Agenda pack
North Lanarkshire Council · 8 September 2022
Back to Audit and Scrutiny Panel — 8 September 2022 and its agenda
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Our Ref: Your Ref: Contact: Tel: Fax: E-Mail: Date: Lesley Dysart dysartl@northlan.gov.uk 30 Aug 2022 Members of the Audit and Scrutiny Panel Chief Executive’s Office Archie Aitken Head of Legal & Democratic Solutions Civic Centre, Windmillhill Street Motherwell ML1 1AB DX 571701, Motherwell 2 www.northlanarkshire.gov.uk Notice is given that a Meeting of the AUDIT AND SCRUTINY PANEL is to be held within Committee Room 1, Civic Centre, Motherwell on Thursday, 8 September 2022 at 2pm which you are requested to attend. The agenda of business is attached. Head of Legal and Democratic Solutions Members : Councillors: H Dunbar, J Hume, D Johnston, T Johnston, P Kelly, G Lennon, H Loughran, F McNally, G Robinson, K Stevenson and S Watson. Page 1 of 418
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AGENDA (1) Declarations of Interest in terms of the Ethical Standards in Public Life Etc. (Scotland) Act 2000 YEAR-END ITEMS (2) Internal Audit Annual Report 2021-22 (page 5 - 18) Submit report by the Head of Audit and Risk informing that the Public Sector Internal Audit Standards and the Council's Internal Audit Charter require the Head of Audit and Risk to provide the Panel, the Chief Executive, and the Corporate Management Team, with an annual summary of the work undertaken by Internal Audit, and also to provide an annual independent opinion on the Council's corporate governance, risk management and internal control arrangements (copy herewith) (3) Annual Governance Statement 2021/22 (page 19 - 40) Submit report by the Head of Business and Digital presenting the Annual Governance Statement for consideration of the Panel (copy herewith) (4) Unaudited Annual Accounts for the year ending 31 March 2022 (page 41 - 166) Submit report by the Head of Financial Solutions (1) informing the Panel that the unaudited accounts for the year ended 31 March 2022 were completed and submitted to Audit Scotland by 30 June 22 in accordance with the statutory deadline (copy herewith) AUDIT RELATED ITEMS (5) External Audit Annual Plan 2021-22 (page 167 - 188) Submit report by the Head of Audit and Risk enabling the Council's appointed external auditors, Audit Scotland, to present to the Panel, a document setting out their planned audit activities and how they intend to discharge their responsibilities, as laid out in Audit Scotland's Code of Audit Practice and relevant International Standards on Auditing, for the audit of the Council for the year-ending 31 March 2022 (copy herewith) (6) Internal Audit Progress Report (page 189 - 256) Submit report by the Head of Audit and Risk (1) providing an overview of Internal Audit activity, and (2) reporting the results of Internal Audit outputs finalised since the last update to the Panel in March 2022 (copy herewith) (7) Internal Audit: Follow-Up of Actions previously agreed by Management in response to Audit Recommendations (page 257 - 270) Submit report by the Head of Audit and Risk updating 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 previous Internal and External Audit recommendations (copy herewith) (8) Internal Audit Annual Plan 2022-23 (page 271 - 330) Submit report by the Head of Audit and Risk presenting the proposed internal Audit Plan 2022- 23 to members of the Panel for their consideration and approval (copy herewith)Page 3 of 418
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2 RISK MANAGEMENT RELATED ITEMS (9) Risk Management Update and Corporate Risk Register 2022-23 (page 331 - 346) Submit report by the Head of Audit and Risk providing the Panel with (1) a general update on key risk management developments, with a particular focus on the results of the recent annual review of the corporate risk register, and (2) a proposed timetable for future reporting on key corporate risks (copy herewith) SCRUTINY RELATED ITEMS (10) Strategic Governance Framework - Annual Review and Refresh (page 347 - 392) Submit report by the Head of Business and Digital (1) acknowledging the annual review which has been undertaken to refresh the Strategic Governance Framework, and that a review programme would be updated at an appropriate interval and reported to the relevant Committee, (2) continuing to carry out their role in respect of the Strategic Governance Framework, in term of providing independent assurance to the Council and those Charged with Governance on the adequacy of the Council's risk management framework and internal control environment, and (3) seeking approval of the refreshed Strategic Governance Framework (copy herewith) (11) Scrutiny Work Programme (page 393 - 400) Submit report by the Head of Business and Digital providing an update to the assessment and prioritisation process previously approved in 2018 to establish a work programme for the scrutiny function of the Audit and Scrutiny Panel (copy herewith) (12) Arm's Length External Organisations: Governance and Risk Management: Oversight and Assurance Report 2022/23 (Programme of Work 75.1 - part 2) (page 401 - 418) Submit report by the Head of Business and Digital providing an overview of the ALEO landscape and the performance and financial monitoring safeguards that are in place to provide such assurance (copy herewith) Page 4 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref KA/ASP/September22 Date 08/09/22 Internal Audit Annual Report 2021-22 From Ken Adamson, Head of Audit and Risk E-mail adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary The Public Sector Internal Audit Standards and the Council’s Internal Audit Charter require the Head of Audit and Risk to provide the Audit and Scrutiny Panel (and the Chief Executive and Corporate Management Team) with an annual summary of the work undertaken by Internal Audit and to provide an annual independent opinion on the Council’s corporate governance, risk management and internal control arrangements. This report fulfils that requirement by providing an overview of the activities of the Internal Audit section for the year 2021-22, by highlighting a number of the more significant issues which arose from the work undertaken by Internal Audit during the year and by presenting (at Appendix 1) the annual Internal Audit opinion. The annual opinion is unqualified and the report offers a generally positive view of the Council’s governance and internal control arrangements. This report has previously been submitted to the Chief Executive and Corporate Management Team in early-June. Due to the elections, this is the first meeting of the Panel since the report was finalised in late-May. Recommendations The Panel is invited to: (1) note the 2021-22 Internal Audit Annual Report and the associated annual opinion of the Head of Audit and Risk; and (2) consider whether there are any issues arising on which the Panel wishes to request further reports from Internal Audit and/or relevant management. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 2 Page 5 of 418
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1. Background 1.1 Internal Audit is an independent and objective assurance function designed to add value and improve the Council’s operations which helps the Council accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of the Council’s risk management, internal control and governance processes. 1.2 Internal Audit’s primary objectives are: • to provide a high quality and customer focused internal audit service which is responsive and flexible, consistent with best professional practice, focuses on areas that matter, uses resources efficiently and effectively, and is seen by stakeholders as adding value and making a vibrant and relevant contribution to the Council; and • to assist the Audit and Scrutiny Panel (the Panel) to effectively discharge its role and responsibilities. 1.3 The purpose, authority, responsibilities and main objectives of the Council’s Internal Audit service are outlined in the Internal Audit Strategy 2019-20 to 2021-22 (approved by the Panel in June 2019) and the current Internal Audit Charter (approved by the Panel in September 2021). 1.4 Internal Audit reports its outputs regularly throughout the year to the Audit and Scrutiny Panel in accordance with the Internal Charter and associated reporting protocol. The Panel also approves Internal Audit’s annual audit plan and monitors the performance of the function. 1.5 Internal Audit activity is planned to enable an independent annual opinion to be given by the Head of Audit and Risk on the adequacy and effectiveness of internal controls within the authority, including the systems designed to achieve the corporate objectives of the Council and those that manage the material risks faced by the authority. 1.6 It should be 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 the Council’s 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. 2. Report High level overview of Internal Audit activity during 2021-22 2.1 I can confirm that during 2021-22 Internal Audit operated with no impairments or restrictions in scope and that all key stakeholders continued to respect the independence of the function. The Head of Audit and Risk (who acts as the Council’s ‘Chief Audit Executive’ per the Public Sector Internal Audit Standards (PSIAS)) reports directly to the Chief Executive and is a member of the Council’s Corporate Management Team. The role and status of the Internal Audit function within the Council is therefore consistent with best practice. Page 6 of 418
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2.2 Internal Audit activity during the year was undertaken in accordance with the Internal Audit Annual Plan which was approved by the Audit and Scrutiny Panel in June 2021. Appendix 2 shows key details (status and where appropriate the relevant audit opinion and date presented to the Panel) of all items in the approved 2021-22 Plan. During the year some amendments were made to the plan to enable the function to respond flexibly to changing circumstances since the plan was developed and approved (most notably changes already reported to the Audit and Scrutiny Panel in March 2022 arising from the impact of Internal Audit staff being temporarily seconded to other duties as part of the Council’s response to the public health pandemic) and these changes are detailed in Appendix 2. 2.3 Action plans are agreed with management in response to all recommendations made within Internal Audit reports and follow-up reports are presented regularly to the Audit and Scrutiny Panel to provide assurance that matters raised by Internal Audit have been appropriately addressed by management and that agreed actions have been implemented. Where follow-up work indicates that inadequate progress has been made, this is brought to the attention of the Panel. 2.4 Internal Audit also has responsibility for investigating, as appropriate, alleged frauds and irregularities brought to our attention in accordance with the Council’s anti-fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Head of Service 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. 2.5 During 2021-22, Internal Audit staff continued to liaise closely with Audit Scotland, the Council’s appointed external auditors, to facilitate their work and to avoid any potential duplication of effort. As part of the external audit process, the external auditor annually assesses the work of Internal Audit and I am pleased to be able to report that during the period covered by this report the external auditors were able to continue to place formal reliance on our work. 2.6 Internal Audit operated in 2021-22 in accordance with the Public Sector Internal Audit Standards (PSIAS). In September 2019 the Panel received a report from the independent external quality assurance review (EQAR) of the internal audit function which concluded that the Internal Audit Service within North Lanarkshire fully conformed with the PSIAS. During 2021-22, I assessed the extent to which current Internal Audit activity, policies and procedures conform to expected requirements contained within the PSIAS and am pleased to be able to report that the results of that review continued to show a high degree of compliance with the detailed requirements of PSIAS. As previously reported, progress implementing all agreed actions arising from the EQAR has been impacted by competing priorities arising from the public health emergency, but all outstanding issues are now actively being addressed and a status report on implementation of all agreed actions will be submitted to a future meeting of the Panel. Issues arising from Internal Audit activity during 2021-22 2.7 Appendix 2 provides an overview of Internal Audit activity against the 2021-22 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. Page 7 of 418
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2.8 It should be noted that during part of the year, a significant proportion of Internal Audit staff were temporarily seconded to other duties for a period in response to the pandemic. This impacted on our ability to undertake planned work and details of the impact on our work programme and how we prioritised outstanding work were reported to the Audit and Scrutiny Panel in March 2022. Although this has had some impact on our ability to deliver all planned work, I am content that sufficient work has been undertaken to support the preparation of my annual opinion. 2.9 A small number of audit assignments were reported during 2021-22 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 2022-23 to provide senior management and the Panel with further assurance that relevant key controls are operating effectively. 2.10 During 2021-22 the Council had to continue to respond to challenges arising from the public health emergency but there was less direct pressure on governance and internal controls than in 2020-21 when the Council had to transition very quickly to significantly different ways of operating with consequential impacts on governance, internal control and risk management arrangements. Internal Audit continued, however, to work with senior management to provide advice and commentary on any proposals relating to new working arrangements and pandemic-related changes to internal controls and governance arrangements and overall, I am satisfied that the Council’s internal control and governance arrangements remained reasonably robust throughout 2021-22. 2.11 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. 2.12 Our work also suggests that despite significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the Council. 2.13 All audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. I am also pleased to be able to report that there were no material frauds or irregularities identified in 2021-22 that I require to bring to your attention. 2.14 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: • The Council has set itself a challenging agenda in ‘The Plan for North Lanarkshire’ with key priorities and projects set out clearly in the associated annual Programme of Work. Although the Programme of Work includes an indicative timetable for reporting on progress to Service Committees, the nature of many of the reports submitted to Committee does not always easily allow elected members to monitor and/or assess progress against plans (timescales and budgets). Similarly, there is currently no mechanism to easily allow senior management to review progress across the range of Programme of Work activities. Management has previously committed to improving the ability of key stakeholders to monitor the progress of major projects/programme of work activities and we will continue to monitor closely developments on this issue. Page 8 of 418
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• The Council’s Strategic Performance Framework (SPF) established in 2019 aims to produce evidence that allows for day-to-day activities, and progress towards achieving the Council’s ambition, to be regularly monitored, reported, assessed, and scrutinised and to enable any performance issues to be identified and addressed. Although supportive of the approach adopted, Internal Audit recognises that implementation of effective, timely and regular performance reporting on key strategic and operational performance measures to the Corporate Management Team and Service Committees has been significantly impacted over the last two years due to the need to respond to, and prioritise resources as a result of, the pandemic. Internal Audit will closely monitor developments in this area in 2022-23 as the Council moves beyond the pandemic; and • The Council has set out a range of significant actions in relation to its current and future operating model. These are linked to a range of planned developments impacting upon workforce, digital transformation, service re-design, assets and governance. Future Internal Audit interest will focus on how these actions are managed and progressed and the extent to which these contribute towards the achievement of the Council’s ambitions. Annual Internal Audit Opinion 2021-2022 2.15 There is a formal requirement for me to prepare an annual opinion on the Council’s internal control system. The opinion is presented to members of the Audit and Scrutiny Panel, the Chief Executive and the other members of the Council’s Corporate Management Team and is intended to provide independent and objective assurance to these different stakeholders as to the adequacy and effectiveness of internal controls within the Council. 2.16 My evaluation of the control environment is informed by a number of sources and in bringing these together, consideration has been given to whether there is evidence that any key controls are absent, inadequate or ineffective and whether the existence of any weaknesses identified, taken independently or with other findings, significantly impairs the adequacy and effectiveness of the Council’s overall systems of internal control. Wider issues relating to the Council’s corporate governance and risk management arrangements have also been considered. 2.17 The nature of individual audit assignments is such that most Internal Audit reports identify some weaknesses or areas where scope for improvement exists. During work undertaken in 2021-22 there have been instances where the control environment was not strong enough or complied with sufficiently to prevent risks to the organisation. In these cases, Internal Audit has made recommendations to further improve the systems of control and compliance. Although sometimes significant to the control environment in place for the individual system or areas that have been audited, I do not consider these weaknesses material enough to have a significant impact on my overall opinion on the adequacy of the Council’s control environment at the year end. Further reviews and/or follow-up work in areas where limited assurance has been given are scheduled to be completed during 2022-2023 to ensure that the actions agreed in response to Internal Audit’s recommendations have been implemented and the relevant controls are working well in practice. 2.18 My formal annual Internal Audit opinion on the soundness of the Council’s internal control systems is presented at Appendix 1. Overall, the results of the work of Internal Audit in 2021-22 taken with other information available to me, did not lead me to conclude that the Council’s overall systems of internal control were inadequate or their effectiveness significantly or materially impaired. Page 9 of 418
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2.19 Finally, I would like to thank all Council staff who have assisted Internal Audit during our work throughout 2021-22 and also to thank senior management and elected members for the consideration and due regard given to our work. 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. 4. Supporting documentation Appendix 1 2021-22 Annual Internal Audit Opinion Appendix 2 Implementation of the approved 2021-2022 Internal Audit Plan Appendix 3 Internal Audit performance data 2021-2022 Ken Adamson Head of Audit and Risk Page 10 of 418
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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 ☒ 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 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 operate an effective Internal Audit function consistent with the Public Sector Internal Audit Standards (PSIAS) could impair the Council’s compliance with its Code of Corporate Governance. Risks to the effective operation of the Internal Audit service (including failure to comply with the PSIAS) and how these are mitigated are documented in the Service’s risk register which is subject to regular review by the Head of Audit and Risk. Page 11 of 418
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Appendix 1 2021-22 Internal Audit Opinion To the members of North Lanarkshire Council’s Audit and Scrutiny Panel, the Chief Executive and other members of the Council’s Corporate Management Team As Head of Audit and Risk of North Lanarkshire Council, I am pleased to present my annual statement on the adequacy and effectiveness of the Council’s framework of governance, risk management and internal control for the year ended 31 March 2022. Respective responsibilities of management and internal auditors in relation to governance, risk management and internal control It is the responsibility of the Council’s senior management to establish appropriate and sound systems of governance, risk management and internal control and to monitor the continuing effectiveness of those systems. It is the responsibility of the Head of Audit and Risk to provide an independent annual opinion on the adequacy and effectiveness of the Council’s framework of governance, risk management and internal control. The Council’s framework of governance, risk management and internal controls The main objectives of the Council’s framework of governance, risk management and internal controls are to ensure that resources are directed in accordance with agreed plans, policies and priorities and to ensure that there is sound decision-making and clear accountability for the use of those resources in order to achieve the desired outcomes for service users and communities. This includes ensuring that appropriate internal controls and risk management arrangements are in place to effectively manage issues which might impact on the delivery of Council services, the achievement of corporate and service objectives, ambitions and priorities and public confidence in the Council. The Council also requires effective internal controls and risk management arrangements to safeguard its employees, to protect its assets, to maintain effective stewardship of public funds, to ensure good corporate governance, to ensure compliance with statutory requirements and to ensure it continues to deliver best value. The work of Internal Audit Internal Audit is an independent and objective assurance function established by the Council designed to add value and to improve the Council’s operations. It helps the Council accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the Council’s risk management, control and governance processes and by providing an independent and objective opinion on the Council’s internal control environment. It also objectively examines, evaluates and reports on the adequacy of the control environment as a contribution to the proper, economic, efficient and effective use of the Council’s resources. The Internal Audit section operated throughout 2021-22 in accordance with the Public Sector Internal Audit Standards (PSIAS). As part of the Internal Audit quality assurance and improvement programme, I have assessed the extent to which current internal audit activity, policies and procedures conform to expected requirements. The results show that the section continues to substantively comply with the PSIAS. The section undertakes an annual programme of work formally approved by the Audit and Scrutiny Panel. The audit plan is determined following a risk-based audit needs assessment that is revised on an ongoing basis to reflect my assessment of the evolving risks and changes within the Council. All Internal Audit reports identifying system weaknesses and/or non-compliance with expected controls are brought to the attention of management and include appropriate recommendations and agreed action plans. It is management’s responsibility to ensure that proper consideration is given to Internal Audit reports and that appropriate action is taken on audit recommendations. Page 12 of 418
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Appendix 1 (continued) 2021-22 Internal Audit Opinion Internal Audit is required to ensure that appropriate arrangements are made to determine whether action has been taken on Internal Audit recommendations or, where appropriate, that management has understood and assumed the risk of not acting. Significant matters (including non-compliance with audit recommendations) arising from internal audit work are reported regularly to the Chief Executive, to the Corporate Management Team and to the Audit and Scrutiny Panel. Basis of Opinion My evaluation of the control environment is informed by several sources: • the audit work undertaken by Internal Audit during the year to 31 March 2022; • the assessment of risk completed during the preparation of the 2021-22 and 2022-23 annual plans; • my wider knowledge of the Council’s corporate governance, risk management and performance management arrangements; • assessments of the general control environment within individual Services in 2021-22 completed by Heads of Service; and • reports issued by the Council’s external auditors during 2021-22, together with reports from other external review and inspection bodies. Opinion on the Council’s internal control systems It is my opinion that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s framework of governance, risk management and internal control for the year ended 31 March 2022. Ken Adamson CPFA Head of Audit and Risk North Lanarkshire Council 31 May 2022 Page 13 of 418
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Appendix 2 Implementation of the approved 2021-2022 Internal Audit Plan (as at date of signing the annual opinion) Topic Status Audit grading Reported to A&SP Corporate governance Risk management Underway To be confirmed Expected June 2022 Corporate governance Complete Reasonable assurance (Green-Amber) March 2022 Performance management Underway To be confirmed Expected June 2022 Assurance mapping Note 1 Key strategic / corporate risks / programmes of work Management of strategic change Note 1 Digital NL and change programme Complete Reasonable assurance (Green-Amber) December 2021 Enterprise project Complete Reasonable assurance (Green-Amber) June 2022 Sickness absence Underway To be confirmed Expected June 2022 City Deal Complete Substantial assurance (Green) June 2022 Hub development and delivery programme Complete Reasonable assurance (Green-Amber) December 2021 Business continuity planning Underway To be confirmed Expected June 2022 Climate change Note 1 Tackling poverty Complete Reasonable assurance (Green-Amber) December 2021 Additional support needs (ASN) Note 1 Procurement Complete Reasonable assurance (Green-Amber) December 2021 Workforce planning Note 2 Service / operational CLNL insourced activities Note 1 Education quality assurance arrangements Note 2 Social Work – Home Care Note 1 Page 14 of 418
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Appendix 2 Implementation of the approved 2021-2022 Internal Audit Plan (continued) (as at date of signing the annual opinion) Topic Status Audit grading Reported to A&SP Financial management and key financial systems Key controls – Housing Rents Complete Substantial assurance (Green) December 2021 Regularity work – Payroll/Employee Service Centre Complete Reasonable assurance (Green-Amber) March 2022 Regularity work – Non-Domestic Rates Complete Reasonable assurance (Green-Amber) March 2022 Scottish Welfare Fund Complete Limited assurance (Amber-Red) December 2021 Regularity work - Creditors Complete Reasonable assurance (Green-Amber) March 2022 Credit cards and purchase cards Complete Limited assurance (Amber-Red) December 2021 Fraud and irregularity Review of the Council's Anti-Fraud arrangements Ongoing N/A N/A National Fraud Initiative Complete N/A Various Covid-19 Business Grants Complete N/A N/A Allowance for fraud and irregularity investigations Complete N/A Various Provision of IA services to third parties Integrated Health and Social Care - North Lanarkshire JIB Complete Note 3 Audit Committee and External Audit Liaison with external audit Complete N/A N/A Facilitating the work of the Audit and Scrutiny Panel Complete N/A N/A Follow-up of IA and EA recommendations Complete N/A Each meeting of the Panel Follow-up: Audit Scotland/Accounts Commission national reports Note 4 Page 15 of 418
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Appendix 2 Implementation of the approved 2021-2022 Internal Audit Plan (continued) (as at date of signing the annual opinion) Topic Status Audit grading Reported to A&SP Other PSIAS self-assessment and Quality Assurance Programme Complete N/A N/A Provision of ad hoc advice on systems development and control issues Complete N/A N/A Participation in a range of Corporate Working Groups Complete N/A N/A Community Councils Complete N/A N/A Contingency N/A N/A N/A Unplanned / carried forward Public Protection Complete Reasonable assurance (Green-Amber) September 2021 Follow-up: Scottish Attainment Challenge (SAC) and Pupil Equity Fund (PEF) Complete Reasonable assurance (Green-Amber) September 2021 Clyde Valley Waste Contract Underway To be confirmed Expected June 2022 Investigation: Alleged financial irregularities at secondary school A Complete Reported in line with relevant reporting protocol: September 2021 Investigation: Waste and Fleet overtime Complete Reported in line with relevant reporting protocol: March 2022 Investigation: Alleged irregularities at secondary school B Complete Not reported – in line with relevant reporting protocol Explanatory notes Where a report is marked as ‘Underway’ and ‘Expected June 2022’ – this means that the audit work has been concluded and a draft report has been issued, or will be imminently, but management responses to the report and associated recommendations have not yet been finalised. Note 1 As reported to the Audit and Scrutiny Panel in March 2022, these assignments were postponed and consideration will be given to their inclusion in future work programmes as part of the normal audit planning process. Note 2 As reported to the Audit and Scrutiny Panel in March 2022, these assignments have been delayed/carried forward into the 2022-23 Plan Note 3 Annual programme agreed with, and reported to, relevant senior management and NL JIB Performance, Finance and Audit Sub-Committee. Note 4 Audit Scotland has necessarily had to re-prioritise its resources in response to the public health emergency and there have been fewer than normal national VFM or performance audits in respect of local government services issued in the period. Page 16 of 418
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Appendix 3 2021-22 Internal Audit performance data Category Measure 2021-22 performance result 1. Delivery of Annual Plan Percentage completion of agreed plan 82.7% 2. Targeting Percentage of key corporate risks and key financial systems over which assurance provided (note 100% coverage planned over a 3-year rolling period) Corporate risks – 28% audited in 2021-22 Financial systems – 33% audited in 2021-22 3. LGBF - Efficiency Cost of Internal Audit per £ million revenue budget To be confirmed 4. LGBF - Efficiency % of productive hours delivered v Plan 83% (excludes hours relating to covid-19 secondments) 5. Delivery / recommendations Percentage implementation of agreed actions by implementation date (cumulative year to date) 64% 6. Delivery / other Number of significant irregularity / fraud investigations 4 7. Customer satisfaction results Scores from customer satisfaction questionnaires (audit assignments) (cumulative year to date) See separate table below 8. Customer satisfaction results Scores from key stakeholders (CMT and A&SP) questionnaires (overall performance of the function) See separate table below 9. Quality / standards Reliance placed by External Audit on the work of Internal Audit Yes 10. Quality/ standards Quality review outcomes – EQAR or internal self-evaluation 2019 EQAR ‘Fully Conforming’ with PSIAS 2022 self-assessment confirmed ongoing compliance 11. Delivery of Annual Report Annual opinion /report prepared by 31 May annually Annual opinion/report signed 31/05/22 12. Targeting Approval by CMT and A&SP of strategy and annual plan by 31 May annually Annual plan approved by CMT 24/05/22 No ASP meeting due to elections. Plan will be presented to first meeting of the new Committee. Page 17 of 418
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Appendix 3 (continued) 2021-22 Internal Audit performance data Customer Satisfaction Results The results presented in the tables below show positive feedback on the work of internal audit. For individual audit assignments 90% of respondents agreed that Internal Audit added value by assisting in providing assurance and that reports were relevant and constructive with findings clearly and accurately communicated. Similar positive trends are displayed in the key stakeholder results with all respondents agreeing that Internal Audit acts as a trusted advisor and critical friend, helping to improve the achievement of the Council’s objectives and effective public service delivery whilst being sufficiently independent to be able to influence and, where necessary, challenge senior management decision-making on governance, risk and control issues. In both type of questionnaire, we also seek feedback on what key stakeholders have 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. Key stakeholder feedback Responses were received from 12 stakeholders which includes a mix of elected members on the Audit and Scrutiny Panel and Heads of Service Strongly Agree or Agree Neither agree nor disagree Question Internal Audit focus their work on significant matters where assurance is most needed 100% 0% Internal Audit outputs are clear and easy to understand and offer relevant, evidence-based comment and practical recommendations 92% 8% Internal Audit act as a trusted advisor and critical friend, helping to improve the achievement of the Council’s objectives and effective public service delivery 100% 0% Internal Audit appear sufficiently independent to be able to influence and, where necessary, challenge senior management decision-making on governance, risk and control issues 100% 0% Internal Audit is meeting my expectations and helping me to discharge my role 92% 8% Client feedback– individual audit assignments Responses received from 10 clients related to assignments reported to the Panel in December 2021 and March 2022 Strongly Agree or Agree Neither agree nor disagree Disagree Question 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 90% 10% 0% Internal Audit findings were accurate and clearly communicated 90% 0% 10% The audit report made relevant, constructive and practical recommendations to help improve operations 90% 10% 0% Internal Audit staff were professional and courteous throughout the audit process 100% 0% 0% Page 18 of 418
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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 08/09/22 Annual Governance Statement 2021/22 From Katrina Hassell, Head of Business and Digital E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary The council is required to produce an Annual Governance Statement in line with The Local Authority Accounts (Scotland) Regulations 2014. This Statement requires to be included within the council’s Annual Accounts and it is subject to review by the external auditors as part of their year-end Annual Audit Report (AAR) process. The Statement for 2021/22, attached as Appendix 1, outlines the council’s governance arrangements for the last financial year and demonstrates how the council complies with the Delivering Good Governance in Local Government: Framework (2016). It also supports the council’s Best Value duty in terms of securing continuous improvement. Included in the Annual Governance Statement is the annual Internal Audit opinion from the Head of Audit and Risk on the council’s internal control systems which states 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 2022”. The Annual Governance Statement is presented herewith for the consideration of the Audit and Scrutiny Panel. This has been prepared with evidence gathered from various different sources (which includes the annual opinion from the Head of Audit and Risk) to ensure that it properly reflects the effectiveness of the council’s governance arrangements during 2021/22. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Consider and note the Annual Governance Statement for 2021/22, and (2) Confirm the inclusion of the assurance statement - as set out in section 2.1.3 (3) regarding the management of the risk of fraud and corruption - in the Annual Governance Statement for 2021/22. The Plan for North Lanarkshire Priority All priorities AGENDA ITEM 3 Page 19 of 418
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1. Background 1.1 The production of the council’s Annual Governance Statement is underpinned by statute through 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 Compliance with the legislation also ensures the council demonstrates its commitment to the good governance principles as set out in the Delivering Good Governance in Local Government: Framework (2016) and accompanying Guidance Notes for Scottish Local Authorities (2016) published by Chartered Institute of Public Finance and Accountancy (CIPFA) in association with Society of Local Authority Chief Executives (SOLACE). 1.3 The essence underpinning the Delivering Good Governance in Local Government: Framework is that local government develops and shapes its own approach to governance, taking account of the environment within which it operates. Within this context, it is therefore up to each local authority to: • Set out its commitment to the principles of good governance outlined in the Delivering Good Governance in Local Government: Framework. • Determine its own governance arrangements, or local code, underpinned by these principles. • Ensure that the local code operates effectively in practice. 1.4 In line with the Delivering Good Governance in Local Government: Framework all councils are required to test their governance arrangements (local code) against these principles by: • Reviewing existing governance arrangements. • Developing and 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. • Reporting publicly on compliance with the local code on an annual basis, including how the governance arrangements have been monitored for effectiveness in the year and identifying planned changes. 1.5 The council’s own governance arrangements, or local code, is set out in the Strategic Governance Framework. The accompanying report to the Audit and Scrutiny Panel details the process in place for annual review, assessment, assurance, and reporting purposes and the role of the Strategic Governance Framework in terms of informing the Annual Governance Statement. 1.6 In line with the regulations set out in paragraph 1.1 and the good governance requirements outlined in paragraph 1,4, this report presents the Annual Governance Ambition statement All ambition statements Page 20 of 418
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Statement for 2021/22 to ensure due consideration by the Audit and Scrutiny Panel in line with the terms of reference for the Panel as set out in the Scheme of Administration “to review the Annual Governance Statement prior to approval and consider whether it properly reflects the risk environment and supporting assurances, taking into account Internal Audit’s opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control”. 1.7 In light of the Committee structure still being finalised following the local government elections and the changes approved at the Council meeting on 9th June 2022, the Audit Director of Audit Scotland (the external auditors) confirmed in a conversation with the Head of Financial Solutions that, in this instance, the Annual Governance Statement could remain unsigned in the unaudited Annual Accounts for 2021/22 when submitted to the external auditors in line with the statutory deadline of 30th June 2022. It was also confirmed that consideration by the Audit and Scrutiny Panel would, in this instance, be able to be undertaken at the first available meeting of the new committee structure. 1.8 As part of the Annual Accounts for 2021/22, the Annual Governance Statement for 2021/22 is presented herewith for due consideration by the Audit and Scrutiny Panel in line with the requirement set out in paragraph 1.1 to ensure that the findings from the annual governance review “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”. Following Audit and Scrutiny Panel consideration, the Annual Governance Statement will be signed off by the Chief Executive and Leader of the Council. 2. Annual Governance Statement 2021/22 2.1 The Annual Governance Statement has been prepared with evidence gathered from various different sources to ensure that it properly reflects the effectiveness of the council’s arrangements during 2021/22. The information gathered to inform the evidence base is summarised in paragraphs 2.1.1 to 2.1.5 below. 2.1.1 Heads of Service have reviewed the effectiveness of governance arrangements within their area of responsibility and signed off the Chief Officer Certificate of Assurance to support the preparation of statements on corporate governance and internal financial control for year ending 31 March 2022 and completed the accompanying 75 point checklist covering the following nine areas: 1. The control environment 2. Risk management 3. Business planning, information, and reporting 4. Financial control processes 5. Project management 6. Monitoring and corrective action 7. Human resources 8. Arm’s length bodies 9. Assessing whether key controls have been applied during the year Through this process Heads of Service have confirmed corporate governance arrangements and financial controls in their area of responsibility have been, or are, working well and there are no other significant matters arising which would require to be raised specifically in the Annual Governance Statement. 2.1.2 The council’s seven arm’s length external organisations (ALEOs) have also completed a Certificate of Assurance to support the preparation of the council’s statements on Page 21 of 418
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corporate governance and internal financial control for year ending 31 March 2022 and completed the accompanying 58 point checklist covering areas 1 to 7 and 9 listed in paragraph 2.1.1 above. • 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, or are, working well and there are no other significant matters arising which would require to be raised specifically in the council’s Annual Governance Statement. 2.1.3 In line with the guidance set out by the external auditors (Audit Scotland) in 2021, there are four specific CIPFA statements which the council is required to demonstrate that they comply with in the Annual Governance Statement. (1) The CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Audit Charter, the Head of Audit and Risk is required to provide an annual opinion on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control”. The CIPFA Statement considers this to be the most important output from the Head of Audit and Risk and one of the main sources of objective assurance that the Chief Executive and the Corporate Management Team have to support the Annual Governance Statement. In this respect, the Corporate Management Team considered and noted the Internal Audit annual report 2021/22 from the Head of Audit and Risk on 7th June 2022. This report stated 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 2021/22 states that it is the opinion of the Head of 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 2022”. (2) CIPFAs 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 2021/22 the purpose of the Audit and Scrutiny Panel was 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” and its activities included providing an “independent review of the council's governance, risk management, performance, and control frameworks and oversees the financial reporting and annual governance processes” - as set out in the Scheme of Administration (December 2019). (3) 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. In this respect the council has a number of policies and procedures in place as noted below: • Corporate Anti-Fraud Policy and Response Plan (updated in June 2017, review scheduled to be undertaken during 2022/23). Page 22 of 418
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• Whistleblowing Procedures (update approved in March 2022). • Gifts and hospitality policy for employees (incorporated into the Employee Code of Conduct in 2018) with a register that is updated every six months. • Employee Code of Conduct (update approved in March 2021). • Code of Conduct for Chief Officers (updated in November 2017, review scheduled to be undertaken during 2022/23). • Information Security Policy (update approved in June 2021). The identification of risks is carried out in line with the council’s Risk Management Strategy and through the risk for serious organised crime, fraud, and corruption which sits within the Corporate Risk Register. The Head of Legal and Democratic Solutions (the council’s Monitoring Officer) is the identified lead for this risk. The CIPFA statement also requires responsibility to be acknowledged. In this respect the Internal Audit annual report 2021/22 from the Head of 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 anti-fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Head of Service with recommendations made which are designed to address any weaknesses identified. Such work is reported to the Audit and Scrutiny 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 2021/22 from the Head of Audit and Risk has confirmed that “All audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. I am also pleased to be able to report that there were no material frauds or irregularities identified in 2021-22 that I require to bring to your attention”. Having considered information presented above to support the council’s arrangements to manage the risk of fraud and corruption and, in line with the CIPFA Statement, the Audit and Scrutiny Panel are asked to approve the following statement for inclusion in the Annual Governance Statement prior to signing off by the Chief Executive and Leader of the Council: “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”. (4) 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 Head of Audit and Risk (referenced above). 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 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. 2.1.4 Various self-evaluation exercises have been undertaken by the council as part of the governance and performance management arrangements. This followed consideration Page 23 of 418
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of the refreshed Strategic Self-Evaluation Framework and rolling review programme at the Audit and Scrutiny Panel in September 2021. During 2021/22 five self-evaluation exercises were completed in terms of: • Compliance with the CIPFA Financial Management (FM) Code. This self- evaluation concluded that the council’s financial management practices comply with all aspects of the CIPFA FM Code with an average overall rating of 98% from the assessment team in terms of strongly agreeing or agreeing the extent of compliance across all of the 17 financial management standards. This is supported by a significant bank of evidence collected through a desktop exercise and substantiated by the assessment team which comprised members of the Corporate Management Team. • Reviewing the adequacy and effectiveness of the revised Corporate Management Team arrangements including how well it operates as a vehicle for monitoring and scrutinising progress implementing The Plan for North Lanarkshire and individual Programme of Work items. This self-evaluation identified that the Corporate Management Team has a clear vision and effective leadership with a sound approach that provides a clear direction for its work. In terms of deployment and assessment and review, it was considered that the new arrangements had not yet had the time to be embedded fully. Notwithstanding this, a number of improvements (with responsibilities and timelines) have been agreed for action during 2022/23 to ensure that the arrangements are implemented to their full potential. • Risk governance arrangements in respect of DigitalNL. This self-evaluation supported the annual review of the DigitalNL Programme Risk Register and, while focusing on both the risk management arrangements and the risks themselves for the DigitalNL programme, it also considered the inter-relationships of associated programme risks across the three levels in the organisation (project, service, corporate). The findings from the self-evaluation exercise were reported to the Transformation and Digitisation Committee in November 2021. One improvement action was identified - this was to consider the inter-connectedness of the DigitalNL programme risks with those on the Corporate Risk Register and the Business Solutions service risk register to ensure risks are managed at the appropriate level in the organisation, and the mitigating actions and controls are aligned and implemented accordingly. • Reviewing whether the arrangements for the Data Governance Board (DGB) adequately contribute to the achievement of the council’s vision as detailed in the Roadmap. Undertaken at a time that followed changes to the membership of and arrangements for the DGB, this self-evaluation identified two areas requiring improvement for which an action plan has been agreed by the Board. These improvement actions focus on (a) those which require to be considered within the context of the efficient operation of the DGB, and (b) those which require to be aligned to the combined Action Plan for the Board (which comprises the Information Governance Action Plan and Data and Information Management Strategic Roadmap work packages) to avoid any duplication and ensure a fully integrated approach to improvement. • The effectiveness of current arrangements for the North Lanarkshire health and social care IJB and how well the Board meets its intended outcomes. Findings from this self-evaluation exercise demonstrate the extent of the positive results and good practice examples identified by the assessment team. Only three areas for improvement were identified and these aim to further strengthen existing arrangements and add value to existing practices, rather than fill any gap or address any significant issue in terms of effectiveness. Findings from this exercise also serve to reassure the new members of the IJB (both Elected Members and executive members) of the effectiveness of the current arrangements for the Board Page 24 of 418
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and its supporting governance, and sets out the priorities for improvement in this respect. 2.1.5 The evidence has also included an annual review and refresh of the council’s Strategic Governance Framework and its supporting review programme which is set out in the accompanying report to the Audit and Scrutiny Panel. In this respect: • An annual review process is in place to fulfil the requirements of the national Delivering Good Governance in Local Government: Framework. This process also sets out the role of the Chief Officers and Elected Members who are responsible for implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. The Strategic Governance Framework also sets out the role of the Corporate Management Team 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 21st June 2022. • In line with the annual review process, each of the elements and mechanisms on the review programme which supports the Strategic Governance Framework have been reviewed with updates made as required to the relevant documentation and hyperlinks, as well as the review timeframe and date of next update, and the assessment of the current position (which includes the corresponding RAG status). This process ensures all elements and mechanisms are as up to date as they require to be while providing a method by which to identify and prioritise items requiring to be reviewed and updated further. • An Internal Audit on Corporate Governance in March 2022 cited the formal assessment process now in place through the Strategic Governance Framework and its accompanying review programme as good practice. It was also cited that there are now “formal and robust arrangements” in place to ensure that such reviews are undertaken on an annual basis. • The Internal Audit on Corporate Governance 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 and effective”. 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 undertaken of Principles A and B”. 2.2 The evidence presented above in section 2.1 (paragraphs 2.1.1 to 2.1.5), and the results of these processes, are considered sufficient to support the Chief Executive and the Leader of the Council signing the Annual Governance Statement (after due consideration by the Audit and Scrutiny Panel) and stating that reasonable assurance can be placed on the adequacy and effectiveness of the corporate governance systems operating within the council, and that the council complies with relevant corporate governance principles in all significant respects. Next steps 2.3 As part of the annual process, the Annual Governance Statement for 2021/22 will be reported publicly through the website to demonstrate the council’s compliance with the principles of good governance. Information will also be included to demonstrate how the governance arrangements have been monitored for effectiveness in the year and planned changes will be identified. 3. Measures of success Page 25 of 418
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3.1 Measures of success include the production of an Annual Government Statement in line with the Local Authority Accounts (Scotland) Regulations 2014 and good governance principles, that is considered by the Audit and Scrutiny Panel, signed off by the Chief Executive and Leader of the Council, included in the Annual Accounts, and reported publicly on the council’s website. 4. Supporting documentation 4.1 Appendix 1 - Annual Governance Statement 2021/22 Katrina Hassell Head of Business and Digital 5. Impacts ( http://connect/report-template-guidance ) 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? The Delivering Good Governance in Local Government: Framework (2016) positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such this is reflected in the Strategic Governance Framework. 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 have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Development and publication of the Annual Governance Statement ensures the council complies with the CIPFA Statement on the Role of the Chief Financial Officer in Local Government 2016 in terms of financial controls. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ Page 26 of 418
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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 have been discussed and agreed with Legal and Democratic Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Production of the council’s Annual Governance Statement is underpinned by statute through the Local Authority Accounts (Scotland) Regulations 2014, as noted in paragraph 1.1. 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 technology, has an assessment been carried out (or scheduled) 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? The Delivering Good Governance in Local Government: Framework (2016) positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such this is reflected in the Strategic Governance Framework. 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? Through publication of the Annual Governance Statement on the website, the council will ensure it meets the requirements to report publicly on compliance with the principles of good governance. 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 27 of 418
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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? Development and publication of the Annual Governance Statement in line with the Local Authority Accounts (Scotland) Regulations 2014, the principles set out within the Delivering Good Governance in Local Government: Framework (2016), and in line with the Best Value duty, contributes towards the mitigation of the risk on the Corporate Risk Register for Governance, Leadership, and Decision Making. Page 28 of 418
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Appendix 1 Annual Governance Statement 2021/22 1. Scope of responsibility 1.1 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. 1.2 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. 1.3 To maintain compliance in terms of ensuring good governance and delivering continuous improvement, 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) published by Chartered Institute of Public Finance and Accountancy (CIPFA) in association with Society of Local Authority Chief Executives (SOLACE). 1.4 To ensure its good governance arrangements are sound and the highest standards are met, the council has set out its commitment to the national principles of good governance by determining its own governance structure (local code) underpinned by these principles. This local code is set out in the Strategic Governance Framework. 1.5 In discharging these duties Chief Officers and Elected Members are responsible for implementing the council’s governance arrangements and ensuring the local code, the Strategic Governance Framework, is assessed on an annual basis to ensure ongoing effectiveness and compliance. 1.6 In this respect, the council has arrangements in place through the Corporate Management Team to ensure appropriate and regular oversight, management, and reporting at a strategic level to support delivery of The Plan for North Lanarkshire and Programme of Work. A standing agenda item for governance and risk further demonstrates the commitment to ensuring effective corporate governance arrangements are in place. As part of their annual evaluation process of the Strategic Governance Framework and supporting review programme, the Corporate Management Team is also responsible for identifying improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement. 1.7 Independent and objective assurances are provided by Internal Audit whose function is 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). 1.8 Internal Audit activity is planned to enable an independent opinion to be given by the Head of Audit and Risk each year 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 Page 29 of 418
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is not a substitute for, effective control. 1.9 The purpose of the 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), 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. In this respect, the Panel is responsible for providing independent review of the council's governance, risk management, performance, and control frameworks, and overseeing the financial reporting and annual governance processes. It also oversees the council's internal and external audit arrangements, helping to ensure efficient and effective assurance arrangements are in place. 1.10 This statement also covers the organisations consolidated in the council’s Group Accounts. 2. Strategic Governance Framework 2.1 In February 2020, the Audit and Scrutiny Panel approved the council’s Strategic Governance Framework as the council’s local code of governance aligned to the national Delivering Good Governance in Local Government: Framework. This sets out the elements and mechanisms which form the council’s local code of governance and demonstrates North Lanarkshire Council’s commitment to the principles of good governance. 2.2 The Strategic Governance Framework is one of six inter-related corporate frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and the Framework for Demonstrating Improved Outcomes for Communities) which are key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work, while ensuring each stage of delivery towards achieving the overall ambitions is appropriately planned, guided, implemented, and governed. 2.3 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 at all times for completeness and to raise awareness of the role of good governance in delivering the strategic ambition through the Programme of Work. 2.4 The Strategic Governance Framework outlines the elements and mechanisms in place to ensure appropriate oversight and governance of The Plan for North Lanarkshire and supporting Programme of Work and enable the council to monitor the delivery of its ambitions while ensuring arrangements for corporate governance, risk management, and internal financial controls are sound. This is based on the following: • Identifying and setting out the council’s long-term strategic ambition and priorities in The Plan for North Lanarkshire and ensuring the vision for inclusive growth and prosperity for all is embedded throughout all other policy statements agreed by the council as well as all strategic management, service delivery, and corporate governance approaches. • Establishing the six inter-related corporate frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and the Framework for Demonstrating Improved Outcomes for Communities) and ensuring these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work through a regular review and refresh programme. • Standing Orders that allow the council to delegate decision making to committees, sub-committees, or officers and sets out the rules which apply to the running and operation of council and committee meetings. Page 30 of 418
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• 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. • 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 North Lanarkshire Council funds. Compliance with these regulations ensures that public 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 - as the overarching framework that establishes the financial strategies and policies to ensure effective financial governance, planning, and management - also sets out the responsibility for safeguarding public funds within the council and the role of the Section 95 Officer. The strategies and policies covered by the Financial Strategy include the Capital Strategy, Treasury Management Strategy, Revenue Budget Strategy, and the Medium-Term Financial Plan. • A Risk Management Strategy with arrangements that reflect the council’s strategic ambition at a corporate, service, and project level. A key part of the system of internal control, the council’s risk management arrangements are designed to identify, assess, prioritise, and mitigate risks which impact on achievement of the council’s priorities. These arrangements are designed to enable the council to perform well, to manage risk effectively, and to minimise any potential impacts on service delivery and the achievement of planned outcomes. • 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. • An Anti-Fraud Policy and Fraud Response Plan which sets out the council’s expectations (which 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 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 Corporate Management Team with a supporting meetings structure comprising service Senior Management Team meetings, and Operational Management Team meetings to cascade the context, deliverables, and accountabilities and ensure consistency of message in the vision set out in The Plan for North Lanarkshire and the delivery required through the Programme of Work. All Heads of Service are members of the Corporate Management Team; this includes those Heads of Service 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 that aims to enable performance to be measured and assessed at three levels within the council and includes target setting and service and statutory reporting in line with an annual schedule. • 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 by management and Elected Members. Page 31 of 418
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• A range of programme Boards and working groups aligned to the delivery of specific Programme of Work items, e.g. Strategic Capital Delivery Group, DigitalNL, Hub Delivery Programme Board, and Data Governance. • An Information Governance Policy Framework, comprising policies in terms of records and information management, data protection, information handling and classification, information risk, and information 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 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 reporting arrangements. • A range of employment and other policies and the associated guidance documents and forms which promote and support ethical behaviour and standards of conduct by employees, along with an employee Performance Review and Development (PRD) process, and access to a range of employee and Elected Members’ training and development programmes and opportunities through LearnNL. • 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 their Annual Audit Report (AAR) process and a range of other external audit and inspection bodies. 3. Review of effectiveness of governance arrangements 3.1 The Annual Governance Statement has been prepared with evidence gathered from various different sources to ensure that it properly reflects the effectiveness of the council’s arrangements during 2021/22. The information gathered to inform the evidence base is summarised in paragraphs 3.1.1 to 3.1.6 below. 3.1.1 Heads of Service have reviewed the effectiveness of governance arrangements within their area of responsibility by completing a Certificate of Assurance and updating a 75 point checklist covering: the control environment, risk management, business planning / information / reporting, financial control processes, project management, monitoring and corrective action, human resources, arm’s length bodies, and assessing whether key controls have been applied during 2021/22. • Through this process Heads of Service have confirmed corporate governance arrangements and financial controls in their area of responsibility have been, or are, working well and there are no other significant matters arising which would require to be raised specifically in the Annual Governance Statement. 3.1.2 The council’s seven arm’s length external organisations (ALEOs) have also completed a Certificate of Assurance and updated the accompanying 58 point checklist to support the preparation of the council’s statements on corporate governance and internal financial control for year ending 31 March 2022. • 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, or are, working well and there are no other significant matters arising which would require to be raised specifically in the council’s Annual Governance Statement. Page 32 of 418
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3.1.3 Compliance with four specific CIPFA statements. (1) The CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). To enable the Head of Audit and Risk to fulfil his role in this respect, the Corporate Management Team are 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 has undergone an annual review and refresh process in order to identify how the effectiveness of the council’s governance arrangements has been monitored and evaluated in the year) and which was endorsed by the Corporate Management Team at its meeting in June 2022. In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Audit Charter, the Head of Audit and Risk has provided an annual opinion on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control”. The Corporate Management Team considered and noted the Internal Audit annual report 2021/22 and annual opinion from the Head of Audit and Risk on 7th June 2022. This report stated 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 2021/22 states that it is the opinion of the Head of 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 2022”. (2) CIPFAs 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 2021/22 the purpose of the Audit and Scrutiny Panel was 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” and its activities included providing an “independent review of the council's governance, risk management, performance, and control frameworks and oversees the financial reporting and annual governance processes” - as set out in the Scheme of Administration (December 2019). (3) 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. In this respect the council has a number of policies and procedures in place as noted below: • Corporate Anti-Fraud Policy and Response Plan (updated in June 2017, review scheduled to be undertaken during 2022/23). • Whistleblowing Procedures (update approved in March 2022). • Gifts and hospitality policy for employees (incorporated into the Employee Code of Conduct in 2018) with a register that is updated every six months. • Employee Code of Conduct (update approved in March 2021). • Code of Conduct for Chief Officers (updated in November 2017, review scheduled to be undertaken during 2022/23). • Information Security Policy (update approved in June 2021). The identification of risks is carried out in line with the council’s Risk Management Strategy and through the risk for serious organised crime, fraud, and corruption which sits within the Corporate Risk Register. The Head of Legal and Democratic Solutions (the council’s Monitoring Officer) is the identified lead for this risk. Page 33 of 418
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The CIPFA statement also requires responsibility to be acknowledged. In this respect the Internal Audit annual report 2021/22 from the Head of 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 anti-fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Head of Service with recommendations made which are designed to address any weaknesses identified. Such work is reported to the Audit and Scrutiny 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 2021/22 from the Head of Audit and Risk has confirmed that “All audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. I am also pleased to be able to report that there were no material frauds or irregularities identified in 2021-22 that I require to bring to your attention”. (4) 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 Head of Audit and Risk (referenced above). 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 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. 3.1.4 Various self-evaluation exercises have been undertaken by the council as part of the governance and performance management arrangements. This has been undertaken in line with the refreshed Strategic Self-Evaluation Framework and rolling review programme which were approved by the Audit and Scrutiny Panel in September 2021. During 2021/22 five self-evaluation exercises were completed in terms of: • Compliance with the CIPFA Financial Management (FM) Code. This self- evaluation concluded that the council’s financial management practices comply with all aspects of the CIPFA FM Code with an average overall rating of 98% from the assessment team in terms of strongly agreeing or agreeing the extent of compliance across all of the 17 financial management standards. This is supported by a significant bank of evidence collected through a desktop exercise and substantiated by the assessment team which comprised members of the Corporate Management Team. • Reviewing the adequacy and effectiveness of the revised Corporate Management Team arrangements including how well it operates as a vehicle for monitoring and scrutinising progress implementing The Plan for North Lanarkshire and individual Programme of Work items. This self-evaluation identified that the Corporate Management Team has a clear vision and effective leadership with a sound approach that provides a clear direction for its work. In terms of deployment and assessment and review, it was considered that the new arrangements had not yet had the time to be embedded fully. Notwithstanding this, a number of improvements (with responsibilities and timelines) have been agreed for action during 2022/23 to ensure that the arrangements are implemented to their full potential. • Risk governance arrangements in respect of DigitalNL. This self-evaluation supported the annual review of the DigitalNL Programme Risk Register and, while focusing on both the risk management arrangements and the risks themselves for the DigitalNL programme, it also considered the inter-relationships of associated programme risks across the three levels in the organisation (project, service, Page 34 of 418
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corporate). The findings from the self-evaluation exercise were reported to the Transformation and Digitisation Committee in November 2021. One improvement action was identified - this was to consider the inter-connectedness of the DigitalNL programme risks with those on the Corporate Risk Register and the Business Solutions Service Risk Register to ensure risks are managed at the appropriate level in the organisation, and the mitigating actions and controls are aligned and implemented accordingly. • Reviewing whether the arrangements for the Data Governance Board (DGB) adequately contribute to the achievement of the council’s vision as detailed in the Roadmap. Undertaken at a time that followed changes to the membership of and arrangements for the DGB, this self-evaluation identified two areas requiring improvement for which an action plan has been agreed by the Board. These improvement actions focus on (a) those which require to be considered within the context of the efficient operation of the DGB, and (b) those which require to be aligned to the combined Action Plan for the Board (which comprises the Information Governance Action Plan and Data and Information Management Strategic Roadmap work packages) to avoid any duplication and ensure a fully integrated approach to improvement. • The effectiveness of current arrangements for the North Lanarkshire health and social care IJB and how well the Board meets its intended outcomes. Findings from this self-evaluation exercise demonstrate the extent of the positive results and good practice examples identified by the assessment team. Only three areas for improvement were identified and these aim to further strengthen existing arrangements and add value to existing practices, rather than fill any gap or address any significant issue in terms of effectiveness. Findings from this exercise also serve to reassure the new members of the IJB (both Elected Members and executive members) of the effectiveness of the current arrangements for the Board and its supporting governance, and sets out the priorities for improvement in this respect. 3.1.5 The evidence has also included an annual review and refresh of the council’s Strategic Governance Framework. In this respect: • An annual review process is in place to fulfil the requirements of the national Delivering Good Governance in Local Government: Framework. This process also sets out the role of the Chief Officers and Elected Members who are responsible for implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. The annual review and update of the Strategic Governance Framework was endorsed by the Corporate Management Team at their meeting in June 2022 in line with their role to also identify any improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement activity. • In line with the annual review process, each of the elements and mechanisms within the Strategic Governance Framework have been reviewed with updates made as required to the relevant documentation and hyperlinks, as well as the review timeframe and date of next update, and the assessment of the current position (which includes the corresponding RAG status). This process ensures all elements and mechanisms are as up to date as they require to be while providing a method by which to identify and prioritise items requiring to be reviewed and updated further. • An Internal Audit on Corporate Governance in March 2022 cited the formal assessment process now in place through the Strategic Governance Framework and its accompanying review programme as good practice. It was also cited that there are now “formal and robust arrangements” in place to ensure that such reviews are undertaken on an annual basis. • The Internal Audit on Corporate Governance 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 and effective”. 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 undertaken of Principles A and B”. Page 35 of 418
