitability of the iTrent system and actions put in place to deal with duplicate payments; and (b) recovery of overpayments. Complete – a report on these matters is included as a separate agenda item at today’s meeting of the Panel. 2. The risk management update report to include details regarding the change to the Procurement corporate risk. Complete – information included in the quarterly risk management update report as a separate agenda item at today’s meeting of the Panel. May 2024 3. The follow-up report detailing progress in implementing agreed audit actions be amended to specifically highlight instances where Service action to address the recommendation was still outstanding, but the original implementation date agreed by management was over a year old. Complete – the follow-up report detailing progress in implementing agreed audit actions, presented as a separate agenda item at this meeting, includes information regarding this request. February 2024 4. A report be brought back to the Panel post-Summer 2024 in relation to the effectiveness of the Service’s compliance monitoring of the implementation of new processes in respect of school funds management. Complete – work in relation to this issue was included in the 2024-25 Internal Audit Plan. The audit assignment related to this item has now been completed and the audit report is included in the Internal Audit Progress Report agenda item at today’s meeting of the Panel. September 2023 5. Request a further report be brought back by management to a future meeting on progress implementing outstanding actions identified by Internal Audit follow-up work in relation to the implementation of quality assurance processes to monitor compliance with Project Management framework. In progress – implementation of this action has been tracked via the Internal Audit reports following up on previously agreed actions. The most recent assessment via this is that the management actions regarding this are now complete. The 2024- 25 Internal Audit Annual Plan approved by the Panel in May 2024 includes work to review how the results of management’s quality assurance processes for project management have progressed. This audit assignment is now at the planning stage and the results of this audit work will be reported to the Panel once completed. Page 271 of 412
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Appendix 1 Audit and risk related items: Outstanding action log (continued) Requests or agreed action Status May 2023 6. Request a further report be brought back by management to a future meeting on outstanding actions identified by Internal Audit follow-up work in relation to managing strategic change. Partially complete – implementation of this action has been tracked via the Internal Audit reports following up on previously agreed actions. The most recent assessment via this is that the management actions regarding this are now complete. The 2024-25 Internal Audit Annual Plan approved by the Panel in May 2024 includes work to focus on providing assurance on the adequacy and effectiveness of the Council’s recently revised governance arrangements implemented to oversee delivery of the Programme of Work to 2028. The results of this audit work will be reported to the Panel once completed. 7. Request a further report be brought back by management to a future meeting on outstanding actions identified by Internal Audit follow-up work in relation to ‘Employee Service Centre – key controls’. Not yet due – an update report by the Chief Officer (People Resources) on this issue was presented to CMT in May 2024 where it was agreed that a sub-group of relevant Chief Officers would discuss this issue and present their findings to CMT in late 2024. The revised timescales for agreed actions are not yet due and will be reported on, as they fall due, in line with Internal Audit’s arrangements for reporting on follow-up. Page 272 of 412
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North Lanarkshire Council Report Audit & Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref PH/ASP/Strategy 2024 Date 31/10/24 Internal Audit Strategy From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Executive Summary The Internal Audit Strategy (Strategy) sets out the strategic objectives of the Council’s Internal Audit section and how these will be delivered. The purpose of this report is to seek endorsement of the attached Internal Audit Strategy for 2024-25 to 2026-27 (at Appendix 1) which has recently been reviewed and revised. In updating the Strategy, consideration has been given to how the Internal Audit team will operate going forward to best meet our audit objectives. Additionally, the Strategy has been updated to reflect the Council’s standard template, better align with the Council’s ambition set out in the Plan for North Lanarkshire and reflect changes in relation to strengthening reference to independence, integrity and objectivity, stakeholder engagement to better inform the Internal Audit Annual Plan and further detail on developing our staff to make sure we have the right skills. Recommendations The Audit and Scrutiny Panel is invited to approve the revised Internal Audit Strategy at Appendix 1. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Item 8 Page 273 of 412
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1. Background 1.1 The Internal Audit Strategy (Strategy) is a formal document that defines Internal Audit’s strategic objectives and outlines how these will be achieved. Whilst the current Public Sector Internal Audit Standards (PSIAS) have no requirement for Internal Audit functions within local authorities to have an Internal Audit Strategy, it is considered that such a statement benefits both key stakeholders and Internal Audit staff, providing a clearer overview of what Internal Audit is trying to achieve, and how, and by establishing key principles against which the performance of Internal Audit can be assessed. 1.2 The most recent Internal Audit Strategy was approved by the Panel in June 2019. This report outlines the outcome of the most recent review and update of the Strategy for 2024-25 to 2026-27. 2. Report Review and Refresh of the Internal Audit Strategy 2.1 The most recent Internal Audit Strategy, approved in June 2019, has now been reviewed and refreshed, and the revised Strategy for 2024-25 to 2026-27 is provided at Appendix 1. 2.2 The Global Internal Audit Standards (GIAS), which underpin the UK PSIAS, were recently reviewed with the updated standards released in January 2024, for implementation by January 2025. The UK Public Sector Internal Auditing Standards Advisory Board has committed to undertaking a review of the new standards, with a view to identifying and producing any sector specific interpretations or other material, to ensure that they are suitable for use by UK public sector organisations. It is anticipated that the new material will be available for implementation on 1 April 2025 to align with the requirements for annual opinions and other relevant aspects of UK public sector governance. 2.3 Although there is currently no requirement for Internal Audit functions within local authorities to have an Internal Audit Strategy, in line with the updated GIAS, it is anticipated that the updated PSIAS will contain a requirement to develop and implement a strategy. 2.4 Given the scheduled review of new standards by the PSIAS Advisory Board, an interim update was undertaken to better align with the Council’s shared ambition set out in ‘The Plan for North Lanarkshire’ and associated Programme of Work and reflect changes in relation to strengthening reference to independence, integrity and objectivity, stakeholder engagement to better inform the Internal Audit Annual Plan and further detail on developing our staff to make sure we have the right skills. 2.5 Once the updated guidance has been formally released, a further review of the Strategy will be undertaken to ensure continued alignment to, and compliance with, the updated standards. The fully updated Strategy will be presented to the Panel alongside the 2025-26 Internal Audit Annual Plan. 2.6 In terms of the current review, the Strategy has been updated to reflect the Council’s standard template and I have taken the opportunity to reconsider and update how the Internal Audit team will operate going forward, and the activities we will undertake, to best meet our objectives. 2.7 Key stakeholder feedback received from Chief Officers and ASP members has also been taken into consideration in updating the Strategy, with many of the comments provided regarding how Internal Audit can increase the value of the service we provide being incorporated into the Strategy for development over the coming years. This includes, for example, a refreshed approach to stakeholder engagement and a move toward ‘auditing with agility’. Page 274 of 412
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3. Measures of success 3.1 The Council is required to ensure that it has an effective internal audit function consistent with PSIAS. The Council’s appointed external auditors regularly review and report on the Council’s Internal Audit function to establish whether they can place reliance on its work and as part of their wider work of the Council’s corporate governance framework. 3.2 In addition, PSIAS requires an external quality assurance review of the Internal Audit function to be undertaken at least every five years. The last review was undertaken in April 2024 and concluded that the Internal Audit team fully conforms with the Standards. 4. Supporting documentation 4.1 Appendix 1 – Updated Internal Audit Strategy Paula Hendry Acting Chief Officer (Audit and Risk) Page 275 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ Page 276 of 412
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5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 277 of 412
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DRAFT INTERNAL AUDIT STRATEGY Page 278 of 412
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Document control Title Internal Audit Strategy Owner Paula Hendry, Acting Chief Officer (Audit and Risk) Contact hendryp@northlan.gov.uk Governance Group Audit and Scrutiny Panel Author Paula Hendry, Acting Chief Officer (Audit and Risk) Contact hendryp@northlan.gov.uk Revision History Number Originator Date Review Commenced Revision description/record of change 1.0 Ken Adamson April 2018 Update and refresh of document Ken Adamson May 2019 Updated to recognise the ongoing transformation and change within the Council Paula Hendry August 2024 Update and refresh of document Document Approvals Number Governance Group Date approval granted Date approval to be requested (if document still draft) 1.0 Audit and Governance Panel February 2015 2.0 Audit and Scrutiny Panel April 2018 3.0 Audit and Scrutiny Panel June 2019 4.0 Audit and Scrutiny Panel 31 October 2024 Consultation Record (for most recent update) Status of document consulted upon N/A Stakeholders consulted/date N/A Strategic Alignment The Internal Audit Strategy is a formal document that sets out Internal Audit’s strategic objectives and outlines how these will be delivered. Next review date Review Date April 2025, then every 3 years thereafter Page 279 of 412
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[Title] 8 1. OUR AUDIT ENVIRONMENT 1.1 In this document, we set out our strategy for 2024-25 to 2026-27. This remains a very uncertain and challenging time for the Council and the local government sector generally and this strategy reflects how we intend to support the Council’s senior management and elected members in responding to the challenges facing the Council. 1.2 The Council’s strategic-level plan (‘The Plan for North Lanarkshire’) and its associated Programme of Work to 2028 sets out the Council’s strategic ambitions and those key activities designed to deliver against them and to address the challenges facing the people and communities of North Lanarkshire. 1.3 The Council continues to seek to achieve its ambitions against a backdrop of significant financial pressures, increasing demands for many key services and ever-changing expectations about how services will be delivered. These financial challenges mean that the Council will continue to face difficult decisions around financial sustainability and about which services to stop and/or reduce and significant ongoing pressure to ensure that those which remain are delivered in a cost-effective manner. The Council also needs to respond to the impacts on it and its communities of a range of Scottish and UK Government policies. Finally, external events including the ongoing cost of living crisis and the subdued performance of the UK and Scottish economies as well as posing immediate challenges to which the Council is responding, also create considerable additional longer term risks and uncertainties. 1.4 Our audit environment continues to evolve at a rapid pace. The Programme of Work to 2028 commits senior management to a challenging agenda which requires to be underpinned by sound leadership, effective financial management and robust governance arrangements. These arrangements will require to be supported by effective performance and risk management arrangements and an increased emphasis on project and programme management, service redesign, contract management, commissioning and contracting and how best to secure the benefits of new digital technology and transformation. 1.5 The Council, therefore, faces significant challenges balancing the day-to-day delivery of services with achieving its wider strategic priorities, whilst delivering efficiencies, driving service improvements and managing and delivering large scale transformational change. 1.6 In this context, the role of Internal Audit has never been more important. Our independence and commitment to high quality work will provide senior management and the Audit and Scrutiny Panel with appropriate assurance and insights into the use of public funds and on the adequacy and effectiveness of the Council’s corporate governance, risk management and internal control arrangements. 1.7 Our aim is to add real value through our support to senior management and elected members and our wider influence as we focus on the issues of greatest priority and have the capacity and resources to support accountability and drive corporate and service improvement. Page 280 of 412
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[Title] 9 2. OUR STRATEGIC OBJECTIVES 2.1 In this environment, Internal Audit will need to continually reflect and evolve what it does and how it does it in order to ensure that it can continue to operate efficiently and effectively and to demonstrate relevance and value to the Council. 2.2 Our strategic aim is to provide a high quality and customer focused internal audit service which is responsive, flexible and consistent with best professional practice. We aim to concentrate on key areas of significance, utilise resources in an efficient and effective manner, and for Internal Audit to be seen by stakeholders as a value-adding function, offering meaningful insights and making a dynamic and significant contribution to the Council. We will do this by: • supporting elected members and senior management in undertaking their respective roles by providing an independent, objective assurance and consulting activity designed to add value and improve the effectiveness of the Council’s operations; • delivering an internal audit service which fulfils the role and responsibilities given to it formally by the Council as laid out in the Internal Audit Charter approved by the Audit and Scrutiny Panel, the Chief Executive and the Council’s s95 officer; • providing an internal audit service consistent with best professional practice in accordance with the Public Sector Internal Audit Standards (PSIAS) and the associated CIPFA Local Government Application Note (LGAN); • helping to drive improvements in the Council’s risk management, internal control, governance and service delivery arrangements in order to make a positive contribution to the overall management and operation of the authority; and • focusing our resources on providing assurance on the management of the Council’s core governance processes, strategic priorities and key corporate risks. 3. DELIVERING OUR STRATEGY Independence, Integrity and Objectivity 3.1 Although Internal Audit is a Service within the Council, independence, integrity and objectivity are essential attributes for us, not only in complying with best professional practice, but in ensuring that we can contribute most effectively to the Council’s governance arrangements. We greatly value our independence, integrity and objectivity and are fully committed to demonstrating these attributes in all that we do. Providing assurance and adding value 3.2 We will deliver our strategy through a range of assurance outputs for senior management and the Audit and Scrutiny Panel focused on cyclical coverage of core corporate governance processes, key strategic priorities and programmes of work, corporate risks and key financial systems. 3.3 Our work will include in-depth assessments of how well key risks, priorities, projects and programmes of work are being managed and by examining and reporting on the adequacy, efficiency and effectiveness of relevant management arrangements, we will add value by highlighting scope for improvements and providing those we audit with better insight into how they manage and use public money. 3.4 We will seek to contribute to the Council’s achievement of best value and value for money by providing independent assurance on relevant management arrangements and by constantly being aware of the need to highlight where scope for improved efficiency may exist. Page 281 of 412
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[Title] 10 3. DELIVERING OUR STRATEGY Stakeholder engagement 3.5 Recognising the importance of pro-active stakeholder engagement, we will continue to develop our approach in this area via our annual planning arrangements and introduction of formal audit closure meetings with Chief Officers, to discuss findings, issues and recommendations. By collaborating in this way, we will ehance audit effectiveness and foster a culture of transparency and trust. 3.6 We currently have a well-established planning methodology which includes consideration of a wide range of factors such as the relative scale, significance and complexity of systems; previous audit activity; horizon scanning; review of key corporate risks and the controls in place to mitigate these; and possible impact of any failures on the achievement of the Council’s objectives, priorities and ambitions. However, we will continue to evolve our approach to audit planning through improved stakeholder engagement and collaboration. 3.7 A formal process of consultation with Chief Officers and their respective management teams will be undertaken in advance of preparation of the annual plan to capture, and thereafter consider, potential areas of risk and uncertainty, service developments or areas of concern more fully. Securing influence through consulting and auditing with agility 3.8 We want Services to view Internal Audit as a valuable resource that can help them to achieve corporate and service objectives. We will seek, where appropriate and without compromising our primary function and independence, to become involved in relevant emerging issues or new systems or process development at an early stage and to provide advice and guidance to prevent problems or weaknesses from arising and to ensure effective and efficient use of Council resources. 3.9 We will explore auditing with agility as a mechanism to ensure that we are able to respond to the changing environment the Council is operating in and to enhance and protect organisational value. Support for the Audit and Scrutiny Panel 3.10 We will seek to work closely with the Audit and Scrutiny Panel which takes evidence from Internal Audit reports and will continue to help the Panel discharge its responsibilities and to respond more quickly to emerging issues. We will develop an effective working relationship with the Convener of Audit and Scrutiny to help them shape the work of the Panel. 3.11 We will support and provide assistance to the Audit and Scrutiny Panel to undertake self-assessment against the ‘CIPFA position statement on Audit Committees in Local Government (2022)’ and evaluate its effectiveness in discharging its duties. Aligned to this we will also facilitate the development and delivery of a training programme based on needs identified by the Panel. Awareness of counter fraud arrangements 3.12 We will work with management to continually improve the Council’s counter fraud arrangements and to ensure that key fraud risks are identified and appropriately managed. This will include awareness raising of the Counter Fraud Strategy. 3.13 We will respond appropriately, and in a timely manner, to relevant issues drawn to our attention by elected members, management and members of the public. Page 282 of 412
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[Title] 11 3. DELIVERING OUR STRATEGY Resource requirements 3.14 Internal Audit services are expected to be provided by an in-house team during the period covered by this strategy. The Chief Officer (Audit and Risk) (as head of the function) will continue to annually assess the level and capacity of internal audit resources and will report to the Audit and Scrutiny Panel on the adequacy, or otherwise, of the resources available to them. 3.15 We have recently implemented an improved structure for the audit team and will review and monitor the effectiveness of this approach on an ongoing basis. Developing our staff to make sure we have the right skills 3.16 The environment within which we and the Council are operating continues to change and this will need to be reflected in our staff. As well as continuing to invest in our core internal audit skills, we will continue to enhance the range of other skills within Internal Audit needed to focus our work on the key governance processes and strategic risks and priorities faced by the Council. 3.17 Investing in our staff is critical to our success. We want to embed a culture of continuous learning and development, whereby we help our staff to keep their skills at the desired level and develop the skills they need for the future. To achieve this, we need to support them to further develop their skills across relevant areas, including technological and methodological skills, digital skills, sector and cross-government knowledge and personal effectiveness skills. 3.18 The need for Internal Audit to adapt to the changing landscape while providing ‘business as usual’ assurance has been identified as a key development objective for all internal audit teams. Of specific focus at present, is the need to explore and make greater use of data analytics as an effective way to improve professional development of our staff. As such, a key focus over the period of this Strategy will be to embed the use of data analytics within our processes and outputs to enhance our performance, and inform and improve the quality of our findings and support to clients. Delivering high performance 3.19 We will measure the success of this Strategy via our approved performance management framework (Appendix 1) against which we will report regularly. We will also continue to challenge ourselves to work as efficiently as possible by seeking to ensure that our own use of resources is cost-effective and to seek continuous improvements in our audit methodologies and other internal processes. 3.20 Our most recent (April 2024) independent External Quality Assurance Review (EQAR) of our compliance with the Public Sector Internal Audit Standards (PSIAS) confirmed we are fully compliant with all aspects of the detailed requirements of PSIAS. However, recommendations for continuous improvement were made and we will work to fully address these on a timely basis. Page 283 of 412
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[Title] 13 Appendix 1: Internal Audit performance framework Category Measure Internal Audit management Reported to Chief Executive and CMT Reported to A&SP (Quarterly) Reported to A&SP (Annual) 1. Delivery of Annual Plan Percentage completion of agreed plan X X X 2. Targeting Percentage of key corporate risks and key financial systems over which assurance provided X X X 3. LGBF - Efficiency Cost of Internal Audit per £ million revenue budget X X 4. LGBF - Efficiency % of productive hours delivered v Plan X X 5. Delivery / recommendations Percentage implementation of agreed actions by implementation date (cumulative year to date) X X X X 6. Delivery / other Number of significant irregularity / fraud investigations X X X X 7. Customer satisfaction results Scores from customer satisfaction questionnaires (audit assignments) (cumulative year to date) X X X X 8. Customer satisfaction results Scores from key stakeholders (CMT and A&SP) questionnaires (overall performance of the function) X X X 9. Quality / standards Reliance placed by External Audit on the work of Internal Audit X X X 10. Quality/ standards Quality review outcomes – EQAR or internal self- evaluation X X X 11. Delivery of Annual Report Annual opinion /report prepared by 31 May annually X X X 12. Targeting Approval by CMT and A&SP of strategy and annual plan by 31 May annually X X X Internal management performance indicators 13. Efficiency Actual v planned days on completed assignments X 14. Efficiency Time between completion of fieldwork and draft reports being issued X 15. Efficiency Time between draft reports and final reports being issued X Page 285 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref PH/ASP/PROct24 Date 31/10/24 Internal Audit progress report From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Executive Summary The purpose of this report is to provide an overview of Internal Audit activity and to report the results of Internal Audit outputs finalised since the last update to the Panel in August 2024. This report highlights the most significant issues arising from these recently completed Internal Audit assignments as well as providing updates on other aspects of the work of Internal Audit. Appendix 1 provides a summary of the scope and key findings of each substantive planned audit report and relevant investigative outputs. Full copies of the relevant audit outputs highlighted in this report are also included in the meeting paper in line with best professional practice and the approved Internal Audit Charter and associated reporting protocol. The 2024-25 Annual Plan was approved by the Audit and Scrutiny Panel in May 2024. The Internal Audit Charter, most recently approved by the Panel in August 2024, requires that the results of Internal Audit’s work be periodically reported to CMT and the Panel. This report fulfils that expectation. Recommendations The Panel is invited to: (a) note the findings, conclusions, and recommendations of completed Internal Audit reports together with the associated management responses; (b) consider whether there are any issues raised by Internal Audit which the Panel consider are sufficiently significant to require a further report from management to be submitted to a future meeting of the Panel; (c) request that Internal Audit provide a report to future meetings of the Panel reporting progress made by management implementing agreed management actions in relation to all audit recommendations categorised as ‘High’ or ‘Medium’; and (d) otherwise note this report. Item 9 Page 287 of 412
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1. Background 1.1 The 2024-25 Annual Plan was approved by the Audit and Scrutiny Panel in May 2024. The Internal Audit Charter, most recently approved by the Panel in August 2024, requires that the results of Internal Audit’s work be periodically reported to CMT and the Panel. This report fulfils that expectation. 2. Report Audit review completed in the period 2.1 Table 1 below provides an overview of completed Internal Audit reports since the last update to the Panel in August 2024. These outputs were included in the 2024-2025 Internal Audit Plan. Table 1: Completed Internal Audit outputs in the period Subject Internal Audit Opinion 1. Scottish Welfare Fund Reasonable assurance (Green-Amber) 2. Council tax refunds Reasonable assurance (Green-Amber) 3. School fund – compliance arrangements Limited assurance (Amber-Red) 4. Social Work – Quality Assurance arrangements Reasonable assurance (Green-Amber) 2.2 Appendix 1 provides a summary of those reports forming part of the annual programme of planned assurance work and investigation reports as required by the Internal Audit Charter and associated reporting protocol. This report excludes audit outputs produced for the North Lanarkshire IJB which are reported directly to its senior management team and audit committee. 2.3 Appendix 2 contains detailed definitions of the categories used by Internal Audit when making recommendations, providing an audit opinion and on the extent of assurance which is being provided to management and Panel members on those systems or areas of Council operations examined by Internal Audit. 2.4 In addition to the above reports, work is currently underway on a range of topics including housing rents, purchase cards, NDR and Devolved School Management (DSM). Once finalised, these reports will be submitted to future meetings of the Panel. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Page 288 of 412
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Commentary on completed ‘core’ Internal Audit work 2.5 The nature of Internal Audit exercises means that most audit reviews invariably find some scope for improvement, usually in the form of controls which are weak or only partially effective and, therefore, contain recommendations. 2.6 One of the four reports being reported in the period is assessed as providing only limited assurance, while three of the reports provided more positive levels of assurance. All four reports contain a range of improvement actions and audit recommendations. 2.7 Our work in respect of specific school fund compliance arrangements was designed to provide assurance on the adequacy and effectiveness of the Council’s approach and management arrangements for reviewing schools’ compliance with expectations around the use and management of school funds, including determining and assessing progress made in developing and implementing the compliance framework. We were pleased to note that the Service has devised a compliance framework and that, following an instruction issued to Heads of Establishments, required documentation (compliance checklist, annual Income and Expenditure Statement and Independent Reviewers’ Reports) was submitted to Education HQ by 78% of the educational establishments. 2.8 However, based on the results of our audit work, together with our wider knowledge gained from previous Internal Audit work undertaken in this area, we have categorised this audit as offering ‘limited assurance’, as we consider the framework developed by the Service to be lacking in both detail and guidance in respect of the means to measure compliance, address identified areas of non-compliance and report thereon to senior management. In addition, we noted that there have been no detailed checks carried out on the documentation submitted to confirm individual establishments’ compliance, or otherwise, with the procedures. 2.9 We appreciate, however, that there have been other, more pressing, priorities within the Service and that, as a result, the Service have not had sufficient resources to fully progress these actions. As a result, we consider that until a fully developed compliance framework is implemented, the control environment remains weakened, leaving the Service exposed to potentially significant risk. Management has responded positively to the report and satisfactory management responses and commitments to planned actions have been received. 2.10 The report on Scottish Welfare Fund (SWF) was designed to provide assurance on the adequacy and effectiveness of the Council’s management arrangements and key controls relating to the operation of the Scottish Welfare Fund (SWF) and the extent to which planned outcomes are being delivered. 2.11 Based on the results of our work, we have categorised this audit as offering ‘reasonable assurance’, as we are satisfied that applicants are generally being treated consistently and in line with Scottish Government guidance and Council processes, payments are being made to the named applicant for the correct amount, and that management have appropriate arrangements in place for monitoring spend against the SWF and managing situations where demands are greater than available resources. 2.12 We have identified some areas for improvement which include the need for a reconciliation between the paypoint transaction list to the Civica system which records SWF grant decisions to be regularly undertaken and a need to review and reassess the purpose of, and process for, undertaking second officer checks to ensure that it Page 289 of 412
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provides a robust compliance framework. Management has responded positively to the report and satisfactory management responses and commitments to planned actions have been received. 2.13 Our work on Council Tax refunds was designed to provide assurance that the Council’s financial controls and processes in place for making refunds to council tax ratepayers are sufficiently robust to ensure that refunds are correctly raised, authorised and paid. This exercise was carried out in response to an incident at Aberdeen City Council whereby a Team Leader within the council tax team was identified, and convicted, of embezzling more than £1m from council tax refunds. 2.14 We have categorised this audit as offering ‘reasonable assurance’, as we are satisfied that the arrangements in place for processing council tax refunds are generally robust. Sample testing confirmed that the processes in place are consistent with the expected procedures, and we consider that all refunds reviewed were made to the correct ratepayers for the correct amount. 2.15 Although there is no indication of any fraudulent activity in relation to council tax refunds, we have identified some areas where the processes in relation to council tax refunds and requests for creditors references could be strengthened to further enhance the controls in place. Management has responded positively to the report and satisfactory management responses and commitments to planned actions have been received. 2.16 Our report on Social Work – Quality Assurance was to provide independent assurance on the adequacy and effectiveness of the Council’s quality assurance arrangements in relation to the provision of social work and social care services. 2.17 Based on the results of our work, we have categorised this audit as offering ‘reasonable assurance’. We are satisfied that the Service’s arrangements for monitoring external care providers is generally sound and broadly reflects good practice principles, and reports have been produced for key stakeholders on the results of the Council’s quality assurance and continuous improvement activities. We are also satisfied that the key expectations set out in the contract management framework are generally being applied in practice. 2.18 We have identified some areas for improvement which include the need for the contract management framework to be reviewed and updated to fully reflect best practice and actual current working practices and a need for greater consistency with, and for the Quality Assurance Team to better demonstrate compliance with, expected monitoring arrangements. Management has responded positively to the report and satisfactory management responses and commitments to planned actions have been received. Other matters – Internal Audit performance 2.19 In March 2021, the Panel were presented with a revised performance management framework for Internal Audit that was to be implemented from April 2021. Most indicators are reported on an annual basis. There are two indicators, however, that are subject to quarterly reporting. 2.20 The first is about the implementation of agreed actions arising from Internal Audit reports by the implementation date. Progress in implementing agreed actions is monitored and reported separately to the Panel each cycle. 64% of agreed actions have been implemented by the agreed implementation date in the period to September 2024 (was 54% in the previous update). Page 290 of 412
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2.21 The second performance indicator is about client satisfaction. Appendix 3 provides a summary of the results of four key questions we ask audit clients at the conclusion of each audit assignment. The results presented continues to show positive feedback on the work of Internal Audit, with 100% of respondents in the period agreeing that Internal Audit added value by assisting in providing assurance, and that reports were relevant and constructive with findings clearly and accurately communicated. 2.22 Where management raise concerns over Internal Audit’s work, these matters are discussed with relevant senior management to fully understand the nature of any concerns and, where it is considered appropriate, to identify areas for improvement. We also seek Services’ views on what they liked or disliked about the audit process and comments received are used to inform future action plans for improving the service provided by Internal Audit. 2.23 Finally, the Panel will be aware that one of the key annual performance indicators for the function is the percentage of the Internal Audit Plan (the Plan) completed each year, with a target of 90% set for this indicator. I require to inform the Panel that performance against this indicator is likely to be impacted in 2024-25. 2.24 Members will recall that the annual plan report presented to the Panel in May 2024 highlighted that the structure of the Internal Audit team changed for 2024-25 because of a staffing structure review undertaken during 2023. Although this has led to an increase in the number of qualified auditor posts within the team, ensuring that the staffing structure continues to be ‘fit for purpose’ and reflects current and likely future demands placed on the Service by changes in the auditing landscape, we operated during the first quarter of the year with an auditor vacancy whilst recruitment processes were undertaken. The departure of the Chief Officer (Audit and Risk), and interim arrangements to cover this and the Audit Manager post, has meant we continued to have a reduced auditor complement in quarter 2. 2.25 The new Chief Officer is due to take up post in December 2024, at which time the Internal Audit team will be back to full capacity. The impacts on planned work and identification of assignments from the approved plan which may need to delayed, postponed or cancelled will be considered. In determining this, priority will be given to those assignments which provide core support for the annual opinion that is required to be provided, and those audits in areas of greatest perceived risk and/or where there are external requirements and/or expectations that specific work will be undertaken. We will also consider the extent to which alternative sources of assurance are available for areas of planned audit coverage. A full update on the outcome of this review will be reported to the Panel in cycle 1 of 2025. 3. Measures of success 3.1 Internal Audit reports annually on its performance to the Panel and is also subject to review annually by the Council’s appointed external auditors. Page 291 of 412
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4. Supporting documentation Appendix 1 Summary of Internal Audit assignments completed in the period Appendix 2 Audit gradings Appendix 3 Internal Audit Performance Framework Paula Hendry, Acting Chief Officer (Audit and Risk) Page 292 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ Page 293 of 412
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If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Effective responses by management to the weaknesses, control issues and/or areas of improvement identified by Internal Audit will increase the likelihood of the Council achieving its ambitions by improving control frameworks and more effectively mitigating potential risks and threats to the achievement of planned outcomes. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 294 of 412
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Appendix 1 Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 1 Scottish Welfare Fund (SWF) Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 1 Medium 2 Low 2 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s management arrangements and key controls relating to the operation of the Scottish Welfare Fund (SWF) and the extent to which planned outcomes are being delivered. The audit focussed on reviewing the Council’s procedures and processes for SWF and assessment of these against Scottish Government guidance to determine whether applicants are treated consistently and in line with eligibility criteria, and that appropriate documentation had been obtained to support decisions and any awards made. The audit also assessed whether payments had been made to the correct applicants for the correct amounts and the effectiveness of management arrangements for reviewing demand and determining whether priority levels should be amended. The SWF is a Scottish Government grant scheme administered by local authorities and is made up of two different grants – Crisis Grants, which are intended to help with an unexpected crisis or emergency, and Community Care Grants, designed to help an applicant or someone they care for to start to live, or to carry on living, a settled life in the community. The Council awarded SWF grants totalling approximately £5.3m in 2023/24 and, to date, the total value of SWF grants paid in 2024/25 is £1.87m (against a budget of £2.76m). This area was last reviewed in 2021, when it received a limited assurance audit opinion. Based on the results of our work during this audit, we are satisfied that applicants are generally being treated consistently and in line with Scottish Government guidance and Council processes, payments are being made to the named applicant for the correct amount, and management have appropriate arrangements in place for monitoring spend against the SWF and managing situations where demands are greater than available resources. We have therefore, categorised this audit as providing ‘reasonable assurance’ meaning that there is generally a sound system of governance, risk management and control in place. We have, however, identified a small number of areas where we consider that there is scope for improvement, and these are detailed at section 3 of the audit report and include: • no reconciliations of Paypoint transactions to Civica records are undertaken; • there is a need to improve the Council’s SWF Guidance Manual and decision-making template to ensure that individual applications are processed in a consistent and effective manner; and • there is a need to review and reassess the purpose of, and process for, undertaking second officer checks to ensure that it provides a robust compliance framework. Satisfactory management responses, including agreed proposed actions have been received from management in response to the recommendations contained in the report. Page 295 of 412
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 2 Council tax refunds Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 0 Medium 1 Low 0 This review was a short, focussed exercise designed to provide assurance that the Council’s financial controls and processes in place for making refunds to council tax ratepayers are sufficiently robust to ensure that refunds are correctly raised, authorised and paid. This exercise was carried out in response to an incident at Aberdeen City Council whereby a Team Leader within the council tax team was identified, and convicted, of embezzling more than £1m from council tax refunds. In the period January to June 2024, the Council has processed over 5,000 council tax refunds across many liability years amounting to over £900,000. All refunds are paid via the creditors system, with 55% of these paid by bank transfer and 45% by cheque sent to the ratepayer’s address. Established processes are in place within the council tax team to identify, review and process refunds to council tax ratepayers. We have categorised this audit as offering ‘reasonable assurance’ as we are satisfied that the arrangements in place for processing council tax refunds are generally robust. From our review of a sample of requests for Cedar references and refunds paid, we were pleased to note that the processes in place are consistent with the expected procedures, and we consider that all refunds reviewed were made to the correct ratepayers for the correct amount. Although there is no indication of any fraudulent activity in relation to council tax refunds, we identified a gap within the current control environment that could lead to the potential for a fraudulent payment to be made. As such, we have identified some areas where the processes in relation to council tax refunds and requests for creditors references could be strengthened to further enhance the controls in place. These are detailed in the action plan at section 3 of the report for management consideration. Satisfactory management responses, including agreed proposed actions have been received from management in response to the recommendations contained in the report. Page 296 of 412
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 3 School fund – compliance arrangements Internal Audit Opinion: Limited assurance (Amber-Red) Audit recommendations: High 1 Medium 1 Low 1 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s approach and management arrangements for reviewing schools’ compliance with expectations around the use and management of school funds, including determining and assessing progress made in developing and implementing the compliance framework. Many educational establishments operate ‘Establishment Funds’ (otherwise known as ‘School Funds’) in addition to their delegated school budget. Although school funds are not Council funds, the Council has a responsibility to ensure adequate stewardship of these monies. As such, there is an Educational Establishment Fund Financial Procedures manual, which Heads of Establishment have received and are required to adhere to. Over the course of the last two years, there have been repeated audit outputs, detailing the outcome of reviews/investigations regarding anomalies and issues arising relating to the management of school funds and recommendations made in respect of this. Following a request from the Audit and Scrutiny Panel, the Chief Officer (Education and Families - North) presented a report to the February 2024 meeting of the Panel where he committed to the Service developing a framework to review and confirm individual establishments’ compliance with the procedures, including annual compliance submissions and spot checks on a sample of establishments. We were pleased to note that the Service has devised such a framework and that, following an instruction issued to Heads of Establishments, required documentation (compliance checklist, annual Income and Expenditure Statement and Independent Reviewers’ Reports) was submitted to Education HQ by 78% of the educational establishments. However, based on the results of our work, together with our wider knowledge gained from previous Internal Audit work undertaken in this area, we have assessed this audit as providing only ‘limited assurance’. We consider the framework developed by the Service to be lacking in both detail and guidance in respect of the means to measure compliance, address identified areas of non-compliance and report thereon to senior management. In addition, we noted that there have been no detailed checks carried out on the documentation submitted to confirm individual establishments’ compliance, or otherwise, with the procedures. We appreciate, however, that there have been other, more pressing, priorities within the Service and that, as a result, the Service have not had sufficient resources to fully progress these actions. As a result, we consider that until a fully developed compliance framework is implemented, the control environment remains weakened, leaving the Service exposed to potentially significant risk. We have identified areas for improvement, which are detailed at Section 3 of the report and these include: • a need for the Service to further develop the Compliance Framework to clearly document how it plans to effectively monitor schools’ compliance with the Educational Establishment Fund Financial Procedures and thereafter address issues identified with the individual establishments; and • a lack of information reported to senior management within the Service with regards to educational establishments’ compliance with the Establishment Fund Financial Procedures. Satisfactory management responses, including agreed proposed actions have been received from management in response to the recommendations contained in the report. Page 297 of 412
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 4 Social Work – Quality Assurance arrangements Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 0 Medium 4 Low 1 The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s quality assurance arrangements in relation to the provision of social work and social care services. The Council has a responsibility for providing and/or commissioning a range of social care services across a wide range of functional areas. The role of Social Work’s Quality Assurance function is intended to assist in ensuring and facilitating the delivery of high-quality services through effective business planning, maintaining quality standards and undertaking a range of activity designed to ensure that any issues arising with the provision and/or standard of care are identified and that appropriate action is taken to remedy any such issues identified. The Service’s previous contract monitoring arrangements were reviewed with a refreshed Contract Management Framework for external providers implemented in April 2023. This framework details the approach to be taken to effectively manage purchased care and support services to ensure that the appropriate quality of care is delivered. Arrangements for extending the Quality Assurance Team’s remit to include monitoring services provided internally by the Council are currently being piloted. We undertook an assessment of the Service’s arrangements against good practice set out in the Scottish Government/COSLA Guidance on the Procurement of Care and Support Services (2021) and also carried out testing on a sample of the Service’s monitoring files to assess the extent to which monitoring activity had been undertaken in accordance with expected practice. We noted that the Service continues to evolve and develop its contract management arrangements and there were some areas during the audit where further development activity by management was underway. As these areas were still in development phase, no specific audit testing was undertaken. Based on the results of our audit work, we have categorised this audit as offering ‘reasonable assurance’. We are satisfied that the Service’s arrangements for monitoring external care providers is generally sound and broadly reflects good practice principles and reports have been produced for key stakeholders on the results of the Council’s quality assurance and continuous improvement activities. We are also satisfied that the key expectations set out in the contract management framework are generally being applied in practice, however, we have identified several areas where we consider scope for improvement exists and have made a number of recommendations which are detailed at Section 3 of the report and include: • a need for the Contract Management Framework to be reviewed and updated to fully reflect both best practice and actual current working practices; • there has been a lack of progress in implementing the monitoring framework for in-house providers; • a need for greater consistency with, and for the Quality Assurance Team to better demonstrate compliance with, expected monitoring arrangements; and • recently revised arrangements to record, monitor and track issues identified and actions arising from monitoring activity need to be reviewed to ensure they are adequate and effective. A draft report has been issued and we are awaiting management responses. It is expected that the report will be finalised and available for inclusion in the papers for the Panel meeting on 31 October. Page 298 of 412
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Appendix 2 Audit Gradings Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance There are minimal or minor control weaknesses that present low risk to the control environment. The control environment has substantially operated as intended although some minor errors have been detected. Very few or no improvements are needed. Green-Amber Reasonable Assurance There are some control weaknesses that present a low to medium risk to the control environment. The control environment has mainly operated as intended although errors have been detected. Some improvements should be made. Amber-Red Limited Assurance There are significant control weaknesses that present medium to high risk to the control environment. The control environment has not operated as intended. Significant errors have been detected. Substantial improvements should be made. Red No Assurance There are fundamental control weaknesses that present an unacceptable level of risk to the control environment. The control environment has fundamentally broken down and is open to significant error or abuse. Immediate and major changes need to be made. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant, but it is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action were taken. Prompt action is required Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 299 of 412
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Appendix 3 Internal Audit Client Feedback Results Responses received in this period from 5 clients related to assignments reported to the Panel (note these responses primarily relate to audit assignments reported in the Internal Audit Progress Reports presented to the August and October meeting of the Panel) Question Strongly Agree or Agree (%) 1. Internal Audit added value to my area by assisting in providing assurance and/or identifying weaknesses and/or improvements in relevant governance/business process and internal controls 100% 2. Internal Audit findings were accurate and clearly communicated 100% 3. The audit report made relevant, constructive and practical recommendations to help improve operations 100% 4. Internal Audit staff were professional and courteous throughout the audit process 100% Page 300 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 1 INTERNAL AUDIT REPORT SCOTTISH WELFARE FUND Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Chief Officer (Finance) and Business Finance Manager (Resource Solutions) Copied to: Chief Executive and Depute Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s management arrangements and key controls relating to the operation of the Scottish Welfare Fund (SWF) and the extent to which planned outcomes are being delivered. The audit focussed on reviewing the Council’s procedures and processes for SWF and assessment of these against Scottish Government guidance to determine whether applicants are treated consistently and in line with eligibility criteria, and that appropriate documentation had been obtained to support decisions and any awards made. The audit also assessed whether payments had been made to the correct applicants for the correct amounts and the effectiveness of management arrangements for reviewing demand and determining whether priority levels should be amended. The SWF is a Scottish Government grant scheme administered by local authorities and is made up of two different grants – Crisis Grants, which are intended to help with an unexpected crisis or emergency, and Community Care Grants, designed to help an applicant or someone they care for to start to live, or to carry on living, a settled life in the community. The Council awarded SWF grants totalling approximately £5.3m in 2023/24 and to date, the total value of SWF grants paid in 2024/25 is £1.87m (against a budget of £2.76m). This area was last reviewed in 2021, when it received a limited assurance audit opinion. Based on the results of our work during this audit, we are satisfied that applicants are generally being treated consistently and in line with Scottish Government guidance and Council processes, payments are being made to the named applicant for the correct amount, and that management have appropriate arrangements in place for monitoring spend against the SWF and managing situations where demands are greater than available resources. We have therefore, categorised this audit as providing ‘reasonable assurance’ meaning that there is generally a sound system of governance, risk management and control in place. We have, however, identified a small number of areas where we consider that there is scope for improvement, and these are detailed at section 3 of the audit report and include: • no reconciliations of Paypoint transactions to Civica records are undertaken; • there is a need to improve the Council’s SWF Guidance Manual and decision-making template to ensure that individual applications are processed in a consistent and effective manner; and • there is a need to review and reassess the purpose of, and process for, undertaking second officer checks to ensure that it provides a robust compliance framework. Internal Audit Opinion (see definition at Appendix 1) Reasonable Assurance (Green-Amber) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0200/2025/001 Date issued 02/10/2024 Audit Team Euan Campbell and Lesley Armstrong Page 301 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 2 1. Executive Summary Objectives The purpose of this audit was to assess the adequacy and effectiveness of key controls associated with the delivery of the Scottish Welfare Fund and assess the extent to which planned outcomes are being delivered. In particular, we considered the following: • Are effective controls in place to ensure that applicants are treated consistently and in line with approved guidance/eligibility criteria? • Is there appropriate documentary evidence to support decisions made, including entitlement to SWF grants? • Are payments made correctly calculated, properly authorised and to the named applicant? • How effective are the management arrangements for dealing with situations where the demands on the SWF funds are greater than available resources? The audit involved assessing the management arrangements in place, and undertaking substantive testing on a sample of Community Care Grants and Crisis Grants applications received in the last 6 months, to ensure that decisions are made consistently and in line with procedures and processes, and that there is sufficient evidence to support these decisions. Given the high inherent risk of fraud within the SWF and the recent incidences of awards being made to fraudulent applicants, the audit also considered how the Council addresses and mitigates fraud risks associated with such applications and payments. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 1 2 2 Key areas requiring management action (High) One key area requiring urgent management action has been identified: • no reconciliations of Paypoint transactions to Civica records are undertaken. Good practice identified We noted the following areas of good practice during the audit: • The Service has developed a SWF Guidance Manual, which supplements the Scottish Government Guidance, to assist decision makers with handling applications and making decisions. • Decision maker templates have been developed for both Crisis Grant and Community Care Grant applications, to ensure consistency between decision makers when reviewing applications and making decisions. • Second officer checks are undertaken on a sample of processed applications to identify issues and errors in processing and highlight any resultant potential training needs for staff. • Senior management regularly monitor and discuss SWF spend to project potential overspends against the budget available, with a view to considering whether there is a need to amend the priority level at which applications are assessed. Any changes to priority are notified to the Finance and Resource Committee as part of the quarterly Revenues and Benefits Update report. Other areas for improvement (Medium) A number of other areas for improvement were also identified: • there is a need to improve the Council’s SWF Guidance Manual and decision-making template to ensure that individual applications are processed in a consistent and effective manner; and • there is a need to review and reassess the purpose of, and process for, undertaking second officer checks to ensure that it provides a robust compliance framework. Page 302 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 3 3. Action Plan (continued) Scottish Welfare Fund 0200/2025/001 Ref Finding 1 No reconciliations of Paypoint transactions to Civica records are undertaken. Where a decision is made to award a crisis grant, the decision maker records the award on the applicant’s record on Civica and arranges for payment to the applicant through a Paypoint voucher passed via text message. We noted that no reconciliations of Paypoint transactions to Civica are undertaken to confirm that all Paypoint vouchers requested match to a valid application and are for the correct amount. Whilst our sample checks did not identify any instances of fraudulent payments, we consider this to be a fundamental detective control, as the absence of these reconciliations could result in fraudulent payments, which are not linked to an application, being raised and paid and not being identified. When a decision is made to award an SWF crisis grant, the decision maker records the application reference, applicant name and phone number and voucher value on a Paypoint spreadsheet. Twice daily, one of the decision makers conducts a Paypoint upload to request the Paypoint vouchers and once complete, receives a report and confirms that all requested payments have been successfully processed. No separate checks are undertaken to confirm the accuracy of the information on the Paypoint spreadsheet to ensure that the details recorded relate to the correct people for the correct amount prior to the Paypoint voucher being raised. Implication Recommendation Priority Management response Implementation Month/Year If reconciliations are not undertaken regularly, there is an increased risk that errors and fraudulent payments will not be identified promptly which can result in a delay in corrective action being undertaken, causing unnecessary strain on the SWF fund. The Chief Officer (Finance) should: (1) as a matter of priority, ensure that reconciliations between Paypoint and Civica are undertaken on a regular and timely basis and are supported by documentation which has been updated to reflect any issues identified and actions taken and has been signed and dated as prepared and checked by a second officer, and. (2) review the current Paypoint upload process and consider whether there is scope to enhance existing processes to include additional second officer checks on Paypoint upload spreadsheets prior to upload to ensure that each voucher requested contains the correct telephone number and amount as per the application. High Agree Greg Telfer, Business Finance Manager (1) The Service will introduce a reconciliation between Civica and the Paypoint spreadsheet. (2) The Service will introduce additional second officer checks on awards recorded on the Paypoint upload spreadsheets. November 2024 Page 303 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 4 3. Action Plan Scottish Welfare Fund 0200/2025/001 Ref Finding 2 There is a need to improve the Council’s SWF Guidance Manual and decision-making template to ensure that individual applications are processed in a consistent and effective manner. Internal Audit last reported on SWF management arrangements in October 2021, where we identified a need to develop and implement a decision-makers handbook/operating guidance to supplement the Scottish Government SWF guidance, to reflect the Council’s own systems and operational practices and expectations. We recommended that this guidance should include reference to all the Council’s expected processes, documentation and system screens which should be checked/completed by staff as part of the decision-making process. We were pleased to note, during this review, that an SWF Guidance Manual has now been developed and is available to decision makers for use in conjunction with the Scottish Government Guidance. From our review of this guidance, we noted that it includes reference to various aspects of the SWF process, including logging applications received via telephone, a process map for decision making, payment of awards and the review process. We consider, however, that it could be enhanced to provide more sufficient guidance in relation to: • the Council’s expectations on the minimum required eligibility checks, as agreed by management, that should be undertaken to source documentation to confirm and evidence the identity (e.g. name, address) and low income status of applicants prior to assessing the application and making an award decision (e.g. to the council tax system and Searchlight); • the additional checks that should be undertaken where the minimum checks are insufficient to confirm identity and may be indicative of fraud; • details of the documentary evidence which should be obtained and held on file to support an application; • the use and content of diary notes to clearly state the checks undertaken, how eligibility was confirmed, details of any conversations with the applicant and any additional information obtained and considered; • guidance on priority levels and how, when there is greater demand on the fund than resources available, this should be applied to individual applications; • potential indicators of fraud, how these can be identified and the action required should a potentially fraudulent application be detected; and • the requirement to communicate decisions made on crisis grants to applicants immediately. The Scottish Government guidance includes a template for recording decisions on SWF applications to ensure that all applications are processed consistently. The SWF Team has created two templates (one for crisis grants and once for community care grants) to record information in relation to the application, decision and the rationale for the decision. These templates are generally reflective of the template provided by the Scottish Government, however, it is considered that there is scope for improvement by having specifically clearly titled sections which are consistent with the Scottish Government template and providing additional guidance on the information that should be recorded in each section. We also noted that some of the recommended sections were omitted from the template for community care grants (i.e. reference to information which has been disregarded, how the applicant has been given the opportunity to put their case, other support offered and other documentation or information relevant to the application). We also undertook substantive testing on a sample of crisis grants and community care grants which were awarded, declined and refused and noted the following issues: • a number of grants where the decision-making template had not been used; • a lack of information recorded in diary notes to detail how identity and income checks had been verified (generally only stated ‘confirmed’); • a lack of confirmation that checks had been undertaken to confirm whether the applicant was in receipt of a hardship payment; • no confirmation of the assessed priority level, how the priority matrix had been applied or the reasons for the priority assessment made; and • in relation to the level of award, instances where the decision maker had not detailed their workings to establish the grant available based on the applicant’s circumstances, the incorrect assessment criteria (e.g. single applicant assessed as couple) had been used and the award amount had not been adjusted to deduct child benefit. Page 304 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 5 3. Action Plan(continued) Scottish Welfare Fund 0200/2025/001 Implication Recommendation Priority Management response Implementation Month/Year Procedural documentation prepared by the Service may not provide adequate guidance which could result in decision makers processing applications inconsistently and ineffectively. There is a risk of non-compliance with best practice and statutory requirements should the Council fail to maintain a robust audit trail of grant award decisions. If inadequate levels of information regarding grant award decisions are recorded, the Council may not be able to justify the reasons for such decisions. The Chief Officer (Finance) should ensure that a review of the SWF Guidance Manual and templates for both crisis grants and community care grants is undertaken and thereafter updated to ensure that they cover all relevant aspects of the Scottish Government guidance and provide appropriate personalisation to incorporate the Council’s own practices and processes (including, but not limited to, those stated in the finding above). Any updated guidance and templates should be issued to all staff, in conjunction with appropriate training, to ensure that all staff are fully aware of the expected procedures and processes. Medium Agree Greg Telfer, Business Finance Manager A comprehensive review of the Scottish Welfare Fund guidance is already underway and will incorporate all aspects highlighted within the findings above. Once complete, the revised guidance will be relaunched with staff, in conjunction with additional training, to reinforce the key messages. January 2025 Page 305 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 6 3. Action Plan (continued) Scottish Welfare Fund 0200/2025/001 Ref Finding 3 There is a need to review and reassess the purpose of, and process for, undertaking second officer checks to ensure that it provides a robust compliance framework. Given the nature of how SWF grants are assessed, with no requirement for decisions to be authorised or checked prior to awards being made, and the short target timescales for making award decisions (particularly for crisis grants), it is important that a robust compliance framework is in place to provide assurance that applications are processed consistently, decisions are made in line with guidance and awards are made to the correct person for the correct amount. One method for providing such assurance is undertaking second officer checks on a sample of applications processed. We were pleased to note that second officer checks are undertaken for a random sample of crisis grants, with details of the applications selected for review recorded on a spreadsheet and the outcome of the individual checks being recorded on an ‘SWF Staff Audit’ checklist which is attached to the applicant’s record on the Services document management system (Workflow 360). From our review of the spreadsheet and checklist, we consider that improvements could be made and as such there is a need to reassess the purpose of, and process for, undertaking second officer checks to ensure that they are meaningful and assist in identifying inconsistencies in decision making and common issues for facilitating future training and service improvement. Aspects which should be considered include: • the number of applications subject to a second officer check and how these are selected to ensure that they are proportionate to the number of applications processed and contain a sufficient mix of decision makers; • analysis of second officer checks completed to identify trends and issues which can be used to inform training requirements, enhance processes and develop sample selection for future periods to facilitate a more risk-based approach; • who is best placed to undertake the checks, to ensure that such officers are sufficiently experienced and empowered to identify areas where expected practice has not been observed and provide appropriate feedback to adequately inform future training needs of individual staff; • a review of the spreadsheet for recording the checks undertaken to ensure that, against all applications listed as checked, it also records who undertook each check and when it was undertaken, whether any issues were identified and what these were and details of any resultant actions, together with progress of these actions; and • a review of the ‘SWF Staff Audit’ checklist for recording the outcome of second officer checks, and preparation of guidance to assist officers undertaking these checks, to ensure that there are clear expectations on the checks required, including review of diary notes to confirm that the application template has been fully and properly completed and the decision made is clearly justified. We were also advised by the Service that they previously undertook second officer checks for the community care grants awarded via the SWF, however, these have not been undertaken since September 2023. We consider that these checks should be re-instated. Implication Recommendation Priority Management response Implementation Month/Year The absence of adequate second officer checks could lead to grant awards being awarded inconsistently and/or for the incorrect amount and/or to the incorrect person and any errors or issues may go unnoticed and may be replicated in other applications. The Chief Officer (Finance) should: (1) review and reassess the purpose of, and process for, second officer checks, for both crisis and community care grants, to ensure that they are meaningful and assist in identifying inconsistencies in decision making and common issues for facilitating future training and service improvement. This should cover all aspects included in the finding above; and (2) re-instate the second officer checks for community care grants. Medium Agree Greg Telfer, Business Finance Manager (1) The Service will undertake a full review of the current second officer check process to improve its fitness of purpose and support the identification of further training and development requirements for staff. (2) Second officer checks for community care grants have now been re-instated but will be further reviewed in light of (1) above. December 2024 Page 306 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 7 3. Action Plan (continued) Scottish Welfare Fund 0200/2025/001 Ref Finding 4 Management should undertake checks on information for inclusion in committee reports prior to submission. From the audit work undertaken, including discussions with the Business Finance Manager and review of Committee reports, we consider that the management arrangements for dealing with situations where demands on the SWF funds are greater than available resources are generally effective. Where financial monitoring of SWF spend indicates a likely overspend of the fund, this is discussed by senior management to determine whether there is a need to change the priority for awarding grants. These discussions consider the wider objectives of the Council with regards to tackling poverty and the need for the fund against the anticipated overspend, and whether this can be managed through underspends in other areas, to ensure that the Council can continue to help those most in need. We did note, however, that the Business Finance Manager only receives information in relation to SWF spend and levels of applications and awards made on a quarterly basis for reporting to Committee and were advised that no checks are undertaken to confirm the accuracy of these figures prior to inclusion in the committee report. The documentation provided to Internal Audit to support the figures contained in the Committee report for September 2024 did not agree to the reported figures, with the total financial value of grants paid from the SWF being up to 15% overstated in the Committee report than on the supporting documentation. Implication Recommendation Priority Management response Implementation Month/Year Senior management and elected members may be provided with incorrect data around the demand on SWF grants and available funds which may result in ill- informed decisions. The Chief Officer (Finance) should ensure that checks on the validity of data in relation to SWF grants is undertaken prior to inclusion in committee reports. Low Agree Greg Telfer, Business Finance Manager Additional checks will be introduced to ensure the accuracy of data being reported to Committee. October 2024 Page 307 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 8 3. Action Plan (continued) Scottish Welfare Fund 0200/2025/001 Ref Finding 5 There is scope to enhance fraud checks in relation to SWF applications. Given the inherent risk of fraud in the SWF, we consider it prudent for the Service to consider mechanisms to identify key themes and trends for fraud awareness raising to enable staff to be more vigilant of the likelihood of fraud when assessing applications and making decisions on awards. We noted that the Service’s risk register does not currently include any entry regarding fraud in the SWF and consider this to be a good mechanism for the Service to identify potential fraud risk areas, controls and actions required to mitigate these. We were advised by the Service that two records of fraudulent applications are held, one detailing fraud identified internally, and one detailing fraud reports received from other local authorities. From our review of the internal record, we noted that it only contains the personal details of the claimant and does not detail the application reference, reasons for being considered fraudulent, how the case was identified and whether any resultant actions are required/have been taken. We also noted that this record only contains five entries, including only one of the 11 fraudulent applications identified as part of recent investigation work. Whilst the record of externally notified frauds is more comprehensive and captures more information relating to each instance of fraud, it does not detail the actions taken by the Service to investigate any similar occurrences within NLC. Implication Recommendation Priority Management response Implementation Month/Year There is a risk that future instances of fraud may go undetected should there be an insufficient lessons learned process following historic instances of fraud. The Chief Officer (Finance) should: (1) by referring to the Council’s risk management strategy, develop a risk in relation to fraud for SWF for inclusion in the Service’s risk register; and (2) review and update the records of internally and externally identified fraud to ensure that they are a complete and comprehensive source to inform staff of potential areas of fraud. Low Agree Greg Telfer, Business Finance Manager (1) The Service will review its current risk register to ensure an appropriate risk is developed and included in the service risk register. (2) The Service will review the fraud recording process to ensure it is comprehensive and helps feed back into the training and development requirements of the team. January 2025 Page 308 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2024-25/0200.2025.001 - scottish welfare fund/a - findings & report/a06a 20241002 swf final report (as issued).docx 9 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 309 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/unplanned work/2024-25/council tax refund fraud (aberdeen city council)/a - findings and report/a06a 20241002 council tax refunds - final report as issued.docx INTERNAL AUDIT REPORT COUNCIL TAX REFUNDS Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Chief Officer (Finance) and Business Finance Manager Copied to: Chief Executive Headlines This review was a short, focussed exercise designed to provide assurance that the Council’s financial controls and processes in place for making refunds to council tax ratepayers are sufficiently robust to ensure that refunds are correctly raised, authorised and paid. This exercise has been carried out in response to an incident at Aberdeen City Council whereby a Team Leader within the council tax team was identified, and convicted, of embezzling more than £1m from council tax refunds. In the period January to June 2024, the Council has processed over 5,000 council tax refunds across many liability years amounting to over £900,000. All refunds are paid via the creditors system with 55% of these paid by bank transfer and 45% by cheque sent to the ratepayer’s address. Established processes are in place within the council tax team to identify, review and process refunds to council tax ratepayers. We have categorised this audit as offering ‘reasonable assurance’ as we are generally satisfied that the arrangements in place for processing council tax refunds are generally robust. From our review of a sample of requests for Cedar references and refunds paid, we were pleased to note that the processes in place are consistent with the expected procedures, and we consider that all refunds reviewed were made to the correct ratepayers for the correct amount. Although there is no indication of any fraudulent activity in relation to council tax refunds, we identified a gap within the current control environment that could lead to the potential for a fraudulent payment to be made. As such, we have identified some areas where the processes in relation to council tax refunds and requests for creditors references could be strengthened to further enhance the controls in place. These are detailed in the action plan at section 3 of this report for management consideration. Internal Audit Opinion (see definition at Appendix 1) Reasonable Assurance (Green-Amber) Organisational impact (see definition at Appendix 1) Moderate Report Status FINAL Audit Ref 0200/2025/004 Date issued 02/10/2024 Audit Team Elaine MacDonald and Lesley Armstrong Page 310 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/unplanned work/2024-25/council tax refund fraud (aberdeen city council)/a - findings and report/a06a 20241002 council tax refunds - final report as issued.docx 1. Executive Summary Objectives The purpose of this exercise was to gain assurance that the Council’s financial controls and processes in place for making refunds to council tax ratepayers are sufficiently robust, and considered the following key areas of potential risk: • how, and by whom, bank details on council tax ratepayers’ accounts can be amended and updated; • whether amendments/updates to ratepayers’ bank details need to be authorised or verified by a second officer; • how, and by whom, overpayments are flagged for refund, and any limitations on the value of refunds permitted; and • whether there are any second officer checks on proposed refunds, including adding or deleting approved refunds, and the extent to which this process ensures bank details are correct prior to the refund being made. Testing involved establishing the processes and procedures in place for identifying, raising, authorising and paying refunds on council tax accounts and sample checking to confirm whether these processes were operating as expected. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 0 1 0 Key areas requiring management action (High) No areas requiring urgent management action were identified. Good practice identified We noted the following areas of good practice during the audit: • Refunds are only made where an overpayment on a taxpayer’s account has been verified as properly due and that there are no other outstanding balances in the taxpayer’s name against which to offset the overpayment; • All refunds are processed via the creditors system in eFinancials and a Cedar reference must be created for each council tax ratepayer to enable these payments to be made; • All users flagging council tax accounts for refund were recognised council tax staff with suitable authority to do so; and • Prior to each refund payment run being made, a prelist report of refunds due is run and reviewed for accuracy, and any adjustments to delete proposed refunds are made. A final revised extract is then produced and sent to the Creditors team, together with an email from an authorised signatory, for payments to be processed. Other areas for improvement (Medium) Other areas for improvement were identified: • processes in relation to council tax refunds and requests for creditors references could be strengthened to further enhance the controls in place. Page 311 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/unplanned work/2024-25/council tax refund fraud (aberdeen city council)/a - findings and report/a06a 20241002 council tax refunds - final report as issued.docx 3. Action Plan Council tax refunds 0200/2025/004 Ref Finding 1 Processes in relation to council tax refunds and requests for creditors references could be strengthened to further enhance the controls in place. Refunds on council tax accounts with credit balances are generally raised as a result of a change in the circumstances which has resulted in a reduction in their council tax liability or where the account has a credit balance and the ratepayer has requested a refund. In cases where a refund is properly due, council tax staff ‘flag’ the ratepayer’s account as being due a refund, and as refunds are processed through the creditors system, checks whether the ratepayer has a creditors (Cedar) reference. Where the ratepayer does not have an existing Cedar reference, council tax staff record the personal details of the ratepayer (including bank details) on a spreadsheet. On a weekly basis, the Team Leader checks the details on this spreadsheet to Civica and passes it to Creditors, who subsequently create and advise on the Cedar reference allocated. Upon confirmation of the Cedar reference, the council tax team records the Cedar reference on Civica. Twice weekly, a list of refunds flagged on the council tax system is generated and reviewed by a council tax officer. Once this check is confirmed a payment file is generated and a feeder authorisation is sent to Creditors to process the refunds flagged as being due for payment. From our review of a sample of requests for Cedar references and refunds paid, we were pleased to note that the processes in place are consistent with the expected procedures and that we consider that all refunds were made to the correct ratepayers for the correct amount. However, we identified some areas where we consider that the processes could be strengthened to further enhance the controls in place. These include: • although the council tax procedures manual includes a section on refunds, it could be enhanced by more fully detailing all aspects of the refund process and the expected checks required at key stages; • the spreadsheet used for requesting Cedar references (which records name, address and bank details) is accessible to, and can be amended by, a significant number of council tax staff; • there is a lack of separation of duties in the refund process as council tax staff are involved in each step and have the ability to update a ratepayer’s bank details on Civica, flag a ratepayer’s account for refund on Civica and populate the spreadsheet for requesting Cedar references; • although a list of ratepayers’ accounts flagged for refund are subject to review by a second officer before they are passed to Creditors for payment, there is no threshold applied to the refund value above which additional management checks or ‘authorisation’ by management is specifically required; • we understand that a Team Leader undertakes checks on the details entered on the spreadsheet used for creating Cedar references to the details held on Civica prior to passing the spreadsheet to Creditors, but no documentation regarding this is retained; and • when an overpayment is identified on a ratepayer’s account, no checks to ascertain whether there have been any recent changes to the bank account details are undertaken prior to marking the account for refund nor is a check on bank detail amendments made when the Team Leader reviews the Cedar references spreadsheet. (continued overpage) Page 312 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/unplanned work/2024-25/council tax refund fraud (aberdeen city council)/a - findings and report/a06a 20241002 council tax refunds - final report as issued.docx Implication Recommendation Priority Management response Implementation Month/Year Payment details passed to Creditors to create new cedar references and creditor accounts could be changed with the purpose of diverting refunds to another party. System users having access to multiple aspects of the refund process increases the risk of fraudulent refunds being made. The Chief Officer (Finance) should ensure that: (1) a review of the process for council tax refunds is undertaken and thereafter the council tax procedures amended and communicated to council tax staff. This review should include, but not be limited to: • restricting access to the spreadsheet for recording requests for creditor’s references; • identification of the stages involved and consideration of where adequate separation of duties could be introduced; • consideration of the introduction of a documented authorisation process for requesting refunds where the value of the refund is significant; • the checks which should be undertaken prior to flagging a ratepayer’s account for refund, including outstanding debt and whether the ratepayer’s bank details have recently been changed; and • the process for undertaking second officer checks on the creditor reference request spreadsheet prior to passing to Creditors for actioning, including retention of documentation confirming the checks undertaken, by whom and when. (2) explore if any exception reports regarding relevant areas, such as bank detail changes, can be generated and thereafter reviewed by management to ensure that any changes made are legitimate and supported by appropriate documentation. Medium Agree Greg Telfer, Business Finance Manager (1) The Service will conduct a review of the current refund process giving due consideration to issues raised by Internal Audit, with amendments made as appropriate/necessary. (2) In conjunction with the Business Development and Performance team, the Service will review the availability of exception reporting through Civica for the relevant areas and assess whether these be used to support additional checks. January 2025 Page 313 of 412