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3.1.6 Comments made by the external auditors and other audit and inspection bodies, feedback from Elected Members and committees in their scrutiny role, and issues considered by the Audit and Scrutiny Panel. 4. Continuous improvement 4.1 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, service delivery, and corporate governance approaches across the council. 4.2 The Programme of Work process (established in 2019) provides a clear roadmap for work across council services and with partners. Directing policies and plans to support delivery of The Plan for North Lanarkshire, the Programme of Work is therefore instrumental in bringing together the elements that support strategic planning, local development, enterprise activities, and community investment in a cohesive manner. 4.3 Sitting alongside this - 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 2022. The supporting review programme ensures each of the strategies, policies, and plans are up to date, reviewed and updated at an appropriate interval, and reported to the relevant committee. 4.4 The fourth annual iteration of the Programme of Work (for 2022/23) was approved by the Policy and Strategy Committee in March 2022. This reflects the changes required to deliver on the long-term ambition and the broad range of innovative and transformative programmes of work and projects required in order to maintain services for residents in local communities which are efficient and effective, while targeting resources towards those individuals in the most vulnerable situations and ensuring value for money. 4.5 The council has long since recognised that it does not have the luxury of a traditional once and done approach to strategic planning and change and the Programme of Work has enabled a recurring and dynamic approach in this respect. It has enabled delivery of the long-term vision to be informed by an annual strategic planning process that is influenced by national policy changes and new developments which impact on the achievement of the vision and which require due consideration in future strategies, policies, plans, and programmes of work. However, the considerable challenges that remain across North Lanarkshire - as demonstrated by the latest performance results reported to the Policy and Strategy Committee in March 2022 - means that an even greater focus is required to escalate the pace and depth of change in order to maximise positive outcomes for the people and communities of North Lanarkshire. As such, a commitment has been made to ensure further work is undertaken during 2022/23 to fundamentally evaluate activities undertaken, resources expended, and results achieved against the direction of travel in order to assess the impact towards achieving The Plan for North Lanarkshire’s long-term vision of inclusive growth and prosperity for all. 4.6 Key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the Page 36 of 418
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overall ambitions is appropriately planned, guided, implemented, and governed) are six inter-related corporate frameworks: • Strategic Policy Framework • Strategic Governance Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities 4.7 To ensure these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work, all are on an annual 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. 4.8 The Strategic Governance Framework has been developed taking into account the local environment within which the council operates. 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 programme and 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. 4.9 The annual review process now established through the Strategic Governance Framework ensures that the council’s governance arrangements are regularly assessed for ongoing effectiveness within the context of The Plan for North Lanarkshire. 4.10 Following publication of the Accounts Commission’s Best Value Assurance Report (BVAR) for North Lanarkshire Council in May 2019, updates on implementation of the eight recommendations for improvement were reported to the Policy and Strategy Committee in September 2019 and again in March 2020. The report in March 2020 consolidated the eight improvement actions within the Programme of Work to strengthen a corporate and integrated approach to improvement that supports delivery of The Plan for North Lanarkshire. The external auditors Annual Audit Report (AAR) for 2020/21 (reported to the Audit and Scrutiny Panel in December 2021) concluded that four of the improvement actions were now complete, and noted good or reasonable progress was being made regarding the remaining four. 4.11 During 2021/22, the COVID-19 pandemic continued to impact on the council’s delivery of planned day to day activities and achievement of strategic priorities, albeit to a lesser extent than the previous year. The impact of this is also recognised in the annual audit opinion from the Head of Audit and Risk. In line with the guidance set out by the Scottish Government, a COVID Operating Model was approved at the Council meeting in March 2022. This provides a template as to how the council will operate over the next six months in a manner which recognises the ongoing risks associated with the pandemic, sets out the routine protection measures to be adopted across all council facilities, and allows for delivery of all council services in a manner more reflective to what existed pre- pandemic. 4.12 In line with the commitment to review the new hybrid working model (approved at Committee in December 2021), there will also be a review of the COVID Operating Model within a similar timeline. The purpose of this will be to reflect on any issues arising through its implementation and to have regard to any change in national policy which is Page 37 of 418
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likely to be kept under review over the same time period. 4.13 Following the decision taken by the Policy and Strategy Committee at its meeting in January 2020 the insourcing of culture, sport and leisure services was effective from 1 April 2021, under the new, focussed, and integrated Active and Creative Communities (ACC) team. 4.14 Six monthly reports during 2021/22 have provided the Audit and Scrutiny Panel with oversight and assurance of governance, financial governance, and risk management arrangements within the council’s Arm’s Length External Organisations (ALEOs). The reports have also highlighted where Covid has impacted on company operations, including the safeguards that were put in place during the pandemic to maintain service delivery and ensure safe working practices and the recovery strategies developed to resume service delivery as Covid restrictions were lifted. 5. Current year issues arising from Internal Audit activity during 2021/22 5.1 In his Internal Audit annual report for 2021/22, presented to the Chief Executive and Corporate Management Team in June 2022, the Head of Audit and Risk provided an overview of the activities of the Internal Audit section for the year 2021/22. 5.2 This included highlights of issues arising from Internal Audit activity during the year. In this respect, the Head of Audit and Risk commented on the following: • The significant proportion of Internal Audit staff who were temporarily seconded to other duties for a period during part of the year, in response to the pandemic. This impacted on the ability of Internal Audit to undertake planned work and details of the impact on the work programme and how outstanding work was prioritised were reported to the Audit and Scrutiny Panel in March 2022. Although this has had some impact on Internal Audit’s ability to deliver all planned work, the Head of Audit and Risk reported that “I am content that sufficient work has been undertaken to support the preparation of my annual opinion”. • A small number of audit assignments reported during 2021/22 which offered only limited assurance. In all cases, management committed to a range of relevant improvement actions, some of which have already been completed. In this respect Internal Audit will continue to monitor progress on these issues during 2022/23 to provide senior management and the Audit and Scrutiny Panel with further assurance that relevant key controls are operating effectively. • The results from detailed Internal Audit work examining the council’s corporate governance arrangements which suggest that compliance with the requirements of the corporate governance framework adopted by the council continued to be positive with no significant weaknesses or areas of concern highlighted. • Internal Audit work which suggests that despite significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council. • All 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. There were no material frauds or irregularities identified in 2021/22 that required to be brought to the attention of the Corporate Management Team. • The ongoing need for the council to continue to respond to challenges arising from the public health emergency, but there was less direct pressure on governance and internal controls than in 2020/21 when the council had to transition very quickly to significantly different ways of operating with consequential impacts on governance, internal control, and risk management arrangements. • While there are no issues that require the Head of Audit and Risk to quality his annual opinion, there are a small number of areas highlighted which will continue to be the focus of future audit coverage: - Programme of Work reports to committee - which are considered not to always easily allow elected members to monitor and/or assess progress against plans (timescales and budgets). Similarly, there is currently no mechanism to easily Page 38 of 418
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allow senior management to review progress across the range of Programme of Work activities. Management has previously committed to improving the ability of key stakeholders to monitor the progress of major projects / programme of work activities. - The Strategic Performance Framework - supportive of the approach adopted, Internal Audit recognises that implementation of effective, timely, and regular performance reporting on key strategic and operational performance measures to the Corporate Management Team and Service Committees has been significantly impacted over the last two years due to the need to respond to, and prioritise resources as a result of, the pandemic. - Current and future operating model - and the linked planned developments impacting upon workforce, digital transformation, service re-design, assets, and governance and how these actions are managed and progressed and the extent to which these contribute towards the achievement of the council’s ambitions. 5.3 Despite the challenges presented by the pandemic and notwithstanding the results of some specific individual audit assignments, overall the Head of Audit and Risk reported that he was satisfied that the council’s internal control and governance arrangements remained reasonably robust throughout 2021/22. 6. Previous year issues - 2020/21 6.1 In his Internal Audit annual report for 2020/21 the Head of Audit and Risk provided an overview of the activities of the Internal Audit section for that year. While this included highlights of a number of the more significant issues which arose from the work undertaken by Internal Audit during the year, none of these required actions which carried forward into the following year or which have not already been identified in paragraph 5.2 above. 7. Certification 7.1 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. 7.2 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. Chief Executive Leader of the Council Page 39 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref;EK/KS/VR/SD Date 08/09/22 Draft Unaudited Annual Accounts for the year to 31 March 2022 From Elaine Kemp, Head of Financial Solutions E-mail KempE@northlan.gov.uk Telephone 07939280601 1. Background 1.1. The Statement of Accounts summarises the Council’s transactions for the 2021/22 financial year and the resulting financial position as at 31 March 2022. 1.2. Preparation of the Accounts is a key statutory responsibility for Financial Solutions and the Council. The Local Authority Accounts (Scotland) Regulations 2014 require the Council to prepare an annual Statement of Accounts. 1.3. The Local Government in Scotland Act 2003 requires the Statement of Accounts to be prepared in accordance with proper accounting practices. In the local government context, proper accounting practices are detailed in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code), supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under Section 12 Executive Summary The purpose of the report is to inform the Panel that the unaudited accounts for the year ended 31 March 2022 were completed and submitted to Audit Scotland by 30 June 2022 in accordance with the statutory deadline . The Panel is asked to acknowledge the key matters highlighted in this report and in the attached unaudited accounts. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Acknowledge the contents of the report and the unaudited accounts submitted to External Audit by 30 June 2022. 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 AGENDA ITEM 4 Page 41 of 418
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of the 2003 Act. 2 Report 2.1 Accounting Policies 2.1.1 Proper accounting practice requires the Council to comply with the Code as issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee (LASAAC) when producing the Annual Accounts. The Council's compliance with the Code is demonstrated via the Statement of Accounting Policies, included within the Accounts. 2.1.2 As previously reported to the Audit and Scrutiny Panel, the 2021/2022 Code did not incorporate any significant changes that materially impacted on the reporting of the Council's Annual Accounts for the year. 2.2 Matters to Note 2.2.1 The net General Fund surplus brought forward from 2020/21 has been restated from £116.751m to £162.181m to reflect the change in presentation in respect of the balances held for future costs of PPP Schools, as discussed and agreed with Audit Scotland. 2.2.2 The Council’s 2021/22 position includes a net usable donation in relation to the insourcing of Culture Leisure North Lanarkshire of £6.486m. 3. Measures of success 3.1 The Council has complied with statutory obligations. 4. Supporting documentation 4.1 Appendix 1 Unaudited Annual Accounts 2021/22 Name Elaine Kemp Title Head of Financial Solutions 5. Impacts ( http://connect/report-template-guidance ) 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 Page 42 of 418
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Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? 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 have been discussed and agreed with People and Organisational Development? 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 have been discussed and agreed with Legal and Democratic Solutions? 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? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) 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? Page 43 of 418
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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? Page 44 of 418
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ANNUAL ACCOUNTS 2021-2022 Page 45 of 418
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Management Commentary 1 Statement of Accounts Comprehensive Income and Expenditure Statement 16 Balance Sheet 17 Movements in Reserves Statement 18 Cash Flow Statement 20 Notes to the Accounts 1 Accounting Policies 21 2 Expenditure and Funding Analysis 32 3 Accounting Standards that have been Issued but not yet Adopted 33 4 Critical Judgements in Applying Accounting Policies 34 5 Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty 34 6 Events After the Balance Sheet Date 36 7 Restatement 36 8 Other Operating Expenditure 36 9 Financing and Investment Income and Expenditure 37 10 Taxation and Non-Specific Grant Income 37 11 Grant Income 38 12 Agency Services 39 13 Property, Plant and Equipment 40 14 Heritage Assets 42 15 Intangible Assets 43 16 Long-Term Debtors 44 17 Financial Instruments 44 18 Inventories 53 19 Short-Term Debtors 53 20 Cash and Cash Equivalents 53 21 Short-Term Creditors 54 22 Provisions 54 23 Contingent Assets and Liabilities 54 24 Leases 55 25 Public Private Partnerships and Similar Contracts 56 26 Pension Costs 58 27 Usable Reserves 63 28 Unusable Reserves 65 Page 47 of 418
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29 Capital Commitments 67 30 Capital Expenditure and Capital Financing 68 31 Adjustments between Accounting Basis and Funding Basis under Regulations 69 32 Transfers to/from Statutory Reserves 71 33 Reconciliation of Comprehensive Income and Expenditure Statement to Cash Flow Operating Activities 71 34 Reconciliation of Financing Activities to Balance Sheet 72 35 External Audit Costs 72 36 Statutory Trading Operations 72 37 Related Parties 73 Housing Revenue Account 76 Council Tax Income Statement 77 Non Domestic Rates Income Statement 78 Sundry Accounts Statement 79 Group Comprehensive Income and Expenditure Statement 80 Group Balance Sheet 81 Movements in Group Reserves Statement 82 Group Cash Flow Statement 84 Notes to the Group Accounts 1 Disclosure of Interest in Other Entities 85 2 Group Structure 85 3 Combining Entities 87 4 Changes to Group Structure 87 5 Principal Place of Business 87 6 Reconciliation Statements 88 7 Further Details on Consolidation 89 8 Interests in Other Entities 92 Remuneration Report 93 Statement of Responsibilities 102 Annual Governance Statement 103 Glossary of Terms 114 Page 48 of 418
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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 the growing population of 341,140 residents and those who come to live, learn, work, invest and visit. Background 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 2022. 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). The Accounts also reflect the requirements of accounting and statutory guidance set by the Government. IFRS is a set of accounting standards developed by the independent, not-for-profit organisation, the International Accounting Standards Board (IASB) in order to provide a global framework and general guidance to allow organisations to prepare and disclose financial statements. Comprehensive Income and Expenditure Statement (CIES) The CIES (page 16) 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 £875.301m and other corporate charges totalling £46.549m. These were funded by Taxation and Non-Specific Grant Income (including Council Tax, General Revenue Grant and Non Domestic Rates) of £894.056m. This resulted in an accounting deficit on the provision of services for the year of £27.794m. Other net income not related to the provision of services totalling £590.874m is also reported, resulting in the Total Comprehensive Income and Expenditure for the year showing a surplus of £563.080m. This is an increase of £425.681m from the position reported in 2020/21, primarily due to a reduction in the actuarial valuation of the Council’s share of pension scheme liability, and which has been partially offset by an increased surplus on revaluation of non-current assets. Movement in Reserves Statement (MiRS) The MiRS statement (page 18) 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 £77.048m. The net General Fund surplus brought forward from 2020/21 has been restated from £116.751m to £162.181m to reflect the change in presentation in respect of the balances held for future costs of PPP Schools, as discussed and agreed with Audit Scotland. The overall surplus to be carried forward into 2022/23 is £239.229m. This overall balance has increased over recent years largely due to funding in respect of COVID-19, some of which is being carried forward for future obligations, as well as 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. The overall balance is represented by: Page 49 of 418
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£m £m Earmarked COVID Funding 30.551 Earmarked for Service Expenditure 138.536 169.087 Change Management Fund 29.424 Contingency 8.000 Unallocated 32.718 Total General Fund Balance 239.229 Expenditure and Funding Analysis The Expenditure and Funding Analysis (Note 2 page 32) 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 18), with the Housing Revenue Account financial statements detailed on page 76. These reflect transactions linked to managing the Council’s housing stock. The account shows an in-year deficit of £7.957m, which when deducted from the 2020/21 balance brought forward results in a cumulative surplus of £19.496m, shown within the Council’s Usable Reserves. Of this surplus, £12.871m has been approved for specific purposes including Council Ambition of £5.054m, housing repairs £2.500m and HRA capital energy efficiency programme of £2.500m. In addition, there is an approved £1.470m contingency reserve, which leaves an unallocated balance of £5.155m. The opening 2021/22 equal pay provision included £0.123m in relation to the Housing Revenue Account. There was no movement on the provision during the year and no further changes made to the level required resulting in the £0.123m balance carrying forward to 2022/23. Capital Account Details of Capital Expenditure and Capital Financing are shown on page 68. Total gross expenditure for Housing and General Fund Services amounted to £172.647m. This was funded as summarised below: £m Sale of Council Assets 1.014 Contributions from Revenue Budgets 34.262 Donated Assets 2.381 Capital Grants and Other Income 62.828 Loans Fund Advances 72.162 172.647 The 2021/22 loans fund advance of £72.162m was funded primarily from a combination of internal cash balances/reserves and short-term borrowing in lieu of future long-term borrowing from the Public Works Loan Board (PWLB). In response to the COVID-19 health crisis, a revised Strategic Capital Investment Programme was developed by the Council’s Strategic Capital Delivery Group with the revised plan for 2021/22 to 2025/26 approved at the Policy and Strategic Committee in March 2021. Financial year 2021/22 was the first year of the Council’s approved programme. Page 50 of 418
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During 2021/22 the Council’s Strategic Capital Investment Programme faced a number of delivery challenges linked to the ongoing impacts of recovery from COVID-19 and Brexit on industries such as construction and transport linked to the availability of labour and raw materials. These resulted in reduced capacity for external contractors to deliver projects within previously assumed timelines, increased material costs and changes in the scope and timing of programmes in response to COVID-19 and Brexit. The overall impact meant that lower than anticipated expenditure, and resultant borrowing, was incurred in delivering the capital programme with the programme delivery reprofiled across the remainder of the five capital planning period. The revised Strategic Capital Investment Programme was approved at Policy and Strategy Committee in March 2022. Cash Flow Statement The Council’s cash and cash equivalent balance (detailed on page 20) increased by £3.445m during 2021/22. This represents a net cash inflow from operating activities of £175.690m, a net cash outflow in investing activities of £117.106m and a net cash outflow from financing activities of £55.139m with a further non cash adjustment of £0.030m in respect of accrued interest made to the closing cash and cash equivalents, giving a closing cash and cash equivalents balance of £114.256m. 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 2021/22 were approved by the Finance and Resources Committee on 11 March 2021. 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 2021/22 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 attractive 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, the management of carrying costs and the retention of cash balances at appropriate levels managing the associated investment, interest and liquidity risk. Further detailed information and narrative 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 58 to 62) for employers participating in the Strathclyde Pension Fund is based on a snapshot valuation as at 31 March 2022. The value of the pension funds 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 2021/22 took place as at 31 March 2021 with no change to the employer’s contribution which remains at 19.3%. The latest funding position as at 31 March 2021 is 106% compared to the previous triennial review position at March 2017 of 105%. The improvement is explained as being a result of better than anticipated investment returns on the Fund’s assets and changes in future inflation expectations. The liabilities show the underlying commitments that the Council has in the long run to pay retirement benefits. The total net liability of £156.156m (page 60) has a significant impact on the net worth of the Council as recorded in the Balance Sheet. However, the deficit on the local government pension scheme will be made good by contributions over the remaining working life of employees, as assessed by the scheme actuary. The estimated fair value of the fund's assets has increased by £333.115m as shown in note 26.3 and the estimated fair value of future liabilities has increased by £72.081m as shown in Note 26.2, which together result in a net decrease in liability of £261.034m. This reflects updated assumptions on a number of variables by the pension actuaries. Page 51 of 418
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Group Accounts The Council has a controlling interest in a number of companies and 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 £2,457.608m as at 31 March 2022, an increase of £184.528m 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 80 to 92. A brief summary of in year activity in respect of Council Arm’s Length External Organisations (Council companies & joint venture companies) is provided below: Services previously provided by Culture and Leisure NL (CLNL) Ltd were successfully insourced to the Council on 1 April 2021. At that point, CLNL Ltd ceased to provide services and frontline service provision was carried out directly through the Council’s Active and Creative Communities and Asset and Procurement Solutions (Community Facilities) functions. CLNL Ltd is now in the process of being dissolved. 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, Parental Engagement Support Fund, Young Person Guarantee and Prospects. Their services play a major role in ensuring employability support is available for unemployed and underemployed residents of North Lanarkshire. In addition, the arrangements during 2021/22 have ensured continued support for the Education and Families Pathways Programme for school leavers, enhanced support for 16-24 year olds with specific barriers or underrepresentation in the labour market and tailored support to cover over 50s, BAME community and Community Justice clients. Amey Public Services (APS) LLP continued to successfully deliver its full contractual responsibilities during 2021/22, whilst adhering to Scottish Government and Construction Scotland work restrictions and safety guidance relating to COVID-19. The company have continued to perform well throughout the year and have successfully exceeded their forecast turnover and profit margins. During the initial lockdown MEARS operations were restricted to emergency and essential services only. The key partner worked with the Council on a Defined Service Agreement to facilitate company trading on a no- profit/no-loss basis. This agreement came to an end in June 2021. Since then MEARS has continued to face ongoing challenges in the trading environment both as a result of COVID-19 related absences and working conditions and wider economic impacts on the price and availability of materials. MEARS continues to work in partnership with the Council to discuss and resolve these issues, where possible. North Lanarkshire Properties (NLP) LLP the Covid-19 pandemic continued to provide a demanding and challenging operational environment for NLP during 2021/22. In particular, the ending of the Furlough scheme and withdrawal of other business support put pressure on tenants’ ability to continue to trade. NLP continued to focus on recovery of rental income by engaging with tenants, agreeing repayment plans where appropriate to minimise the impact and potential loss of income. As a result, the company have continued to perform well throughout the year and have over-achieved against their projected rental collection targets. Following an anti-money laundering and financial crime compliance review undertaken by the Royal Bank of Scotland in October 2021, the Board of North Lanarkshire Municipal Bank Ltd considered the various issues, challenges and implications in continuing to provide banking services, and agreed to cease services and take the necessary steps close the bank. This decision was ratified by the Council’s Policy and Strategy Committee in October 2021. A working group has been set-up to take forward the closure plan and ensure all operation, legal and governance requirements are met. The Council has agreed to provide assistance from Financial Solutions, Strategic Communications and Legal & Democratic Solutions to progress. The closure process is underway including the preparation of a detailed wind-up delivery plan and timeline, with a proposed dissolution date of 30th September 2022. The plan gives due consideration to provision of support to customers during the transition period. Fusion Assets Ltd has continued with its development plans utilising Vacant & Derelict Land Fund funding and internal resources to progress current and future developments, as well as finalising the successful sale of its Newhouse A2 site for the development of a new Co-op distribution depot bringing investment and jobs to the local economy. The Board of Directors continue to closely monitor the economic effects of the pandemic, Page 52 of 418
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however the industrial sector, which is Fusion Assets’ primary business area, remains relatively strong with demand for distribution warehousing continuing to grow. 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 2021/22 opening provision value of £5.606m comprised of £5.483m in relation to General Fund and £0.123m for HRA. Total claims paid out during 2021/22 equated to £0.558m 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 54 provides the detail of the 2021/22 closing provision for Equal Pay of £5.048m. Political Composition and Council Structure The Council is overseen by 77 elected members as at the balance sheet date. At the date of issue, the political composition of the elected members for North Lanarkshire Council is shown below: The Local Government elections held May 2022 and subsequent meeting of the Council led to a change in Council leadership from a minority Labour administration to a minority SNP administration. At the Council meeting of 9 June 2022, the following appointments were agreed: with Councillor Jordan Linden appointed as Leader of the Council and Councillor Tracy Carragher as the Depute Leader. In addition, Councillor Agnes Magowan is the appointed Provost and First Citizen of North Lanarkshire, and Councillor Anne Thomas is Depute Provost. Further information on the political composition of the Council, Committee membership and Councillors is available on the Council’s website or Councillor Information System (CoInS). 36 32 5 2 1 1 Scottish National Party Scottish Labour Party Scottish Conservative and Unionist Independent British Unionists Scottish Greens Page 53 of 418
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The Council’s reporting structure during 2021/22 is illustrated in the diagram below and is reflected in the Financial Statements. Since the approval of the long-term vision for North Lanarkshire through We Aspire - a Shared Ambition for North Lanarkshire (in September 2018), significant progress has been made towards realising inclusive growth and prosperity for all. The Policy & Strategy Committee approved the Delivering for Communities report in December 2020, setting out proposals for a future operating model and the required next stages of structural realignments to further support the delivery of the shared ambition. Evolution of the Council’s senior management structure is required to align these roles with the Community Board model and support this evolution, while recognising the challenges and changes accelerated by the coronavirus pandemic and its impact on communities across North Lanarkshire. The new approved organisational and reporting structure, was implemented from 1 April 2022. The Plan for North Lanarkshire and Programme of Work The Plan for North Lanarkshire, launched in 2019, established the long-term vision for North Lanarkshire which is centred around a place based strategy that provides a clear future vision for the area in terms of achieving inclusive growth and prosperity for all, and making North Lanarkshire the place to Live, Learn, Work, Invest, and Visit. This also provides a very clear focus and compelling narrative of what the Council (and partners) is working towards. The vision has been shaped by the area’s demographic, social, and economic profile. An update on this profile is presented to the Policy and Strategy Committee annually through the suite of indicators designed to provide a high-level impact assessment of the work of the Council and partners on North Lanarkshire’s economy, its people, and its communities. This suite of indicators collectively provided the North Lanarkshire context and therefore the context within which the Council delivers its portfolio of programmes, projects, and plans. Delivery of these programmes, projects, and plans was further realised during the year following Committee approval in March 2020, through the Programme of Work for 2021/22. In this respect a wide range of reports have been presented to their respective Committees throughout 2021/22 in line with the approved Programme of Work timetable. This has enabled Elected Members to review progress in the delivery of the ambitions outlined in The Plan for North Lanarkshire. This includes oversight of the next phase of delivery for integrated investment (through The Place The Vision) in respect of town centre and community regeneration, town and community hubs, schools new build programme, and parks master planning, as well as the associated active travel plans. This next phase has been informed through a programme of public engagement which enabled feedback on the potential locations Page 54 of 418
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for town hubs as well as the concepts and ideas being proposed within the Town Visions to ensure they truly reflect future community needs. Proof of concept work also commenced for a unified leadership and operational model to support a much wider integrated community offer - with communities having more direct access to the services they need and staff closer to the communities they work in. This unified approach aims to put communities at the heart of the Council’s operating model and seeks to ensure everyone is given equality of opportunity and individuals are supported, encouraged, and cared for at each key stage of their life. Annual review and evaluation work highlighted the successes achieved from the Programme of Work for 2020/21, which were reported to the Policy and Strategy Committee in March 2022. This summarised some of the achievements from the Programme of Work 2020/21 that have been instrumental in both supporting the long-term vision and intentions laid out in The Plan for North Lanarkshire and demonstrating the extent of the response locally to the COVID-19 pandemic in terms of maintaining the provision of critical frontline care, supports, and services, and enabling the ongoing safety and wellbeing of service users and staff. The fourth annual iteration of the Programme of Work (for 2022/23) was approved in March 2022. An update of the Strategic Policy Framework in March 2022 has ensured that strategy and policy continue to support the Council’s strategic planning framework and 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. The evidence through the latest results for suite of indicators that provide the North Lanarkshire context, which was reported in March 2022, suggest there is a danger that already unacceptably high levels of deprivation and child poverty have become further exacerbated due to the impact of the pandemic, and there are also very real challenges facing the future sustainability of the local economy. Mindful of the current demographic, social, and economic profile - which is set against a backdrop of significant financial challenges to come for local government - a management commitment was made in the Programme of Work report to Committee in March 2022. This commitment set out the intention during 2022/23 to fundamentally evaluate activities undertaken, resources expended, and results achieved against the direction of travel in order to assess the impact towards achieving the ambition of inclusive growth and prosperity for all. Strategy & Performance Key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately planned, guided, implemented, and governed) are six inter-related corporate frameworks: • Strategic Policy Framework • Strategic Governance Framework • Strategic Self-Evaluation Framework • Strategic Performance Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities To ensure these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work, all are on an annual 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. The pandemic continued to impact on the Council’s delivery of planned day to day activities and achievement of strategic priorities, which was reflected in subsequent levels of performance and availability of performance results to ensure regular performance reporting on key strategic and operational performance measures. Notwithstanding this, a series of performance reporting pilots were established which reaffirms responsibilities for service committees and set out suites of performance results for each service area and balanced reporting between progress against the Council’s long-term vision and delivering on what matters today locally. Trends from previous years performance results were presented to enable an assessment of the impact of the pandemic on the delivery of council services over time. The suite of performance indicators also included information from a nationally developed COVID data dashboard, set up to enable important aspects of the Council’s response to the pandemic to be monitored. This also means that the suite of performance information presented reflects as full and complete a picture of service performance as possible. 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- Page 55 of 418
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level performance indicators, comparable across other councils, that are designed to help inform improvements in services and outcomes. In this respect the latest results for the Council were presented to the Audit and Scrutiny Panel in September 2021 and March 2022 through a series of information updates, which were aligned to the priorities in The Plan for North Lanarkshire, to allow for scrutiny of data on costs, outputs, and outcomes within the local context. The 2021/22 performance information will not be available publicly until later in the year, however past performance reports can be accessed via the Local Government Benchmarking Framework website and the online data tool (https://scotland.mylocalcouncil.info/ ) for individual local authorities, or comparisons of Family Group Local Authorities based on a geographical basis - city, urban, semi-urban and rural, or Scottish Index of Multiple Deprivation (SIMD) characteristics. During 2021/22 the Council has undertaken a structured programme of self-evaluation to underpin the duty to secure continuous improvement. This includes assessments on the Council’s compliance with the CIPFA Financial Management (FM) Code, reviewing the adequacy and effectiveness of the revised Corporate Management Team arrangements including how well it operates as a vehicle for monitoring and scrutinising progress implementing The Plan for North Lanarkshire and individual Programme of Work items, the risk governance arrangements in respect of DigitalNL, reviewing whether the arrangements for the Data Governance Board (DGB) adequately contribute to the achievement of the Council’s vision as detailed in the Roadmap, and the effectiveness of current arrangements for the North Lanarkshire health and social care IJB and how well the Board meets its intended outcomes. COVID-19 Recovery During 2021/22 the Council continued with its recovery from the pandemic and continued to provide advice and support to the most vulnerable in our communities. This included: • continuation of the Council’s Community Assistance Helpline for inbound and outbound calls. • facilitating a range of financial supports to individuals including crisis grants through the Scottish Welfare Fund. • putting in place processes to assess and award non-domestic rates relief to thousands of businesses across North Lanarkshire. In addition, the Council administered a range of grants totalling a further £17.186 million on behalf of the Scottish Government (£68.433m in 2020/21) to support both businesses and individuals throughout the pandemic. These have been assessed as agency payments and are not recognised as part of the Council’s financial position for the year. A net debtor of £0.222m is shown on the Council’s balance sheet in relation to reimbursement outstanding as at 31st March 2022 (£15.262m in 2020/21). Financial Planning In line with the Strategic Policy Framework the Council has an overarching Financial Strategy, which clearly 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 and programme actions. The Council remains committed to long-term financial planning and approved an update to the Medium Term Financial Plan on 30 September 2021 covering financial years 2022/23 to 2026/27. Given the level of uncertainty surrounding funding and difficulty forecasting too far into the future a 5 year plan is considered most meaningful. The plan recognises the challenges facing the Council and makes assumptions about these, presenting a range of scenarios which may ultimately be faced by the Council. It includes assumptions about the likely levels of resources, which are subject to ongoing review with updates presented following the Scottish Budget announcement and confirmation of the Local Government Finance Settlement. The Council also has an approved Reserves Policy which aims to ensure available balances are managed and utilised in accordance with effective governance principles, and continues to ensure financial plans are affordable and sustainable. A contingency reserve 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 2021/22 budget setting and this level continues to be considered appropriate. Due to Local Government Financial Settlements and increased cost pressures the Council has made significant budget savings, over a number of years, to ensure it complies with the statutory requirement to set a balanced budget, whilst meeting the needs of local residents. The following chart illustrates the significant value of savings achieved over the past 5 years. For 2021/22, Services achieved total savings of £14.228m against the approved target of £20.050m (71%) with the shortfall of £5.822m also achieved through alternative savings and management action. Page 56 of 418
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As a result of the highly challenging financial environment facing Local Authorities arising from reducing funding for core services and increasing cost pressures, the Council has been required to reduce spending and generate additional income over a number of years. This has been achieved through various means, including revising service delivery models, implementing efficiency measures, reducing levels of service provision in some areas and introducing or increasing fees and charges for others. To facilitate a more strategic approach to establishing budgets and associated savings options, a Revenue Resources Budget Strategy was approved by the Policy and Strategy Committee in June 2019. An annual update details the continuing progress and highlights further considerations for moving forward with future financial plans. Notable progress and achievements are: • The Council continues to see real benefits from having well developed medium term financial planning arrangements, producing a rolling five year Medium Term Financial Plan which informs the three year rolling budget setting process. Despite facing a significant budget gap of £14m, the Council set a balanced budget for 2021/22, which also allowed for a prudent level of investment. This was possible largely due to previously approved savings for financial years 2021/22 and 2022/23, which were agreed in February 2020, thus putting the Council in a strong position to address the budget gap in 2021/22. However, it was acknowledged that additional challenges and unprecedented uncertainties arising from COVID-19 has restricted the Council’s ability to consider further actions to manage the forecast future budget gaps including 2023/24. • Ongoing service redesign and savings proposals were considered by various Committees throughout 2020/21 in accordance with one of the key principles of the strategy. This ensures delivery models are prudent, affordable and sustainable, and drives out efficiency savings to support the management of future forecast budget gaps. For 2021/22 this included re-profiling loan debt repayments, re-designing fleet maintenance services and a review of management structures. • The Council continues to give consideration to planned, sustainable use of available balances, in line with the Council’s approved Reserves Policy and a key principle of the Revenue Resources Budget Strategy. This includes further development of forecast Change Management Fund reserve requirements. A four year forecast position was reported as part of the 2021/22 budget setting report, indicating that forecast one-off costs of implementing the savings and transformation agenda, can be managed within existing forecast reserves balances. This further demonstrates the sustainability of approved plans and associated one-off costs. Council Tax Council Tax is the system of local taxation used to part fund services provided by local authorities. Introduced in 1993, the rate of tax payable is based on the value of residential property. In setting the 2021/22 budget, the Council decided that Council Tax would be frozen at 2020/21 rates, maintaining a Band D charge of £1,221.25. By freezing the rates, the Scottish Government provided £4.640m – approximately equivalent to a 3% increase. The Council Tax Income Statement for the year is provided on page 77 and provides the details of the calculation of the Council’s Council Tax base and the charge per dwelling for each Council Tax Band. 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 £000s £000s £000s £000s £000s 2017/18 2018/19 2019/20 2020/21 2021/22 Savings Achieved £000's In Year Savings £000s Cumulative Savings £000s Page 57 of 418
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Treasury Management The Council’s Treasury Management team is responsible for ensuring the Council’s Capital Investment plans, not resourced by capital grants and other contributions, is fully funded, whilst also managing 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 achieve interest cost efficiencies. The techniques include for example: cash flow management and forecasting; balance sheet analysis; weekly PWLB loan rate trend analysis; debt maturity profiling; and debt rescheduling. These techniques combined with projections have enabled the Council to time its borrowing in order to take advantage of opportunities that may arise to achieve beneficial borrowing rates, minimising interest rate risk. In recent years the strategy adopted has primarily been to use internal cash balances whilst undertaking short-term borrowing where available at attractive rates. Adopting flexibilities within the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 (the 2016 Regulations) which came into force on 1 April 2016 which allow a local authority to subsequently vary either the period or the amount of the repayment (or both) if it considers it prudent to do so. A review of the Council’s loans fund was undertaken in 2020/21 and a revised Loans Fund Advance Repayments Policy approved by Finance and Resources Committee on 26 November 2020 and incorporated within the Treasury Management Strategy. The revised policy includes the application of a fixed average life to all loans fund advances, and changes to the annuity rate adopted to calculate loans fund advance repayments, including the retrospective adjustment to the period over which historic loans fund advance repayments were made and applying this approach to future loans fund advances. This resulted in revised loans fund advance repayment profiles with the Council applying a prudent approach specific to the Council’s financial position including an assessment of the whole life impact both in nominal and NPV terms of options considered. The Council continued to see some further one-off financial benefit from this review during 2021/22 financial year. Capital Strategy Following the publication of the revised Prudential Code for Capital Finance in Local Authorities 2017, there is a requirement for Councils 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. 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. It is a means of developing capital investment proposals based on available resources aligned to The Plan for North Lanarkshire, Best Value and Efficiency, the Financial Regulations, the Corporate Asset Management Plan, and the Medium Term Financial Plan. The Capital Strategy to 2022/23 represents a refresh of the Capital Investment Strategy further developing the previous approach, in light of the Prudential Code requirements. The strategy is subject to ongoing review and the main principles outlined and adopted remain unchanged. A full review is due to be undertaken and presented to Committee in cycle one of 2023. The Prudential Code for Capital Finance and Treasury Management Code of Practice were both revised in December 2021, which included updated guidance on prudent borrowing requirements. The revised code specifies that an authority must not borrow to invest primarily for financial return, and that there would be implications on an authority’s ability to source borrowing from the PWLB if the Code is breached. The updated Codes also has new and updated prudential indicators for capital and treasury management monitoring that require to reported to members on a quarterly basis. These will be fully incorporated into future reports. Following a review of the Council’s capital programme and alignment with the Plan for North Lanarkshire, the Council’s Strategic Capital Delivery Group developed a Strategic Capital Investment Plan for 2021/22 to 2025/26, which was approved at Policy and Strategy Committee in March 2021. This plan will deliver record General Fund investment of £521.724m over the 5-year period including the first phase of funding in support of the Council’s ambitions for Town and Community Hubs, Town Centres and Parks Masterplan. The capital programme was reviewed and an updated Strategic Capital Investment Plan for 2022/23 to 202/26 was approved at Policy and Strategy Committee in March 2022. This updated plan will deliver General Fund investment of £479.016m over this four-year period, with General Fund investment of £81.114m incurred in 2021/22 with total investment projected of £560.130m. Page 58 of 418
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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 funded 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 2021/22, the Council was allocated general funding as follows: • General Revenue Grant Funding (£621.480m): 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) (£87.394m): 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 (£36.507m); Pupil Equity Fund (£10.926m); and Offenders/ Criminal Justice Social Work (£6.544m). 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. Budget Setting and Monitoring 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. The Council approved the proposed General Fund Revenue Budget of £849.369m (inc. specific grants of £51.025m), net of savings of £20.050m, on 2 March 2021. However, the COVID-19 pandemic created significant financial management and financial planning challenges for the Council. These challenges centred around the difficulties in predicting costs associated with the response to and recovery from COVID-19 and the constantly evolving funding position for both the Scottish Government and, by extension, local government. Given these uncertainties, it was deemed prudent to set the Council’s core budget for 2021/22, with COVID-19 funding and costs considered later in the year, when there was greater clarity over cost profiles and funding settlements. Therefore, the approved budget was further updated throughout 2021/22 to take account the approved COVID Budget reported to Finance & Resources Committee on 23 September 2021, and Scottish Government redeterminations/ additional funding made available to assist with managing the additional cost pressures mainly due to COVID, resulting in a final budget of £874.726m. The 2021/22 budget has been closely monitored through the management and budgetary processes which are embedded within the Council’s existing financial reporting arrangements. The Provisional Outturn position reported to Corporate Management Team anticipated a combined surplus of £27.628m on the General Fund and HRA, against the amended budget. The movement to final outturn position reported per the Movement in Reserves Statement is illustrated in the table overleaf; Page 59 of 418
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Budget 2021/22 Provisional Outturn 2021/22 (Under)/ Overspend £m £m £m Education and Families 432.778 429.153 (3.625) Enterprise & Communities 195.021 190.948 (4.073) Chief Executives & Other Corporate Services 87.676 86.642 (1.034) Social Work (non Integrated) 167.328 167.328 0.000 Social Work (Integrated) 0.000 0.000 0.000 HRA 0.000 (2.262) (2.262) Financing Costs & Other Budgetary Issues (8.077) (25.154) (17.077) Total Expenditure (Provisional Outturn) 874.726 846.655 (28.071) Sources of Funding 874.726 874.283 0.443 (Surplus)/Deficit (Provisional Outturn) (27.628) Use of Earmarked Reserves 36.505 Additional & Previously Approved Earmarked Reserves (34.544) New Service Requests (39.813) GF/HRA Movements & Use of Reserves (3.612) Movement on General Fund and HRA Services (69.092) Risk Management Risk management forms an important element of the Council’s corporate governance arrangements. 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 six 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 60 of 418
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Potential risks highlighted within the Corporate Risk Register currently include: • Information Security and Information Governance – mismanagement of information potentially leading to 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; • Managing Strategic Change – The Council may be unable to effectively implement the pace and scale of reform or change needed to enable it to deliver its corporate objectives, at a time of significant challenge, long-term reductions in funding and an ageing and growing population; • 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; • Engagement and Consultation with Communities– That 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 reductions in central government funding, the Council is unable to adequately fund and plan resources to meet service delivery and deliver against its’ corporate ambitions. 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. 2022/23 Budget The Council approved a composite General Fund Revenue budget of £887.270m for 2022/23 at a Council meeting on the 17 February 2022, which is net of pre-approved savings of £16.484m (approved in February 2020). However, as part of the Medium-Term Financial Plan update in September 2021 and in setting the 2022/23 budget in February 2022, the Council deemed it prudent to reverse £6.500m of 2022/23 savings, mainly due to the challenges facing Adult Social Care services and therefore the delivery of £6.000 million of the 2022/23 DigitalNL Savings. This leaves £9.984m of savings to be delivered in 2022/23. The Council also approved new one-off investment of £13.000m to support COVID recovery and one-off investment in local communities. This is in addition to £9.423m (year 2) of budget approved for 2022/23, as part of the COVID budget approved by Finance & Resources Committee in September 2021. The Corporate Management Team has also approved a further allocation of £4.407m for 2022/23 in relation to additional funding requirements for Services linked to the anticipated legacy impacts of Covid, which will be met from the previously approved COVID contingency budget of £5.000m, for which there had been no requirement for. In setting the 2022/23 budget, the Council agreed a 3% rise Council Tax rates, raising a Band D to £1,257.89. Page 61 of 418
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In addition, £8.000m continues to be provided as a contingency reserve, £30.551m of the General Fund balance has been earmarked for COVID-19, £29.424m for Change Management and a further £138.536m earmarked to fund specific future commitments, which leaves a general unallocated balance of £32.718m. See details below: 2022/23 Earmarked Funds £m £m COVID-19 Directed Funding 6.896 COVID-19 General Funding 20.655 COVID-19 Recovery General Fund Contribution 3.000 30.551 Change Management Fund 29.424 Schools Future Contractual Obligations 54.175 Early Years & Childcare Expansion 14.249 Strategic Workforce Planning 13.000 Temporary Accommodation 8.038 Energy costs and Other Non Pay Inflation 7.220 2022/23 Budget One-off Investment 6.000 Pupil Equity Fund 5.122 Balances held by Schools under Devolved School Management 3.652 Digitisation 2.498 Active & Creative Communities 2.000 Enterprise Contract 1.687 Schools ICT Orders/Refresh & FMS Project Development 1.680 Business Gateway and Business Recovery 1.700 Youth Guarantee Funding 2.367 Winter Reserve 1.500 E&C 21/22 One Off Investment 1.146 Rapid Rehousing 1.159 Other Earmarked Funds 10.093 138.536 Contingency Reserve 8.000 Unallocated Balance 32.718 General Fund Surplus as at 31 March 2022 239.229 Financial Sustainability Taking a strategic and longer term approach to budget setting remains a sound financial management principle and is essential to ensuring ongoing financial sustainability. However, applying this principle is increasingly challenging. Whilst the Scottish Government in their Resource Spending Review has indicated total funding for Local Government between 2023/24 and 2026/27, there is no clarity of funding for individual Local Authorities, making longer term planning extremely difficult. It should also be recognised that the continued financial impact of COVID-19 and huge uncertainty in respect of pay and non-pay inflation, present new and additional challenges, which have the potential to significantly impact the Council’s finances over an extended planning period. The effect on service delivery and financial sustainability remains unclear and the Council continues to work with COSLA to fight for a more sustainable funding package for Local Government. Revenue Resources Budget Strategy An update to the Revenue Resources Budget Strategy was taken to Policy and Strategy Committee in June 2021 and remains an integral part of the Council’s overarching Financial Strategy developed to ensure robust governance in financial planning and to ensure the Council remains financially sustainable. The principles which underpin the Strategy remain valid and will be further developed to ensure the continued relevance and effectiveness of the Strategy in determining affordability in delivering the Plan for North Lanarkshire, the Council’s recovery from COVID-19 and the continued challenging Local Government Financial settlements as well as the significant increases in pay and non-pay inflation currently being experienced. Page 62 of 418
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The changing picture for the economic outlook at both a UK and Scottish level will have implications for national budgets with potential for reprioritisation of resources within both current and future spending plans. This means that there is increased risk of an adverse impact on the Council’s Medium Term Financial Plan. The medium to longer term outlook for the economy and public finances in both the UK and Scotland is in a period of huge instability that is unprecedented and will need to be closely monitored. This is likely to result in, for example, continuing contraction of public sector expenditure, an increase in unemployment and the resulting increased cost burden this will place on Local Authorities. An update of the Council’s Medium Term Financial Plan will be reported to Committee in the autumn of 2022, which will outline the revised forecast budget gaps based on a number of planning scenarios. This will support members in determining any savings necessary to ensure a balanced budget is set moving forward. Key Challenges and Pressures Facing Local Government It is important that the Council recognises the key challenges and pressures facing public services and specifically Local Government. These challenges and pressures include: • The ongoing financial impact of recovery from COVID-19 including; supporting the economic recovery including supporting people, business and organisations • Continuing to provide priority services • Cost pressures arising from inflation, including pay awards, demographic changes and demand for services • Continuing to ensure the Council develops the workforce for the future • Impact of Brexit • Implementation of legislative and policy changes of both UK and Scottish Governments • Delivering transformation and digital services 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 104 to 114. 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 Jordan Linden Head of Financial Solutions Chief Executive Council Leader Page 63 of 418
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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. Restated 2020/21 2021/22 Gross Expenditure Gross Income Net Expenditure Note Gross Expenditure Gross Income Net Expenditure £000 £000 £000 £000 £000 £000 419,263 (75,095) 344,168 Education & Families 493,514 (75,707) 417,807 234,518 (30,468) 204,050 Enterprise & Communities 281,437 (64,589) 216,848 3,245 (3,245) - Trading Operations 2,614 (2,614) - 158,566 (96,225) 62,341 Chief Executives & Other Corporate Services 160,267 (92,224) 68,043 151,848 - 151,848 Adult Health & Social Care (Non- Integrated) 167,499 - 167,499 214,737 (206,716) 8,021 Adult Health & Social Care (Integrated) 226,471 (212,062) 14,409 115,075 (146,339) (31,264) Housing Revenue Account 118,799 (130,171) (11,372) (3,120) (33) (3,153) Non Service-Specific Costs 14,005 (11,938) 2,067 1,294,133 (558,121) 736,012 Net Cost of Services 1,464,606 (589,305) 875,301 - (1,375) (1,375) Other Operating Expenditure 8 (767) (767) 96,846 (46,476) 50,370 Financing and Investment Income and Expenditure 9 98,461 (51,145) 47,316 - (869,506) (869,506) Taxation and Non-specific Grant Income 10 - (894,056) (894,056) (84,500) (Surplus) or Deficit on the Provision of Services 27,794 Items that will not be reclassified to the (Surplus) or Deficit on the Provision of Services (105,007) (Surplus) or deficit on the revaluation of non current assets 28 (232,365) 52,108 Re-measurement of the net defined Liability 26 (352,023) Other Comprehensive Income (6,486) (52,899) Other Comprehensive Income and Expenditure (590,874) (137,399) Total Comprehensive Income and Expenditure (563,080) Page 64 of 418
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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’. Restated 2020/21 2021/22 £000 Note £000 £000 Property, Plant and Equipment 13,14 1,102,141 Council Dwellings 1,294,941 1,504,711 Other Land and Buildings 1,568,839 47,884 Vehicles, Plant and Equipment 46,688 261,004 Infrastructure Assets 261,983 12,360 Community Assets 15,854 22,252 Surplus Assets 22,184 46,668 Assets Under Construction 68,219 3,278,708 Intangible Assets 15 123 Software Licences 99 1,544 Software/Solution Development 2,981 6,502 Intangibles Under Development 9,038 12,118 1,535 1,189 Long-Term Debtors Long-Term Investments 16 17 1,519 1,170 3,007,913 Long-Term Assets 3,293,515 88 Short-Term Investments 17 89 1,891 Inventories 18 2,529 114,710 Short-Term Debtors (net of impairment) 19 89,430 110,781 Cash and Cash Equivalents 20 114,256 227,470 Current Assets 206,304 (263,140) Short-Term Borrowing 17 (250,098) (156,836) Short-Term Creditors 21 (192,500) (13,372) Short-Term Provisions 22 (12,637) (7,258) Short-Term Finance Lease Liabilities 24,25 (7,013) (2,957) Revenue Grant Receipts in Advance (1,403) (443,563) Current Liabilities (463,651) (490,575) Long-Term Borrowing 17 (439,933) (151) Long-Term Provisions 22 (55) (173,905) Other Long-Term Liabilities (Finance Leases) 24,25 (166,945) (417,190) Other Long-Term Liabilities (Pensions) 26 (156,156) (1,081,821) Long-Term Liabilities (763,089) 1,709,998 Net Assets 2,273,079 Usable Reserves 162,180 General Fund Reserve 239,229 27,453 Housing Revenue Account Balance 19,496 4,470 Capital Fund 396 11,651 Repairs and Renewals Fund 13,755 13,000 Insurance Fund 13,000 12,421 Capital Grants Unapplied Account 7,124 231,175 Total Usable Reserves 27 293,000 1,478,823 Unusable Reserves 28 1,980,079 1,709,998 Total Reserves 2,273,079 The unaudited accounts were issued on 30 June 2022. Elaine Kemp, CPFA Head of Financial Solutions Page 65 of 418
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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 2022 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 2021 162,181 27,453 4,470 11,651 13,000 - 12,421 1,478,823 1,709,999 Movement in Reserves during 2021/22 Surplus / (Deficit) on Provision of Services (42,203) 14,409 - - - - - - (27,794) Other Comprehensive Income and Expenditure 6,486 - - - - - - 584,388 590,874 Total Comprehensive Income and Expenditure (35,717) 14,409 - - - - - 584,388 563,080 Adjustments between Accounting Basis and Funding Basis under Regulations (Note 31) 110,399 (22,366) - - - 396 (5,297) (83,132) - Net Increase / (Decrease) before Transfers to Other Statutory Reserves 74,682 (7,957) - - - 396 (5,297) 501,256 563,080 Transfers to and from Other Statutory Reserves (Note 32) 2,366 - (4,074) 2,104 - (396) - - - Increase / (Decrease) in the Year 77,048 (7,957) (4,074) 2,104 - - (5,297) 501,256 563,080 Balance at 31 March 2022 Carried Forward 239,229 19,496 396 13,755 13,000 - 7,124 1,980,079 2,273,079 Page 66 of 418
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Restated Comparative Figures for Year ended 31 March 2021 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 2020 48,401 14,146 1,154 672 13,000 - 17,724 1,477,503 1,572,600 Movement in Reserves during 2020/21 Surplus / (Deficit) on Provision of Services 57,976 26,524 - - - - - - 84,500 Other Comprehensive Income and Expenditure - - - - - - - 52,899 52,899 Total Comprehensive Income and Expenditure 57,976 26,524 - - - - - 52,899 137,399 Adjustments between Accounting Basis and Funding Basis under Regulations (Note 31) 65,629 (13,217) - - - 4,470 (5,303) (51,579) - Net Increase / (Decrease) before Transfers to Other Statutory Reserves 123,606 13,307 - - - 4,470 (5,303) 1,320 137,399 Transfers to and from Other Statutory Reserves (Note 32) (9,825) - 3,316 10,979 - (4,470) - - - Increase / (Decrease) in the Year 113,780 13,307 3,316 10,979 - - (5,303) 1,320 137,399 Balance at 31 March 2021 Carried Forward 162,181 27,453 4,470 11,651 13,000 - 12,421 1,478,823 1,709,999 Page 67 of 418
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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. 2020/21 2021/22 £000 Note £000 £000 OPERATING ACTIVITIES Cash Inflows: 89,736 Rents (after rebates) 84,588 121,769 Council Tax receipts 127,200 628,153 Revenue Support Grant 621,928 88,971 71,438 DWP grants for Housing Benefits Non Domestic Rates Receipts 81,989 87,304 83,639 Other government grants 93,556 19,753 Cash received for goods and services 32,010 80,188 Other operating cash receipts 84,620 256 Interest received 6,690 1,183,903 1,219,885 Cash Outflows: (551,245) Cash paid to and on behalf of employees (584,488) (372,654) Other operating cash payments (376,353) (36,383) Housing Benefit paid out (34,078) (13,305) Precepts paid (14,887) (37,175) Interest Paid (34,389) (1,010,762) (1,044,195) 173,141 Net Cash Inflow / (Outflow) from Operating Activities 33 175,690 INVESTING ACTIVITIES Cash Inflows: 3,340 Sale of non-current assets 1,410 40,675 Capital grants received 50,385 2,478 Other capital cash receipts 5,847 465 Proceeds from Investments redeemed 17 46,958 57,659 Cash Outflows: (136,158) Purchase of non-current assets (174,765) - Long- term Investments - - Investment in Subsidiary - (136,158) (174,765) (89,200) Net Cash Inflow / (Outflow) from Investing Activities (117,106) 83,941 Net Cash Inflow / (Outflow) before Financing Activities 34 58,584 FINANCING ACTIVITIES Cash Inflows: 271,000 New Loans Raised 176,000 Net Agency Grants 15,423 271,000 191,423 Cash Outflows: (283,676) Repayments of amounts borrowed (239,287) (6,994) Capital payments of finance leases (7,275) (15,423) Net Agency Grants (306,093) (246,562) (35,093) Net Cash Inflow / (Outflow) from Financing Activities 34 (55,139) 48,848 Net Increase / (Decrease) in cash and cash equivalents 34 3,445 61,958 Cash and Cash Equivalents at the beginning of the year 34 110,781 (25) Increase / (Decrease) Non-cash in cash equivalents 34 30 110,781 Cash and Cash Equivalents at the end of the year 34 114,256 Page 68 of 418
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1. Accounting Policies General Principles The Statement of Accounts summarises the Council’s transactions for the 2021/22 financial year and its position at the year-end of 31 March 2022. 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 2021/22, 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 69 of 418
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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 70 of 418
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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 In accordance with LASAAC guidance, fair value is adjusted to reflect the ratio of local authority rents to private sector rents. Other Land & Buildings Depreciated replacement cost/Existing Use Value Vehicles, Plant & Equipment Open market value/Historical Cost Infrastructure Assets Historical cost Community Assets Historical cost Surplus Assets Fair Value (IFRS13) Assets Under Construction Historical cost Investment Properties Open market value Heritage Assets Historic Cost/Insurance Value Where there is no market-based evidence of current value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of current value. Where non-property assets have short useful lives or low values (or both), depreciated historical cost basis is used as a proxy for current 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. Where decreases in value are identified, they are accounted for as follows: Page 71 of 418
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• 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 2022. When an item of Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately. 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 72 of 418
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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. The Council’s museum and gallery collections were managed by the Council subsidiary Culture and Leisure NL Ltd (CLNL) on behalf of the Council prior to insourcing on 1 April 2021. CLNL had their own policy for the Acquisition and Disposal of items to the Museum Service Inventory. 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 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. Page 73 of 418
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a. a charge for the acquisition of the interest in the property, plant or equipment is applied to write down the lease liability 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. 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 Page 74 of 418
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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 75 of 418
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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 2021/22, 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. 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 Receipts in Advance Reserve The Capital Receipts in Advance reserve is used to account for Grants received that have not yet met the conditions set by the grant awarding body. 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 Page 76 of 418
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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 2022. 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 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 2.0%. The discount rate used by the appointed actuaries to place a value on the liability is based on Corporate bond yields Page 77 of 418
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on high quality bonds and recognises the weighted average duration of the benefit obligation for the Council; • 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); Page 78 of 418
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• 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. 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 79 of 418
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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 Restated 2020/21 2021/22 Net Expenditure Chargeable to the General Fund and HRA Balances Adjustments between the Funding and Accounting Basis (Note 2.2) Net Expenditure in the Comprehensive Income and Expenditure Statement Net Expenditure Chargeable to the General Fund and HRA Balances Adjustments between the Funding and Accounting Basis (Note 2.2) Net Expenditure in the Comprehensive Income and Expenditure Statement £000 £000 £000 £000 £000 £000 306,607 37,561 344,169 Education & Families 374,296 43,512 417,808 156,568 47,482 204,050 Enterprise & Communities 148,985 67,863 216,848 (7) 7 - Trading Accounts 3 (3) - 57,248 5,093 62,341 Chief Executives & Other Corporate Services 58,846 9,197 68,043 148,434 3,414 151,848 Adult Health & Social Care (Non-Integrated) 164,788 2,712 167,499 (397) 8,418 8,021 Adult Health & Social Care (Integrated) (94) 14,504 14,409 (28,331) (2,933) (31,264) Housing Revenue Account (5,382) (5,991) (11,372) 1,582 (4,735) (3,153) Other Segments (6,923) 8,990 2,067 641,703 94,307 736,011 Net Cost of Services 734,518 140,783 875,301 (778,615) (41,895) (820,510) Other Income and Expenditure (801,243) (52,750) (853,993) (136,912) 52,412 (84,499) (Surplus) or Deficit on the Provision of Services (66,725) 88,033 21,308 (62,547) Opening General Fund and HRA Balance (189,634) (136,913) Less/Plus (Surplus) or Deficit on General Fund and HRA Balance in Year (66,725) 9,825 Transfers to/(from) other statutory reserves (2,366) (189,634) Closing General Fund and HRA Balance at 31 March* (258,725) 2021/22 Adjustments for Capital Purposes1 Net Change for the Pensions Adjustments2 Other Differences3 Total Adjustments Education & Families 25,778 20,148 (2,414) 43,512 Enterprise & Communities 42,187 24,545 1,131 67,863 Trading Accounts (8) - 6 (3) Chief Executives & Other Corporate Services 1,424 7,788 (14) 9,197 Adult Health & Social Care (Non-Integrated) 2,712 - - 2,712 Adult Health & Social Care (Integrated) (3) 14,550 (43) 14,504 Housing Revenue Account (11,327) 5,279 57 (5,991) Other Segments - 8,990 - 8,990 Net Cost of Services 60,762 81,299 (1,278) 140,783 Other Income and Expenditure (60,749) 9,690 (1,691) (52,750) Surplus or Deficit 13 90,989 (2,969) 88,033 Page 80 of 418
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2020/21 Adjustments for Capital Purposes1 Net Change for the Pensions Adjustments2 Other Differences3 Total Adjustments Education & Families 24,977 9,727 2,857 37,561 Enterprise & Communities 37,074 9,686 722 47,482 Trading Accounts (7) - 14 7 Chief Executives & Other Corporate Services 824 3,818 451 5,093 Adult Health & Social Care (Non-Integrated) 3,414 - - 3,414 Adult Health & Social Care (Integrated) - 7,411 1,007 8,418 Housing Revenue Account (6,148) 2,949 266 (2,933) Other Segments (3) (4,732) - (4,735) Net Cost of Services 60,131 28,859 5,317 94,307 Other Income and Expenditure (48,675) 8,480 (1,700) (41,895) Surplus or Deficit 11,456 37,339 3,617 52,412 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. 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 2022/23 Code due to be adopted in future years and the possible impact. CIPFA/LASAAC have formally agreed to defer the implementation of IFRS 16 Leases until 1 April 2024 however the Code will allow for adoption from 1 April 2022 or 1 April 2023. The deferral is intended “…to reduce resource pressures in the local audit framework while there are ongoing audit timeliness issues”. The Council continues to review its current lease portfolio including operating and finance leases in preparation for implementation of the new accounting requirements. Current estimates indicate that had implementation not been deferred, adoption of this standard from 1 April 2022 would have recognised a right of use asset and related liability of £2.855m in respect of properties leased by the Council and a right of use asset of £0.180m and liability of £0.126m for vehicles plant and equipment leased by the Council with the difference of £0.054m due to prepayments at 31 March 2022 in respect of these leases forming part of the right of use value. In addition, the annual IFRS improvement programme notes four changed standards with an effective implementation date of 1 April 2022: Page 81 of 418
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• IFRS 1 (First-time adoption) – amendment relates to foreign operations of acquired subsidiaries transitioning to IFRS • IAS 37 (Onerous contracts) – clarifies the intention of the standard • IFRS 16 (Leases) – amendment removes a misleading example not referenced in the Code • IAS 41 (Agriculture) –expected to apply to local authorities in limited circumstances. 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 is deemed to control the services provided under the agreements for the provision of educational establishments and for the Clyde Valley Waste Recycling Plant. 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 a separate note to the accounts for Public Private Partnerships and Similar Contracts. 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 2022 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 Provisions The Council holds provisions of £12.693m including £5.048m for the settlement of Equal Pay claims, based on the number of claims received and £7.493m for restoration of the Council’s former landfill sites, based on an externally sourced estimate of these costs. With regards the Provision made for Equal Pay Claims a methodology was developed which identified the number of claims and the costs within an overall risk assessment process. A change in the likely cost of claims in respect of Pay Protection and Job Evaluation categories would result in a change in the Provision required of £0.561m. A change in the likely future costs of landfill restoration would result in a change in the provision required. For instance, a 10% increase in the restoration costs would result in an increase in provision required of £0.749m. Page 82 of 418
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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 non current 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 2022. Following a review of assets, a BCIS indexation adjustment has been made of £289.949m to reflect estimated material movements in current value since the last valuations under depreciated replacement cost for Education properties, Council Dwellings and Leisure Properties & Open Spaces. 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 £9.953m for every year that useful lives had to be reduced. A 1% change in the value of the Council’s Property, Plant and Equipment would result in a movement on the Council’s balance sheet of £32.787m. Fair Value Measurement When the fair values of financial assets and financial liabilities cannot be measured based on quoted prices in active markets (i.e. Level 1 inputs), their fair value is measured using valuation techniques. Where possible, the inputs to these valuation techniques are based on observable data, but where this is not possible judgement is required in establishing fair values. These judgements typically include considerations such as uncertainty and risk. However, changes in the assumptions used could affect the fair value of the Council’s assets and liabilities. Where Level 1 inputs are not available, the Council employs relevant experts to identify the most appropriate valuation techniques to determine fair value (for example for investment properties, the Council’s chief valuation officer and external valuer). Information about the valuation techniques and inputs used in determining the fair value of the Council’s assets and liabilities is disclosed in Notes 17.3. Significant changes in any of the unobservable inputs would result in a significantly lower or higher fair value measurement for the investment properties and financial assets. For further information refer to Note 17.2. Net Pension Liability Estimation of the net 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 liability can have a material effect on the Council’s Net Worth. For instance, a 0.1% change in the defined benefit obligation would result in a change in the net pension liability of £2.893m and a 0.1% change in the value of the scheme assets would result in a change in the net pension liability of £2.737m. Page 83 of 418
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Item Uncertainties Effect if Actual Results Differ from Assumptions Employee Benefits The Council has used a sampling approach to calculating the accrual for short-term compensated absences. A random sample of employees has been used to calculate the accrual necessary for annual leave owed as at 31 March 2022. A 10% change in annual leave owed compared to the value accrued would result in a movement in the net cost of services of £2.172m. 6. Events After the Balance Sheet Date The Head of Financial Solutions issued the unaudited Statement of Accounts on 30 June 2022. There have been no material events since the date of the Balance Sheet which necessitate revision to the figures in the financial statements. 7. Restatement 7.1. Single Entity Restatement The figures for 2020/21 have been restated to reflect a number of adjustments to the notes to the accounts. Further details of these restatements are set out in the table below. 7.2. Group Accounts Restatement Following a review of the Group consolidation process a number of amendments were made to restate the 2020/21 Group Financial Statements. The restatements reflect the final 2020/21 audited accounts of the Group Entities. This has resulted in a net decrease (excluding Council restatements noted above in 7.1) to the Group Balance Sheet of £1.158m, decreasing the uplift to the single entity position for 2020/21 to £133.324m; the Group Comprehensive Income and Expenditure Statement remains unchanged; the Group Cash Flow Statement cash position remains unchanged. The various adjustments have been reflected in the Group Movement in Reserves Statement and associated notes to the Group Accounts. 8. Other Operating Expenditure 2020/21 2021/22 £000 £000 (Gains) or losses on disposal of non-current assets (1,375) (767) Total (1,375) (767) Restatement Reason Amount £000 Statements Affected Reclassified/presentational change for the PPP and DBFM Funding Gap Inconsistent treatment 45,429 CIES Balance Sheet MiRS Note 2 Expenditure & Funding Analysis Note 21 Creditors Note 27.1 General Fund Group Accounts Restatement of 20/21 Housing Rents Receivable Error in figure disclosed 3,652 Note 17.3 Credit Exposure to Council’s Customers Note 19 Short Term Debtors Note 17.1 Types of Financial Instruments Note 17.2 Fair Value of Assets & Liabilities Carried at Amortised Cost Page 84 of 418
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9. Financing and Investment Income and Expenditure 2020/21 2021/22 Expenditure Income Expenditure Income £000 £000 £000 £000 Interest Payable and similar charges 37,352 - 34,087 - Pensions interest income on plan assets - (45,307) - (50,814) Pension interest cost on defined benefit obligation 53,584 - 60,132 - Interest receivable and similar income (727) (231) Surpluses on Trading Undertaking not included in Net Cost of Services 216 (326) 376 1 Income from dissolution of group entities - - - - Financial Guarantee - (106) - (101) Gain on De-recognition of Financial Asset - (10) - - Impairment of Financial Assets 5,694 - 3,866 - Total 96,846 (46,476) 98,461 (51,145) 10. Taxation and Non-Specific Grant Income 2020/21 2021/22 £000 £000 Income from Council Tax (122,490) (125,200) Distribution from Non-Domestic Rates pool (71,360) (87,394) General Revenue Grant (628,356) (621,480) Recognised capital grants and contributions (47,300) (59,982) Total (869,506) (894,056) It should be noted that the General Revenue Grant recognised in the CIES has been adjusted from that shown in Local Government Finance Circular 1/2022 to reflect proper accounting practice. In accordance with LASAAC guidance, income included within the circular totalling £11.032m has been treated as relating to an agency arrangement and therefore not reflected within the Council’s CIES. Income not included in the circular of £1.065m has been accrued in relation to the final Discretionary Housing Payment claim. Page 85 of 418
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11. Grant Income The Council credited the following grants and contributions to the Comprehensive Income and Expenditure Statement 2020/21 2021/22 £000 £000 Credited to Comprehensive Income and Expenditure Statement General Revenue Grant 628,356 621,480 Distribution from Non-Domestic Rates pool 71,360 87,394 Capital - Scottish Government General Grant 22,704 21,908 Capital - Scottish Government Other Grants 23,318 34,223 Capital – Other Grants 1,173 1,470 Donated Assets 105 2,381 Total 747,016 768,856 Credited to Services Housing Benefit 88,832 81,925 1140 Hours Early Years 32,581 36,507 Pupil Equity Fund 9,110 10,926 Scottish Attainment Challenge 8,199 7,799 Offenders / Criminal Justice Grant 6,589 6,544 Scotland’s Schools for the Future COVID 19 - Additional Teachers and Support 4,761 3,772 4,772 - European Grant Income 2,062 1,388 Regeneration Capital Grant Fund COVID 19 - Discretionary Fund 1,735 1,710 - - Education Maintenance Allowance COVID 19 - Vulnerable Children and Young People - Winter Protection COVID 19 - Food Fund - Holidays Vacant and Derelict Land Fund Fleet 1,321 1,318 1,303 1,287 1,132 1,066 - - 720 144 Home Energy Efficiency Programme NSS Donated PPE Physical Education, Physical Activity & Sport Young Person’s Guarantee City Deal COVID 19 - Furlough Income COVID 19 - Vaccination Centre 1,087 1,085 922 816 815 788 536 173 - 865 1,346 486 900 2,385 Resettlement Programme 448 237 Directed Service Grants – COVID SG Main Capital Grant - 3rd Party Write Off's No One Left Behind Test Centre Set Up Children & Young People’s Mental Health Other Miscellaneous Grants and Contributions - 311 203 5 - 3,051 642 1,474 883 812 696 3,502 Total 175,779 166,192 Page 86 of 418
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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 2021/22 the Council collected and paid over £52.800m (2020/21 £51.248m) and received £1.137m (2020/21 £1.137m) for providing this service. In addition, throughout the course of the COVID-19 pandemic, 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 targeted business support funding such as the strategic framework, but also including grants to the newly self employed, and low income families. The Council made payments of £17.186m (£68.433m in 2020/21), with a net debtor of £0.222m shown on the Council’s balance sheet in relation to reimbursement outstanding as at 31st March 2022 (£15.262m in 2020/21). Further detail is shown in the table below. Net Debtor at 31 March 2020 Payments Made in 2020/21 Funding Received in 2020/21 Net Debtor at 31 March 2021 Payments Made in 2021/22 Funding Received in 2021/22 Net Debtor at 31 March 2022 £000 £000 £000 £000 £000 £000 £000 Business Grant Scheme 2,690 39,532 (42,187) 35 37 - 72 Strategic Framework - 11,703 - 11,703 1,010 (12,713) - Retail, Hospitality Top Up Support - 9,184 (9,390) (206) 2,807 (3,729) (1,128) Child Bridging Payment - - - - 4,821 (4,856) (35) Taxi and Private Hire Vehicle Driver Support - 2,313 - 2,313 3,715 (4,623) 1,405 £100 Hardship Payments - 2,154 (2,243) (89) 1,134 (1,045) - Self Isolation - 310 - 310 2,170 (1,697) 783 Other 3,237 (2,041) 1,196 1,492 (3,563) (875) Total Provisions 2,690 68,433 (55,861) 15,262 17,186 (32,226) 222 Page 87 of 418
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13. Property, Plant and Equipment 13.1. Movement on Balances in 2021/22 HRA Dwelling Other Land & Buildings Vehicles, Plant & Equipment Infrast’re Assets Community Assets Surplus Assets Assets Under Construct’n Total £000 £000 £000 £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2021 1,179,654 1,683,365 89,959 464,059 12,360 22,391 46,669 3,498,457 Additions in year 62,799 12,102 8,513 15,433 3,538 - 63,612 165,997 Donated assets - 719 1,662 - - - - 2,381 Disposals in year - - (2,478) - - - - (2,478) Revaluation and impairment adjustments to revaluation reserve 128,004 103,354 330 - - - - 231,688 Revaluation and impairments adjustments to CIES - (13,768) (268) (305) (44) 16 (1,201) (15,570) Transfer to/ from AUC 31,333 8.783 50 695 - - (40,861) - Transfer to assets held for sale - - - - - - - - Other reclassifications - - - - - - - - At 31 March 2022 1,401,790 1,794,555 97,768 479,882 15,854 22,407 68,219 3,880,475 Depreciation At 1 April 2021 77,513 178,654 42,075 203,055 - 139 - 501,436 Depreciation charge for the year 29,336 47,085 11,226 14,844 - 16 - 102,507 Revaluation and impairment adjustments to revaluation reserve - - - - - - - - Revaluation and impairments adjustments to CIES - (23) 257 - - 68 - 302 On disposals - - (2,478) - - - - (2,478) Other reclassifications - - - - - - - - At 31 March 2022 106,849 225,716 51,080 217,899 - 223 - 601,767 Net Book Value At 31 March 2022 1,294,941 1,568,839 46,688 261,983 15,854 22,184 68,219 3,278,708 At 31 March 2021 1,102,141 1,504,711 47,884 261,004 12,360 22,252 46,668 2,997,020 Nature of Asset Holding at 31 March 2022 Owned 1,294,941 1,274,086 46,652 261,983 15,854 22,184 68,219 2,983,919 Finance Lease - - 36 - - - - 36 PPP - 294,753 - - - - - 294,753 Page 88 of 418
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13.2. Movement on Balances in 2020/21 HRA Dwelling Other Land & Buildings Vehicles, Plant & Equipment Infrast’re Assets Community Assets Surplus Assets Assets Under Construct’n Total £000 £000 £000 £000 £000 £000 £000 £000 Cost or Valuation At 1 April 2020 1,122,536 1,566,339 87,963 451,108 11,384 16,908 26,994 Additions in year 47,449 22,399 9,990 12,834 745 11 36,721 130,149 Donated assets - - 105 - - - - 105 Disposals in year - (2,593) (8,743) - - (245) - (11,581) Revaluation and impairment adjustments to revaluation reserve 8,745 90,081 66 - 111 5,724 - 104,727 Revaluation and impairments adjustments to CIES - (6,571) - - (11) (7) (1,587) (8,176) Transfer to/ from AUC 924 13,710 578 213 131 - (15,556) - Transfer to assets held for sale - - - - - - - - Other reclassifications - - - (96) - - 96 - At 31 March 2021 1,179,654 1,683,365 89,959 464,059 12,360 22,391 46,668 3,498,456 Depreciation At 1 April 2020 49,349 133,003 40,439 187,714 - 124 - 410,629 Depreciation charge for the year 28,164 46,127 10,377 15,341 - 15 - 100,024 Revaluation and impairment adjustments to revaluation reserve - - - - - - - - Revaluation and impairments adjustments to CIES - (476) - - - - - (476) On disposals - - (8,741) - - - - (8,741) Other reclassifications - - - - - - - - At 31 March 2021 77,513 178,654 42,075 203,055 - 139 - 501,436 Net Book Value At 31 March 2021 1,102,141 1,504,711 47,884 261,004 12,360 22,252 46,668 2,997,020 At 31 March 2020 1,073,187 1,433,336 47,524 263,394 11,384 16,784 26,994 2,872,603 Nature of Asset Holding at 31 March 2021 Owned 1,102,141 1,227,237 47,884 261,004 12,360 22,252 46,668 2,719,546 Finance Lease - - - - - - - - PPP - 277,474 - - - - - 277,474 Page 89 of 418
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13.3. Valuation of Non-Current Assets The following statement shows the progress of the Council’s five-year 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 Infrastructure Assets Community Assets Surplus Assets Assets Under Total Construction £000 £000 £000 £000 £000 £000 £000 £000 Value at historical cost - 127,892 45,240 261,983 13,479 1,587 68,219 518,400 Valued at current value plus additions less depreciation as at: 31 March 2022 141,807 220,336 383 - - 2,105 - 364,631 31 March 2021 - 186,549 1,002 - 112 11,912 - 199,575 31 March 2020 - 37,594 - - - - - 37,594 31 March 2019 - 959,678 - - - - - 959,678 31 March 2018 1,153,134 36,790 63 - 2,263 6,580 - 1,198,830 Total Value as at 31 March 2022 1,294,941 1,568,839 46,688 261,983 15,854 22,184 68,219 3,278,708 The five-year rolling valuation programme, as determined by Asset and Procurement Solutions, is structured on the following outline: Year 1 2018/19 Education Properties Year 2 2019/20 Social Work, Office Buildings, Depots and Industrial Properties Year 3 2020/21 Leisure Properties Year 4 2021/22 Leisure Properties and Open Spaces Year 5 2022/23 Council Dwellings, Planning and Development Properties, Car Parks and Miscellaneous 2021/22 was the fourth year of the Council’s rolling five-year revaluation programme and will continue in 2022/23 with Council Dwellings, Planning and Development Properties, Car Parks and Miscellaneous, in line with the five year valuation programme outlined above. At 31 March 2022, a BCIS indexation adjustment was made of £141.643m (15.86%) for Education properties within Other Land & Buildings, £141.807m (13.87%) for Council Dwellings, and Leisure Properties and Open Spaces within Other Land & Buildings £6.387m and within Vehicle, Plant and Equipment £0.111m (11.1%) to reflect estimated material movements in current value since the last valuation under the depreciated replacement cost, which was undertaken in 2018/19 for primarily Education Properties, 2017/18 for Council Dwellings and 2021/22 for Leisure Properties and Open Spaces. These adjustments are incorporated within the 31 March 2022 figures in the table above. 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 1 296 Museum Exhibits 1 9 Paintings 12 109 Sculptures 1 39 Total 15 453 Page 90 of 418
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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. 15. Intangible Assets The Council accounts for software licences and software development costs as intangible assets. There are no internally generated intangible assets. 2020/21 2021/22 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 - 169 2,629 2,798 123 1,544 6,502 8,169 Additions in year 123 248 5,017 5,388 - 294 3,975 4,269 Transfers - 1,144 (1,144) - 1,438 (1,438) - Amortisation - (17) - (17) (25) (295) - (320) Balance at 31st March 123 1,544 6,502 8,169 99 2,981 9,038 12,118 Represented by: Gross Carrying Amount 123 1,561 6,502 8,186 123 3,293 9,039 12,455 Accumulated amortisation - (17) - (17) (25) (312) - (337) Balance at 31st March 123 1,544 6,502 8,169 99 2,981 9,039 12,118 At 31 March 2022, the Council had contractual capital commitments of £3.635m in respect of the acquisition of intangible assets. Page 91 of 418
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16. Long-Term Debtors 2020/21 2021/22 £000 £000 Balance at the start of the year 2,036 1,535 Recorded debt (259) (61) Bad debt provision (242) 45 Balance at the end of the year 1,535 1,519 For further details refer to Soft Loans and Provisions: Financial Guarantee section within Note 17. 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 Current At 31 March 2021 At 31 March 2022 At 31 March 2021 At 31 March 2022 Financial Liabilities £000 £000 £000 £000 Borrowings at amortised cost: - Principal Sum Borrowed 490,575 439,933 256,361 243,715 - Accrued Interest - - 4,242 3,865 - EIR Adjustments - - 2,537 2,518 Total Borrowings 490,575 439,933 263,140 250,098 - Provisions: Financial Guarantees 152 55 101 97 Other Long-term Liabilities at amortised cost: - Finance Leases 1,711 1,543 190 221 - PPP and similar arrangements 172,194 165,402 7,068 6,792 Total Other Long-term Liabilities 173,905 166,945 7,258 7,013 *Creditors - - 171,465 156,287 Total Financial Liabilities 664,632 606,933 441,964 413,495 Financial Assets: At amortised cost : - Principal Sum Invested 1,189 1,170 70,386 73,823 - Accrued Interest - - 3 22 At fair value through profit & loss : - Principal Sum Invested - - 40,000 39,990 - Accrued Interest - - - 11 **Debtors - - 41,806 49,861 Interest in Subsidiaries Associates and Joint Ventures. - - - - Total Financial Assets 1,189 1,170 152,195 163,707 * 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. Page 92 of 418
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For the year ended 31 March 2022 the element of long-term liabilities/assets that fall due for payment or receipt on or within 12 months has been treated as current within the above table. The amounts which relate to long-term liabilities, shown within the current category, comprise Public Work Loans Board debt of £35.394m of principal, and accrued PWLB interest of £3.036m. This category also includes market loan debt of £15.000m, accrued market loan interest of £0.750m and a cumulative effective interest rate adjustment of £2.518m plus £0.248m in respect of Salix interest free loan debt. The amount which relates to the long-term financial assets, shown within current category is £0.089m in relation to subordinated debt investments under ‘hubco’ arrangements as described later in the section below. The Financial Assets current category, shown at amortised cost, held for a period of less than one year, include the bank current accounts / call accounts 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 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 & 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 current, where appropriate, are included within the Cash and Cash Equivalents (Note 20). The 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 £1.259m outstanding, shown as £1.170m long-term and £0.089m 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 adopt 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 93 of 418
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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 2021 31 March 2022 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 (23,248) - - (23,248) (20,355) - - (20,355) PPP Unitary Charge Interest (13,957) - - (13,957) (13,598) - - (13,598) Finance Lease Interest (147) - - (147) (135) - - (135) Impairment of Financial Assets - (5,694) - (5,694) - (3,866) - (3,866) Total Expense (37,352) (5,694) - (43,046) (34,088) (3,866) - (37,954) Interest Income - 566 161 727 - 216 14 230 Gain on De-recognition - 9 - 9 - - - - Financial Guarantee Premium - 106 - 106 - 101 - 101 Total Income - 681 161 842 - 317 14 331 Net (Loss) / Gain for the year (37,352) (5,013) 161 (42,204) (34,088) (3,549) 14 (37,623) 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 94 of 418
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Fair 31 March 2021 31 March 2022 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 2 434,585 437,844 551,896 407,349 410,385 469,557 Non PWLB Debt 2 312,351 315,871 368,707 276,299 279,646 313,577 Financial Guarantee - 253 253 253 152 152 152 Finance Leases 2 1,901 1,901 2,443 1,764 1,764 2,077 PPP & similar arrangements 2 179,262 179,262 230,734 172,194 172,194 200,905 Creditors1 - 171,465 171,465 171,465 156,287 156,287 156,287 Total Financial Liabilities 1,099,817 1,106,596 1,325,498 1,014,045 1,020,428 1,142,555 Financial Assets At Amortised Cost 2 71,575 71,578 71,578 74,993 75,015 75,015 At Fair Value through Profit and Loss 1 40,000 40,000 40,000 39,990 40,001 40,001 Debtors2 - 41,806 41,806 41,806 49,861 49,861 49,861 Total Financial Assets 153,381 153,384 153,384 164,844 164,877 164,877 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 2022, 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 31 March 2022. • 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 service charge 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. • 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 Page 95 of 418
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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 2022 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 2022. 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 & 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 2021/22 have been calculated. Page 96 of 418
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Credit Risk 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 2021/22 Treasury Management Strategy, prescribed that short-term deposits could 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 and Poors). These ratings are monitored by the Council's Treasury Management team and procedures are put 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 2021/22 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 2021 (Restated) 31 March 2022 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 6,063 27,598 6,454 5,705 14,548 5,708 Three to six months 3,027 - 628 1,767 415 Six to twelve months 1,854 - 567 1,960 774 More than one year 1,238 - 6,073 2,467 5,176 Debt Outstanding 12,182 27,598 13,722 11,899 14,548 12,073 Expected Credit Losses (8,778) - (3,774) (8,900) - (3,068) Average allowance for Expected Credit Loss (%) 72.1% 0% 27.5% 74.8% 0% 25.4% Total Debtors 3,404 27,598 9,948 2,999 14,548 9,005 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 considers 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 revised to £0.152m. 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. This valuation Page 97 of 418
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recognised as higher than the alternative measurement basis available based on the IFRS9 Expected Credit Loss Allowance with the higher value the recognised provision. The Council has agreed with the NLP LLP that the premium payable to the Council for providing this guarantee will be paid in annual instalments on a fair value basis over the term of the loan. The Council has therefore included a long-term debtor of £0.055m and a short-term debtor of £0.097m within the Balance Sheet to reflect this arrangement. Soft Loans The Council has recognised an amount receivable of £1.465m within Long-Term Debtors (2020/21 – £1.384m), 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 £2.365m of amounts recoverable (2020/21 - £2.330m) adjusted to reflect an expected credit loss allowance of £0.901m (2020/21 - £0.946m). 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 meet its commitments to make payments. 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 98 of 418
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The maturity analysis of financial liabilities incorporating PWLB Debt, Non PWLB debt based on principal outstanding is as follows: At 31 March 2021 At 31 March 2022 £000 £000 Less than one year 256,361 243,716 Between one and two years 50,642 26,586 Between two and seven years 98,422 83,007 Between seven and fifteen years 100,564 100,392 More than fifteen years 240,947 229,947 Total 746,936 683,648 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 £13.0m 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 6.40% 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 balance of £13.0m comprises £3.0m of vanilla type LOBO’s where the lender has the option to impose a higher interest rate on certain dates with the Council having the option to repay with the £10m balance structured as an inverse floater rate loan where interest rates moves are based on a cap /floor ceiling structured arrangement linked to a 10 year swap rate. 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 2022, the Council as permitted by its investment strategy, as outlined within section 17.1, has a total investment of £1.259m in subordinated debt in relation to two school projects. The first investment taken out in 2015/16 in relation to the 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 in 2017/18 completing the final phase in July 2017 with a balance due of £0.904m at 31 March 2022 which includes accrued interest due of £0.045m with the balance of £0.859m 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 £0.355m at 31 March 2022 which includes accrued interest due of £0.017m with the balance of £0.338m 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 financial loss might arise for the Council as a result of changes in such measures as interest rates, prices and foreign exchange rates. Market Risk – Interest Rates The Council is exposed 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 liability will fall; • investments at variable rates – the interest income credited to the Comprehensive Income and Expenditure Statement will rise; and Page 99 of 418
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• investments at fixed rates – the fair value of the assets will fall. 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 150 Increase in interest receivable on variable short-term investments (709) Overall Impact on Comprehensive Income and Expenditure Statement (559) Share of Overall impact debited to the HRA (228) 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 (150) Decrease in interest receivable on variable short-term investments 59 Overall Impact on Comprehensive Income and Expenditure Statement (91) Share of Overall impact debited to the HRA (37) 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 (68,849) 80,833 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 by way of a separate note within the Group Accounts (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, monitoring factors that might cause a fall in the value of specific shareholdings. Page 100 of 418
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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: 2020/21 2021/22 £000 £000 Opening Balance at 1 April 1,728 1,891 Purchases 7,925 9,378 Donations 1,085 - Recognised as an expense in the year (8,840) (8,641) Write Off Balances (7) (99) Closing Balance at 31 March 1,891 2,529 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: 2020/21 2021/22 £000 £000 £000 £000 Central Government Bodies 46,556 22,579 Other Local Authorities 1,687 1,001 NHS Bodies 8,401 1,879 Public Corporations and Trading Funds 26 2 Trade Debtors, Other Entities and Individuals 41,806 49,861 Provision for Expected Credit Losses (4,751) (4,288) House Rents Receivable: Rents Receivable 12,182 11,899 Less Expected Credit Losses (8,778) 3,404 (8,900) 2,999 Arrears in Local Taxation: Council Tax 115,598 118,506 Less Provision (98,017) 17,581 (103,469) 15,037 NNDR Statutory Addition 5,035 5,550 Less Provision (5,035) (5,190) 360 Total Debtors 114,710 89,430 20. Cash and Cash Equivalents 2020/21 2021/22 £000 £000 Cash held by the Council 480 499 Bank current accounts / call accounts 70,301 73,756 Money Market Funds 40,000 40,001 Net Cash and Cash Equivalents 110,781 114,256 Page 101 of 418
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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: 2020/21 2021/22 £000 £000 Central Government (2,960) (6,201) Other local authorities (4,048) (2,706) NHS Bodies (318) (4,895) Public Corporations and Trading Companies (762) (694) Trade Creditors, Other Entities and Individuals (125,753) (156,287) Short-term compensated absences (1) (22,995) (21,717) Total Creditors (156,836) (192,500) (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) In 2012/13, a provision was recognised for the future costs associated with the restoration of Auchinlea landfill site. Additional provisions were made in 2020/21. During 2021/22 £0.171m of the provision was utilised. (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 2022 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 2022 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 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 Balance at 31 March 2020 Additional Provisions Made in 2020/21 Amounts Used in 2020/21 Balance at 31 March 2021 Additional Provisions Made in 2021/22 Amounts Used in 2021/22 Balance at 31 March 2022 £000 £000 £000 £000 £000 £000 £000 Equal Pay (1) 5,757 - (151) 5,606 - (558) 5,048 Landfill (2) 188 7,734 (258) 7,664 - (171) 7,493 Financial Guarantee (3) 359 - (106) 253 - (101) 152 Total Provisions 6,304 7,734 (515) 13,523 - (830) 12,693 Page 102 of 418
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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. Potential claim volume and values cannot be quantified at this time therefore no financial provision has been made. The Council is unaware of any other material contingent asset or liability as at 31 March 2022. 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 transferred as part of the CLNL Insourcing is included within Vehicles, Plant & Equipment valuation. 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: 2020/21 2021/22 £000 £000 Finance lease liabilities Current 190 221 Non-current 1,711 1,543 Finance costs payable in future years 643 510 Minimum lease payments 2,544 2,274 The minimum lease payments will be payable over the following periods: Minimum Lease Payments Finance Lease Liabilities 2020/21 2021/22 2020/21 2021/22 £000 £000 £000 £000 Not later than one year 325 344 190 221 Later than one year and not later than five years 1,299 1,336 905 1,005 Later than five years 920 594 806 538 Total 2,544 2,274 1,901 1,764 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 2021/22 were £3.508m (2020/2021 £3.419m). The Council also leases various vehicles, plant and equipment on lease terms that are typically between one and five years. The rentals payable in 2021/22 were £0.927m (2020/21 £1.210m). Rental charges for operating leases have been included in the Comprehensive Income and Expenditure Statement. The future minimum lease payments under non-cancellable leases in future years are as follows: Page 103 of 418
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Operational Buildings Vehicles, Plant & Equipment 2020/21 2021/22 2020/21 2021/22 £000 £000 £000 £000 Not later than one year 854 854 921 483 Later than one year and not later than five years 2,294 2,294 666 231 Later than five years 1,002 579 - - Total 4,150 3,727 1,587 714 The Council has sub-let a number of these buildings and the minimum lease payments expected to be received from these sub leasing agreements is £0.046m (2020/21 £0.026m). 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 2021/22 was £1.304m (2020/21 £1.289m) 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 2020/21 2021/22 £000 £000 Within one year 901 930 Later than one year and not later than five years 1,530 1,508 Later than five years and not later than ten years 1,769 1,783 Later than ten years and not later than fifty years 12,526 12,472 Later than 50 years 8,372 8,077 Total 25,098 24,770 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 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 with the current outstanding DBFM liability incorporated within the following table. 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 capital values of £34.188m and £1.545m respectively, with Phase 2b with a capital value of £1.176m 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. As a result, in 2019/20 there was an addition of £9.342m which represents its share of use of the asset under a service concession arrangement with an addition of £1.416m in 2020/21 representing the Council’s share of capitalised interest recognised in 2020/21 excluded from the capitalised value in 2019/20. Page 104 of 418
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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: 2020/21 2021/22 £000 £000 Opening Net Book Value 268,058 277,474 Additions 2,592 - Disposals - - Depreciation charge for the year (5,861) (5,920) Revaluations in year 12,685 23,199 Closing Net Book Value 277,474 294,753 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 2022 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 19,448 6,707 13,822 39,977 Payable within two to five years 79,921 31,567 57,168 168,656 Payable within six to ten years 115,065 46,626 70,598 232,289 Payable within eleven to fifteen years 135,195 55,337 68,680 259,212 Payable within sixteen to twenty years 66,816 22,821 7,629 97,266 Payable within twenty one to twenty five years 37,980 10,856 2,027 50,863 Total 454,425 173,914 219,924 848,263 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: 2020/21 2021/22 £000 £000 Balance outstanding at the start of the year (183,487) (179,262) Additions during the year (2,592) - Payments during the year 6,817 7,068 Balance outstanding at year-end (179,262) (172,194) Included in Balance Sheet Current (7,068) (6,792) Non-current (172,194) (165,402) Page 105 of 418
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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 £766m of total NLC assets in the pension fund of £2.7bn (28%). 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. In 2021/22, the Council paid £37.896m (£36.931m in 2020/21) to the Scottish Public Pensions Agency in respect of teachers' retirement benefits, representing an employer contribution of 23.0% (23.0% from 1/9/2019 onwards). In addition, the Council is responsible for all pension payments relating to previously awarded added years. In 2021/22, these amounted to £5.064m (£5.070m for 2020/21). 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: 2020/21 2021/22 £000 £000 Comprehensive Income and Expenditure Statement (CIES) Included within Net Cost of Service within CIES: • Current service cost 77,503 119,672 • Past service cost/(gain) including curtailments • Effect of Settlements 2,785 - 1,125 - 80,288 120,797 Included within Financing and Investment Income & Expenditure in CIES: • Net interest expense 8,277 9,318 8,277 9,318 Total Post-employment Benefit charged to Surplus or Deficit on the Provision of Services 88,565 130,115 Other Post-employment Benefits charged to the CIES: Re-measurement of the net defined benefit liability 52,108 (352,023) Total Post-employment Benefits charged to the CIES 140,673 (221,908) Less Employer’s contributions payable to pension scheme (51,228) (55,329) Impact of Business Combination and Disposals - 16,203 Movement in Pension Reserve 89,445 (261,034) Page 106 of 418
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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 is as follows: 2020/21 2021/22 £000 £000 Opening balance at 1 April (2,300,643) (2,820,623) Current service cost (77,503) (119,672) Interest cost (53,584) (60,132) Contributions from scheme participants (13,033) (14,384) Remeasurement (gains) and losses: Actuarial gains/losses arising from changes in demographic assumptions 72,363 19,023 Actuarial gains/losses arising from changes in financial assumptions (566,193) 201,456 Actuarial gains/losses arising from changes in other experience 50,414 (12,993) Past service cost including gains/losses on curtailment (2,785) (1,125) Benefits paid 70,341 69,665 Effect of settlements - (153,919) Closing Balance at 31 March (2,820,623) (2,892,704) A reconciliation of the Council’s share of the fair value of Strathclyde Pension Fund’s assets is as follows: 2020/21 2021/22 £000 £000 Opening balance at 1 April 1,972,898 2,403,433 Interest income 45,307 50,814 Return on assets 448,679 144,537 Contributions from employer 43,711 46,991 Contributions from scheme participants 13,033 14,384 Contributions in respect of Unfunded Benefits 7,517 8,338 Benefits paid Effect of settlements (70,341) - (69,665) 137,716 Actuarial gains/losses arising from changes in other experience (57,371) - Closing Balance at 31 March 2,403,433 2,736,548 Page 107 of 418
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26.3. Local Government Pension Scheme assets The Council’s share of the Pension Fund’s assets at 31 March is as follows: 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 £45.102m, £88.979m and £14.635m in respect of LGPS, Teachers’ and Pre-LGR unfunded pensions. For unfunded liabilities as at 31 March 2022, it is assumed that all unfunded pensions are payable for the remainder of the member’s life. 2020/21 2021/22 £000 £000 Cash and cash equivalents 40,349 69,631 Equity instruments (by industry type) • Consumer 138,388 128,199 • Manufacturing 137,096 120,585 • Energy utilities 25,104 28,478 • Financial institutions 85,076 75,364 • Health and care 67,049 91,446 • Information technology 111,210 158,905 Sub-total equity 563,923 602,977 Bonds (by sector) • Corporate 1 1 Sub-total bonds 1 1 Property 194,730 230,783 Private equity 429,880 535,716 Other investment funds • Equities 840,611 1,013,302 • Bonds 325,057 276,388 • Commodities 1,017 940 • Infrastructure 2,429 2,402 • Other 5,003 4,408 Sub-total other investment funds 1,174,117 1,297,440 Derivatives 433 - Total assets 2,403,433 2,736,548 2020/21 2021/22 £000 £000 Fair Value of Employer Assets 2,403,433 2,736,548 Present Value of Funded Liabilities (2,666,350) (2,743,988) Net (under)/Overfunding in Funded Plans (262,917) (7,440) Present Value of Unfunded Liabilities (154,273) (148,716) Net Asset/(Liability) (417,190) (156,156) Amount in Balance Sheet: Liabilities (417,190) (2,892,704) Assets - 2,736,548 Net Asset/(Liability) (417,190) (156,156) Page 108 of 418
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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 of £156.156m 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 2020 shows a funding position of 106% therefore it is expected that future contributions will be sufficient to meet the liabilities. 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 2022. 2020/21 2021/22 Mortality Assumptions: Longevity at 65 for current pensioners: • Men 19.8 19.6 • Women 22.6 22.4 Longevity at 65 for future pensioners: • Men 21.2 21.0 • Women 24.7 24.5 Rate of increase in salaries 3.55% 3.90% Rate of increase in pensions 2.85% 3.20% Discount Rate 2.00% 2.70% 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. 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 Present value of defined benefit obligations as at 31st March Page 109 of 418
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Approximate Monetary Amount £000 Approximate % Increase to Employer Liability Rate of increase in salaries (increase by 0.1%) 7,638 0% Rate of increase in pensions (increase by 0.5%) 46,017 2% Rate for discounting scheme liabilities (decrease by 0.1%) 1 Year increase in the member life expectancy 54,129 115,708 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 being invested in too narrow a range. A large proportion of the assets relate to equities (79%) and bonds (10%). The comparative year’s figures are 76% and 14%. The scheme also invests in properties (8%) and cash (3%), with comparative year’s figures of 8% and 2%. 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 2022 is £46.193m. 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 19 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 2020), 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. The most recent triennial valuation was completed as at March 2020. This shows a funding position of 106% (March 2017; 105%). Employer contributions remain at 19.3% for 2021/22 to 2023/24, the following three years will be set following completion of the next triennial valuation in 2023/24. 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. Page 110 of 418
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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 Restated Balance at 31 March 2021 Transfers Out Transfers in Balance at 31 March 2022 £000 £000 £000 £000 Earmarked General Fund Reserves COVID-19 Directed Funding 15,203 (14,629) 6,322 6,896 COVID-19 General Funding 14,362 (14,362) 20,655 20,655 COVID-19 Recovery General Fund Contribution 6,500 (3,500) - 3,000 Change Management Fund 10,021 - 19,403 29,424 One off Costs of Savings Programme 12,021 (12,021) - - Schools Future Contractual Obligations 49,029 - 5,146 54,175 Early Years & Childcare Expansion 11,256 - 2,993 14,249 Strategic Workforce Planning - - 13,000 13,000 Temporary Accommodation - - 9,288 9,288 Energy costs & Other Non Pay Inflation - - 7,220 7,220 2022/23 Budget One-off Investment - - 6,000 6,000 Pupil Equity Fund 3,984 (3,984) 5,122 5,122 Balances held by Schools under Devolved School Management 4,545 (4,545) 3,652 3,652 Digitisation 2,953 (455) - 2,498 Active & Creative Communities - - 2,000 2,000 Business Gateway and Business Recovery 1,510 (73) 263 1,700 Enterprise Contract 1,701 (14) - 1,687 ICT Orders/Refresh & FMS Project Development - - 1,680 1,680 Youth Guarantee Funding - - 2,367 2,367 Winter Reserve - - 1,500 1,500 E&C 21/22 One Off Investment - - 1,146 1,146 Rapid Rehousing 752 (77) 484 1,159 Other Earmarked Funds 6,114 (2,063) 6,042 10,094 Total Earmarked 139,951 198,511 Contingency Reserve 8,000 8,000 Unallocated Balance 14,229 18,489 32,718 Total General Fund Balance 162,180 239,229 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 2020/21 annual accounts. 27.2. HRA Balance Balance at 31 March 2021 Transfers Out Transfers in Balance at 31 March 2022 £000 £000 £000 £000 Earmarked HRA Balance Temporary Accommodation 8,348 (8,348) - - Welfare Changes and Financial Insecurity 2,760 (1,180) - 1,580 Ambition 5,054 - - 5,054 Housing Repairs (Potential Demand Increase) 2,500 - - 2,500 HRA Capital Programme (Energy Efficiency) 2,500 - - 2,500 Other 3,419 (2,182) - 1,237 Total Earmarked 24,581 12,871 Unallocated/Held for Risks and Uncertainties 1,402 - 3,753 5,155 Contingency Reserve 1,470 - - 1,470 Total HRA Balance 27,453 19,496 Page 111 of 418
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27.3. Capital Grants Unapplied Account The Capital Grants Unapplied Account is used to hold grant received but not yet utilised. 2020/21 2021/22 £000 £000 Opening Balance at 1 April 17,724 12,421 Capital grants received in the year but unapplied 8,476 5,283 Capital grants received in previous years now applied (13,779) (10,580) Closing Balance at 31 March 12,421 7,124 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. 2020/21 2021/22 £000 £000 Opening Balance at 1 April 672 11,651 Transfers in year (see Note 32) 10,979 2,104 Closing Balance at 31 March 11,651 13,755 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. 2020/21 2021/22 £000 £000 Opening Balance at 1 April 1,154 4,470 Amounts expended on principal repayments (1,154) (4,470) Transfer from Capital Receipts Reserve 4,470 396 Closing Balance at 31 March 4,470 396 27.6. Insurance Fund The Insurance Fund represents a resource to make provision for outstanding claims and events. 2020/21 2021/22 £000 £000 Opening Balance at 1 April 13,000 13,000 Amounts expended on premiums and claims settlements (3,309) (3,677) Contributions to / from Insurance Fund 3,309 3,677 Closing Balance at 31 March 13,000 13,000 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. 2020/21 2021/22 £000 £000 Opening Balance at 1 April - - Capital receipts received in the year 4,494 1,410 Amount applied to finance new capital investment (24) (1,014) Amount transferred to Capital Fund (4,470) (396) Closing Balance at 31 March - - Page 112 of 418
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28. Unusable Reserves The total for Unusable Reserves in the Balance Sheet is made up of the following reserves: 2020/21 2021/22 £000 £000 Revaluation Reserve 646,564 865,929 Capital Adjustment Account 1,300,938 1,318,825 Financial Instruments Adjustment Account (28,494) (26,802) Pensions Reserve (417,190) (156,156) Employee Statutory Adjustment Account (22,995) (21,717) Total Unusable Reserves 1,478,823 1,980,079 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. 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 31 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. 2020/21 2021/22 £000 £000 Opening Balance at 1 April 553,724 646,564 Upward revaluation of assets 109,813 237,287 Downward revaluation of assets and impairment losses not charged to the Surplus / Deficit on Provision of Services (4,806) (4,922) Surplus / Deficit on revaluation of non-current assets not posted to the Surplus / Deficit on Provision of Services 105,007 232,365 Difference between fair value depreciation and historical cost depreciation (9,324) (10,655) Accumulated gains on assets sold (2,843) (2,345) Closing Balance at 31 March 646,564 865,929 Page 113 of 418
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2020/21 2021/22 £000 £000 Opening Balance at 1 April 1,299,393 1,300,938 Items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement: • Charges for depreciation and impairment of non-current assets (107,740) (118,732) • Net book value of non-current assets written off on disposal or sale (3,119) (644) Donated assets 105 2,381 Adjusting amounts written out of the Revaluation Reserve 12,167 12,999 Net transfer to Capital Grants Unapplied Account 3,647 5,226 Capital financing applied in the year: • Use of Capital Receipts Reserve to finance new capital expenditure 24 1,014 • Capital grants and contributions credited to the Comprehensive Income and Expenditure Statement that have been applied to capital financing 47,195 57,601 • Statutory provision for the financing of capital investment charged against the General Fund and HRA balances (Loans Fund repayments) 21,848 23,780 • Capital expenditure charged against the General Fund and HRA balances 27,418 34,262 Closing Balance at 31 March 1,300,938 1,318,825 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. 2020/21 2021/22 £000 £000 Balance at 1 April (30,192) (28,494) Premiums / Discounts Annual Write-Off 1,674 1,675 Re-measurement of LOBO loans 24 16 Balance at 31 March (28,494) (26,803) 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. 2020/21 2021/22 £000 £000 Balance at 1 April (327,745) (417,190) Re-measurement of net defined pension liability (52,108) 352,023 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 (88,565) (130,115) Employers’ pensions contributions paid to Strathclyde Pension Fund 51,228 55,329 Effect of Business Combinations and Disposals - (16,203) Balance at 31 March (417,190) (156,156) Page 114 of 418
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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. 2020/21 2021/22 £000 £000 Balance at 1 April (17,677) (22,995) Settlement or cancellation of accrual made at the end of the preceding year 17,677 22,995 Amounts accrued at the end of the current year (22,995) (21,717) Balance at 31 March (22,995) (21,717) 29. Capital Commitments At 31 March 2022, the Council was contractually committed to the following significant capital works. £000 HRA – New Build Programme 28,440 HRA – Heating 11,303 HRA – Roofing & Render 15,850 HRA – Bathrooms 1,300 HRA – Kitchens 1,000 HRA – Windows and Doors 5,338 HRA – Tower Strategy 6,997 HRA – Lead Pipe 1,048 HRA – Community Care 2,525 HRA – Security & DE Systems 1,390 HRA – Estate Regeneration 300 HRA – Fire Safety 950 HRA – Other 400 School Alterations and Upgrades 3,148 Redevelopment and Office Upgrades 598 Other Projects 338 Schools Modernisation 50,233 Early Years Expansion 711 City Deal 20,487 Regeneration Capital Grant Fund 2,491 PBIP 647 Other Regeneration Projects 1,302 Digital NL 3,635 Road Operations-LED Lighting 2,349 Road Operations-Roads/Bridges 2,521 Garrell Burn Project 1,234 Park Path Widening 113 Active Travel 851 Ventilation 416 Flood Alleviation 87 Biodiversity/Nature Trails 219 Solar Lighting 158 Page 115 of 418
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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. 2020/21 2021/22 £000 £000 Net Book Value of Property, Plant & Equipment 2,872,603 2,997,021 Intangible Assets 2,798 8,169 Transfer of Property Plant & Equipment to Held for Sale - - Capital Adjustment Account (1,299,393) (1,300,938) Revaluation Reserve (553,724) (646,563) Opening capital financing requirement 1,022,284 1,057,689 Capital investment Property, plant and equipment 130,149 165,997 Donated Assets 105 2,381 Intangible assets 5,388 4,269 Sources of Finance Capital Receipts (24) (1,014) Government Grants and Other Contributions (50,842) (62,828) Donated Assets (105) (2,381) Sums set aside from revenue Direct revenue contributions (27,418) (34,262) Repayment of loans fund advances (21,848) (23,780) Closing capital financing requirement 1,057,689 1,106,071 Explanations of movements in year Increase in underlying need to borrow 32,813 48,382 Assets acquired under finance leases - - Assets acquired under PPP contracts 2,592 - Increase / (decrease) in capital financing requirement 35,405 48,382 Page 116 of 418
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31. 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. 2021/22 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 88,382 30,350 - - - (118,732) Capital grants and contributions applied (44,088) (15,824) - - (5,297) 65,209 Amounts written off as part of gain/loss on disposal 644 (644) Movements in the fair value of Investment properties - - - - - - Statutory provision for the financing of capital investment (14,916) (8,864) - - - 23,780 Capital expenditure funded from current revenue (1,448) (32,813) - - - 34,261 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 (1,396) (14) 1,410 - Use of capital receipts to finance new capital expenditure (1,014) 1,014 Adjustment primarily involving the Financial Instruments Adjustment Account: Movements recognised under statutory provisions relating to Financial Instruments (1,001) (690) - - - 1,691 Adjustments primarily relating to the Pensions Reserve: Reversal of items relating to retirement benefits charged to the CI&E Statement 120,664 9,451 - - - (130,115) Employer’s pensions contributions and direct payments to pensioners payable in the year (35,107) (4,019) - - - 39,126 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 (1,335) 57 - - - 1,278 Total Adjustments 110,399 (22,366) - 396 (5,297) (83,132) Page 117 of 418
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2020/21 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 78,823 28,917 - - - (107,740) Capital grants and contributions applied (35,733) (9,911) - - (5,303) 50,947 Amounts written off as part of gain/loss on disposal 3,119 - - - - (3,119) Movements in the fair value of Investment properties - - - - - - Statutory provision for the financing of capital investment (13,929) (7,919) - - - 21,848 Capital expenditure funded from current revenue (272) (27,146) - - - 27,418 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 (4,470) (24) - 4,494 - - Use of capital receipts/capital fund to finance new capital expenditure - - - (24) - 24 Adjustment primary involving the Financial Instruments Adjustment Account: Movements recognised under statutory provisions relating to Financial Instruments (1,041) (658) - - - 1,699 Adjustments primarily relating to the Pensions Reserve: Reversal of items relating to retirement benefits charged to the CI&E Statement 80,837 7,728 - - - (88,565) Employer’s pensions contributions and direct payments to pensioners payable in the year (46,758) (4,470) - - - 51,228 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 5,053 266 - - - (5,319) Total Adjustments 65,629 (13,217) - 4,470 (5,303) (51,579) Page 118 of 418
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32. 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 2021/22. Figures for 2020/21 are provided in an additional table for comparison purposes: 2021/22 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 Amounts expended on repairs and renewals on Council facilities - - - - - - Contributions to Repairs & Renewals Fund from General Fund (2,104) - - 2,104 - - Contributions to Insurance Fund (1,816) 1,816 Amounts expended on premiums and claims settlements 1,816 (1,816) HRA Contribution to General Fund Amounts expended on principal repayments 4,470 (4,470) Contribution to Capital Fund 396 (396) Total Adjustments 2,366 - (4,074) 2,104 - (396) 2020/21 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 Amounts expended on repairs and renewals on Council facilities - - - - - Contributions to Repairs & Renewals Fund from General Fund (10,979) - - 10,979 - Contributions to Insurance Fund (1,455) (1,854) - - 3,309 - Amounts expended on premiums and claims settlements 1,455 1,854 - - (3,309) - HRA Contribution to General Fund - - - - - - Amounts expended on principal repayments 1,154 - (1,154) - - - Contribution to Capital Fund - - 4,470 - - (4,470) Total Adjustments (9,825) - 3,316 10,979 - (4,470) 33. Reconciliation of 2021/22 Comprehensive Income and Expenditure Statement to Cash Flow Operating Activities £000 £000 Surplus / (Deficit) on the Provision of Services (21,308) Non-Cash Transactions Items Relating to Loans Fund (426) Adjustment relating to Provisions (2,386) Adjustment relating to Non Domestic Rates (90) Adjustment relating to Capital Items 66,217 Adjustment relating to Pensions Reserve 90,989 154,304 Items on an Accruals Basis Increase in Inventories (638) Decrease in Debtors 10,673 Increase in Creditors 32,659 42,694 Net Cash Inflow from Operating Activities 175,690 Page 119 of 418
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34. Reconciliation of Financing Activities to Balance Sheet Balance at 31 March 2021 Cash Flow Non-Cash Balance at 31 March 2022 Cash and Cash Equivalents 110,781 3,445 30 114,256 110,781 3,445 30 114,256 Financing Activities: Borrowing short-term 263,140 (25,803) 12,761 250,098 Borrowing long-term 490,575 (37,484) (13,158) 439,933 Net Agency Grants (15,423) 15,423 - - Finance leases short-term 7,258 (7,275) 7,030 7,013 Finance leases long-term 173,905 - (6,960) 166,945 919,455 (55,139) (327) 863,989 Total cash outflow from financing activities (55,139) Total cash inflow before financing activities 58,584 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). Net Agency Grants represents financing whereby the Council had been asked by Scottish Government to administer a number of COVID-19 grant schemes on their behalf to a wide range of recipients, with the amount shown representing the balance due to be reimbursed to the Council for payments made in advance of receipt of external funding. 35. External Audit Costs North Lanarkshire Council incurred the following fees relating to external audit inspection: 2020/21 2021/22 £000 £000 Agreed fee for the year 530 540 Total 530 540 The external audit costs include a fee of £4,100 (£4,100 2020/21) in relation to the audit of the Council’s Charitable Trusts. 36. 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 2021/22 is £0.076m. The financial results for the last three years of the Trading Operation can be summarised as follows: Turnover Expenditure (Surplus)/ Deficit £000 £000 £000 Trading Operation 2019/20 2020/21 2021/22 (4,802) (3,572) (2,938) 4,472 3,447 3,014 (330) (125) 76 (Surplus) / Deficit over 3 years (11,312) 10,932 (380) The activities, customers and operational objectives of the above Statutory Trading Operation are listed below: The Building Cleaning Trading operation provides a comprehensive cleaning service to external businesses and service partners across approximately 49 building locations, with an overall staffing complement of 234 staff (68.24 FTE). Some of these locations also receive a janitor/cleaning service. The operation deliver cleaning services on behalf of Engie to schools in the Education 2010 project. The Waste Solutions Trading Operation provides refuse collection and disposal services for approximately 1600 traders. The service is provided by 10 staff (10 FTE). Page 120 of 418
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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 TCA Trading operation provides CCTV and Alarm monitoring to 6 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 element of the Trading Operation is also fully accredited by Investors in People and have successfully retained the relevant accreditations. 37. 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 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: 2020/21 2021/22 £000 £000 Strathclyde Partnership for Transport 5,411 5,453 Strathclyde Concessionary Travel Scheme 568 572 Lanarkshire Valuation Joint Board 2,195 2,106 Page 121 of 418
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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. 2020/21 2021/22 Income Expenditure Income Expenditure £000 £000 £000 £000 Amey Public Services LLP 260 14,087 641 18,141 Culture and Leisure NL Ltd 2,683 27,289 - - Fusion Assets Ltd 111 809 125 821 Mears Scotland LLP 102 39,878 1,971 52,898 North Lanarkshire Integration Joint Board 136,461 148,430 149,586 164,787 North Lanarkshire Municipal Bank Ltd 144 200 144 181 NL Properties Routes to Work 952 25 1,626 2,244 1,998 13 475 3,605 The Campsies Centre (Cumbernauld) Ltd 77 - 9 - Outstanding balances for each of these entities are as follows: 2020/21 2021/22 Debtor Creditor Debtor Creditor £000 £000 £000 £000 Amey Public Services LLP 116 660 410 1,965 Culture and Leisure NL Ltd 913 64 - - Fusion Assets 34 132 - 740 Mears Scotland LLP 13 (11) 1,424 177 North Lanarkshire Integration Joint Board - 16,718 - 31,919 North Lanarkshire Municipal Bank Ltd NL Properties - 1,727 - 1,143 - 1,500 - 26 Routes to Work 21 - 8 3 The Campsies Centre (Cumbernauld) Ltd 87 - - - The Council’s financial statements show no debtor or creditor balances for North Lanarkshire Municipal Bank Ltd. However, at the 31 March 2022 the Council’s short-term borrowing included £19.067m (£21.871m in 2020/21) of Municipal Bank deposits which are invested in the Council. Page 122 of 418
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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 Council) 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. West of Scotland Loan Fund Limited by guarantee (financial risk not material to Council) Partnership of authorities from within the former Strathclyde Regional Council area and was formed to encourage the creation and growth of small businesses within local Council areas. 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 123 of 418
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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 2020/21 2021/22 2021/22 £000 £000 £000 143,586 Dwelling Rent Income (136,319) 1,077 - Non-Dwelling Rent Income Departmental Recharges (1,101) (3,328) 1,676 Other Income (1,031) 146,339 Total Income (141,779) 45,569 Repairs and Maintenance 53,697 40,589 Supervision and Management 38,013 28,264 Depreciation 29,427 653 Revaluations 922 - Other Expenditure 8,348 115,075 Total Expenditure 130,407 (31,264) Net (Surplus)/Deficit of HRA Services per Income and Expenditure Account (11,372) 404 HRA Service Share of Corporate and Democratic Core 2,193 (413) HRA Share of other amounts included in the whole authority Net Cost of Services but not specifically allocated to specific services 677 (31,273) Net (Surplus)/Deficit of HRA Services (8,502) (24) Gains or Losses on disposal of non-current asset (14) 9,191 Interest Payable (Including Amortisation of Premiums) 8,194 (161) 4,932 Interest and Investment Income Impairment of Financial Assets (14) 2,275 722 Net Interest on the Net Defined Benefit Liability/Asset (524) (9,911) Recognition of Capital Grant (15,824) (26,524) (Surplus)/Deficit for the year on HRA Services (14,409) 1.1. Statement of Movement on the Housing Revenue Account Balance 2020/21 2021/22 2021/22 £000 £000 £000 (14,146) Balance on the HRA at the end of the previous year (27,453) (26,524) 13,217 (13,307) (Surplus) / Deficit for the year on the HRA Income and Expenditure Statement Adjustments between accounting basis and funding basis under regulations (see Note 31) Transfer (to) and from other statutory reserves (see Note 32) (14,409) 22,366 - 7,957 (27,453) Balance on the HRA at the end of the current year (19,496) 1.2. Housing Stock The Council’s housing stock at 31 March 2022 was 36,961 (36,792 at 31 March 2021) in the following categories: House Numbers 2020/21 Property Types House Numbers 2021/22 305 1 Apartment 305 6,687 2 Apartment 6,697 18,935 3 Apartment 19,030 9,811 4 Apartment 9,865 1,022 5 Apartment 1,031 32 Other 33 36,792 Total 36,961 1.3. Rent Arrears Current rent arrears outstanding as at 31 March 2022 amounted to £5.656m. This represented 4.26% of rents paid during the year (the comparative figures for the 2020/21 year were £5.049m and 3.52% respectively). 1.4. Impairment of Financial Assets The expected credit losses at 31 March 2022 amounted to £6.992m (£8.778m as at 31 March 2021). 1.5. Void Rents The level of income lost from unlet Council Dwellings during 2021/22 amounted to £1.343m (2020/21 £0.965m). Page 124 of 418
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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. 2020/21 2021/22 £000 £000 Gross Council Tax levied and contributions in lieu 176,528 177,994 Adjustments for prior years Council Tax (2,120) (2,071) Adjusted for: Council Tax Benefits (Net of Government Grants) Council Tax Reduction Scheme - (25,444) - (23,989) Other discounts and reductions (21,024) (21,410) Provision for Non-collection (5,450) (5,324) Net Council Tax Income per the Comprehensive Income and Expenditure Account 122,490 125,200 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 53,039 2,767 (38) 7,127 518 42,665 0.6666 28,441 Band B 37,840 935 6 4,220 309 32,370 0.7777 25,173 Band C 19,881 412 25 2,004 124 17,316 0.8888 15,390 Band D 17,713 202 (47) 1,320 70 16,168 1.0000 16,168 Band E 17,157 113 39 825 64 16,116 1.3139 21,175 Band F 10,070 48 80 320 35 9,587 1.6250 15,579 Band G 3,088 16 44 93 8 2,927 1.9583 5,732 Band H 162 3 1 4 0 154 2.4500 377 Total 128,035 Provision for non-collection 4,161 Council Tax Base 123,874 3. The Council Tax Charge The charge for each band for 2021/22 was as follows: £ per Dwelling Band A 814.17 Band B 949.86 Band C 1,085.56 Band D 1,221.25 Band E 1,604.59 Band F 1,984.53 Band G 2,391.61 Band H 2,992.06 Page 125 of 418
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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. 2020/21 2021/22 £000 £000 Gross rates levied and contributions in lieu 145,451 144,880 Less: Reliefs and other deductions (64,883) (46,536) Payments of interest - - Provision of bad and doubtful debts (2,417) (2,950) Net Non Domestic Rate Income 78,151 95,394 Adjustment to previous years’ NNDR (3,774) (2,761) Contribution to Non Domestic Rates 74,377 92,634 Distribution from Non Domestic Rate Pool 71,360 87,394 Adjustment for the years prior to the introduction of the pool - - Income credited to the Comprehensive Income and Expenditure Statement 71,360 87,394 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 2021/22 is 49p for properties with a rateable value not greater than £51,000. The Intermediate Property Rate of 50.3p (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 51.6p (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 responding directly to the immediate challenges posed to the commercial property market by 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. In addition, 100% relief for retail, hospitality, and leisure (RHL) and aviation sectors is made available subject to eligibility. Analysis of Rateable Values as at 1 April 2021. Number of Subjects Rateable Value £000 Industrial and Freight 3,075 98,406 Commercial Subjects Shops (inc. Restaurants) 2,586 64,078 Offices 2,189 35,467 Hotels, Boarding Houses etc. 33 3,179 Others 1,193 25,518 Miscellaneous and Formula Valued Subjects 1,250 60,774 Total 10,326 287,422 Page 126 of 418
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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 £0.177m and the Marshall (Education) Trust at £0.540m, 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 2022 was £1.077m (£1.007m at 31 March 2021) and is shown at book value on the balance sheet £0.032m (£0.032m 2020/21). Summary Income and Expenditure Account 2020/21 2021/22 £000 £000 Education Trust Funds: Income Interest on Investments, etc. 13 18 Expenditure Grants, Prizes, Awards, etc. (20) (19) Surplus / (Deficit) for the year (7) (1) Other Sundry Trust Funds: Income Interest on Investments - - Expenditure Grants, Prizes, Awards, etc. - - Surplus / (Deficit) for the year - - Balance Sheet at 31 March 2022 2020/21 2021/22 2021/22 £000 £000 £000 Investments 32 Education Trust Funds 32 1 Sundry Trust Funds 1 33 33 733 Advances to Council Loans Fund 730 71 Current Assets 74 837 Net Assets 837 Education Trust Funds 32 Capital 32 732 Revenue 731 764 763 Sundry Trust Funds 0 Capital 1 73 Revenue 73 73 74 837 Total Reserves 837 Page 127 of 418
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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. 2020/21 Restated 2021/22 Gross Expenditure Gross Income Net Expenditure Gross Expenditure Gross Income Net Expenditure £000 £000 £000 £000 £000 £000 419,263 (75,095) 344,168 Education & Families 493,514 (75,706) 417,808 234,518 (30,468) 204,050 Enterprise & Communities 281,437 (64,589) 216,848 3,245 (3,245) 0 Trading Operations 2,614 (2,614) - 158,566 (96,225) 62,341 Chief Executives & Other Corporate Services 160,267 (92,224) 68,043 151,848 - 151,848 Adult Health & Social Care (Non-Integrated) 167,499 - 167,499 214,737 (206,716) 8,021 Adult Health & Social Care (Integrated) 226,471 (212,062) 14,409 115,075 (146,339) (31,264) Housing Revenue Account 118,799 (130,171) (11,372) (3,120) (33) (3,153) Non Service-Specific Costs 14,005 (11,938) 2,067 11,036 (6,206) 4,830 Subsidiaries (6,407) (4,177) (10,584) 1,305,169 (564,327) 740,842 Net Cost of Services 1,458,199 (593,481) 864,718 - (1,375) (1,375) Other Operating Expenditure - (767) (767) 99,763 (56,011) 43,752 Financing and Investment Income and Expenditure 100,369 (51,389) 48,981 78 (869,506) (869,428) Taxation and Non-specific Grant Income 131 (894,056) (893,925) (86,209) (Surplus) or Deficit on the Provision of Services 19,007 (19,938) Associates and Joint Ventures accounted for on an Equity Basis (34,501) (106,147) Group (Surplus) or Deficit (15,495) Items that will not be reclassified to the (Surplus) or Deficit on the Provision of Services (105,007) (Surplus) or deficit on the revaluation of non current assets (232,365) 56,389 Actuarial (gains) or losses on pension assets and liabilities (352,655) (617) Share of Other Comprehensive Income and Expenditure of Associates and Joint Ventures (13,769) (49,235) Other Comprehensive Income and Expenditure (598,789) (155,382) Total Comprehensive Income and Expenditure (614,284) Page 128 of 418
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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 2021 Restated 31 March 2022 £000 £000 £000 Property, Plant and Equipment 1,102,141 Council Dwellings 1,294,941 1,504,711 Other Land and Buildings 1,568,839 48,617 Vehicles, Plant and Equipment 46,689 261,004 Infrastructure Assets 261,983 12,360 Community Assets 15,854 22,252 Surplus Assets 22,184 46,668 Assets Under Construction 68,219 3,278,709 Intangible Assets 123 Software Licences 99 1,544 6,502 Software/Solution Development Intangibles Under Development 2,981 9,038 12,118 70,730 Investment Property 69,796 94,637 2,179 1,384 Investments in Associates and Joint Ventures 135,911 Long-Term Investments Long-Term Debtors 2,160 1,519 3,174,852 Long-Term Assets 3,500,213 88 Short-Term Investments 89 - Assets Held for Sale - 5,153 Inventories 5,413 114,949 Short-Term Debtors (net of impairment) 91,821 133,806 Cash and Cash Equivalents 125,920 253,996 Current Assets 223,243 (264,398) Short-Term Borrowing (250,098) (163,613) Short-Term Creditors (197,905) (13,353) Short-Term Provisions (12,719) (7,258) (2,957) Short-Term Finance Lease Liabilities Revenue Grant Receipts in Advance (7,013) (1,403) (451,579) Current Liabilities (469,138) (525,690) Long-Term Borrowing (473,619) (509) Liabilities in Associates and Joint Ventures (55) (173,905) Other Long-Term Liabilities (Finance Leases) (166,945) (433,842) Other Long-Term Liabilities (Pensions) (156,091) - Long-Term Provisions - (1,133,946) Long-Term Liabilities (796,710) 1,843,323 Net Assets 2,457,608 Usable Reserves 162,180 General Fund Reserve 239,229 27,453 Housing Revenue Account Balance 19,496 4,470 Capital Fund 396 12,421 Capital Grants Unapplied Accounts 7,124 13,000 Insurance Fund 13,000 11,651 Repairs and Renewals Fund 13,755 231,175 Total Usable Reserves 293,000 1,478,823 Unusable Reserves 1,980,079 133,324 Group Reserves 184,528 1,843,323 Total Reserves 2,457,608 The unaudited accounts were issued on 30 June 2022. Elaine Kemp, CPFA Head of Financial Solutions Page 129 of 418
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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 2022 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 2021 162,181 27,453 41,542 1,478,823 1,709,999 39,197 94,127 1,843,323 Movement in Reserves during 2021/22 Surplus / (Deficit) on Provision of Services (42,203) 14,409 - - (27,794) 8,789 34,501 15,495 Other Comprehensive Income and Expenditure 6,486 - - 584,388 590,874 632 7,283 598,789 Total Comprehensive Income and Expenditure (35,717) 14,409 - 584,388 563,080 9,421 41,783 614,284 Adjustments between Accounting Basis and Funding Basis under Regulations 110,399 (22,366) (4,901) (83,132) - - - - Net Increase or Decrease before Transfers to Other Statutory Reserves 74,682 (7,957) (4,901) 501,256 563,080 9,421 41,783 614,284 Transfers to and from Other Statutory Reserves 2,366 - (2,366) - - - - - Increase or Decrease in the Year 77,048 (7,957) (7,267) 501,256 563,080 9,421 41,783 614,284 Balance at 31 March 2022 Carried Forward 239,229 19,496 34,275 1,980,079 2,273,079 48,618 135,911 2,457,607 Page 130 of 418