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/unplanned work/2024-25/council tax refund fraud (aberdeen city council)/a - findings and report/a06a 20241002 council tax refunds - final report as issued.docx Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 314 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 1 INTERNAL AUDIT REPORT COMPLIANCE WITH ESTABLISHMENT FUND ARRANGEMENTS Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Chief Officers (Education and Families) Copied to: Chief Executive and Depute Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s approach and management arrangements for reviewing schools’ compliance with expectations around the use and management of school funds, including determining and assessing progress made in developing and implementing the compliance framework. Many educational establishments operate ‘Establishment Funds’ (otherwise known as ‘School Funds’) in addition to their delegated school budget. Although school funds are not Council funds, the Council has a responsibility to ensure adequate stewardship of these monies. As such there is an Educational Establishment Fund Financial Procedures manual, which Heads of Establishment have received and are required to adhere to. Over the course of the last two years, there have been repeated audit outputs, detailing the outcome of reviews/investigations regarding anomalies and issues arising relating to the management of school funds and recommendations made in respect of this. Following a request from the Audit and Scrutiny Panel, the Chief Officer (Education and Families - North) presented a report to the February 2024 meeting of the Panel where he committed to the Service developing a framework to review and confirm individual establishments’ compliance with the procedures, including annual compliance submissions and spot checks on a sample of establishments. We were pleased to note that the Service has devised such a framework and that following an instruction issued to Heads of Establishments, required documentation (compliance checklist, annual Income and Expenditure Statement and Independent Reviewers’ Reports) was submitted to Education HQ by 78% of the educational establishments. However, based on the results of our work, together with our wider knowledge gained from previous Internal Audit work undertaken in this area, we have assessed this audit as providing only ‘limited assurance’. We consider the framework developed by the Service to be lacking in both detail and guidance in respect of the means to measure compliance, address identified areas of non-compliance and report thereon to senior management. In addition, we noted that there have been no detailed checks carried out on the documentation submitted to confirm individual establishments’ compliance, or otherwise, with the procedures. We appreciate, however, that there have been other, more pressing, priorities within the Service and that, as a result, the Service have not had sufficient resources to fully progress these actions. As a result, we consider that until a fully developed compliance framework is implemented, the control environment remains weakened, leaving the Service exposed to potentially significant risk. We have identified areas for improvement, which are detailed at Section 3 of this report and these include: • a need for the Service to further develop the Compliance Framework to clearly document how it plans to effectively monitor schools’ compliance with the Educational Establishment Fund Financial Procedures and thereafter address issues identified with the individual establishments; and • a lack of information reported to senior management within the Service with regards to educational establishments’ compliance with the Establishment Fund Financial Procedures. Internal Audit Opinion (see definition at Appendix 1) Limited Assurance (Amber-Red) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0450/2025/002 Date issued 10/10/2024 Audit Team Lynn McCrum and Paula Hendry Page 315 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s approach and management arrangements for reviewing schools’ compliance with expectations around the use and management of school funds, including determining and assessing progress made in developing and implementing the compliance framework. The review sought to offer an audit opinion on the following: • Has the Service developed a framework to assess the extent to which Heads of Establishment are complying with the Establishment Fund Procedures and does it cover all relevant aspects of the procedures? • For the initial submissions by establishments (required by January 2024) have these been reviewed in line with the requirements of the compliance framework established by the Service? • Are there plans in place to monitor and review annual returns by establishments, identify areas for further checking and undertake targeted sampling to ensure procedures are being adhered to? • Are there arrangements in place to identify any areas of non-compliance and ensure that these are recorded and actioned promptly? • Are the results of the compliance framework reported to senior management on a timely basis? This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 1 1 1 Key areas requiring management action (High) The following key area requiring urgent management action has been identified: • There is a need for the Service to further develop the Compliance Framework to clearly document how it plans to effectively monitor schools’ compliance with the Educational Establishment Fund Financial Procedures and thereafter address issues identified with the individual establishments. Good practice identified We noted the following areas of good practice during the audit: • The Service have an Educational Establishment Fund Procedures manual in place which provides guidance and expected practice to establishments in the administration of school funds. • The Service have developed an Establishment Fund Compliance Framework to ensure that establishments are complying with the Service’s Educational Establishment Fund Financial Procedures. • An instruction to submit a Compliance Checklist, Annual Income and Expenditure Statement and Independent’s Reviewer Report to Education and Families HQ was issued to all Heads of Establishment, by the Chief Officer (Education – North). • An initial review of the documentation received from the establishments was undertaken to ensure that the required documentation had been returned. The Education and Families Managers were alerted where documentation remained outstanding and requested to follow this up with the individual establishments. Other areas for improvement (Medium) One other area for improvement was also identified: • There was a lack of information reported to senior management within the Service with regards to educational establishments compliance with the Establishment Fund Financial Procedures. Page 316 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 3 3. Action Plan Compliance with Establishment Fund Arrangements 0450/2025/002 Ref Finding 1 There is a need for the Service to further develop the Compliance Framework to clearly document how it plans to effectively monitor schools’ compliance with the Educational Establishment Fund Financial Procedures and thereafter address issues identified with the individual establishments. Over the course of the last two years, there have been repeated audit outputs, detailing the outcome of reviews/investigations regarding anomalies and issues arising relating to the management of school funds and recommendations made in respect of this. Progress on action taken to address these recommendations and associated agreed management actions have been tracked as part of Internal Audit’s follow-up process. Following a request from the Audit and Scrutiny Panel, the Chief Officer (Education and Families - North) presented a report to the February 2024 meeting of the Panel where he committed to the Service developing a framework to review and confirm individual establishments’ compliance with the procedures, including review of an annual Compliance Checklist, completed by each Head of Establishment, and spot checks on a sample of establishments. A Compliance Framework has been developed to ensure compliance with the Service’s Educational Establishment Fund Financial Procedures across the Council’s educational establishment network. The Framework consists of five components (Governance and Reporting; Risk Management; Operational Policy; Monitoring and Testing; and Communication and Training) which are part of a continual process for ensuring compliance across the Service. While there is some detail provided in respect of each of the components, we consider this to be brief and it does not provide adequate detail or guidance to the reader on what steps require to be taken, and by whom, to determine the extent to which the Heads of Establishment are complying with the Establishment Fund Procedures (this includes: detail in respect of who will monitor submission of returns; how these will be recorded; what checks will be carried out on the documentation submitted to ensure compliance; what the protocol is for those establishments who have either not returned the required documentation (either in full or in part) or where queries/issues and/or areas of non-compliance have been identified/raised with the documentation submitted). The Compliance Framework does reference that testing of year-end compliance returns will be undertaken on a sample of establishments based on testing guidance from Finance but there is no further detail provided in relation to this and, to date, we understand that no discussions have been held with Finance in this respect. There is also no documented programme in place to schedule and undertake targeted sample checks on the documentation submitted by the establishments either in the current or future years. As part of the Service’s monitoring arrangements, an instruction to submit a Compliance Checklist, Annual Income and Expenditure Statement and Independent’s Reviewer Report for session 2022-23 to Education and Families HQ by January 2024 was issued to all Heads of Establishment, by the Chief Officer (Education – North). As of June 2024, the Service have reported that 78% of establishments have submitted the required documentation in full. We noted the following in respect of the returned documentation: • The Service have carried out basic checks to ensure that the documentation returned by the establishments was for the correct year, fully completed and in the correct format; • There has been no detailed guidance/instruction on the level of checks which require to be carried out on the submitted documentation; • A log of issues identified during checks carried out by the Service and/or recorded on the documentation by the Head of Establishment and/or Independent Reviewer has been compiled but there has been no detailed analysis or follow-up action taken to further investigate or address these issues or requests for assistance identified by the establishments. Such issues include: incorrect format; incorrect year; irreconcilable differences; establishment fund being poorly managed by previous administration etc.; and • There were no detailed checks undertaken to measure compliance either on the documentation received or at a sample of establishments. We understand that the Service intends to undertake more detailed testing on the 2023-24 documentation which is due for submission in October 2024. The level and extent of such testing has still to be determined and will be dependent on the availability of resource. Page 317 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 4 3. Action Plan (continued) Compliance with Establishment Fund Arrangements 0450/2025/002 Implication Recommendation Priority Management response Implementation Month/Year The absence of adequate oversight/monitoring of schools’ compliance with the Council’s Educational Establishment Fund Procedures may result in areas of non-compliance going undetected and/or increase the risk of fraud or misappropriation of funds. Unless establishments are notified of areas of non-compliance and/or the Service take action to address these issues there is a high probability that these errors and/or malpractices will be carried forward and repeated in future years which increases the potential risk of theft or misappropriation of funds. The Chief Officers (Education and Families – North and South) should ensure that action is taken to further develop each of the five components within the Compliance Framework for the Service to ensure compliance on the operation and management of Establishment Funds across educational establishments. This should include, but is not limited to, specific detail and/or guidance regarding the following: • who will monitor submission of returns by Heads of Establishment and recording and tracking of this; • the initial checks required to be undertaken on these submissions, by whom and the recording of the outcome; • determination of a proportionate risk-based programme which clearly documents how the Service will identify and thereafter undertake targeted sample checks at establishments to verify compliance with the Educational Establishment Fund Procedures; and • the protocol for action to be taken on those establishments who have either not returned the required documentation (either in full or in part) or where issues/areas of non-compliance have been identified with the documentation submitted. High Agree Barry Smedley, Chief Officer (Education and Families – South) The compliance framework will be reviewed and updated to incorporate the Service’s approach, including the points as referenced in the recommendation and outlined below: • exploring the introduction of an electronic system to collate annual returns from schools; • consulting with Internal Audit on the questions and information to be submitted in annual returns; • adopting a risk-based response to compliance omissions and breaches which will take cognisance of the relative importance of issues raised and available staffing resources; and • Education Managers and Senior Education Managers will oversee the monitoring and review of headteacher/ school adherence to Establishment Funds procedures on a cluster basis. December 2024 Page 318 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 5 3. Action Plan (continued) Compliance with Establishment Fund Arrangements 0450/2025/002 Ref Finding 2 There was a lack of information reported to senior management within the Service with regards to educational establishments compliance with the Establishment Fund Financial Procedures. The Compliance Framework established by the Service sets out an expectation that there will be reporting on compliance with the establishment fund procedures to both the Education and Families Finance and Resources Group and the Education and Families SMT. As reflected in the finding at 1 above, there is a lack of detail with regards to frequency or content of such updates. During our review, we confirmed that two such updates have been provided to the Education and Families Finance and Resources Group. The March 2024 update indicated a low response rate which resulted in an action being created that communication was to be issued to the Heads of Establishment explaining that failure to return completed documentation would result in their school fund being suspended. The June 2024 update provided a copy of the Compliance Framework. No actions or identification of next steps arising from this were recorded on the Group’s action log. In June 2024 an update report was provided to the former Senior Education and Families Manager which recorded that 78% of establishments had fully submitted the requested documentation. There is no evidence to demonstrate that the information from this report was thereafter disseminated to the Education and Families Finance and Resources Group and neither the agenda nor action log reference an update being provided to this meeting. Implication Recommendation Priority Management response Implementation Month/Year The absence of regular, accurate and timely reporting may mean that senior management are not made fully aware of the extent of establishments’ compliance with the Establishment Fund Financial Procedures. The Chief Officers (Education and Families - North and South) should determine, and formally document, the frequency and content (i.e. level of returns submitted by establishments and results of compliance checks undertaken including issues identified, proposed actions and progress to address issues) of information which requires to be provided to Service management with regards the establishment fund Compliance Framework. Medium Agree Barry Smedley, Chief Officer (Education and Families – South) Summary information generated via the annual returns will be submitted to the Service SMT on an annual basis. Additional reports on the performance of individual schools will be submitted to SMT on an exceptions basis. If a school fails to return compliance information or it is determined an establishment is not adhering to the relevant fund guidance the SMT will take appropriate action up to and including the potential suspension of a school fund account. December 2024 Page 319 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 6 3. Action Plan (continued) Compliance with Establishment Fund Arrangements 0450/2025/002 Ref Finding 3 There is a need for the Educational Establishment Fund Procedures to be amended to reflect the need for additional information to be provided to support the cash and bank balances declared by establishments in their Annual Income and Expenditure Statement. As part of the Service’s monitoring arrangements, an instruction to submit a Compliance Checklist, Annual Income and Expenditure Statement and Independent’s Reviewer Report for session 2022-23 to Education and Families HQ by January 2024 was issued to all Heads of Establishment, by the Chief Officer (Education – North). Following a recommendation made in a recent Internal Audit report, the Service had committed to requesting that Heads of Establishment submit a breakdown of the cash and bank balance which make up the closing balance on their Annual Income and Expenditure Statement to Education Central Support, together with a copy of both the bank reconciliation at the end of the session and the corresponding bank statement. This request was not made and thus this information was not received from the Heads of Establishment for the period under review. The Service have, however, advised that going forward, for session 2023-24 onwards, the Annual Income and Expenditure Statement will be amended to include the cash in hand and reconciled bank balance and the Educational Establishment Fund Financial Procedures will thereafter be updated to reflect this and the need for both the bank reconciliation at the year end and the corresponding bank statement to be submitted to Education Central Support with the year- end documentation. Implication Recommendation Priority Management response Implementation Month/Year The absence of adequate oversight/monitoring by Education and Families HQ of schools’ compliance with the Council’s Educational Establishment Fund Financial Procedures may result in areas of non-compliance arising which could lead to weaknesses and consequently result in an increased risk of theft or misappropriation of funds. The Chief Officers (Education and Families – North and South) should ensure that for upcoming submissions for session 2023-24 and annually thereafter: (1) the Annual Income and Expenditure Statement contained within the school fund guidance is amended, to include the requirement to record the cash in hand and bank account balance at the year-end (which supports the surplus/deficit for the year and resultant carry forward balance); and (2) the Procedures are amended to include the requirement for Heads of Establishment to provide a copy of the bank reconciliation at the year-end together with a copy of the corresponding bank statement. Low Agree Barry Smedley, Chief Officer (Education and Families – South) The Service will amend the Income and Expenditure Statement and Establishment Fund Procedures to incorporate the requested changes for financial year 2024/25 onwards. The Service will also undertake a review of the Establishment Fund procedures on a minimum 3 yearly cycle. In the interim correspondence will be issued to Heads of Establishment advising them of the compliance requirements for financial year ended 2023/24 including the information described in 1 and 2. March 2025 Page 320 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0450.2025.002 - Compliance with Establishment Fund Arrangements/A - FINDINGS AND REPORT/A05 20240924 Compliance with Establishment Fund Arrangements Final Report v1.0.docx 7 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 321 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 1 INTERNAL AUDIT REPORT SOCIAL WORK – QUALITY ASSURANCE ARRANGEMENTS Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: (where applicable) Issued to: Chief Officer (Planning, Performance and Quality Assurance and Senior Manager (Quality Assurance) Copied to: Chief Executive and Depute Chief Executive Headlines The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s quality assurance arrangements in relation to the provision of social work and social care services. The Council has a responsibility for providing and/or commissioning a range of social care services across a wide range of functional areas. The role of Social Work’s Quality Assurance function is intended to assist in ensuring and facilitating the delivery of high-quality services through effective business planning, maintaining quality standards and undertaking a range of activity designed to ensure that any issues arising with the provision and/or standard of care are identified and that appropriate action is taken to remedy any such issues identified. The Service’s previous contract monitoring arrangements were reviewed with a refreshed Contract Management Framework for external providers implemented in April 2023. This framework details the approach to be taken to effectively manage purchased care and support services across to ensure that the appropriate quality of care is delivered. Arrangements for extending the Quality Assurance Team’s remit to include monitoring services provided internally by the Council are currently being piloted. We undertook an assessment of the Service’s arrangements against good practice set out in the Scottish Government/COSLA Guidance on the Procurement of Care and Support Services (2021) and also carried out testing on a sample of the Service’s monitoring files to assess the extent to which monitoring activity had been undertaken in accordance with expected practice. We noted that the Service continues to evolve and develop its contract management arrangements and there were some areas during the audit where further development activity by management was underway. As these areas were still in development phase, no specific audit testing was undertaken. Based on the results of our audit work, we have categorised this audit as offering ‘reasonable assurance’. We are satisfied that the Services arrangements for monitoring external care providers is generally sound and broadly reflects good practice principles and reports have been produced for key stakeholders on the results of the Council’s quality assurance and continuous improvement activities. We are also satisfied that the key expectations set out in the contract management framework are generally being applied in practice, however we have identified several areas where we consider scope for improvement exists and have made a number of recommendations which are detailed at Section 3 of this report and include: • there is a need for the Service’s Contract Management Framework to be reviewed and updated to fully reflect both best practice and actual current working practices; • the Service needs to finalise, and thereafter implement, the monitoring framework for internally provided services; • a need for greater consistency with, and for the Quality Assurance Team to better demonstrate compliance with, expected monitoring arrangements; and • recently revised arrangements to record, monitor and track issues identified and actions arising from monitoring activity need to be reviewed to ensure they are adequate and effective. Internal Audit Opinion (see definition at Appendix 1) Reasonable assurance (Green-Amber) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0510/2025/001 Date issued 14/10/2024 Audit Team Euan Campbell, Lynn McCrum and Lesley Armstrong Page 322 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s quality assurance arrangements in relation to the provision of social work and social care services. The review sought to offer an audit opinion on the following: • Are the Council’s quality assurance arrangements consistent with the Care Inspectorate’s expectations and are they designed to deliver services of the appropriate quality including the prevention of harm to service users? • Have the Council’s quality assurance arrangements, in relation to the provision of social work and social care services, been operated in line with the Council’s own expectations? • Is there clear evidence that the Service takes timely and appropriate action where quality assurance arrangements highlight areas of potential concern? • Is there periodic reporting to key stakeholders on the results of the Council’s quality assurance and continuous improvement activities and their impact on expected outcomes? As part of this review, we have considered whether the service’s arrangements are consistent with the good practice set out in the Scottish Government/COSLA Guidance on the Procurement of Care and Support Services (updated June 2021). Detailed testing was also carried out on a sample of the Service’s monitoring files to assess the extent to which monitoring activity had been undertaken in accordance with expected practice under the Service’s existing monitoring arrangements. The audit was not designed to offer assurance on the performance or quality of independent service providers or individual review activity. This engagement has been conducted in accordance with the ‘Public Sector Internal Audit Standards’. The Internal Audit section reports formally on conformance with these standards to the Audit and Scrutiny Panel. 2. Findings and Recommendations Number and category of recommendations raised (see definition of priority at Appendix 1) High Medium Low 0 4 1 Key areas requiring management action (High) There were no key areas requiring urgent management action identified during the audit. Good practice identified We noted the following areas of good practice during the audit: • The Service has devised a Contract Management Framework which details the approach taken to effectively manage purchased care and support services across all client groups, including key monitoring activities and processes. • The Service undertake more rigorous (increased) monitoring for those providers where issues or concerns have been identified that indicate a need for intervention. The issues, and actions prescribed, are thereafter recorded on a spreadsheet and discussed at weekly team meetings to ensure that corrective action is planned/taken where required. • A Monitoring Prioritisation Assessment (MPA) provides a tool to enable Senior Officers to assess the level of risk associated with each commissioned service and thereafter determine the level of monitoring activity to be assigned. • Quarterly performance reports for commissioned services are presented to the Senior Leadership Team, with an annual performance report thereafter submitted to the Adult Health and Social Work Committee. Page 323 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 3 Other areas for improvement (Medium) A number of other areas for improvement were identified: • there is a need for the Service’s Contract Management Framework to be reviewed and updated to fully reflect both best practice and actual current working practices; • the Service needs to finalise, and thereafter implement, the monitoring framework for internally provided services; • there is a need for greater consistency with, and for the Quality Assurance Team to better demonstrate compliance with, expected monitoring arrangements; and • recently revised arrangements to record, monitor and track issues identified and actions arising from monitoring activity need to be reviewed to ensure they are adequate and effective. Page 324 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 4 3. Action Plan Social Work – Quality Assurance Arrangements 0510/2025/001 Ref Finding 1 There is a need for the Service’s Contract Management Framework to be reviewed and updated to fully reflect both best practice and actual current working practices. The Council’s Quality Assurance Team have developed a Contract Management Framework (CMF), and associated appendices, which provides guidance to staff and details the approach to be taken to effectively manage purchased care and support services across all client groups to ensure that the appropriate quality of care is delivered. We assessed the CMF, and associated appendices, against good practice as detailed in the Scottish Government’s ‘Procurement of care and support services: best practice guidance’ (updated June 2021) and, while we noted that the Service’s CMF generally reflects the good practice principles, we identified a number of areas where we consider that the current arrangements could better reflect good practice. This included a need for: • guidance for working in a collaborative setting with other Local Authorities, and taking appropriate action to avoid duplication of work; • reference to be made to key performance indicators and their link to service specification; • reference to be made to the use of action plans to record and track improvement actions; and • clarity around the frequency of reporting to management. From testing undertaken and discussions with relevant officers in the Service, we have concluded that the CMF and its associated appendices do not currently reflect recent developments in working practices (e.g. the introduction of Highlight Reports and subsequent review by the Service Manager; amendments to Monitoring Visit Reports; Quarterly Reports submitted to the Senior Leadership Team etc), and we identified some instances where practices outlined in the guidance are no longer undertaken (e.g. letters issued to providers in respect of the decision to apply or remove increased monitoring and a requirement for two-monthly management reviews for those providers subject to increased monitoring). In addition, we consider there to be a number of areas where the section of the CMF with guidance in respect of increased monitoring requires to be further developed and this includes: the need for clarity around roles and responsibilities of staff involved at each stage of the process; the recording of minutes of meetings and/or discussions with providers and/or service management; and defining the process to be followed for removal of increased monitoring status once the identified issues have been fully resolved. Implication Recommendation Priority Management response Implementation Month/Year If documented arrangements do not fully reflect recognised good practice, this could negatively impact on the quality of care being provided to service users and could lead to the Council potentially facing reputational risk and/or criticism from the Care Inspectorate. Where documented arrangements do not reflect management expectations and/or current working practices, staff may not be fully aware of, and/or carry out, expected practices. The Chief Officer (Planning, Performance and Quality Assurance) should review the current Contract Monitoring Framework, and associated documentation, and make the necessary amendments to ensure that these arrangements: (1) fully reflect best practice; management expectations and current working practices (removing reference to elements no longer undertaken), based on the detail outlined in the finding above; and (2) include the provision of more robust guidance in respect of the roles and responsibilities of staff at each stage of the increased monitoring process. Medium Agree Maria Williamson, Senior Manager The Contract Monitoring Framework and associated documentation will be reviewed in line with the recommendation and will focus on the following: • Modification of the format into specific elements of the procurement journey; • Inclusion of roles and responsibilities; • Purpose of and the arrangements for the completion/review of highlight reports, monitoring visit reports and quarterly performance reports; • Arrangements for management oversight of compliance with contract monitoring; • Removal of elements no longer undertaken; and • clearer guidance on the process for the removal of the enhanced monitoring status. April 2025 Page 325 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 5 3. Action Plan (continued) Social Work – Quality Assurance Arrangements 0510/2025/001 Ref Finding 2 The Service needs to finalise, and thereafter implement, the monitoring framework for internally provided services. In addition to procuring services from care homes and other external providers, the Council also provide services to many people who have been assessed as requiring support using other registered in-house services such as Care at Home, Locality Support, Residential Children’s Homes and Integrated Day Services. The monitoring arrangements for these internally provided services do not currently form part of the remit of the Quality Assurance Team, however, to enhance existing arrangements and support implementation of best practice, the Quality Assurance Team has developed an ‘In-House Monitoring Toolkit/Framework’ to be used for the Council’s internally provided services as detailed in the paragraph above. The role of the Quality Assurance Team is to “develop, implement, monitor and review an internal cycle of continuous self-evaluation, monitoring and triangulation of available evidence within services”. A Test of Change Programme (‘pilot’) across home support services is currently being undertaken to trial this proposed approach to monitoring internally provided services and the intention is that, once this is complete and has been evaluated, refinements will be made to the process before it is rolled out to the other internally provided services. An initial timeline was set, to conclude this pilot by June 2024, however, at the time of our fieldwork in June 2024, it was noted that there had been some slippage, due to the competing demands and high priority activities linked to inspection across home support, therefore this was not yet completed. As the ‘pilot’ for the ‘In-House Monitoring Framework/Toolkit was still ongoing at the time of the audit fieldwork, the documentation contained within the Framework/Toolkit was not considered complete, therefore a critical appraisal has not been undertaken as part of this audit. Implication Recommendation Priority Management response Implementat ion Month/Year Delays in implementation/full roll-out of monitoring arrangements for internally provided services may result in quality issues going undetected which, if they come to fruition, could negatively impact on the Council’s reputation. The Chief Officer (Planning, Performance and Quality Assurance) should ensure that: (1) appropriate action is taken to complete and evaluate the ‘pilot’ in line with the adjusted timescale, and make the necessary refinements to ‘the In-House Monitoring Framework/Toolkit’; (2) the ‘In-house Monitoring Framework/Toolkit’ is timeously rolled out across all internally provided services; and (3) there is periodic reporting to key stakeholders on the results of the quality assurance and continuous improvement activities undertaken for internally provided services. Medium Agree Maria Williamson, Senior Manager (1) Stages 3 and 4 of the Test of Change (“pilot”) will be finalised. Thereafter, a self- evaluation of the In-House monitoring documentation will be undertaken, with refinements made as appropriate. (2) The In-House monitoring framework will be rolled out across the organisation. (3) A subgroup of the ASW Governance group will be established, which will include Registered Managers of our in- house services, to ensure there is a forum for review, self-audit, sharing of good practice and governance. April 2025 May 2025 January 2025 Page 326 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 6 3. Action Plan (continued) Social Work – Quality Assurance Arrangements 0510/2025/001 Ref Finding 3 There is a need for greater consistency with, and for the Quality Assurance Team to better demonstrate compliance with, expected monitoring arrangements. Monitoring activity is recorded within a monitoring spreadsheet/log maintained by the Quality Assurance Team, and the documentation submitted and/or gathered is held within a specific electronic file for each provider on the Service’s SharePoint site. A wealth of information is submitted by the external provider (e.g. quarterly returns) and/or gathered by the Quality Assurance Senior Officer (e.g. Care Inspectorate reports, monitoring visits etc.) which is then analysed to enable the officer to complete a Monitoring Prioritisation Assessment (MPA) to assess the level of risk and thereafter make an informed decision on the level of monitoring which requires to be assigned to each provider. We were pleased to note that, for the sample of providers reviewed, quarterly returns received from providers and MPAs carried out by the Quality Assurance Senior Officers were generally held on file. However, testing carried out highlighted the following issues: • the monitoring spreadsheet/log is not always appropriately and promptly updated to reflect that quarterly returns have been received, MPAs have been completed, monitoring visits have been carried out and monitoring reports completed; • documentation in respect of monitoring activity (e.g. quarterly monitoring returns, MPAs and monitoring visit reports etc) is not saved consistently in the providers’ files on SharePoint, therefore, for the sample of providers reviewed, we were not always able to obtain appropriate documentation to support the level of monitoring undertaken; • there appears to be no central record which records when monitoring returns are due and/or received, or schedules time for Senior Officers to review and analyse the information received and thereafter complete the MPA; and • a diary/calendar has recently been introduced, which appears to solely record monitoring visits and, at the time of the fieldwork being carried out, this was not fully populated. Implication Recommendation Priority Management response Implementation Month/Year Where documentation in respect of monitoring activity is either not received or not easily located on the provider’s electronic file, there is an increased risk that issues arising may not be identified and appropriate action taken to address/rectify these issues. This then has the potential to negatively impact on the quality of care received by service users which may lead to the Council being subject to reputational risk. The Chief Officer (Planning, Performance and Quality Assurance) should ensure that: (1) the monitoring spreadsheet used to record monitoring activity, including quarterly submissions from providers and the level of risk assigned to them by the Senior Officer, is fully and timeously populated to reflect both documentation received and monitoring thereafter undertaken with any gaps in the monitoring spreadsheet identified and appropriate action subsequently taken to follow-these up with the relevant provider and/or Quality Assurance Senior Officer; (2) clear instruction issued to the Quality Assurance Team in relation to how and where documentation in relation to monitoring activity (including, but not limited to, quarterly returns; annual returns; monitoring prioritisation assessments; monitoring visit reports, notes/minutes of meetings with the providers and correspondence thereon) is held on the provider’s electronic file; and (3) consideration is given as to how the Service can better schedule and track when key monitoring returns (including, but not limited to, quarterly returns; annual returns; monitoring prioritisation assessments and monitoring visits) are due and subsequently received/completed. Medium Agree Maria Williamson, Senior Manager (1) Monitoring spreadsheet will be updated on a timely basis and a monthly compliance check will be introduced. (2) New electronic file structure has been introduced and this will be included in the CMF guidance. (3) Central record for timeline of quarterly/annual returns from providers will be devised. This will include deadlines for providers to submit their returns along with a timescale for Senior Officers to analyse and complete the MPA. A system will be developed for Resource Workers to notify service managers of any outstanding quarterly monitoring returns, MPA’s and monitoring visit reports. This system will be in addition to monthly sampling by service managers. April 2025 Page 327 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 7 3. Action Plan (continued) Social Work – Quality Assurance Arrangements 0510/2025/001 Ref Finding 4 Recently revised arrangements to record, monitor and track issues identified and actions arising from monitoring activity need to be reviewed to ensure they are adequate and effective. Given that one of the key purposes of monitoring activity is to identify actions for continuous improvement we reviewed the arrangements for identifying, recording and tracking improvement actions. Our testing of current arrangements highlighted that there is very little detail provided in respect of a formalised process for recording and tracking issues and improvement actions from identification through to resolution. We understand, however, that there have been recent developments made to working practices and that monitoring visit reports have now been updated to include key findings and actions thereafter identified. In addition, we understand that the Quality Assurance Senior Officers are now required to complete a monthly Highlight Report for submission to the Service Manager for review. These reports require to be completed for each provider in the Senior Officer’s portfolio and provide an overview of contract monitoring activity for each, including detail in respect of monitoring visits; explanation when assessed as Tier 3 or Tier 4; progress updates in relation to ongoing pieces of work and detail in respect of engagement and participation. These reports are intended to give the Service Manager an overview of the position, and any issues arising, for all providers. For those providers assessed as high-risk, and thus subject to increased levels of monitoring, the issues identified, and actions prescribed/taken are tracked at weekly meetings and brief detail in respect of the action proposed and/or taken documented on a spreadsheet which is thereafter used to facilitate quarterly reporting to the Senior Leadership Team. We do, however, consider that there remains a need for a formalised action plan with actions tracked and monitored to conclusion for each provider. As these arrangements are relatively new and were not fully operational at the time the fieldwork was carried out, they were not assessed as part of the audit testing undertaken. Implication Recommendation Priority Management response Implementation Month/Year The absence of a formalised action plan increases the risk of issues being unresolved and may in turn lead to the failure to deliver the expected quality of provision. The Chief Officer (Planning, Performance and Quality Assurance) should ensure that: (1) a review of the adequacy and effectiveness of the recently revised arrangements referenced above is undertaken once these arrangements have had sufficient time to be embedded into operational processes; and (2) consideration is given as to whether an action plan, or similar, should be prepared for each provider to formally track and monitor identified issues, prescribed actions and the progress thereon. If deemed necessary, then the action plan should include a responsible officer and target timescales for each identified action. Medium Agree Maria Williamson, Senior Manager (1) Review of highlight reports, monitoring visit reports and weekly monitoring system for tier 3 and 4 services are now standing agenda items at team meetings. We will review the adequacy and effectiveness of this approach once these have had sufficient time to be embedded. (2) An action plan will be added to the Highlight Report template and any actions agreed with providers will be reviewed during the next monitoring visit. A system will be devised for collating outstanding actions and for reporting to service managers on a monthly basis. April 2025 Page 328 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 8 3. Action Plan (continued) Social Work – Quality Assurance Arrangements 0510/2025/001 Ref Finding 5 There is a need for the Service to revisit the method used to risk assess providers and their quality-of-service provision. The Monitoring Prioritisation Assessment (MPA) devised by the Service is a key component of the Contract Management Framework. This document provides an up-to-date position statement on the performance of commissioned contractors and is completed at least a quarterly basis based on the collation and analysis of a variety of information sources such as contract monitoring returns; contract monitoring visits; feedback and reports from the Care Inspectorate; and information gathered from the provider and, where applicable, the locality. Completion of the MPA determines the level of support to be provided and frequency of monitoring to be undertaken. Our review of the tool indicated that whist the ‘risk factors’ appear relevant and useful when used to assess and inform the level of monitoring required, the application of a likelihood and severity as part of a risk scoring doesn’t appear to easily lend itself to being an appropriate mechanism to achieve this. The criteria in place that determines the thresholds for each level of severity is largely subjective in nature or focuses on historical events which make the ‘likelihood’ aspect redundant. There needs to be further consideration given to how the risk factors consistently translate into a priority level and in some cases whether certain factors carry a greater weight than others. We were advised that the Service have also identified limitations with this document and are currently undertaking a review to determine how best it can be updated to reflect the needs of the Service. Implication Recommendation Priority Management response Implementation Month/Year Failure to properly risk-assess the provision of care being provided may result in an inappropriate level of monitoring being carried out which could lead to the potential failure to secure intended outcomes, including the safeguarding and health and well- being of service users. The Chief Officer (Planning, Performance and Quality Assurance) should review and update the existing Monitoring Prioritisation Assessment to ensure that it provides a more meaningful and consistent basis for assessing and determining the frequency of monitoring activity for each service provider. Low Agree Maria Williamson, Senior Manager The MPA has been reviewed and updated and is awaiting feedback from the Corporate Risk Manager. Thereafter, the QA team will test this tool and continue to monitor and evaluate it. April 2025 Page 329 of 412
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2024-25/0510.2025.001 - Social Work Quality Assurance Arrangements/A - FINDINGS AND REPORT/A07a 20241014 Social Work QA Final Report v1.0.docx 9 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 330 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref PH/LM/ASP/October 2024 Date 10/10/24 Internal Audit: Follow up of actions previously agreed by management in response to audit recommendations From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Executive Summary The purpose of this report is to update the Panel on the results of Internal Audit’s follow-up work, reviewing the extent to which management have implemented actions previously committed to in response to External Audit recommendations made in the last two years, and ‘High’ and ‘Medium’ Internal Audit recommendations which were previously reported as outstanding or due to be completed in the period July to the end of September 2024. The Panel should note that where actions are not yet ‘complete’, this does not mean that no relevant activity has been undertaken by management and that the actions taken/progress made to date will often have reduced the risk exposure in respect of the weaknesses previously identified even if the action is not yet complete. Those recommendations which were previously reported to the Panel as ‘partially implemented’ are now monitored against revised target implementation dates agreed with management and previously reported to the Panel. In this cycle, eight of the 11 actions agreed in respect of External Audit outputs have been completed, two are partially implemented and one is no longer relevant. Of the 14 actions, agreed in response to relevant Internal Audit recommendations, due in the period, 6 have been fully completed and 8 have been assessed as partially implemented. However, it should be noted that 88% of all relevant audit recommendations made since April 2021, where the original agreed implementation date was either due or had passed, have been implemented by Services, meaning that only 12% of these audit recommendations remain outstanding. Recommendations The Panel is invited to: (1) note the contents of this report; (2) note the recommendations made by Internal Audit at Appendix 2; and (3) consider whether there are any issues arising from this report on which they wish to receive further information from relevant management. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work All Programmes of Work Item 10 Page 331 of 412