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Year Ended 31 March 2021 Usable Reserves Unusable Reserves Total Reserves of the Council Council Subsidiaries Council’s Share of Reserves of Associates and Joint Ventures Total Reserves Restated General Fund Housing Revenue Account Other Statutory Reserves £000 £000 £000 £000 £000 £000 £000 £000 Balance at 31 March 2020 48,401 14,146 32,550 1,477,503 1,572,600 41,768 73,572 1,687,940 Movement in Reserves during 2020/21 Surplus / (Deficit) on Provision of Services 57,976 26,524 - - 84,500 1,710 19,938 106,148 Other Comprehensive Income and Expenditure - - - 52,899 52,899 (4,281) 617 49,235 Total Comprehensive Income and Expenditure 57,976 26,524 - 52,899 137,399 (2,571) 20,555 155,383 Adjustments between Accounting Basis and Funding Basis under Regulations 65,629 (13,217) (833) (51,579) - - - - Net Increase or Decrease before Transfers to Other Statutory Reserves 123,606 13,307 (833) 1,320 137,399 (2,571) 20,555 155,383 Transfers to and from Other Statutory Reserves (9,825) - 9,825 - - - - - Increase or Decrease in the Year 113,780 13,307 8,992 1,320 137,399 (2,571) 20,555 155,383 Balance at 31 March 2021 Carried Forward 162,181 27,453 41,542 1,478,823 1,709,999 39,197 94,127 1,843,323 Page 131 of 418
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The Group Cash Flow Statement shows the changes in cash and cash equivalents of the Council and its subsidiaries during the reporting period. 2020/21 2021/22 2021/22 £000 £000 £000 180,922 Net Cash Inflow / (Outflow) from Operating Activities 162,401 INVESTING ACTIVITIES Cash Inflows: 3,748 Sale of non-current assets 1,410 40,675 Capital grants received 50,385 2,487 Other capital receipts 5,847 465 Investments redeemed 17 47,375 57,659 Cash Outflows: (138,484) - - Purchase of non-current assets Long-term investment Investment in subsidiary (174,901) - - (91,109) Net Cash Inflow / (Outflow) from Investing Activities (117,242) FINANCING ACTIVITIES Cash Inflows: 271,000 New loans raised 176,000 - Net Agency Grants 15,423 271,000 191,423 Cash Outflows: (284,319) Repayments of amounts borrowed (239,287) - Donation (53) (7,013) (15,423) Capital payments of finance leases Net Agency Grants (7,275) - (306,755) (246,615) (35,755) Net Cash Inflow / (Outflow) from Financing Activities (55,192) 54,058 Net Increase / (Decrease) in cash and cash equivalents (10,033) 79,773 Cash and Cash Equivalents at the beginning of the year 135,918 54,058 Net Increase / (Decrease) in cash and cash equivalents (10,033) (25) Increase / (Decrease) Non-cash in cash equivalents (35) 133,806 Cash and Cash Equivalents at the end of the year 125,920 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 (12,521) Non-Cash Transactions Items Relating to Loans Fund (426) Adjustment relating to Provisions (17,130) Adjustment relating to Capital items 65,362 Adjustment relating to National Non-Domestic Rates (90) Adjustment relating to Pension Reserve 90,989 138,705 Items on an Accruals Basis Increase in Inventories (318) Decrease in Debtors 12,444 Increase in Creditors 24,090 36,216 Net Cash Inflow from Operating Activities 162,401 Page 132 of 418
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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 133 of 418
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As illustrated in the diagram, North Lanarkshire Municipal Bank Limited is not consolidated within the Group Accounts. For transparency, the following disclosures are made: North Lanarkshire Council Subsidiary Companies Regeneration Fusion Assets Limited North Lanarkshire Properties LLP Banking Services North Lanarkshire Municipal Bank Limited 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. Not consolidated into the Group Accounts as no financial benefit accrues to the Council and it is not exposed to any financial liabilities as a result of its interest in the Bank 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 (28% of voting rights) Page 134 of 418
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The Directors of the Bank are all Elected Members of North Lanarkshire Council. At 31 March 2022, there were 4,462 accounts held within the Bank, with a total of £19.041m on deposit. The Bank has total assets of £19.067m all of which was invested with North Lanarkshire Council. 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 2022 with the only exceptions being in respect of Amey Public Services LLP and Mears Scotland LLP which report to 31 December 2021. 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 During 2021-22 the group structure has now changed to remove the now dissolved Campsies Centre Cumbernauld Ltd, and Culture and Leisure NL Limited which is in the process of being dissolved. Culture and Leisure NL Limited operations are incorporated within North Lanarkshire Council accounts. 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 Page 135 of 418
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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 2020/21 Restated 2021/22 £000 £000 (137,398) Total Comprehensive Income and Expenditure on the Council's Comprehensive Income and Expenditure Statement (563,080) (Surplus)/Deficit arising from other entities included in the Group Accounts (1,710) Subsidiaries (8,789) (1,586) Associates (1,078) (18,352) Joint Ventures (33,423) Other Comprehensive (Income) and Expenditure 4,281 Subsidiaries (632) (617) Associates (7,283) (155,382) Group total Comprehensive Income and Expenditure for the year (614,284) 6.2 Council Balance Sheet to Group Balance Sheet 31 March 2021 Restated 31 March 2022 £000 £000 1,709,998 Net Assets on Council Balance Sheet 2,273,079 Long Term Assets in Group Balance Sheet 68,078 Investments in Associates 75,929 26,559 Investments in Joint Ventures 59,982 72,302 Subsidiary Non Current Assets 70,788 Current Assets 26,526 Subsidiaries 16,939 Current Liabilities (8,015) Subsidiaries (5,487) Long Term Liabilities (509) Associates (0) (51,616) Subsidiaries (33,621) 1,843,323 Net Assets on Group Balance Sheet 2,457,609 1,709,998 Total Reserves on Council Balance Sheet 2,273,079 Group Income and Expenditure and Other Reserves 26,559 Joint Ventures 59,982 67,569 Associates 75,929 39,197 Subsidiaries 48,617 1,843,323 Total Reserves on Group Balance Sheet 2,457,351 Page 136 of 418
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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. 2020/21 Restated 2021/22 Campsies Centre C’nauld Ltd Fusion Assets Ltd North L’shire Properties LLP Culture & Leisure NL Ltd Campsies Centre C’nauld Ltd Fusion Assets Ltd North L’shire Properties LLP Culture & Leisure NL Ltd £'000 £'000 £000 £000 £'000 £'000 £000 £000 Comprehensive Income and Expenditure Statement Surplus/ (Deficit) on Provision of Service (2,428) 343 2,934 861 - 557 667 7,565 Other Comprehensive Income and Expenditure - - (357) (3,924) - - 632 - Balance Sheet Non-Current Assets - 2,986 68,584 732 - 2,986 67,802 - Current Assets Inventories - 3,204 - 58 - 2,884 - - Short-Term Debtors - 462 (842) 619 - 1,508 883 - Cash and Cash Equivalents - 2,491 7,133 13,401 - 2,563 9,101 - Current Liabilities Short-Term Creditors - (150) (384) (6,119) - (494) (4,993) - Short-Term Borrowing - - (1,258) - - - - - Long Term Liabilities Long Term Borrowing - - (34,911) (53) - - (33,686) - Deferred Income - - - - - - - - Capital Grants Received in Advance - - - - - - - - Pensions - - (449) (16,203) - - 65 - Reserves Income and Expenditure - (7,389) (15,073) (197) - (7,952) - - General Fund - - - (8,139) - - - - Pension - - 449 16,203 - - - - Revaluation Reserve - (406) (23,248) - - (400) (23,355) - Other - (1,094) (1) (302) - (1,094) (15,816) - Page 137 of 418
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7.2 Joint Ventures The table below illustrates the Council’s payments to its Joint Ventures. 2021/22 Council Payments to Entity % of Entity's Annual Turnover Council Share of Net Assets / (Liabilities) £000 % £000 Amey Public Services LLP 18,141 89.73 42 Mears Scotland LLP 52,898 98.86 214 NL Integration Joint Board 164,787 24.18 59,726 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. 2020/21 restated 2021/22 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 15,960 40,338 693,105 20,217 48,955 691,397 Net Profit/ (Loss) before Taxation 367 415 36,704 562 1,812 66,334 Taxation - - - - - - Net Profit/ (Loss) after Taxation 367 415 36,704 562 1,812 66,334 Balance Sheet Non-Current Assets 87 282 - 89 78 - Current Assets 3,618 12,209 53,118 3,325 10,419 119,452 Liabilities due within one year (4,137) (11,876) - (3,287) (8,191) - Liabilities due after more than one year - (1,154) - - (1,663) - Net Pension Asset - - - - - - Provision for Liabilities - - - - - - Capital and Revenue Reserves 432 539 (53,118) (127) (642) (119,452) Group Accounts 2021/22 and Restated Group Accounts 2020/21 In prior year, both Amey and Mears net assets/liabilities and surplus/deficit have been excluded from the group statements in order to comply with IAS 28 which required that where NLC’s share of a Joint Venture’s liabilities exceed it’s share of their assets, the body is excluded from the group statements. Both companies have made a surplus during 2021/22 with a share of this up to the value of our share of net assets have been consolidated. Page 138 of 418
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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. 2021/22 Council Payments to Entity % of Entity's Annual Turnover Council Share of Net Assets/ (Liabilities) Debtors included in Council Accounts Creditors Included in Council Accounts £000 % £000 £000 £000 Strathclyde Concessionary Travel Scheme Joint Board 572 14.06 646 - - Strathclyde Partnership for Transport 5,453 10.53 73,655 - - Lanarkshire Valuation Joint Board 2,106 48.18 1,409 - - Routes to Work Limited 3,254 84.07 219 - - 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. 2020/21 restated 2021/22 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 2,775 4,472 3,871 4,386 Net Surplus / (Deficit) (10) (812) 40 (363) Balance Sheet Non-Current Assets 21 177 5 156 Current Assets 1,319 1,485 1,420 1,614 Liabilities due within one year (288) (479) (332) (225) Long-Term Liabilities - - - (1,273) Retirement Benefit Asset / (Liabilities) - (2,200) - - Accumulating Compensated Absences - 121 - 90 Capital, Revenue & Pension Reserves (1,052) 896 (1,093) (362) Page 139 of 418
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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 8. Interests in Other Entities There are 13 related companies that have been identified as being relevant for group purposes as illustrated by the flowchart on page 85. Of these only two were considered out with the scope of the group: North Lanarkshire Municipal Bank Limited is a municipal bank which accepts deposits and invests those funds (with the exception of working balances) with North Lanarkshire Council. 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 28% voting rights on the Board however on the grounds of materiality it has not been consolidated as part of the group. It should also be noted that the group accounts for both 2021/22 and the restated accounts for 2020/21 exclude NLC’s share of the joint ventures Mears and Amey under compliance with IAS 28. Page 140 of 418
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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. 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 2021 (SSI 2021/18). 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 £43,412. For 2021/22 the salary for the Leader of North Lanarkshire Council was £43,207. The Regulations permit the Council to remunerate one Provost with a maximum salary of £32,560. For 2021/22 the salary for the Provost of North Lanarkshire Council was £32,406. 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 2021/22 was £562,030. 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 £486,058 in 2021/22. 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. All information disclosed in the following tables in this Remuneration Report will be subject to audit. The other sections of the Remuneration Report will be reviewed by external audit to ensure that they are consistent with the financial statements. Page 141 of 418
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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 65 62.68 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% 30 1-50% 33 51-99% 0 100% 2 Percentage of the total pay bill spent on facility time Total cost of facility time (£) 120,272 Total pay bill (£) 588,914,152 Percentage of the total pay bill spent on facility time 0.02% Time spent on paid trade union activities as a percentage of total paid facility time hours 100% Page 142 of 418
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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 (£) 2020/21 2021/22 Officers Teachers Total Officers Teachers Total 50,000 - 54,999 118 255 373 143 260 403 55,000 - 59,999 39 176 215 104 184 288 60,000 - 64,999 33 110 143 30 106 136 65,000 - 69,999 21 51 72 25 52 77 70,000 - 74,999 7 8 15 25 10 35 75,000 - 79,999 2 8 10 6 6 12 80,000 - 84,999 2 1 3 - 3 3 85,000 - 89,999 4 9 13 1 5 6 90,000 - 94,999 14 1 15 - 2 2 95,000 - 99,999 - 2 2 7 3 10 100,000- 104,999 1 - 1 12 - 12 105,000 - 109,999 - - - - - - 110,000 - 115,999 - - - 2 - 2 125,000 - 129,999 - - - - - - 130,000 - 134,999 1 - 1 1 - 1 135,000 - 139,999 1 - 1 - - - 145,000 - 149,999 - - - 2 - 2 150,000 – 154,999 - - - 1 - 1 160,000 – 164,999 1 - 1 1 - 1 190,000 – 194,999 - - - 2 - 2 220,000 – 224,999 - - - 1 - 1 244 621 865 363 631 994 Page 143 of 418
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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 2020/21 Total Remuneration 2021/22 Total Remuneration £ £ James Logue Leader of the Council 41,688 43,207 Paul Kelly Depute Leader of the Council 31,131 32,406 Jean Jones Provost 31,131 32,406 Tom Castles Depute Provost 25,267 26,302 Robert Burrows Convener of Finance and Resources Committee 31,131 32,406 Harry Curran Convener of Planning Committee 25,267 26,302 William Shields Convener of Local Review Body 25,267 26,302 Thomas Johnston Leader of the SNP Group (until 8 March 2021) 23,675 - Jordan Linden Leader of the SNP Group (from 8 March 2021) 1,592 26,426 Thomas Morgan Convener of Adult Health and Social Care Committee (Until April 21) 25,267 1,251 Tom Fisher Convener of Adult Health and Social Care Committee (From April 21) - 21,687 Frank McNally Convener of Education and Families Committee 31,131 32,406 Nicky Shevlin John McLaren Convener of Regulatory Committee Convener of Licensing Board 25,267 25,267 26,302 26,302 Allan Graham Convener of Enterprise and Growth Committee 25,267 26,302 Michael McPake Convener of Environment and Transportation Committee 25,267 26,302 Heather Brannan- McVey Convener of Housing and Regeneration Committee 31,131 32,406 Meghan Gallacher Convener of Audit and Scrutiny Panel (Until May 2021) 31,131 8,410 Alexander Watson Convener of Audit and Scrutiny Panel (From May 2021) - 23,996 Louise Roarty Business Manager 31,131 32,406 Kenneth Duffy Convener of Transformation and Digitisation Committee 25,267 26,302 Angela Campbell Convener of Community Empowerment Committee 25,267 26,302 Alex McVey Convener of Lanarkshire Joint Valuation Board 4,468 4,458 Total 542,010 560,590 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 amounts for service as Senior Councillors and does not include any remuneration which relates to previous or subsequent appointment with the Council. 3. 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. 4. 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 2021/22: • Councillor A McVey was the Convener of the Lanarkshire Joint Valuation Board from 26 June 2017 and the Council was reimbursed £5,934 for 2021/22 (£4,468 for 2020/21). Page 144 of 418
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b. Remuneration of Councillors The Council paid the following renumeration to all Councillors (including the Senior Councillors above) during the year. Type of Remuneration 2020/21 2021/22 £ £ Salaries 1,539,231 1,632,919 Expenses 14,632 11,311 Total 1,553,863 1,644,230 Note: The annual return of Councillors’ renumeration for 2021/22 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 Renumeration 2021/22 c. Remuneration of Council Senior Employees Name Post Title 2020/21 2021/22 Total remuneration Salaries, fees and allowances Compensation for loss of office Total remuneration £ £ £ £ Desmond Murray Chief Executive 170,052 183,348 - 183,348 Robert Steenson Executive Director (Enterprise and Communities) 136,270 136,503 100,479 236,982 Elaine Kemp Head of Financial Solutions (Section 95 Officer) 90,288 94,889 - 94,889 Katrina Hassell Head of Business Solutions 92,016 94,618 - 94,618 Fiona Whittaker Head of People and Organisational Development 92,017 93,143 - 93,143 Stephen Penman Head of Strategic Communications 92,096 102,908 - 102,908 Ross McGuffie Chief Officer (Health and Social Care). 101,601 102,730 - 102,730 Derek Brown Executive Director (Education and Families) 134,348 137,063 - 137,063 Alison Gordon Head of Children, Families & Justice Social Work Services (Chief Social Work Officer) 92,017 93,132 - 93,132 Archie Aitken Head of Legal & Democratic Solutions (Monitoring Officer) 92,652 102,908 - 102,908 Ken Adamson Head of Audit and Inspection 67,202 69,694 - 69,694 Total 1,160,559 1,210,938 100,479 1,311,417 1. Total remuneration disclosed relates to salary, fees and allowances and compensation for loss of employment. 2. The 2021/22 remuneration in the table above includes election payments; Desmond Murray £12,632 (2020/21 £408) Elaine Kemp £1,780 (2020/21 £180), Katrina Hassell £1,600 (2020/21 £0), Stephen Penman £9,765 (2020/21 £0), Archie Aitken £9,765 (2020/21 £635) and Ken Adamson £1,500 (2020/21 £175). 3. Robert Steenson was employed until 6 April 2022, however as the amounts were agreed during 2021/22 and included in the council’s expenditure and exit package disclosures the inclusion in the above disclosure was deemed to be appropriate to support overall transparency. 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. Robert Steenson has been credited with an additional period of service. A person who has been granted a credited period is entitled to receive compensation in the form of a lump sum and annual compensation, both of which are included within the compensation for loss of employment. The disclosure includes all payments due. Page 145 of 418
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d. Remuneration of Council’s Subsidiary Bodies Senior Employees Name Post Title 2020/21 2021/22 Total remuneration Salaries, fees and allowances Compensation for loss of office Total renumeration £ £ £ £ David Baird Kenneth McDonald Murray Collins Jillian Ferrie Surveying and Technical Manager, North Lanarkshire Properties (until 30 November 2020) Surveying and Technical Manager, North Lanarkshire Properties from (01 December 2020) Managing Director, Fusion Assets Chief Executive, Culture and Leisure NL (Until 30th April 2021) 42,496 14,587 71,727 90,210 - 44,922 73,776 4,670 - - - 44,124 - 44,922 73,776 48,794 Emma Walker Managing Director, Culture and Leisure NL (until 2 June 2020) 92,059 - - - Total 311,079 123,358 44,124 167,482 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. 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 2022 at the rate on the following bands of pay: Band Range Contribution Rate 1 On earnings up to and including £22,000 5.50% 2 On earnings above £22,001 and up to £27,100 7.25% 3 On earnings above £27,701 and up to £37,200 8.50% 4 On earnings above £37,201 and up to £49,600 9.50% 5 On earnings above £49,601 12.00% The pension entitlements for Senior Councillors, Senior Employees of the Council and Subsidiary Bodies for the year to 31 March 2022 are shown in the tables below, together with the contribution made by the Council or the Subsidiary Body during the year. Page 146 of 418
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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 2021 For year to 31 March 2022 As at 31 March 2021 Movement In Year As at 31 March 2022 £ £ £000 £000 £000 James Logue 8,046 8,992 Pension Lump Sum 9 3 2 0 11 3 Paul Kelly 6,008 6,745 Pension Lump Sum 7 2 1 0 8 2 Jean Jones - - Pension Lump Sum - - - - - - Tom Castles - - Pension - - - Lump Sum - - - Robert Burrows 6,008 6,745 Pension Lump Sum 7 2 3 0 10 2 Harry Curran 4,877 5,474 Pension Lump Sum 6 1 1 0 7 1 William Shields 4,877 5,474 Pension Lump Sum 5 1 1 0 6 1 Thomas Johnston 4,796 - Pension Lump Sum - - - - - - Jordan Linden - - Pension - - - Lump Sum - - - Thomas Morgan 4,877 3,925 Pension Lump Sum 4 - 1 - 5 0 Tom Fisher - 5,403 Pension Lump Sum 2 0 0 0 2 0 Frank McNally 6,008 6,745 Pension Lump Sum 5 - 1 - 6 - Nicky Shevlin 4,877 5,474 Pension Lump Sum 6 2 1 - 7 2 John McLaren 4,877 5,474 Pension Lump Sum 4 - 1 - 5 - Allan Graham 4,877 5,474 Pension Lump Sum 4 - 1 - 5 - Michael McPake 4,877 5,474 Pension Lump Sum 5 - - - 5 - Heather Brannan- McVey 6,008 6,745 Pension Lump Sum 5 - 1 - 6 - Meghan Gallacher 6,008 4,549 Pension Lump Sum 2 - 1 - 3 - Louise Roarty - - Pension - - - Lump Sum - - - Kenneth Duffy 4,877 5,474 Pension Lump Sum 2 - - - 2 - Angela Campbell 4,877 5,474 Pension Lump Sum 2 - - - 2 - Alex McVey 4,292 4,817 Pension Lump Sum 2 - - - 2 - Alexander Watson - 6.049 Pension Lump Sum 2 - - - 2 - Total 91,067 104,507 90 15 105 Page 147 of 418
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b. Pension Benefits of Council Senior Employees Name In-year pension contributions Accrued pension benefits For year to 31 March 2021 For year 31 March 2022 As at 31 March 2021 Movement in Year As at 31 March 2022 £ £ £000 £000 £000 Desmond Murray 32,705 37,472 Pension Lump Sum 54 62 4 - 58 62 Robert Steenson 26,192 287,640 Pension Lump Sum 66 111 6 1 72 112 Elaine Kemp 17,303 19,288 Pension Lump Sum 34 48 2 1 36 49 Katrina Hassell 17,670 19,270 Pension Lump Sum 43 74 2 1 45 75 Fiona Whittaker 17,687 19,306 Pension Lump Sum 6 - 3 - 9 - Stephen Penman 17,687 19,306 Pension Lump Sum 20 - 2 - 22 - Ross McGuffie 19,519 21,291 Pension Lump Sum 8 - 2 - 10 - Derek Brown 25,806 28,375 Pension Lump Sum 15 - - - - - Alison Gordon 17,687 19,303 Pension Lump Sum 29 25 2 0 31 25 Archie Aitken 17,687 19,306 Pension Lump Sum 40 60 3 1 43 61 Ken Adamson 12,883 14,152 Pension Lump Sum 30 46 2 - 32 46 Total 222,826 504,709 771 32 803 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. Robert Steenson has been credited with an additional period of service and a payment of £259,415 was made to the pension fund. c. Pension Benefits of Council’s Subsidiary Bodies Senior Employees Name In-year pension contributions Accrued pension benefits For year to 31 March 2021 For year 31 March 2022 As at 31 March 2021 Movement in Year As at 31 March 2022 £ £ £000 £000 £000 David Baird Kenneth McDonald Murray Collins Jillian Ferrie 7,548 2,827 25,123 15,410 - 9,573 24,328 2,204 Pension Lump Sum Pension Lump Sum Pension Lump Sum Pension 26 41 1 - - - 37 - 1 - - - - - 2 - - - Emma Walker 3,514 - Lump Sum Pension Lump Sum 58 26 26 - - - - - - Total 54,422 36,105 215 1 2 Page 148 of 418
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5. Exit Packages North Lanarkshire Council terminated the contracts of a number of employees in 2020/21 and 2021/22 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. • 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 2021/22 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 24 - - - 24 £20,001-£40,000 5 135 - 5 - 140 £40,001-£60,000 6 258 - 70 - 328 £60,001-£80,000 3 185 - 32 - 218 £80,001-£100,000 2 138 - 31 - 169 £100,001-£150,000 9 427 20 420 239 1,105 £150,001-£200,000 2 76 11 210 88 384 £200,001-£250,000 1 23 7 131 76 236 £250,001-£300,000 1 19 - 114 139 272 £550,001-£600,000 1 74 27 259 210 569 36 1,360 66 1,271 750 3,447 Comparative Exit Packages 2020/21 Banding Employees Redundancy Lump Sums CAY Lump Sums Strain Costs Estimated CAY Liabilities Total Exit Package Costs No. £000 £000 £000 £000 £000 £0-£20,000 5 71 - - - 71 £20,001-£40,000 18 546 - 15 - 561 £40,001-£60,000 11 437 4 78 27 546 £60,001-£80,000 8 240 7 240 54 541 £80,001-£100,000 1 33 - 65 - 98 £100,001-£150,000 9 204 47 422 514 1,187 £150,001-£200,000 £200,001-£250,000 4 2 82 51 36 14 303 166 317 256 738 487 £250,001 £300,000 - - - - - - £550,001 £600,000 - - - - - - 58 1,664 108 1,289 1,168 4,229 Des Murray Councillor Jordan Linden Chief Executive Council Leader Page 149 of 418
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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 Head of Financial Solutions 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 the Coronavirus (Scotland) Act, 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 Jordan Linden Council Leader The Head of Financial Solutions Responsibilities The Head of Financial Solutions 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 Head of Financial Solutions 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 Head of Financial Solutions 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 2022, and its income and expenditure for the year ended 31 March 2022. Elaine Kemp, CPFA Head of Financial Solutions Page 150 of 418
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1. Scope of responsibility 1.1 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. 1.2 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. 1.3 To maintain compliance in terms of ensuring good governance and delivering continuous improvement, 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) published by Chartered Institute of Public Finance and Accountancy (CIPFA) in association with Society of Local Authority Chief Executives (SOLACE). 1.4 To ensure its good governance arrangements are sound and the highest standards are met, the council has set out its commitment to the national principles of good governance by determining its own governance structure (local code) underpinned by these principles. This local code is set out in the Strategic Governance Framework. 1.5 In discharging these duties Chief Officers and Elected Members are responsible for implementing the council’s governance arrangements and ensuring the local code, the Strategic Governance Framework, is assessed on an annual basis to ensure ongoing effectiveness and compliance. 1.6 In this respect, the council has arrangements in place through the Corporate Management Team to ensure appropriate and regular oversight, management, and reporting at a strategic level to support delivery of The Plan for North Lanarkshire and Programme of Work. A standing agenda item for governance and risk further demonstrates the commitment to ensuring effective corporate governance arrangements are in place. As part of their annual evaluation process of the Strategic Governance Framework and supporting review programme, the CMT is also responsible for identifying improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement. 1.7 Independent and objective assurances are provided by Internal Audit whose function is 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). 1.8 Internal Audit activity is planned to enable an independent opinion to be given by the Head of Audit and Risk each year 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. 1.9 The purpose of the 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), 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. In this respect, the Panel is responsible for providing independent review of the council's governance, risk management, performance, and control frameworks, and overseeing the financial reporting and annual governance processes. It also oversees the council's internal and external audit arrangements, helping to ensure efficient and effective assurance arrangements are in place. Page 151 of 418
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1.10 This statement also covers the organisations consolidated in the council’s Group Accounts. 2. Strategic Governance Framework 2.1 In February 2020, the Audit and Scrutiny Panel approved the council’s Strategic Governance Framework as the council’s local code of governance aligned to the national Delivering Good Governance in Local Government: Framework. This sets out the elements and mechanisms which form the council’s local code of governance and demonstrates North Lanarkshire Council’s commitment to the principles of good governance. 2.2 The Strategic Governance Framework is one of six inter-related corporate frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and the Framework for Demonstrating Improved Outcomes for Communities) which is key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work, while ensuring each stage of delivery towards achieving the overall ambitions is appropriately planned, guided, implemented, and governed. 2.3 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 at all times for completeness and to raise awareness of the role of good governance in delivering the strategic ambition through the Programme of Work. 2.4 The Strategic Governance Framework outlines the elements and mechanisms in place to ensure appropriate oversight and governance of The Plan for North Lanarkshire and supporting Programme of Work and enable the council to monitor the delivery of its ambitions while ensuring arrangements for corporate governance, risk management, and internal financial controls are sound. This is based on the following: • Identifying and setting out the council’s long-term strategic ambition and priorities in The Plan for North Lanarkshire and ensuring the vision for inclusive growth and prosperity for all is embedded throughout all other policy statements agreed by the council as well as all strategic management, service delivery, and corporate governance approaches. • Establishing the six inter-related corporate frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and the Framework for Demonstrating Improved Outcomes for Communities) and ensuring these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work through a regular review and refresh programme. • Standing Orders that allow the council to delegate decision making to committees, sub-committees, or officers and sets out the rules which 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. • 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 North Lanarkshire Council funds. Compliance with these regulations ensures that public 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. Page 152 of 418
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• The Financial Strategy which - as the overarching framework that establishes the financial strategies and policies to ensure effective financial governance, planning, and management - also sets out the responsibility for safeguarding public funds within the council and the role of the Section 95 Officer. The strategies and policies covered by the Financial Strategy include the Capital Strategy, Treasury Management Strategy, Revenue Budget Strategy, and the Medium-Term Financial Plan. • A Risk Management Strategy with arrangements that reflect the council’s strategic ambition at a corporate, service, and project level. A key part of the system of internal control, the council’s risk management arrangements are designed to identify, assess, prioritise, and mitigate risks which impact on achievement of the council’s priorities. These arrangements are designed to enable the council to perform well, to manage risk effectively, and to minimise any potential impacts on service delivery and the achievement of planned outcomes. • 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. • An Anti-Fraud Policy and Fraud Response Plan which sets out the council’s expectations (which 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 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 Corporate Management Team with a supporting meetings structure comprising service Senior Management Team meetings, and Operational Management Team meetings to cascade the context, deliverables, and accountabilities and ensure consistency of message in the vision set out in The Plan for North Lanarkshire and the delivery required through the Programme of Work. All Heads of Service are members of the CMT; this includes those Heads of Service 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 that aims to enable performance to be measured and assessed at three levels within the council and includes target setting and service and statutory reporting in line with an annual schedule. • 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 by management and Elected Members. • A range of programme Boards and working groups aligned to the delivery of specific Programme of Work items, e.g. Strategic Capital Delivery Group, DigitalNL, Hub Delivery Programme Board, and Data Governance. • An Information Governance Policy Framework, comprising policies in terms of records and information management, data protection, information handling and classification, information risk, and information 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 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. Page 153 of 418
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• Publicly available complaints and freedom of information procedures with management, monitoring, and reporting arrangements. • A range of employment and other policies and the associated guidance documents and forms which promote and support ethical behaviour and standards of conduct by employees, along with an employee Performance Review and Development (PRD) process, and access to a range of employee and Elected Members’ training and development programmes and opportunities through LearnNL. • 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 their Annual Audit Report (AAR) process and a range of external audit and inspection bodies. 3. Review of effectiveness of governance arrangements 3.1 The Annual Governance Statement has been prepared with evidence gathered from various different sources to ensure that it properly reflects the effectiveness of the council’s arrangements during 2021/22. The information gathered to inform the evidence base is summarised in paragraphs 3.1.1 to 3.1.6 below. 3.1.1 Heads of Service have reviewed the effectiveness of governance arrangements within their area of responsibility by completing a Certificate of Assurance and updating a 75 point checklist covering: the control environment, risk management, business planning / information / reporting, financial control processes, project management, monitoring and corrective action, human resources, arm’s length bodies, and assessing whether key controls have been applied during 2021/22. • Through this process Heads of Service have confirmed corporate governance arrangements and financial controls in their area of responsibility have been, or are, working well and there are no other significant matters arising which would require to be raised specifically in the Annual Governance Statement. 3.1.2 The council’s seven arm’s length external organisations (ALEOs) have also completed a Certificate of Assurance and updated the accompanying 58 point checklist to support the preparation of the council’s statements on corporate governance and internal financial control for year ending 31 March 2022. • 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, or are, working well and there are no other significant matters arising which would require to be raised specifically in the council’s Annual Governance Statement. 3.1.3 Compliance with four specific CIPFA statements. (1) The CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). To enable the Head of Audit and Risk to fulfil his role in this respect, the Corporate Management Team are 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 has undergone an annual review and refresh process in order to identify how the effectiveness of the council’s governance arrangements has been monitored and evaluated in the year) and which was endorsed by the Corporate Management Team at its meeting in June 2022. In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Page 154 of 418
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Audit Charter, the Head of Audit and Risk has provided an annual opinion on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control”. The Corporate Management Team considered and noted the Internal Audit annual report 2021/22 and annual opinion from the Head of Audit and Risk on 7th June 2022. This report stated 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 2021/22 states that it is the opinion of the Head of 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 2022”. (2) CIPFAs 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 2021/22 the purpose of the Audit and Scrutiny Panel was 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” and its activities included providing an “independent review of the council's governance, risk management, performance, and control frameworks and oversees the financial reporting and annual governance processes” - as set out in the Scheme of Administration (December 2019). (3) 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. In this respect the council has a number of policies and procedures in place as noted below: • Corporate Anti-Fraud Policy and Response Plan (updated in June 2017, review scheduled to be undertaken during 2022/23). • Whistleblowing Procedures (update approved in March 2022). • Gifts and hospitality policy for employees (incorporated into the Employee Code of Conduct in 2018) with a register that is updated every six months. • Employee Code of Conduct (update approved in March 2021). • Code of Conduct for Chief Officers (updated in November 2017, review scheduled to be undertaken during 2022/23). • Information Security Policy (update approved in June 2021). The identification of risks is carried out in line with the council’s Risk Management Strategy and through the risk for serious organised crime, fraud, and corruption which sits within the Corporate Risk Register. The Head of Legal and Democratic Solutions (the council’s Monitoring Officer) is the identified lead for this risk. The CIPFA statement also requires responsibility to be acknowledged. In this respect the Internal Audit annual report 2021/22 from the Head of 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 anti-fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Head of Service with recommendations made which are designed to address any weaknesses identified. Such work is reported to the Audit and Scrutiny 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 2021/22 from the Head of Audit and Risk has confirmed that “All audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. I am also pleased to be able to report that there were no material frauds or irregularities identified in 2021-22 that I require to bring to your attention”. Page 155 of 418
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(4) 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 Head of Audit and Risk (referenced above). 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 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. 3.1.4 Various self-evaluation exercises have been undertaken by the council as part of the governance and performance management arrangements. This has been undertaken in line with the refreshed Strategic Self-Evaluation Framework and rolling review programme which were approved by the Audit and Scrutiny Panel in September 2021. During 2021/22 five self-evaluation exercises were completed in terms of: • Compliance with the CIPFA Financial Management (FM) Code. This self-evaluation concluded that the council’s financial management practices comply with all aspects of the CIPFA FM Code with an average overall rating of 98% from the assessment team in terms of strongly agreeing or agreeing the extent of compliance across all of the 17 financial management standards. This is supported by a significant bank of evidence collected through a desktop exercise and substantiated by the assessment team which comprised members of the Corporate Management Team. • Reviewing the adequacy and effectiveness of the revised Corporate Management Team arrangements including how well it operates as a vehicle for monitoring and scrutinising progress implementing The Plan for North Lanarkshire and individual Programme of Work items. This self-evaluation identified that the Corporate Management Team has a clear vision and effective leadership with a sound approach that provides a clear direction for its work. In terms of deployment and assessment and review, it was considered that the new arrangements had not yet had the time to be embedded fully. Notwithstanding this, the evidence suggests there is room for improvement in terms of ensuring that the arrangements work effectively in practice and are implemented to their full potential. As such, a number of improvement actions (with responsibilities and timelines) have been agreed for implementation during 2022/23. • Risk governance arrangements in respect of DigitalNL. This self-evaluation supported the annual review of the DigitalNL Programme Risk Register and, while focusing on both the risk management arrangements and the risks themselves for the DigitalNL programme, it also considered the inter-relationships of associated programme risks across the three levels in the organisation (project, service, corporate). The findings from the self-evaluation exercise were reported to the Transformation and Digitisation Committee in November 2021. One improvement action was identified - this was to consider the inter-connectedness of the DigitalNL programme risks with those on the Corporate Risk Register and the Business Solutions Service Risk Register to ensure risks are managed at the appropriate level in the organisation, and the mitigating actions and controls are aligned and implemented accordingly. • Reviewing whether the arrangements for the Data Governance Board (DGB) adequately contribute to the achievement of the council’s vision as detailed in the Roadmap. Undertaken at a time that followed changes to the membership of and arrangements for the DGB, this self-evaluation identified two areas requiring improvement for which an action plan has been agreed by the Board. These improvement actions focus on (a) those which require to be considered within the context of the efficient operation of the DGB, and (b) those which require to be aligned to the combined Action Plan for the Board (which comprises the Information Governance Action Plan and Data and Information Management Strategic Roadmap work packages) to avoid any duplication and ensure a fully integrated approach to improvement. • The effectiveness of current arrangements for the North Lanarkshire health and social care IJB and how well the Board meets its intended outcomes. Findings from this self- Page 156 of 418
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evaluation exercise demonstrate the extent of the positive results and good practice examples identified by the assessment team. Only three areas for improvement were identified and these aim to further strengthen existing arrangements and add value to existing practices, rather than fill any gap or address any significant issue in terms of effectiveness. Findings from this exercise also serve to reassure the new members of the IJB (both Elected Members and executive members) of the effectiveness of the current arrangements for the Board and its supporting governance, and sets out the priorities for improvement in this respect. 3.1.5 The evidence has also included an annual review and refresh of the council’s Strategic Governance Framework. In this respect: • An annual review process is in place to fulfil the requirements of the national Delivering Good Governance in Local Government: Framework. This process also sets out the role of the Chief Officers and Elected Members who are responsible for implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. The annual review and update of the Strategic Governance Framework was endorsed by the Corporate Management Team at their meeting in June 2022 in line with their role to also identify any improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement activity. • In line with the annual review process, each of the elements and mechanisms within the Strategic Governance Framework have been reviewed with updates made as required to the relevant documentation and hyperlinks, as well as the review timeframe and date of next update, and the assessment of the current position (which includes the corresponding RAG status). This process ensures all elements and mechanisms are as up to date as they require to be while providing a method by which to identify and prioritise items requiring to be reviewed and updated further. • An Internal Audit on Corporate Governance in March 2022 cited the formal assessment process now in place through the Strategic Governance Framework and its accompanying review programme as good practice. It was also cited that there are now “formal and robust arrangements” in place to ensure that such reviews are undertaken on an annual basis. • The Internal Audit on Corporate Governance 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 and effective”. 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 undertaken of Principles A and B”. 3.1.6 Comments made by the external auditors and other audit and inspection bodies, feedback from Elected Members and committees in their scrutiny role, and issues considered by the Audit and Scrutiny Panel. 4. Continuous improvement 4.1 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, service delivery, and corporate governance approaches across the council. 4.2 The Programme of Work process (established in 2019) provides a clear roadmap for work across council services and with partners. Directing policies and plans to support delivery of The Plan for North Lanarkshire, the Programme of Work is therefore instrumental in bringing together the elements that support strategic planning, local development, enterprise activities, and community Page 157 of 418
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investment in a cohesive manner. 4.3 Sitting alongside this - 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 2022. The supporting review programme ensures each of the strategies, policies, and plans are up to date, reviewed and updated at an appropriate interval, and reported to the relevant committee. 4.4 The fourth annual iteration of the Programme of Work (for 2022/23) was approved by the Policy and Strategy Committee in March 2022. This reflects the changes required to deliver on the long- term ambition and the broad range of innovative and transformative programmes of work and projects required in order to maintain services for residents in local communities which are efficient and effective, while targeting resources towards those individuals in the most vulnerable situations and ensuring value for money. 4.5 The council has long since recognised that it does not have the luxury of a traditional once and done approach to strategic planning and change and the Programme of Work has enabled a recurring and dynamic approach in this respect. It has enabled delivery of the long-term vision to be informed by an annual strategic planning process that is influenced by national policy changes and new developments which impact on the achievement of the vision and which require due consideration in future strategies, policies, plans, and programmes of work. However, the considerable challenges that remain across North Lanarkshire - as demonstrated by the latest performance results reported to the Policy and Strategy Committee in March 2022 - means that an even greater focus is required to escalate the pace and depth of change in order to maximise positive outcomes for the people and communities of North Lanarkshire. As such, a commitment has been made to ensure further work is undertaken during 2022/23 to fundamentally evaluate activities undertaken, resources expended, and results achieved against the direction of travel in order to assess the impact towards achieving The Plan for North Lanarkshire’s long-term vision of inclusive growth and prosperity for all. 4.6 Key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately planned, guided, implemented, and governed) are six inter-related corporate frameworks: • Strategic Policy Framework • Strategic Governance Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities 4.7 To ensure these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work, all are on an annual 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. 4.8 The Strategic Governance Framework has been developed taking into account the local environment within which the council operates. 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 Page 158 of 418
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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 programme and 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. 4.9 The annual review process now established through the Strategic Governance Framework ensures that the council’s governance arrangements are regularly assessed for ongoing effectiveness within the context of The Plan for North Lanarkshire. 4.10 Following publication of the Accounts Commission’s Best Value Assurance Report (BVAR) for North Lanarkshire Council in May 2019, updates on implementation of the eight recommendations for improvement were reported to the Policy and Strategy Committee in September 2019 and again in March 2020. The report in March 2020 consolidated the eight improvement actions within the Programme of Work to strengthen a corporate and integrated approach to improvement that supports delivery of The Plan for North Lanarkshire. The external auditors Annual Audit Report (AAR) for 2020/21 (reported to the Audit and Scrutiny Panel in December 2021) concluded that four of the improvement actions were now complete, and noted good or reasonable progress was being made regarding the remaining four. 4.11 During 2021/22, the COVID-19 pandemic continued to impact on the council’s delivery of planned day to day activities and achievement of strategic priorities, albeit to a lesser extent than the previous year. The impact of this is also recognised in the annual audit opinion from the Head of Audit and Risk. In line with the guidance set out by the Scottish Government, a COVID Operating Model was approved at the Council meeting in March 2022. This provides a template as to how the council will operate over the next six months in a manner which recognises the ongoing risks associated with the pandemic, sets out the routine protection measures to be adopted across all council facilities, and allows for delivery of all council services in a manner more reflective to what existed pre-pandemic. 4.12 In line with the commitment to review the new hybrid working model (approved at Committee in December 2021), there will also be a review of the COVID Operating Model within a similar timeline. The purpose of this will be to reflect on any issues arising through its implementation and to have regard to any change in national policy which is likely to be kept under review over the same time period. 4.13 Following the decision taken by the Policy and Strategy Committee at its meeting in January 2020 the insourcing of culture, sport and leisure services was effective from 1 April 2021, under the new, focussed, and integrated Active and Creative Communities (ACC) team. 4.14 Six monthly reports during 2021/22 have provided the Audit and Scrutiny Panel with oversight and assurance of governance, financial governance, and risk management arrangements within the council’s Arm’s Length External Organisations (ALEOs). The reports have also highlighted where Covid has impacted on company operations, including the safeguards that were put in place during the pandemic to maintain service delivery and ensure safe working practices and the recovery strategies developed to resume service delivery as Covid restrictions were lifted. 5. Current year issues arising from Internal Audit activity during 2021/22 5.1 In his Internal Audit annual report for 2021/22, presented to the Chief Executive and Corporate Management Team in June 2022 the Head of Audit and Risk provided an overview of the activities of the Internal Audit section for the year 2021/22. 5.2 This included highlights of issues arising from Internal Audit activity during the year. In this respect, the Head of Audit and Risk commented on the following: Page 159 of 418
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• A small number of audit assignments reported during 2021/22 which offered only limited assurance. In all cases, management committed to a range of relevant improvement actions, some of which have already been completed. In this respect Internal Audit will continue to monitor progress on these issues during 2022/23 to provide senior management and the Audit and Scrutiny Panel with further assurance that relevant key controls are operating effectively. • The results from detailed Internal Audit work examining the council’s corporate governance arrangements which suggest that compliance with the requirements of the corporate governance framework adopted by the council continued to be positive with no significant weaknesses or areas of concern highlighted. • Internal Audit work which suggests that despite significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council. • All 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. There were no material frauds or irregularities identified in 2021/22 that required to be brought to the attention of the Corporate Management Team. • The ongoing need for the council to continue to respond to challenges arising from the public health emergency but there was less direct pressure on governance and internal controls than in 2020/21 when the council had to transition very quickly to significantly different ways of operating with consequential impacts on governance, internal control, and risk management arrangements. • While there are no issues that require the Head of Audit and Risk to quality his annual opinion, there are a small number of areas highlighted which will continue to be the focus of future audit coverage: - Programme of Work reports to committee - which are considered not to always easily allow elected members to monitor and/or assess progress against plans (timescales and budgets). Similarly, there is currently no mechanism to easily allow senior management to review progress across the range of Programme of Work activities. Management has previously committed to improving the ability of key stakeholders to monitor the progress of major projects / programme of work activities. - The Strategic Performance Framework - supportive of the approach adopted, Internal Audit recognises that implementation of effective, timely, and regular performance reporting on key strategic and operational performance measures to the Corporate Management Team and Service Committees has been significantly impacted over the last two years due to the need to respond to, and prioritise resources as a result of, the pandemic. - Current and future operating model - and the linked planned developments impacting upon workforce, digital transformation, service re-design, assets, and governance and how these actions are managed and progressed and the extent to which these contribute towards the achievement of the council’s ambitions. 5.3 Despite the challenges presented by the pandemic and notwithstanding the results of some specific individual audit assignments, overall the Head of Audit and Risk reported that he was satisfied that the council’s internal control and governance arrangements remained reasonably robust throughout 2021/22. 6. Previous year issues - 2020/21 6.1 In his Internal Audit annual report for 2020/21 the Head of Audit and Risk provided an overview of the activities of the Internal Audit section for that year. While this included highlights of a number of the more significant issues which arose from the work undertaken by Internal Audit during the year, none of these required actions which carried forward into the following year or which have not already been identified in paragraph 5.2 above. 7. Certification 7.1 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 Page 160 of 418
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be monitored and reported as part of the next annual review. 7.2 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. Des Murray Councillor Jordan James Linden Chief Executive Leader of the Council Page 161 of 418
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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. 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. 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. Page 162 of 418
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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 163 of 418
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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 164 of 418
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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_2022_00125 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 166 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref: KA/ASP/September22 Date 08/09/22 External Audit – Annual Plan 2021-22 From: Ken Adamson, Head of Audit and Risk E-mail: adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary The purpose of this report is to enable the Council’s appointed external auditors, Audit Scotland, to present to the Panel a document setting out their planned audit activities and how they intend to discharge their responsibilities, as laid out in Audit Scotland’s Code of Audit Practice and relevant International Standards on Auditing, for the audit of the Council for the year-ending 31 March 2022. The external auditors will speak to the Panel about their plan at the meeting and highlight to members any issues arising that they wish to bring to the Panel’s attention. Recommendations The Panel is requested to invite Audit Scotland to comment on their planned audit approach and to note the work proposed in undertaking the 2021-22 audit of the Council. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 5 Page 167 of 418
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1. Background 1.1 The Accounts Commission appointed Audit Scotland as the Council’s external auditor for the five-year period from 2016-17. As a result of the pandemic impacting on the process for new appointments and a desire to achieve continuity, all local government audit appointments were extended nationally by the Accounts Commission in October 2020 for an additional year and will now conclude with finalisation of the 2021-22 audits. 1.2 Audit Scotland’s Code of Audit Practice and International Standards on Auditing stipulate those areas to be examined and expected outputs to be produced by the external auditors require to be outlined each year in their annual planning document. 2. Key issues arising 2.1 The attached document produced by Audit Scotland outlines their planned activities and key expected audit outputs for the audit of the Council for the year ending 31 March 2022. Core elements of the work include • providing an audit opinion on the Council’s 2021-22 financial statements and those of relevant registered charities administered by the Council; • undertaking and reporting on interim audit fieldwork reviewing the Council’s accounting procedures, relevant financial systems and key corporate governance arrangements; and • work associated with the wider dimensions of public sector audit including considerations relating to value for money, best value, financial sustainability and financial management. 2.2 Panel members should note that good professional practice requires the external auditor to communicate and discuss planned external audit activity with the senior management of a body and with those elected members charged with governance matters, but it is for the external auditor alone to determine the work considered necessary by him/her to fulfil his/her responsibilities. 3. Measures of success 3.1 External audit reports annually to the Panel on its work. The Council seeks to achieve an unqualified opinion on its financial statements and positive comments (or the absence of critical comments) in respect of those wider aspects considered by the external audit process. 4. Supporting documentation Appendix 1 Audit Scotland Annual Audit Plan 2021-22 Ken Adamson, Head of Audit and Risk Page 168 of 418
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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 ☒ 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 ☒ Page 169 of 418
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Prepared for North Lanarkshire Council April 2022 North Lanarkshire Council Annual Audit Plan 2021/22 Page 170 of 418
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North Lanarkshire Council Annual Audit Plan 2021/22 | 2 Contents Introduction 3 Financial statements audit planning 5 Audit dimensions and Best Value 11 Reporting arrangements, timetable, and audit fee 14 Other matters 17 Page 171 of 418
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Introduction | 3 Introduction Summary of planned audit work 1. This document summarises the work plan for our 2021/22 external audit of North Lanarkshire Council. The main elements of our work include: • evaluation of the key controls within the main accounting systems • an audit of, and provision of an Independent Auditor’s Report • an audit opinion on regularity and other statutory information published within the annual report and accounts including the Management Commentary, the Governance Statement and the Remuneration Report • consideration of arrangements in relation to the audit dimensions: financial management, financial sustainability, governance and transparency and value for money that frame the wider scope of public sector audit • consideration of Best Value arrangements • providing assurance on the Housing Benefit Subsidy Claim, Non- Domestic Rates Return and the Whole of Government Accounts (WGA) return • review North Lanarkshire Council’s arrangements for preparing and publishing statutory performance information • review North Lanarkshire Council’s participation in the National Fraud Initiative. Impact of Covid-19 2. The coronavirus disease (Covid-19) pandemic has had a significant impact on public services and public finances, and the effects will be felt well into the future. 3. The Auditor General for Scotland, the Accounts Commission and Audit Scotland continue to assess the risks to public services and finances from Covid-19 across the full range of our audit work, including annual audits and the programme of performance audits. The well-being of audit teams and the delivery of high-quality audits remain paramount. Changes in our approach may be necessary and where this impacts on annual audits, revisions to this Annual Audit Plan may be required. Page 172 of 418
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Introduction | 4 Adding value 4. We aim to add value to the council through our external audit work by being constructive and forward looking, by identifying areas for improvement and by recommending and encouraging good practice. In so doing, we will help North Lanarkshire Council promote improved standards of governance, better management and decision making and more effective use of resources. Additionally, we attend meetings of the Audit and Scrutiny Panel and actively participate in discussions. Respective responsibilities of the auditor and North Lanarkshire Council 5. The Code of Audit Practice (2016) sets out in detail the respective responsibilities of the auditor and North Lanarkshire Council. Key responsibilities are summarised below. Auditor responsibilities 6. Our responsibilities as independent auditors are established by the Local Government (Scotland) Act 1973 and the Code of Audit Practice (including supplementary guidance) and guided by the Financial Reporting Council’s Ethical Standard. 7. Auditors in the public sector give an independent opinion on the financial statements and other information within the annual report and accounts. We also review and report on the arrangements within the audited body to manage its performance, regularity and use of resources. In doing this, we aim to support improvement and accountability. North Lanarkshire Council responsibilities 8. The council is responsible for maintaining accounting records and preparing financial statements that give a true and fair view. 9. Also, the council has the primary responsibility for ensuring the proper financial stewardship of public funds, compliance with relevant legislation and establishing effective arrangements for governance, propriety and regularity that enable them to deliver their objectives. Managing the transition to 2022/23 audits 10. Audit appointments are usually for five years but were extended to six years due to Covid-19. 2021/22 is the final year of the current appointment and we will work closely with our successors to ensure a well-managed transition. Page 173 of 418
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Financial statements audit planning | 5 Financial statements audit planning Materiality 11. Materiality is an expression of the relative significance of a matter in the context of the financial statements as a whole. We are required to plan our audit to determine with reasonable confidence whether the financial statements are free from material misstatement. The assessment of what is material is a matter of professional judgement over both the amount and the nature of the misstatement. Materiality levels for the 2021/22 audit 12. We assess materiality at different levels as described in Exhibit 1. The materiality values for North Lanarkshire Council are set out in Exhibit 1. Exhibit 1 2021/22 Materiality levels for North Lanarkshire Council Materiality Amount Group Planning materiality – This is the figure we calculate to assess the overall impact of audit adjustments on the financial statements. It has been set at 1% of gross expenditure for the year ended 31 March 2022 based on the latest audited financial statements for 2020/21. £14 million £14 million Performance materiality – This acts as a trigger point. If the aggregate of errors identified during the financial statements audit exceeds performance materiality, this would indicate that further audit procedures should be considered. Using our professional judgement, we have assessed performance materiality at 50% of planning materiality. £7 million £7 million Reporting threshold (clearly trivial) – We are required to report to those charged with governance on all unadjusted misstatements more than the ‘reporting threshold' amount. £250,000 £250,000 Source: Audit Scotland Page 174 of 418
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Financial statements audit planning | 6 Significant risks of material misstatement to the financial statements 13. Our risk assessment draws on our cumulative knowledge of North Lanarkshire Council, its major transaction streams, key systems of internal control and risk management processes. Also, it is informed by our discussions with management, meetings with internal audit, attendance at committees and a review of supporting information. 14. Based on our risk assessment process, we identified the following significant risks of material misstatement to the financial statements. These are risks which have the greatest impact on our planned audit procedures. Exhibit 2 summarises the nature of the risk, the sources of assurance from management arrangements and the further audit procedures we plan to perform to gain assurance over the risk. Exhibit 2 2021/22 Significant risks of material misstatement to the financial statements Significant risk of material misstatement Sources of assurance Planned audit response 1. Risk of material misstatement due to fraud caused by the management override of controls As stated in International Standard on Auditing (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. Owing to the nature of this risk, assurances from management are not applicable in this instance. • Assess the design and implementation of controls over journal entry processing. • 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 at the year-end and post-closing entries and focus on significant risk areas and transactions with related parties. • Consider the need to test journal entries and other adjustments during the period. • Evaluate significant transactions outside the normal course of business. • We will assess any changes to the methods and underlying assumptions used to prepare accounting estimates compared to the prior year. • Focussed testing of accounting accruals and prepayments. 2. Estimation in the valuation of land and buildings The council operates a five-year rolling programme of revaluations with whole asset classes Use of clearly defined methodologies and procedures will enable an assessment to be made to ensure the • Review the information provided to the external valuer to assess for completeness. • Evaluate the competence, capabilities, and objectivity of the professional valuer. • Complete a walkthrough of the valuation process to obtain an understanding of the process, Page 175 of 418
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Financial statements audit planning | 7 Significant risk of material misstatement Sources of assurance Planned audit response being valued once every five years. Per the Accounting Code of Practice, this is acceptable “provided that the carrying amount does not differ materially from that which would be determined using the current value at the end of the reporting period.” Last year the assessment of carrying value assets, based on a sample of school properties and review of housing properties indicated an understatement of £63.6 million, which was adjusted in the audited accounts. Leisure properties and open spaces are to be revalued in 2021/22. Major asset classes (school buildings and housing) have not been revalued for three and four years respectively. A new valuer was appointed from 2021/22. Management is required to assess the current values of other assets at the year end. There is a risk that the carrying valuer of assets not subject to valuations in 2021/22 will be materially misstated. carrying value of assets does not differ materially from that which would be determined using the current value at the end of the reporting period. including the methodologies and assumptions applied. • Review of reports from the valuer to confirm overall asset valuation movements. • Obtain an understanding of the management’s involvement in the valuation process to assess if appropriate oversight has occurred. • Examine management’s assessment of any assets not revalued in 2021/22 against evidence of changes in other revalued assets. • Test the reconciliation between the financial ledge and the property asset register. • Sample testing of individual asset valuations and lives. Source: Audit Scotland Page 176 of 418
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Financial statements audit planning | 8 15. As set out in International Standard on Auditing (UK) 240: The auditor’s responsibilities relating to fraud in an audit of financial statement, there is a presumed risk of fraud over the recognition of revenue. There is a risk that revenue may be misstated resulting in a material misstatement in the financial statements. We have considered the risk of fraud over income recognition (ISA 240). We also considered the risk of fraud over expenditure, as most public bodies are net spending bodies, and the risk of external fraud (in accordance with Practice Note 10 (Audit of Financial Statements and Regularity of Public Sector Bodies in the UK). 16. We have rebutted the presumption that a material risk exists, with the exception of management override, as noted above. This is on the basis that: • There are generally no incentives for staff to commit fraudulent financial reporting • Most income is provided by the Scottish Government and other public bodies and is easily verified • Most expenditure is in low-risk areas where individual transactions are well-controlled (for example salaried staff costs in a well-defined grading system) and individual transactions are relatively small in scale, with management or board approval required for material transactions • Evidence of external fraud from the National Fraud Initiative does not indicate material risks • Experience in the sector and of the audit of North Lanarkshire Council, including a review of past misstatements. 17. Our audit testing is directed towards testing significant and unusual transactions and towards assessing accounting estimates to address any residual risk, as part of our standard fraud procedures. We have not, therefore, incorporated specific work into our audit plan in these areas over and above our standard audit procedures. Other areas of audit focus 18. As part of our assessment of audit risks, we have identified other areas where we consider there are also risks of material misstatement to the financial statements. Based on our assessment of the likelihood and magnitude of the risk, we do not consider these to represent significant risks. We will keep these areas under review as our audit progresses. If our assessment of risk changes and we consider these risks to be significant, we will communicate this to management and those charged with governance and revise our planned audit approach accordingly. 19. The areas of specific audit focus are: • Valuation of the present value of promised retirement benefits and North Lanarkshire Council’s share of the pension asset/liability of Strathclyde Pension Fund. We will consider the reasonableness of actuarial estimates on material elements of the valuation and the accuracy of information provided to the actuary by the council. Page 177 of 418
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Financial statements audit planning | 9 • The accounting treatment and process for the in-sourcing of Culture and Leisure North Lanarkshire Limited (CLNL Ltd). CLNL Ltd was previously two separate subsidiaries of the council. Transactions have been processed through, and balances are still held, on a separate ledger to the council’s main accounting system. We will review the process and controls in place for transferring balances into the council’s financial ledger; review the accounting treatment at the year-end and include transactions and balances relating to CLNL Ltd in our sample testing. Group Consideration 20. As group auditors, we are required under International Standard on Auditing (UK) 600: Audits of group financial statements (including the work of component auditors) to obtain sufficient appropriate audit evidence on which to base our audit opinion on the group financial statements. 21. North Lanarkshire Council has a group which comprises component entities, including subsidiaries, associates, and joint ventures. The audits of the financial information of some of the components are performed by other auditors. We plan to place reliance on the work of the component auditors. We will obtain sufficient appropriate audit evidence in relation to the consolidation process and the financial information of the components on which to base our group audit opinion. We note that the council is currently procuring auditors for the North Lanarkshire Properties Limited subsidiary and at the time of writing no auditor is in place. Audit of the trusts registered as Scottish charities 22. Members of North Lanarkshire Council are sole trustees for the JC McNaught Poor Children’s Holiday Fund and the North Lanarkshire Council Educational Endowments trusts registered as Scottish charities. The preparation and audit of financial statements of registered charities is regulated by the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006. 23. The 2006 Regulations require charities to prepare annual accounts and require an accompanying auditor’s report where any legislation requires an audit. The Local Government (Scotland) Act 1973 specifies the audit requirements for any trust fund where some or all members of a council are the sole trustees. Therefore, a full and separate audit and independent auditor’s report is required for each registered charity where members of the council are sole trustees, irrespective of the size of the charity. Materiality levels for the 2021/22 audit of trusts registered as Scottish charities 24. Materiality levels for the various trusts are set out in Exhibit 3. Page 178 of 418
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Financial statements audit planning | 10 Exhibit 3 2021/22 Materiality levels for charitable trusts Charitable trust Planning Materiality Performance Materiality Reporting Threshold JC McNaught Poor Children’s Holiday Fund £74 (Based on 1% of audited 2020/21 net asset value) £67 (Based on 90% of planning materiality) £4 North Lanarkshire Council Educational Endowments trusts £203 (Based on 1% of gross expenditure) £183 (Based on 90% of planning materiality) £10 Source: Audit Scotland 25. There are no specific risks for these audits which we require to bring to your attention. Audit risk assessment process 26. Audit risk assessment is an iterative and dynamic process. Our assessment of risks set out in this plan may change as more information and evidence becomes available during the progress of the audit. Where such changes occur, we will advise management and where relevant, report them to those charged with governance. Page 179 of 418
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Audit dimensions and Best Value | 11 Audit dimensions and Best Value Introduction 27. The Code of Audit Practice sets out the four dimensions that frame the wider scope of public sector audit. The Code of Audit Practice requires auditors to consider the adequacy of the arrangements in place for the audit dimensions in audited bodies. Audit dimensions 28. The four dimensions that frame our audit work are shown in Exhibit 4. Exhibit 4 Audit dimensions Source: Code of Audit Practice 29. In summary, the four dimensions cover the following: • Financial management – financial management is concerned with financial capacity, sound budgetary processes and whether the control environment and internal controls are operating effectively. • Financial sustainability – as auditors, we consider the appropriateness of the use of the going concern basis of accounting as part of the annual Page 180 of 418
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Audit dimensions and Best Value | 12 audit. We will also comment on financial sustainability in the longer term. We define this as medium term (two to five years) and longer term (longer than five years). • Governance and transparency – governance and transparency is concerned with the effectiveness of scrutiny and governance arrangements, leadership, and decision-making and transparent reporting of financial and performance information. • Value for money – value for money refers to using resources effectively and continually improving services. Best Value 30. 2021/22 is the final year of the extended six-year approach to auditing Best Value in councils. Best Value work is integrated within the annual audit. It is to be assessed comprehensively over the period of the audit appointment, both through ongoing annual audit work and through discrete packages of work focussing on specific issues. Conclusions and judgements on Best Value will be reported through: • the Annual Audit Report for each council that will provide a rounded picture of the council overall. • an Annual Assurance and Risks Report that the Controller of Audit will provide to the Accounts Commission that will highlight issues from across all 32 council annual audit reports. • a Best Value Assurance Report (BVAR) for each council that will be considered by the Accounts Commission at least once over the period of the audit appointment. 31. BVARs will be considered by the Accounts Commission between February and September 2022 on the councils listed in Exhibit 5. Exhibit 5 2022 Best Value Assurance Reports Comhairle nan Eilean Siar Shetland Island Council Angus Council Moray follow-up Source: Audit Scotland Page 181 of 418
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Audit dimensions and Best Value | 13 32. The Best Value work planned this year will focus on following-up findings reported in North Lanarkshire Council’s Best Value Assurance Report in May 2019. We will assess progress on the pace and depth of continuous improvement and our findings will be reported through our Annual Audit Report. Audit dimension risks 33. Based on our risk assessment process, we have not identified any audit risk in respect of our wider dimensions work. 34. We will follow up on the recommendations we made in our 2020/21 Annual Audit Report and report progress in delivering agreed actions in our 2021/22 Annual Audit Report. Page 182 of 418
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Reporting arrangements, timetable, and audit fee | 14 Reporting arrangements, timetable, and audit fee Reporting arrangements 35. Audit reporting is the visible output for the annual audit. All Annual Audit Plans and the outputs, as detailed in Exhibit 7, and any other outputs on matters of public interest will be published on our website: www.audit-scotland.gov.uk. 36. Matters arising from our audit will be reported on a timely basis and will include agreed action plans. Draft management reports will be issued to the relevant officers to confirm factual accuracy. 37. We will provide an independent auditor’s report to the council and the Accounts Commission setting out our opinions on the annual report and accounts. We will provide North Lanarkshire Council and the Accounts Commission with an annual report on the audit containing observations and recommendations on significant matters which have arisen during the audit. 38. Exhibit 6 outlines the target dates for our audit outputs, and we aim to issue the independent auditor’s report by the statutory deadline of 31 October 2022. We acknowledge this will be challenging due to the ongoing pressures and uncertainties caused by Covid-19. The Audit and Scrutiny Panel meeting date in October 2022 has yet to be confirmed. Exhibit 6 2021/22 Audit outputs Audit Output Target date Audit and Risk Committee Date Annual Audit Plan 31/03/2022 Agreed by correspondence Independent Auditor's Report 31/10/2022 TBC Annual Audit Report 31/10/2022 TBC Source: Audit Scotland Page 183 of 418
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Reporting arrangements, timetable, and audit fee | 15 Timetable 39. To support an efficient audit, it is critical that the timetable for producing the annual report and accounts for audit is achieved. We have included a proposed timetable for the audit at Exhibit 7 that has been discussed with management. 40. Covid-19 has had a considerable impact on the conduct and timeliness of the audit. We recognise that it is in the best interests of public accountability to get the reporting of audited accounts back to pre-pandemic timelines. To this end, 2021/22 is a transition year with the reporting deadline brought forward by one month relative to the two prior years. We are identifying ways to work more efficiently to expedite the 2021/22 audits whilst at the same time maintaining high standards of quality. 41. We will continue to work in close partnership with management with clarity over timescales and the requirement for high quality unaudited accounts and supporting working papers. Progress will be discussed with management and finance officers over the course of the audit. We note that there have been changes to finance officers responsible for key areas of the financial statements. We will work closely with these officers and engage early to ensure any issues are identified promptly. Exhibit 7 Proposed annual report and accounts timetable Key stage Provisional Date Consideration of the unaudited annual report and accounts by those charged with governance 30 June 2022 (TBC) Latest submission date for the receipt of the unaudited annual report and accounts with complete working papers package. 30 June 2022 Latest date for final clearance meeting with the Director of Finance (or equivalent) 7 October 2022 (TBC) Issue of Letter of Representation and proposed Independent Auditor’s Report 14 October 2022 (TBC) Agreement of audited and unsigned annual report and accounts October 2022 (TBC) Issue of Annual Audit Report to those charged with governance. October 2022 (TBC) Signed Independent Auditor’s Report 31 October 2022 Source: Audit Scotland Page 184 of 418
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Reporting arrangements, timetable, and audit fee | 16 Audit fee 42. The proposed audit fee for the 2021/22 audit of the council is £540,526 (2020/21: £530,310). In determining the audit fee, we have taken account of the risk exposure of the council, the planned management assurances in place and the level of reliance we plan to take from the work of internal audit. 43. Where our audit cannot proceed as planned through, for example, late receipt of unaudited annual report and accounts, the absence of adequate supporting working papers or being unable to take planned reliance from the work of internal audit, a supplementary fee may be levied. An additional fee may also be required in relation to any work or other significant exercises out with our planned audit activity. Page 185 of 418
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Other matters | 17 Other matters Internal audit 44. International standards on Auditing (UK) 610: Considering the work of internal audit requires us to: • consider the activities of internal audit and their effect on external audit procedures; • obtain an understanding of internal audit activities to inform our planning and develop an effective audit approach that avoids duplication of effort; • perform a preliminary assessment of the internal audit function when there is scope for relying on internal audit work which is relevant to our financial statements' responsibilities; and • evaluate and test the work of internal audit, where use is made of that work for our financial statements responsibilities to confirm its adequacy for our purposes. 45. From our initial review of the internal audit plans, we do not plan to place formal reliance on internal audit’s work for our financial statements' responsibilities. For our wider audit responsibilities, we will consider the findings of internal audit across a range of work including: • council tax • payroll and • housing rents. Independence and objectivity 46. Auditors appointed by the Auditor General for Scotland or Accounts Commission must comply with the Code of Audit Practice and relevant supporting guidance. When auditing the financial statements, auditors must also comply with professional standards issued by the Financial Reporting Council and those of the professional accountancy bodies. These standards impose stringent rules to ensure the independence and objectivity of auditors. Audit Scotland has robust arrangements in place to ensure compliance with these standards including an annual ‘fit and proper’ declaration for all members of staff. The arrangements are overseen by the Director of Audit Services, who serves as Audit Scotland’s Ethics Partner. 47. The engagement lead (i.e., appointed auditor) for the council is Brian Howarth, Audit Director. Auditing and ethical standards require the appointed auditor to communicate any relationships that may affect the independence and Page 186 of 418
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Other matters | 18 objectivity of audit staff. We are not aware of any such relationships pertaining to the audit of North Lanarkshire Council. Quality control 48. International Standard on Quality Control (UK) 1 (ISQC1) requires a system of quality control to be established, as part of financial audit procedures, to provide reasonable assurance that professional standards and regulatory and legal requirements are being complied with and that the independent auditor’s report or opinion is appropriate in the circumstances. 49. The foundation of our quality framework is our Audit Guide, which incorporates the application of professional auditing, quality and ethical standards and the Code of Audit Practice (and supporting guidance) issued by Audit Scotland and approved by the Auditor General for Scotland. To ensure that we achieve the required quality standards, Audit Scotland conducts peer reviews and internal quality reviews. Additionally, the Institute of Chartered Accountants of Scotland (ICAS) have been commissioned to carry out external quality reviews. 50. As part of our commitment to quality and continuous improvement, Audit Scotland will periodically seek your views on the quality of our service provision. We welcome feedback at any time, and this may be directed to the engagement lead. Page 187 of 418
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Other matters | 19 North Lanarkshire Council Annual Audit Plan 2021/22 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 188 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No ☒approval ☐noting Ref KA/ASP/Sept22 Date 08/09/22 Internal Audit progress report From: Ken Adamson, Head of Audit and Risk E-mail: adamsonk@northlan.gov.uk Telephone 07939 280602 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 March 2022. While all Internal Audit reports completed in the period provided positive assurance, the report highlights the most significant issues arising from the completed audit work 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. In line with best professional practice and the Internal Audit Charter and associated reporting protocol, full copies of the relevant audit outputs highlighted in this report are also included in the meeting papers. 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. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 6 Page 189 of 418
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1. Background 1.1 The 2021-22 Annual Plan was approved by the Audit and Scrutiny Panel in June 2021. The Internal Audit Charter, most recently approved by the Panel in September 2021, requires that the results of Internal Audit’s work are periodically reported to CMT and the Panel. This report fulfils that expectation. 2. Report Audit reviews 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 March. These outputs were included in the 2021-2022 Internal Audit Plan. Work is currently underway on other assignments included in the 2022-23 Plan and this work will be reported to the Panel as it is completed. Table 1: Completed Internal Audit outputs in the period Subject Internal Audit Opinion 1. Enterprise Contract Reasonable assurance (Green-Amber) 2. City Deal Substantial assurance (Green) 3. Clyde Valley Waste Contract Substantial assurance (Green) 4. Business Continuity Planning Reasonable assurance (Green-Amber) 5. Risk Management Reasonable assurance (Green-Amber) 6. Supporting attendance Reasonable assurance (Green-Amber) 7. Investigation: Use of Credit Cards at ‘School A’ Not applicable 2.2 In addition to the above reports, a draft audit output has also been issued to management in respect of performance management. The findings, conclusions and recommendations in this draft report are still being discussed with management. Once finalised, this reports will be submitted to a future meeting of the Panel. 2.3 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. 2.4 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. The Panel should note that we have reviewed and refreshed our recommendation priority definitions with a move to High, Medium and Low categorisation (previously Red, Amber and Green) and updated the definitions to support the categorisation of audit recommendations. 2.5 This report excludes audit outputs produced for the North Lanarkshire IJB which are reported directly to its senior management team and audit committee. Page 190 of 418
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Commentary on completed planned ‘core’ Internal Audit work 2.6 The nature of Internal Audit exercises means that most reviews invariably find some scope for improvement, usually in the form of controls which are weak or only partially effective and, therefore, contain recommendations. I am pleased however, to be able to report that although we have identified a range of improvement actions and made a series of recommendations, all of the reports finalised in this period provided positive assurance. 2.7 Our work on the Enterprise Contract reflected on the current status of the project and considered the adequacy and effectiveness of the management arrangements in place, including the extent to which key elements of good project management, risk management and financial controls are in place. 2.8 We are satisfied that the governance arrangements in place are adequate and appear robust, and that the project is being managed in line with corporate expectations in a manner consistent with good practice. Financial control and risk management appear appropriately embedded in the governance of the project. 2.9 Despite our positive overall assessment of the project’s governance arrangements, it is recognised given the outcome of the ESCP procurement exercise, the scale of the Enterprise Project and the level of uncertainty around the market, that there remains a high level of risk to the successful delivery of the project, primarily due to potential issues around market failure and affordability. The Project Team and Board have recognised that market appetite remains a significant risk and continue to take action to try to mitigate this risk, predominantly through extensive market engagement and research. We also recognise that affordability will also be considered as part of the process of considering market responses to the Council’s proposals. 2.10 Although the outcome of recent market engagement does appear to indicate that the revised delivery model is more commercially attractive to potential bidders than the previous ESCP proposals, it is also recognised that there are limited markets/potential respondents for each of the two main activities for which bids are being sought and that current economic and general market volatility increases the risks of insufficient tender responses and/or tender responses which are not financially attractive. We consider that it is vital therefore that formal contingency plans are developed in response to the potential inability of the Council to be able to progress with part or all of the proposed project. I am pleased to confirm that management has responded positively to the recommendations contained within the report. 2.11 Our work on City Deal reviewed the adequacy and effectiveness of the Council's arrangements in respect of its participation in the Glasgow City Region (GCR) City Deal, including the extent to which the Council is adhering to key elements of the GCR City Deal Assurance framework with a focus on the processes surrounding the preparation and submission of grant claims, reviewing any relevant procurement/tendering arrangements and the appropriateness and effectiveness of the governance arrangements in place as they relate to the Council’s City Deal activities. 2.12 We are satisfied that the Council is complying with the GCR Assurance Framework 2019 and have categorised the audit as offering ‘substantial assurance’ as the control environment appears adequate and to have operated as intended with only a small number of minor discrepancies or areas for improvement identified. I am pleased to confirm that management has responded positively to the recommendations contained within the report. 2.13 Internal Audit is required to return an annual assurance statement to the Head of Audit at Glasgow City Council as the lead auditor for the GCR City Deal. Based on the results of this review and our other knowledge and understanding of the Council’s arrangements, we have returned an assurance statement for City Deal to Glasgow City Council Internal Audit which states that there are no significant matters that require to be raised which could have a material impact on the GCR Annual Assurance Statement for financial year 2021-2022. Page 191 of 418
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2.14 The Clyde Valley Waste Contract requires the ‘Lead Authority’s’ internal audit service to provide an annual statement of assurance regarding the project’s governance arrangements relating to payment processes and project monitoring arrangements to ensure these are compliant. The result of this review fulfils that requirement. 2.15 We have categorised the audit as offering ‘substantial assurance’ with a sound system of governance, risk management and internal controls in place which is consistent with the expectations placed upon the ‘Lead Authority’ as outlined in the contract and partnership documentation. We were also pleased to note that the CVWC Management Team (CMT) have discharged their obligations significantly as expected with appropriate arrangements in place for the monitoring of waste processing information, processing payments and monitoring the contractor’s performance. 2.16 Only a small number of issues of non-compliance and/or scope for improvement were identified and based on the results of this review, we have now returned an assurance statement to the Joint Steering Board which states that there are no significant matters that require to be raised which could have a material impact on the delivery of, or compliance with, the Project Agreement for 2021-2022. I am pleased to confirm that management has responded positively to the recommendations contained within the report. 2.17 The purpose of our work on Business Continuity Planning was to provide independent assurance on the extent of compliance across the Council with key corporate expectations. A particular focus was given to assessing the adequacy and effectiveness of the Council’s governance arrangements, policies and procedures in relation to business continuity planning including determining whether the Services have established business continuity plans and the extent to which these plans are being reviewed and tested; and assessing whether, where plans were invoked, these plans worked in line with expectations and any lessons learned were identified and communicated as appropriate. 2.18 We have categorised the results of work undertaken as part of this audit as offering ‘reasonable assurance’ meaning we consider that the Council has established adequate governance arrangements for business continuity planning and can demonstrate a track record of responding effectively to a range of ‘emergencies’. Although we were pleased to note that guidance notes and templates designed to assist Services in the preparation of business continuity (BC) and disaster recovery (DR) plans are in place, we have identified a need for improvements to the current framework for documenting individual Services’ BC/DR arrangements to enhance the quality and completeness of the corresponding plans, as at present there remains considerable variation in the depth and quality of plans being prepared by the Services. 2.19 Other areas for improvement are detailed at section 3 of the report and include that corporate and individual Services’ business continuity and disaster recovery arrangements would benefit from a more robust, formalised review process; and that formal testing of business continuity and/or disaster recovery arrangements needs to be undertaken consistently across the Council in line with corporate expectations. Once again, I am pleased to confirm that management has responded positively to the recommendations contained within the report. 2.20 The purpose of our work on Risk Management was to provide independent assurance that the Council has robust and effective risk management arrangements. The audit included a review of both corporate and Services’ arrangements for ensuring that all significant risks are identified, evaluated and controlled, risk registers have been prepared and are kept up-to-date, and appropriate arrangements are in place to review/monitor and report on risk. It also considered the extent to which management had taken action to address the recommendations contained in the previous Internal Audit report on this topic issued in September 2020. Page 192 of 418
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2.21 In line with the Internal Audit Charter and to ensure the independence of the Internal Audit function when reviewing an activity for which the Head of Audit and Risk has line management responsibility, this work was led by the Principal Auditor and planned and conducted without the involvement of the Head of Audit and Risk (who instead assumed the role of client during the audit process). 2.22 Overall, the report categorised the audit as offering ‘reasonable assurance’ meaning that Internal Audit consider that the Council’s risk management arrangements have continued to improve and embed since our last review. We are generally satisfied that these arrangements are being actively supported and promoted by senior management at both corporate and service level, and that risk management contributes towards the achievement of corporate objectives. We are also satisfied that there are adequate procedures in place at both corporate and Service levels for identifying and prioritising risks and identifying appropriate action to mitigate/manage those risks. Although at different stages of maturity, Services continue to improve and enhance their risk management arrangements. 2.23 We identified a number of other areas where we consider further management action is required and these are detailed in section 3 of the report and include the need for replacement and/or new corporate risks to be documented and assessed in line with the agreed timetable and the need to develop and implement a framework for monitoring compliance with the Risk Management Strategy to better facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services. Satisfactory management responses have been received to the issues and recommendations raised in the report. 2.24 Our work on Supporting attendance focused on the adequacy and effectiveness of the Council’s current arrangements for assessing compliance with expected procedures in relation to the management of sickness absence and on the robustness of relevant performance reporting. 2.25 Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’. We consider that the Council has put in place appropriate management arrangements to support compliance with the Supporting Attendance policy and for managing, monitoring and reporting sickness absences and that generally these arrangements are operating as expected. 2.26 We were pleased to note that the revised policy, supporting toolkits and eLearning module clearly set out the Council’s expected processes and that managers generally appeared aware of, and understood, their roles and responsibilities for complying with the policy. In addition, we were satisfied that there was appropriate support and advice available to managers via the Employee Relations team to manage/monitor individual absences and that absence levels/patterns were being actively monitored and reported to managers via Employee Relations and HR Business Partners. We did, however, identify a small number of areas where we consider that scope for improvement exists. These include that management needs to ensure that the policy is being effectively implemented in line with corporate expectations, that lessons learned/issues raised are acted upon/shared as appropriate and that its impact/effectiveness is regularly reviewed. We also considered that improvements are needed to the consistency and content of performance information presented to senior management and to ensure that process for preparing performance information is fully documented. 2.27 Satisfactory management responses have been received in response to the recommendations contained within the report. 2.28 Finally, one audit investigation report concluded in the period requires to be reported. This report was in respect of further work undertaken on corporate credit card use at School A. The need for this additional work arose during our earlier corporate review of credit and purchase cards on which we reported in late-2021. This highlighted several transactions, mainly relating to subscription services, at School A which we considered may not be in line with the relevant Council policy. Page 193 of 418
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2.29 Based on interviews with staff and information and records held within the school, we were unable to determine whether any of the benefits attached to the subscriptions have been utilised for personal use. However, our review has highlighted that the use of the credit card at School A is not adhering to many of the corporate expectations set out in the Policy and accordingly we recommended that Education and Families arrange for the relevant credit card be cancelled with immediate effect; and that a wider review be undertaken of the current use of credit cards within other schools with credit cards to establish whether there remains a valid business need for the remaining schools to continue to hold these cards. I am pleased to report that management have responded positively to the recommendations contained within the report. 2.30 There are no other issues arising from core Internal Audit work which I consider sufficiently significant to highlight to the Panel. Future follow-up reports will provide the Panel with information on the implementation, or otherwise, of all actions proposed by management in response to audit recommendations categorised as ‘High’ or ‘Medium’. 2.31 There are no other matters arising from areas of unplanned or ‘non-core’ work undertaken by Internal Audit in the period that I require to bring to your attention in accordance with the Internal Audit reporting protocol. Other Matters – Internal Audit Performance 2.32 In March 2021, the Panel were presented with a revised performance management framework for Internal Audit that was to be implemented from April 2021 for the 2021-22 audit plan (at Appendix 3). The majority of indicators are reported on an annual basis with data in respect of 2021-22 reported in the 2021-22 Internal Audit annual report (which is a separate agenda item at this meeting). 2.33 There are two indicators however that are subject to quarterly reporting. The first is about the implementation of agreed actions arising from Internal Audit reports by the implementation date. 61% of agreed actions have been implemented by the agreed implementation date in the period April to June 2022. Progress in implementing agreed actions is monitored and reported separately to the Panel each cycle. 2.34 The second performance indicator is about client satisfaction. Appendix 4 provides a summary of the results of four key questions we ask audit clients at the conclusion of each audit assignment. The results presented show generally positive feedback on the work of Internal Audit, with 92% of respondents agreeing that Internal Audit added value by assisting in providing assurance and that reports were relevant and constructive with findings clearly and accurately communicated. 2.35 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. 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. 4. Supporting documentation Appendix 1 Summary of completed Internal Audit assignments Appendix 2 Audit gradings Appendix 3 Internal Audit performance framework Appendix 4 Internal Audit Client Feedback Results Ken Adamson, Head of Audit and Risk Page 194 of 418
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5. Impacts ( http://connect/report-template-guidance ) 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 ☒ 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 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 and plans by more effectively mitigating potential threats to planned outcomes. Page 195 of 418
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Appendix 1 Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 1. Enterprise Contract Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 0 Medium 1 Low 0 This audit exercise was a high-level review designed to provide independent assurance that the Enterprise Project is being appropriately progressed and that key risks are being effectively managed. Our review reflected on the current status of the project and considered the adequacy and effectiveness of the management arrangements in place, including the extent to which key elements of good project management, risk management and financial controls are in place. This exercise was not intended to provide assurance or offer an opinion on any specific decisions being made by the Project Board or on the likely operational or financial viability of the project. Based on the results of our work, we have categorised this audit as offering ‘reasonable assurance’. We are satisfied that the governance arrangements in place are adequate and appear robust, and that the project is being managed in line with corporate expectations in a manner consistent with good practice. Financial control and risk management appear appropriately embedded in the governance of the project. We were pleased to note that a Project Brief, which forms the basis for the management, implementation and assessment of the Enterprise Project’s overall success has been prepared and there is a detailed project plan in place with key milestones, which is reviewed and updated on a regular basis to reflect current progress. We were also pleased to note that the Project Board meets regularly, is provided with an update on progress, makes decisions on key elements and appears to be providing effective scrutiny and challenge on the work being undertaken. Despite our positive overall assessment of the project’s governance arrangements, it is recognised given the outcome of the ESCP procurement exercise, scale of the Enterprise Project and uncertainty around the market, that there remains a high level of risk to the successful delivery of the project, primarily due to potential issues around market failure and affordability. The Project Team and Board have recognised that market appetite remains a significant risk and continue to take action to try to mitigate this risk, predominantly through market engagement and research. We also recognise that affordability will also be considered as part of the process of considering market responses to the Council’s proposals. Although the outcome of recent market engagement does appear to indicate that the revised delivery model is more commercially attractive to potential bidders than the previous ESCP proposals, it is also recognised that there are limited markets/potential respondents for each of the two main activities for which bids are being sought and that current general market volatility increases the risks of insufficient tender responses and/or tender responses which are not financially attractive. We consider that it is vital therefore that formal contingency plans are developed in response to the potential inability of the Council to be able to progress with part or all of the proposed project. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 196 of 418
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 2. City Deal Internal Audit Opinion: Substantial assurance (Green) Audit recommendations: High 0 Medium 0 Low 2 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council's arrangements in respect of its participation in the Glasgow City Region (GCR) City Deal. This audit assessed the extent to which the Council is adhering to key elements of the GCR City Deal Assurance framework with a focus on the processes surrounding the preparation and submission of grant claims, reviewing any relevant procurement/tendering arrangements and the appropriateness and effectiveness of the governance arrangements in place as they relate to the Council’s City Deal activities. Based on the results of our work, we have concluded that: • we are satisfied that the Council is complying with the GCR Assurance Framework 2019; • the City Deal team has substantively complied with the Council’s General Contract Standing Orders in its procurement/tendering processes for City Deal projects; • the Council has continued to successfully apply expected governance arrangements in relation to the planning, controlling, monitoring and oversight of City Deal projects; and • City Deal grant claims in 2021-22 were properly prepared and submitted in accordance with the terms and conditions under which the grant award was made, the funds have been used for the intended purposes in accordance with the relevant terms and conditions under which the grant is made and the sums claimed are properly due. We have categorised the audit as offering ‘substantial assurance’ as the control environment appears adequate and to have operated as intended with only a small number of minor discrepancies or areas for improvement identified which are outlined in the Action Plan at Section 3 of the report. Internal Audit is required to return an annual assurance statement to Head of Audit at Glasgow City Council as the lead auditor for the GCR City Deal. Based on the results of this review and our other knowledge and understanding of the Council’s arrangements, we have returned an assurance statement for City Deal to Glasgow City Council Internal Audit which states that there are no significant matters that require to be raised which could have a material impact on the GCR Annual Assurance Statement for financial year 2021-2022. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 197 of 418
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 3. Clyde Valley Waste Contract Internal Audit Opinion: Substantial assurance (Green) Audit recommendations: High 0 Medium 1 Low 2 The Clyde Valley Waste Contract (CVWC) is a partnership between North Lanarkshire Council, East Dunbartonshire Council, East Renfrewshire Council, North Ayrshire Council and Renfrewshire Council for the provision of joint residual waste treatment and disposal services. The terms of the partnership are contained in the Inter Authority Agreement (IAA), which sets out the scope of the agreement and key obligations of the ‘Lead Authority’ and partner authorities as members. The IAA requires the ‘Lead Authority’s’ internal audit service to provide an annual statement of assurance regarding the project’s governance arrangements relating to payment processes and project monitoring arrangements to ensure these are compliant with the IAA, the Project Agreement and any other contract documents. The result of this review fulfils that requirement. We reviewed the Council's arrangements for undertaking the role of ‘Lead Authority’ against the criteria outlined in the IAA. We also assessed the Council’s CVWC Management Team (CMT) arrangements for ensuring that payment processes and project monitoring arrangements had operated in accordance with the key aspects outlined in the Authority Requirement. We have categorised the audit as offering ‘Substantial assurance’ with a sound system of governance, risk management and internal controls in place which is consistent with the expectations placed upon the ‘Lead Authority’ as outlined in the IAA. We were also pleased to note that the CVWC Management Team (CMT) have discharged their obligations significantly as expected with appropriate arrangements in place for the monitoring of waste processing information, processing payments and monitoring the contractor’s performance. A small number of issues of non-compliance and/or scope for improvement were identified and these have been outlined in Section 3 of the report. The most significant of these being the need to ensure the Joint Steering Board (JSB) is provided with all necessary and relevant information outlined in the IAA so they can fully and effectively discharge their key responsibilities. Based on the results of this review, we have now returned an assurance statement to the Joint Steering Board which states that there are no significant matters that require to be raised which could have a material impact on the delivery of the Project Agreement or compliance with the IAA for year 2021-2022 (Appendix 2 of the attached report). Satisfactory management responses have been received in response to the recommendations contained within the report. Page 198 of 418
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 4. Business continuity planning Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 1 Medium 2 Low 1 The purpose of this audit was to provide independent assurance on the extent of compliance across the Council with key corporate expectations in respect of business continuity planning. A particular focus was given to assessing the adequacy and effectiveness of the Council’s governance arrangements, policies and procedures in relation to business continuity planning including determining whether the Services have established business continuity plans and the extent to which these plans are being reviewed and tested; and assessing whether, where plans were invoked, these plans worked in line with expectations and any lessons learned were identified and communicated as appropriate. The Council’s resilience and business continuity activities are co-ordinated by the Resilience Development Unit supported by the Corporate Resilience Management Team. The Council has a Corporate Resilience Plan which sets out clear expectations and specific roles and responsibilities for front-line responders when planning and preparing for emergencies. It is the responsibility of each Service area to detail their specific business continuity arrangements which would be enacted to ensure continuity of critical services and mitigate the impact of an emergency or other potential disruptions. These plans are reviewed and updated annually and are thereafter collated to form the Corporate Business Continuity Plan. Both the overall resilience and service business continuity arrangements have had cause to be deployed over the last few years in response to the Covid-19 pandemic and both corporate and service plans have been reviewed and updated accordingly. An audit of the Council’s response to the pandemic was undertaken in February 2021 which concluded that the Council had invoked relevant business continuity arrangements and the Corporate Resilience Plan, which enabled the Council to respond promptly and effectively in meeting their statutory obligations when Covid-19 was declared a global pandemic and continued, as far as possible, to deliver key critical services. We have categorised the results of work undertaken as part of this audit as offering ‘reasonable assurance’ meaning we consider that the Council has established adequate governance arrangements for business continuity planning and can demonstrate a track record of responding effectively to a range of ‘emergencies’. Although we were pleased to note that guidance notes and templates designed to assist Services in the preparation of business continuity (BC) and disaster recovery (DR) plans are in place, we have identified a need for improvement to the current framework for documenting individual Services’ BC/DR arrangements to enhance the quality and completeness of the corresponding plans, as at present there remains considerable variation in the depth and quality of plans being prepared by the Services. Other areas for improvement include: • corporate and individual Services’ business continuity and disaster recovery arrangements would benefit from a robust, formalised review process; and • formal testing of business continuity and/or disaster recovery arrangements needs to be undertaken consistently across the Council in line with corporate expectations. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 199 of 418
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 5. Risk management Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 0 Medium 3 Low 2 The purpose of this audit was to provide independent assurance that the Council has robust and effective risk management arrangements. The audit included a review of both corporate and Services’ arrangements for ensuring that all significant risks are identified, evaluated and controlled, risk registers have been prepared and are kept up-to-date, and appropriate arrangements are in place to review/monitor and report on risk. As part of this audit, we assessed the arrangements against good practice as identified by Audit Scotland in their ‘Best Value toolkit: Risk management’. We also considered the extent to which management had taken action to address the recommendations contained in the previous Internal Audit report on this topic issued in September 2020. The Council operates in a complex environment and faces multiple challenges in delivering against its priorities. Effective risk management arrangements are therefore essential and form a key part of good corporate governance. The Corporate Risk Team and wider risk network continue to develop risk management via activities such as the annual refresh of the Corporate Risk Register (CRR), quarterly reporting on key developments in risk management to the Corporate Management Team (CMT) and Audit and Scrutiny Panel (ASP), active participation in the review of the project management model to ensure appropriate focus and guidance on risk and providing risk support to a number of key projects across the Council. Overall, we have categorised the audit as offering ‘reasonable assurance’ meaning that we consider that the Council’s risk management arrangements have continued to improve and embed since our last review. We are generally satisfied that these arrangements are being actively supported and promoted by senior management at both corporate and Service level, and that risk management contributes towards the achievement of corporate objectives. We are also satisfied that there are adequate procedures in place at both corporate and Service levels for identifying and prioritising risks and identifying appropriate action to mitigate/manage those risks. Although at different stages of maturity, Services continue to improve and enhance their risk management arrangements and as such, there is scope for some further improvement. We have identified a number of areas where we consider further management action is required and these are detailed in section 3 of the report and include: • replacement and/or new risks need to be documented and assessed in line with the agreed timetable; • a framework for monitoring compliance with the Risk Management Strategy needs to be developed and implemented to facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services; and • improvements are required to current arrangements for ensuring that all relevant staff undertake the appropriate mandatory training for risk management Satisfactory management responses have been received in response to the recommendations contained within the report. Page 200 of 418
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Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 6. Supporting attendance Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 0 Medium 2 Low 2 The purpose of the audit was to provide independent assurance on the adequacy and effectiveness of the Council’s current arrangements for assessing compliance with expected procedures in relation to the management of sickness absence and on the robustness of relevant performance reporting. Work undertaken during the audit included a high-level review of how management seeks to ensure, monitor and assess compliance with key aspects of the policy and whether issues arising from management reviews of compliance have been communicated to relevant management and, where appropriate, translated into specific actions which are then progressed. We also undertook a brief high-level review of the processes for compiling, communicating and monitoring sickness absence data. This included some limited substantive testing and re-performance of reported sickness absence data and consideration of the adequacy of management actions undertaken or planned in response to recent/current sickness absence performance. The Council’s current Supporting Attendance Policy (the Policy), approved by the Finance & Resource Committee in March 2021, sets out the processes expected to be followed in managing sickness absence across the Council. The policy covers all Single Status employees, with a separate policy, which is currently being refreshed, for teaching staff (expected completion date of December 2022). Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’. We consider that the Council has put in place appropriate management arrangements to support compliance with the Supporting Attendance policy and for managing, monitoring and reporting sickness absences and that generally these arrangements are operating as expected. We were pleased to note that the revised policy, supporting toolkits and eLearning module clearly set out the Council’s expected processes and that managers generally appeared aware of, and understood, their roles and responsibilities for complying with the policy. In addition, we were satisfied that there was appropriate support and advice available to managers via the Employee Relations team to manage/monitor individual absences and that absence levels/patterns were being actively monitored and reported to managers via Employee Relations and HR Business Partners. We have, however, identified a small number of areas where we consider that scope for improvement exists and have made some recommendations for management consideration/action. These are detailed at section 3 of the report and include: • management needs to ensure that the policy is being effectively implemented in line with corporate expectations, that lessons learned/issues raised are acted upon/shared as appropriate and that its impact/effectiveness is regularly reviewed; and • Improvements are needed to the consistency and content of performance information presented to senior management and to ensure that process for preparing performance information is fully documented. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 201 of 418
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Internal Audit outputs: Audit opinion and commentary 7. Investigation report – Use of corporate credit card at School A Internal Audit Opinion: Not applicable The purpose of this audit was to undertake a more detailed review of the use of a corporate credit card at School A. The need for this additional work arose during our earlier corporate review of credit and purchase cards on which we reported in late-2021. This highlighted several transactions, mainly relating to subscription services, at School A which we considered may not be in line with the relevant Council policy. Based on interviews with staff and information and records held within the school, we were unable to determine whether any of the benefits attached to the subscriptions have been utilised for personal use. However, our review has highlighted that the use of the credit card at School A is not adhering many of the corporate expectations set out in the relevant corporate policy and accordingly we recommended that Education and Families arrange for the relevant credit card to be cancelled with immediate effect; and that a wider review be undertaken of the current use of credit cards within other schools with credit cards to establish whether there remains a valid business need for the remaining schools to continue to hold these cards. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 202 of 418
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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 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 203 of 418
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Appendix 3: 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 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 204 of 418
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Appendix 4: Internal Audit Client Feedback Results Responses received from 13 clients related to 2021-22 assignments reported to the Panel (note: these covers audit assignments reported in the Internal Audit Progress Reports presented to the December 2021, March 2022 and September 2022 meeting of the Panel) Question Strongly Agree or Agree Neither agree nor disagree Disagree 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 92% 8% 0% Internal Audit findings were accurate and clearly communicated 92% 0% 8% The Internal Audit report made relevant, constructive and practical recommendations to help improve operations 92% 8% 0% Internal Audit staff were professional and courteous throughout the audit process 100% 0% 0% Page 205 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 1 INTERNAL AUDIT REPORT ENTERPRISE PROJECT Contents 1. Executive Summary 2. Findings and Recommendations Appendix 1: Audit grading Appendix 2: Good practice toolkit – key questions Issued to: Head of Asset and Procurement Solutions, Commercial Contracts Manager Copied to: Project Development Manager, Deputy Chief Executive and Chief Executive Headlines This audit exercise was a high-level review designed to provide independent assurance that the Enterprise Project is being appropriately progressed and that key risks are being effectively managed. This report is the third in a series of reports, with previous audit reports in relation to the previous Enterprise Strategic Commercial Partnership (ESCP) having been issued in March 2020 and March 2021. The ESCP represented a significant, complex and challenging project in the Council’s programme of work and formed an important part of the Council’s ambitions. It was progressed to the procurement stage, but despite positive pre-procurement market engagement, the advertised opportunity failed to attract sufficient interest to enable the ESCP to proceed and the Project Board decided to discontinue the procurement. The Board recognised, however, that the ambition of the project remained valid and agreed that a revised delivery model should be developed. In September 2021, the Project Board agreed the revised delivery model, renamed the Enterprise Project. The revised model adopts a hybrid approach consisting of a blend of in-house delivery whilst continuing to deliver services through a range of third-party contracts and aims to deliver similar outcomes (over comparable timescales) as the ESCP by creating focused strategic relationships with a small number of private sector providers and developing a more internal ‘intelligent client’ function, building on internal commercial capacity and capability. Policy & Strategy Committee approved this delivery model in December 2021 and preparations are now well underway in advance of the expected procurement exercises in summer 2022. Our review reflected on the current status of the project and considered the adequacy and effectiveness of the management arrangements in place, including the extent to which key elements of good project management, risk management and financial controls are in place. As with previous exercises, we have undertaken an assessment of the current programme governance arrangements against corporate expectations and a good practice checklist prepared from a range of sources including National Audit Office (see Appendix 2). This exercise was not intended to provide assurance or offer an opinion on any specific decisions being made by the Project Board or on the likely operational or financial viability of the project. Based on the results of our work, we have categorised this audit as offering ‘reasonable assurance’. We are satisfied that the governance arrangements in place are adequate and appear robust, and that the project is being managed in line with corporate expectations in a manner consistent with good practice. Financial control and risk management appear appropriately embedded in the governance of the project. We were pleased to note that a Project Brief, which forms the basis for the management, implementation and assessment of the Enterprise Project’s overall success has been prepared and there is a detailed project plan in place with key milestones, which is reviewed and updated on a regular basis to reflect current progress. We were also pleased to note that the Project Board meets regularly, is provided with an update on progress, makes decisions on key elements and appears to be providing effective scrutiny and challenge on the work being undertaken. (continued overleaf) 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 0660/2022/001 Date issued 24/05/22 Audit Team Lesley Armstrong and Paula Hendry Page 206 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 2 Headlines (continued) The Preliminary Risk Assessment (PRA) originally prepared for the ESCP has been reviewed and updated for the new Enterprise Project to reflect changes to the risk profile- for the new model, and a project risk register which identifies known and likely/foreseeable risks has been prepared and is regularly reviewed and monitored. Additionally, a newly framed corporate risk has been created to reflect changes in project scope, expected timescales and ambitions the Council now wishes to achieve through this project. Despite our positive overall assessment of the project’s governance arrangements, it is recognised given the outcome of the ESCP procurement exercise, scale of the Enterprise Project and uncertainty around the market, there remains a high level of risk to the successful delivery of the project, primarily due to potential issues around market failure and affordability. The Project Team and Board have recognised that market appetite remains a significant risk and continue to take action to try to mitigate this risk, predominantly through market engagement and research. We also recognise that affordability will also be considered as part of the process of considering market responses to the Council’s proposals. Although the outcome of recent market engagement does appear to indicate that the revised delivery model is more commercially attractive to potential bidders than the previous ESCP proposals, it is also recognised that there are limited markets/potential respondents for each of the two main activities for which bids are being sought and that current general market volatility increases the risks of insufficient tender responses and/or tender responses which are not financial attractive. We consider that it is vital therefore that formal contingency plans are developed in response to the potential inability of the Council to be able to progress with part or all of the proposed project. We noted that the implications of market failure and actions required to take the project forward have been presented to and discussed by the Project Board and that the component parts of an alternative ‘Plan B’ were agreed. Perhaps understandably, however, management focus has remained on the procurement launch and a formal contingency plan has not yet been documented or timescales for preparing such a plan agreed. We have therefore raised a specific recommendation in this regard in section 3 of this report for management consideration. Page 207 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 3 1. Executive Summary Objectives This audit exercise was a high-level review designed to provide independent assurance that the Enterprise Project is being appropriately progressed and that key risks are being effectively managed. The work reflected on the current status of the project and considered the adequacy and effectiveness of the management arrangements in place in respect of good project management, risk management and financial controls. These arrangements were assessed against corporate project management expectations and a good practice checklist, prepared by Internal Audit, based on a range of sources including the National Audit Office, HM Treasury and the Cabinet Office infrastructure and Projects Authority. In particular, we considered the following: • Is it clear what the current stage of the project is intended to deliver? Are short-term scope and milestones realistic, understood, clearly articulated and capable of being met? • Are there effective governance structures that provide periodic updates on progress/status and strong and effective oversight, challenge and direction? Does this include appropriate consideration of relevant risks and how key risks are being managed? • Are there appropriate financial controls and budget monitoring in place to ensure expenditure is in line with appropriated budgets and is subject to period review? Work undertaken involved discussions with key project staff and a detailed review of documentation to evidence the operation of relevant key processes and procedures. 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 have been identified. Good practice identified We noted the following areas of good practice during the audit: • The Enterprise Project has an appropriate and effective governance structure. There is a Project Board with a written terms of reference which clearly defines the responsibilities of Board members. The Project Board is chaired by the Head of Asset and Procurement Solutions, who is the Senior Responsible Officer (SRO), and membership includes relevant Heads of Service and senior officers, ensuring that it has the authority to make decisions and provide the necessary resources to support the delivery of the Enterprise Project. • The Project Board meets approximately every eight weeks, with additional meetings held should the need arise, and the minutes of these meetings confirm that the Board appears effective in providing oversight, challenge and direction. • A Project Brief has been prepared which defines the scope and requirement of the Enterprise Project and acts as a base document against which the Project Sponsor, SRO and Project Board can assess progress, direct change management and assess ongoing viability. The document also outlines the strategic objectives of the Project, together with its critical success factors. • There is a detailed project plan in place which details the key tasks required to progress the project, together with durations, target completion timescales and percentage completion. The project plan is reviewed on a weekly basis by the Project Team and updated as appropriate. Critical path activities are clearly identified on the project plan and these are a main focus of reporting to the Project Board to ensure that the Board is kept up to date with progress, that the required decisions are made at the right time and to drive the project forward at the correct pace. Page 208 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 4 Good practice identified (continued) • The Preliminary Risk Assessment (PRA) prepared for the ESCP has been reviewed and updated for the Enterprise Project to reflect changes to the risk profile. A risk register, which identifies likely and foreseeable risks, has been prepared to supplement the PRA. The risk register has identified the impact and likelihood of each risk, and confirmed the controls in place, and actions required, to mitigate the risk. • The services of external advisors have been procured to provide relevant specialist advice and expertise (which is not available within the Council) to support the progression and successful implementation of the Enterprise Project. Funding for these external advisors has been secured for the Enterprise Project and the Project Board are provided with a financial update at each Board meeting. Other areas for improvement (Medium) One area for improvement was identified: • Formal contingency plans should be developed in response to the potential inability of the Council to be able to progress with part or all of the proposed project Page 209 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 5 3. Action Plan Enterprise Contract 0660/2022/001 Ref Finding 1 Formal contingency plans should be developed in response to the potential inability of the Council to be able to progress with part or all of the proposed project A key action, undertaken by the Project Team, to mitigate the risk of market failure has been significant market engagement and research. Although this work has indicated that the revised delivery model is more commercially attractive that the previous ESCP, it has also indicated that there are limited markets for each of the two main procurements (corporate and housing property repairs and maintenance and roads maintenance ) to be undertaken in the coming months. Additionally, current market volatility including ongoing supply chain risks and inflationary pressures creates a higher risk that even if sufficient tender responses are received, these may not be financially attractive to the Council. We noted that the implications of market failure and actions required to take the project forward were presented to the Project Board in February 2022 and that the component parts of a ‘Plan B’ were agreed. The Project Team advised that the detailed development of ‘Plan B’ needs to be balanced with the progress of the current project plan and the resource/cost requirements involved and provided an indication of the timescales involved for the further development of the plan. We understand the focus to date has understandably remained on the procurement launch and that a formal contingency plan has not yet been documented or a detailed timeline for this included within the project plan Implication Recommendation Priority Management response Implementation Month/Year Without a robust and realistic contingency plan in place the Council may not be able to ensure continuity of service delivery and achievement of ambitions. The Enterprise Project Board should ensure that the key tasks required to fully document a contingency plan, including key milestones and lead times/critical path, is included in the project plan and thereafter monitor development of the contingency plan to ensure that an alternative ‘Plan B’ is available, and lead times/critical path are clearly understood should the project not be able to be progressed as currently envisaged. Medium Agree Graham Proudfoot, Commercial Contracts Manager The Project Board is aware of the significant risk of a lack of market appetite to participate in the phase 1 public procurement opportunities and the potential consequences of this. This risk has also been discussed separately with the SRO, Project Sponsor and Chief Executive. As noted in the finding above, the high-level actions required to develop and agree a Contingency Plan (the ‘Plan’) providing alternate delivery solutions, was considered and agreed by the Project Board in February 2022. Project resources have necessarily been focused on the work required to ensure the timely launch of the phase 1 procurements, however in parallel the Project Lead is taking advice from the project’s legal advisers which will help to further develop the detail of the Plan. Tasks related to the further development of the Plan have now been incorporated into the Project Plan. The Plan will be sufficiently developed by the end of July 2022 (the SPD submission deadline) at which time the level of market interest will be known. This will, if required, after appropriate engagement with the Project Board, CMT and Elected Members, allow the Plan to be enacted. July 2022 Page 210 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 6 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 211 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 7 Appendix 2 – Good practice toolkit – key questions Strategic Definitions and Preparation of Business Case 1 Has it been clearly documented what the programme/project is intended to achieve/deliver with realistic objectives and an understanding of what success looks like? 2 Has a detailed Project Business Case or equivalent been preapred which outlines the programme/project scope, expected deliverables, costs, affordability, risks, procurement route and high-level project plan? Note – in reviewing the project business case or equivalent consideration should be given to whether it clearly documents and demonstrates that: • the council is clear about the benefits expected and about how they will be achieved. • options have been identified and assessed. • project costs have been built up in a consistent manner, including, where appropriate, specific risks, optimism bias allowances, and realistic inflation costs. • project procurement routes and options have been fully explored and form part of the developed project business case. Governance 3 Has a Project Board or equivalent been established to undertake a high-level monitoring role for the project and ensure that decisions made regarding the project are adequately considered? 4 Does the Project Board or equivalent have clear terms of reference and it is chaired by the SRO and attended by all key people involved in the project? 5 Have clearly defined roles and responsibilities been documented for the SRO, Project Sponsor, Project Manager and Project Team? 6 Is there a distinct project/programme management team with authority and responsibility for delivering the programme? 7 Is the Board meeting regularly? Project Plan 8 Is there a high-level project plan and does it establish project/programme timescales? 9 Is the project plan broken down into manageable workstreams and relevant project milestones which are meaningful to the Project Board to allow accurate and frequent tracking of progress on the project and maximise visibility of inter-dependencies? 10 Does the project plan record and continually update its critical path? 11 Are critical path activities identified and used as a base timeline against which other activities and interdependencies are reported on? 12 As necessary, is analysis undertaken of the effects of any slippage on time, cost, scope or quality? Risk Management 13 Where appropriate was a Preliminary Risk Assessment (PRA) undertaken? 14 Is there clear evidence of appropriate consideration of risks which have the potential to undermine the success of the programme/project? Have these been recorded on a project risk register which includes an assessment of likelihood and impact and are the results used to inform the management of project risks? 15 Is up to date information on key risks regularly presented to the Project Board or equivalent? 16 Has a threshold been agreed at which risks require to be escalated? Are these arrangements working in practice? Page 212 of 418