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1. Background 1.1 Internal and External Audit reports contain management responses to audit recommendations which generally include a commitment to specific actions by a stated date. This report presents an overview of progress by management in addressing all External Audit recommendations made in the last two years, and all ‘High’ and ‘Medium’ Internal Audit recommendations which were previously reported as outstanding or where the proposed actions were due to be completed in the period July to the end of September 2024. 1.2 The format of this report is designed to allow the Panel to focus on those issues where non-implementation of agreed actions presents the most significant ongoing risk to the Council and to enable the Panel to hold relevant senior management to account. 1.3 Internal Audit’s arrangements for following-up audit recommendations include, in certain circumstances, agreeing a revised implementation date and monitoring and reporting against these revised dates where we are provided with a strong rationale for the non-implementation of the audit recommendation by the originally agreed date. This avoids repeatedly reporting and focusing on actions which are ‘late’ where there are sound reasons for non-implementation by the originally agreed date. 1.4 This report presents the assessment of the potential risks arising from those planned actions, agreed in response to Internal Audit recommendations, due in the period (July to September 2024) which are not yet fully completed. 1.5 The updates from management on progress to date have been verified on a sample basis by Internal Audit as part of the preparation of this report. However, it should be noted that this review has focused on whether planned actions have been completed and has not included detailed substantive testing of whether the implemented actions have been effective in addressing previously identified weaknesses. 2. Report Actions previously agreed by management – Internal Audit recommendations 2.1 Table 1 below shows whether management have implemented those actions previously agreed to in response to ‘High’ and ‘Medium’ Internal Audit recommendations which were due to be completed in the period July to the end of September 2024. Overall, 5 of the agreed actions have been completed and 9 have been assessed as partially implemented. Table 1 Complete Partially implemented No longer relevant Total Chief Officer Area Asset and Procurement 1 1 0 2 Audit and Risk 1 0 0 1 Community Operations 1 1 0 2 Education 1 0 0 1 Finance 0 2 0 2 Housing Management 2 0 0 2 People Resources 0 3 0 3 Place 0 1 0 1 TOTAL 6 8 0 14 Page 332 of 412
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2.2 The Panel will recall their request for this report to clearly identify those actions which have been assessed this cycle as being complete but were previously assessed, and reported to the Panel, as partially implemented. In this cycle (October 2024), there have been three such actions and detail in respect of these is included at Appendix 1. 2.3 Internal Audit has reviewed the management updates and agreed, with relevant management, revised implementation dates for all 8 recommendations listed as partially implemented at Table 1. These recommendations will now be monitored in line with the agreed revised date and will be reported back to the Panel in accordance with this revised timescale, at which time consideration will be given as to whether previously identified weaknesses have now been addressed. 2.4 Detail in respect of each of these recommendations and the current residual risk assessed by Internal Audit because of partial implementation is provided in Appendix 2, in which we have also made suggestions as to how the Panel may wish to consider these issues. Definitions of the residual risk ratings are provided at Appendix 3. 2.5 Whilst not due to be implemented and therefore status reporting this cycle, the Panel previously requested that an update be provided at each meeting detailing action taken in response to Internal Audit recommendations made in relation to School Excursions. The Service are working to a revised implementation date of March 2025, as agreed at the last Panel, and although there has been limited progress since the last update, the Service are confident that they are on track to implement the agreed actions. We acknowledge that progressing these actions has been somewhat impeded by the Service’s resources being focussed on the ongoing issues around school transport. We will continue to track, and report on progress, at each meeting of the Panel. Outstanding Internal Audit Recommendations 2.6 As at this cycle (October 2024), 88% of all relevant audit recommendations, where the original agreed implementation date was either due or had passed, have been fully implemented by Services, meaning that the percentage overall of all audit recommendations made since April 2021, which remain outstanding, is 12%. This is a slight drop in performance since the last period when 89% were complete and 11% were outstanding. 2.7 We have considered the Panel’s request for this report to specifically highlight instances where Service action to address the recommendation is still outstanding, but the original implementation date agreed by management was over a year old. Any such recommendations will have been previously reported to the Panel and a revised timescale agreed to which the Services then work towards. We continue to obtain a status update on progress made in line with the follow-up protocol and will report on such as the revised implementation date becomes due. Given the above, we do not consider including these actions as a separate appendix would add additional value. Actions previously agreed by management – External Audit recommendations 2.8 Table 2, on the next page, shows the status of actions agreed by management in response to External Audit reports issued as part of the 2021-22 and 2022-23 audits. 2.9 Internal Audit has concluded that eight of the agreed actions have been completed, two have been partially implemented, and the remaining action is no longer relevant. Page 333 of 412
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Table 2 Completed Partially implemented Not yet due No longer relevant Total Report Title/Year 2021-22 Annual Report 2021/22 4 0 0 1 5 2022-23 Annual Report 1 2 0 0 3 Best Value Thematic Report 3 0 0 0 3 TOTAL 8 2 0 1 11 2.10 The External Audit action assessed as ‘no longer relevant’ relates to an issue on which External Audit have made a similar recommendation in a subsequent audit report. 3. Measures of success 3.1 Internal Audit report each cycle to the Audit and Scrutiny Panel on the progress made by management in implementing actions previously committed to in response to Internal and External Audit reports. 4. Supporting documentation Appendix 1 Internal Audit recommendations reported as outstanding in previous cycles now assessed as ‘complete’ Appendix 2 Internal Audit recommendations: Management actions assessed as ‘not yet complete’ in this cycle Appendix 3 Residual risk rating definition Paula Hendry, Acting Chief Officer (Audit and Risk) Page 334 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact because of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Failure by Services to address previously identified issues and/or weaknesses will impact on the effectiveness of the relevant control framework. This, depending on the nature of the issue, will be captured and should be reflected in the relevant service risk register or the corporate risk register (as appropriate). 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ Page 335 of 412
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Appendix 1 Internal Audit recommendations reported as outstanding in previous cycles now assessed as ‘complete’ Chief Officer Report Details Details from original recommendation Original due date Extension Action taken to address recommendation and mitigate risk Chief Officer (Audit and Risk) Review of the Council’s Counter Fraud Arrangements (August 2023) Risk: Staff and Elected Members may not be aware of the Council’s approach to fraud and their responsibilities in relation to the prevention, detection and reporting of fraud. Recommendation: The Chief Officer (Audit and Risk) should identify and implement appropriate and effective methods for communicating and raising awareness of fraud risks and responsibilities for preventing, detecting and reporting fraud. This should include: • promoting the Counter Fraud Policy by making it available on relevant platforms (such as InsideNL, MYNL and the Council’s website) and through regular awareness raising activities (such as NLC announcements or inclusion in staff newsletters); and • creating a form for reporting fraud, both internally and externally, to incorporate all the required information and enable prompt notification to Internal Audit. Category: Medium October 2023 April 2024 September 2024 Fully implemented The Counter Fraud Policy is available on InsideNL and the Council’s website. A reporting form for employees, and on the Council website for the public, has been devised to enable suspected frauds and irregularities to be reported. An NLC all user announcement has been issued which signposts the recipient to the Council’s Counter Fraud Policy and provides detail in respect of Corporate Fraud; the Policy and what/how to report suspected fraud. The NLC announcement includes a link to the Internal Fraud Reporting Form and also provides details on reporting concerns about social security benefits to the Department of Work and Pensions. Page 336 of 412
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Appendix 1 (continued) Internal Audit recommendations reported as outstanding in previous cycles now assessed as ‘complete’ Chief Officer Report Details Details from original recommendation Original due date Extension Action taken to address recommendation and mitigate risk Chief Officer (Community Operations) Follow-up of Investigation of Staffing Issues within Waste and Fleet Resources (July 2023) Risk: Recruitment processes may not be compliant with corporate expectations. Staff may be recruited in posts which they are not suitably qualified for which could affect Service operations and could have an adverse effect on the Council. Recommendation: The Chief Officer (Community Operations) should: (1) in consultation with the Talent and Organisational Development Team, prepare and issue formal guidance on essential qualification requirements, which indicates the types of qualifications that meet these requirements, and which advises that where there is dubiety over specific qualifications, advice should be sought from the Talent and Organisational Development Team prior to confirming the list of interviewees; (2) in consultation with People Resources ensure that specific and targeted recruitment training is devised for this Service area which includes specific reference to essential qualification requirements and the formal documentation prepared above; and (3) undertake checks on a sample of recruitments to ensure that the Council’s policies and expectations have been adhered to and that the successful candidate holds the essential qualifications for the post, prior to the contract being issued. Category: High December 2023 June 2024 September 2024 Fully implemented Refresher recruitment training has now been completed within Community Operations management which has included ensuring clarity for all Managers regarding the requirement to ensure only applicants who meet all the required Essential criteria, including qualifications, are taken forward to interview. Checks on a sample of recruitments have been undertaken by the HR Business Partners to ensure the above points are being complied with. This will continue for the next six months. People Resources are currently reviewing and updating the Council’s recruitment guidance to ensure continuous improvement to ensure strength of processes. This area of work will be considered for inclusion in the Internal Audit Annual Plan for 2025-26. Page 337 of 412
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Appendix 1 (continued) Internal Audit recommendations reported as outstanding in previous cycles now assessed as ‘complete’ Chief Officer Report Details Details from original recommendation Original due date Extension Action taken to address recommendation and mitigate risk Chief Officer (Education and Families – North and South) Education: Quality Assurance Arrangements (January 2023) Risk: The service may fail to adequately review school performance and/or improvement progress in a timely and ongoing manner, resulting in a failure to identify and then progress appropriate actions to secure improvement. Recommendation: Education and Families should ensure that: (1) the refreshed quality assurance framework is fully implemented in a timely manner across all primary and secondary schools; (2) regular monitoring is undertaken to ensure that all planned quality assurance activities are undertaken in a timely manner consistent with an updated quality improvement framework calendar; and (3) a formal review of the adequacy and effectiveness of recently revised/updated processes (particularly VSE and SIDS) is undertaken, after a sufficient period, to assess how well they are operating, identifying and taking any necessary adjustments and/or improvement actions as appropriate. Category: High June 2023 September 2023 July 2024 Fully implemented The Quality Improvement Framework has now been fully implemented across all primary and secondary schools. The Quality Improvement Framework Calendar was distributed and used to outline and monitor key planning and reporting activity. A formal review of the adequacy and effectiveness of agreed processes for Validated Self-Evaluation (VSE) has been undertaken. The VSE processes have thereafter been updated and presented to the Senior Leadership Team. Chief Officer (Housing Management) Housing Allocations (August 2023) Risk: The Council may fail to award housing based upon need if all applications are not accurately assessed and recorded. If information is not input and checked for accuracy it may result in an applicant not being correctly assessed which could result in them being omitted from consideration of an offer of housing or unfairly disadvantage other applicants. Recommendation: The Chief Officer (Housing Management) should determine and introduce appropriate exception reports to identify and monitor instances of the same officer inputting and checking an application to ensure this key control is not diminished and appropriate action can be taken if the incidence of the same person inputting and checking increases. Category: Medium October 2023 April 2024 September 2024 Fully implemented A scoping exercise was carried out to review the possibility of developing an exceptions report in respect of the same officer inputting and checking an application. However, it was determined an IT reporting solution could not be developed for the current system. To mitigate the risk, a monthly 10% manual audit of all applications input is being undertaken to review input and check officer details. Page 338 of 412
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Appendix 2 Internal Audit recommendations - Management actions assessed as ‘not yet complete’ in this cycle Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (Asset and Procurement) Creditors (April 2024) Risk: There may be inconsistency in the way invoices are approved for payment that is not fully compliant with the Financial Regulations. The Council’s reputation and statutory responsibility may be compromised if it fails to implement adequate controls in a timely manner. Invoices may be passed for processing where goods and services have not been received and/or in the absence of appropriately authorised orders. Recommendation: The Chief Officer (Asset and Procurement) should monitor and periodically report to senior management on purchase activity undertaken using and not using the PECOS system (or other approved electronic procurement systems) with a view to identifying scope for greater use of automated purchasing arrangements. Category: High The Service are gathering data to compile a spreadsheet which will provide detail on the total e-financials spend and on spend using PECOS, CIMS, HSMS, Freeway and Mosaic. The baseline for this report is the financial year 2023/24 and reports can be produced quarterly thereafter for the financial year 2024/25. These reports will thereafter be reported to the P2P Group and the Chief Officers and will provide detail as required per the audit recommendation. We expect this report to have a short-term duration as it will be superseded by the development of the overall P2P project. Original timescale: September 2024 Revised timescale: November 2024 We acknowledge the action that has been taken to date to address the recommendations made and the planned actions proposed to mitigate the risks. We further acknowledge that the delay in implementation is largely due to competing priorities and the secondment of members of the Corporate Procurement Team to other projects. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Medium’. We consider it important that the agreed extension date of November 2024 is achieved. We would suggest that the Panel may wish to consider agreeing to note the progress made to date and the revised completion date and to monitor progress being reported at future meetings of the Panel. Page 339 of 412
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Appendix 2 (continued) Internal Audit recommendations – Management actions assessed as ‘not yet complete’ Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (Community Operations) Follow-up of Investigation of Staffing Issues within Waste and Fleet Resources (July 2023) Risk: A lack of documentation to clearly support the reasons for staff undertaking higher duties means claims for higher duties payments may be authorised inappropriately and staff could receive payments which they are not entitled to, and this could lead to increased costs for the Council. Failure to apply conditions of service appropriately could lead to inconsistency of employee payments across both the Service and the Council. If errors are not stopped immediately when they are first identified, any overpayments arising from the error could continue to increase and the likelihood of recovery could be reduced. Delays in employees agreeing and signing repayment schedules for overpayments could lead to a delay in recovery and increase the risk of the overpayment not being recovered if the employee were to leave the Council’s employment. Recommendation: (1) ensure that HR Business Partners, prior to authorising and passing higher duties claims for payment, properly scrutinise and understand the appropriateness of such claims, confirm that claims have been agreed and authorised by the Chief Officer or senior management and ensure that documentation accurately reflects the reason for such payments; (2) review, and take appropriate action, to resolve the issues and errors in contractual and non-contractual payments identified by Internal Audit and outlined in the document which has been provided under separate cover; (3) identify other employees who may be affected by the issues identified in the finding above, with a view to review and taking appropriate action to resolve any subsequent issues/errors identified; and (4) ensure that where overpayments arise from these reviews, prompt action is taken to ensure that appropriate repayment schedules, with reasonable terms, are promptly agreed with relevant employees and that recovery commences as soon as possible. Category: High Parts (1) and (2) of the recommendations made are considered to be fully implemented. Requests for higher duties claims are authorised by the Business Manager, Chief Officer and HR Business Partner to ensure all such claims have been properly scrutinised and appropriately authorised. A review of the contractual and non- contractual payments has been completed and appropriate action is being and/or will be taken to resolve the issues and errors in these payments as identified both by Internal Audit and during the aforementioned review. Discussions are ongoing between the HR Business Partner and the Employee Service Centre to agree the value, and thereafter arrange recovery, of the overpayments Original timescale: September 2023 Revised timescale: September 2024 Further revised timescale: November 2024 We acknowledge the action that has been taken to date to address the recommendations made and the planned actions proposed to fully mitigate the risks. We further acknowledge that the delay in implementation is largely due to competing priorities. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Medium’. We consider it important that the agreed extension date of November 2024 is achieved. We would suggest that the Panel may wish to consider agreeing to note the progress made to date and the revised completion date and to monitor progress being reported at future meetings of the Panel. Page 340 of 412
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Appendix 2 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (Finance) Review of Petty Cash Imprests (October 2023) Risk: A lack of review of the ongoing need for cash being held by establishments could lead to a greater amount of cash being held than is necessary and the increased likelihood of fraudulent activity and misappropriation occurring. Recommendation: The Chief Officer (Finance) should undertake a review of imprest accounts and cash floats held by Services and establishments to determine whether there is a continued need for each and, where still required, whether their value remains valid and appropriate. Appropriate action should be taken to implement any findings arising from the review. Category: Medium Work has been ongoing in this area to review imprest accounts. As of September 2024, there has been a reduction of 32% in petty cash imprest accounts. The Service are currently engaging with the remaining account holders (13%) to review the accounts with a view to either closing or reducing them. This has, however, taken longer than anticipated. Original timescale: March 2024 Revised timescale: July 2024 Further revised timescale: October 2024 We acknowledge the action that has been undertaken to date and note that the delay in full implementation is due to an underestimation of the time required to undertake the review and thereafter engage with the Services. We have assessed the residual risk as ‘Low’ and consider it important that the agreed timescale for implementation is adhered to. Accordingly, we suggest that the Panel may simply wish to consider agreeing to note the progress made and the revised completion date. Creditors (April 2024) Risk: Failure to appropriately discharge delegated authority in accordance with financial regulations may result in payment of invoices which may not be properly due. Recommendation: The Chief Officer (Finance) should consider how best Services’ compliance with the certification requirements set out in the financial regulations (currently section 14.4) can be reviewed/verified in a proportionate and risk-based manner and thereafter introduce appropriate arrangements. Category: Medium The financial regulations have been reviewed and are being amended to include additional requirements for authorisers to confirm that, for invoices etc. for long standing contracts, up to date contract documents exist and are available for inspection should they be requested. A similar statement will be included for tables of agreed charges. Creditors will introduce a schedule of intermittent checking and log when these have been reviewed and the outcome. In addition, the interface between PECOS and eFinancials should ensure that there is always sufficient back-up for payment which will automatically allow Creditors to release payment. Where this does not exist, the invoice will automatically be reverted to the Service to address. Original timescale: August 2024 Revised timescale: November 2024 We acknowledge that this action is largely complete and that the delay in full implementation of the action is due to the timing of the next Finance and Resources Committee in November 2024. We have assessed the residual risk for this recommendation as ‘Low’ and consider it important that the agreed timescale for implementation is adhered to. Accordingly, we suggest that the Panel may simply wish to consider agreeing to note the progress made and the revised completion date. Page 341 of 412
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Appendix 2 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (People Resources) Payroll Key Controls: Overtime and Travel and Subsistence Claims (April 2023) Risk: Overtime and expenses transactions which have not been properly authorised may be processed, resulting in an increased risk of incorrect, invalid or inappropriate payments being made. Recommendation: The Chief Officer of Finance should: (1) in conjunction with the Chief Officer of People Resources, review the appropriateness of the current authorised signatory database for payroll transactions and consider if controls built into the iTrent system itself would provide a more effective means of operating delegated authority requirements; and (2) undertake a review of the appropriateness and effectiveness of the current arrangements for the ASDB for other types of transactions, taking into consideration current operating environments (with many authorisations now taking place using user permissions set-up within relevant systems), to determine whether it remains fit for purpose and how delegated authorities can, going forward, be best established and effectively discharged. Category: High Initial discussions were held by Finance and People Resources regarding the current arrangements for the authorised signatory database where it was agreed that in-built controls in the iTrent system would provide a more effective solution than the existing arrangements. Work is currently underway to develop a module on the iTrent system to hold the authorised signatory information and replace the current MS Access database. Testing is ongoing with additional development being progressed prior to rollout. Once the module is operational, required users will be set up with access to the separate Authorised Signatories module and authorised signatory information can be searched as per iTrent mechanics with full access to information, as per the current Authorised Signatories Database, to confirm authority for approving transactions. In the interim, Finance has continued to implement as much change as is reasonably possible in the existing operating environment, in order to manage and mitigate the risk of the database and/or iTrent not being current and accurate. Such changes include: weekly update reports being issued by People Resources to Finance to ensure any vacancies/transfer of position is actioned and the database updated. In addition, Finance prepare a weekly report of additions/ changes which is passed to People Resources with a view to ensuring iTrent is kept up to date. Original timescale: September 2023 Revised timescale: September 2024 Further revised timescale: December 2024 We acknowledge the work which has been taken to date to address this recommendation and note that this is largely complete. We have assessed the residual risk for this recommendation as ‘Low’ and consider it important that the agreed timescale for implementation is adhered to. Accordingly, we suggest that the Panel may simply wish to consider agreeing to note the progress made and the revised completion date. Page 342 of 412
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Appendix 2 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (People Resources) Corporate Governance Principles C & D (May 2023) Risk: Without regular review, key corporate policies may not be appropriate or accurately reflect the Council’s arrangements and/or staff and other key stakeholders may not be aware of the most up to date policies and procedures. Recommendation: The Chief Officer (People Resources) should ensure that appropriate arrangements are put in place to allow for key HR related documents referenced in the finding above to be reviewed/refreshed and communicated to staff and that these are monitored to ensure revised timescales are achieved. Category: Medium All HR policies are regularly reviewed on a rolling cycle. The Chief Officers Code of Conduct has been reviewed and updated and was approved by the Policy and Strategy Committee in June 2023. The Employee Code of Conduct was scheduled to be reviewed in January 2024 but was delayed due to other priorities taking precedence. The review is underway and, once concluded, will be updated and submitted to the Trade Unions for consultation. Thereafter, the document will be finalised and presented to the Policy and Strategy Committee for approval. The mandatory training module will be updated to reflect any changes. The PRD process has been reviewed and implemented. A report was presented to BMT in May 2023 to agree the full roll out and launch of the new process and the new system approach was promoted as part of the ‘learning at work’ week in June 2023. Original timescale: September 2023 Revised timescale: September 2024 Further revised timescale: March 2025 We acknowledge that while there has been considerable action taken to date to address the recommendations made, the review of the Employee Code of Conduct has not been concluded and the document has not been finalised. We have however assessed the residual risk as ‘Low’ and consider that it is important that the revised timescale for the outstanding actions is adhered to. Accordingly, we suggest that the Panel may simply wish to consider agreeing to note the progress made and the revised completion date. Page 343 of 412
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Appendix 2 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (People Resources) Payments to Staff Additional Non-Standard Payments (October 2023) Risk: Payments may be allocated to the incorrect post which could result in incorrect payments and additional costs to the Council. Recommendation: (1) The Chief Officer (Education – South), in conjunction with the Chief Officer (People Resources) should undertake a review to identify staff who regularly receive casual worker payments to ensure that they have an appropriate casual worker post set up on iTrent and a current Casual Worker Agreement in place. Where no post and/or agreement exists, appropriate action should be taken to correct this. (2) The Chief Officer (People Resources) should: • Consider whether the review recommended at (1) above needs to be extended to other Service areas, facilitating this as appropriate; • Consider whether an exception report can be devised to capture instances where casual worker payments are being made to staff without a casual worker post set up in iTrent and/or a Casual Worker Agreement in place to enable monitoring, identification and prompt action to correct this; and • Remind casual workers, and managers authorising claims, of the requirement to ensure that casual worker payments are only allocated to their casual worker post. Category: Medium Communication was issued to all managers and casual employees advising them of the correct process and the requirement for compliance was re- emphasised in the ESC Managers Bulletin in March 2024. No review has been undertaken as yet to identify staff who regularly receive casual worker payments to ensure that they have an appropriate casual worker post set up on iTrent and a current Casual Worker Agreement in place. Discussions will take place between the ESC Manager and HR Business Partnership Manager to devise a plan going forward as to how best to address the audit recommendations regarding casual workers. Original timescale: January 2024 Revised timescale: July 2024 Further revised timescale: March 2025 There has been limited action taken to date primarily dure to competing priorities, however a commitment has been made by the Service to discuss and agree actions to be taken to address the recommendations made by Internal Audit. We have assessed the residual risk for this recommendation as 'Medium' and consider it important that the agreed extension date of March 2025 is achieved. We would suggest that the Panel may wish to consider agreeing to note the proposed action to be taken and the revised completion date and to monitor progress being reported at future meetings of the Panel. Page 344 of 412
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Appendix 2 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Chief Officer Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Chief Officer (Place) Creditors (April 2024) Risk: There may be inconsistency in the way invoices are approved for payment that is not fully compliant with the Financial Regulations. The Council’s reputation and statutory responsibility may be compromised if it fails to implement adequate controls in a timely manner. Invoices may be passed for processing where goods and services have not been received and/or in the absence of appropriately authorised orders. Recommendation: The Chief Officer (Place) should ensure that, as a matter of urgency, the solution for an interface between PECOS and eFinancials is finalised and implemented. This should include ensuring that user acceptance testing is satisfactorily completed, and that staff involved in raising and approving and matching PECOS orders/invoices are provided with appropriate training prior to implementation. Category: High The interface between PECOS and eFinancials has been fully acceptance tested and signed off by both internal and external parties. All Services have completed a review of their PECOS plans including requisitioners and approvers. A training module has been developed and training for staff involved in raising and approving and matching PECOS orders/invoices is currently being rolled out. Full implementation is now scheduled for November 2024. Original timescale: September 2024 Revised timescale: November 2024 We acknowledge the work that has been undertaken to date to develop and implement this interface and note that the delay in full implementation is largely due to a need for training to be delivered to all staff who have been nominated as requisitioners prior to the interface ‘going live’. Given the length of time taken thus far to progress this action and fully implement the interface we have assessed the residual risk for this recommendation as 'Medium' and consider it important that the agreed extension date of November 2024 is achieved. We would suggest that the Panel may wish to consider agreeing to note the proposed action to be taken and the revised completion date and to monitor progress being reported at future meetings of the Panel. Page 345 of 412
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Appendix 3 Residual risk rating definition Internal Audit assessment of residual risk from non-implementation High Non-implementation of actions has the potential to significantly undermine the relevant control environment. Medium Non-implementation of actions has the potential to impact upon the achievement of the control environment. Low Other issues which require management attention but which pose less significant or less immediate impacts to the control environment. Page 346 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref PH/ASP Date 31/10/24 National Fraud Initiative (NFI) From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Executive Summary The purpose of this report is to inform the Audit and Scrutiny Panel of the requirement for the Council to participate in the forthcoming National Fraud Initiative 2024 (NFI 2024). The NFI is a data matching exercise, organised by Audit Scotland, which is undertaken every two years, and the Council has successfully participated since the first exercise is 2004. The NFI is widely recognised as an important tool in detecting and preventing fraud and involves comparing different data sets using defined criteria which allows for the identification of inconsistencies and anomalies which may be indicative of possible fraud and/or error. This information then enables public bodies to follow-up matches to consider whether fraud has occurred and to take appropriate action. Recommendations The Panel is asked to note the positive outcome of the self-assessment of the Council’s arrangements in respect of NFI as outlined in appendix 1 and endorse the Council’s ongoing participation in the NFI exercise as outlined in this report and. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Item 11 Page 347 of 412
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1. Background 1.1 The NFI is a UK-wide exercise which enables public bodies to take advantage of data matching to assist them in detecting fraud and error. It is organised by Audit Scotland and is carried out by them under statutory powers added to the Public Finance and Accountability (Scotland) Act 2000 by section 97 of the Criminal Justice and Licensing (Scotland) Act 2010. 1.2 The NFI works by using data matching to compare a range of information held on bodies’ systems to identify potential inconsistencies or circumstances that could indicate potential fraud or errors. A match does not automatically mean that there is a fraud or error, and investigations are required to enable the correct conclusion to be drawn from each match. Bodies are expected to investigate these matches and record the outcomes from their investigation on a secure web application. 1.3 The last data submission by the Council was in October 2022 as part of the NFI 2022 and included data on the Council’s employees, tenants, housing waiting list applicants, council tax reduction claimants, taxi licence holders, creditors and recipients of the Small Business Bonus relief for non-domestic rates. The Department of Work and Pensions also submitted information drawn from the Council’s housing benefit system. 1.4 Data was also submitted centrally by the Strathclyde Pension Fund (SPF), Student Awards Agency Scotland (SAAS), Social Security Scotland (SSS), Her Majesty’s Revenue and Customs (HMRC), National Entitlement Cards (NEC) and Blue Badge Digital Service (BBDS). 1.5 The results of the data matching for these datasets were received in January 2023, with supplementary matches released at various times since. Matches received were prioritised using a risk-based approach and appropriately followed up. The outcome of the NFI 2022 exercise was reported to the Panel in May 2024. 1.6 Work undertaken on data matches arising from NFI 2022 has identified cumulative savings of £33,625 to date, relating to overpayment of Housing Benefit and Council Tax Reduction; £56585 to date, relating to duplicate payments to creditors; and £977 to date, relating to incorrectly awarded Small Business Bonus relief. Additionally, 567 blue badges were cancelled as a result of this exercise. 2. Report NFI 2022 – Audit Scotland national report 2.1 Audit Scotland issued a report on The National Fraud Initiative in Scotland 2024 on 15 August 2024. This report outlines the savings and outcomes arising from the NFI 2022 exercise and contains some recommendations for Scottish public bodies to maximise the benefits of participating in the NFI. These recommendations include ensuring that an appropriate level of resource is available to follow-up NFI matches in an efficient and effective manner and completion of the NFI Self-Appraisal Checklist as part of the planning for the NFI 2024 exercise. 2.2 The self-appraisal checklist has been considered a copy of the completed checklist is attached at Appendix 1. This shows that the Council can demonstrate a high degree of compliance with the expected arrangements which is consistent with previous external audit assessments of the Council’s arrangements. Planned actions arising from the self-assessment will be progressed by relevant staff. NFI 2024 – proposed datasets 2.3 NFI 2024 is about to commence, and we have recently received guidance from Audit Scotland. Details of the data sets which require to be submitted by the Council are included at Appendix 2. Page 348 of 412
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2.4 For NFI 2024, there are no new additional datasets. The personal budget and private residential care home data sets, which are mandatory, are expected to be collected during 2025 as work is ongoing to determine the appropriate legal basis to permit such matches to be undertaken. The timetable for these datasets will be notified by Audit Scotland in due course. NFI 2024 – the next steps 2.5 The information for the majority of data sets must be extracted and uploaded to the NFI database between Tuesday 1 October 2024 and Friday 25 October 2024. The Council Tax and Electoral Register data must be extracted and uploaded on Monday 25 November 2024. Arrangements are underway for the datasets to be uploaded in line with these timescales. 2.6 The Council will be required to provide the data under section 97 of the Criminal Justice and Licensing (Scotland) Act 2010. Since the processing of data by Audit Scotland is lawful and carried out with statutory authority, data subjects’ consent is not required. However, in line with data protection legislation, the Council is required to provide a privacy notice to data subjects which clearly explains that the data may be disclosed for the prevention and detection of fraud, details the legal basis for sharing the data and specifies where to obtain further information. 2.7 In most cases, it is sufficient for privacy notices to be provided at the point of application, and most application forms/processes already contain appropriate notifications. For those datasets which do not require an application form, Internal Audit has been liaising directly with the responsible Services to ensure that adequate privacy notices are in place for all datasets. 3. Measures of success 3.1 Successful participation in NFI 2024, fraud and potential savings identified and positive assessment by the Council’s external auditors of the Council’s approach. 4. Supporting documentation 4.1 Appendix 1 – Audit Scotland’s Self-Appraisal Checklist 4.2 Appendix 2 – NFI 2024 – Data Sets for Local Authorities Paula Hendry Acting Chief Officer (Audit and Risk) Page 349 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☒ No ☐ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Future data matching arrangements will be reviewed to ensure the Council remains legally compliant with recent legislative changes. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☒ No ☐ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☒ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Page 350 of 412
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Failure to participate in the NFI could result in non-compliance with legislation, criticism from external audit and create additional potential for fraudulent activity not being identified at an early stage. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 351 of 412
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Appendix 1 Audit Scotland self-appraisal checklist – as completed by NLC Internal Audit Team Part A: for those charged with governance Yes/No/Partly Is action required? Who by and when? Leadership, commitment and communication 1. Are we aware of emerging fraud risks and take appropriate preventative and detective action? Yes – significant or material fraud risks and those mitigating controls designed to prevent and/or detect fraud are expected to be included in Service risk registers. The Council has a well-established Counter Fraud Policy, last updated in June 2023, which sets out the Council’s approach to the prevention, detection and investigation of fraud across all the Council’s service areas. This message will be reinforced through the Council’s risk management arrangements and targeted awareness raising of the counter fraud policy. Yes Chief Officer (Audit and Risk) March 2025 2. Are we committed to NFI? Has the council/board, audit committee and senior management expressed support for the exercise and has this been communicated to relevant staff? Yes – Council participation endorsed by both CMT and the ASP. No N/A 3. Is the NFI an integral part of our corporate policies and strategies for preventing and detecting fraud and error? And do we make reference to NFI in our governance codes and statements? Yes – NFI is an established part of our counter fraud arrangements and is referenced in the Counter Fraud Policy and Annual Governance Statement for 2023-24. No N/A 4. Does our key contact have sufficient authority and time to ensure that NFI is delivered effectively? Yes – the key contact is a member of the Internal Audit team and time has been allocated in the Internal Audit Annual Plan to allow for this officer to monitor progress of NFI matches. No N/A Page 352 of 412
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Part A: for those charged with governance Yes/No/Partly Is action required? Who by and when? Leadership, commitment and communication (continued) 5. Has the approach to follow up of different NFI match types been clearly set out and reported as part of the bodies NFI planning process? Yes – as part of the preparation work for NFI, a plan for progressing matches is prepared which details the actions required, officers responsible for reviewing matches and completion dates. No N/A 6. Are the NFI progress and outcomes reported regularly to senior management and elected/board members (eg, the audit committee or equivalent)? Yes – reported to the ASP and CMT throughout the process. No N/A 7. Where we have not submitted data or used the matches returned to us (e.g. council tax single person discounts) are we satisfied that alternative fraud detection arrangements are in place and that we know how successful they are? Yes – not reviewed council tax matches as a separate and more cost-effective exercise is undertaken by Finance. The last exercise was undertaken between July 2022 and April 2023 and the outcomes were included in the NFI update report to CMT and ASP. No N/A 8. Does internal audit, or equivalent, monitor our approach to NFI and our main outcomes, ensuring that any weaknesses are addressed in relevant cases? Yes – the process is lead and co-ordinated by Internal Audit. Issues arising are reflected in future arrangements. No N/A 9. Do we review how frauds and errors arose and use this information to improve our internal controls? Yes – information from NFI is used as part of risk- assessment processes. No N/A 10. Do we need and have access to fraud investigation officers to enable frauds to be followed up fully? Yes – any suspected fraud resulting from a review of matches are generally investigated by Internal Audit staff. The Appeals and Adjudications Team investigate any suspected fraud arising from Housing benefit and council tax reduction matches. No N/A 11. Do we publish, as a deterrent, internally and externally the achievements of our fraud investigators (eg, successful prosecutions)? Partly – done for HB fraud. Not routinely undertaken for other types of fraud but would be considered where such frauds were significant and/or key messages were deemed to merit publicity. No N/A Page 353 of 412