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https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0660.2022.001 Enterprise Project/A - FINDINGS AND REPORT/A06 20220524 Enterprise Project final report .docx 8 Procurement 17 Where procurement is required, are procurement activities being undertaken in a manner consistent with corporate expectations (i.e. compliance with CSOs, use of appropriate and legally compliant competitive processes designed to secure achievement of best value etc)? Planning – Benefits Realisation 18 Has a benefits realisation plan been prepared which details identified programme benefits, ways of measuring achievement of those benefits and benefit owners? Has the plan been approved by the Project Board? 19 Has current baseline performance been documented and is there an appropriate plan to establish what information needs to be captured to measure future impacts and/or changes in performance arising from the programme/project? Oversight and Scrutiny – Project Board 20 Are there arrangements in place to allow the SRO and Project Board to regularly monitor delivery of the programme/project against the project plan including costs v budget, achievement of key milestones and performance v timescales? 21 Do progress reports to the SRO/Project Board make appropriate use of expected reporting formats and/or include: • details of progress against pre-defined criteria on cost, time, quality and key project milestones; • reports on individual work packages/workstreams; • resources and funding used to date (including against expectation and progress); • details of any changes to previously approved plans/timelines/milestones; and • confidence in forward plans? 22 Where there are issues which are impacting (or are considered likely to impact) on the successful delivery of a programme/project (on the achievement of planned deliverables/outcomes, or to time, or to budget), have these issues been discussed and remedial actions identified? Are the implementation of these actions and their impact being monitored? 23 Is performance against the benefits realisation plan reviewed to determine whether the programme is on track to deliver intended benefits and outcomes? 24 Is the programme on track to deliver intended benefits? Oversight and Scrutiny – Elected Members 25 Are there regular reports to elected members on the progress of the programme/project? 26 Do reports to elected members provide a realistic overview of the progress of the programme/project to date (including costs v budget, achievement of key milestones and performance v timescales) to enable members to provide effective oversight and scrutiny? 27 Where appropriate, are any key risks or issues impacting (or likely to impact) on successful delivery highlighted and information provided as to what management is doing or plans to do to in response? 28 Where changes have been agreed by the Board to expected milestones/timescales/budgets have any material changes reported to elected members? Page 213 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0630.2022.002 City Deal/A - Findings and Reports/A06a 20220606 CITY DEAL Final report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT CITY DEAL Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: City Deal Assurance Statement Issued to: Head of Financial Solutions (point 1) and Head of Planning and Regeneration (point 2) Copied to: City Deal Manager, Business Finance Manager, Deputy Chief Executive and Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council's arrangements in respect of its participation in the Glasgow City Region (GCR) City Deal. Internal Audit is required to return an annual assurance statement to Head of Audit at Glasgow City Council as the lead auditor for the GCR City Deal and this work will underpin the completion of the statement for 2021-22. This audit assessed the extent to which the Council is adhering to key elements of the GCR City Deal Assurance framework with a focus on the processes surrounding the preparation and submission of grant claims, reviewing any relevant procurement/tendering arrangements and the appropriateness and effectiveness of the governance arrangements in place as they relate to the Council’s City Deal activities. Based on the results of our work, we have concluded that: • we are satisfied that the Council is complying with the GCR Assurance Framework 2019; • the City Deal team has substantively complied with the Council’s General Contract Standing Orders in its procurement/tendering processes for City Deal projects; • the Council has continued to successfully apply expected governance arrangements in relation to the planning, controlling, monitoring and oversight of City Deal projects; and • City Deal grant claims in 2021-22 were properly prepared and submitted in accordance with the terms and conditions under which the grant award was made, the funds have been used for the intended purposes in accordance with the relevant terms and conditions under which the grant is made and the sums claimed are properly due. We have categorised the audit as offering ‘substantial assurance’ as the control environment appears adequate and to have operated as intended with only a small number of minor discrepancies or areas for improvement identified which are outlined in the Action Plan at Section 3. Based on the results of this review and our other knowledge and understanding of the Council’s arrangements, we have returned an assurance statement for City Deal to Glasgow City Council Internal Audit which states that there are no significant matters that require to be raised which could have a material impact on the GCR Annual Assurance Statement for financial year 2021-2022 (Appendix 2). Internal Audit Opinion (see definition at Appendix 1) Substantial assurance Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0630/2022/002 Date issued 06/06/22 Audit Team Elaine MacDonald, Paula Hendry and Hugh Shevlin Page 214 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0630.2022.002 City Deal/A - Findings and Reports/A06a 20220606 CITY DEAL Final report v1.0 as issued.docx 2 1. Executive Summary Objectives This audit was a short and focused review involving Internal Audit assessing the Council’s arrangements and assessing the extent to which the Council is adhering to key elements of the GCR City Deal Assurance framework with a focus on: (1) the processes surrounding the preparation and submission of grant claims made in 2021-22; (2) the regularity and competency of any significant procurement/tendering arrangements undertaken since April 2021; and (3) whether appropriate governance arrangements are in place and operating in line with expected requirements outlined in the GCR governance/assurance framework. 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 0 2 Key areas requiring management action (High) No key areas requiring urgent management action have been identified. Good practice identified We noted the following areas of good practice during the audit: • The Council has substantively complied with its General Contract Standing Orders in its procurement/tendering processes for City Deal projects; • The Council has established a series of governance arrangements in relation to the planning, controlling, monitoring and oversight of projects which is consistent with the requirements set out in the Glasgow City Region Assurance Framework 2019; and • Grant claims for 2020-21 have been properly prepared and submitted in accordance with the terms and conditions under which the grant award is made. Other areas for improvement (Medium) No other areas for improvement were identified. Page 215 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0630.2022.002 City Deal/A - Findings and Reports/A06a 20220606 CITY DEAL Final report v1.0 as issued.docx 3 3. Action Plan CITY DEAL 0630/2022/002 Ref Finding 1 Grant claims appeared accurate, fairly stated and the expenditure incurred met the terms and conditions of the grant offer with only minor discrepancies identified. Although the results of our review of the Council’s grant claim processes was generally satisfactory, we noted that the Glasgow City Region PMO require that all grant claims are submitted to them directly by the relevant authorities S95 officer. During our review we noted that the completed grant claim document for Quarter 1 2021/22 was submitted on behalf of the Head of Financial Solutions (S95 officer) rather than in accordance with City Deal expectations. We also noted that relevant employee costs are capitalised to City Deal one period in arrears. However, some employee costs incurred in Period 2 2021/22 which should have been capitalised to City Deal in period 3, had not been posted until period 4. As a result of this minor timing issue, this expenditure was included in a later grant claim rather than the draw down grant claim for Quarter 1. Implication Recommendation Priority Management response Implementation Month/Year The Council may not be able to adequately demonstrate appropriate authorisation of key aspects of the procurement and/or grant claim processes. Expenditure may not be claimed on a timely basis and/or in accordance with the terms and conditions of the grant award. The Head of Financial Solutions should: (1) ensure that authorisation requirements set out by the GCR PMO are fully adhered to for all future grant claims; and (2) remind relevant City Deal staff of the need to ensure that, as far as possible, expenditure is claimed in the relevant quarter in accordance with the terms and conditions of the grant offer and expected practice. Low Agree Greg Telfer, Business Finance Manager May 2022 Page 216 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0630.2022.002 City Deal/A - Findings and Reports/A06a 20220606 CITY DEAL Final report v1.0 as issued.docx 4 3. Action Plan (continued) CITY DEAL 0630/2022/002 Ref Finding 2 Tendering processes were found to be substantively compliant with the Council’s Contract Standing Orders (CSO’s), with only a small number of minor discrepancies and/or areas for improvement identified. We reviewed a sample of procurement exercises for City Deal and noted: • the General CSO’s (section 18.5) set out the expectation that the secure electronic deposit box for tender documents should be unlocked by two officers. The ITQ Electronic Return Log for the drainage works at Strathclyde Road records that only one individual was present when the tenders were opened; and • the Selection Stage Summary Evaluation Form for the drainage works at Strathclyde Road contract was signed and dated as required by the Enterprise Category Manager, however, there is no record of a second officer undertaking any checks on the summary as required by the template. Implication Recommendation Priority Management response Implementation Month/Year Without fully completed documentation to support the tendering, evaluation and selection processes, the Council may not be able to adequately demonstrate appropriate robustness and transparency in its decision- making processes. The Head of Planning and Regeneration should remind all relevant City Deal staff of the importance of ensuring that all relevant procurement documentation is fully completed and signed in accordance with corporate expectations. Low Agree Lyndsay Noble, City Deal Manager. May 2022 Page 217 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0630.2022.002 City Deal/A - Findings and Reports/A06a 20220606 CITY DEAL Final report v1.0 as issued.docx 5 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 218 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0630.2022.002 City Deal/A - Findings and Reports/A06a 20220606 CITY DEAL Final report v1.0 as issued.docx 6 Appendix 2 Glasgow City Region – City Deal North Lanarkshire Council Assurance Statement 2021-2022 1. Purpose of Statement The purpose of this statement is to provide assurance that sound internal control and governance arrangements exist within North Lanarkshire Council, and that no material issues have been identified which may directly or indirectly have an effect on the delivery of the City Deal programme. Any issues which are identified will be used to inform the Glasgow City Region Annual Assurance Statement for financial year 2021-2022 2. Assurance by Head of Audit and Risk, North Lanarkshire Council North Lanarkshire Council seeks at all times to adhere to the laws and regulations relating directly to the financial statements and the laws, regulations and the local code of governance under which the organisation conducts its business. I confirm that any issues identified which may have a negative impact on the City Deal programme (such as cases of actual or potential non-compliance with relevant laws and regulations, significant failures in the control environment and all known or suspected cases of fraud) have been reported to the Chief Auditor of Glasgow City Council (previously, or as set out below). While I acknowledge that no system of control can ever give an absolute assurance that all transactions are properly processed, all errors have been prevented, and all policies and procedures have been fully implemented throughout the organisation there are no known material issues which have not been considered in the completion of this Assurance Statement. 3. Declaration There are, in my opinion, no significant matters that require to be raised in this statement which would have a material impact on the Glasgow City Region Annual Assurance Statement for financial year 2021-2022. It is my opinion that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s framework of governance, and financial controls in relation to City Deal for the year ended 31 March 2022. Ken Adamson Head of Audit and Risk, North Lanarkshire Council 17 May 2022 Page 219 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT CLYDE VALLEY WASTE CONTRACT Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Assurance statement 2021-22 Issued to: Head of Regulatory Services and Waste Solutions, Copied to: Contracts Manager, Chief Executive and Deputy Chief Executive Headlines The purpose of this audit is to provide assurance on the adequacy and effectiveness of the Council’s arrangements in respect of its duties as ‘Lead Authority’ for the Clyde Valley Waste Contract. The Clyde Valley Waste Contract (CVWC) is a partnership between North Lanarkshire Council, East Dunbartonshire Council, East Renfrewshire Council, North Ayrshire Council and Renfrewshire Council for the provision of joint residual waste treatment and disposal services. The terms of the partnership are contained in the Inter Authority Agreement (IAA), which sets out the scope of the agreement and key obligations of the ‘Lead Authority’ and partner authorities as members. As ‘Lead Authority’, the Council had responsibility for sourcing and awarding the contract. Viridor was appointed in 2019 and details of the contractual arrangements are set out in a Project Agreement and supporting Authority Requirement agreed between North Lanarkshire Council and Viridor Clyde Valley Limited. The IAA requires the ‘Lead Authority’s’ internal audit service to provide an annual statement of assurance regarding the project’s governance arrangements relating to payment processes and project monitoring arrangements to ensure these are compliant with the IAA, the Project Agreement and any other contract documents. The result of this review fulfils that requirement. We reviewed the Council's arrangements for undertaking the role of ‘Lead Authority’ against the criteria outlined in the IAA. We also assessed the Council’s CVWC Management Team (CMT) arrangements for ensuring that payment processes and project monitoring arrangements had operated in accordance with the key aspects outlined in the Authority Requirement. We have categorised the audit as offering ‘Substantial assurance’ as we consider that on the basis of the current management of the contract to date, a sound system of governance, risk management and control is in place which is consistent with the expectations placed upon the ‘Lead Authority’ as outlined in the IAA. We were also pleased to note that the CVWC Management Team (CMT) have discharged their obligations significantly as expected with appropriate arrangements in place for the monitoring of waste processing information, processing payments and monitoring the contractor’s performance. A small number of issues of non-compliance and/or scope for improvement were identified and these have been outlined in Section 3. The most significant of these being the need to ensure the Joint Steering Board (JSB) is provided with all necessary and relevant information outlined in the IAA so they can fully and effectively discharge their key responsibilities. Based on the results of this review, we intend to return an assurance statement to the Joint Steering Board which states that there are no significant matters that require to be raised which could have a material impact on the delivery of the Project Agreement or compliance with the IAA for year 2021-2022 (Appendix 2). Internal Audit Opinion (see definition at Appendix 1) Substantial assurance (Green) Organisational impact (see definition at Appendix 1) Minor Report status FINAL Audit ref 0640/2022/001 Date issued 06/06/22 Audit Team Elaine MacDonald, Paula Hendry and Jacqueline Struthers Page 220 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 2 1. Executive Summary Objectives This audit was a short and focused review involving Internal Audit assessing the Councill's arrangements against the requirements and expectations imposed on the Council by the Inter Authority Agreement for the Clyde Valley Waste Contract. The IAA requires the Lead Authority’s internal audit service to provide an annual statement of assurance regarding the project’s governance arrangements relating to payment process and project monitoring arrangements to ensure they have complied with the IAA, the Project Agreement and any other Contract Documents. This review fulfils this requirement with a focus on ensuring each aspect of the Project Tasks (Sch1 of the IAA) attributed to the Lead Authority, Project Director and Contract Manager have been complied with. We also reviewed whether the Lead Authority has in place robust data collection processes from which to gather reliable waste processing information in a timely manner, and whether the Lead Authority regularly monitors Viridor’s arrangements, performance updates, action plans and risk registers to ensure they are being addressed and achieved in a manner consistent with the Project Agreement. 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 2 Key areas requiring management action (High) No areas requiring urgent management action have been identified. Good practice identified We noted the following areas of good practice during the audit: • The Council has appointed a Project Director, Contract Manager and supporting contract management team with responsibility for monitoring and reviewing performance and delivery; • Terms of Reference outline the role and remit for the Joint Steering Board. The Board meets regularly and is attended by key contract representatives, including a nominated party from each authority. The Contract Manager submits a service report to the Board meetings; • Contractor monthly unitary charge invoices are supported by the contractor’s monthly performance report, spreadsheets of monthly waste activity and weighbridge turnaround times. Costs are promptly and accurately recharged to each authority in line with the contract; • The Contractor produces Monthly, Quarterly and Annual performance reports in the format set out in the Authority requirements document; and • The Contract Management Team undertakes their own monthly site visits to satisfy itself of the adequacy and accuracy of the contractor’s performance monitoring processes. A checklist based upon the KPIs is populated for each visit and retained as evidence. Other areas for improvement (Medium) One area for improvement was identified: • To assist the Joint Steering Board (JSB) to discharge their responsibilities fully and effectively, regular updates on contract risk and revisions to the Contract Management Plan (CMP) need to be periodically presented to them. Page 221 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 3 3. Action Plan CLYDE VALLEY WASTE CONTRACT 0640/2022/001 Ref Finding 1 For the Joint Steering Board (JSB) to discharge their key responsibilities fully and effectively, regular updates on contract risk and revisions to the Contract Management Plan (CMP) need to be periodically presented to them. A joint steering Board (JSB) has been formed to oversee and monitor the operation and performance of the Project and the management of the project Director and Contract Manager. The IAA requires the Contract Manager to present a draft Contract Management Plan (CMP) to the JSB by 31 October in each contract year and the JSB should approve this plan no later than 31 December in each contract year. The CMP has not been presented to the JSB since 2019. We understand the CMP is currently at its 6th revision The Lead Authority is required to present key information to the JSB at their periodic meetings. Much of this is included in the Contract Manager’s progress report, budget and finance reports and other topical reports as required. We were pleased to note that there is a contract risk register which is regularly reviewed and updated by the CMT and that previously special meetings to discuss risk that have changed have been held with the JSB. However, from our review of recent reports presented and matters minuted as discussed at JSB meetings we noted that no formal update on the consideration and monitoring of contract risk issues has been provided to the JSB. Implication Recommendation Priority Management response Implementation Month/Year If key information is not made available to the JSB in a timely manner it may impact on the ability of the JSB to enable it to review key issues and/or ensure that the project delivers the desired outcomes for the partner authorities. Management should ensure that: (1) The CMP is presented annually to the JSB in accordance with the expectations set out in the IAA; and (2) The JSB establish a formal risk tolerance for risks to be escalated to them and that risk is thereafter reported to the board in accordance with this. We consider that if no risks breach the threshold established, this should also be confirmed to the Board in the Contract Manager’s progress report. Medium Agree Jackie Lyttle, Contract Manager (1) Changes to the CMP will be presented as they are required to the JSB. However, the Contract Manager report will also include a section that states if there has been no change. (2) The risk register will be reported and presented to the JSB at the first JSB of the year (June 2022). The Contract Manager will also recommend to the JBS that if a risk moves to high after it has been mitigated and/or a risk changes more than one scale point, e.g. low to high or very low to medium it will be presented to the Board. June 2022 Page 222 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 4 3. Action Plan (continued) CLYDE VALLEY WASTE CONTRACT 0640/2022/001 Ref Finding 2 Information provided by the contractor needs to address all obligations set out in the Authority Requirements. The Authority Requirement sets out the obligation on the contractor to provide key information to the Lead Authority on a regular basis. We noted that Viridor (the contractor) provide Monthly, Quarterly and Annual Reports to the CMT that significantly address expected issues including identified actions and their outcomes, performance monitoring outcomes, environmental monitoring and complaints. However, we noted some areas where there is scope to enhance current reporting to ensure clear visibility of all relevant aspects of the ‘Authority Requirements’ per the Project Agreement including: • complying with best practice by providing, updating and reissuing the Service Delivery Plans, Operating Manuals, Quality Plans and Health and Safety Plans on a regular basis. During our testing we noted that none of these had been updated since the original tender process in 2019. We understand this was due to Viridor being taken over in July 2021 and changes to working arrangements during the COVID pandemic period; and • quarterly service reports could provide more details on recruitment activity and how the contractor engages with SME development, social enterprise organisations and community education and awareness. Implication Recommendation Priority Management response Implementation Month/Year The Council (as ‘Lead Authority’) may fail to fully discharge its responsibilities to ensure that the Authority Requirements are fully complied with. Management should ensure that sufficient information is provided to the JSB to demonstrate that all relevant aspects of the ‘Authority Requirements’ per the Project Agreement, are being addressed. In particular: (1) confirmation, at regular intervals, that Service Delivery Plans, Operating Manuals, Quality Plans and Health and Safety Plans, have been updated and re-issued; and (2) considering how appropriate details on recruitment activity, engagement and involvement with SME development and social enterprise organisations and community education and awareness activities can be included in the reports presented to the JSB. Low Agree Jackie Lyttle, Contract Manager (1) The contractor is updating the Service Delivery plans, H&S and Quality Plans and they should be complete by end of June 2022. These are reviewed annually as per the contract. The delay for the latest versions has been due to Covid, sale of Viridor and staffing issues at Viridor. The Contract Manager has however stated that if they are not complete by end June/early July at the latest KPI’s will be deducted. The JSB will be updated when they are complete and after the annual review going forward. (2) The Community Benefit information from the annual report will be included in the Contract Manager’s report for the June meeting of the JSB. July 2022 Page 223 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 5 3. Action Plan (continued) CLYDE VALLEY WASTE CONTRACT 0640/2022/001 Ref Finding 3 Monies due to the contractor by the Lead Authority and from partner authorities to the Lead Authority are not always settled in a timely manner and/or in accordance with contractual expectations. There are clear arrangements that set out the payment terms for settlement of monies due to the contractor by the Lead Authority and by partner authorities to the Lead Authorities. These are: • Section 45.4 of the Clyde Valley Residual Waste Project Agreement (with Viridor) requires that the Lead Authority (NLC) shall pay the amount stated in any invoice submitted under Clause 45.2 (Report and Invoice) by the final Business Day of the relevant month or Contract Month (as applicable) in which such invoice is received; and • Section 12.6 of the Inter Authority Agreement states that each Authority shall make arrangements to pay their Payment Proportion to the Lead Authority in cleared funds by the 25th day of the month in which the instruction for payment or invoice is served (the “Due Date”). During our testing we noted that: • of the last twelve monthly invoices from Viridor, three of these had not been settled by the Lead Authority (NLC) within the expected timeframe; and • invoices are raised by North Lanarkshire Council to partner authorities on a monthly basis within 10 days of the date of the Viridor invoice in accordance with the IAA. However, these are often not settled by the partner Council by the 25th of the month in which the invoice was sent. Implication Recommendation Priority Management response Implementation Month/Year There is a risk that late payment penalties are incurred where payments are not settled in accordance with agreed arrangements. Management should ensure that: (1) contractor invoices are settled within the required settlement period; and (2) Partner authorities are reminded of their obligation under the IAA to settle recharged MUC invoices with the Lead Authority within agreed terms. Low Agree Jackie Lyttle, Contract Manager (1) Discussions have been held with NLC creditors team (May 2022) to ensure that invoices are treated as urgent and email header wording to highlight the invoice as such in the emails has been agreed. This has been updated in the CVWMC processes file. (2) Although partner authorities are reminded that payment is due within 25 days, the CMT will issue an email to both technical and finance officers to remind them and the Contract Manager will also include this in the JSB report and remind the Board of the implications for late payment to NLC. June 2022 Page 224 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 6 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 225 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0640.2022.001 Clyde Valley Waste contract/A - Findings and Reports/A06a - 20220606 CV WASTE Final report v1.0 as issued.docx 7 Appendix 2 Clyde Valley Waste Contract assurance statement for year ending 31 March 2022 ASSURANCE STATEMENT FOR THE YEAR ENDING 31 MARCH 2022 1. Purpose of Statement The purpose of this statement is to provide assurance that adequate and effective internal control and governance arrangements exist within North Lanarkshire Council in respect of its duties as Lead Authority for the Clyde Valley Waste Contract, and that no material issues have been identified which may directly or indirectly have an effect on the delivery of the contract. 2. Assurance by the Head of Audit and Risk, North Lanarkshire Council North Lanarkshire Council always seeks to adhere to all relevant laws and regulations and the local code of governance under which the organisation conducts its business. While I acknowledge that no system of control can ever give absolute assurance that all transactions are properly processed, all errors have been prevented, and all policies and procedures have been fully implemented throughout the organisation, based on the results of our audit work, I can confirm there are no known material issues which have not been considered in the completion of this Assurance Statement. 3. Declaration There are, in my opinion, no significant matters arising from our audit work that require to be raised with the Joint Steering Board for financial year 2021-2022 and it is my opinion that the Council’s procedures which have been designed to ensure proper governance and financial control in relation to Clyde Valley Waste Contract matters are adequate and consistent with the Inter Authority Agreement, the Project Agreement and other Contract Documents and have operated effectively in the year ending 31 March 2022. Ken Adamson CPFA Head of Audit and Risk North Lanarkshire Council 6 June 2022 Page 226 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 1 INTERNAL AUDIT REPORT BUSINESS CONTINUITY PLANNING Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of Regulatory Services and Waste Solutions Copied to: Resilience Development Co-ordinator, Chief Executive and all other members of CMT Headlines The purpose of this audit was to provide independent assurance on the extent of compliance across the Council with key corporate expectations in respect of business continuity planning. A particular focus was given to assessing the adequacy and effectiveness of the Council’s governance arrangements, policies and procedures in relation to business continuity planning including determining whether the Services have established business continuity plans and the extent to which these plans are being reviewed and tested; and assessing whether, where plans were invoked, these plans worked in line with expectations and any lessons learned were identified and communicated as appropriate. The Council’s resilience and business continuity activities are co-ordinated by the Resilience Development Unit supported by the Corporate Resilience Management Team. The Council has a Corporate Resilience Plan which sets out clear expectations and specific roles and responsibilities for front-line responders when planning and preparing for emergencies. It is the responsibility of each service area to detail their specific business continuity arrangements which would be enacted to ensure continuity of critical services and mitigate the impact of an emergency or other potential disruptions. These plans are reviewed and updated annually and are thereafter collated to form the Corporate Business Continuity Plan. Both the overall resilience and service business continuity arrangements have had cause to be deployed over the last few years in response to the Covid-19 pandemic and both corporate and service plans have been reviewed and updated accordingly. An audit of the Council’s response to the pandemic was undertaken in February 2021 which concluded that the Council had invoked relevant business continuity arrangements and the Corporate Resilience Plan, which enabled the Council to respond promptly and effectively in meeting their statutory obligations when Covid-19 was declared a global pandemic and continued, as far as possible, to deliver key critical services. We have categorised the results of work undertaken as part of this audit as offering ‘reasonable assurance’ meaning we consider that the Council has established adequate governance arrangements for business continuity planning and can demonstrate a track record of responding effectively to a range of ‘emergencies’. Although we were pleased to note that guidance notes and templates designed to assist Services in the preparation of business continuity (BC) and disaster recovery (DR) plans are in place, we have identified a need for improvement to the current framework for documenting individual Services’ BC/DR arrangements to enhance the quality and completeness of the corresponding plans, as at present there remains considerable variation in the depth and quality of plans being prepared by the Services. Other areas for improvement are detailed at section 3 of this report and include: • corporate and individual services’ business continuity and disaster recovery arrangements would benefit from a robust, formalised review process; and • formal testing of business continuity and/or disaster recovery arrangements needs to be undertaken consistently across the Council in line with corporate expectations. 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 0900/2022/010 Date issued 20/07/22 Audit Team Lynn McCrum, Paula Hendry and Hugh Shevlin Page 227 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 2 1. Executive Summary Objectives The purpose of this audit was to provide independent assurance on the extent of compliance across the Council with key corporate expectations in respect of business continuity planning. The key control objectives reviewed and tested during the audit considered whether: • the Council have adequate and effective governance arrangements, policies and procedures in relation to business continuity planning; • there is evidence that Services have established and are regularly reviewing their business continuity plans; • there is evidence that Services are undertaking appropriate testing of business continuity plans; and • where business continuity plans have been required to be actioned, the plans worked in line with expectations and appropriate lessons were identified. Testing was undertaken on both corporate arrangements and a sample of individual service areas’ BC and DR arrangements. The review did not specifically consider the local and/or national response to Covid-19 where local arrangements have already been considered by Internal Audit and/or where the Council will, with local partners, continue to be involved in wider reviews regarding lessons to be learned. In addition, the review did not consider the adequacy and effectiveness of the ICT Disaster Recovery Plan. This will be reviewed and considered as part of an exercise on Cyber Security, which is currently underway. 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 1 Key areas requiring management action (High) The following key area requiring urgent management action has been identified: • Improvements are required to the framework in place for documenting individual Services’ business continuity and disaster recovery arrangements to enhance the quality and completeness of the corresponding plans. Good practice identified We noted the following areas of good practice during the audit: • The Resilience Development Unit, under the strategic direction of the Head of Regulatory Services and Waste Solutions, is responsible for co-ordinating the Council’s business continuity activities. They are supported in this by the Corporate Resilience Management Team. • The Council have produced and issued a Corporate Resilience Plan and a Corporate Business Continuity Plan. The Corporate Resilience Plan is reviewed on a biennial basis and the Corporate Business Continuity Plan reviewed and updated annually. • The Council has established a network of Business Continuity Champions across all areas of the Council to co-ordinate the review and update of Service’s business continuity arrangements. • Heads of Service are required to submit an annual assurance return confirming that they have reviewed their business continuity plans and providing details of which critical activities within their Business Continuity Plans have been subject to testing. • An annual report is submitted to the CMT and elected members providing an update on progress in relation to resilience planning and business continuity. Page 228 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 3 Other areas for improvement (Medium) Two other areas for improvement were also identified: • Corporate and individual services’ business continuity and disaster recovery arrangements would benefit from a robust, formalised review process; and • Formal testing of business continuity and/or disaster recovery arrangements needs to be undertaken consistently across the Council in line with corporate expectations. Page 229 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 4 3. Action Plan Business Continuity Planning 0900/2022/010 Ref Finding 1 Improvements are required to the framework in place for documenting individual Services’ business continuity and disaster recovery arrangements to enhance the quality and completeness of the corresponding plans. Individual service areas are responsible for detailing the specific business continuity (BC) and disaster recovery (DR) arrangements which would be enacted, as appropriate, to mitigate the impact of any emergency or disruption and ensure that critical services are maintained in the event of potential incidents occurring which could impact on delivery of their operational activities. Standard business continuity guidance has been devised to outline corporate expectations and enable a more consistent approach towards business continuity planning across all Council services. This guidance includes templates to be completed by individual service areas for inclusion in the Corporate Business Continuity Plan (BCP) and the Disaster Recovery Plan (DRP). While the guidance and templates provide an overview for Services to document their BC and DR arrangements, we consider that neither the guidance nor the templates provide sufficient detail around the expected content of the BCP and Annexe A (DRP) documents. In particular there is a lack of detail or guidance around what constitutes a critical activity; how categorisation of timeframes for recovery should be decided on; and how the critical activities/functions and potential hazards or risks should be identified, assessed and reviewed. Further, we consider that the templates in their current format do not appear to provide the most appropriate or effective mechanism for Services to document BC and DR arrangements. From our perspective, a shift from critical activity being the driving force to a focus on what scenarios might impact on the achievement of the Service areas objectives may yield better plans. This shift would allow Services to identify and fully document response plans which clearly detail their key areas of service delivery with corresponding realistic timescale for recovering/reinstating these, considering the precise nature of the potential emergency or disruption, and the actions/procedures necessary to fully ensure continuity of service. We also consider that there appears to be little or no benefit to the collation of individual service submissions into a corporate document as is currently the case. Our review of a small sample of individual service areas’ BCP and DRP (Annexe A) returned similar results to our review of this area in 2018. Audit testing has highlighted that there remains considerable variation in the depth and quality of the content of plans being prepared by the service areas. We noted that: • the BCP/DRPs are predicated on the identification of critical activities within Service areas. We noted many instances where we consider that the documented BC and DR arrangements were not always reflective of all critical activities pertinent to the service area (either inclusion of activities not deemed critical or omission of activities that appear critical in nature); • instances where the ‘critical activity’ column included detail on a scenario which has the potential to impact on service delivery but did not identify the related activity; • many of the Plans do not contain sufficient detail in respect of the methodology and processes which require to be followed to ensure that critical services are maintained or resumed in the event of an emergency incident which could impact on service delivery (including key personnel and resources); • in documenting the response procedures for the activity identified it is not clear that consideration has been given by Services to the necessary actions to ensure that the activity will be maintained or restored in the timescale listed in the BCP (e.g., 0-24 hours, 1-3 days, etc) • BCP/DRPs do not always detail alternative arrangements to be invoked where the critical services are likely to be unavailable for a prolonged period of time. A significant proportion of critical activities are dependent on ICT systems/applications. We noted from a high-level review of Service BCP/DRPs that the detailed responses in these plans do not always appear to take into consideration the recovery timescales stated in the ICT Disaster Recovery Plan for their individual system(s)/application(s). Indeed, there were instances where the individual service areas’ arrangements did not fully detail the ICT system(s)/application(s) which form part of their critical services and therefore no consideration was given, and/or documented, in respect of the alternative arrangements which would need to be invoked should the system/application be unavailable for any prolonged period of time. (Continued over page) Page 230 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 5 3. Action Plan Business Continuity Planning 0900/2022/010 Implication Recommendation Priority Management response Implementation Month/Year Without, appropriate and detailed guidance, the documented business continuity arrangements may not fully consider the impact of potential emergency situations on all critical services and the necessary steps to minimise disruption to these services. Resulting plans may be incomplete and/or not adequate resulting in services not being capable of being restored in line with Service and/or corporate expectations Management should: (1) undertake a formal review of the current framework, including consideration of the specific issues raised above, to ensure that relevant guidance supports the production of robust and comprehensive Service business continuity plans; and (2) ensure the timely implementation of the results of the above review including establishing clear timescales for how individual service areas should revisit their BCP/DRPs to comply with any revised guidance. High Agree Aileen McMann, Resilience Development Coordinator The proposed implementation dates reflect the extensive nature of the actions required to be taken and the existing timelines in place for the preparation and submission of the individual service areas’ business continuity and disaster recovery arrangements. (1) A formal in-depth review of the current framework for business continuity planning will be undertaken. This review will consider each of the issues raised in the finding and in conjunction with a review of best practice, revised detailed guidance and business continuity plan templates will be devised which will enable service areas to adjust their business continuity arrangements to reflect the new corporate approach. (2) Heads of Service will be asked to undertake a review of their business continuity and disaster recovery arrangements in line with revised guidance and templates. Clear timelines will be established and communicated to Heads of Service ensuring the revised business continuity/disaster recovery plans are submitted to the Resilience Development Unit prior to the end of September 2023. February 2023 September 2023 Page 231 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 6 3. Action Plan (continued) Business Continuity Planning 0900/2022/010 Ref Finding 2 Corporate and individual services’ business continuity and disaster recovery arrangements would benefit from a robust, formalised review process. Similar to our findings on business continuity reported in 2018, we have again found that there is currently a lack of effective oversight, scrutiny and challenge of the Services’ business continuity arrangements. Whilst we acknowledge it is the responsibility of Services to identify critical activities and document corresponding BC/DR arrangements, we noted that there has been no formal review of plans and/or consideration corporately as to whether activities have been categorised into the most appropriate timeframes and nor is there any form of peer review or scrutiny of these plans. There have been a number of structural changes within the Council over the last two years which has resulted in various functions and service areas being reallocated and included within the remit of a different Head of Service. The most recent BCP and DRPs do not fully reflect these structural changes. A review of the documented arrangements for both BC and DR highlighted issues which could have been identified had the plans been subject to review. These include duplication of some service arrangements, omission of some service areas and inclusion of incorrect documentation being collated into the corporate business continuity and disaster recovery plans. Implication Recommendation Priority Management response Implementation Month/Year A lack of, or Inadequate, oversight, scrutiny and challenge of BC and DR plans may impact on the quality and robustness of such plans. Management should introduce a formalised review process which subjects proposed business continuity and disaster recovery plans to effective review and/or challenge. This should include ensuring that these arrangements sufficiently detail the methodology and processes which will enable critical activities to be maintained or resumed in the event of an incident which could impact on service delivery and that all functions/service areas of the Council are included in these plans. Medium Partially Agree Aileen McMann, Resilience Development Coordinator The introduction of additional scrutiny/peer reviews was considered when the initial guidance was introduced and the decision made to wait until this guidance had time to be embedded in the process before considering introducing additional reviews. In light of the findings highlighted both above and in previous audits, it is agreed that additional scrutiny should be introduced to ensure a more consistently robust approach across all service areas. The Resilience Development Unit (RDU) will undertake a sample of random checks on those activities under the 0–24-hour priority timeline across all service areas. However, it will remain the responsibility of the individual service area to assess which activities should be included under which priority timeline. As part of the review highlighted in the response to Action Plan Ref 1(2) above, Heads of Service will be required to review the Plans for their Service to ensure that all individual service areas under their remit are included, the correct documentation has been used and the arrangements sufficiently detail the methodology and processes which will be required to enable critical activities to be maintained or resumed in the event of an incident which could impact on service delivery. On completion of the Plans, the RDU will undertake a review of the arrangements to ensure that these are consistent with corporate expectations although the effectiveness of the proposed responses cannot be assessed by the RDU and this will remain the responsibility of individual Service areas. September 2023 Page 232 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 7 3. Action Plan (continued) Business Continuity Planning 0900/2022/010 Ref Finding 3 Formal testing of business continuity and/or disaster recovery arrangements needs to be undertaken consistently across the Council in line with corporate expectations. Annual Assurance Returns are required to be completed by each of Head of Service and submitted to the Resilience Development Unit. The purpose of these returns is to demonstrate that each service area has reviewed their BCP to take account of any change in circumstance to their business activity and also to provide examples of which business areas have had their BCP subject to testing. We understand that the content of the Annual Assurance Returns submitted is not currently reviewed by the Resilience Development Unit. The Business Continuity guidance states that an integral part of any Business Continuity arrangement is to ensure that elements of the plan are regularly tested and reviewed and as a minimum it is recommended that at least one area of each service area’s plan is tested through a table-top exercise on an annual basis. In the last two years the Covid pandemic was viewed as a live testing and training exercise in terms of both overall resilience and business continuity arrangements and thus the Resilience Development Unit deemed that there was no requirement for arrangements to be tested by individual services. It should be noted, however, that there were some service areas where testing was carried out and this has been detailed on their Annual Assurance Return. Implication Recommendation Priority Management response Implementation Month/Year The absence of regular testing of planned business continuity and disaster recovery arrangements may lead to an increased risk that these arrangements are ineffective and/or inadequate in the event of an emergency. Management should ensure that: (1) a formal programme of future planned tests is prepared and implemented across all Services to ensure appropriate testing of all business continuity and disaster recovery arrangements. Testing should be risk-based, proportionate and include table-top exercises, structured walkthroughs and disaster simulation testing as appropriate; (2) testing and review templates, as referenced in the guidance, are completed by all service areas recording details of all such testing undertaken including: the outcomes of testing; lessons learned and improvement actions identified; (3) once completed, testing and review templates referenced at (2) above are reviewed by the Resilience Development Unit for each service area and lessons learned collated into a document for sharing across Services; and (4) Annual Assurance Returns are reviewed and a summary thereafter prepared, detailing testing undertaken in the year and the subsequent outcomes of such testing, for inclusion in the annual report on resilience planning submitted to CMT and elected members. Medium Agree Aileen McMann, Resilience Development Coordinator and Andrew McPherson, Head of Regulatory Services and Waste Solutions Implementation of the recommendations from this audit will place additional asks on the Resilience Development Unit. Although this will enhance the overall approach to business continuity across the Council, it must also be recognised that this team is one of the least resilient services within the Council with a staffing compliment of 1.5FTE. To address this and provide capacity to both introduce and fulfil the additional points raised in the audit recommendation, the Head of Regulatory Services and Waste Solutions will pursue an increase in resource within the Unit to 2FTE. (1) Heads of Service will be asked to undertake this task as part of the review highlighted in the response to Action Plan Ref 1(2) above; (2) As per point (1) above; (3) Included within the revised guidance under ‘Testing and Review’ will be a requirement for all Heads of Service to return all testing and review templates along with their annual assurance return to the Resilience Development Unit. This in turn will be reviewed and collated by the Unit and where common improvements have been identified which can be replicated generically across all/ most service areas this will be circulated across all service areas. (4) Annual Assurance Returns will be reviewed and a and a summary thereafter prepared, detailing testing undertaken in the year and the subsequent outcomes of such testing, for inclusion in the annual report on resilience planning submitted to the Environment and Place Committee. August 2022 March 2023 September 2023 September 2023 September 2023 Page 233 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 as issued .docx 8 3. Action Plan (continued) Business Continuity Planning 0900/2022/010 Ref Finding 4 The role and remit of the ‘Business Continuity Champions’ should be formalised and documented. The Resilience Development Unit is responsible for co-ordinating the Council’s resilience activities and is supported by the Corporate Resilience Management Team, a corporate group comprising representatives from individual Services or crucial parts of Services from across the Council. Individual Services are responsible for documenting their BC and DR arrangements to ensure that critical services are maintained in the event of potential incidents occurring which could impact on the delivery of their operational activities. They are supported in this role by Business Continuity Champions. However, while anecdotal evidence suggests that the Business Continuity Champions are clear on their roles and responsibilities, there is no clearly defined documented remit in this respect. The Business Continuity Champions generally hold senior positions within the Council and as such they are limited in the time which they can commit to this role. At present, our review highlighted that in general terms the Business Continuity Champions act as a conduit between Services and the Resilience Development Unit for submission of BCP/DRPs rather than having an active or direct involvement in the completion and/or review of these plans. Implication Recommendation Priority Management response Implementation Month/Year If the role of the Business Continuity Champions is not clearly documented, there may not be appropriate support, oversight, scrutiny and challenge of the individual service areas’ business continuity and disaster recovery arrangements. Management should ensure that the role and responsibilities of Business Continuity Champions are reviewed and documented to provide greater clarity of corporate expectations of what such individuals are expected to do in relation to business continuity. Low Agree Aileen McMann, Resilience Development Coordinator Roles and responsibilities will be formalised and included within the revised guidance document. November 2022 Page 234 of 418
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Https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.010 Business Continuity Planning/A - FINDINGS AND REPORT/A09A 20220720 Business Continuity Planning Final Report v1.0 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 235 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 1 INTERNAL AUDIT REPORT RISK MANAGEMENT Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of Audit and Risk and Corporate Risk Manager Copied to: Deputy Chief Executive and Chief Executive Headlines The purpose of this audit was to provide independent assurance that the Council has robust and effective risk management arrangements. The audit included a review of both corporate and Services’ arrangements for ensuring that all significant risks are identified, evaluated and controlled, risk registers have been prepared and are kept up-to-date, and appropriate arrangements are in place to review/monitor and report on risk. As part of this audit, we assessed the arrangements against good practice as identified by Audit Scotland in their ‘Best Value toolkit: Risk management’. We also considered the extent to which management had taken action to address the recommendations contained in the previous Internal Audit report on this topic issued in September 2020. The Council operates in a complex environment and faces multiple challenges in delivering against its priorities. Effective risk management arrangements are therefore essential and form a key part of good corporate governance. The Corporate Risk Team and wider risk network continue to develop risk management via activities such as the annual refresh of the Corporate Risk Register (CRR), quarterly reporting on key developments in risk management to the Corporate Management Team (CMT) and Audit and Scrutiny Panel (ASP), active participation in the review of the project management model to ensure appropriate focus and guidance on risk and providing risk support to a number of key projects across the Council. Overall, we have categorised the audit as offering ‘reasonable assurance’ meaning that we consider that the Council’s risk management arrangements have continued to improve and embed since our last review. We are generally satisfied that these arrangements are being actively supported and promoted by senior management at both corporate and service level, and that risk management contributes towards the achievement of corporate objectives. We are also satisfied that there are adequate procedures in place at both corporate and service levels for identifying and prioritising risks and identifying appropriate action to mitigate/manage those risks. Although at different stages of maturity, Services continue to improve and enhance their risk management arrangements and as such, there is scope for some further improvement. We have identified a number of areas where we consider further management action is required and these are detailed in section 3 of this report and include: • replacement and/or new risks need to be documented and assessed in line with the agreed timetable; • a framework for monitoring compliance with the Risk Management Strategy needs to be developed and implemented to facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services; and • improvements are required to current arrangements for ensuring that all relevant staff undertake the appropriate mandatory training for risk management. 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 0900/2022/011 Date issued 21/07/22 Audit Team Jacquie Howden and Paula Hendry Page 236 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 2 1. Executive Summary Objectives The purpose of this audit was to provide independent assurance that the Council has robust and effective risk management arrangements. The work undertaken was designed to offer an audit opinion on the following: • Risk management is actively supported and promoted by senior officers/elected members and contributes towards the achievement of corporate objectives; • There is a systematic approach to identify and prioritise risks (corporate and Service level) and match them with appropriate responses; and • Risks, and the action taken to mitigate them, are regularly monitored. The audit was not intended to provide assurance on the adequacy or otherwise of the identification of, or management’s responses to, specific individual risks. In accordance with the Council’s Internal Audit Charter, this assignment was led by the Principal Auditor and the Head of Audit and Risk (who also leads on corporate risk management) was not involved in the design of the audit methodology, the conduct or review of the audit fieldwork or the preparation of the draft report. 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 3 2 Key areas requiring management action (High) No key areas requiring urgent management action has been identified. Good practice identified We noted the following areas of good practice during the audit: • The Council’s Risk Management Strategy 2020-2022 was approved by the Policy and Strategy (P&S) Committee in March 2020 and clearly sets out the roles and responsibilities for staff, senior management and elected members in respect of risk management, as well as the roles of the P&S Committee and ASP in providing oversight of the risk management arrangements. • The Strategy has been developed in accordance with the CIPFA/SOLACE local code of corporate governance ‘Delivering Good Governance in Local Government’ and the Audit Scotland ‘Best Value toolkit: Risk Management’, which recognises risk management as an integral part of good corporate governance, and in accordance with the International Risk Management Standard ISO31000:2018 ’Risk Management – Guidelines’. • The Strategy and associated guidance also clearly set out the corporate methodology for identifying, prioritising, managing and reporting risks. Training on this methodology is included in a mandatory eLearning risk management training module, which all staff are required to undertake every two years, with further training provided by the Corporate Risk Team as required. • The Risk Management Corporate Working Group (RMCWG) is responsible for supporting the Corporate Management Team (CMT) in implementing the strategy and promoting good risk management practice across the council, including the promotion of risk management within Service planning, performance management, programme management and change initiatives processes. The RMCWG is chaired by the Head of Audit and Risk and includes representation from the Corporate Risk Team and designated Risk Champions from each Service. • The Council has a risk management information system (Figtree) which is used to record all corporate and Service risk registers and allows for a standardised approach to identifying, managing and reviewing risks across the Council against the standard risk categories and with consideration to the corporate and Service objectives and priorities. Page 237 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 3 Good practice identified (continued) • Risk registers have been prepared for all Services on Figtree and require to be reviewed regularly in accordance with the frequencies determined by the individual risk’s residual risk rating (as detailed in the Strategy). All corporate risks are assigned to a named member of CMT and are reviewed on a quarterly basis by the CMT, with service and project risk registers reviewed quarterly, six-monthly or annually as required. The Figtree system automatically prompts the risk/action owner when the risk is due for review. • Quarterly risk management update reports are presented to the ASP setting out the key risk activity over the previous period. In addition, deep dive reviews are regularly reported to the Panel in respect of individual/new corporate risks. Risks are also routinely reported at CMT level for corporate risks. • Six monthly monitoring reports are presented to the ASP in respect of governance and risk management arrangements for the Council’s Arms-length external organisations (ALEOs) and external partnerships which include the key risks for each organisation. Risks around ALEOs and partnerships are included in the Business Solutions service risk register. Other areas for improvement (Medium) A small number of other areas for improvement were also identified: • Replacement and/or new risks need to be documented and assessed in line with the agreed timetable; • A framework for monitoring compliance with the Risk Management Strategy needs to be developed and implemented to facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services; and • Improvements are required to current arrangements for ensuring that all relevant staff undertake the appropriate mandatory training for risk management. Page 238 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 4 3. Action Plan Risk Management 0900/2022/011 Ref Finding 1 Replacement and/or new risks need to be documented and assessed within a reasonable timescale. Our last review of risk management in 2020 identified three risks from the Corporate Risk Register (CRR) that were under development and needed to be completed and moved to ‘live’ status. Whilst management committed to action to ensure this, two of these risks (asset rationalisation and Health and Social Care Integration(HSCI) / Integrated Joint Board (IJB)) have not yet been moved to ‘live status’. We noted, however, that the changing operational landscape has presented challenges in agreeing how these risks should be framed. These outstanding risks have now been replaced with the scope of the asset rationalisation risk being widened to better reflect how this, and other key programme of work items, align and link together to reflect the strategic risk around the implementation of the target operating model and associated resources and the HSCI/IJB risk being replaced by a new National Care Service (NCS) risk. The CRR is reviewed annually to ensure completeness and alignment to the Council’s strategic objectives. The outcome of the most recent refresh was presented to CMT in June 2022 and we noted that two new risks (education attainment and supply chain) as well as the previous corporate risk relating to the Scottish Child Abuse Inquiry risk have been assessed as meriting inclusion in the CRR. This means that overall there are now four corporate risks that need to be documented, assessed and moved to ‘live’ status and a fifth that is now under ownership of CMT rather than the individual Service. We also noted that the report to CMT reminded the corporate risk leads of the need to ensure that the Corporate Risk Team is contacted when reminders are received for the review of corporate risks thus ensuring review frequencies are maintained and avoiding the risk becoming out of date. A proposed timetable for reviewing/reporting corporate risks to CMT including expected dates for presenting the risks above that are under development has been approved by CMT. We consider it vital that these corporate risks are formally documented, assessed and moved to ‘live’ status in accordance with his timetable to enable the council to appropriately monitor, review and where appropriate, take action to mitigate them. Implication Recommendation Priority Management response Implementation Month/Year The absence of a fully documented corporate risk register, subject to regular monitoring and challenge may mean that key stakeholders may fail to fully understand the key risks the Council faces and in turn may consequently fail to take appropriate action to mitigate them. The Head of Audit and Risk should ensure that the replacement and/or new corporate risks detailed above are documented, assessed and moved to ‘live’ status within a reasonable timescale. Medium Agree Ken Adamson, Head of Audit and Risk Corporate risk management staff will liaise and work with the relevant Chief Officers designated as Risk Leads for each of the replacement or new corporate risks to ensure that these are documented, assessed and moved to ‘live’ status as soon as practical and subsequently reported to CMT and ASP in accordance with the timetable approved by CMT. Although the initial risks relating to NCS will be documented in line with the proposed timetable, it should be noted that the development of the NCS risk will be an ongoing issue, with the risk continuing to evolve as the relevant legislation passes through the Scottish Parliament and the detailed nature of the NCS proposals, the expectations and responsibilities placed upon local authorities and the likely impacts become clearer and more easily understood. September 2022 Page 239 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 5 3. Action Plan Risk Management 0900/2022/011 Ref Finding 2 A framework for monitoring compliance with the Risk Management Strategy needs to be developed and implemented to facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services. Work undertaken during this audit to review current risk management arrangements within Services and consider the extent to which management action has been taken to address previous audit recommendations demonstrates continued development and embedding of risk management across the Council. We were pleased to note that all Services have now input their risk registers into the Figtree system and that guidance on the use of Figtree and the review process was issued to all Risk Champions in October 2020. We noted that the Risk Champions also provide regular updates on the completeness of their Service’s risk registers at the Risk Management Corporate Working Group (RMCWG) meetings and that, in general, appropriate arrangements for reporting risk issues across the Council were in place. Our review has, however, identified the following: • although progress has been made, there is still scope to further develop the risk registers for Education and Families and Adult Health and Social Care (AHSC), where high-level service risks and only some operational level risks have currently been included. We understand that this is due in part to ongoing service re-structures and lack of clarity over the future structures and governance arrangements within these Services and that the Corporate Risk Team is continuing to work closely with them to further develop their risk registers; • there is scope to improve the completeness of the fields within the Figtree system for individual risks – particularly in relation to the completeness of risk context and proximity fields and linking risks to the key corporate priorities; • from a brief high-level review of service risk registers in Figtree, we noted that there are still a high number of instances where risks have not been reviewed in accordance with the expected timescales. From discussions with the Risk Champions, we understand that, whilst Figtree automatically prompts the risk/action owner that a review is required, a number of review dates have been missed due to the competing workloads of the relevant officers; • there is a need to further develop the processes for monitoring each service’s overall risk profile. We understand that some Services have begun considering this through a review of the reporting processes; • there is scope for Services to consider how best to identify and record ‘near misses’ within their risk registers and ensure that the appropriate action can be taken forward. Some Services were able to evidence risks having been reviewed to take account of such instances, whilst the arrangements for other Services are not yet sufficiently advanced to give this aspect appropriate consideration; • whilst risk is discussed at several forums at Service level, we noted that it is not a standing agenda item at all Services’ Senior Management Team (SMT) meetings. In addition, our testing highlighted that not all of the Council’s Risk Champions are members of the SMT (in accordance with good practice), indicating that risk management may not currently be getting the necessary level of exposure at these meetings. There is also scope to improve the current arrangements for providing regular risk monitoring/update information to senior management, which detail the risks identified, their risk ratings and any action taken. Whilst one Service routinely used risk register reports for this purpose, other Services indicated that there were no formal/regular reporting mechanisms currently in place; and • we reviewed a sample of committee reports and noted that, whilst narrative had been included within the risk impact section for all reports in accordance with expected procedures, there is scope to improve the quality and quantity of the detail provided to members to ensure that the risks is clearly detailed and more easily understood. We were pleased to note that the Corporate Risk Team have recognised the need for improved monitoring of performance and compliance against key expectations contained within the Risk Management Strategy. Within their risk actions/priorities, the Corporate Risk Team has identified a need to prepare a compliance strategy which will allow Services to self-evaluate against the corporate expectations. This would also provide useful information for the Corporate Risk Team to monitor and direct resources to better embed risk management across the organisation by identifying areas of good practice as well as areas for improvement. We understand that as part of this process, the Corporate Risk Team is liaising with other councils to identify the approaches they have to measuring compliance and performance and will seek to develop relevant key performance indicators for monitoring and reporting purposes. We were also pleased to note that some progress has been made by the Corporate Risk Team regarding the development of guidance on monitoring/reporting risk management issues and that initial sessions have been held with the individual Risk Champions and Risk Facilitators with a view to establishing service-based risk forums which the Corporate Risk Team will lead/participate in until they are well established. The expected approach for this is being informed by discussions with the risk network and the resulting arrangements are expected to assist in establishing consistency of reporting to SMT’s across the Council. (continued overleaf) Page 240 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 6 3. Action Plan Risk Management 0900/2022/011 Implication Recommendation Priority Management response Implementation Month/Year Management may lack assurance on the extent to which key expectations/requirements contained the strategy are being complied with. Without formal processes in place for reporting risk issues, management may not be able to take appropriate or timely action to address these risks. The Head of Audit and Risk should ensure that: (1) work continues to develop a framework, including suitable KPIs, to appropriately monitor compliance with key aspects of the Risk Management Strategy, with areas for improvement being captured and thereafter tracked and monitored; and (2) clear expectations regarding consideration, monitoring and reporting of risk are incorporated into the revised Risk Management Strategy so that Services can incorporate this into their individual governance arrangements. Medium Agree Ken Adamson. Head of Audit and Risk (1) Arrangements for assessing and reporting compliance with key expectations will be developed and included as part of the revised Risk Management Strategy due to be submitted for approval by Committee in line with corporately agreed timelines. (2) Arrangements for ensuring that appropriate consideration of risks is incorporated into individual Service governance arrangements will also be included as part of the revised Risk Management Strategy due to be submitted for approval by Committee in line with corporately agreed timelines. December 2022 December 2022 Page 241 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 7 3. Action Plan Risk Management 0900/2022/011 Ref Finding 3 Improvements are required to current arrangements for ensuring that all relevant staff undertake the appropriate mandatory training for risk management. The Council has two online eLearning modules in relation to risk management – ‘Introduction to Risk Management’, which is mandatory for all employees and ‘Advanced Risk management’, which requires to be completed by the members of the ASP, Risk Champions and Risk Facilitators, 3rd/4th tier managers and all supervisors/team leaders. The mandatory eLearning course requires to be completed every two years and the employee and their line manager are automatically notified by email one month before the two- year period is due to expire. Line managers are able to monitor progress/completion by everyone in their team through the Teams dashboard within LearnNL and monitor overall uptake of the training. From discussions with the Risk Champions, we noted that staff were generally encouraged to complete the risk management training, but that service managers were not always being proactive in monitoring the uptake of the training modules. There is also no formal monitoring of the completion of the modules by the Corporate Risk Team or the RMCWG for individual Services and/or the council as a whole. We understand that the Corporate Risk Team is looking to develop a methodology for monitoring uptake of the training courses as part of their planned monitoring compliance framework. We noted that the training matrix set out in the Risk Management Strategy includes the requirement for Risk Champions and Risk Facilitators to undertake a one-day training in addition to the mandatory courses detailed above. We understand that this one-day course was undertaken some time ago before some of the current Risk Champions were in place and is no longer available. However, all Risk Champions have attended a reduced session on risk management and the Corporate Risk Team works closely with all Services to ensure they are aware of their roles and responsibilities. The Corporate Risk Team is currently developing a risk network training course which will aim to bring all Risk Champions and Risk Facilitators together twice a year. Implication Recommendation Priority Management response Implementation Month/Year Without appropriate training, staff may not be aware of their roles in respect of risk management. The Head of Audit and Risk should: (1) remind Services of the need to complete and monitor uptake of the mandatory risk management training by staff; (2) determine how best to capture/monitor the uptake of mandatory training module for each Service and the Council as a whole in accordance with expected timescales, ensuring that this is regularly monitored, and action taken as appropriate on any issues arising, by the Corporate Risk Team and RMCWG; and (3) ensure the risk network training is finalised and implemented within a reasonable timescale. Medium Agree Ken Adamson, Head of Audit and Risk (1) Services will be reminded of the need to ensure that all staff undertake the relevant training appropriate to their role. (2) Consideration will be given as to the most effective and efficient way to gather and report data in relation to the completion of mandatory and other training. (3) Risk network training will be finalised in due course. July 2022 October 2022 October 2022 Page 242 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 8 3. Action Plan Risk Management 0900/2022/011 Ref Finding 4 There is scope to improve the corporate risk management strategy to better reflect good practice. The Council’s current Risk Management Strategy (2020-2022) was approved by the Policy and Strategy Committee in March 2020 and provides an enterprise risk management approach which recognises the link between risks at different levels and areas of activity within the Council, together with those risks arising from relationships and contracts with other parties outwith the Council. The strategy was due to be reviewed in December 2021, but due to absences within the Corporate Risk Team, this has now been extended to December 2022. From a review of the Strategy and discussions with the Risk Champions, we are satisfied that it generally reflects good practice expectations, clearly setting out the roles and responsibilities of staff, senior management and elected members in respect of risk management and the corporate methodology for identifying, scoring/prioritising, managing and reporting risks. We consider, however, that there is scope for improvement to better reflect good practice as it does not currently provide clear guidance on risk appetite, tolerance levels and/or consideration of opportunities as well as threats to the Council. We understand from the Corporate Risk Manager that this was a conscious decision and will be reviewed in due course as service risk arrangements mature and the Risk Champions are more established in their roles. Implication Recommendation Priority Management response Implementation Month/Year The Council’s risk management strategy may not fully reflect good practice. The Head of Audit and Risk should ensure that as part of the next review of the Risk Management Strategy, further consideration is given as to whether it is appropriate to include risk appetite, expected tolerance levels and opportunities in the Strategy. Low Agree Ken Adamson, Head of Audit and Risk Consideration will be given, as part of the planned update to the current Risk Management Strategy, to the inclusion of clearer guidance on adopting risk appetites, expected tolerance levels and capturing opportunities. December 2022 Page 243 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 9 3. Action Plan Risk Management 0900/2022/011 Ref Finding 5 A replacement Risk Champion for Education and Families should be identified to ensure a smooth transition. Risk Champions and Risk Facilitators are in place across all Service areas. We noted, however, that due to a Service restructure, the current Risk Champion for Education and Families will be moving to Business and Digital Service area and as such will no longer be undertaking the champion role for this area. We understand that an officer has been identified to temporarily undertake this role but that the Service have still to agree the permanent replacement. Implication Recommendation Priority Management response Implementation Month/Year Without suitably experienced Risk Champion covering all Services, there may be an absence of appropriate monitoring, support and the ability to provide assurance that risk management arrangements are operating effectively. The Head of Audit and Risk, in conjunction with Education and Families management, should ensure that an appropriate replacement officer is formally assigned to the role of Risk Champion for Education and Families, with the relevant officer provided with appropriate training to facilitate undertaking the role effectively. Low Agree Ken Adamson, Head of Audit and Risk Audit and Risk will liaise closely with Education and Families senior management to ensure that an appropriate replacement officer is formally assigned to the role of Risk Champion for Education and Families and that the identified officer is provided with relevant training to enable him/her to undertake that role effectively. August 2022 Page 244 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0900.2022.011 risk management/a. findings and report/a06b 20220721 risk management final report v1.0 as issued .docx 10 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 245 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 1 INTERNAL AUDIT REPORT SUPPORTING ATTENDANCE Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of People and Organisational Development and Senior Employee Relations Adviser Copied to: Chief Executive and Deputy Chief Executive Headlines The purpose of the audit was to provide independent assurance on the adequacy and effectiveness of the Council’s current arrangements for assessing compliance with expected procedures in relation to the management of sickness absence and on the robustness of relevant performance reporting. Sickness absence and its effective management is, and has been for a considerable time, a high-profile issue. Over the last five years the Council has had persistently high levels of sickness absence, with a concerning growth in the level of long-term absences often related to stress and other mental health issues. The public health emergency associated with the Covid pandemic has created additional challenges in managing attendance, with significant numbers of staff and managers working remotely; increased challenges generally around employees’ health and wellbeing; and significant pressures placed on a number of groups of front-line workers. Whilst short-term absences have fallen across all Services since lockdown in March 2020, the level of long-term absences remains significant, although it is noted that that data for 2021-22 shows a 4.4% improvement in mental health related absence from the previous year. The Council’s current Supporting Attendance Policy (the Policy), approved by the Finance & Resource Committee in March 2021, sets out the processes expected to be followed in managing sickness absence across the Council. The policy covers all Single Status employees, with a separate policy, which is currently being refreshed, for teaching staff (expected completion date of December 2022). Work undertaken during the audit included a high-level review of how management seeks to ensure, monitor and assess compliance with key aspects of the policy and whether issues arising from management reviews of compliance have been communicated to relevant management and, where appropriate, translated into specific actions. We also undertook a brief high-level review of the processes for compiling, communicating and monitoring sickness absence data. This included some limited substantive testing and re-performance of reported sickness absence data and consideration of the adequacy of management actions undertaken or planned in response to recent/current sickness absence performance. Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’. We consider that the Council has put in place appropriate management arrangements to support compliance with the Supporting Attendance policy and for managing, monitoring and reporting sickness absences and that generally these arrangements are operating as expected. We were pleased to note that the revised policy, supporting toolkits and eLearning module clearly set out the Council’s expected processes and that managers generally appeared aware of, and understood, their roles and responsibilities for complying with the policy. In addition, we were satisfied that there was appropriate support and advice available to managers via the Employee Relations team to manage/monitor individual absences and that absence levels/patterns were being actively monitored and reported to managers via Employee Relations and HR Business Partners. We have, however, identified a small number of areas where we consider that scope for improvement exists and have made some recommendations for management consideration/action. These are detailed at section 3 of the report and include: • management needs to ensure that the policy is being effectively implemented in line with corporate expectations, that lessons learned/issues raised are acted upon/shared as appropriate and that its impact/effectiveness is regularly reviewed; and • Improvements are needed to the consistency and content of performance information presented to senior management and to ensure that process for preparing performance information is fully documented. 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 0320/2022/002 Date issued 22/08/22 Audit Team Jacquie Howden, Paula Hendry and Jackie Struthers Page 246 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 2 1. Executive Summary Objectives The purpose of the audit was to provide independent assurance on the adequacy and effectiveness of the Council’s current arrangements to assess compliance with expected procedures in relation to the management of sickness absence and the robustness of relevant performance reporting. In particular, the audit was designed to provide independent assurance on the following issues: • Has the Council put in place appropriate management arrangements to support the delivery of effective compliance with the Supporting Attendance Policy (which was approved by the Finance and Resources Committee in March 2021) and are these arrangements operating satisfactorily? and • Has the Council established formal procedures for managing absences and monitoring, and reporting robust performance data relating to sickness absence and is appropriate management action taken where performance is below target and/or need and scope for improvement is identified? Our review of the robustness of absence performance indicators was limited to a high-level review of the process for this and some limited substantive testing and re-performance of reported sickness absence data. We did not undertake any specific checks on the accuracy of the underlying information held within the iTrent system itself as part of our audit. The audit was not intended to offer detailed comment on the content or effectiveness of the Supporting Attendance Policy or to review/offer assurance on how individual absence cases have been managed and/or whether the processes followed for individual cases were consistent with the policy. 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 2 2 Key areas requiring management action (High) There were no areas identified which required urgent management action. Good practice identified We noted the following areas of good practice during the audit: • The Council has an approved corporate Supporting Attendance Policy, which was developed following a significant programme of review of current best working practices in respect of sickness absence and in full partnership with management and the Trade Unions. The focus of the revised policy is on maintaining low levels of short-term absences and on reducing the currently high levels of long-term absences through early support and intervention. The policy clearly sets out the roles and responsibilities of all parties in respect of the expected processes for supporting attendance across the Council. • The Policy is aligned to other corporate policies and frameworks including Smarter Working, Special leave, Workforce for the Future Strategy 2020-2023 and the revised Mental Health and Wellbeing strategy, which are currently being progressed through the programme of work item P064.2 - Employee engagement and wellbeing. • A series of toolkits has been developed to accompany the Policy and to provide additional support and guidance to managers on supporting attendance. These cover a range of topics including the newly introduced early support procedures, guidance on the new short and long- term sickness absence stages, conducting return to work discussions and absence support meetings and on using the occupational health service referral process. • An eLearning module on the Policy and associated toolkits has been developed to facilitate managers in applying the processes within the revised policy and training records are maintained of all managers who have undertaken the training. In addition, there are a range of masterclass eLearning modules for managers dealing with particular areas such as stress risk assessment and mental health. Page 247 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 3 Good practice identified (continued) • There are also various supports and resources available on MyNL, LearnNL and Workwell relating to absence topics, and all managers have access to the support and advice of the Employee Relations team. • Supporting attendance is a standing agenda item at Service Management Meetings and individual service leadership team meetings. • Dedicated Employee Relations Advisors (ERAs) have been assigned to each service to ensure that absence levels are being appropriately monitored on a monthly basis; to identify and discuss any underlying issues with the Employee Relations (ER) team; and to provide ongoing support and/or guidance to service managers as required. Formal arrangements are in place, with the HR Business Partners attending SMT meetings to discuss the services’ overall absence data and ERAs attending monthly attendance meetings with the individual service managers to assist in actively managing individual absence cases. • Performance data for sickness absence in respect of Teaching and Single Status staff is submitted to the Improvement Service (IS) as part of the Local Government Benchmarking Framework (LGBF). Other areas for improvement (Medium) A number of other areas for improvement were identified: • Management needs to ensure that the policy is being effectively implemented in line with corporate expectations, that lessons learned/issues raised are acted upon/share as appropriate and that its impact/effectiveness is regularly reviewed; and • Improvements are needed to the consistency and content of performance information presented to senior management and to ensure that process for preparing performance information is fully documented. Page 248 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 4 3. Action Plan Supporting Attendance 0320/2022/002 Ref Finding 1 Management needs to ensure that the policy is being effectively implemented in line with corporate expectations, that lessons learned/issues raised are acted upon/shared as appropriate and that its impact/effectiveness is regularly reviewed. We reviewed the level of support and advice provided to senior management by the Employee Relations (ER) team in respect of managing sickness absence and were pleased to note that there were adequate and generally effective processes in place at service/operational level to ensure that individual absences are appropriately and actively monitored/managed. We were also pleased to note that the ER team had undertaken several targeted service reviews in recent years around sickness absence – most recently in September 2021 for long term absences within the Adult Health and Social Care (AHSC) and, in November 2021, for long term absences within Education & Families (School Estates). However, there was no evidence of the recent reviews for AHSC and Education & Families having been discussed at the relevant SMT and/or CMT and/or any specific actions having been documented to address any of the issues arising/lessons learned from the reviews. We also noted that requests for specific reviews or issues arising can originate from many different sources but that at present there is no overarching corporate action plan to assess, identify and thereafter monitor continuous improvement activity in relation to sickness absence. The Council’s expected year-end outturn position for 2021/22 for sickness absence is 10.08 FTE average days lost per employee (against a target of 9.86 FTE average days lost per employee). In comparison to 2020/21, which reported 7.89 FTE average days lost per employee, this shows a marked deterioration. However, last year was not a typical year for sickness absence levels (with significant COVID related absences and large numbers of employees shielding and/or working from home) and is not considered to provide a reliable benchmark (2019/20 data is suggested to provide a more meaningful comparison). The reported FTE average days lost per employee for 2019/20 was 10.55. Current year outturn is below this. The Supporting Attendance Policy sets out that the effectiveness of the Policy will be monitored through regular reporting of relevant sickness absence information to CMT and Elected Members. Although we recognise that the impacts of the covid pandemic were still present during the first year of implementation of the revised Supporting Attendance Policy, we consider it important that a formal assessment of the effectiveness of the Policy is undertaken at an appropriate stage. We also noted that the ER team does not currently undertake periodic compliance reviews at corporate level to determine whether services are complying with the Supporting Attendance Policy and/or whether absences have been actively monitored/managed in accordance with the expected stages and/or timescales. Implication Recommendation Priority Management response Implementation Month/Year Without a formal review of the Policy it would be difficult to determine if the new policy is effective. Without a formal action plan, it would be difficult to monitor and track identified improvement actions and the progress and resultant impact of those actions. Management may not be able to take appropriate action to address issues identified. Management may lack assurance on the extent to which key expectations/requirements contained the policy are being complied with. People and Organisation Development should: (1) undertake a formal review of the effectiveness and impact of the new Supporting Attendance Policy; (2) capture any agreed improvement actions for sickness absence in a corporate action plan, progress against which is then tracked and monitored; and (3) undertake periodic compliance reviews on a sample of services and/or service areas and/or individual absence cases to determine the extent to which the revised Supporting Attendance policy is being implemented across the Council in line with corporate expectations. Medium Agree Fiona Whittaker, Head of People & Organisational Development (1) As part of the rollout of the Supporting Attendance Policy it was agreed that a review meeting would take place with the Trades Unions to gather feedback on the policy and discuss any issues/concerns that have arisen during the first year of implementation. Those meetings have now taken place and the ER ream are now considering whether there needs to be any changes made to the policy and/or associated procedures. Following the first year of operation of the policy, feedback will also be sought from a selection of managers and ER will then consider whether there needs to be any changes made to the policy and/or associated procedures and seek approval for these as necessary. As the policy has only been in place for a year and is still in effect bedding-in we will undertake a fuller review in a further 12 months. (2) An action plan will be developed and thereafter tracked and monitored. (3) The format and frequency of compliance reviews will be considered and incorporated into the action plan at 2 above. December 2022 December 2023 December 2022 December 2022 Page 249 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 5 3. Action Plan (continued) Supporting Attendance 0320/2022/002 Ref Finding 2 Improvements are needed to the consistency and content of performance information presented to senior management and to ensure that process for preparing performance information is fully documented. We reviewed the arrangements for reporting performance information to senior management and noted that there had been no quarterly performance reports presented to the Corporate Management Team (CMT) since September 2021 (for the quarter to June 2021). We understand that a decision was made at that time for performance information to instead be reported at service management team (SMT) level. We obtained and reviewed the SMT minutes of meeting for the last three months for three services at random (Education and Families, Chief Executives Office and Enterprise and Communities), however, and noted that the equivalent performance data (including actual v targets) was not always being routinely reported at the individual SMT meetings. We understand, however that quarterly reporting to CMT on absence data will resume for 2022-23. In addition, we noted that there was often insufficient detail within the available minutes to allow us to determine whether all key issues arising from the absence reports were being reported and/or whether the actions which should be taken to address these issues were being discussed/monitored. In particular, there was no evidence of those sections with the highest levels of absence having been highlighted to either the Chief Executives or Enterprise and Communities SMT for further discussion/investigation or of the trends in respect of long-term and short-term absences. We were satisfied, however, that there was appropriate detail provided to Education & Families SMT members to allow for further investigation of individual cases/sections as appropriate. Sickness absence performance information is generated by the Workforce Systems and Analytics team within the ESC via iTrent reporting functionality and passed to the ER team for further analysis and reporting. This information is used for a variety of purposes including the quarterly performance information previously reported to CMT (and now due to be reported to SMTs on a monthly basis), the annual JCC performance information and the LGBF annual sickness absence return. We noted that for the sickness absence performance information there were no formal documentation and/or proforma definition sheets in place formally recording the processes and underlying data sources to be used in generating the relevant performance data. The current corporate expectation is that all performance indicators are required to have a performance information definition sheet which provides a definition of the process and information required to calculate the final indicator results, a worked example showing how the indicator will be calculated, the frequency of the calculation, the data source and details of the Calculating Officer and Verification Officer. In recent audit work on the strategic performance framework, we noted that a definition sheet was generally not prepared for the LGBF indicators as the Improvement Service has prepared definitions. However, we consider that a definition sheet should be prepared for these indicators as it will provide further information to staff on corporate expectations re the calculation methodology to be used, details of data sources, etc. Implication Recommendation Priority There would be no record of the key absence issues and/ or any proposed actions to be taken to address these issues having been discussed. Management may not be able to take appropriate action to address key issues. Without formal documented processes outlining how performance information should be prepared, staff may not be aware of how to calculate the performance measures which may result in inaccurate performance data being reported to key stakeholders. People and Organisation Development should ensure that: (1) monthly performance information on sickness absence is reported as standard across all Services at SMT meetings, any key issues in relation to absences are discussed with senior management at these meetings and that appropriate documentation is maintained to support the effective monitoring of any management actions identified and/or taken to address these issues; and (2) the processes for preparing/calculating sickness absence performance information for LGBF, SMT and JCC are formally documented, with proforma definition sheets clearly setting out the definition of the performance measure and the methodology for its calculation in accordance with the Council’s performance management arrangements. Medium Page 250 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 6 3. Action Plan (continued) Supporting Attendance 0320/2022/002 Management response Implementation Month/Year Agree (1) Fiona Whittaker, Head of People & Organisational Development The ER team currently provide monthly absence performance reports to HRBP teams to cascade to their SMT’s. These are high level reports (service information rather than division) but should still be discussed at SMT meetings. The HRBP teams should provide more detailed information on areas of concern for discussion at these meetings. In addition, the ER attend monthly absence meetings with Heads of Service/Senior Managers across the services to discuss cases. The HRPB and ER teams will undertake a review of current arrangements including areas of responsibility and an action plan will be developed to implement and thereafter monitor any management actions identified. The outcome of this will be cascaded to CMT to ensure all Services are aware of expectations. (2) William Cunningham, Workforce Systems and Analytics Manager The Workforce Systems & Analytics team will undertake a review of all reporting documentation to ensure that it meets organisational requirements. Part of this work will be the creation of a reporting library, which will hold proforma definition sheets that provide a detailed breakdown of the various reporting elements (requirements, data, selection criteria, calculations, publications, frequency, etc), with these being reviewed on an annual basis. December 2022 April 2023 Page 251 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 7 3. Action Plan (continued) Supporting Attendance 0320/2022/002 Ref Finding 3 Although generally satisfactory, there is a need to improve some aspects of current arrangements for managing/monitoring sickness absence. From our audit testing, we were satisfied that there are appropriate arrangements in place for managing/monitoring individual absences, with Absence Management and Absence Trigger reports routinely circulated to managers and reviewed in conjunction with the designated ERAs each month. In addition, we noted that the ER team undertakes periodic spot checks on the accuracy/completeness of the information contained in the iTrent system. We understand from our discussions with the ERO, however, that there are some ongoing issues regarding the accuracy of the information in the iTrent system, particularly in respect of absences not being promptly closed off following an employee’s return to work affecting the accuracy of the performance information. We did not undertake any specific checks on the accuracy of the information within the iTrent system itself as part of our audit, but we were satisfied that this message is being regularly/routinely raised with managers as part of the monthly absence meetings with the ERAs. We noted, however, that the iTrent system is not a case management system and does not, therefore, automatically prompt managers as to when action is required to be taken to address absences. At present, there is also no report which can be produced from the system to highlight whether managers are acting in accordance with the expected timescales once the thresholds for triggers have been met. Through discussions with the Senior Employee Relations Advisor, we understand that management is aware of this and is actively looking to develop and/or procure a new case management system which will allow individual absence cases to be more easily and effectively monitored/managed. Implication Recommendation Priority Management response Implementation Month/Year Without accurate and up to date information, management may not be aware of the true levels of absences and may not take the appropriate remedial action. Without timely notification of triggers/absence stages prompt and appropriate action to address staff absence may not be taken. People and Organisation Development should: (1) ensure that the ERAs continue to regularly/routinely raise with managers the need to ensure complete and accurate information in relation to staff absences is recorded in the iTrent system (including closing off all absences promptly after the employee returns to work); and (2) continue to explore whether/how automatic and timely notification to managers of triggers/key absence could be developed to better support prompt and timely action by managers where required by the policy and facilitate more effective management/monitoring of sickness absence. Low Agree (1) Linda Cullen, Acting Employee Relations Manager A new report has now been developed that shows the key absence stages for the Supporting Attendance Policy with absences that have occurred and where dates for meetings should be visible. At present this is just being issued to the ERAs for review and follow up with managers. Going forward, this will be issued direct to managers and they will be expected to undertake their responsibility regarding recording of key absence dates on iTrent. ER will then undertake spot checks on this. (2) William Cunningham, Workforce Systems and Analytics Manager and Linda Cullen, Acting Employee Relations Manager Although there are workflows that can be switched on in iTrent to notify a manager on various aspects of managing attendance (e.g. hitting a trigger) we have ascertained that these do not facilitate improvements in the management/monitoring of absence. However, improvements are being made to the case management system that links to iTrent. Lack of functionality in its current format means the case management system is not being used for sickness absence but Midland HR (iTrent software provider) continues to develop the functionality of this system. An update is due in the coming month, and we will continue to monitor enhanced functionality provided by this and subsequent updates with a view to using the case management system for absence and rolling it out to Managers. This will be kept under review and is dependent on Midland HR’s development of the software. January 2023 March 2023 Page 252 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance final report v1.0.docx 8 3. Action Plan (continued) Supporting Attendance 0320/2022/002 Ref Finding 4 There is scope to improve current arrangements for ensuring that all relevant managers undertake appropriate training for managing staff absences. We were pleased to note that there are various training materials available to managers on MyNL, Learn NL and Workwell relating to absence topics, and all managers have access to the support and advice provided by the Employee Relations Team in respect of managing individual absence cases. In addition, we were pleased to note that an eLearning module has been developed to support managers on the implementation of the revised Supporting Attendance policy and the processes detailed in the policy and associated toolkits. There are also a range of masterclass eLearning modules for managers dealing with particular areas such as stress risk assessment and mental health and wellbeing. We reviewed the eLearning Supporting Attendance module and were satisfied that it clearly and accurately reflects the requirements of the revised Supporting Attendance policy and related processes. We selected a sample of line managers from across the services who had undertaken the training module and were pleased to note that in general they found it useful in effectively managing/monitoring staff absences. We also selected a sample of managers from across the services who had not yet undertaken the training module, however, and noted that this was generally due to being unaware of the training available or not having sufficient time to undertake the training to date. The eLearning training module is not currently mandatory, with managers currently required to self-identify their training requirements. We understand, however, that the ER Team is currently considering ensuring that the training is included in the Leadership Development process for all new managers. Employee Relations management obtain reports on a regular basis from Learn NL as to who has completed this training (masterclass and/or e-learning module) and uptake by Managers is shared with the HRBP and ER teams to enable targeting of areas targeted where there is a low uptake compared to sickness absence levels. We consider it important that the need for this training to be designated as mandatory should be kept under review. Implication Recommendation Priority Management response Implementation Month/Year Without formal arrangements for identifying and training managers, some managers may not be aware of their need to undertake the training; managers may not be aware of their roles and responsibilities for managing/ monitoring absences and/or managers who have not undertaken relevant training may go undetected. People and Organisation Development should review the current training expectations for managers around sickness absence, including formalising what training, if any, requires to be made mandatory for all managers with responsibility for managing staff absence. Low Agree Linda Cullen, Acting Employee Relations Manager The ER team has considered whether this training should be made mandatory and has determined it is not necessary at this time. Communication has and continues to be issued through various sources (CMT, SMTs, Managers Bulletins, HRBP teams, Service Absence meetings) reinforcing that all managers with responsibility for supporting attendance are expected and encouraged to undertake the training. The need for this training to be mandatory will be kept under review and will be informed by the ongoing monitoring of uptake levels of training courses. Ongoing Page 253 of 418
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https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2021-22/0320.2022.002 management of sickness absence/a - findings and reporting/a07a 20220822 managing attendance 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 254 of 418
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INTERNAL AUDIT REPORT USE OF CORPORATE CREDIT CARD WITHIN SCHOOL A Headlines As part of the 2021-22 annual audit plan, we undertook a review to assess the adequacy and effectiveness of key controls relating to the Council’s use of corporate credit cards which included substantive testing on a sample of transactions across all relevant Services. The Council currently has 28 corporate credit cards across all Services. We noted that of the 178 education establishments within the Council, six have corporate credit cards registered to Head Teachers. Our sample selected included the credit card registered to School A. While the credit card is registered to the Head Teacher of School A, purchases and subscriptions using the credit card are generally made by other personnel within the school (i.e. Senior Clerical Assistant, Principal Teacher and Depute Head Teacher) who all have access to the card. This is in direct contravention of the Corporate Credit Card Policy (the Policy) which clearly states only the registered card holder should use the card. The Policy sets out corporate expectations on the acceptable use of a Council credit card and clearly states that the card should only be used when the Council’s established ordering processes cannot be used. Although the Policy does state that online purchases and downloads which cannot be made using normal procurement procedures are acceptable, this should be the exception rather than the norm. We noted however that the credit card expenditure at School A included a high incidence of transactions using online retailers such as Amazon and we consider that many of these items could have been procured via normal purchasing channels. Our review highlighted several transactions for this card which we consider may not be in line with the Policy. These included monthly subscriptions for Amazon Prime, Apple Music and Spotify. We consider that there are additional risks attached to such subscriptions and as a result of our audit work in this area, Financial Solutions updated the Policy in March 2022 to provide clearer examples of the type of transactions which would constitute unacceptable use of a credit card. This includes purchases from online retailers and services such as Amazon, eBay and PayPal and subscriptions to Amazon Prime, Spotify and Apple Music. A more detailed review of the expenditure incurred on the card registered to the Head Teacher of School A highlighted multiple subscriptions for the same online platforms. Specifically, in the period January 2019 to October 2021, there were 21 occasions where there were two separate monthly subscriptions charged for Amazon Prime and 27 occasions where there were two separate monthly subscriptions charged for Apple Music. Neither the Head Teacher nor the Senior Clerical Assistant could provide explanations as to why there were two subscriptions running simultaneously for Amazon Prime other than that one of the accounts had been set up in error and neither the Head Teacher nor the Senior Clerical Assistant appeared to have the necessary log-in details to enable them to access the account and to cancel the subscription which appeared to have been set-up some time ago. We reviewed the credit card statements and order history of the other Amazon account (for which the log-in details are known) for the period January 2020 to March 2022 and noted that there appeared to be no transactions/purchases for Amazon made using the account attached to the original Amazon Prime subscription. It should be noted, however, that this account must have been accessed by someone in March 2021 to enable the expired credit card details to be updated so that the subscription remained live and then for the subsequent cancellation of this Amazon Prime subscription prior to the September 2021 charge. We noted that this cancellation coincided with the start of our previous audit work in this area. With regards to the subscriptions for Apple Music, we were advised that these had been set up as the school uses music to signify the start of lessons etc. The second subscription was cancelled in October 2021. Page 255 of 418
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Headlines (continued) Based on information and records held within the school, we were unable to determine whether any of the benefits attached to the subscriptions have been utilised for personal use. However, our review has highlighted that the use of the credit card at School A is not adhering many of the corporate expectations set out in the Policy and accordingly we recommend that Education and Families should: (1) arrange for the credit card registered to the Head Teacher of School A to be cancelled with immediate effect; and (2) review the current use of credit cards within other schools with credit cards to establish whether there remains a valid business need for the remaining schools to continue to hold these cards. Education and Families have subsequently agreed to: (1) cancel the credit card registered to the Head Teacher of School A no later than close of business on 15 August 2022; and (2) undertake a review of the use of credit cards within other schools across the estate to establish whether there is a valid business need for these schools to hold the cards. This review will be concluded by 31 August 2022. Report status FINAL Audit ref 0900/2022/006 Date issued 14/06/2022 Audit Team Lynn McCrum, Paula Hendry and Hugh Shevlin Issued To Depute Chief Executive, Heads of Education and Families, Head of Financial Solutions Page 256 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel ☐approval ☒noting Ref KA/LM/ASP/Sep 2022 Date 08/09/22 Internal Audit: Follow up of actions previously agreed by management in response to audit recommendations From Ken Adamson, Head of Audit and Risk Email adamsonk@northlan.gov.uk Telephone 07939 280602 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 previous Internal and External Audit recommendations. Information is contained in respect of the last two years External Audit outputs and those actions agreed in response to ‘High’ and ‘Medium’ Internal Audit recommendations which were due to be completed in the period up to the end of June 2022. 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 often the actions taken/progress made to date will have reduced the risk exposure in respect of the weaknesses previously identified even if the action is not yet complete. It should note that, as reported to the Audit and Scrutiny Panel in December 2021, there has been a change to our reporting on follow-up and those recommendations which were previously reported to the Panel as partially implemented will now be monitored against revised target implementation dates agreed with management. 9 of the 14 actions agreed in respect of External Audit outputs have been completed, one has been partially implemented and four are no longer relevant. 10 of the 27 actions agreed in response to relevant Internal Audit recommendations due in the period have been fully completed, 15 have been assessed as partially implemented and two as no longer relevant. Recommendations The Panel is invited to: (1) note the contents of this report; and (2) approve the recommendations made by Internal Audit at Appendix 1 and to 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 AGENDA ITEM 7 Page 257 of 418
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1. Background 1.1 All 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 by the end of June 2022. 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 As reported to the Audit and Scrutiny Panel in December 2021, Internal Audit recently reviewed our arrangements for following-up audit recommendations. As a result, we amended our processes to 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 original 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 change means that 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 (April to June 2022) 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 overleaf 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 by the end of June 2022. Overall, 10 of the agreed actions have been completed, 15 are partially implemented and two are no longer relevant. Table 1 Head of Service Area Complete Partially implemented No longer relevant Total Adult Social Work Services 2 1 0 3 Asset and Procurement 2 1 0 3 Audit and Risk 0 0 1 1 Business and Digital 0 8 0 8 Education (North/South) 1 2 0 3 Education and Families 0 1 0 1 Financial Solutions 2 1 1 4 People & Organisational Development 1 1 0 2 Performance, Planning and Quality Assurance 2 0 0 2 TOTAL 10 15 2 27 Page 258 of 418
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2.2 Internal Audit has reviewed the management updates and agreed revised implementation dates for all 15 recommendations listed as partially implemented at Table 1 with relevant management. 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. 2.3 Detail in respect of each of these recommendations and the current residual risk assessed by Internal Audit as a result of partial implementation is provided in Appendix 1. In this appendix, 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 2. 2.4 The two issues assessed as being no ‘longer relevant’ relate to Risk Management and Debt Management. These are being followed up separately as part of detailed audit work presently being undertaken in these areas and, where appropriate, updated recommendations will be made in the current audit report. Actions previously agreed by management – External Audit recommendations 2.5 Table 2 shows the status of actions agreed by management in response to External Audit reports issued as part of the 2019/20 and 2020/21 audits. Internal Audit has concluded that nine of the 14 agreed actions have been completed, one has been partially implemented and the remaining four actions are no longer relevant. Table 2 Completed Partially implemented Not yet due No longer relevant Total Report Title/Year 2019/20 Interim Audit Report 1 1 0 2 4 Annual Report 2 0 0 1 3 2020/21 Interim Audit Report 3 0 0 1 4 Annual Report 3 0 0 0 3 TOTAL 9 1 0 4 14 2.6 The four External Audit actions assessed as ‘no longer relevant’ relate to issues on which External Audit have made a subsequent recommendation in subsequent audit reports. 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 documents Appendix 1 Internal Audit recommendations - Management actions assessed as ‘not yet complete’ in this cycle Appendix 2 Residual risk rating definition Ken Adamson, Head of Audit and Risk Page 259 of 418
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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 ☒ 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 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 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). Page 260 of 418
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Appendix 1 Internal Audit recommendations - Management actions assessed as ‘not yet complete’ in this cycle Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Asset and Procurement Procurement (November 2021) Risk: If performance measures are not correctly calculated in line with the definition, management and elected members may misinterpret the information presented to them and may not raise appropriate questions. Recommendation: Asset and Procurement Solutions should review the processes in place to ensure that all future performance measures contained within the Annual Procurement Report are accurately and consistently calculated in line with the corresponding definition. Category: Medium Performance indicators have been reviewed and amended. Work is ongoing with the Scottish Government to ensure that relevant content is incorporated into the future Annual Procurement Report. The Annual Procurement Report is currently being finalised prior to it being reported to the Finance and Resource Committee in September 2022. Original timescale: June 2022 Revised timescale: September 2022 The Service has indicated that they consider this recommendation to be largely complete and have committed to finalising the Annual Procurement Report for the next meeting of the Finance and Resource Committee scheduled for September 2022. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Low’. Accordingly, we would suggest that the Panel may simply wish to consider agreeing to note the progress made and the revised completion date Head of Business and Digital Corporate Governance Principles E, F & G (June 2021) Risk: The operating model may result in Community Boards failing to discharge their roles and responsibilities adequately or effectively which may impact on the achievement of the shared ambition. Recommendation: The Chief Executive should ensure, after allowing a sufficient period of time for the model and individual Boards to become established, that a formal review (or self-assessment) of the effectiveness of the Community Boards should be undertaken. Category: Medium A number of actions have been progressed aimed at assessing ongoing effectiveness of Community Boards. A performance framework for delivery of Local Outcome Improvement Plans has been established and progress will be reported to the Council’s People and Communities Committee and the Strategic Leadership Board of North Lanarkshire Partnership. The performance framework and reporting arrangements will be further developed to ensure that the Council and its partners have confidence that the Community Boards are operating effectively. Original timescale: April 2022 Revised timescale: March 2023 We acknowledge that, to date, there has been some progress made in measuring the effectiveness of the Community Boards. While we appreciate that oversight and governance of the Boards is largely a matter for the Strategic Leadership Board of the North Lanarkshire Partnership, we welcome the further steps being taken to ensure that the Council and its partners can have confidence that these Boards are operating effectively. Given that action is required to further improve the control environment we assess the residual risk as ‘Medium’ and consider it important the agreed extension date of March 2023 is achieved. We would suggest that the Panel may wish to consider agreeing to note the progress made and agree to monitor progress being made as part of the next follow-up report. Page 261 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Business and Digital Digital NL (November 2021) Risk: Inadequate arrangements for identifying, agreeing and realising expected outcomes (including expected financial savings) within timescales may result in consequential impacts on the management of the Council’s finances. Recommendation: Management should continue to review the future deliverability of the revised Digital NL programme to ensure timescales for delivery and expected outcomes are realistic and achievable. This should include consideration of: • further developing/enhancing the RAG status for assessing individual projects/workstreams. In particular consideration should be given to splitting the RAG status to provide separate assessments of achievement of timescales and achievement of projected benefits (including expected savings) to enable the impact of the RAG status on savings to be more clearly documented. • the use of optimism bias to make explicit risk-based adjustments to the projected estimates of projects costs, benefits (including expected savings), and duration; and • the identification and implementation of actions necessary to address the continual movement of projected savings. Category: High A full review of deliverability of the DigitalNL programme, SmartNL and infrastructure business has taken place. The outstanding year 3 development work and the potential Year 4 Roadmap were reviewed in line with shape and size, resource availability, benefits realisation, funding availability and risk. A prioritisation matrix has been developed and an Assessment Board created to ensure all activities are reviewed in line with the newly developed Integrated Programme Plan. The full end to end process was presented to the SRO meeting on 26 May 2022 with approval given at this meeting to further develop the proposals. In recognising the Delivery Board is responsible for governing the DigitalNL programme and its associated outcomes, the final proposals will be presented to the Delivery Board in August 2022 for consideration and approval as appropriate. Original timescale: June 2022 Revised timescale: August 2022 The Service has indicated that they consider these actions to be largely complete. However, while we acknowledge that there has been some progress made in this area, we consider there is still further action which requires to be taken to fully address the identified risks. Given that action is required to further improve the control environment we assess the residual risk as ‘Medium’ and consider it important that the agreed extension dates are achieved. We would suggest that the Panel may wish to consider agreeing to note the progress made and the revised completion date and to monitor progress being made as part of the next follow-up report. Risk: Benefits and savings may not be being adequately tracked and monitored resulting in the Council being unable to demonstrate the achievement of the objectives of the programme. Recommendation: Management should ensure that: (1) the non-financial benefits tracker is finalised and approved with non-financial benefits thereafter identified, calculated, tracked and monitored for all workstreams; and (2) the review of the suite of documentation cited in the Benefits Management Realisation approach is completed and the process thereafter updated and circulated to all relevant parties. Category: Medium The non-financial benefits tracker has been finalised and the updated Benefits Management Approach revised and updated. However, the non-financial benefits tracker has not yet been populated for all workstreams and work is ongoing in this area. The agenda for SRO/Delivery Board has recently been amended to focus on Benefits Realisation as the first agenda item. Original timescale: April 2022 Revised timescale: September 2022 Page 262 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Business and Digital Digital NL (November 2021) Risk: Without full, clear and timely information, key stakeholders may not be able to effectively monitor performance in respect of the DigitalNL programme and/or progress against expected benefits and planned outcomes or determine whether the programme is achieving its targets, and/or identify and agree timely action to address areas of underperformance and/or make informed decisions about the future direction of the DigitalNL programme. Without clear recording of actions prescribed and identified responsible officers for actions planned in response to highlighted risks, key stakeholders would be unable to monitor the risk to ascertain if it had been addressed/mitigated. Recommendation: Management should ensure that: (1) reports on DigitalNL to the Delivery Board, CMT and Committee are amended to provide a clear and comprehensive assessment of progress/status of both the programme as a whole and of individual workstreams. This should include an assessment of each project/workstreams RAG status; (2) reports submitted to the Board make clear reference to all those significant risks with the potential to impact on the successful delivery of the programme including the relevant mitigating controls; actions planned to further address the relevant risk and identified officers tasked with doing so and that key risks are tracked and monitored at each meeting of the Board; and (3) discussions at the Board in relation to any high/significant programme risks included on the Programme Highlight Report submitted to the Board, including the corresponding prescribed action(s) and identified officers, are clearly documented in the Action Note or Action Summary of that meeting. Category: Medium The Programme Highlight report submitted to the Delivery Board has been reviewed and amended to clearly show the RAG status and the financial and non-financial benefits anticipated for each business change sprint. The reports submitted to the Board make clear reference to significant risks and a link to the Risk Register has been added to the Programme Highlight Report. The Action Summary, introduced in early 2022, allows members of the Delivery Board to focus on agreed actions. Original timescale: June 2022 Revised timescale: September 2022 The Service has indicated that they consider this action to be substantially complete. However, due to the limited number of Delivery Board meetings since the process was amended, we have not yet been able to determine whether adequate detail is provided and/or appropriate discussions held with regards to those risks assessed as ‘high’/red. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Low’. Accordingly, we would suggest that the Panel may wish to consider agreeing to note the progress made and the revised completion date. Page 263 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Business and Digital Governance of Capital Projects (December 2019) Housing Investment Programme (October 2020) Managing Strategic Change (June 2021) The three audit reports listed each raised issues regarding the Council’s project management model. In summary the risks and recommendations arising comprised the following: Risk: The Council’s project management arrangements may not reflect good practice which may lead to projects being managed and documented on an inconsistent basis. Key stakeholders may not be adequately informed of progress in the Council’s key corporate projects and may not be able to undertake effective oversight and/or ensure that timely remedial action, necessary to ensure that projects are delivered successfully, has been progressed by relevant management. Recommendation: Management should: • review and update, as appropriate, the project management model to ensure that it is sufficiently prescriptive to enable officers to identify the circumstances of when, and to what extent, it should be followed. • review and amend the project management documentation to ensure that it requires the title of the project to be recorded and includes version control to clearly detail when it was prepared and last updated. • review the ‘project management model review programme’ particularly in relation to: expanding the sample of projects being reviewed to incorporate some capital and non-capital projects that Services have not received advance notification of; and reviewing and updating the checklist giving due consideration to the suggested improvements made by Internal Audit. • progress the previously identified action of establishing a reporting mechanism which better facilitates regular and ongoing oversight by key stakeholders of the progress of key projects against plan, including management of key risks, progress against timelines, cost against budget, achievement or otherwise of key milestones and expected outcomes or benefits realisation. We suggest that this could include introducing a standard reporting template and adopting a traffic light system to report progress against key criteria, project milestones and overall deliverability against expected time, cost and any other intended outcomes. Category: Medium The planned review process and subsequent refresh of the council’s Project Management Model took place from February to June 2022. A Review Team comprising representatives from all Services, including audit and risk, took part in the evaluation and review process. The refreshed Project Management Framework was circulated to the Review Team for their final input in June 2022. Insufficient feedback was received from the majority of service representatives on the Review Team which led to a delay in the finalisation of the refreshed Project Management Framework. Further work is being undertaken on a 1:1 basis to ensure Services are fully engaged with, and involved in, the final development stages of the refreshed Project Management Framework. Following this, the Project Management Framework will be finalised and submitted to CMT for approval. Original timescale: June 2020 or September 2021 Revised timescale: April 2022 Further revised timescale: September 2022 The Service has indicated that these actions are largely complete and that the delay in implementation is largely due to insufficient feedback from service representatives which the Service are currently taking steps to address. Given the extensive delay in implementation of these recommendations, we assess the residual risk as ‘High’ and would suggest that the Panel may wish to consider noting the progress made to date and the revised timescale but also to request an update on this issue from relevant senior management at the next meeting of the Panel if the action is not fully implemented at that time. Page 264 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Education (North/South) Follow Up: Scottish Attainment Challenge & Pupil Equity Fund (August 2021) Risk: Without short, medium and long-term targets against which performance can be monitored, there is a risk that effective oversight of the SAC and PEF programmes may be impaired. Without an effective performance management framework, management would not be able to measure whether the SAC and PEF programmes were being delivered and/or may not be able to take appropriate action to address areas of ‘under-performance’. Recommendation: Management should: (1) identify and set realistic short, medium and long- term targets for the SAC and PEF programmes and consider the current and future planned actions which will be taken to deliver against the identified objectives and measures of success (2) ensure that appropriate and realistic SMART performance measures are used wherever possible in the annual SAC Plan, subsequent progress reports to committee and within the individual establishments’ SIPs and SIRS to ensure that progress of key all actions and interventions can be appropriately tracked; and (3) set out clearly defined baselines against which the activities or interventions will be assessed for their contribution to closing the poverty-related attainment gap and ensure that the reports at both authority and individual establishment level clearly set out to key stakeholders the progress made against the identified targets/milestones together with any significant challenges in achieving these targets. Category: Medium Previous targets have been set by the Scottish Government but from 2022, targets in relation to progress in attainment are being set in collaboration and discussion with local authorities and both the SAC and PEF Team are engaging in discussions to agree on aspirational yet achievable targets and align the plans for the year ahead. Further development sessions for Headteachers and senior managers have taken place to assist with the development of clear rationales; help with the identification of outcomes and measures and provide both a local and national context to their approach. Whilst improvements in planning at school level have been noted the SAC and PEF Team consider there is still work to be done in encouraging greater detail in school improvement plans. The Improvement and Equity Lead continues to support and challenge establishments in both their SAC and PEF submissions through scrutiny of plans and encouraging all schools to ensure that, wherever possible, data should form the basis of all submissions of progress in the bi-annual checkpoints. Original timescale: December 2021 Revised timescale: June 2022 Further revised timescale: September 2022 Whilst we acknowledge that there has been some action taken to address the recommendations made, we consider that there is still further action required to fully mitigate the identified risks. Given that action is required to further improve the control environment we assess the residual risk as ‘Medium’ and consider it important that the agreed extension date of September 2022 is achieved. We would suggest that the Panel may simply wish to consider agreeing to note the progress made and the revised completion date and to monitor progress being made as part of the next follow-up report. Page 265 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Education (North/South) Follow Up: Scottish Attainment Challenge & Pupil Equity Fund (August 2021) Risk: Services may not be procured in accordance with the Framework. Without formal documentation, schools may not be able to evidence why a particular procurement method and/or supplier was selected and/or be able to demonstrate best value when procuring services Recommendation: Management should: (1) remind/encourage all schools to use the Procurement framework as far as possible and of the requirements of the Framework (including the use of approved suppliers wherever possible) and the importance of completing the RFP documentation for each procurement exercise; (2) periodically report to senior management on the use of, and expenditure incurred via, the Framework against the total spend allocation; and (3) ensure that they periodically review non-Framework expenditure items to obtain sufficient assurance that procurement activity funded via SAC/PEF is being undertaken in accordance with corporate expectations and can demonstrate best value. Category: Medium Headteachers are reminded on an ongoing basis of the requirements of the Procurement Framework. A review of Framework and non-Framework expenditure for session 2021-22 has been undertaken with subsequent findings to be reported to the Programme Board and Services Senior Leadership Team in August 2022. Original timescale: December 2021 Revised timescale: June 2022 Further revised timescale: September 2022 Whilst we acknowledge that there has been some action taken to address the recommendations made, we consider that there is still further action required to fully mitigate the identified risks. Given that action is required to further improve the control environment we assess the residual risk as ‘Medium’ and consider it important that the agreed extension date of September 2022 is achieved. We would suggest that the Panel may wish to consider agreeing to note the progress made and the revised completion date and to monitor progress being made as part of the next follow-up report. Head of Education and Families Public Protection (September 2021) Risk: If areas for improvement are not adequately identified, quantified, addressed and regularly monitored and reviewed the Council may fail to effectively deliver its public protection responsibilities. Recommendation: Management should ensure that consideration is given to preparing and thereafter tracking and monitoring an action plan for the NLCOPPG. Category: Medium The NLCOPPG have delegated responsibility for taking forward improvement actions arising from the self- evaluation to the Lead Officers Public Protection Group. Action areas have been agreed and the action plan and progress report will be presented to the NLCOPPG at its next meeting in October 2022. Original timescale: November 2021 Revised timescale: May 2022 Further revised timescale: October 2022 The Service has indicated that the majority of the recommendations have been addressed. The outstanding actions relate to reports being presented to future meetings of the NLCOPPG. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Low’. Accordingly, we would suggest that the Panel may wish to consider agreeing to note the progress made and the revised completion date. Page 266 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Education and Families Tackling Poverty (November 2021) Risk: If the process to create a consolidated action plan is not properly documented, the LCPAR action plan may not be appropriately aligned with the strategy action plan which may result in key actions potentially being missed in error. Feedback from external reviews may not be incorporated into the LCPAR resulting in a failure to address or progress relevant actions or activities. Recommendation: Management should ensure that: (1) all relevant key actions from the strategy are, where appropriate, incorporated within the LCPAR action plan and/or that where actions are removed/not included there is appropriate documentary evidence maintained to support the rationale for their removal; and (2) all outstanding recommendations and actions arising from the NL Fairness Commission and Scottish Government reviews are, where appropriate, incorporated into the LCPAR. Category: Medium Following the production of the Best Start, Bright Futures Child Poverty Delivery Plan 2022-2026, the LCPAR will be incorporated within the production of a new Tackling Poverty Strategy 2023-2026 which will allow for forward planning whilst meeting the requirements of the Scottish Government. This document will include all of the outstanding recommendations and actions from the North Lanarkshire Fairness Commission and Scottish Government reviews. The Local Child Poverty Action Report will be prepared and submitted to the Policy and Strategy Committee in September 2022. Original timescale: June 2022 Revised timescale: September 2022 The delay in implementing this action is due to a number of factors, including the Council elections, however a firm commitment has been given by the Service to submit the LCPAR to Committee in September 2022. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Low’. Accordingly, we would suggest that the Panel may wish to consider agreeing to note the progress made and the revised completion date. Page 267 of 418
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Appendix 1 (continued) Internal Audit recommendations - Management actions assessed as ‘not yet complete’ Head of Service Report Details Details from original recommendation Current position per management update Original and revised timescales Internal Audit comment Head of Financial Solutions Use of Corporate Credit Cards and Purchase Cards (November 2021) Risk: Without a clear statement of expected procedures and oversight arrangements, there is an increased risk of inadequate control over the administration of purchase cards and expenditure incurred which may be inappropriate and/or not appropriately monitored. Recommendation: The Head of Financial Solutions should, in conjunction with Facility Support Services, undertake a formal review of the purchase card scheme, to ensure that an appropriate and effective control environment is established and thereafter implemented. The review should include, but not be limited to, considering the issues identified in the finding. Category: High The review of the purchase card scheme is currently underway. Delays in implementation are due to staff changes, shortages and a prioritisation of financial year end activities. Original timescale: April 2022 Revised timescale: September 2022 Although the review of the purchase card scheme is not yet complete, we acknowledge that the delay in implementing this is due to a number of factors, including changes in staff. A firm commitment has been given by the Service to complete the review by the proposed revised timescale. Given that action is required to further improve the control environment we assess the residual risk as ‘Medium’ and consider it important that the agreed extension date of September 2022 is achieved. We consider it important, that the revised timescale is achieved and would suggest that the Panel may wish to consider agreeing to monitor progress as part of future follow-up reports. Head of People and Organisational Development Corporate Governance Principles A & B (February 2022) Risk: Without effective workforce planning there is a risk the Council may not have in place (or identified the actions it needs to progress to ensure it has in place) the staff and skills it needs to enable it to deliver services and achieve planned outcomes Recommendation: The Head of People and Organisational Development should ensure that the service workforce plans are completed and reported in accordance with the revised timescales to inform future workforce planning activity. Category: Medium Workforce Plans have been completed for each service and were presented to CMT April 2022. A summary report will be submitted to the Policy and Strategy Committee in September 2022. Thereafter refreshed streamlined plans and associated action plans will be submitted to CMT December 2022 Original timescale: June 2022 Revised timescale: December 2022 The Service has indicated that the recommendation has largely been addressed. The outstanding actions relate to refreshed streamlined plans and associated action plans being presented to CMT. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Low’. Accordingly, we would suggest that the Panel may wish to consider agreeing to note the progress made and the revised completion date. Page 268 of 418
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Appendix 2 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 269 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref KA/ASP/September22 Date 08/09/22 Internal Audit Annual Plan 2022-23 From: Ken Adamson, Head of Audit and Risk E-mail: adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary The purpose of this report is to present the proposed Internal Audit Plan 2022-23 to members of the Audit and Scrutiny Panel for their consideration and approval. Although senior management is consulted in the development of the plan, the Head of Audit and Risk is solely responsible for determining the content of Internal Audit’s plans. The work proposed for 2022-23 has been discussed with, and endorsed by CMT, but responsibility for the approval of the plan lies solely with the Audit and Scrutiny Panel. The report sets out the background and context within which the internal audit planning process is undertaken and provides a high-level overview of how it is proposed Internal Audit resources will be allocated in 2022-23. The Plan follows a well-established planning methodology which is designed to ensure cyclical internal audit coverage of key corporate risks, key corporate priorities (as outlined in the approved annual Programme of Work), key governance arrangements and key financial systems. Members are asked to consider whether they are content that this represents an appropriate programme of work for Internal Audit to undertake in 2022-23 and/or whether there are any items in the draft Plan that they do not consider appropriate for inclusion and/or whether there are any additional items they would wish to suggest for possible inclusion. Recommendations The Panel is invited to: (1) note the approach adopted to produce the 2022-23 Internal Audit Annual Plan; (2) consider the detailed list of proposed Internal Audit assignments for the 2022-23 Plan (at Appendix 1); and (3) subject to any changes agreed by the Head of Audit and Risk arising from discussions with the Panel during consideration of the proposed assignments at (b) above, approve the proposed 2022-23 Internal Audit Annual Plan (at Appendix 1). The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 8 Page 271 of 418
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1. Background 1.1 The Audit and Scrutiny Panel is required annually to consider and approve the Internal Audit Annual Plan for the coming financial year. 1.2 Responsibility for the production and execution of the audit plan and subsequent audit activities rests with the Council’s Head of Audit and Risk (who fulfills the role of the ‘Chief Audit Executive’ as defined by the Public Sector Internal Audit Standards). Although senior management is consulted in the development of the plan, the Head of Audit and Risk is solely responsible for determining the content of Internal Audit’s plans. 1.3 This report sets out the background and context within which the Internal Audit planning process is undertaken and provides a high-level overview of how Internal Audit resources will be allocated in 2022-23. 1.4 In line with best professional practice, the draft plan has been discussed with the Council’s Corporate Management Team before it is presented to the Panel for consideration and approval. The main objectives of the Council’s Internal Audit service are outlined in the Internal Audit Strategy 2022-23 to 2024-25 which is also being submitted for Panel approval as a separate agenda item. 1.5 Internal Audit activity is governed by policies, procedures, rules, and regulations established by the Council including the Council’s Financial Regulations and Internal Audit Charter which is approved by the Panel, the Council’s s95 officer and the Chief Executive. The Internal Audit service is expected to comply with the standards laid down by the Public Sector Internal Audit Standards (PSIAS). 1.6 The planned work of the Internal Audit service is outlined in the Internal Audit Annual Plan, which is submitted to, and approved by, the Panel annually. Any proposed programme of work must be appropriate and sufficient to support the preparation of an opinion by the Head of Audit and Risk on the overall soundness of the Council’s corporate governance, risk management and internal control systems. 2. Report 2.1 Internal Audit is an independent and objective assurance function whose work is designed to evaluate and improve the effectiveness of the Council’s risk management, control and governance processes. The service aims to provide a high quality and customer-focused internal audit service, which is responsive and flexible, consistent with best professional practice, aims to focus on areas that matter, to use resources efficiently and effectively and to be seen by stakeholders as adding value, providing valuable insights and making a vibrant and relevant positive contribution to the Council’s activities. The wider audit environment 2.2 The Council’s strategic-level plan (‘The Plan for North Lanarkshire’) and its associated ‘Programme of Work sets out the Council’s strategic-ambitions and those key activities designed to deliver against them. These ambitions and the associated programmes represent a bold and challenging approach to addressing the issues facing the Council and the people and communities of North Lanarkshire. The Council also continues to seek to achieve its ambitions against a backdrop of significant financial pressures. 2.3 At the same time the Council faces increasing demands for many key services and will also have to respond to ever-changing expectations about how services will be delivered. The Council also needs to respond to the impacts on it and its communities of a range of Scottish and UK Government policies. There also continue to be significant changes in governance structures and processes across the Council. Finally, ongoing events surrounding the COVID-19 pandemic and its short, medium and longer-term impacts, as well as posing an immediate challenge to which the Council is responding, also create considerable additional longer-term risks and uncertainties. Page 272 of 418
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2.4 Internal Audit has an unusual role within any organisation. Its forms part of the organisation but is operationally independent which provides a core basis for its work and its ongoing independence and objectivity is an important element in ensuring that it can effectively meet stakeholders’ needs and expectations. Providing commentary on the adequacy and effectiveness of risk management, internal controls and governance arrangements remains central to our purpose, but it is important that while providing an internal audit opinion, we also focus on helping secure wider improvements and assisting the Council in delivering against its corporate ambitions and in ensuring best value. Planning considerations 2.5 Internal Audit will meet this objective by operating in accordance with the Public Sector Internal Audit Standards (PSIAS) and the associated CIPFA Local Government Application Note (LGAN) which will enable the section to fulfil the roles and responsibilities given to it by the Council as laid out in the Internal Audit Charter. 2.6 Internal Audit will do this by undertaking a risk-based work programme focused on cyclical coverage of the Council’s core corporate governance processes, key corporate risks, significant programme of work activities and key financial systems. In doing so, elected members and senior management will be supported in undertaking their roles by Internal Audit providing assurance on the management of key strategic risks and priorities which could impact on the achievement of the Council’s objectives. 2.7 The Internal Audit Annual Plan for 2022-23 (at Appendix 1) has been prepared in accordance with well-established planning methodology which includes consideration of a wide range of factors including the relative scale, significance and complexity of systems, previous experience of the control environment, proposed or known changes in the environment within which the Council operates, the potential financial, operational and reputational consequences of any significant failures in relevant internal controls and the possible impact of any failures on the achievement of the Council’s objectives, priorities and ambitions. Consideration is also taken of the extent and quality of assurance available from other sources with reliance placed upon alternative sources of assurance where it is appropriate to do so (such as external regulators and selected high-quality relevant internal sources). Formal assurance mapping will be considered as part of our wider work examining the Council’s corporate governance arrangements. 2.8 The Council’s risk management arrangements continue to improve but are not yet sufficiently mature to enable me to fully align our audit planning entirely with management’s assessment of the risks facing the Council, although the extent of alignment continues to increase each year. Careful consideration has been given, however, in preparing the plan to the key corporate risks identified by senior management (see Appendix 2). We expect to align our planning more closely with the corporate risk management processes each year as these risk management arrangements become more mature. 2.9 Internal Audit will continue to work closely with the Council’s external auditors to ensure that all audit activities are properly coordinated to minimise any duplication of work and that the Council’s external auditors are able to place reliance on our work, where they wish to do so. 2.10 As part of planning considerations, I have considered the level of resources and the experience and skills available to Internal Audit. The section’s staffing complement for 2022-23 remains unchanged from the prior year and I remain satisfied that the resources available are adequate for the function to carry out its role effectively. This assessment is based on the level of available resources enabling adequate coverage of core corporate governance processes, key corporate risks, programme of work items and key financial systems over a rolling three-year period. 2.11 As I have previously outlined to the Panel, I continue to review the Section’s ability to deliver the range of ICT audit work necessary and will bring forward to the Panel detailed proposals if I consider additional specialist resources may be required to supplement the core team. Page 273 of 418