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Part B: for the NFI key contacts and users Yes/No/Partly Is action required? Who by and when? Planning and preparation 1. Are we aware of emerging fraud risks and take appropriate preventative and detective action? Yes – significant or material fraud risks and those mitigating controls designed to prevent and/or detect fraud are expected to be included in Service risk registers. This message will be reinforced through the Council’s risk management arrangements. Yes Chief Officer (Audit and Risk) March 2025 2. Are we investing sufficient resources in the NFI exercise? Yes – no resource issues identified. No N/A 3. Do we plan properly for NFI exercises, both before submitting data and prior to matches becoming available? This includes consideration of data quality and being clear about the approach to follow up different match types. Yes – planning arrangements are satisfactory. No significant issues have previously occurred over failure to submit data or with data quality. No N/A 4. Where NFI outcomes have been low in the past, do we recognise that this may not be the case the next time, that NFI can deter fraud and that there is value in the assurances that we can take from low outcomes? Yes – outcomes have not been low, but even in areas where little or no fraud has been identified, there is a recognition that the exercise has value in confirming the adequacy of existing controls and deterring fraud. No N/A 5. Do we confirm promptly (using the online facility on the secure website) that we have met the fair processing notice requirements? Yes – confirmed in line with advised timescales. No N/A 6. Do we plan to provide all NFI data on time using the secure data file upload facility properly? Yes – Services notified of relevant dates in advance and reminded prior to upload date. No N/A Page 354 of 412
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Part B: for the NFI key contacts and users Yes/No/Partly Is action required? Who by and when? Effective follow-up of matches 7. Do all departments involved in NFI start the follow-up of matches promptly after they become available? Yes – generally satisfactory – Services are reminded of the importance of timely action at the start of each new exercise and upon receipt of new matches. No N/A 8. Do we give priority to following up high-risk matches, those that become quickly out of date and those that could cause reputational damage if a fraud is not stopped quickly? Yes – we initially review sensitive and high-quality matches then consider remaining matches. No N/A 9. Are we investigating the circumstances of matches adequately before reaching a ‘no issue’ outcome, in particular? Yes – arrangements ensure that we are satisfied with outcome of investigation prior to marking matches as ‘no issue’. No N/A 10. Are we drawing appropriately (in health bodies) on the help and expertise available from NHS Scotland Counter Fraud Services? Not applicable. N/A N/A 11. Are we taking appropriate action in cases where fraud is alleged (whether disciplinary action, penalties/ cautions or reporting to the procurator fiscal)? Are we recovering funds effectively? Yes – dealt with on a case-by-case basis but generally appropriate action is taken in line with the Council’s relevant policies (disciplinary and anti-fraud). Recovery is pursued where this is likely to be feasible and cost effective. No N/A 12. Do we deploy resources in proportion to risks, and scale down work on match reports where early work has not found any fraud or error? Yes – resources are targeted at high-risk areas including those with high previous incidences of fraud or error. No N/A 13. Where the number of high-risk matches is very low, are we adequately considering the medium and low- risk matches before we cease our follow-up work? Yes – both medium and low-risk matches are considered prior to ceasing follow-up work. No N/A 14. Overall, are we deploying appropriate resources on managing the NFI exercise? Yes – level of resources deployed appears appropriate. No N/A Page 355 of 412
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Part B: for the NFI key contacts and users Yes/No/Partly Is action required? Who by and when? Recording and reporting 15. Are we recording outcomes properly in the secure website and keeping it up to date? Yes – outcomes are generally populated on a timely basis. No N/A 16. Do staff use the online training modules and guidance on the secure website and do they consult the Cabinet Office NFI team if they are unsure about how to record outcomes (to be encouraged)? Yes – where necessary, although the majority of staff using the secure website have been involved in previous exercises. No N/A 17. If, out of preference, we record some or all outcomes outside the secure website, have we made arrangements to inform Audit Scotland and the Cabinet Office NFI team about these outcomes? Not applicable – all outcomes are updated on the secure website. No N/A Page 356 of 412
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Appendix 2 NFI 2024 – Data Sets for Local Authorities Mandatory Data Sets Data Set Officer Responsible for Providing Data Housing/Council Tax Benefit None – provided directly by DWP Pensions None – provided directly by Strathclyde Pension Fund Students None – provided directly by SAAS Social Security Scotland benefits (note 1) None – provided directly by Social Security Scotland HMRC payroll, pensions and savings (note 1) None – provided directly by HMRC National entitlement cards for adults None – provided directly by the NEC Programme Office Disabled parking (blue badges) None – provided directly by the Blue Badge Digital Service (BBDS) Payroll Chief Officer (People Resources) Council tax reduction scheme Chief Officer (Finance) Creditors’ payments and standing data Chief Officer (Finance) Council tax Chief Officer (Finance) Non-domestic rates Chief Officer (Finance) Personal budgets and social care payments (note 2) Chief Officer (Finance) Current tenants Chief Officer (Housing Management) Housing waiting lists Chief Officer (Housing Management) Taxi licence holders Chief Officer (Legal and Democratic) Electoral Register Chief Officer (Legal and Democratic) Private supported care home patients (note 2) Chief Officer (Adult Social Work Services) Note 1 The data for this data set will be collected to a different timetable that will be notified by Audit Scotland in due course. Note 2 The data for this data set will not collected later in 2025 as soon as legal gateways are established. Page 357 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref PH/ASP/RM update October 2024 Date 31/10/24 Risk Management Update From Paula Hendry, Acting Chief Officer (Audit and Risk) E-mail hendryp@northlan.gov.uk Telephone 07471 321768 Executive Summary This report provides members with an update on the developments and changes in relation to the Corporate Risk Register (CRR) and other key risk management developments since the last update to the Panel in August, with a particular focus on corporate risks for which a review was completed during the reporting period. The CCR is formally reviewed annually to ensure completeness and continued alignment with the Council’s strategic objectives, The Plan for North Lanarkshire and the associated Programme of Work. The outcome of the latest annual review of the CRR was presented to the Panel in August. Additionally, all corporate risks included on the CRR are subject to regular monitoring and review by senior management, and periodic review by CMT and the Panel in line with their respective governance roles. There have been no additions or deletions to the CRR since the last update, however, there have been changes to the residual risk scores for some corporate risks and these are outlined in section 2 of this report and have been reflected in the CRR at Appendix 1. During the period, Risk Champions completed a self-assessment on behalf of Services as part of a new process for monitoring compliance with the Risk Management Strategy at Service level. The outcomes of this process are intended to facilitate the work of the Corporate Risk Team in supporting the development of risk management maturity across the Council. A summary of the key findings arising from the self-assessment are detailed in section 2.9 of this report. Recommendations The Panel is asked to consider the contents of the report and note the information provided on developments on the Corporate Risk Register for 2024/25 as detailed in Appendix 1 and section 2 of this report. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Item 12 Page 359 of 412
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1. Background 1.1 The Risk Management Strategy requires that the Corporate Risk Register (CRR) is formally reviewed on an annual basis, led by the Corporate Risk Team, working with the Risk Management Corporate Working Group (RMCWG) on behalf of, and in consultation with, the Corporate Management Team. In addition, each Service is required to maintain its own risk register in respect of the operational risks within their areas of responsibility. 1.2 The outcome of the latest annual review of the CRR, that was undertaken to ensure completeness and continuing alignment with the Council’s strategic objectives, The Plan for North Lanarkshire and the associated Programme of Work, was presented to the Panel in August, and the approved CRR for 2024-25 is included at Appendix 1. 1.3 All corporate risks included on the CRR are subject to regular monitoring and review by senior management, and periodic review by CMT and the Panel in line with their respective governance roles. 1.4 The Corporate Risk Team has recently introduced a tool, developed to gauge compliance with the Risk Management Strategy at Service level. This includes a self- assessment, completed by Risk Champions on behalf of Services, which is designed to shape the work of the Corporate Risk Team in supporting Services in developing their risk management arrangements and advancing the maturity of risk management across the Council. 2. Report Corporate Risk Register 2024-25 1.1 The current Corporate Risk Register (CRR) for 2024-25, approved by the Panel in August, is included at Appendix 1. Risks are subject to ongoing monitoring and review by risk owners, the frequency of which is determined by the latest residual assessment, with higher scoring risks being subject to more frequent management consideration. The CRR is updated to reflect any changes arising from these reviews. 2.2 Management’s review of identified risks considers any relevant changes in the operating environment, the effectiveness of existing controls, progress of actions on developing existing controls and whether any additional controls or actions are required. All of these factors inform the management view on whether it would be appropriate to adjust either the residual assessment or the risk response (treat, transfer, tolerate, terminate), in line with the Risk Management Strategy. 2.3 There have been no additions to the CRR since the last update, however, there have been changes to the residual risk scores for some corporate risks. This report provides further commentary on the rationale for these changes. Developments relating to Corporate Risks since the last update 2.4 Enterprise Contract (Mobilisation) 2.4.1 The reframing of the Enterprise Contract (Mobilisation) Risk has been completed. This risk has been refocussed following the transition to the mobilisation stage for services provided through the Enterprise Contracts for both Housing and Corporate and Roads and Infrastructure, and the previous ‘NLC Enterprise Project’ risk is now closed. The new risk captures the uncertainty around the Council being unable to implement and deliver the benefits arising from the contract. Page 360 of 412
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2.4.2 There are a number of controls already implemented for this risk, which is reflected in a reduction in the inherent risk assessment of 25 (Very High) to the current residual risk assessment of 20 (High) at the time of the latest review. This is mainly attributed to the contracts for both Housing and Corporate and Roads and Infrastructure having been approved. The residual assessment reflects a cautious management position which reflects that, whilst the controls are deemed to be robust, time is required for the effectiveness of these controls to be assessed, further enhanced and fully implemented. 2.5 Managing Strategic Change 2.5.1 Progress has been made on reframing the Managing Strategic Change risk to reflect the uncertainty pertaining to the delivery of approved programmes of work. Redrafting of the risk is underway by management. Progress on this risk will be provided to the Panel in the next quarterly risk management update. 2.6 Early Learning Childcare Workforce 2.6.1 A significant change has been recorded for the Early Learning Childcare Workforce risk. This risk focusses on the uncertainty around the Council’s ability to provide the Early Learning and Childcare model from August 2024. Changes to practitioner role grading locally and related national funding arrangements have resulted in the potential of a shortage of suitably qualified staff. 2.6.2 The critical period for this risk (mid-August to end September) has now passed. Recruitment campaigns are now complete with all roles filled and, since the start of the new school term in August, the Service has been able to operate as planned. All controls implemented are working effectively and the Service has contingency plans, which can be implemented at short notice should issues in relation to adequately trained staff arise. Therefore, the residual risk, which was previously 16 (High), has now been assessed as 6 (Low). As a result, this risk will be removed from the CRR but will continue to be actively monitored as part of the Service’s risk management arrangements. 2.7 National Care Service 2.7.1 There has been recent media coverage regarding proposals for the introduction of a National Care Service whereby both COSLA and Unions have stated that current Scottish Government proposals are not acceptable. Due to these developments, this corporate risk is currently under review and progress on this will be provided to the Panel in the next quarterly update. 2.8 Procurement Risk Update 2.8.1 At the Panel in August, members requested additional information in relation to a change in scoring of the Procurement risk. The Risk Management Update report to the Panel in August 2024 included the following commentary: “There is only one risk which has changed scoring since the previous report to the Panel. The residual risk assessment of the Procurement risk has increased to reflect the need for continuous improvement (identified through for example internal audit and PCIP assessment) and recognises that some controls are not yet fully implemented. The Corporate Procurement Working Group (CPWG) has oversight of progress of the actions identified to implement the controls.” Page 361 of 412
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2.8.2 This risk captures uncertainty around whether the Council’s procurement practices are aligned with the Council’s procurement duty. It was subject to a complete review due to the appointment of a new manager and resultant changes made to the team structure, operating practices across the Council and the Procurement Strategy. The review resulted in an increase in the residual risk rating from 12 (Medium) to 16 (High). There are nineteen actions, with target dates staggered through to September 2025, and until these are complete and controls are fully implemented, it is anticipated that the residual risk rating will remain high. Other Risk Management Developments 2.9 As previously reported to the Panel, the corporate approach for monitoring compliance with the Risk Management Strategy, which was approved by BMT, is through the Risk Management Corporate Working Group (RMCWG). As part of this approach, a self- assessment was completed, by Risk Champions on behalf of Services, to assist the Corporate Risk Team in supporting Services in developing their risk management arrangements and advancing the maturity of risk management across the Council. Since the last update to the Panel, the results of the self-assessment have been assessed, with feedback being largely positive. Some areas for improvement for both Services and the Corporate Risk Team have been identified and progress of these, together with their respective actions, will be monitored through the RCMWG. 2.10 The Corporate Risk Management team have undertaken a review of risk management training material. A refreshed “Introduction to Risk Management” module has been developed and feedback is currently being sought from members of the RMCWG. It is anticipated that the new version of the training module will go live this quarter. This will be supplemented by a refresh of awareness / training materials that are targeted to support staff in their risk-related role. 3. Measures of success 3.1 The Corporate Risk Team will continue to report quarterly to CMT and the Audit and Scrutiny Panel, providing an overview of key developments in risk management and updating on progress in respect of planned improvements to the Council’s risk management arrangements. 3.2 The adequacy and effectiveness of the Council’s risk management arrangements will be independently and regularly reviewed by Internal Audit, who will report directly on the results of that work to the Audit and Scrutiny Panel. 3.3 Effective risk management arrangements assist the Council in achieving planned outcomes and/or help the Council mitigate the impacts of adverse events. 4. Supporting documentation Appendix 1: Corporate Risk Register 2024-25 Paula Hendry, Acting Chief Officer (Audit and Risk) Page 362 of 412
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact because of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If yes, please provide a summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Effective risk management arrangements will enable the Council to manage its risks more effectively, increasing the likelihood of the Council achieving its plans and ambitions by minimising or mitigating potential threats to planned outcomes. A robust risk management strategy lays out the framework and underpins all risk management activity across the organisation. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex-Service personnel, or their families, or widow(er)s)? Yes ☒ No ☒ 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ Page 363 of 412
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Appendix 1 Corporate Risk Register 2024-25 CORPORATE RISKS (Operational) Likelihood Impact Rating Evaluation Change 1. Impact of proposal to create a National Care Service 5 5 25 Very High No 2. Home support service delivery/ sustainability 5 5 25 Very High No 3. Information security and governance 5 4 20 High No 4. ICT operational capability 5 4 20 High No 5. Enterprise Contract (Mobilisation) (NEW) 4 5 20 High New 6. Human resources (workforce planning) 4 4 16 High No 7. Public protection 4 4 16 High No 8. Procurement risk 4 4 16 High No 9. Governance, leadership and decision- making 4 4 16 High No 10. Health and Safety 5 3 15 Medium No 11. RAAC 3 5 15 Medium No 12. Business continuity planning 5 3 15 Medium No 13. Terrorism 3 5 15 Medium No 14. Home to school transport delivery/ sustainability 3 4 12 Medium No 15. Resilience planning 2 5 10 Medium No 16. Serious organised crime, fraud and corruption 3 3 9 Medium No 17. Impact of changes to SFRS operating arrangements 2 4 8 Low No 18. Early learning childcare workforce (Defer to Service Register) 2 3 6 Low Was 16 CORPORATE RISKS (Strategic) Likelihood Impact Rating Evaluation Change 19. Tackling poverty 5 4 20 High No 20. Power resilience (Black Start) 4 5 20 High No 21. Climate change 5 4 20 High No 22. Digital adoption 5 4 20 High No 23. Financial sustainability 3 5 15 Medium No 24. Digital and IT strategy 4 3 12 Medium No 25. Engagement and consultation 3 3 9 Medium No 26. Improving educational outcomes 3 3 9 Medium No 27. Delivery of approved programme of work (REFRAME from Managing Strategic Change) TBC TBC TBC TBC N/A Page 364 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref KH/SL Date 31/10/24 Strategic Performance Framework - Performance Reporting Schedule quarterly performance assurance review From Katrina Hassell, Chief Officer (Business and Digital) E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary The purpose of this report is to bring together a summary of the council’s performance reports in one composite assurance overview to support the Audit and Scrutiny Panel in maintaining strategic oversight and awareness of the council’s performance reporting arrangements in line with the Panel’s remit to provide “independent review of the council’s governance, risk management, performance, and control frameworks”. It also supports the Audit and Scrutiny Panel’s governance and accountability role in terms of ensuring the council can demonstrate Best Value through the existence of robust arrangements for performance reporting and scrutiny. This process monitors reports which have been submitted to council committees (in line with the Strategic Performance Framework - Performance Reporting Schedule) during the previous cycle. This process began following the annual Performance Reporting Schedule for 2023 to 2024 at the Audit and Scrutiny Panel meeting in February 2023 with implementation of a quarterly performance assurance review report thereafter. This report herewith provides the Panel with the outcome from the latest quarterly performance assurance review that has been undertaken on performance reports previously submitted to council committees during cycle 3 of 2024 (in line with the Performance Reporting Schedule for 2024 to 2025 which was at the Panel meeting in February 2024). Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Review the composite overview of performance reporting provided in Appendices 1 and 2 to maintain an awareness of each report within the Performance Reporting Schedule for 2024 to 2025, and (2) Identify whether there are any significant issues arising, from the composite performance overview presented in the attached Appendices, that the Panel considers requires additional scrutiny and a further report to be submitted from the respective Chief Officer to a future meeting of the Panel (following review through the Scrutiny Assessment and Prioritisation Process). Item 13 Page 365 of 412
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1. Background 1.1 Members of the Audit and Scrutiny Panel will recall the report in February 2024 which contained the Strategic Performance Framework - Performance Reporting Schedule. This set out the reporting, review, and scrutiny arrangements for a range of performance information to be considered at each cycle of committee meetings for 2024 to 2025, and provided an update on the previous Performance Reporting Schedule for 2023 to 2024 which was at the Panel in February 2023. 1.2 The Strategic Performance Framework comprises performance measurement at three levels (as per the diagram on the right). This aims to collectively provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people and communities of North Lanarkshire. The measures in this Framework allow for day-to- day activities, and progress towards achieving the long-term vision set out in The Plan for North Lanarkshire, to be regularly monitored, reported, assessed, and scrutinised. 1.3 The supporting Performance Reporting Schedule forms a key part of the Scrutiny Work Programme that underpins the Best Value governance and accountability theme by ensuring the council can demonstrate the existence of robust arrangements for scrutiny and performance reporting. It also aims to fulfil the Audit and Scrutiny Panel’s remit as per the Scheme of Administration to: • Review and monitor the performance of the council in delivering upon its priorities, outcomes, programme of work and targets in the council plan, specifically performance in improving local services and outcomes and in demonstrating Best Value. • Review performance to assess whether intended policy outcomes have been achieved. 1.4 The Strategic Performance Framework comprises a set of non-negotiable standards which Chief Officers are required to apply in all performance reporting that supports the Framework. These standards aim to ensure that performance reporting is: • Aligned - to The Plan for North Lanarkshire to give stakeholders an insight into the performance of council activities both in the short-term and against the long-term ambitions. • Consistent - to ensure a standard, easily recognisable, and well-established process across each different audience over time. This aims to help build credibility, reliability, and a common understanding. • Transparent - to allow stakeholders to understand what is being measured, what it means, what level of performance has actually been achieved, and what difference this means in reality for the people and communities of North Lanarkshire. • In context - to avoid the So What? question and provide a coherent narrative to ensure fully informed review, reporting, scrutiny, and decision making processes. • Balanced - to ensure any text adds value and tells a balanced narrative. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Page 366 of 412
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Performance reports should identify areas requiring improvement as well as areas of good performance. Narrative should include reasons for performance levels not in line with targets and the remedial action undertaken to address this. 1.5 The Performance Reporting Schedule shows there is a significant volume of performance information timetabled to be reported to various council committees in each cycle of 2024 to 2025. Cycle 3 reports were reviewed by the Business Management Team in October 2024 to ensure the relevant assurances in terms of performance management arrangements that promote effective use of the council’s resources, performance information being scrutinised at a senior management level, and performance monitoring arrangements in place to effectively address areas of underperformance, identify the scope for improvement, and agree remedial action. 1.6 The volume of performance information in the cycle 3 reports has been reviewed and summarised further in Appendices 1 and 2 attached. It should be noted that the performance information within Appendices 1 and 2 has already been reviewed by Service Committees during cycle 3. The purpose of the information presented herewith is therefore to provide Audit and Scrutiny Panel members with a composite, but easily digestible, overview for governance and assurance purposes in line with the specific scrutiny and strategic oversight role of the Panel. 1.7 Should the Panel consider there are any significant issues arising from the composite performance overview which require additional scrutiny, these matters will be reviewed through the Scrutiny Assessment and Prioritisation Process (updated and approved by the Panel in September 2022 and further endorsed in September 2023), prior to being added to the Scrutiny Work Programme for a further report to be submitted from the respective Chief Officer to a future meeting of the Panel. 2. Quarterly performance assurance review 2.1 The Strategic Performance Framework - Performance Reporting Schedule sets out several aspects of performance reporting. As part of this, paragraphs 2.2 to 2.6 itemise the performance reports submitted to cycle 3 committees in accordance with the timetable set out in the Schedule. (1) Chief Officer’s individual Performance Reviews at Service Committees in line with the Strategic Performance Framework. (2) Chief Officer service specific performance reporting which takes place each year to meet business and/or statutory obligations. (1) Chief Officer’s individual Performance Reviews at Service Committees in line with the Strategic Performance Framework. 2.2 The Strategic Performance Framework comprises a range of performance indicators from each Chief Officer’s portfolio and the latest results in this respect are aligned to the respective ambition statements in The Plan for North Lanarkshire. The two reports previously submitted to the relevant committee in cycle 3 of 2024 are listed in Table 1 below, along with the corresponding hyperlink for ease of access. Table 1 Report title Committee Date Strategic Performance Framework - latest performance results for Business and Digital link to report Finance and Resources Committee 11 September 2024 Page 367 of 412
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Health and Social Care North Lanarkshire performance update - Quarter 4 (January to March 2024) link to report IJB Performance, Finance and Audit Committee 21 August 2024 2.3 Each council report was produced in line with a standard template and (a) provides the reader with the current context within which the service is operating, (b) highlights areas of good performance that can be evidenced in the accompanying data, and (c) provides a summary of areas of performance requiring improvement along with narrative that gives an explanation for the level of performance achieved and summarises the remedial action implemented (or to be implemented) to bring performance back on track. 2.4 A short summary analysis for each of the two reports is set out in Appendix 1 against the five non-negotiable standards. (2) Chief Officer service specific performance reporting which takes place each year to meet business and/or statutory obligations. 2.5 This aspect relates to service specific reporting which is required to meet business and/or statutory obligations. This is included in the Performance Reporting Schedule to ensure all the council’s performance reporting arrangements are captured in the one place and the Schedule reflects a one council approach to performance reporting. 2.6 The 16 reports previously submitted to the relevant committee in cycle 3 of 2024 are listed in Table 2 below, along with the corresponding hyperlink for ease of access. A short summary for each of these reports is set out in Appendix 2. While this summary is set out against the five non-negotiable standards it recognises there may also be statutory specific approaches or standards which require to be adhered to. Table 2 Report title Committee Date Tackling poverty - annual report 2023/24 link to file Wellbeing and Tackling Poverty Committee 16 August 2024 Community Asset Transfer and Participation Requests - annual report 2023/24 link to file Communities Committee 19 August 2024 Local Outcome Improvement Plans (LOIP) performance report - October 2023 to March 2024 link to report Communities Committee 19 August 2024 Scottish Roadworks Commissioner - annual performance 2023/24 link to file Environment and Climate Change Committee 21 August 2024 Business regulation / food law - annual plan and performance link to file Environment and Climate Change Committee 21 August 2024 Scottish Housing Regulator - Annual Assurance Statement 2023/24 link to file Housing Committee 28 August 2024 Community safety hub performance and development link to file Housing Committee 28 August 2024 Economic Regeneration Delivery Plan (ERDP) performance framework - annual update 2023/24 link to file Enterprise and Fair Work Committee 31 August 2024 Community Learning and Development - activity for 2023/24 link to file Education, Children, and Families Committee 10 September 2024 Page 368 of 412
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Procurement - annual report 2023/24 link to file Finance and Resources Committee 11 September 2024 Data protection - annual report 2023/24 link to file Finance and Resources Committee 11 September 2024 Treasury management annual activity report 2023/24 link to file Finance and Resources Committee 11 September 2024 Revenues and benefits update link to file Finance and Resources Committee 11 September 2024 Financial monitoring report - council summary (revenue) link to file Finance and Resources Committee 11 September 2024 Financial monitoring report - council summary (capital) link to file Finance and Resources Committee 11 September 2024 Financial monitoring - savings link to file Finance and Resources Committee 11 September 2024 Next steps 2.7 Assurance reviews will continue to be undertaken and reported to the Audit and Scrutiny Panel on a quarterly basis in order to maintain the measures of success set out in paragraph 3.1. 2.8 The content of these quarterly assurance review reports will be informed by the updated Reporting Schedule for 2024 to 2025 which was at the Audit and Scrutiny Panel meeting in February 2024. This set out the performance and progress monitoring information timetabled to be reported to various council committees in each cycle of 2024 to 2025. 2.9 Reports submitted to the respective committee (in line with the Schedule) will continue to be kept under review by the senior management team of the council so that adherence to the timetable is maintained. This will also seek to ensure the relevant assurances in terms of the efficient and effective operation of the council and that the ongoing delivery of the long-term ambition set out in The Plan for North Lanarkshire is underpinned with corporate governance, risk management, and financial management controls. 3. Measures of success 3.1 Measures of success include: • Regular oversight and monitoring of performance across the organisation to gain assurances in terms of governance and accountability. • Regular review and challenge processes to scrutinise the performance of the council to ensure effective use of resources and that resources are directed in accordance with agreed policy and according to priorities, while ensuring sound decision making and clear accountability for the use of resources in achieving improved outcomes for service users and the local community. • Performance monitoring, management, and reporting arrangements that support the demonstration of improved performance in local services and outcomes, and the delivery of Best Value. Page 369 of 412
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4. Supporting documentation Appendix (1) Chief Officer’s individual Performance Reviews at Service Committees in line with the Strategic Performance Framework. Appendix (2) Chief Officer service specific performance reporting which takes place each year to meet business and/or statutory obligations. Katrina Hassell Chief Officer (Business and Digital) 5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☒ No ☐ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Local Government Act 1992 established the role of the Statutory Direction to direct councils in terms of the “publication of information as to standards of performance”. The Local Government in Scotland Act 2003 introduced the duty of Best Value; this requires that councils “make arrangements to secure continuous improvement in Page 370 of 412
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performance”. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Implementation of the Schedule, which aims to facilitate effective review and scrutiny processes, contributes to the mitigation of the risk on the Corporate Risk Register for governance, leadership, and decision making. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Page 371 of 412
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Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 372 of 412
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Appendix 1 (1) Chief Officer’s individual Performance Reviews at Service Committees in line with the Strategic Performance Framework (SPF). Report title Summary SPF - latest performance results for Business and Digital September 2024 Business and Digital have 12 indicators in the Strategic Performance Framework covering two areas of activity (technology strategy solutions and business strategy) that work corporately across the council. • Technology Strategy Solutions, who are responsible for the live delivery and operational management of technology solutions required to support services and schools in delivering front line day-to-day operations and in progressing activities which facilitate delivery of the council’s strategic place-based ambition. A key aspect of this area of activity is also the development of the technology estate, its solutions, and integrations with third party suppliers. • Business Strategy, who are responsible for driving business change, improvement, and service redesign in order to provide efficient and effective services in line with the council’s, and the North Lanarkshire Partnership’s, strategic aims and plans. This area of activity also includes measuring success against The Plan for North Lanarkshire and ensuring the established frameworks and supporting governance remains relevant and up to date. Aligned Priority: • Enhance participation, capacity, and empowerment across our communities. • Improve North Lanarkshire’s resource base. Ambition statement: 18. Ensure our digital transformation is responsive to all people’s needs and enables access to the services they need. 24. Review and design services around people, communities, and shared resources. 25. Ensure intelligent use of data and information to support fully evidence based decision making and future planning. Consistent The pre-defined template was used to ensure a standard, easily recognisable, and well established process across each different audience over time. The use of this template aims to help build credibility, reliability, and a common understanding. Transparent RAG indicators: Volume measures: • IT incidents. • IT service requests. Governance indicators: • Data protection - number of breaches. • Data protection - number of near misses. Benchmarking indicators: • Broadband - % of properties receiving superfast broadband. • Fibre - % of residential premises in North Lanarkshire with full fibre availability In context The service’s operating environment has changed significantly in recent years and, as such, the report recognises the context within which the performance information requires to be considered: • Service specific advancements in terms of the procurement, and subsequent deployment and roll-out of revised Connectivity contracts and infrastructure. • The end of the contract with Agilisys in April 2022 and the ensuing significantly reduced resource available from 2022/23 onwards. • The development of the Business and Digital Integrated Programme Plan which aims to capture all areas of activity across the service and serve as a guide to support resource planning and operational delivery, as well as the relevant project management and governance controls. Page 373 of 412
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• The changing structure required following approval to insource those services previously outsourced to Wipro (supplier of the ICT service delivery contract), the alignment of service provision following the insourcing of culture, sport, and leisure services (previously delivered through Culture and Leisure NL Limited), and the final steps in the integration of the schools’ technician’s service. • The extent to which the service has supported the council in terms of responding to and recovering from the pandemic, while resuming business as usual activities at pace and delivering on the digital vision set out in the new Digital and IT Strategy for 2024 to 2027 approved at Policy and Strategy Committee in March 2024 (and the aligned Digital North Lanarkshire Programme of Work) for which further context is provided below. • Through the delivery of the Digital North Lanarkshire Programme of Work, Business and Digital lead activities which focus on developing a skilled digital workforce, promoting an innovative sustainable culture, and providing digital leadership for an evolving North Lanarkshire. This means building on existing achievements and embedding digital thinking into everyday delivery, embracing digital technology to do business significantly differently, and always considering a digital-first approach. Business activities, and therefore key performance indicators, focus primarily around availability, security, and incident response, but must also be considered against the requirement to undertake works which simultaneously facilitate delivery of the council’s overarching Programme of Work priorities. Balanced Performance highlights: • According to the Ofcom Connected Nations update, 99% of properties in North Lanarkshire receive superfast broadband - the 4th highest of all 32 local authority areas in Scotland. The Superfast broadband referenced by Ofcom, also known as Fibre to the Cabinet (FTTC), requires a combination of fibre and cable technology. Fibres go to the cabinet on the street, and from there, copper cables (as used in cable broadband) go to a house. This makes superfast broadband vastly more accessible, as the copper cables are mostly already installed to provide landlines. Ofcom define superfast broadband as supporting download speeds of at least 30Mbit/s. To put this in context, it has around the same megabits per second as the 4G on a mobile phone. For streaming, only around 1.5mbps or 2.8 is needed for HD quality. Most everyday tasks only need a maximum of about 20mbps. 2.9 Fibre connectivity supports higher speeds than this but requires fibre optic cabling rather than the more readily available copper cables used in traditional networks. It is this type of connectivity - also called Fibre to the Premise (FTTP) - which the council is targeting through the Connectivity Framework approved by committee in December 2021, to ultimately enhance fibre coverage across the North Lanarkshire area. • Committees have received several detailed updates regarding connectivity in 2024 and the performance report provides additional narrative to highlight the difference between the two connectivity performance measures. Reports to committee include - Communities Committee in February 2024 which provided an update on the delivery of the added value and community benefits experienced to date within the connectivity contract, Finance and Resources Committee in February 2024 which provided an update on the implementation and operational status of the Connectivity Framework approved by committee in December 2021, and the performance of the approved provider Commsworld Ltd, and an in-depth review of digital broadband was also considered by the Audit and Scrutiny Panel in May 2024. • The report illustrates that full fibre connectivity / availability (FTTP) has increased to 32.6% across North Lanarkshire. This differs to FTTC in that fibres are delivered directly to a house or business premise (rather than to a cabinet on the street), making the connection much quicker. This type of ultrafast broadband has download speeds of more than 300mbps. 5G would come under this banner too, reaching up to 1gbps. This also means that if a house doesn’t have a phone line, or if such stops working for some reason, then internet access will not be affected. Similarly, if a business or a household is accessing the internet a lot, and lots of people are trying to do lots of things at once, then ultrafast broadband is much quicker than superfast as it can handle more simultaneous uploads and downloads. Areas of performance requiring improvement • Data breaches - While reporting on data breaches has improved across the council, reflecting improved understanding of process and responsibility, there is a clear increasing trend in respect of the volume of data breaches (as also noted in the corresponding Data Protection Officer’s annual data protection report for 2023/24). A proportion of data breaches can be attributed to e-mail misuse which are frequently due to simple mistakes, e.g. selecting the wrong address using auto complete, sending an e-mail with an expanded distribution list instead of using the BCC option, e-mailing the wrong address with unrelated information, or e-mailing a personal address rather than a business address. As a recommendation from the Information Commissioners Office referred to removing the e-mail address autocomplete function Business and Digital are in the process of establishing a proof of concept for technology that uses rules and evolving pattern recognition to mitigate this risk. The product Egress Prevent has been chosen for a one-year proof of concept, monitoring outbound and internal e-mail traffic to alert users to potential data breaches and stop them before they happen. With increased use of digital services, this is expected to impact the volume of e-mail data breaches. It should be noted that there may be additional unnoticed data breaches and hence not reported, however Egress Prevent will equally provide benefit here. Page 374 of 412
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• For requests for the IT service desk being logged through the self-serve portal, performance in 2024/25 to date (as at June 2024) shows this indicator has improved but remains below the target (of 70%) at 61.4%. When broken down further this reflects a year-to-date position of 69% corporate and 39% schools. The use of the self-serve portal remains strong within the council’s corporate environment, and as more self-help functionality is developed this will become increasingly useful for staff. The chat functionality is in the process of being removed for a number of months to allow modernisation of the user interface and improve alignment with the HR service desk portal, with the intention to merge into a single employee portal in the future. Schools use of the portal is less successful, partly due to culture and partly due to availability, however with all school areas now utilising dedicated individual accounts, this is expected to increase. • Previous reports to the service committee in respect of indicator for the % of all severity level 3 service desk incidents resolved within target show this has been an area under ongoing review since the insourcing of Wipro when this indicator was changed to capture all severity level 3 tickets in order to provide a more complete picture of all incidents that require to be resourced by the service. This has increased the volume of incidents recorded within this indicator and required ongoing and closer analysis of demand in order to fully understand the asks of the service and manage these in a way that takes into consideration all the related component parts of the service to be delivered as well as improvements required in the longer term. While the rise of agile working, increased adoption of third party services, and vacancies in resolver groups increase the overall complexity of incident types and adversely impact overall resolution timeframes, (as frequently these involve interaction with both third parties and staff moving from differing environments), trends continue to show a decline in performance (which reflects upon the increased stability of the estate and the device build in particular) and performance continues to remain below the stated target (i.e. performance in 2024/25 (as at June 2024) remains below the revised target (of 85%) at 73.3% with 1,619 out of 2,208 incidents resolved within target to date. While there is an understanding that aspects of this are due to how the system is being used rather than a true indication of performance, it is recognised that the metrics that are measured and the service levels applied are in general those determined by previous external providers over 10 years ago. They are therefore now in scope for a full review. Research is underway via industry bodies and peers in terms of what metrics are being measured and their purpose and usefulness and this will be reviewed to ensure measures align to organisational need and ambition. Report title Summary Health and Social Care performance update - Quarter 4 (January - March 2024) August 2024 The Chief Officer (Health and Social Care North Lanarkshire) has joint quarterly performance review meetings with the Chief Executives of NHS Lanarkshire and North Lanarkshire Council. These meetings are supported by a Chief Executive’s Performance Framework which comprises a range of performance measures taken from across both the health and social work systems, including relevant targets and trajectories for the measures presented. In each quarter there are areas for improvement identified within the performance framework; these are identified using a RAG rating and those measures that are flagged as Red or Amber are subject to improvement or corrective action. The performance review meetings are used as a means for jointly agreeing these actions. Aligned Priority: Improve the health and wellbeing of our communities. Ambition statement: 12. Ensure our residents are able to achieve, maintain and recover their independence through appropriate supports at home and in their communities. 13. Improve preventative approaches including self-management and giving people information and choice over supports and services. 14. Ensure the highest standards of public protection. Consistent A pre-defined Health and Social Care Partnership template is in place to ensure a standard, easily recognisable, and well established process for quarterly reporting on areas for improvement. Transparent Based on a traffic-light system there are areas for improvement identified within the performance framework each quarter for those areas that are flagged as Red or Amber. The areas for improvement identified are progressed as a matter of priority, and progress updates are reported at future meetings of the Integrated Joint Board and/or the Integration Joint Board Performance, Finance, and Audit Committee as appropriate. Page 375 of 412
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In context • The joint performance review meetings (involving the Chief Officer for the Health and Social Care Partnership, the Chief Executive of NHS Lanarkshire, and the Chief Executive of North Lanarkshire Council) are used as a means for jointly agreeing corrective actions within the current operating environment. • The report describes the progress that has been made in pursuit of the national health and wellbeing outcomes and recognises that this progress has been made against a challenging position of recovery and remobilisation of services following the pandemic, which is reflected in the performance in some of the metrics presented in the report. Balanced The purpose of the report is to provide an update on the areas for improvement what have been identified as part of the quarterly performance review. The quarter 4 report (for January - March 2024) sets out corresponding narrative and corrective actions agreed for the areas identified for improvement; the narrative and corrective actions are summarised below. • Cervical screening - Analysis on uptake for cervical screening shows that over the last year there have been three practices consistently performing well against the cervical screening target of 80%. In the last quarter, one practice has slipped below 60% uptake. Improving and maintaining cervical screen uptake is complex and improvement actions include re-engaging the cluster leads and service managers as key stakeholders in driving appointment availability and capacity within their systems, as access to primary care appointments is a known barrier to women accessing the service. In addition, several multidisciplinary actions are in place with a particular focus on inequalities, this includes general awareness raising, targeted work in the community, targeted work in primary care. • Children immunisations - The measure for 5-year-olds remains in decline. To address this, action is being conducted at the level of the individual and a deep dive is being conducted of every child’s journey, and for non-attenders a number of factors are being considered to improve performance in this indicator. At every stage of the pathway contact is made and targeted contact is made pre-immunisation to confirm attendance; if non-attendance is likely, alternative options and appointments are offered. For non-attendance, colleagues are making contact and engaging with the family to understand if there are barriers, such as boundary/travel, or vulnerabilities that are preventing their attendance. Where a child has a non-complete immunisation record, this information is shared promptly with their GP. This information sharing has prompted further consideration of the wider public health implications of immunisation. Health visiting teams have been actively pursuing an offer of vaccination where this has previously been declined. Health visitors are discussing vaccinations at every pathway visit and a specific script was developed to assist staff nurses when calling and talking with families. There has been some feedback from families of having received multiple approaches and vaccination offers, which has the potential to impact negatively, and this situation will be monitored to ensure that no negative effect will be experienced. • 6-8 week reviews - These appointments are an important opportunity for parents to speak with a health visitor to discuss their baby's development and progress, as well as their own health and wellbeing. Performance data for the most recent two quarters is not available and previous data is being reviewed to ensure consistency in this metric moving forward. In the meantime, work continues to establish the Universal Health Visiting Pathway as a high priority for Morse implementation as an area of need and risk (Morse is an offline first electronic patient record which allows for scheduling, the recording of patient contacts and reporting). This sits alongside wider engagement nationally to support a national digital recording solution. In addition, scoping work continues regarding the Elsie App, which is used in other healthcare settings to reduce DNA through more dynamic communication, reducing manual processes, and increasing productivity of colleagues. At a locality level the service continues to implement practical actions to address the immediate concerns around missed reviews, and incomplete or missing records. Specific testing is being undertaken in Airdrie on improvements to the process and it is hoped that this can be scaled and spread, providing a consistent approach across each locality. • Reablement and rehabilitation - The aim of rehabilitation and reablement services is to ensure that residents are able to achieve, maintain, and recover their independence through appropriate supports at home and in their communities, including preventative approaches, self-management and choice over supports and services. In addition, the shift in the balance of care toward delivering services by Self-directed Support, allowing people to have greater choice and control in their own lives, requires that further consideration is required as to the performance indicators that might best represent how the delivery of services is changing. Working in these new ways, there is an associated increase in system capacity and improvement in patient flow by reducing the occupied bed days caused by Delayed Discharge. The development of the Reablement service is interdependent with work to develop Home Assessment Teams (HATs), the ongoing Review of Home Support services and the development of Locality Enabling Hubs. This is further dependent on the work to ensure that Reablement and Rehabilitation practice is cohesive across HAT, Home Support, and Integrated Rehab Teams. While recruitment remains a challenge for such services, with HAT teams not fully staffed and therefore little capacity to mitigate the impact of any sickness absence and annual leave, significant progress has been made. As well as raising awareness and understanding of HAT, the practice of assessment at home and a home first approach embedded in everyday practice, tests of change are currently underway to introduce Non-Prescriptive Referrals for Home Support. This follows analysis of data and information showing discrepancy between prescribed discharge care plans and the actual care that patients required Page 376 of 412
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post-discharge, leading to a reduction in care provided. The purpose of the test of change is to increase the accuracy of home support referrals and improve patient outcomes by adopting non-prescriptive referrals, whereby potential referrals are screened by home support team leads and support is delivered on basis of need-led input and available resources are optimised. • Child and adolescent mental health services (CAMHS) - Although performance has decreased during Q4, and the data prior to 2022 shows a higher level of performance, this does not reflect the increasing number of children and young people waiting for first assessment. The reduced capacity to see new patients resulted in more routine/return activity, which in turn resulted in decreased performance. At present over 200 waits had been removed from the waiting list in April 2024, those children having received a choice appointment. The trajectory for long waits is a 40% and then a further 25% reduction in the coming months, with the end goal of having no initial wait for an appointment. A number of key actions are in place at various stages of progress with the aim of reducing the waiting list and addressing performance, this includes - locality waiting list initiative, introduction of group therapy in several specialist areas, additional support from the wider CAMHS workforce, as well as centralised to provide additional scheduled and unscheduled support to locality teams. West of Scotland collaborative work has also helped to build a broader unscheduled intensive workforce to support care provided at home. • Adult mental health - For adult mental health services, there has been a slight decline in the performance, however it remains within the expected range against modelling carried out by the internal analyst. The service continues to refresh and monitor the modelling. A number of factors contribute to the inability to meet the target, most notably the staffing establishment as at the end of March 2024 which saw 23.2 whole time equivalent vacancies within the service. Nevertheless, there has been focussed efforts to reduce the longest waits, with those patients waiting greater than 18 weeks for treatment being targeted. In relation to outpatients (12 weeks), the vacancy level for general adult psychiatry remains at approximately 66% in North Lanarkshire with the staffing position mostly unchanged since autumn 2024. The service is considering the changes needed to current traditional psychiatry working practices and where appropriate, developing new practice. • Dietetics - Following the significant reduction in the level of performance in Q2, the improvement in Q3 has sustained in Q4. The overall long-term trend is for improving performance, however further analysis would be required to understand any cause/effect relationship with wider system factors, as the service continues to be restricted by the (approximately) 20% reduction in available workforce, which is due to both long term sickness and sustained vacancies. Although recruitment activity continues, as with many services dietetics has difficulty in attracting suitably skilled and experienced staff due to lack of available workforce nationwide. Modelling and process mapping has been commissioned for the service with the aim of modernising the approach and service model. However, it should be noted that some additional project management support will likely be required to progress the work, given the capacity and vacancies both within the service and the wider directorate. • Complaints - Work is underway to develop a new system for the management of complaints which will offer improved reporting, including a focus on learning. Over 2023/24, the number of contacts to patient affairs for the North Lanarkshire Health and Social Care Partnership increased over time. In order to improve performance, additional communication has been disseminated to encourage resolution of complaints at stage 1, promoting the stage 1 guidance and, for stage 2 complaints, the person centred complaint handling procedure. A short animation on writing complaint comments has been developed, which should assist in the response to stage 2 investigations. The stage 2 escalation procedure provides examples of when it is appropriate to apply extensions to timescales, which should assist colleagues in managing the 20-working day response target, while balancing the need for a quality investigation. The SPSO are due to publish the amended Child Friendly Complaints Procedure; the expectation is that when handling complaints involving children there will be requirement to be mindful of the principles but that there will be no expectation to implement the full procedure. The date for full implementation is yet to be announced and the NHS Lanarkshire response will be scoped when the procedure is received from the SPSO. • Smoking cessation - The indicator remains a red RAG against target, although the data is presented two quarters in arrears. To address this, a number of key actions are underway, this includes a local action plan developed to address the recommendations and adopt the best practice documented in the national review of smoking cessation services. This will require a redesign of smoking cessation service, realignment of a standard operating procedure to facilitate the provision of Nicotine Replacement Therapies (NRT) from non-clinical staff to people who are motivated to stop smoking. In addition, the use of a patient group directive for the supply of NRT will be stood down. All change and improvement actions required will employ recognised improvement methodology, with a specific focus on understanding and addressing unwarranted variation in the overall system. A number of the actions focus on communication and engagement, emphasising the need for colleagues at all levels to actively raise the issue of smoking. Beyond high-level messaging around smoking cessation, actions aim to increase direct referrals to the Lanarkshire Quit Your Way (QYW) service from maternity, mental health, secondary care services, as well as voluntary and third sector partners. Direct communication and engagement with these services will be supplemented by a broader social media campaign to share information. • Adult social work - There were 798 adult protection support referrals during Q4; this represents a decrease of around 10% in comparison with Q4 in the Page 377 of 412
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previous year (891). Despite the overall decrease, there has been an increase in referrals from Police Scotland (+12%) and NHS Lanarkshire (+13%). However, there has been a slight decrease in referrals from Scottish Fire and Rescue and the council’s housing service when compared with the previous year. Over the last 12 months, the care home sector has generated the greatest number of referrals, however in Q4 the number of referrals from care homes fell by around 40%, leaving health as the highest referrer for the period. Despite this reduction, the care home sector remain a priority for ongoing adult support and protection work to support improvements in both the quality of referrals and defensible decision making. Analysis of the referrals has highlighted that community based referrals are more likely to progress to adult support and protection investigations when compared to referrals from care homes. Referrals generated by social work and community partners often relate to multiple types of harm, but analysis has identified that self-neglect and hoarding continue to rise; these cases are often complex and require a long-term, inter-agency response. Council procedures have been updated with changes to the language used in the procedures to describe how adult support and protection inquiries and investigations are now viewed and to differentiate between inquiries with, and without, investigatory activity. Investigatory activity involves any direct contact with the adult or their legal proxy and as such, it is anticipated there will be a rise in investigatory activity. To date reasons recorded for inquiry with investigation activity are psychological / emotional harm, physical, self-neglect, financial, institutional harm, self-harm, sexual, and not recorded. From the total of 151 inquiries with investigatory activity, 18 progressed to case conference for further action during Q4, which represents 12% of all investigatory activity cases. This is a 20% increase from the same quarter in the previous year (15). Appendix 2 (2) Chief Officer service specific performance reporting which takes place each year to meet business and/or statutory obligations. Report title Summary Tackling Poverty annual report 2023/24 August 2024 This report provides details of the income maximisation work carried out by the Tackling Poverty Team and council services during 2023/24 and additional benefit income for the residents of North Lanarkshire. It also highlights the activity of the external services commissioned by the council and the additional income generated for residents. The report also focuses in particular on the key area of income from welfare benefits and therefore also updates on the continued programme of welfare reform and its impact, including the introduction of benefits devolved and now provided through Social Security Scotland as well as the challenges which the council, partners, and local communities are predicted to face over the next three to four years. Aligned Priority: • Improve the health and wellbeing of our communities. Ambition statement: 11. Increase economic opportunities for adults by understanding, identifying, and addressing the causes of poverty and deprivation and barriers to financial inclusion. Consistent • The council is the largest local authority landlord in Scotland with circa 36,315 houses. In addition, the local Registered Social Landlord sector owns and manages approximately 9,000 properties. • The report estimates that around 58.5% of social tenants are in receipt of Housing Benefit (57.3% in the council housing sector). Early intervention with income maximisation assists in the prevention of rent arrears and the sustainability of tenancies. Housing advisors provide basic information and advice to vulnerable tenants and homeless people, concentrating on housing benefit to ensure people can pay their rent. They receive welfare rights training and are supported by Welfare Rights Officers from the Tackling Poverty Team. Transparent • The report provides a very detailed overview of performance in all the key areas of service delivery - income maximisation, appeals, debt advice, training, external services and the impact of legislative / policy changes. • The report also lists benefits which have now been devolved to Scotland which the Scottish Social Security Agency are in the process of rolling out. • The report also references changes made by the Scottish Government in 2024/25 in relation to welfare payments and support to tackle poverty. Page 378 of 412
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Report title Summary In context • The report sets out the context in terms of 2023/24 still having legacy issues of the pandemic alongside the impact of the cost-of-living crisis which are considered to have impacted disproportionately on those disadvantaged residents which have brought the importance of income maximisation and wider work to tackle poverty into sharp focus, highlighting the impact of low paid and insecure work in particular as being a particular challenge. • The report also sets out the context in terms of local approaches to tackling poverty and reducing inequality in North Lanarkshire, which continue to be driven by the Towards a Fairer North Lanarkshire Tackling Poverty Strategy with activity focused on the key drivers of poverty. Balanced The report lists a range of key highlights for 2023/24 which include the following: • Since establishing the Cost of Living helpline in early 2023, with funding provided by the Joint Integration Board, there has been an increase of 41.2% in the number of benefit checks completed for residents; rising from 18,521 benefit checks completed in 2022/23 to 26,158 in 2023/24. • The additional benefit income generated by the council increased by 35.1%, with a total of £47.9m of additional benefit income generated via claims, mandatory reconsiderations, and appeals for benefits. External services commissioned by the council generated £8.3m in additional benefit income. • Demand has increased in respect of the welfare rights service, with the average number of referrals per month received by the team rising from 945 in 2022/23 to 1,180 referrals per month in 2023/24. While the majority of referrals are received directly or via council service, over the year there were 12,659 referrals for welfare rights and debt advice received from elected members, MSPs, MPs, NHS Lanarkshire, and other agencies. • The increase in referrals has had an impact on response times, with the normal call back of 3-5 working days moving to 5-7 days to meet that demand. At times it has been necessary to move this to 7-10 days again to meet the demand placed on the service. • Housing services generated £18.8m in benefits for 7,040 new and existing tenants, making 9,792 claims for benefits of which 5,175 were claims for Housing Benefit (including supported accommodation), Discretionary Housing Benefit, and the Council Tax Reduction Scheme (which is a direct income for the council and in the longer term contributes to the sustainability of tenancies). • The council completed 26,158 Benefit Checks generating an income to local residents of £24.8m, with additional financial gains of £0.7m, (benefits, charities, and energy suppliers, etc.) generated via debt advisors. • The MacMillan Lanarkshire Advice Service (provided by the council) provides home visits, telephone interviews, office visits, and surgeries in local hospitals reported 700 referrals to the service, of which 52% were for DS1500 / BASRiS cases (terminally ill). This is a reduction from previous years, due mainly to cancer services pausing due to the impact of the pandemic, nonetheless £3.5m of income was generated for those residents referred affected by cancer. • In respect of appeals, the council provides representation for residents at mandatory reconsideration stage and Social Security appeals and represented 293 individuals at mandatory reconsideration stage with a success rate of 64% and at 124 appeals (which was a significant decrease on previous years due to decrease in DWP activity, mandatory reconsiderations, and the legacy impact of the pandemic). The overall success rate for Social Security appeal tribunals by the council was 81%, which is the same as last year and above the national average of 66%. • 1,992 referrals were received for money advice / debt advice from residents, elected members, CABx, health and Social Care services, education, housing services, NHS Lanarkshire, and other Advice and Information agencies. 19 Debt Payment Programmes (DPP) were dealt with and 49 bankruptcies were awarded. The cost-of-living crisis and people’s circumstances continuing to be unstable has impacted on the number of formal debt solutions being accessed. This year saw a further increase in the number of payment / crises breaks, variations, and revocations being dealt with by the council for current DPPs. The total debt dealt with was £6.4, which was an increase of £0.5m. • Following the introduction of the Cost-of-Living helpline, a text survey was introduced for residents referred to the council. While the number of returned text survey are very low (186) and work is continuing to increase returns during 2024/25, headline results show that 80% of the referrals were self-referrals and the remaining 20% were NHS Lanarkshire, other council services, or elected members. The main reason for referrals was for benefit advice (income maximisation), followed by money advice, food and fuel poverty, mandatory reconsiderations, and representation at Social Security appeals tribunals. Overall, 90% of those responding were happy with the quality of advice provided, 90% were happy with the timescales of the response time, and 90% were happy with the ease of access to the service, with the main channel still by telephone and e-mail. • During 2023/24, training was provided to council staff and external partners - via online video tools and face to face - covering tackling poverty awareness sessions, updates on benefits, welfare reforms and legislation, financial assessments, employment and support allowance, migrant workers, and other welfare benefits-related subjects. A range of online e-learning training packages continue to be maintained and made available to council services, elected members, and partners - these cover for example the Scottish Welfare Fund, Personal Independence Payments, and Universal Credit. Page 379 of 412
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Community Asset Transfer and Participation Requests - annual report 2023/24 August 2024 This report provides an annual progress update regarding Community Asset Transfer (CAT) and Participation Requests (PR) in North Lanarkshire. This demonstrates the council’s compliance with the Community Empowerment (Scotland) Act 2015 which came into force in July 2015. The Act requires local authorities to engage with communities and the voluntary sector to deliver effective services in partnership to meet local need. Community Asset Transfer is covered under part 5 of the Act and Participation Request requests are covered under Part 3 of the Act. Aligned Priority: • Enhance participation, capacity, and empowerment across our communities. Ambition statement: 19. Improve engagement with communities and develop their capacity to help themselves. Consistent The report has been prepared in line with the legislative requirements set out in Parts 3 and 5 of the Community Empowerment (Scotland) Act 2015, requiring relevant authorities to publish an annual report setting out the number of requests received and the outcome of these. Transparent A summary of this report is published and made available online to communities (https://www.northlanarkshire.gov.uk/your-community/working- communities/community-asset-transfer-and-participation-requests/community-asset-transfer ). In context • The report sets out the context within which the service is required to operate in relation to legislation. • The council’s corporate Community Ownership and Management working group oversees delivery of the processes and is responsible for setting implementation priorities for this part of council business. • Throughout 2023/24 there has been a focus on ensuring that the council’s processes reflect the requirement to: - Empower community bodies through the ownership of land and buildings, giving them a stronger voice to better enable them to participate in decision making processes. - Improve community planning processes through active community participation. - Implement, and continue to review, the Community Asset Transfer and Participation Requests policies approved by Committee in April 2020, ensuring alignment with The Plan for North Lanarkshire and other national guidance. • The report relates to the official Community Asset Transfer process and the reporting requirements set by Scottish Government related to the Community Empowerment (Scotland) Act 2015. The focus for the report is therefore on outcomes associated with the council’s Community Asset Transfer process and policy as at 31st March 2024. • The report references approval of the Community Ownership and Management of Council-Owned Assets Policy at Policy and Strategy Committee in June 2024 to implement a broader and more community focused approach which aims to ensure a more co-ordinated corporate approach and response to promoting, raising awareness, and responding to any requests for community use or the management or ownership of assets. • While this report refers to the formal Community Asset Transfer and Participatory Budgeting process, it is important to note that other mechanisms, for example agreed leases, can often be the most suitable option for groups. Since 2017, a total of 32 council assets have been effectively transferred to community groups. Balanced • The report provides an update on Community Asset Transfers, including in relation to the volume of enquiries and submissions as well as engagement and support to organisations and groups at the different stages of the process. It also sets out the key highlights since the last annual report. • During 2023/24 there was a total of 29 new enquiries relating to Community Asset Transfers. Combined with 18 ongoing enquiries from the previous year, the council has been engaging and supporting 47 organisations and groups, each at different stages of the Community Asset Transfer process. • Key highlights from the last annual report include: - Increased levels of enquiries. - Successful implementation of the one-point-of-contact system - Demonstration by communities of their appetite for community asset transfers or other related solutions. - Significant level of enquires from sports clubs and organisations for asset transfer of sports pitches and other community facilities. - Increased referrals to Voluntary Action North Lanarkshire for advice around governance and funding. - Strengthened relationships with Community Ownership Support Service operated by the Development Trust Association Scotland. Page 380 of 412
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- Trial of setting of deadline dates for assets which are subject to multiple interest for community asset transfer. - Testing of a small new funding stream to support organisations preparing for community asset transfer, funded by UK Shared Prosperity Fund. • The report also provides an update on Participation Requests, including in relation to the volume of enquiries and requests. It also sets out the key highlights since the last annual report. • During 2023/24 there was a total of 5 new enquiries relating to Participation Requests. Combined with 1 ongoing enquiry from the previous year, the council has been engaging and supporting 6 cases. • Key highlights from the last annual report include: - Increased levels of dialogue with community and voluntary sector organisations in respect of the Participation Requests process. - More complex ideas being presented in respect of organisations looking to work with the council to improve services for local communities or in relation to better use of council owned assets. • Information is also provided in the report in terms of community capacity building being delivered to provide support and ensure that organisations understand the empowerment focussed processes and are able to access vital information, guidance, and advice at the same time, as well as corresponding promotional activities being delivered to raise awareness of the various participation and empowerment tools and approaches linked to Community Asset Transfers and Participation Requests. Report title Summary LOIP performance report - October 2023 to March 2024 August 2024 This report provides a snapshot of progress linked to key priorities for each of the nine Local Outcome Improvement Plans (LOIPs) for the period from 1st October 2023 to 31st March 2024. The report also provides an overview of progress with implementation of the Management and Monitoring Framework and work to develop the role of the Local Partnership Teams. Aligned Priority: • Enhance participation, capacity, and empowerment across our communities. Ambition statement: 19. Improve engagement with communities and develop their capacity to help themselves. Consistent • The report advises that the LOIP Management and Monitoring Framework was launched in June 2022 as a tool for partners to highlight and report on progress with local action linked to LOIP priorities. The tool also aims to assist with reporting progress and outcomes around LOIP priorities to a range of audiences including the Community Boards, the Communities Committee, the North Lanarkshire Partnership Strategic Leadership Board, and individual partnership agency leadership teams as appropriate. • The Framework is intended to streamline reporting, ensure consistency, and allow partners to focus on critical issues or significant developments. • The success of the Management and Monitoring Framework does not rest with one agency or an individual officer. All Local Partnership Team members share a collective responsibility for ensuring that the Framework is regularly updated and that there is adequate monitoring and scrutiny of progress and performance at each Local Partnership Team meeting. Transparent • The report advises that the LOIP Management and Monitoring Framework underpins quarterly reporting to individual Community Boards, six monthly reporting to Committee, and statutory annual reporting in line with the Framework for Demonstrating Improved Outcomes for Communities. • The six monthly performance outcomes, attached in appendices to the report, provide a summary of key highlights across the strategic priorities identified in each LOIP. Planned future actions for the forthcoming six months (i.e. April to September 2024) are also included. The report notes a change in one of the LOIPs strategic priorities following discussions at a Community Board meeting in April 2024 whereby digital inclusion was considered a more appropriate and accurate term to define related actions that should be taken forward in the local area. In context • The report sets out the context within which the Management and Monitoring Framework was developed, i.e. in support of the North Lanarkshire Partnership Strategic Leadership Board’s Framework for Demonstrating Improved Outcomes for Communities, a LOIP Management and Monitoring Framework was developed and implemented to ensure effective management, oversight, and reporting of progress on LOIP priorities by Community Planning Partners through the Local Partnership Teams. Page 381 of 412
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• Local Partnership Teams were established to drive and embed delivery of the LOIPs across the Community Planning Partnership and ensure effective monitoring and management of progress. Balanced • The report is accompanied by nine appendices which set out detailed information for each LOIP in terms of priorities, progress and highlights, and planned actions and developments; this information is based on input from partner organisations. • Local Partnership Teams continue to engage in community planning developments to support LOIP monitoring and reporting and work includes: - Working across IT departments to find an efficient and sustainable solution to align IT systems and remove the barriers for some organisations to access a shared MS Teams areas and input to the Management and Monitoring Framework. - Turnover of staff can be a challenge in maintaining a consistent approach and the community partnership team continues to provide input and advice to newer officers in post. - Ensuring local leadership for cross cutting priorities is aligned and connected to strategic approaches. - Ensuring reporting is focused on progress with partnership action linked to LOIP priorities and not single service / agency updates. - The need to continue to improve the quality of information and accountability for the information that is fed into the Framework reflecting progress with action aligned to the LOIP priorities and translating this into useful reports that drive partnership action. All priority leads are responsible for finalising the information that is appended to the various reports as an update on the priorities that they lead on. - Continuing to strive to increase levels of community engagement, participation, and ownership for action in delivery mechanisms. Report title Summary Scottish Roadworks Commissioner - annual performance 2023/24 August 2024 The Scottish Road Works Commissioner oversees improvements to the planning, co-ordination, and quality of road works by both local authorities and statutory undertakers in Scotland. The council has a duty, under section 118(1) of the New Roads and Street Works Act 1991, to co-ordinate the execution of works of all kinds in roads for which it is responsible. This report presents details of the Scottish Road Works Commissioner’s Performance Review in relation to Road Works undertaken by the council during 2023/24. Aligned Priority: • Improve the health and wellbeing of our communities. Ambition statement: 17. Ensure we keep our environment clean, safe, and attractive. Consistent • The report is produced in line with the requirements of the Commissioner who monitors performance and promotes and encourages good practice across both utility companies and all roads’ authorities. The Commissioner also has powers to impose financial penalties on roads authorities who systematically fail in their duty to co-ordinate and upon statutory undertakers who systematically fail to co-operate when undertaking road works. Transparent • The Scottish Road Works Commissioner is an independent public official established under section 16 of the Transport (Scotland) Act 2005 and is accountable to the Scottish Ministers and ultimately the Scottish Parliament. The Commissioner's aim is to improve the planning, coordination, and quality of road works throughout Scotland. • The report sets out the requirement that all works undertaken within the Public Road in Scotland require to be noticed in accordance with the conditions and timescales as set out in the New Roads and Street Works Act 1991 and associated Codes of Practice. All works must be recorded on the Scottish Road Works Register (Aurora). Any proposed works entered onto the Aurora system without the requisite information, or outwith the prescribed timescales (both prior to and after the works are undertaken) will incur a noticing failure. • The report also notes that the Office of the Scottish Roadworks Commissioner issues annual performance review letters to all works promoters in Scotland. Any organisation that fails to meet the identified performance figures may be required to meet with representatives from the Commissioner’s office to discuss the figures in greater detail. In context The report sets out the context in terms of the responsibility for the day-to-day management and co-ordination of works undertaken on roads which is as follows: Page 382 of 412
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• North Lanarkshire Council, as the roads authority, has a duty to co-ordinate all road works carried out on any road for which they are responsible. • The reinstatement of road surfaces remains the responsibility of the party undertaking the works. The roads authority has powers to inspect road works to ensure that statutory undertakers (typically utility companies) fulfil their obligations. • Traffic management at road works (cones, signs, and barriers) is the responsibility of the party undertaking the works. • The roads authority is responsible for any decisions related to the repair and maintenance of their roads. Balanced • The report advises that performance levels in recent years have generally been to a high standard. In 2019/20 the Commissioners report stated that in relation to works planning and operational functions, “North Lanarkshire’s performance sets an example to other roads authorities”. • Performance in 2022/23 was summarised as “overall, the road works performance of North Lanarkshire Council was well-managed during 2022/23. This continues the good management from the 2021/22 reporting year and I acknowledge your continuing commitment.” • Performance in 2023/24 was summarised as “overall, the road works performance of North Lanarkshire Council was satisfactory during 2023/24. I expect to see increased efforts to deliver a well-managed performance in 2024/25”. • The primary reason for the reduction in overall performance was due to the more stringent requirement in noticing regulations implemented through the Transport (Scotland) Act 2109 on 1st April 2023. - On 1st July 2023, the requirement to record start / stop notices within both 2 hours of the work starting and being completed on site was formally introduced. This change seeks to improve the provision of more accurate information to all road users going forward and has required changes in working practices for both the Roads Service and Amey Public Services LLP to ensure compliance. - Training was provided to both internal officers and Amey Public Services operatives in advance of the new requirement. However, both parties initially struggled to implement the operational changes, primarily due to difficulties in sub-contractor compliance and a lack of mobile devices on the operational side. There were also issues identified around public holiday periods. This initially resulted in a significant number of notice failures in quarter 2, followed by gradual improvement throughout the remainder of the year. - Overrunning works were also identified as an area requiring improvement. These occur when the works take longer than anticipated due to unforeseen circumstances, and where the responsible officer fails to apply for a notice extension within the required timeframe. Performance sharply declined for this indicator in Q2 of 2024, potentially due to an unanticipated consequence of the change to the completion notice requirements noted above. Following investigation, further training was undertaken with all relevant officers and contractors to address this issue. - Performance in Q4 shows that noticing performance was back within the Commissioner’s expected performance range where it is anticipated to remain going forward, due to the additional resources and procedures now in place. The service is focused on minimising the risk presented during the forthcoming transition to the new contract. • The report contains an in-depth analysis of council performance with data and graphs in relation to noticing failures, works stated and completed, overrunning works, fixed penalty notices issued to statutory undertakers, and sample inspections undertaken on statutory undertakers works. • The report also highlights the impact of changes in legislation and the council’s role in public utility works. Report title Summary Business regulation/food law - annual plan and performance August 2024 All local authority regulators of food law and occupational health and safety law must plan their enforcement and advisory activities and, in accordance with independent auditor preference, present that plan before a relevant committee for its approval. The report provides a summary of the service plan for the council’s Business Regulation service which fulfils the council’s obligations relevant to food and health and safety law. Aligned Priority: • Improve the health and wellbeing of our communities. Ambition statement: 14. Ensure the highest standards of public protection. Consistent The service is required, in accordance with legislation, to prepare an annual plan which clearly maps out specific aims and objectives for the financial year. Page 383 of 412
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Transparent • Food Standards Scotland advocates that transparency is best achieved by seeking and obtaining the approval of elected members; this is achieved through due consideration of the annual report at a committee of the council each year. • Food Standards Scotland is independent of national government and has the primary objective of protecting the health and other interests of consumers in relation to all food issues. • The Health and Safety Executive’s National Local Authority Enforcement Code requires the council to be accountable to the public and businesses for their actions; this is achieved by publication of the annual Service Plan. In context • The report sets out the context within which the service operates in North Lanarkshire - in this respect the Business Regulation Service is a subset of Protective Services and is responsible for the delivery of the statutory enforcement and advisory service for: - Food law in all food establishments within North Lanarkshire. - Occupational health and safety law in those premises within North Lanarkshire for which they have an enforcement role (health and safety enforcement within premises being split between local authorities and the Health and Safety Executive depending on the nature of the business. • The report also notes that Food Standard Scotland granted dispensation to local authorities to deviate from their annual food inspection plans from 30/03/2020 due to the restrictions imposed during the pandemic, and to enable re-tasking of Environmental Health officers to undertake wider public health duties related to Coronavirus legislation. The dispensation ended on 31/08/2021, at which point local authorities commenced work recovery plans in this area. During 2024/25, the council is continuing to implement the inspection recovery plan, from year 3 into year 4 of the 5-year rolling plan. Extensive risk rating and forward planning has been undertaken to ensure that Food Standard Scotland remain satisfied that the council is adopting an appropriate recovery plan to ensure that all premises receive the required inspection visits within a practicable and programmed timeframe. Balanced • The report sets out the performance targets for the year and the Service Plan in the accompanying appendix details resources and targets for inspections and interventions in respect of food law, including: - Achieving a target of at least 80% of all programmed food law inspections within agreed timeframes. This is an increase on last years’ target which was set at 75%. - Ensuring at least 90% of food business operators’ premises achieve a Pass status in accordance with the national Food Hygiene Information Scheme (FHIS). This is an increase on last years’ target which was set at 80%. - Commencing investigation of at least 90% of high-risk food and food premises complaints within 2 working days of receipt, and commencing investigation of at least 90% of low-risk food and food premises complaints within 5 working days of receipt. This amends the target from last year, when the annual performance measure did not distinguish between high-risk and low-risk. - Maintaining a target of at least 94% of infectious disease cases being responded to in accordance with the NHS Lanarkshire Epidemiological Investigation Protocol. - Responding to at least 93% of high-risk requests for assistance/advice within 2 working days of receipt. - Responding to at least 93% of low-risk requests for assistance/advice within 5 working days of receipt. • The annual Service Plan in the accompanying appendix, sets out the detailed delivery aspects of the service as well as latest demand volumes and performance. • An important principle of the Food Law Rating Scheme is to allow local authorities to target resources on high-risk and non-compliant businesses. The food law intervention scheme rating is based upon a recent food business performance model that targets resources on high to medium risk and non- compliant businesses. This impacts upon the calculation used to determine the frequency of inspection of food business establishments for both the hygiene and standards components of a food law inspection. The Food Law Rating Scheme takes account of a food business operator’s track record of compliance and where this is good, the business will receive an earned recognition status influencing the risk rating to reduce the frequency of inspections. This assists the council by enabling resources to be targeted towards non-compliant businesses which are subjected to more frequent inspections and enforcement actions where required. • The report also includes information on occupational health and safety law - the Health and Safety Executive’s national Local Authority Enforcement Code sets out a risk-based approach to targeting health and safety interventions to be followed by local authority regulators. A key component is to ensure that appropriate interventions are focussed upon specified high-risk sectors. In accordance with the national enforcement code, the council will continue to respond to requests for advice, investigate complaints, accidents, dangerous occurrences, and other incidents reported and undertake appropriate interventions, particularly relevant to North Lanarkshire, wherever possible. The service plan details activities which are planned to be undertaken Page 384 of 412
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throughout the financial year in respect of the regulation of occupational health and safety matters. Additional projects may also be added where appropriate, having being highlighted by the Health and Safety Executive, regionally by the West of Scotland Health and Safety Liaison Group, or through local intelligence, complaint, notification or other direct referral to the council. Report title Summary Scottish Housing Regulator - Annual Assurance Statement 2023/24 August 2024 The Scottish Housing Regulator was empowered by the Housing Scotland Act 2010 and has, since April 2013, possessed statutory powers to monitor, assess, report, and intervene (as appropriate) based on the performance of any Social Landlord in Scotland. Since April 2019, Social Landlords in Scotland have a statutory annual obligation to produce an Annual Assurance Statement relating to the previous financial year (by 31 October each year). The council has adopted a process whereby the statement requires to be presented to Committee and is signed by the Convener of Housing prior to submission to the Regulator. These statements are published for each landlord making them readily available to all tenants. Aligned Priority: • Improve economic opportunities and outcomes. Ambition statement: 14. Ensure a housing mix that supports social inclusion and economic growth. Consistent The service requires to comply with the regulatory requirements set out in Chapters 3 and 5 of the Scottish Housing Regulator Framework. To ensure that compliance is met the service has appropriate and effective mechanisms in place to support the signing of the Annual Assurance Statement each year. These processes and actions continue to be maintained, monitored, reviewed, and updated (if required) on a regular and ongoing basis. Transparent • The full Annual Assurance Statement is attached to the report. To fulfil Scottish Housing Regulator requirements, the service manage and monitor a comprehensive portfolio of control checks and review mechanisms. In addition, an evidence base is held (including items such as base and formulated performance data (with full worked examples of performance measures), procedural guides, process maps, completed audit reports, and copies of reports submitted to council committees) - this comprehensive evidence base is set out in the August 2024 report to the Housing Committee. • The report advises that in 2024 the Scottish Housing Regulator confirmed that the council was one of the landlords selected for a visit to understand the approach to preparing the Annual Assurance Statement and how assurances have been sought in respect of compliance with Regulatory Requirements and Standards. Following a meeting with the Chief Officer (Housing) a feedback letter was received which is attached to the report. An overall report summarising the findings of the visits to all landlords is due to be published by the Scottish Housing Regulator in due course. In context The report advises that its purpose is to seek committee approval on the sign off relating to the fifth Annual Assurance Statement as shown in the appendix to the report. The statement confirms that the North Lanarkshire Council Annual Assurance Statement for 2024 advises that the council: • Complies with all the regulatory requirements set out in section 3 of the Regulatory Framework. • Achieve all the standards and outcomes in the Scottish Social Housing Charter for tenants, people who are homeless, and others who use council services. • Complies with all legal obligations relating to housing and homelessness, equality and human rights, and tenant and resident safety. Balanced • The Scottish Housing Regulator has advised that legally the council must notify them during the year of any material changes to the assurance in the Annual Assurance Statement, including any areas of non-compliance. The report to the Housing Committee in August 2024 advises there are no areas of non-compliance to report for 2023/24. • In line with Scottish Housing Regulator guidelines landlords are asked to confirm whether they meet all duties in relation to tenant and resident safety, and in particular that they have obtained appropriate assurance about compliance with all relevant safety requirements including gas safety, electrical safety, water safety, fire safety, asbestos, damp and mould, and lift safety and the council’s assurance in this respect is set out in the appendix to the report. Report title Summary Community safety hub A report in 2020 provided a one off update on the performance of the Community Safety Hub following its merger into the council’s Housing service. Page 385 of 412
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performance and development August 2024 In order to ensure ongoing performance monitoring this report has now been incorporated into the service’s programme of annual service performance reports. Aligned Priority: • Improve the health and wellbeing of our communities. Ambition statement: 15. Ensure the highest standards of public protection. Consistent A standard set of measures are in place which are recorded and monitored consistently in order to provide a live and complete picture of community safety across North Lanarkshire. These measures focus on incidents captured (criminal incidents, community safety incidents, and anti-social incidents), environmental incidents, evidence requests (evidence disks, and review requests), and missing persons. Transparent A breakdown of all types of incidents is provided in a summary table in the report which compares current year figures with previous years. In context The Plan for North Lanarkshire aims to make North Lanarkshire a better place to live, learn, work, invest, and visit, where homes and public spaces are safe - and feel safe - for everyone. The work of the Community Safety Hub plays a key role in this respect by improving community safety through CCTV, tackling anti-social behaviour, and ensuring public protection. The Community Safety Hub currently delivers: • 24 hour/365 days per year proactive monitoring of 1,378 public space CCTV cameras in North Lanarkshire. • 3 autonomous re-deployable trailers capable of sustaining three to four weeks without a dedicated power supply. • Evidence disks for Police Scotland, the Crown Office, and the Procurator Fiscal. • Call handling for the anti-social behaviour service 24/7. • Management of the public protection service within Housing. • An out of hours anti-social behaviour witnessing service. • An out of hours telephony service for emergency homelessness. • Co-location of Police Scotland officers. • An emergency response centre and relaying of CCTV images to support the council's resilience capacity during major incidents, adverse weather, or other emergencies. Balanced • Work to upgrade the 170 urban housing CCTV cameras on the network is nearing completion, with 164 cameras upgraded over the past three years. The remainder will be upgraded during 2024/25. This upgrade has significantly benefited the communities with increased night-time performance from the high- definition cameras assisting in incidents that may have proven more difficult to detect in the past. • Following the procurement of North Lanarkshire’s first re-deployable trailer, a further two units have been procured, with one dedicated to Housing for deployment in areas to combat anti-social behaviour and criminality. Delivery was concluded in March and testing has been carried out on the devices. These trailers can be deployed for periods of up to four weeks without any requirement for additional power or infrastructure on site and operate completely off grid. The devices utilise solar energy and batteries, coupled with 4G cellular technology to transmit images to the CCTV control room allowing remote monitoring. • Progress is continuing in relation to a pilot and potential deployment of the Noise App. The Noise App is an alternative to installation of sound monitoring equipment. It is less intrusive as the service user captures recordings on their own device and submits it to a case management system for review. Following the outcome of the pilot period a decision will be made in respect of rolling out the Noise App. • In relation to tackling anti-social behaviour across North Lanarkshire, work has continued with the Break the Cycle programme, designed to provide information and education at school level and plans are being made to roll this programme out in the next academic year. Work has also progressed to have sessions delivered on Friday and Saturday evenings in local sports facilities which host a variety of activities for our young people. • Work has been continuing to develop and launch a new case management system to increase efficiency of record handling within the public protection team. Testing of the system continues to ensure all required functionality is included. This system will assist the team with management of workflow and information collation prior to attendance at multi-agency meetings. • The report sets out performance in a range of areas with comparisons to the previous year - this references there were 6,383 recorded incidents during Page 386 of 412
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2023/24 with 2,036 observation review requests (approximately 170 requests to review CCTV footage per month). In addition, within tower blocks and low-rise flats there were 473 incidents captured, CCTV has assisted in 615 apprehension and cautions within the year, and missing persons detected on CCTV has increased slightly, with 184 incidents. • In relation to anti-social call handling and the out of hours service, the report notes that 16,545 inbound calls were handled, an increase from 14,311 in the previous year, which have resulted in 9,342 requests for service, the remainder of the calls can relate to requests for advice only, updates on previous contacts, and signposting of service users to other council services. • Through work undertaken in relation to homeless calls out of hours, the council has taken 11,868 calls during 2023/24 (compared to 7,085 the previous year). These include all call backs and contacts from homeless statutory officers conducting their health and safety check-ins while carrying out their duties out of hours. 3,601 calls passed to standby officers include applicants presenting as homeless at homeless accommodations, people presenting at police offices as homeless and service users who, for a variety of reasons, have been unable to remain in their current accommodation and have been confirmed as homeless through assessment by the call handling team. Report title Summary Economic Regeneration Delivery Plan (ERDP) performance framework - annual update 2023/24 August 2024 This report provides an update on the progress being made towards the implementation and delivery of North Lanarkshire’s Economic Regeneration Delivery Plan (ERDP) and associated Action Plan. The Economic Regeneration Delivery Plan (ERDP) was initially approved at Committee in August 2019, covering the period 2019-23. A light-touch refreshed ERDP, covering the period 2023-28, was then approved at Committee in February 2023. The Action Plan is updated annually, and the progress report details activity as at the 2023/24 year end. The report also presents the latest ERDP Performance Framework update which is used to monitor wider ERDP performance over the short, medium, and longer term (through to 2035). Unlike the ERDP Action Plan, figures within the Performance Framework are reported on a cumulative basis to show the progress against the longer-term ambitions of the ERDP. Aligned Priority: • Improve economic opportunities and outcomes. Ambition statement: 1. Ensure a housing mix that supports social inclusion and economic growth. 2. Refocus our town centres and communities to be multi-functional connected places which maximise social, economic, and environmental opportunities. 3. Maximise the use of our marketable land and assets through improved development in business and industrial infrastructure. 4. Market and promote North Lanarkshire as the place to live, learn, work, invest, and visit. 5. Grow and improve the sustainability and diversity of North Lanarkshire’s economy. Consistent • Since 2019, an Action Plan to support the delivery of the ERDP through a range of key measures and investment programmes has been produced and approved each year by Committee. The Action Plan sets the priorities for the financial year ahead, reflecting progress made to date and the evolving priorities of the council. • The 2023/24 Action Plan was approved at Committee in February 20223 and the current 2024/25 ERDP Action Plan was approved in February 2024. • An accompanying ERDP Performance Framework was approved at Committee in February 2021. Transparent • The report has a dedicated section that summarises the performance review that has been undertaken on the latest data and highlights recent achievements. • An appendix to the report provides an update on all ERDP Action Plan objectives and targets achieved during 2023/24. In context • The ERDP Performance Framework sets out the context within which it operates in that it comprises a set of performance indicators at three levels. • These indicators aim to collectively provide an overview of performance that helps the council to understand the impact of its work on improving economic opportunities and outcomes for all. It also enables performance issues against the ERDPs key priorities to be identified and addressed, mitigating the risk Page 387 of 412
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of delivery failure. • Given the shared ambition set out within The Plan for North Lanarkshire, the ERDP Performance Framework is closely aligned to the corporate Strategic Performance Framework. • The ERDP Performance Framework is kept under regular review to ensure arrangements remain effective and aligned to future versions of the ERDP and The Plan for North Lanarkshire. Balanced The report advises that good progress continues to be made against the ERDPs key objectives with highlights during 2023/24 including: • The delivery of an additional 335 new build council homes via the new supply programme, as well as a further 126 open market / empty homes purchase scheme completions, taking total completions to 2,104 by 31st March 2024 (including open market purchase scheme). • Committee approval of Town Action Plans for Airdrie, Motherwell, and Wishaw in November 2023 with a second phase of plans produced and publicly consulted on for Bellshill, Kilsyth, and Shotts during 2023/24 (which were subsequently approved in May 2024). • The acquisition of The Centre Cumbernauld in June 2023, following £9.225m secured from the UK Government’s Levelling Up Fund, marking a major milestone in the redevelopment of Cumbernauld town centre. • Springhill Community Hub, managed by Getting Better Together Shotts, officially opened in September 2023. • The council secured £150k funding from National Lottery Heritage Fund and Historic Environment Scotland to develop plans for the heritage led regeneration of Airdrie town centre, the Rediscovering Airdrie project. • Fusion Assets remediated 2.55 hectares of land at plot 1, Ravenscraig. • Significant progress was made on the delivery of City Deal projects, such as the Ravenscraig Access infrastructure with the West Coast Mainline crossing rail bridge installed at Ravenscraig in April 2023. • A consultant team was appointed to commence detailed design works for the East Airdrie Link Road. • Considerable progress has been made to migrate the last remaining sites across to the new fibre CommsWorld network, with 96% of sites currently connected. The report also highlights significant progress in improving economic opportunities and outcomes for North Lanarkshire’s residents and businesses. Highlights achieved as at 31st March 2024 include: • 1,351 new build council homes complete. • 753 homes brought into council ownership via the open market purchase scheme, including some homes previously sold under the right to buy. • £92m invested in town centre (including edge of town) developments, of which around £44m was secured via external funding sources. • Town Visions created for all eight North Lanarkshire towns. • Town Action Plans approved for Airdrie, Motherwell, and Wishaw (November 2023) and developed for Bellshill, Kilsyth, and Shotts (and subsequently approved in 2024/25). • 1,692 new affordable town centre homes completed (including edge of town sites) by the council and housing associations. This includes developments across most towns with completed sites including Caledonian Avenue (Bellshill), Berryhill Road (Cumbernauld), 95 Main Street (Kilsyth), and Roberts Street (Wishaw) among others. • 132,910 square feet of business and industrial workspace created or refurbished as a result of investment by the council, Fusion Assets, and North Lanarkshire Properties (NLP). Report title Summary Community Learning and Development - activity for 2023/24 September 2024 This report provides an overview on progress in relation to community learning and development activity for the year 2023/24. This includes both universal and targeted work with an emphasis on engagement with vulnerable people living in the lowest 20% data zones in Scotland (as per the Scottish Index of Multiple Deprivation (SIMD)) and other vulnerable groups as reflected within the revised national self- evaluation framework for community learning and development. Aligned Priority: • Support all children and young people to realise their full potential. Ambition statement: 6. Raise attainment and skills for learning, life, and work to enhance opportunities and choices. Page 388 of 412
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Consistent • The report sets out the role of community learning and development activity in relation to the council’s Programme of Work for 2023 to 2028 as it will be key to delivery of many of the actions. • The annual activity report also reflects the Community Learning and Development Action Plan for 2022-25 which merged the previous Adult Learning, Family Learning, Youth Work, and Recovery Plans into one plan to ensure a more connected and cohesive approach to delivery moving forward. Transparent The report clearly highlights the outcomes for the year 2023/24 against a specified list of Community Learning and Development reportable indicators, with comparisons to previous years. In context • The report notes that community learning and development provision is subject to The Requirements for Community Learning and Development (Scotland) Regulations 2013 and associated guidance for local authorities. Outcomes, improvement activity, and the demonstration of positive impact are captured through the How Good Is Our Community Learning and Development? (4th Version) evaluation framework from Education Scotland. HM Inspectors evaluate and report on the quality of service provision across all local authorities in Scotland through local inspection and progress visits. The most recent visit by HM inspectors took place in December 2023 with the outcome report published by Education Scotland in February 2024. • The report notes that since the removal of pandemic restrictions in 2021, the number of unique learners engaging with community learning and development has increased for the past three years in a row. Balanced • The covering report provides an extensive volume of performance information in relation to key areas of service - engagement in community learning and development programmes, adult learning and resettlement, family learning, youth work, and health and wellbeing. The published annual report in the appendix provides an even more substantial volume of performance information, together with feedback from service users, an update on the action plan, and achievements from cross cutting areas of work. • Key highlights show that: - A total of 8,630 distinct children, young people, and adults engaged in community learning and development programmes during 2023/24 with enrolment in these programmes recovered from the impact of the pandemic and now 15% higher. - 3,390 adults, aged 16 and over, enrolled in community learning and development programmes (up from 2,981 adults in the previous year). Of those learners, 45% lived within the 20% most deprived areas in Scotland. This is an increase of 1 percentage point on last year. - A total of 4,304 young people aged between 8 and 15 engaged in community learning and development provision (up from 3,829 young people in previous year), with 40% living within the 20% most deprived national data zones. This is a slight fall of 3 percentage points from the previous year. - Community learning and development provision included 936 children (up from 900 children in the previous year), with 48% coming from postcodes ranked in the lowest 20% datazones. This is a decrease of 2 percentage points from last year, although still above the service target of 45.5%. - On average, this meant that 43% of all community learning and development participants (children, young people and adults) were from the most deprived datazones in Scotland. This is similar to the 44% recorded last year. As 33% of North Lanarkshire’s general population live in SIMD 1 and 2 datazones, this shows that community learning and development provision continues to effectively target those who may face the most barriers. Given the overall increase in learners over the past year, this means that community learning supported over 300 more learners from SIMD 1 and 2 areas compared to the previous year. Procurement - annual report 2023/24 September 2024 As per the Procurement Reform (Scotland) Act 2014, the council is required to prepare an Annual Procurement Report on all regulated procurement activity as soon as reasonably practicable after the end of each financial year. The latest report to Committee in September 2024, provides the Annual Procurement Report covering the council’s procurement activity during the financial year 2023/24. The Annual Procurement Report also provides a summary of performance against the council’s Procurement Strategy 2023/24, which was approved at Committee in September 2022. The legislation requires that the council publish the Annual Procurement Report on the Internet (https://www.northlanarkshire.gov.uk/business/procurement/key-procurement-documents) and share it with Scottish Ministers. Aligned Priority: • All priorities. Report title Summary Page 389 of 412
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Ambition statement: • All ambition statements. Consistent The Annual Procurement Report is required to be produced in accordance with legislation and specific guidance. The report specifically specifies the areas which the legislation requires the council to report on: • As legislated through the Procurement Reform (Scotland) Act 2014, the council is required to prepare an annual procurement report on all regulated procurement activity as soon as reasonably practicable after the end of that financial year. Regulated Procurements are those above £50,000 for supplies or services, and above £2,000,000 for works. • The legislation requires the council to ensure that its regulated procurements are carried out in accordance with its procurement strategy. • The report data must fully comply with the template requirements set out in the Scottish Procurement Policy Note, SPPN 2/2023. • The Act requires the council’s annual procurement report to include: - A summary of the regulated procurements that have been completed in the previous financial year. - A review of whether those procurements complied with the council’s procurement strategy and, where any regulated procurements did not comply, a statement of how the council intends to ensure that future regulated procurements do comply. - A summary of any community benefits fulfilled from regulated procurements. - A summary of any steps taken to facilitate the involvement of supported businesses in regulated procurements. - A summary of the regulated procurements the council expects to commence in the next two financial years. - Such other information as the Scottish Ministers may by order specify. Transparent • The legislation requires that the council publish the annual procurement report online and notifies Scottish Ministers. This is important as Scottish Ministers must prepare a report on procurement activity in Scotland based on information contained in annual procurement reports. • Scottish Ministers are required to publish their report and lay a copy before the Scottish Parliament. • The legislation also requires Scottish Ministers to publish guidance for the consistent data gathering and preparation of annual procurement reports and procurement strategies; this was done through the Scottish Procurement Policy Note, SPPN 2/2023. In context • The introduction in the appendix to the annual report sets the context in that the council: - Is responsible for the delivery of a wide and diverse range of statutory and discretionary public services. - Delivers services through a mixed economy acting as both a provider, through direct provision of services using its own workforce and assets, and an enabler with services delivered through private contractors, the third sector and supported businesses. - Spent £635m during 2023/24 (excluding VAT) on goods, services, and works to carry out operations and delivery of public services. Balanced • The appendix to the report provides a detailed account of the council’s procurement activities for 2023/24 in line with the national guidance. It provides a summary in terms of regulated procurement activity for 2023/24, compliance with procurement strategy, community benefits, supported businesses, and regulated procurements expected in 2024/25 and 2025/26. • It also sets out the procurement outcomes in detail for the year; these are articulated through a large bank of performance indicators which clearly identify the outcome for the year. • Two additional annexes to the report provide detailed information on regulated procurements completed and planned. Report title Summary Annual data protection report 2023/24 September 2024 This reports on the council’s data protection compliance and activity for the latest financial year in line with the General Data Protection Regulation (GDPR) and the Data Protection Act 2018 which came into force on 25 May 2018. Aligned Priority: • Improve North Lanarkshire’s resource base. Ambition statement: 25. Ensure intelligent use of data and information to support fully evidence based decision making and future planning. Page 390 of 412
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Consistent The UK GDPR introduced a duty for a public authority to appoint a Data Protection Officer (DPO) to assist in terms of monitoring internal compliance, inform and advise on data protection obligations, provide advice regarding Data Protection Impact Assessments (DPIAs), and act as a contact point for data subjects and the Information Commissioner’s Office (ICO). Accountability is one of the data protection principles and, as such, the council is not just responsible for complying with the UK GDPR but also for demonstrating compliance in this respect. The report in September 2024 from the council’s DPO therefore fulfils the duties of the DPO and demonstrates the council’s compliance in terms of accountability in line with the data protection principles. Transparent The report is from the council’s DPO and provides an update in relation to data sharing, breaches, complaints, and training. It complements the Senior Information Risk Owner (SIRO) annual report. In context With a residual risk score of 20 (August 2024) prevalent in respect of the risk for Information Governance and Information Security on the council’s corporate risk register, this subject matter remains as a high priority improvement area for the council. Balanced The report sets out a range of data to provide the relevant assurances regarding data protection. The data is provided at a council level as well as being broken down into the respective services so areas of potential concern can be identified. The report provides a summary which includes data and narrative in respect of data breaches, near misses, complaints, data protection training, and subject access requests. Report title Summary Treasury Management - annual activity report 2023/234 September 2024 This report fulfils the key requirements of the council’s reporting procedures for Treasury Management in accordance with the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities in that it: • Outlines the treasury management activity undertaken during 2023/24 and the resulting impact on the council’s borrowing and investment strategy. • Reports on the council’s performance in complying with the mandatory prudential indicators. • Provides a detailed summary of the council’s performance, making reference to those targets and prudential indicators set at the start of the year within the approved strategy. Aligned Priority: • Improve North Lanarkshire's resource base. Ambition statement: 24. Ensure intelligent use of data and information to support fully evidence based decision making and future planning. Consistent The council’s treasury activities are strictly regulated by statutory requirements and a professional code of practice. Revised editions of the CIPFA Prudential Code and CIPFA Treasury Management Code of Practice were issued in December 2021. In accordance with the council’s financial regulations, the council adopts the fully revised CIPFA Treasury Management in the Public Services Code of Practice including the key principles and the Treasury Management Policy statement. Transparent • Within the council, the Audit and Scrutiny Panel ensures the effective scrutiny of the treasury management strategy and policies, while the Finance and Resources Committee remains responsible for the development of the Strategy, its implementation and monitoring. The council also promotes Elected Members’ responsibility in this area, requiring greater member scrutiny of treasury management activity. • The Code of Practice requires the council to produce reports on its Treasury Management policies, practices, and activities, including (as a minimum) an annual strategic plan at the beginning of the financial year, a mid-year review, followed by an annual report on the measurement of success at the year- end. To ensure compliance with the Code of Practice, Treasury Management procedures are continually reviewed with any amendments reported to Committee as appropriate. • Prudential arrangements and treasury management performance information is also submitted to Committee on a quarterly basis. In context The context is set out in the detailed annual activity report in the appendix, this advises that Treasury Management deals with the borrowing and investment Page 391 of 412
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activity of the council and is an integral part of the council’s Financial Strategy. It seeks to ensure that both capital borrowing requirements and day to day revenue transactions are fully funded. Its importance has increased as a result of the additional freedoms provided by the Prudential Code. Balanced • The report advises that the council has adopted the CIPFA Code of Practice in Treasury Management and operates its treasury services to mitigate the effect of possible risk in this function, while undertaking borrowing and investment activities that are prudent, affordable, and sustainable. • The Code of Practice requires the council to produce reports on its Treasury Management policies, practices, and activities on a regular and ongoing basis. This includes the preparation of an annual activity report providing a detailed summary of the council’s performance, making reference to those targets, limits, and indicators set at the start of the year within the approved strategy. • In accordance with the council’s Treasury Management policy, the report focuses on activities undertaken during the year in the following key areas - external borrowing, interest rates, interest payments, debt maturity profile, sources of borrowing, debt rescheduling, temporary investments, leasing, compliance with the Prudential Code, regulatory framework, risk, and performance. Report title Summary Revenues and benefits update September 2024 This report provides a regular update on the payment performance for council tax and non-domestic rates, the administration of a range of welfare benefits, and the council tax reduction scheme. It provides an update on performance as at 30th June 2024. Aligned Priority: Improve North Lanarkshire's resource base. Ambition statement: 21. Continue to identify and access opportunities to leverage additional resources to support our ambitions. Consistent • Produced quarterly, this report provides Elected Members with detailed in year performance figures which can be compared to the same period in previous years. Transparent • The year to date performance set out in the report covers a wide range of service activities as well as the amount of funding paid out to help households in need in order to provide a safety net for local people on low incomes. • The report also allows for comparisons of performance with the same period in previous years. In context • The council is responsible for the administration and collection of all local taxation in North Lanarkshire in the form of council tax and non-domestic rates. In addition, the council administers a number of benefits for residents of North Lanarkshire including housing benefit, council tax reduction, Scottish welfare fund, discretionary housing payment, free school meals, and clothing grants. • The report includes the latest context within which the service is operating; this is of particular relevance given the aforementioned administration of grants and support payments required for low income households. The report also advises of any new national grants when they are introduced, or will cease, and the qualifying conditions for receipt of such. Balanced The report provides a high-level summary of the highlights which include: • As at 30th June 2024, 29.02% of council tax due for 2024/25 had been collected. This is an increase of 0.13% from the same period last financial year. • Non-domestic rates collection at 30th June 2024 is 20.63% of the total annual charge which is in line with the previous financial year (20.65%) • The service continues to meet statutory timescales for administering benefits applications and changes of circumstance. Report title Summary Financial monitoring report - council summary (revenue) This report presents the council’s revenue monitoring position for the General Fund Account, Housing Revenue Account, and Adult Health and Social Care. (Note, the Revenue Budget for 2024/25 to 2026/27 was approved at the Council meeting in February 2024.) Page 392 of 412
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September 2024 Aligned Priority: Improve North Lanarkshire’s resource base. Ambition statement: 21. Continue to identify and access opportunities to leverage additional resources to support our ambitions. 25. Ensure intelligent use of data and information to support fully evidence-based decision making and future planning. Consistent • The report at each financial period end consolidates the budget monitoring position of all council services into one council summary, highlighting and explaining major variances as per the council’s approved Financial Regulations. • The September 2024 report presents the council’s revenue monitoring position for the financial year to 31st March 2025 as at the end of period 4 (19/07/24). Transparent • The report highlights and explains major variances as per the council’s approved Financial Regulations. The Financial Regulations require services to remain within their approved budgeting provision, and to report all significant deviations - defined as the higher of £100,000 or 5% - within their budget monitoring reports. In context • All activities undertaken by the council are subject to risk, and in acknowledging the council’s approved Risk Management Strategy, services manage these as part of their overall corporate and service planning processes. The September 2024 report states that the current economic climate and pay and non-pay inflation, continuing at historically high levels, are some of the key factors that have the potential to impact on the council’s ability to provide quality services within approved budget levels. Balanced • Where significant deviations are identified, services must provide explanatory commentary, outline the action required to rectify such deviations and, where relevant, must also highlight the impact this has on other budget headings. This information is captured by Finance and summarised in the overall council report. Report title Summary Financial monitoring report - council summary (capital) September 2024 This report provides an update on the 2023/24 resources and expenditure for the council's Strategic Capital Investment Programme. The report also shows the 2023/24 projected outturn position and the resultant variances. (Note, the Strategic Capital Investment Programme for 2024/25 to 2028/29 was approved by Policy and Strategy Committee in March 2024.) Aligned Priority: Improve North Lanarkshire’s resource base. Ambition statement: 21. Continue to identify and access opportunities to leverage additional resources to support our ambitions. 25. Ensure intelligent use of data and information to support fully evidence-based decision making and future planning. Consistent • The report at each financial period end consolidates the capital monitoring position of all council services into one council summary. • The September 2024 report summarises the overall council Strategic Capital Investment Programme for 2024/25 in relation to resources and expenditure and the 2024/25 projected outturn position and resultant variances. Transparent • The report notes that Strategic Capital Investment Programme 2024/25 to 2028/29 was approved at Policy and Strategy Committee in March 2024. It represents the total Community Investment Programme incorporating the General Services Capital Programme and HRA Capital Programmes. • The programme was developed in conjunction with services and led by the Strategic Capital Delivery Group (SCDG) using the principles established by the council’s Capital Strategy. In context • The report states that the General Services Capital Programme supported by General Services resources demonstrates to communities that the place making vision for towns remains a priority, and that the approved 5-year capital investment plan supports delivery of The Plan for North Lanarkshire. Page 393 of 412
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• The programme includes additional investment in Town and Community Hubs, the City Deal programme, and external grant funding. In addition, the Housing Revenue Account (HRA) resources support several HRA Capital Investment Programmes including the mainstream programme for investment in the council’s existing estate and delivery of the ambition for 5,000 additional supply through the new build and council buy back programmes. Balanced • The report notes the current financial position in respect of the 2024/25 General Services Capital Programme and the Housing Revenue Account. This reflects the approved budget in March 2024 at Policy and Strategy Committee and subsequent decisions made at the Strategic Capital Delivery Group (SCDG) in accordance with the SCDG terms of reference, and where appropriate either by the individual service committees, Finance and Resources Committee, or the Policy and Strategy Committee as per the Scheme of Administration. • A breakdown of the overall 2024/25 budget by service programme and associated approved budget movements is included in an appendix to the report. • The report recognises that the capital programme continues to face challenges in relation to the wider economic climate, linked to availability of materials, contractors, and inflationary pressures and notes these are currently being managed by services and Project Boards associated with specific programme delivery and will continue to be monitored throughout the year in accordance with the SCDG terms of reference. Report title Summary Financial monitoring - savings September 2024 This report provides an update on the achievement of the three-year financial savings targets and progress. Aligned Priority: Improve North Lanarkshire’s resource base. Ambition statement: 21. Continue to identify and access opportunities to leverage additional resources to support our ambitions. Consistent This regular report ensures ongoing oversight by Elected Members of the Finance and Resources Committee in terms of the progress in implementing savings. Transparent This report provides the Committee with an update on the achievement of the three-year financial savings total of £28.778m approved as part of the 2024/25 budget setting process and advises it is projected that 93% of the 2024/25 savings will be delivered within the financial year, with replacement savings identified to fully address the shortfall. In addition, it is currently anticipated that there will be no recurring savings gap arising from the 2024/25 to 2026/27 approved savings. In context The report presents the up to date savings position within the context of the overall budget position for the council. Balanced Each service report sets out the context for savings in that services are required to monitor the delivery of their target savings to ensure they remain within their approved budgets and provide periodic progress updates within individual service revenue monitoring reports, identifying alternative solutions to any in- year shortfall envisaged. In addition, services are required to monitor whether the original approved saving has been implemented and if not, provide an explanation along with alternative action required to ensure the recurring financial saving will be achieved going forward. This information is captured by Finance and summarised in the overall council report. Key to RAG status green Performance is on target and/or within acceptable thresholds red Performance does not meet target and is outwith acceptable thresholds blue Performance surpasses the target and exceeds expectations Page 394 of 412
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref KH/SL Date 31/10/24 Strategic frameworks annual position statement From Katrina Hassell, Chief Officer (Business and Digital) E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary The Audit and Scrutiny Panel are aware of the inter-related strategic frameworks that focus on ensuring a corporate one council approach in respect of Policy, Governance, Performance, Self-Evaluation, Project Management, and Demonstrating Improved Outcomes for Communities. These frameworks are key to assessing the success of The Plan for North Lanarkshire and ensuring its delivery through the Programme of Work is appropriately aligned, planned, guided, implemented, monitored, and governed. To ensure these frameworks remain aligned to The Plan for North Lanarkshire, and support delivery of the Programme of Work, each is on a schedule to undergo a regular review and refresh exercise. Since 2020, an annual position statement has been presented to the Audit and Scrutiny Panel to support their role in terms of providing an independent review of the council’s governance, risk management, performance, and control frameworks. Various reports in respect of these Frameworks have been considered by the Audit and Scrutiny Panel during the last year; this composite annual position statement report aims to provide a high level summary and up to date position by setting out the background, current position, and next steps for each Framework. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Acknowledge the position statement for each Framework and the next steps to ensure each remains aligned to The Plan for North Lanarkshire and that its delivery through the Programme of Work is appropriately aligned, planned, guided, implemented, governed, and monitored. (2) Are aware that a corresponding Review Programme supports each Framework which ensures that all relevant matters are kept under review, updated as required, and reported to the relevant committee for Elected Member oversight and scrutiny, and (3) Are aware that as all Frameworks are now well established and embedded into everyday activities with all relevant interconnections made therein, future update reports in respect of each will be carried out in a way that allows a more specific focus Item 14 Page 395 of 412
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1. Background 1.1 The Plan for North Lanarkshire is well established as the long-term strategic direction not just for the council and partners, but for North Lanarkshire as a place. It outlines the shared ambition to make North Lanarkshire the place to Live, Learn, Work, Invest, and Visit. 1.2 The long-term vision in The Plan for North Lanarkshire provides a very clear focus and compelling narrative in terms of what the council is working towards. This vision of inclusive growth and prosperity for all aims to bring equal benefits to all North Lanarkshire’s people and communities and ensure a fairer distribution of wealth. 1.3 This narrative has become embedded consistently throughout all policy statements agreed by the council, as well as all strategic management, financial management, strategy development, service delivery, and corporate governance approaches. As such, it has been the constant basis to enable the Programme of Work to bring together strategic planning and community investment in a cohesive manner and establish solid foundations for the place based approach. 1.4 As the delivery vehicle for The Plan for North Lanarkshire, the Programme of Work translates the vision into priorities for action. To date an annual review process has supported the development of the Programme of Work to ensure the priorities for delivery remain framed within the most up to date demographic, social, and economic context that exists for the place that is North Lanarkshire, as well as the latest national policy developments and priorities. The latest Programme of Work, for 2023 to 2028, approved at the Policy and Strategy Committee in March 2023 aims to escalate the scale and pace of change through a new five year programme. 1.5 Supporting the council’s strategic planning process is a range of inter-related frameworks which are key to assessing the success of The Plan for North Lanarkshire and ensuring a corporate one council approach. They are also key to assessing delivery towards achieving the overall vision and ensuring each stage is appropriately aligned, planned, guided, implemented, monitored, and governed: • Strategic Policy Framework. • Strategic Governance Framework. • Strategic Performance Framework. • Strategic Self-Evaluation Framework (includes the corporate process for Options Appraisal). • Project Management Framework. • Framework for Demonstrating Improved Outcomes for Communities. 1.6 To ensure these frameworks continue to align to The Plan for North Lanarkshire, and on the changes and enhancements to each Framework that further support the council in demonstrating progress in delivering the Programme of Work and achieving the vision set out in The Plan for North Lanarkshire. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Programme of Work Statutory / corporate / service requirement Page 396 of 412
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support delivery of the Programme of Work, all are on a schedule to undergo a regular review and refresh exercise. As all frameworks are now well established and embedded into everyday activities with all relevant interconnections made therein, future update reports in respect of each will be carried out in a way that allows a more specific focus on the changes and enhancements to each Framework that further support the council in demonstrating progress in delivering the Programme of Work and achieving the vision set out in The Plan for North Lanarkshire. 1.7 This report herewith follows on from the annual update of the Frameworks presented to the Audit and Scrutiny Panel in November 2023. It sets out the current position statement for each Framework to provide a composite update in support of the Audit and Scrutiny Panel’s strategic oversight and governance role. 2. Update 1. Strategic Policy Framework Background 2.1 Initially approved in September 2018, the Strategic Policy Framework aims to ensure that strategies, policies, and plans supporting delivery of The Plan for North Lanarkshire are formulated, developed, implemented, monitored, and reviewed in a consistent and transparent manner across the council. 2.2 The Strategic Policy Framework has supported this process by providing corporate Guidance to ensure that the development of new strategies, policies, and plans (and updates to existing documents) remain aligned to the one plan direction and one council approach, as well as relevant local and/or national strategy, policy, and legislative contexts. It also comprises a Review Programme to ensure the ongoing maintenance and monitoring of strategies, policies, and plans within a standardised approach and pre-defined timescales. 2.3 The role of the Strategic Policy Framework in supporting the alignment of The Plan for North Lanarkshire and its delivery arrangements was recognised by Audit Scotland in their Best Value thematic work which reviewed the leadership of the development of new local strategic priorities (as reported to the Policy and Strategy Committee in December 2023): • “The council has a Strategic Policy Framework in place which ensures strategies, policies, and plans remain aligned to its vision and support its shared ambition. This includes all organisational level strategies and plans as well as operational strategies.” • “This framework sets out the formal review process and timetable to ensure all strategies and plans remain aligned to overall council strategy and are fit for purpose. It also provides a consistent approach in how these are developed, implemented, and monitored across the council. The strategic policy framework itself is also subject to an annual review.“ • “Sitting alongside the Programme of Work, the council has a Strategic Policy Framework in place which ensures the council’s strategies, policies and plans remain aligned to its vision and support its shared ambition. This framework details Elected Member and officer responsibilities for strategic planning and includes details of Elected Member approval of individual strategies, policies, and plans.” Current position Page 397 of 412
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2.4 The Strategic Policy Framework has undergone various updates since initially approved. The 2022 annual review process represented the outcome of a significant review exercise undertaken at that time which enabled subsequent reviews to be more lite touch and focussed on specific areas of improvement. The 2024 review focussed on three main aspects - (i) any enhancements required based on the implementation of the Framework in practice during the previous year, (ii) an update to the Review Programme to reflect new (or updates to existing) strategies, policies, and plans during the year and amendments to review dates, and (iii) changes or updates required to the Guidance to ensure council developments in this respect continue to comply with the requirements of Best Value and the principles of good corporate governance (as set out in CIPFAs national Delivering Good Governance in Local Government: Framework (2016)). 2.5 The changes implemented from the 2024 review are summarised below: • The Review Programme was updated with indicative timescales of when updates are expected to ensure all strategies, policies, and plans continue to be kept under review, are updated as required, and are reported to the relevant committee. This also supports forward planning and an indication of when consultation with stakeholders can be expected. • The Strategic Policy Framework hierarchy diagram has been updated to incorporate new strategies, policies, and plans added during the year. • The update to the Review Programme included new strategies, policies, plans which Chief Officers have identified as a result of the implementation of the Programme of Work to 2028 or any existing ones that require to be amended to better align. • The supporting Guidance was reviewed and updated to ensure strategies, policies, and plans continue to be developed in a standardised manner, consistently use a common format, and roles and responsibilities are clear. The main points of note in the updated Guidance include the following: - The inclusion of the Children’s Rights and Wellbeing Impact Assessment (CRWIA) process. This incorporates the means by which to identify and assess the impact of the Rights of the Child to support the development of strategies, policies, or plans. This approach mirrors the committee report template and follows on from the report approved at the Education, Children, and Families Committee in May 2023 (Embedding the United Nations Convention on the Rights of the Child (UNCRC)) which provided added context and reiterated the need to make the system changes required to ensure children’s rights are fully embedded in service and policy development and delivery. - The importance of stakeholder engagement. In this respect the Guidance reiterates roles and responsibilities in terms of the owner of a strategy, policy, or plan (i.e. a Chief Officer) ensuring ongoing engagement with all relevant stakeholders, including Elected Members, in the development of new (or updates to existing) strategies, policies, or plans. While the Guidance has a stand-alone stakeholder engagement section, this requirement is also reflected within other steps in the development and review cycle for a strategy, policy, or plan (i.e. roles and responsibilities, gathering evidence, documentary control, communication and implementation, and monitoring and review). This change fully implements the recommendation made by Audit Scotland in their Best Value thematic work which reviewed the leadership of the development of new local strategic priorities and recommended that “the council should look to improve its existing processes for engaging elected members on the overall strategic planning process”. Page 398 of 412
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2.6 Following the 2024 review and refresh process, the Strategic Policy Framework and accompanying Review Programme were approved at the Policy and Strategy Committee in March 2024. Since then, the Review Programme has continued throughout 2024 with new (or updated) strategies, policies, and plans approved at committee in respect of the following: • Corporate Parenting Strategy - February 2024. • Procurement Strategy 2024/25 - February 2024. • Digital and IT Strategy 2024-27 - March 2024. • North Lanarkshire Carers Strategy 2024-27 - May 2024. • Health and Social Care North Lanarkshire Engagement and Participation Strategy - May 2024. • Temporary Accommodation Strategy 2024-29 - May 2024. • Communications and Engagement Strategy - June 2024 • Internal Audit Strategy - October 2024 2.7 During the year the supporting Guidance was used in the development of new (or existing) strategies, policies, or plans. To provide added assurance in this respect and also ensure compliance with the elements in the Guidance that help to demonstrate the council’s fulfilment with the principles of good corporate governance - e.g. specifying the intended impact on, or changes for, stakeholders (including citizens and service users), ensuring that communication methods are effective, and ensuring openness and comprehensive stakeholder engagement - a lite touch assessment was undertaken on all strategies, policies, and plans updated during the year to further support implementation of the Best Value recommendation referenced in paragraph 2.5. 2.8 The lite touch reviewed identified no significant issues in relation to ensuring compliance with the Strategic Policy Framework Guidance in respect of the points noted in paragraph 2.7 above. Specific areas of good practice were found in the development of the North Lanarkshire Carers Strategy 2024-27 which was informed by extensive carer engagement and participation activity themed around “what might help”, and a clear programme of stakeholder engagement being set out in the covering report for the Digital and IT Strategy for 2024-27 which included Elected Members, Community Boards, and the Driving Digital Locally subgroup. In addition, the Health and Social Care North Lanarkshire Engagement and Participation Strategy was informed by co-production work and several stakeholder events which helped to shape content and ensure the National Standards for Community Engagement (promoted by Scottish Community Development Centre) were applied throughout. Next steps 2.9 The Strategic Policy Framework and its accompanying Review Programme will continue to undergo a regular review and update process, and paragraph 1.6 outlines the intention for future reporting in this respect. 2. Strategic Governance Framework Background 2.10 The Strategic Governance Framework brings the principles of good governance together with legislative requirements and management processes by which the council is directed and controlled and through which it is accountable to, engages with, and leads the local community. It sets out the council’s local code of governance in line with the national Delivering Good Governance in Local Government: Framework (2016). Page 399 of 412
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2.11 The Strategic Governance Framework recognises the importance of good governance in terms of meeting statutory Best Value obligations and ensuring the council is able to effectively pursue the long-term ambition set out in The Plan for North Lanarkshire, while ensuring this is underpinned with control and the management of risk, and: • Resources are directed in accordance with agreed policies and according to priorities, and in line with corporate Project Management procedures. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in achieving defined outcomes for service users and local communities. 2.12 More specifically, the Strategic Governance Framework outlines the list of elements and mechanisms that demonstrate the council’s compliance with the 7 principles, 21 sub principles, and 91 behaviours and actions contained within the national Delivering Good Governance in Local Government: Framework. It should be noted that the list of elements and mechanisms does not aim to introduce new items of governance to the council, rather its purpose is to collate all existing items (produced by the respective Chief Officer) into the one local code for annual review, assessment, assurance, and reporting purposes. 2.13 Initially approved in February 2020, the Strategic Governance Framework went through a substantial review and update process in June 2021 which was thereafter endorsed by the Corporate Management Team and approved by the Audit and Scrutiny Panel. A review and refresh process has subsequently been undertaken annually thereafter, and an updated Strategic Governance Framework is approved by the Audit and Scrutiny Panel each year as part of the evidence used to inform the development of the Annual Governance Statement. 2.14 The Strategic Governance Framework, and its accompanying review programme, have been recognised as an area of good practice in the latest three annual Internal Audits on Corporate Governance. As reported to the Panel in August 2024, the most recent Internal Audit considered that the “council’s corporate governance arrangements in relation to self-assessment are adequate and operating effectively” and therefore this audit was assessed as providing “substantial assurance”. Current position 2.15 Chief Officers and Elected Members are responsible for determining and implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. The Corporate Management Team also have a role to play in terms of identifying any improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement activity and this annual evaluation role was carried out at their meeting on 7th June 2024. The updated Framework was subsequently approved by the Audit and Scrutiny Panel on 27th June 2024. 2.16 Using a RAG status, each of the elements and mechanisms within the Review Programme is assessed to ensure they remain timely and effective in supporting delivery of The Plan for North Lanarkshire. This process provides a method by which to identify and prioritise items requiring to be reviewed and updated further. The latest position as at June 2024 identified no Red elements or mechanisms, two Amber, and the rest were Green. For those assessed as Amber (i.e. employee code of conduct and employee engagement), there is a commitment by the respective Chief Officer to ensure an update is undertaken during 2024/25. Page 400 of 412
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2.17 To fulfil recommendations made following an internal audit review of corporate governance principles C and D in 2023 - which concluded that “management needs to consider how best to evidence the process for identifying, recording, and reporting improvement actions and/or future planned developments in relation to key governance arrangements” - a significant review was undertaken of the processes supporting both the Chief Officer’s year end good governance Assurance Certificate and Checklist and the production of the Annual Governance Statement. The findings from this review were reported to the Panel in June 2024 and the improvements implemented included: • The information regarding continuous improvement in the Annual Governance Statement being reframed to better allow key stakeholders to monitor performance from one year to the next. • An update to the year end good governance Assurance Certificate and Checklist to ensure information regarding the implementation of improvement activity within each Chief Officer’s area of responsibility can be appropriately captured. Next steps 2.18 Moving forward, the Strategic Governance Framework and its accompanying Review Programme will remain on a formal annual review process that will take place each year in order to inform development of the Annual Governance Statement. 2.19 Reported to the Panel in August 2024, findings from an Internal Audit review of corporate governance recommended that any omissions in completing the annual assurance certificate and checklist are reported to the Business Management Team who should thereafter take appropriate action to ensure that the final versions of the annual assurance certificates and checklists have been fully completed, signed, and dated. As the 2023/24 year end process is complete, this action will be incorporated into the 2024/25 year end corporate governance assurance checklist and certificate process when it is next undertaken in May 2025 to further support the Business Management Team in carrying out their strategic oversight and assurance role in respect of the council’s governance arrangements. 3. Strategic Performance Framework Background 2.20 The Strategic Performance Framework comprises performance measurement at three levels (as per the diagram on the right). This aims to collectively provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people and communities of North Lanarkshire. The measures in this Framework allow for day to day activities, and progress towards achieving the long-term vision set out in The Plan for North Lanarkshire, to be regularly monitored, reported, assessed, and scrutinised. 2.21 The Strategic Performance Framework is aligned to the Accounts Commission’s Statutory Direction which places a requirement on councils to report a range of information in terms of (a) improving local services and outcomes, and (b) demonstrating Best Value. Ensuring compliance with the requirements of Best Value, good governance, and the Statutory Direction shaped the development of the Strategic Performance Framework. 2.22 The Audit Scotland Best Value thematic report for 2022/23 (reported to the Panel in Page 401 of 412
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October 2023) acknowledged the approach to performance reporting which has been implemented by the council and concluded that “the council now has a Performance Reporting Schedule in place which includes Chief Officer reviews at service committees, corporate reporting, and service specific reporting”. 2.23 As reported to the Panel in August 2024, the most recent Internal Audit of performance management was categorised as offering “reasonable assurance” and considered there had been “a significant improvement in the current arrangements for performance management, with regular and meaningful reports and data being submitted to committee in line with the reporting schedule, and the implementation of an assurance review and reporting process.” Current position 2.24 A report submitted to the Audit and Scrutiny Panel in February 2024 outlined the Strategic Performance Framework Performance Reporting Schedule for 2024 to 2025. This aims to support the timely submission of a range of performance information that enables Elected Members to undertake regular performance reviews that support the council’s challenge and scrutiny processes. 2.25 The Performance Reporting Schedule shows there is a significant volume of performance information timetabled to be reported to various council committees in each cycle from 2024 to 2025 in line with the two aspects noted below. (1) Chief Officer’s individual Performance Reviews at service committees in line with the Strategic Performance Framework. (2) Chief Officer service specific performance reporting which takes place each year to meet business and/or statutory obligations. 2.26 Chief Officers performance reports are also reviewed by the council’s Business Management Team, Corporate Management Team, and service Senior Management Teams to ensure the relevant assurances can be provided - in line with the Best Value duty - in terms of performance management arrangements that promote effective use of council resources, performance information that is scrutinised at a senior management level, and performance monitoring arrangements that effectively address areas of underperformance, identify the scope for improvement, and agree remedial action. 2.27 Throughout each committee cycle of 2024, Chief Officers have ensured that a wide range of performance has been reported to the respective service committee (in line with the Performance Reporting Schedule) for scrutiny by Elected Members. In addition, a quarterly assurance process (implemented in May 2023) provides further assurances in this respect and supports the Audit and Scrutiny Panel to maintain strategic oversight of the council’s performance in line with the Panel’s role to “review and monitor the performance of the council in delivering upon its priorities, outcomes, programme of work and targets in the council plan, specifically performance in improving services and outcomes and in demonstrating Best Value”. In bringing together a summary of council performance, this approach provides a composite (but easily digestible) overview that also supports the Audit and Scrutiny Panel’s governance and accountability role in terms of ensuring the council can demonstrate Best Value through the existence of robust arrangements for performance reporting and scrutiny. 2.28 Each Chief Officer’s performance report is produced in line with the requirements of the Strategic Performance Framework’s non-negotiable standards and follows a Page 402 of 412
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standard template. This ensures reports consistently (a) set out the current context within which the service is operating, (b) highlight areas of good performance that can be evidenced in the accompanying data (making it clear what makes this an area of good performance and providing comparisons where available, and (c) provides a summary of areas of performance requiring improvement along with narrative that gives an explanation for the level of performance achieved and summarises the remedial action implemented (or to be implemented) to bring performance back on track. This approach reflects key requisites of the Statutory Direction, such as ensuring performance reporting that is balanced and in context. 2.29 A new prerequisite introduced for 2024 is that reports, where required, should demonstrate that the loop has been closed in terms of the implementation and monitoring of both improvement actions and subsequent performance levels. This is required to provide a clear evidence trail that demonstrates continuous improvement in performance in line with the requirements of Best Value and follows an Internal Audit recommendation in relation to performance management reported to the Panel in August 2024. 2.30 As a result of the quarterly performance assurance review report and Elected Member identified items, the following areas of service have been added to the work programme and undergone scrutiny by the Panel throughout 2023 and 2024 to date: • Supported businesses. • Tower laundries. • Compulsory purchase orders • Housing refurbishments. • Community boards. • Digital broadband. • Corporate insurance. • Scottish Housing Quality Standard (SHQS). • Energy Efficiency Standard for Social Housing (EESSH). 2.31 Additional activities undertaken during 2024 to support the council’s Best Value duties in relation to performance management include the following: • An annual update to the level 1 health check indicators continues to be reported to the Policy and Strategy Committee, with the most recent in March 2024. Collectively these indicators provide the North Lanarkshire context and the local demographic, social, and economic profile and were key to shaping the long-term vision set out in The Plan for North Lanarkshire when it was approved in 2019. These indicators have continued to provide a robust, consistent, and independent way of assessing progress since then. • The suite of health check indicators also played an important role in terms in informing the council’s strategic planning process through the Programme of Work to 2028. This continues with an ongoing review of Programme of Work delivery at the Corporate Management Team along with a six monthly progress report to the Policy and Strategy Committee (the latest of which was in September 2024). • Reporting of the Local Government Benchmarking Framework (LGBF) measures was aligned to The Plan for North Lanarkshire and integrated into Strategic Performance Framework reports to service committees alongside the wider suite of measures within each Chief Officers’ area of responsibility. As a single performance indicator in isolation rarely provides a complete picture of performance, this approach now ensures that reports to service committees and the Audit and Scrutiny Panel contain all performance indicators within each Chief Officers’ portfolio in order to provide a complete North Lanarkshire picture. Page 403 of 412
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• The council’s comparative performance in Local Government Benchmarking Framework (LGBF) indicators can be viewed through the Improvement Service’s online dashboard: https://www.improvementservice.org.uk/benchmarking/explore- the-data. Each Chief Officer’s performance report to the respective service committee in respect of the Strategic Performance Framework now also contains this hyperlink. • Chief Officers performance reports are supported by a substantial bank of data that is made available to Elected Members on service committees through a hyperlink to a spreadsheet in the covering report. These spreadsheets are maintained by nominated officers in services in line with documented indicator definitions with data accuracy and completeness checks undertaken through an annual verification process. • In line with the Local Authority Model Complaints Handling Procedure (LAMCHP) which defines the two-stage process which the council is required to implement when handling all complaints received, an annual complaints performance report was considered by the Panel in February 2024. This fulfilled the requirements of the complaint’s governance arrangements in terms of reporting and publicising complaints information that includes performance statistics, trends and outcomes, and actions taken to improve services. Next steps 2.32 As reported to the Audit and Scrutiny Panel in February 2024 and the Policy and Strategy Committee in March 2024 in respect of the single integrated council wide Delivery Plan for the Programme of Work to 2028, strategic portfolio progress monitoring and performance management arrangements have been developed to support oversight of the Programme of Work in line with each audience’s respective role and ensure further alignment and formalisation of the corporate arrangements that support monitoring and governance of The Plan for North Lanarkshire. This includes a quarterly report to each Board supporting delivery of the Programme of Work (and the Corporate Management Team) to allow for a formal progress review in respect of delivery being achieved in line with the dimensions of scope, quality, time, cost, resources, risk, and completed status. Final developments are underway to include relevant performance measures to demonstrate progress in delivering the Programme of Work and achieving the vision set out in The Plan for North Lanarkshire. 2.33 Following various Programme of Work reports to each committee cycle throughout 2023 and 2024, regular news articles and updates on delivery and performance are reported to the public through the council’s website. With the Programme of Work to 2028 and its associated governance arrangements well established, work in 2025/26 will formally review and re-develop public performance reporting arrangements to enhance the public’s ability to determine how the council is performing. 4. Strategic Self-Evaluation Framework Background 2.34 Initially approved in 2018, the Strategic Self-Evaluation Framework asks the questions How well are we doing? How do we know? and How can we do better? to ensure the council has a way of regularly assessing practices, recognising strengths, and identifying areas for improvement. 2.35 This supports the council’s Best Value duty that aims to secure continuous improvement in performance. Being self-aware and undertaking a structured programme of self-evaluation underpins the duty to secure continuous improvement, Page 404 of 412
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and good practice suggests local authorities adopt a single strategy for improvement when implementing self-evaluation. 2.36 A single strategy for improvement is in place through the Strategic Self-Evaluation Framework and rolling Review Programme, which was initially endorsed by the Corporate Management Team in July 2021 and approved by the Audit and Scrutiny Panel in September 2021. A subsequent review and refresh process has been undertaken annually and reported to the Audit and Scrutiny Panel thereafter. 2.37 The report to the Panel in February 2024 updated on the achievements from the Strategic Self-Evaluation Framework rolling Review Programme for 2023 to 2024 and presented the refreshed Framework and rolling Review Programme for 2024 to 2025. 2.38 The council’s commitment to self-evaluation was recognised in the Audit Scotland Best Value 2022/23 thematic report on the council’s leadership of the development of new strategic priorities (reported to the Panel in October 2023) which acknowledged that “the council has a well-established self-evaluation framework in place which supports continuous improvement”. Current position 2.39 As reported to the Panel in June 2024, through the Annual Governance Statement 2023/24, since the Strategic Self-Evaluation Framework and rolling review programme was formally established (and approved by the Audit and Scrutiny Panel) in 2021, nine self-evaluation exercises have been undertaken. A summary of each exercise has been included in previous year’s Annual Governance Statements and an annual monitoring process is in place to capture the status of implementing the improvement actions arising from each self-evaluation exercise: - The nine self-evaluation exercises resulted in areas for improvement being identified and captured in supporting improvement plans. In general, these aimed to further strengthen existing arrangements, rather than address any significant issue in terms of effectiveness. - The latest improvement actions arising from the 2023 self-evaluations (in terms of the Audit and Scrutiny Panel and how effectively it is discharging its role, and of Partnership / Community Board effectiveness in line with their role in improving outcomes for local people and communities) are in the process of being delivered and are scheduled to be completed during 2024/25. - Self-evaluations scheduled to be undertaken in 2024/25 include (a) the governance arrangements supporting the Programme of Work to 2028, focusing on the operation of the supporting Strategic Boards to ensure they are effective in supporting delivery of The Plan for North Lanarkshire, and (b) the council’s compliance with the CIPFA Financial Management (FM) Code. Next steps 2.40 The Strategic Self-Evaluation Framework and its accompanying Review Programme will continue to undergo a regular review and update process, and paragraph 1.6 outlines the intention for future reporting in this respect. 2.41 As the Panel are aware from the update report in February 2024 in respect of auditing Best Value in local government, a new approach was implemented nationally with effect from 2022/23 onwards. This approach comprises (a) the integration of auditing Best Value within each individual council’s external auditors Annual Audit Report (AAR) process, and (b) an annual Best Value thematic report. The 2023/24 AAR in this Page 405 of 412
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respect is scheduled to presented for the Panel’s consideration at the meeting in October 2024. The outcome following the Best Value thematic audit on workforce innovation (specifically how the council is responding to current workforce challenges through building capacity, increasing productivity, and innovation) was reported to the Policy and Strategy Committee in September 2024. 2.42 The council has maintained a dedicated page on the website for a number of years now in order to provide a central location for reporting on findings and recommendations from all national audits and inspections. This continues to be kept up to date as and when new reports become available nationally. https://www.northlanarkshire.gov.uk/your-council/performance-of-the-council/best-value 5. Project Management Framework Background 2.43 Following an extensive review exercise, the council’s Project Management Framework was updated and launched in December 2022. The review and refresh exercise followed recommendations arising from Internal Audit reports on the governance of capital projects and managing strategic change, but was also considered necessary in light of the changes in the council’s operating environment since the introduction of the Model in 2018. These changes had led to a rapid evolution of programmes and projects across the council, as well as increasing complexities in the delivery of many of these, and a growing need for good governance and good project management to set up and deliver a wider range of projects at pace and scale (particularly during the pandemic), and ensure these are well-directed, delivered to time, cost, and quality targets, and provide the expected benefits and improved local outcomes. 2.44 The overarching purpose of the Project Management Framework document is to provide a comprehensive Framework that outlines the processes and techniques which aim to help to scope and manage a project, meet agreed milestones, fulfil appropriate reporting and assurance requirements, involve the right people at the right time, implement each stage of delivery from start to finish, and achieve the expected benefits or improved outcomes of each project. It is designed to promote and encourage best practice in the management and delivery of capital and non-capital programme as well as construction and non-construction projects across the council. It aims to provide support and guidance for all employees involved in project management regardless of their role and previous experience, and it recognises that project management is something that is becoming common practice in the workplace and more prevalent across many operational roles. 2.45 As reported to the Panel in February 2023, the Project Management Framework does not attempt to set out all the complexities of project management - or say there is only one way to manage a project - or define which methodology a particular project should use. The flexibility set out therein is intentional to allow each Senior Responsible Officer (SRO) and Project Manager the ability to identify the approaches that best suit the requirements of a particular project and will most effectively support the delivery of the expected benefits and outcomes to cost, time, and quality - but to do so within the fundamentals of good project management and good governance. Current position 2.46 Following a successful pilot, Project Management training was rolled out across the organisation from February 2023 and has continued into 2024. This comprises a programme of half and full day training sessions for which Chief Officers identified the Page 406 of 412
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employees who had to undergo the training; to date attendance has seen 385 employees taking part in 25 sessions overall. Feedback from these sessions has been very positive and the trainer has made these very informative and engaging sessions. Ongoing support is also available through a range of materials on LearnNL and through 1:1 sessions where requested. 2.47 As reported to the Panel in February 2024, quality assurance arrangements have been established and aligned to the governance supporting the Programme of Work to 2028 to ensure the council can (a) demonstrate compliance with the Project Management Framework, and (b) monitor delivery of projects and activities supporting the Programme of Work in line with the dimensions within which a project requires to be delivered, i.e. scope, quality, time, cost, resources, risk, and completed status. 2.48 The review programme to assess compliance with the Project Management Framework was finalised and implemented during 2023/24. An overview of the results and findings arising following the analysis of the completed baseline self-assessment forms has informed an improvement plan and areas for improvement identified through the review programme are currently being progressed. 2.49 During 2024, the Project Management Framework has undergone a lite touch review process to ensure it continues to remain fit for purpose. This refresh took account any significant feedback arising from the aforementioned training programme, reiterated the requirement to undertake a post project evaluation, incorporated the gateway check process from the Invest in North Lanarkshire Programme of Work, reiterated the importance of Data Protection Impact Assessments (DPIAs) being given due consideration at the beginning of a project, and raised awareness that project management and change management need to complement each other and work in tandem to support delivery of the Programme of Work to 2028 and this would be facilitated through the development of a new change management toolkit. Next steps 2.50 As good practice recommends that a council’s audit and scrutiny committee play an important role in providing independent assurances about the delivery of major programmes and projects, a report to the Audit and Scrutiny Panel in February 2024 provided an initial overview in this respect in advance of future assurance reports that will support future oversight by the Panel in terms of the quality assurance process and review programme for the Project Management Framework. A follow up report in this respect is scheduled for cycle 1 of 2025. 6. Framework for Demonstrating Improved Outcomes for Communities Background 2.51 As the public spending watchdog for local government in Scotland, the Accounts Commission aim to ensure their work (a) helps provide assurance to the public on the performance of each Scottish council, and (b) reflects councils’ responsibilities to deliver high quality services to the public. 2.52 These assurances are provided through a range of audit activity that is set out in the Accounts Commission’s programme of work; this includes setting a Statutory Direction that directs local authorities on the publication of performance information relating to their activities that allows for comparisons over time and with other local authorities. 2.53 In operation since implementation of the Local Government Act 1992, the Statutory Page 407 of 412
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Direction has recently been reviewed and refreshed every three years. The update to the Statutory Direction in November 2021 (covering reporting for the three financial years from 2022/23 to 2024/25) has a focus on a descriptive (rather than prescriptive) approach, with specific revisions centred on a number of key areas which includes community engagement and empowerment. In this respect, the emphasis is on evidencing that the council is carrying out community planning for the “improvement in the achievement of outcomes”. In addition, the Accounts Commission expects councils (in agreeing outcomes with partners and communities) to report on how they have engaged with, responded to and helped to empower their communities, including those who require greater support. 2.54 For this reason, and in line with the focus of the Statutory Direction set out in paragraph 2.53, a Demonstrating Improved Outcomes for Communities Framework was established to ensure the evidence is in place to formally fulfil this aspect. Current position 2.55 Approved by the North Lanarkshire Partnership Strategic Leadership Board in June 2022, the Framework for Demonstrating Improved Outcomes for Communities sets out the model which the North Lanarkshire Partnership use to assess progress and performance in terms of delivering upon priorities and plans and ensuring that partnership activities can demonstrate improved outcomes that make a real difference for local people and local communities. The Framework also includes a number of case studies to highlight just some of the improved outcomes in local communities. 2.56 A regular oversight and outcome report supports the council’s requirements to report publicly on progress including where outcomes have been improved through joint planning, collaboration, and partnership working. In this respect, the latest report to the Communities Committee in February 2024 highlighted where community planning in North Lanarkshire is making a positive impact in strengthening partnership working and improving outcomes in line with The Plan for North Lanarkshire’s shared ambition. 2.57 As noted in paragraph 2.39, a self-evaluation has been undertaken of Partnership / Community Board effectiveness in line with their role in improving outcomes for local people and communities. This followed a corporate governance review undertaken by Internal Audit in 2021 which recommended that “a formal review (or self-assessment) of the effectiveness of the Community Boards should be undertaken once these relatively new arrangements have become more established”. This was considered important in order to ensure that the Community Boards are able to discharge their roles and responsibilities adequately and effectively and have a positive impact on achieving the shared ambition set out in The Plan for North Lanarkshire. 2.58 The outcome from this self-evaluation exercise was considered by the North Lanarkshire Partnership Strategic Leadership Board in April 2023, with an improvement plan developed thereafter and subsequently approved in September 2023. The Audit Scotland Best Value 2022/23 thematic report on the council’s leadership of the development of new strategic priorities (reported to the Panel in October 2023) recognised the council’s commitment to reviewing the effectiveness of Community Board arrangements through the self-evaluation exercise. Next steps 2.59 At a development session in March 2023, the North Lanarkshire Partnership Strategic Leadership Board endorsed the seven priorities in the Programme of Work for 2023 to 2028 as the delivery vehicle to realise the long-term vision set out in The Plan for North Page 408 of 412
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Lanarkshire. This was further ratified at the Strategic Leadership Board meeting in September 2023. A deep dive into the 28 health check indicators in May 2024 further cemented the Community Planning Partnership’s approach to supporting delivery of The Plan for North Lanarkshire and following this, work will be undertaken during 2025/26 to review and refresh the Framework for Demonstrating Improved Outcomes for Communities in line with the new Programme of Work to 2028 and with due consideration of the improvement plan arising from the aforementioned self-evaluation exercise. 3. Measures of success 3.1 Regular scrutiny of the council’s performance and governance arrangements supports the council to efficiently and effectively deliver on the long-term vision set out in The Plan for North Lanarkshire, while ensuring this is underpinned with the relevant controls as set out in the national Delivering Good Governance in Local Government: Framework (2016) and the Best Value Guidance (2020). 3.2 Regular oversight and scrutiny by the Audit and Scrutiny Panel aims to ensure there is effective use of council resources, and resources are directed in accordance with agreed policy and according to priorities, while ensuring sound decision making and clear accountability for the use of resources in achieving improved outcomes for service users and the local community. 4. Supporting documentation None Katrina Hassell Chief Officer (Business and Digital) 5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Page 409 of 412
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Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☒ No ☐ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Local Government Act 1992 established the role of the Statutory Direction to direct the “publication of information as to standards of performance”. The Local Government in Scotland Act 2003 introduced the duty of Best Value; this requires that councils “make arrangements to secure continuous improvement in performance”. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, Page 410 of 412
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highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Work to ensure an annual review and refresh programme for the set of inter- connected strategic frameworks ensures the council continues to support the Best Value duty and comply with the principles set out within the Delivering Good Governance in Local Government: Framework (2016). This contributes towards the mitigation of the risks on the Corporate Risk Register for Governance, Leadership, and Decision Making and Inability to deliver approved programmes of work (formerly framed under the Managing Strategic Change risk). 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 411 of 412
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