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2.12 I am also content that the Chief Executive and s95 officer have previously indicated that additional resource can be made available to Internal Audit in the event of any significant unexpected demands (such as for example, the need to undertake any major investigations). 2.13 If any concerns relating to resources arise during the year which might be seen as impacting on this assessment, these will be discussed initially with the Convener and, if necessary, highlighted at the next Panel meeting. 2.14 I can also confirm the continuing independence of the Internal Audit service and its ability to act in accordance with best professional practice free from undue interference by management and/or senior elected members. I have no concerns over the role and/or status of the function and I am satisfied that the Head of Audit and Risk post has sufficient status within the organisation, being a member of the Corporate Management Team and reporting as it does directly to the Chief Executive. 2.15 If any such matters arise during the year which might be seen as compromising Internal Audit’s independence or ability to discharge its role, these will be discussed with the Convener and if necessary, highlighted at the following Panel meeting. 2.16 The Panel are aware, I also have management responsibility for the Council’s risk management team. This creates a potential conflict of interest which could be seen as compromising my independence when Internal Audit is reviewing the Council’s risk management arrangements, but I have previously outlined to the Panel that I consider that this risk can be effectively managed and appropriate arrangements to ensure the Panel can have confidence in the independence and robustness of future Internal Audit reviews of the risk management function were set out in the Internal Audit Charter approved by the Panel in September 2021. Reporting the audit 2.17 Internal Audit will report regularly on the results of its work in line with the reporting protocol approved by the Panel in September 2021. Each individual Internal Audit report will be issued to the relevant Head of Service and copied to the Chief Executive and Deputy Chief Executive. Reports on the work of Internal Audit will also be presented regularly during the year to the Council’s Corporate Management Team. 2.18 The Internal Audit service will continue to report progress against the plan during 2022-23 to the Audit and Scrutiny Panel. In line with the Internal Audit reporting protocol agreed by the Panel in September 2021 full copies of all substantive audit reports will normally be made available to the Panel and progress reports will include the high-level reporting of all audit outputs included in the approved plan together with more detailed consideration of all significant matters arising from those reports that the Head of Audit and Risk considers necessary to bring to the attention of the Panel. 2.19 An annual report prepared by the Head of Audit and Risk on the adequacy and effectiveness of the Council’s internal controls will also be presented to the Panel and the Chief Executive. The opinion in relation to 2022-23 will be included in my Annual Report for that year which will be presented to the Panel in June 2023. 2.20 A revised performance management framework for Internal Audit (at Appendix 5) was approved by the Panel in March 2021. This sets out what information will be recorded and presented, to whom and with what frequency. As part of this framework, and in response to improvement actions agreed in response to our external review, this includes greater formality around seeking stakeholder feedback on Internal Audit performance from both senior management and elected members. Page 274 of 418
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Main areas of the 2022-23 Annual Plan 2.21 The proposed programme of Internal Audit activity is detailed at Appendix 1. There are several major categories of work within the Annual Plan. These include: • Work on core governance matters including the Council’s wider corporate governance, risk management and performance management arrangements. In 2022-23 this will include work associated with the Council’s strategic governance, strategic performance and strategic self-evaluation frameworks. • Work examining a sample of key strategic/corporate risks, key programmes of work and/or service risks as part of regular cyclical audit coverage. In 2022- 23, this will include work on the Council’s implementation of its future operating model, work reviewing the Council’s arrangements in respect of climate change, workforce planning and contract management and consideration of how key projects, such as the Digital NL programme, are being progressed and managed. We will also be undertaking work on the adequacy and effectiveness of quality assurance arrangements in key Service areas such as Education and Social Work. • Work examining the Council’s finances and key financial systems including, as part of regular cyclical audit coverage, work on financial systems such as, payroll, creditors, debtors, cash and income collection and the administration of housing benefit and council tax reduction. • A range of follow-up work to ensure that previously agreed management actions in respect of both internal and external audit recommendations are being implemented by management. In addition to detailed follow-up work on specific audit reviews, we will also provide quarterly updates in respect of management implementation of actions agreed in response to ‘Red’ and ‘Amber’ audit recommendations; and • Work examining the Council’s anti-fraud arrangements providing independent assurance annually on the Council’s fraud resilience, facilitating and co-ordinating the Council’s participation in the National Fraud Initiative and including an allowance for dealing with the need for Internal Audit to investigate frauds and irregularities which may arise during the year. 2.22 We will also continue to contribute to a wide range of corporate working groups and Project Boards and to provide internal audit services to the North Lanarkshire Health and Social Care Integrated Joint Board. 2.23 In line with good practice, the plan will be reviewed on a regular basis and may be adjusted where necessary in response to changes in the Council’s business, risks, operations, programmes, systems and controls. Any material changes and the rationale for such changes will be reported to the Panel. 3 Measures of success 3.1 Provision of independent assurance in accordance with Public Sector Internal Audit Standards. 3.2 Satisfactory assessment of the work of Internal Audit by the Council’s appointed auditors. 3.3 Positive assessment of the work of Internal Audit by key stakeholders including senior management and members of the Audit and Scrutiny Panel. Page 275 of 418
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4. Supporting Documents Appendix 1 Proposed Internal Audit Plan 2022-23 Appendix 2 Internal Audit coverage of current key corporate risks over the last 5 years Appendix 3 Internal Audit coverage of key financial systems over the last 5 years Appendix 4 Consideration of Programme of Work items for inclusion in the 2022-23 Plan Appendix 5 Internal Audit performance framework Ken Adamson Head of Audit and Risk Page 276 of 418
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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 ☒ 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? Internal Audit forms part of the control framework for the management of several corporate risks relating to corporate governance issues and these are documented in the relevant corporate risk ‘deep-dive’ document which are subject to periodic review by relevant management. Operational risks for the Service itself are documented in the Service’s risk register and are regularly reviewed by the Head of Audit and Risk and the service management team. Page 277 of 418
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Appendix 1 Proposed Internal Audit Plan 2022-2023 Topic Days Rationale and proposed scope Corporate governance Risk management 15 Core corporate governance process. Follow-up of work undertaken in 2021-22 to review the adequacy and effectiveness of the Council's risk management arrangements. Corporate governance 30 Core corporate governance process. Work will review the adequacy and effectiveness of the Council's corporate governance arrangements and compliance with the relevant Code/Framework As well as detailed consideration of the Council’s compliance with two of the principles within the CIPFA/SOLACE Corporate Governance framework, the review will also follow-up previous recommendation and consider the ongoing adequacy and effectiveness of the Council’s strategic governance and self-evaluation frameworks including how management gains assurance on compliance and performance. Performance management 20 Core corporate governance process. Follow-up of work undertaken in 2021-22 to review the adequacy and effectiveness of the Council's strategic performance framework. A particular focus will be on arrangements for monitoring and reporting on the Programme of Work and following-up implementation of previous agreed actions. Key strategic / corporate risks / programmes of work Digital NL and change programme 60 Key element in enabling the achievement of much of the Council’s ambitions and delivering future efficiencies. To review the Council's approach to, and progress in, delivering transformational change and key service review projects. In 2022-23, we will review the adequacy and effectiveness of the management arrangements designed to monitor and progress the programme in line with expectations and examine the management of individual projects including the Digital Infrastructure project/contract. Clyde Valley Waste Contract 10 Internal Audit work required annually to support preparation of an assurance statement on the Council’s governance arrangements for the contract required to be provided by Internal Audit to partner authorities. City Deal 20 Significant external funding scheme. Internal Audit work required annually to support preparation of assurance statement required to be provided by Internal Audit to Glasgow City Council Internal Audit in accordance with the Glasgow City Region City Deal Assurance Framework . Climate change 30 Key corporate risk. Work will focus on providing an assessment of the adequacy and effectiveness of the Council’s arrangements. This is expected to include reviewing how well the Council is developing/progressing realistic plans against relevant local and national commitments and statutory obligations. Cyber security 30 Work will focus on how the Council manages and mitigates key cyber risks. Page 278 of 418
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Appendix 1 Proposed Internal Audit Plan 2022-2023 (continued) Topic Days Rationale and proposed scope Key strategic / corporate risks / programmes of work (continued) Information governance 20 Work will focus on the adequacy and robustness of management’s self-assessment of corporate arrangements in respect of information governance (including how management receives assurance on performance/compliance) and how well the Council is progressing previous audit recommendations. Contract management 50 This work will focus on providing assurance on the adequacy and effectiveness of the Council’s contract management activities across a range of key Services and Programme of Work activities including the Council’s Housing Investment Programme. This will include an assessment of the extent of compliance with key corporate expectations and comparison with best practice. Workforce planning 30 Carried forward from 2021-22, work will focus on providing assurance on the adequacy and effectiveness of the Council’s approach to workforce planning including the extent to which plans appear comprehensive and planned actions are being satisfactorily progressed. Equalities 20 Work will focus on providing assurance that EIAs are being appropriately completed, where required, and that the Council is complying with relevant legal requirements in respect of equalities. Future operating model 30 Work will focus on providing assurance that the Council’s future operating model is being managed and implemented in an efficient and effective manner. This will include consideration of any impacts on asset rationalisation and the implementation of hybrid working arrangements. Service / operational Education – Management of supply teaching staff 50 Work will focus on providing assurance on the adequacy and effectiveness of arrangements put in place by the Service to ensure risks associated with the use of supply staff are being satisfactorily mitigated. Education quality assurance arrangements 40 Delayed/carried forward from 2021-22, work will focus on assessing the adequacy and effectiveness of quality assurance arrangements within schools including arrangements for performance/outcomes reporting. Social Work quality assurance arrangements 30 Work will focus on assessing the adequacy and effectiveness of quality assurance arrangements put in place by Social Work designed to ensure services (internal and third-party/external) are operating in accordance with expected standards and that any issues arising are identified and properly responded to. ASN 20 This work will seek to provide assurance on the adequacy and effectiveness of management arrangements in place to progress and implement actions designed in response to the earlier review of ASN provision. Page 279 of 418
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Appendix 1 Proposed Internal Audit Plan 2022-2023 (continued) Topic Days Rationale and proposed scope Service / operational (continued) Housing allocations 30 Work will focus on providing assurance on the management of housing allocations and the extent to which the system is operating in line with approved Council policies. As well as the management of the ‘waiting list’ and how applicants are offered housing, the work will also cover how the Service manages tenancy succession. Waste and Fleet follow-up 10 Work to provide the Audit and Scrutiny Panel (as requested) with an update on management actions to progress recommendations in a previous Internal Audit report in relation to staffing issues. Financial management and key financial systems Regularity work - financial systems - Payroll 40 Substantive testing on selected key controls associated with the authorisation, regularity and processing of payroll. Regularity work - financial systems - Creditors 40 Substantive testing on selected key controls associated with authorisation, regularity and processing of creditor payments. Regularity work – Housing Benefits 40 Focused on the adequacy and effectiveness of key controls associated with the processing and administration of housing benefit and council tax reduction claims. Income / cash collection 60 Focused on the adequacy and effectiveness of the Council’s management arrangements and key controls for income and cash collection activities Poverty-related grant workstreams 30 Substantive testing on selected key controls associated with the assessment, authorisation, regularity and processing of payments made in relation to grant workstreams to target assistance to individuals in relation to Covid recovery/Cost of Living crisis/Poverty. Debtors 30 Focused on the adequacy and effectiveness of key controls associated with debtors and debt management. Provision of IA services to third parties Integrated Health and Social care - North Lanarkshire JIB 40 Annual programme of work to be agreed with relevant senior management and NL JIB Performance, Finance and Audit Sub-Committee. Page 280 of 418
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Appendix 1 Proposed Internal Audit Plan 2022-2023 (continued) Topic Days Rationale and proposed scope Fraud and irregularity Review of the Council's Anti-Fraud arrangements 30 Work reviewing the current corporate anti-fraud policies and arrangements and implementing any identified actions necessary to ensure that the Council’s arrangements are more fully consistent with recognised good practice (this may include developing a Counter Fraud strategy and/or an annual Counter Fraud Action Plan which more clearly sets out planned actions for managing the risk of fraud and corruptions and any planned fraud prevention and/or pro-active detection work). National Fraud Initiative 40 Work co-ordinating and progressing the Council’s involvement with the NFI. Allowance for fraud and irregularity investigations 50 Demand-led allowance to enable investigations to be undertaken as required. Audit Committee and External Audit Liaison with external audit 5 To ensure the external audit process can proceed efficiently and effectively. Assisting external audit to undertake their role including co-ordinating management responses to assist with the finalisation of audit outputs. Facilitating the work of the Audit and Scrutiny Panel 30 To enable the Audit and Scrutiny Panel to fulfil its role. Preparation of agendas and reports and attendance at meetings. Follow-up of IA and EA recommendations 50 To enable the Audit and Scrutiny Panel to fulfil its role. To monitor and report on whether management has implemented actions agreed by senior management in response to audit reports. Follow-up: Audit Scotland/Accounts Commission national reports 10 To ensure national audit reports are given proper consideration by management and to enable the Audit and Scrutiny Panel to fulfil its role in considering such reports and the Council’s responses. Focusing on how the Council is responding to key issues highlighted in national audit outputs. Page 281 of 418
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Appendix 1 Proposed Internal Audit Plan 2022-2023 (continued) Topic Days Rationale and proposed scope Contribution to good governance Provision of ad hoc advice on systems development and control issues 30 To reflect the provision of input into systems development and ongoing ad hoc advice to management on specific control and risk issues Participation in a range of Corporate Working Groups and Project Boards 50 To ensure that Internal Audit contributes, as appropriate, to corporate arrangements for the oversight and/or development of any relevant control, risk and governance issues. Other PSIAS self-assessment and Quality Assurance Programme 10 To ensure that the service provided is consistent with expectations. Continuous improvement activity to progress recommendations arising from the PSIAS EQAR and internal self-assessment. To enable necessary work to ensure on-going PSIAS compliance can be substantiated. Community Councils 10 Facilitating the audit of community councils and liaising with external auditor on issues arising. Contingency 60 To deal with additional unplanned work Total 1200 Page 282 of 418
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Appendix 2 Internal Audit coverage of current key corporate risks in the last five years Key Corporate Risk Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 1. Information security and information governance YES - √ - √ Audit work in relation to cyber security and management of cyber risks and management assurance arrangements in respect of Information Governance are planned in 2022-23. Previous reports: Information Governance and Security (February 2021) and Information Governance (May 2019) 2. Public protection NO - √ - - No specific audit work planned in 2022-23. Previous audit work has provided sufficient recent assurance on this key risk. Follow- up work will monitor implementation of agreed management actions. Previous reports: Public Protection (September 2021) 3. Managing strategic change YES - √ √ √ This remains a significant key risk and continues to merit high-level review of relevant management arrangements on an annual basis given the scale of Council’s ambitions and the challenging environment in which it is operating. Previous reports: Managing Strategic Change (June 2021), Managing Strategic Change (February 2020) and Managing Strategic Change (March 2019). 4. Health & Safety NO - √ - - No specific audit work planned in 2022-23. Recent audit work has provided sufficient recent coverage on this key risk. Follow-up work will monitor implementation of any agreed management actions. Previous reports: Health and Safety (May 2021) and Health and Safety (Management of Covid risks) (November 2020). 5. Business continuity planning NO √ - - √ No specific audit work planned in 2022-23. Recent audit work has provided sufficient recent coverage on this key risk. Previous reports: Business Continuity Planning (expected Summer 2022) and Business continuity planning (November 2018) 6. Financial sustainability NO - √ - √ No specific audit work planned in 2022-23. Recent audit work has provided sufficient recent assurance on this key risk. Follow-up work will monitor implementation of any agreed management actions. Separate and specific work proposed on individual financial systems is also shown below. Previous reports: Financial management (March 2021), Financial sustainability (November 2020) and Financial savings and financial sustainability (March 2019). See also work on key financial systems below. Page 283 of 418
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Appendix 2 Internal Audit coverage of current key corporate risks in the last five years (continued) Key Corporate Risk Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 7. Human Resources YES √ √ - - Work on workforce planning included in 2022-23 (carried forward from 2021-22). Recent audit work has provided sufficient recent assurance on some aspects of this key risk. Follow-up work will monitor implementation of any agreed management actions. Previous reports: Sickness absence (now expected Summer 2022) and Education Recruitment Investigation (March 2019). 8. Engagement and consultation NO - √ √ - No specific audit work planned in 2022-23. Previous audit work has provided sufficient assurance on some aspects of this key risk. Follow-up work will monitor implementation of any agreed management actions. Previous reports: Community engagement and empowerment (June 2020) and elements covered by work on Corporate Governance Principle B Openness and stakeholder engagement (February 2022 and March 2019). 9. Procurement risks YES √ √ - √ Work planned in 2022-23 will focus on contract management activities as previous audit work has provided sufficient assurance on tendering and contract award arrangements. Previous reports: Procurement (November 2021), Housing Investment Programme (June 2020) and Contract management (Jan 2018). Assurance also obtained via work on Creditors (see below) and through recent work on the Enterprise Contract (March 2021). 10. Enterprise Project YES √ √ √ - Although the nature of this project has been significantly revised, it remains a high-profile key risk which warrants coverage, the scope of which will be dependent on progress of the project. Previous reports: Enterprise Contract (May 2022), ESCP (March 2021) and ESCP (March 2020) 11. Climate change YES - - √ - Work will be focusing on reviewing how well the Council is progressing realistic plans against relevant local and national commitments and statutory obligations. Previous reports: Carbon management (May 2020) Page 284 of 418
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Appendix 2 Internal Audit coverage of current key corporate risks in the last five years (continued) Key Corporate Risk Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 12. Serious organised crime, fraud and corruption NO - √ √ √ No specific audit work is proposed but a high-level review will be kept on the issue, through attendance at the relevant corporate working group, and commentary included, as appropriate, in IA progress reports and the IA Annual Report. Previous reports: Review of anti-fraud arrangements (May 2020) and NFI 2020 and 2018 exercises. 13. Terrorism NO - - - - No specific audit work is proposed but a high-level watch will be kept on the issue, through attendance at the relevant corporate working group, and commentary included, as appropriate, in IA progress reports and the IA Annual Report. Previous reports: None 14. Governance, Leadership and Decision-Making NO - √ √ √ No specific audit work is proposed on this risk in 2021-22 but planned work on corporate governance is expected to also cover many aspects which relate to this issue. Routine follow-up work will monitor implementation of any previously agreed management actions. Previous reports: Corporate Governance (March 2021), Corporate Governance (March 2020) and Corporate Governance Principles A and B (February 2022 and March 2019). 15. ICT operational capability NO - - √ - No specific audit work planned in 2022-23 although work on Cyber Security will touch on this aspect of ICT arrangements. Previous audit work has provided sufficient assurance on some aspects of this key risk. ICT operational capabilities and governance arrangements will also be addressed via work on specific systems and by work on Digital NL. Previous reports: IT Network controls (September 2019) 16. Resilience planning NO √ √ - √ No specific audit work planned in 2022-23. Audit work in relation to corporate business continuity planning arrangements from 2021-22 was delayed and will now be completed in Summer 2022. Previous reports: Covid-19 response (February 2021). Some aspects also covered by work on corporate BCP arrangements (November 2018). Page 285 of 418
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Appendix 2 Internal Audit coverage of current key corporate risks in the last five years (continued) Key Corporate Risk Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 17. Digital and IT strategy YES √ √ - √ No specific audit work is proposed. Recent Internal Audit work in this area has focused on providing ongoing assurance in relation to the implementation and governance of the approved DigitalNL transformation programme and the ongoing digitalisation of Council services and this focus will continue in 2022-23. Previous reports: Digital NL (November 2021 and October 2020), Network controls (September 2019), Digital NL FBC (March 2019) and Digital NL governance arrangements (November 2018). 18. Tackling poverty NO √ - - - No specific audit work is proposed. Routine follow-up work will monitor implementation of any previously agreed management actions. Previous reports: Tackling Poverty (November 2021) 19. Implementation of Economic Regeneration Development Plan (ERDP) NO √ √ - - No specific audit work is proposed. Recent audit work has provided sufficient recent assurance on this key risk. Follow-up work will monitor implementation of any agreed management actions. Previous reports: ERDP (June 2021). 20. Asset management YES - √ - - Will be addressed in part by work on the implementation/progress of the Council’s future operating model. Follow-up work will also monitor implementation of any agreed management actions. This will pick-up and develop work undertaken in 2021. 21. Pandemic Illness: Covid-19 NO - √ - √ No specific audit work is proposed. Previous audit work has provided sufficient recent assurance on this risk. Routine follow- up work will monitor implementation of any agreed management actions. The management of wider impacts of the pandemic will be addressed through work on managing strategic change and corporate governance. Previous reports: Covid-19 response (February 2021). Some relevant aspects also covered by work on Business continuity planning (June 2022) and (November 2018). Page 286 of 418
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Appendix 2 Internal Audit coverage of current key corporate risks in the last five years (continued) Key Corporate Risk Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 22. Administration of elections NO - - - - Given the timing of planned elections in 2022-23, no specific audit work is proposed. Risk management colleagues are working closely with the Election Team to ensure the management of risks associated with the running elections is updated and regularly reviewed. Previous reports: None 23. Further developments: Integration of health and social care NO - - - - No specific audit work is proposed for 2022-23 pending further clarification of the detail and timing of the implementation of the National Care Service. Specific audit work undertaken on behalf of, and reported to, the IJB. A range of audits examining operational Social Work activities are undertaken as part of the Council plan. Recent reports: Public protection (June 2021), Self- Directed Support (November 2020) and Monitoring of external care providers (October 2018) 24. Supply chain risks (New) NO - - - - No specific audit work is proposed for 2022-23 but a watching brief will be kept as to how this risk develops and how well the Council is managing it. Recent reports: None, although aspects will have been addressed through work on creditors and planned work on contract management. 25. Educational attainment (New) YES - - - - Work is planned to look at how the Council is managing this issue given the impact of covid in widening inequalities. Recent reports: None, although aspects have been addressed through work on Pupil Equity Funding (PEF) and Scottish Attainment Challenge Funding (SAC) (various) and planned work on quality assurance arrangements. Page 287 of 418
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Appendix 3 Internal Audit coverage of key financial systems in the last five years Key Financial Systems Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 1. General ledger NO - √ - - Previous audit work has provided positive assurance. Routine follow-up work will monitor implementation of any agreed management actions. Previous report: General ledger (November 2020) 2. Payroll YES √ √ √ √ Recent audit work indicates that the control environment Is now generally robust, but complexity and value of transactions requires regular audit coverage. Previous reports: ESC selected controls (March 2022 and June 2021), Payroll – overtime (May 2020), Payroll – selected key controls (November 2019), Payroll – selected key controls (May 2019), Payroll regularity: VER (November 2018), Payroll follow-up (April 2018). 3. Creditors YES √ √ √ √ Recent audit work indicates that the control environment is generally robust, but complexity and value of transactions requires regular audit coverage. Previous reports: Creditors (March 2022), Creditors selected key controls (February 2021, March 2020 and May 2019) and Creditors regularity (April 2018). 4. Council Tax NO - √ - - Previous audit work has provided positive assurance. Routine follow-up work will monitor implementation of any agreed management actions. Previous reports: Council Tax (November 2020) Council Tax Reduction Scheme (April 2018) 5. Non- domestic rates NO √ - - √ Previous audit work has provided positive assurance. Routine follow-up work will monitor implementation of any agreed management actions. Previous reports: Non-Domestic Rates (January 2022) and NDR billing and collection (November 2018) 6. Housing Rents NO √ - - √ Previous audit work has provided positive assurance. Routine follow-up work will monitor implementation of any agreed management actions. Previous reports: Housing Rents (October 2021 and November 2018). Page 288 of 418
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Appendix 3 Internal Audit coverage of key financial systems in the last five years (continued) Key Financial Systems Include in 2022-23 2021-22 2020-21 2019-20 2018-19 Comments (including date any relevant assignments reported to the Audit & Governance/Scrutiny Panel) 7. Municipal Bank NO - - - √ Although the most recent previous audit work, which provided positive assurance, is now over three years old, the Bank is being wound down, the control environment is relatively stable and there are other areas which are considered a greater priority for audit coverage. Previous reports: Municipal Bank (July 2018). 8. Treasury management NO - √ - - No work planned for 2022-23 as the control environment is relatively stable and previous audit work has provided positive assurance. Previous reports: Treasury management (December 2020 and December 2017) 9. Financial management NO - √ - √ No work planned for 2022-23 as previous audit work and external inspections have provided positive assurance on this key risk area. Previous reports: Financial management (February 2021), Financial management (November 2020) Financial savings and financial sustainability (March 2019) and Financial savings and financial planning (December 2017). 10. Housing Benefit YES - - √ √ Previous audit work which provided positive assurance on this area was now completed some time ago and although the control framework is relatively stable and transaction volumes are lower due to Universal Credit, work is now required to provide assurance to stakeholders. Previous reports: Housing Benefit (September 2019) and Housing Benefits Overpayments (May 2018). 11. Cash/income collection YES - - √ - Previous audit work has provided positive assurance on this area but was now completed some time ago. Exercise will be widened to also include sites where significant amounts of income are collected on site. Previous reports: Cash collection offices (August 2019). 12. Debtors YES - - √ - Previous audit work on this area was now completed some time ago. Previous report: Debt management (December 2019) Page 289 of 418
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Appendix 4 Internal Audit consideration of 2022 Programme of Work for inclusion in the 2022-23 Internal Audit Plan P001.1 Enterprise strategic vehicle The shared ambition articulates a vision for change which aims to revitalise North Lanarkshire’s communities and accelerate inclusive economic growth and prosperity for all. To support the vision, circa £3.5bn public investment is planned over the next 10 years (in capital and ongoing repairs and maintenance). To realise the vision, an innovative new approach to delivery will be developed for a full range of interconnected property, community asset, and linked infrastructure investments. This aims to: • Bring together aspects of infrastructure place shaping, from investment and professional services (such as design and technical services), through to construction (e.g. new housing, schools, roads, and town centres) and associated backbone infrastructure (e.g. land feasibilities and energy). • Bring together comprehensive asset maintenance and lifecycle management (e.g. property repairs and roads repairs). • Link all related service activities and contracts together to enable a strategic commercial partnership to be able to provide strategic development, interconnected end to end delivery, and programming of investment priorities (such as the delivery of new facilities, regeneration, and development) as well as ensuring sustainable assets, through servicing existing assets, regeneration activities, and new assets. • Through the scale and extent of interconnected activities in the strategic partnership, secure significant additional value which feeds into the wider economic growth potential (e.g. in areas such as inward investment to improve the North Lanarkshire infrastructure, employability, carbon neutral infrastructure, and the use and advantage of emerging technologies such as digital and energy). The contract notice for the Enterprise Strategic Commercial Partnership (ESCP) was published on the UK Find a Tender Portal and the Public Contracts Scotland Portal on 23 April 2021, formally launching the procurement process. Despite positive pre-procurement market engagement, the advertised contract opportunity failed to attract sufficient market interest to allow the ESCP as envisaged to proceed. Project Board, on 11 June 2021, decided that the procurement should be discontinued. Project Board agreed that the ambition of the project remained valid and that a revised delivery model, best aligned to the strategic objective and critical success factors of the ESCP project, be developed. Further market engagement was undertaken to better understand organisations’ decisions not to participate in the procurement opportunity, reflecting that several factors resulted in an unacceptable commercial risk. This feedback was taken into consideration in the development of the revised model. A revised delivery model, the Enterprise Project, was developed which adopts a hybrid approach consisting of a blend of in-house delivery supplemented as required by external expertise and capacity, while continuing to deliver services through a range of third-party contracts. The revised delivery model promotes a phased approach to implementation. This will deliver improved efficiency, incremental improvement and greater socio-economic impact in the short to medium-term while allowing the council sufficient time to further develop its in-house commercial capacity and capability and to benefit from any improvement in market conditions in the medium to long-term. The revised delivery model will deliver similar outcomes over a comparable timescales to the original ESCP concept. The revised approach was approved at Policy and Strategy Committee in December 2021. A programme of market engagement has taken place to test market appetite for the revised model. This has indicated that there are limited markets for both housing and corporate and roads and winter services, but that potential bidders viewed the revised model as more commercially attractive. The procurement process for housing and corporate is due to commence in summer 2022, followed by roads and winter in autumn 2022. A committee report will be provided in cycle 4 of 2022. This report will provide Members with an update on the progress of the Enterprise Project as contract awards will not be made until 2023. Internal Audit has previously examined the project management and governance arrangements of the ESCP and the revised Enterprise Contract but, given the scope, scale and complexity of this project will undertake additional work as this project is progressed in 2022-23 with a particular focus on the providing assurance on the adequacy and effectiveness of the Council’s procurement activities and the robustness of arrangements surrounding the processes of tender invitation and evaluation. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 290 of 418
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Appendix 4 Internal Audit consideration of 2022 Programme of Work for inclusion in the 2022-23 Plan (continued) P013 New housing supply programme The council has set a target to deliver 5,000 new homes by 2035. Updated annual targets, including further expansion of homes to be acquired through the open market purchase scheme and off the shelf purchases from housing developers, were approved at committee in November 2020. There was a further update of progress and projections approved at committee in November 2021. Update reports on the progress of the new supply programme will be presented to committee annually. The open market purchase scheme has proved successful and enabled the council to buy back ex council stock to meet identified need, and progress common property works by purchasing flats which give the council 100% (or at least majority ownership) within a block. In November 2021 committee agreed to the expansion of the open market purchase scheme to be able to purchase homes where the owner could remain in situ as a council tenant in mixed tenure blocks where common works are planned or considered to be a high priority and it has not been possible to secure the involvement of the sole owner in the block. The Strategic Housing Investment Plan (SHIP), which helps deliver Local Housing Strategy (LHS) priorities, is updated annually to set priorities for affordable housing projects and help maximise available investment from the Affordable Housing Supply Programme. Internal Audit has previously (March 2020) examined the project management and governance arrangements relating to new housing supply with generally satisfactory results. Programme of work activity and Internal Audit’s assessment of residual risk does not currently require or justify Internal Audit coverage in 2022- 23. NO P014 Tower Strategy The first phase of the re-provisioning programme was approved in May 2018; the overall programme will potentially see all the council’s tower blocks demolished, together with several low-rise blocks of flats, over the next 20 to 25 years. The first phase of the programme comprises over 1,700 flats, including 15 blocks. All phase 1 demolitions are programmed for completion by 2024/25. Tenants in Phase 1 were consulted regarding the planned demolition of their homes and over 80% were in favour of the proposals. Re- housing of existing tenants will take several years, but already 82% of the flats are empty. • The flats at Northburn Place in Airdrie and the three multi-storey blocks at Holehills in Airdrie and Burnside Court in Coatbridge have all been demolished. • The demolition of the low-rise blocks at Gowkthrapple, Motherwell will commence in Q4 of 2021/22, and the towers at Coursington are to commence in Q1 of 2022/23. The demolition of the low-rise blocks at Shawhead will also commence in Q2 of 2022/23. • The design and procurement for the demolition of High Coats, Dunbeth and Jackson Towers in Coatbridge will also commence in Q3 2022/23 Plans for the re-development of the cleared sites as part of the new supply programme are also well underway. A pilot has been completed to install sprinkler systems at Birkshaw Tower in Motherwell and the next phase of sprinkler installations is progressing at Burnside, Doonside, and Lodge towers. The second phase of the sprinklers programme commenced in Q4 of 2021/22 and will include the installation of sprinklers at Glassford, Woodside, and Glen Towers in Motherwell and Coltswood and Redbridge Court in Coatbridge. A further update in respect of the above plans is scheduled to be reported to committee in cycle 4 of 2022 Programme of work activity and Internal Audit assessment of residual risk does not currently require or justify Internal Audit coverage in 2022-23. NO P015 Housing investment programme Work will continue to deliver more than £50m of retrofit investment per annum through the housing capital programme. This includes renewal and replacement of heating systems, kitchens, bathrooms, windows, doors, lead pipes, external roof and rendering as well as rewiring to property and communal areas. A programme of work will also commence to install enhanced measures which will improve the energy efficiency of housing properties within council stock and decarbonize heat. In 2022/23 and beyond this programme of work will see investment in energy efficient technologies and measures to enable the council to meet its statutory obligations in terms of energy efficiency standards for social housing and net zero carbon. The 2022/23 HRA capital programme was approved at committee in cycle 1 of 2022. Internal Audit work on the Housing investment programme was last undertaken in 2019-20 with generally satisfactory results. In 2022-23 we will review corporate contract management arrangements which will include contracts forming part of this programme. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 291 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P019.1 Planning and place making Local Development Plan To support delivery of improved economic outcomes and make appropriate use of available land, the finalisation of a new Local Development Plan is progressing. This is key to ensuring the availability of the right amount of land in the right places to encourage and support growth through investment (industrial, commercial, and residential), while at the same time protecting the valuable natural and built environment. The outcome of consultation on the Proposed Local Development Plan, which was completed in 2019, was reported to committee in February 2020 and submitted for Examination to the Reporter in July 2020. The Report of Examination was published in May 2021 and committee approved an Adoption Plan for submission to Scottish Government in November 2021. It is expected that Adoption will be achieved in Spring 2022. The process of preparing a new Local Development Plan, to take account of the changes in legislation to be implemented through the new Planning (Scotland) Act 2019, will commence in 2022. This is subject to the finalisation of the National Planning Framework 4 (NPF4), and related guidance (late summer 2022) following a delay in publication of, and consultation on, the respective draft documents until late 2021 and early 2022 respectively. The Planning (Scotland) Act 2019 The Planning (Scotland) Act 2019 received Royal Assent in June 2019 and national guidance, regulations, and commencement orders are being progressed to determine how and when the provisions of the new Act are to be implemented. Some of the most significant changes introduced by the Act include the merging of the National Planning Framework and Scottish Planning Policy to form NPF4, which will set out the National Spatial Strategy for Scotland 2045 and introduces new universal policies, against which development proposals must be assessed, the replacement of the requirement to produce Strategic Development Plans with new Regional Spatial Strategies, and a new right for communities to prepare Local Place Plans, which local authorities should have regard to in preparation of their Local Development Plan. To support the implementation of new provisions within the Act, it will therefore be necessary for the council to develop policies and procedures in response to the national guidance and regulations, when issued. It should be noted that the timescales for progressing and implementing key parts of the Act have inevitably been impacted by the pandemic and there is still some uncertainty around timescales for implementation, although there is an intention to have the NPF4 and respective regulations in place at some point in the summer of 2022. Open space strategy Open space strategies are a statutory requirement under the provisions of the new Planning (Scotland) Act 2019. An open space strategy will require a strategic framework to be set out which comprises the council’s policies and proposals regarding the development, maintenance, and use of green infrastructure (including open spaces and green networks). The legislation requires that an open space strategy is underpinned by an audit of existing open space and play provision, an assessment of current and future requirements, and any other matter which the council considers appropriate. Guidance on the requirements of the open space audit and open space strategy (linked to NPF4 and guidance for the preparation of future Local Development Plans) and Play Sufficiency Assessments was published for consultation in late 2021 and has therefore still to be finalised and as a result the indicative programme of work timescales are subject to change. An Open Space Strategy is currently under development. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 292 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P018.1 Economic Regeneration Delivery Plan (ERDP) Committee approved the Economic Regeneration Delivery Plan (ERDP) 2019-23 in August 2019 as the high-level framework which aims to co-ordinate the physical and economic regeneration of North Lanarkshire, increase economic output, and help address social and economic inequality. An integrated approach to investing in the four inter-related areas noted below aims to realise the intentions of the ERDP: • Housing - Increasing housing supply across all tenures to meet current and future housing requirements and support wider regeneration objectives. • Town centres - Supporting the regeneration of North Lanarkshire’s town centres through the development of long-term visions and strategic projects. • Infrastructure - Developing the strategic infrastructure to support physical and economic regeneration, primarily through the City Deal programme. • Business and industry - Enabling and promoting the provision of good quality industrial and office space in the right locations to help attract and retain businesses and improve economic output. Committee also approved an action plan for 2020/21 and 2021/22 to support delivery of the ERDP through a range of projects, such as the development of town visions, as well as complementary elements on the Programme of Work (such as the new housing supply programme, tower strategy, workforce for the future, City Deal, and DigitalNL). An updated ERDP Action Plan was submitted to committee in cycle 1 2022 along with a new ERDP Performance Framework. Performance against this Framework will be reported to committee in cycle 3. While some of the actions identified within the ERDP action plan are reported separately (e.g. new housing supply programme, City Deal, and business support), updates are provided to committee throughout the year in relation to progress against items in the action plan. Town visions and current town centre projects A key priority within the ERDP is the regeneration of North Lanarkshire’s town centres and their redevelopment as modern, high-quality, mixed-use spaces that offer a place where people want to live and visit. To support and guide the long-term transformation of North Lanarkshire’s town centres, Town Visions have been developed for each of North Lanarkshire’s town centres and were approved at committee in September 2021 as part of The Place The Vision. These Visions will now be progressed through the development of Town Action Plans in liaison with North Lanarkshire’s Community Boards. Several strategic town centre projects are also being progressed, including residential conversions, and updates will continue to be presented to committee on a regular basis. Business / industrial areas The ERDP recognises that improving and extending North Lanarkshire’s business and industrial offer is essential to supporting economic growth. While work is ongoing to support and enable the development of North Lanarkshire’s key business locations, and initiatives are being developed to assist with improvements to existing estates, it has been identified that there is a need to develop a more strategic approach. This will be achieved through the establishment of a cohesive Business and Industry Strategy which is closely linked to work programmes for business support and skills development. This will ensure any investment in business infrastructure can promote both business growth and local employment opportunities. Internal Audit work on the ERDP was undertaken in 2020-21. Routine follow-up work will review implementation of agreed actions. Programme of work activity does not currently require or justify further detailed Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 293 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P021 City Deal The Glasgow City Region (GCR) City Deal aims to increase Gross Value Added (GVA) across the entire Glasgow City Region by providing increased access to jobs through improved connectivity to centres of employment and opening development opportunity. It is estimated that North Lanarkshire will benefit from 2,000 new workplace jobs, in addition to a share of 15,000 construction jobs which are expected to be created by the infrastructure programme. The Glenboig Link Road was the first council City Deal infrastructure project to be completed in 2018. Following council and GCR Cabinet approval in March 2019 for a realigned North Lanarkshire City Deal Programme, feasibility and design work has been progressing to take forward all five remaining subprojects: • East Airdrie Link Road (EALR). • Ravenscraig Infrastructure Access (RIA) North and South. • Motherwell Town Centre Interchange (MTCI). • Orchard Farm roundabout. • Eurocentral Park, Ride, and Share. Several key multidisciplinary procurements, to support the option appraisal and specimen design for the infrastructure projects, were undertaken in 2019. These will be managed in future years to enable further construction phases, beginning with Motherwell Town Centre Interchange in early 2022. The Ravenscraig Infrastructure Access project (RIA) achieved Outline Business Case approval during 2020 and is at an advanced stage of design development, with the west coast mainline crossing scheduled, now with Full Business Case approval, to be the first phase of works to commence in spring 2022. Further consultancy services will be procured during 2022 to deliver RIA North and the East Airdrie Link Road. Aligned with the priorities of the ERDP, other infrastructure projects (outwith the City Deal programme) are being progressed, this includes Motherwell Active Travel and Ravenscraig Active Travel Links, and Ravenscraig and Motherwell Active Travel Hubs. Internal Audit work required annually to support preparation of assurance statement required to be provided by Internal Audit to the City Deal PMO as part of the City Deal assurance framework. YES P022.1 Business development and support The council supports businesses in several ways, including through the delivery of the Business Gateway service, the Business Gateway contract, Expert Help Framework, Supplier Development Programme, and a range of thematic and sector specific support. The Economic Recovery Plan approved in February 2021 also outlined a range of support to help businesses recover from the economic impact of the pandemic, including the delivery of Back to Business and Business Recovery and Growth Grants. During 2022/23, the council will continue to support the delivery of a range of business support services, including the Back to Business Fund, the Business Recovery and Growth Fund, and the new Business Start Up grant. The council will also continue to develop the approach to promoting inward investment through its Invest Here campaign and support businesses to improve their digital capabilities and their journey to net zero. In addition to the development of a Business and Industry Strategy - as outlined under the ERDP programme of work - it is also proposed to undertake a review of how the council engages with businesses to improve co-ordination across services and provides bespoke support to businesses looking to set-up locate or expand in North Lanarkshire. This includes how entrepreneurialism is promoted in North Lanarkshire to raise business birth and survivability rates, how businesses are supported to improve their digital capabilities, how businesses are supported to reduce their carbon emissions and achieve net zero, and how to better understand and help meet the skills and employment needs of businesses and facilitate improved access to employment, training, and work experience opportunities for local residents. An update on the review of business support, including financial support and incentives, is scheduled to be reported to committee in cycle 4. Programme of work activity does not currently require or justify Internal Audit coverage in 2022-23. See also previous work on ERDP. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 294 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P025.1 Country parks for the future This programme of work involves development of a 10-year delivery plan (with timetabling and resources) for master planning parks. The intention is to create a shift in the way communities use their parks and greenspace from passive, leisure use to active, engaged community involvement that delivers improvements in specific health, wellbeing, and social outcomes. Initially focusing on Strathclyde, Drumpellier, and Palacerigg Country Parks, The Place The Vision report at committee in March 2020 outlined the unique opportunities in each park. It also highlighted the potential role parks can fulfil as greenspace hubs, significantly increasing their contribution to community health and wellbeing. The parks provide opportunities for improvements in physical and mental health, environmental education, outdoor education, and heritage appreciation. They form key active travel hubs and have the potential to form investment opportunities for the council in terms of the consolidation and refocusing of assets, council wide activities, and use of greenspaces. Development will be taken forward in close co-operation with education services to ensure it meets curriculum and school requirements for outdoor education. Greenspace hubs also have an important role to play in terms of supporting and complementing the successful implementation of the town visions and integrated town and community hubs and ensuring connectivity across North Lanarkshire. The progress made for each of the three country parks was reported to committee in March 2020. This highlighted the extensive public and partner consultation and engagement already undertaken to develop the master plans for the three parks. An update on progress was reported to committee in cycle 4 of 2020 and September 2021 in line with The Place The Vision update and a further update on implementation, and development of the use of greenspace to improve health, wellbeing, and social outcomes, is scheduled to be presented to committee in cycle 3 of 2022. A study is also underway to investigate the feasibility of Strathclyde Park as a source of renewable energy. This would be a significant opportunity for the park to contribute to decarbonization and the council’s goal to move to net zero carbon emissions by 2030. This could potentially be replicated in other greenspaces going forward. An update in this respect was provided to committee in cycle 4 of 2020 and further progress will be reported as part of the overall programme. Outdoor activities Following on from the pilot of outdoor activities for Primary 7 pupils at Strathclyde Park and creation of a new outdoor shelter for education and events, a report in cycle 4 of 2022 will update on plans to explore the future upscaling of the programme. This will detail the longer-term options for the programme to be assessed alongside Environmental Assets Green Growth accelerator feasibility study which has provided an opportunity to consider longer term and bespoke accommodation for the outdoor education programme. Programme of work activity does not currently require or justify Internal Audit coverage in 2022-23. NO P047.1 Hub development and delivery programme As reported to committee in March 2020, the town and community hub strategy identifies the approach required to: • Create eight Town Hubs across North Lanarkshire. These will contain service offerings to serve the requirements of each town community. This could include elements such as education, integrated public services, and culture, sport, and leisure services, together with partnership and flexible workspaces, and commercial opportunities which will promote wider regeneration within the town setting. • Create Community Hubs within each locality. These will provide a local offering which complements the services on offer at the larger Town Hubs, while providing more localised services such as education, community spaces, and partnership and flexible workspaces (such as health centres). These smaller hubs will be tailored to meet the specific needs of each local community and will incorporate existing community assets as part of the wider asset rationalisation programme. Following approval at committee in March 2020 of (a) the guiding principles to be adopted and used to further develop the design proposals for town and community hubs and (b) the prioritisation matrix to be used as the methodology to determine the priority order for town and community hubs development, this programme of work will provide regular update reports to committee on the development and delivery of the town and community hub strategy. Further approval at committee in September 2021 outlined the projects deemed category A1 which will be the focus of further investigation and prioritisation within the development of this programme. Internal Audit work on the Hub development and delivery programme was undertaken in 2021-22 with generally satisfactory results. Routine follow-up work will review implementation of agreed actions. Programme of work activity does not currently require or justify further detailed Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 295 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P077.1 Workforce for the Future Continued delivery of the council’s Workforce for the Future Strategy will be a crucial part of the overall programme of work for 2022/23, and this is in context of the significant and ongoing adverse impacts now being seen within North Lanarkshire’s labour market and as a combined result of the pandemic and other factors including Brexit and an aging workforce demographic. During 2021, the programme has continued to strengthen its focus and delivery capacity under the governance of the Workforce for the Future Steering Group, with five clear workstreams and a workplan to further improve and refine its operating model. In 2022/23 this will include a particular focus on engaging more widely with external employers, and other relevant stakeholders to enable an increasingly demand led focus within the strategy. The steering group has already begun to engage a broader range of staff across the services, holding the first Workforce for the Future Conference in 2021 and with other events planned during 2022 as part of a broad campaign to fully engage stakeholder partners, and employers across North Lanarkshire in the aims and objectives of the strategy. A particular emphasis with this work will be the engagement of stakeholders and employers within known growth / high demand sectors, including construction and health and social care. The next phase of this programme of work will focus on further realigning and accelerating the council’s activities (and those of its arm’s length external organisations and other strategic employability partners, including NHS Lanarkshire) to drive recovery in the labour market - to progress employment opportunities, and to fully leverage use of funding sources and other supports to address gaps in supply and demand. This includes a continuous focus on maximising employment and career progression for employees, young people, and all working age adults across North Lanarkshire’s communities, including those with additional barriers and disabilities. • The 2022/23 Workforce for the Future programme of work will focus on advancing progress across the full spectrum of workforce and employability activities currently undertaken by the council and with partners, and will be set out under five key strategic workstreams: • Business demand and jobs growth - Providing an aligned partnership approach to business demand/engagement to assess current and future jobs and skills requirements, focusing on key sectors to support economic growth and create a skills ready workforce. • Curriculum and pathways alignment - Providing a clear, co-ordinated approach to aligning curriculum opportunities and pathways to labour market intelligence and future labour market needs by delivering a first-class education and skills-based curriculum which supports every child and young person to maximise their talent and realise their potential. • Employability and skills solutions - Enabling collective leadership and shared commitment across employability partners to effectively support a more aligned approach to employability and skills support in North Lanarkshire, reflecting the need to shape coherent and inclusive services and solutions locally to meet the needs of both unemployed residents and employers. • Construction and green jobs - Providing a clear, co-ordinated partnership approach to action planning focused on the current and future demands of the construction and green sectors within North Lanarkshire to ensure economic growth and a skills ready workforce. • Digital skills and inclusion - Developing and delivering digitally confident communities with people and businesses that have the connectivity, confidence, and skills to use digital services, and build a digital ready workforce across North Lanarkshire. • Health and social care academy - Creating the health and social care workforce of the future which best serves the needs of people living in North Lanarkshire, by addressing critical short- and medium-term demand needs within the sector, reducing vacancies and skills shortages and building pipelines of talent to meet future health and social care sector demand. This programme of work is expected to continue beyond 2022/23 and into 2023/24. The focus will be to ensure that the programme delivers a fully integrated end to end approach to this work, beginning in schools, progressing to early careers, and into adult employment to support the full recovery of the North Lanarkshire labour market. This will be delivered through further integrating and leveraging existing services and provisions and partnering with stakeholders, employability service providers, and employers to develop innovative approaches to close skills and qualifications gaps and achieve meaningful improvement in key employability outcomes. An ongoing appraisal of how to best leverage the evolving funding landscape in this area, and the council’s strategic alignment with further and higher education providers, will also form part of this work. Internal Audit coverage in 2022-23 (carried forward from 2021-22) will examine the adequacy and effectiveness of the Council’s approach to workforce planning. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 296 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P031.1 Getting it Right for Every Child (GIRFEC) Getting it Right for Every Child (GIRFEC) is the national policy framework for supporting children and their families in Scotland. GIRFEC processes have existed in North Lanarkshire for over 10 years, but the formation of the education and families service required the redevelopment of existing GIRFEC pathways to fit with revised operating arrangements. A report was approved by committee in May 2020 for the implementation of the refreshed GIRFEC pathway. This pathway is built on the recognition that most children have all their needs met by their immediate families or carers and core universal services. It does however encompass multi-professional arrangements to ensure identification, assessment, planning, and implementation of interventions are in place for those children and young people who need more assistance. This is based on a model of early intervention, ensuring that the right services are provided at the right time and set within the current legislative boundaries of information sharing. The planning document, GIRFEC Pathway for Planning and Support for Education and Families, reflects three stages of intervention - Universal, Additional, and Intensive. This pathway is in use by frontline practitioners as a basis for the identification and planning processes that will allow families to access supports. Staff development programmes have been established and delivered to support this. The GIRFEC principles and pathway has been a significant element in ensuring the council has continued to provide care and support to vulnerable children and families during the period of the restrictions due to the pandemic. The processes that allowed the identification of over 6,000 vulnerable children requiring supports at that time will underpin an integrated approach to wellbeing with the GIRFEC processes at its core. This will develop as the service moves forward and will be reported to committee in the future as part of an integrated well-being approach. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 297 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P030.1 1140 early learning and childcare expansion programme In line with the Children and Young People (Scotland) Act 2014, a national commitment was made to increase the annual entitlement for early learning and childcare from 600 hours to 1140 hours by August 2020 for all three to four-year olds and eligible two-year olds. In response to the pandemic the Scottish Government took the decision to delay the full roll-out of 1140 hours of ELC, until August 2021. Despite the impact of the pandemic and the extreme challenges the council faced in relation to the closure of settings, the delivery of critical childcare, and the planning of sector recovery, full delivery of 1140 hours was achieved in North Lanarkshire by 30 September 2020. The council continues to progress with plans to ensure children and families access the benefits of 1140 hours and fully achieve the ambition to: ‘Deliver in partnership, by a skilled workforce, in stimulating and nurturing environments, high quality and flexible Early Learning and Childcare which is affordable and accessible for all.’ In May 2021 it was reported to committee that six of the nine new build family learning centres and seven of the eight nursery class extensions / adaptations were complete and fully operational. In addition, 64 early learning and childcare settings had benefited from minor adaptations / improvements to support the delivery of 1140 hours. Work began on site for both Forgewood and Cumbernauld Family Learning Centre and plans were progressed to refurbish Wishawhill Community Centre to create Heathery Park Family Learning Centre, and to reconfigure space at Craigneuk to increase capacity. Hot meals were provided to 71% of early learning and childcare settings and 29% were receiving pack lunches. The report referenced the funding follows the child policy and the revised position to offer all the rejected partner provider late applications their first choice, where possible. This honours the previous commitments made to keep late applications under review in this pilot session and allocate places if scope to do so became available. It also gave assurance that future systems for managing late application can be managed in a responsive and timeous fashion considering the data now available. In September 2021 it was reported to committee that 77 early learning and childcare settings had benefited from minor adaptations / improvements to support the delivery of 1140 hours. Positive progress was noted regarding the achievement of one local authority setting, along with one partner provider, in attaining outdoor registration. Recruitment campaigns continued and 92% of promoted posts had been filled. Hot meals were provided to 97% of early learning and childcare settings and only 3% were receiving pack lunches. The launch of the milk and healthy snack scheme was reported. The scheme commenced in August 2021 and funds a daily healthy snack (fruit/veg) and milk (or non-dairy alternative) for those children attending a registered early learning and childcare setting for two hours or more. The September report focused very much on quality improvements and in terms of providing appropriate professional learning opportunities and support that targets and meet the needs of the early learning and childcare workforce resulting in a high-quality service and better outcomes for children and families. It was noted a wide range of training, development and support opportunities was successfully being delivered. In November 2021 it was reported to committee that 79 early learning and childcare settings had benefited from minor adaptations / improvements to support the delivery of 1140 hours. A positive update was provided regarding the appointments to support the delivery of 1140 hours. 97% of promoted posts were filled and the remaining 3% is due to normal fluctuations in the service. Committee were asked to note the expansion and the appoinment of 529 additional employees to support the implementation of 1140 hours. The success of the career pathway was highlighted within the report. An update was provided on recruitment, and committee was advised that an additional 536 employees had been appointed to support the implementation of 1140 hours. The report outlined the final workforce change element of the expansion programme; this included an internal recruitment campaign to secure permanent positions for approximately 300. These posts were filled with staff on temporary contracts It also provided an update on the career pathway for early learning and childcare staff, with 202 having had the opportunity to work towards and achieve qualifications. During 2022/23, reports to committee will update on the progress of the remaining infrastructure projects: Heathery Park, Craigneuk Family Learning Centre adaptations, ongoing minor adaptations, and outdoor registrations. Updates will be reported in relation to the stabilising of the workforce through the recruitment of internal permanent appointments. In addition, reports will update on the review of the funded provider procurement framework, plans to implement new legislation regarding deferred entry, and ongoing quality improvement. This has been the subject of previous audit work but given the extent of progress, expected timescales for remaining key actions and Internal Audit’s assessment of residual risk, the Programme of work activity does not currently require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 298 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2021-22 Plan (continued) P032.1 Mental health, well-being, and resilience A key factor in the development of children and in national policy is health and wellbeing. Health and wellbeing approaches are closely aligned with GIRFEC developments, as GIRFEC is the delivery mechanism for health and wellbeing approaches by schools, clusters, and partners agencies and the GIRFEC element of this programme of work has now been amalgamated with health and wellbeing. To support this delivery a Mental Health, Wellbeing, and Resilience Delivery Plan was approved at committee in September 2019 and reviewed in November 2021. The review of the Mental Health, Wellbeing, and Resilience Delivery Plan has resulted in a one-year plan to consolidate development in the school year 2021/22, with a new plan to be developed in consultation with schools, partner agencies and young people to be launched for a three-year period from school year 2022/23. This will focus on five workstreams: 1. Nurture and resilience. 2. Promoting positive mental health and suicide prevention. 3. Mental health curriculum. 4. Staff wellbeing. 5. Pupil support. The GIRFEC Pathway for Planning and Support for Education and Families, is being further developed across the Cluster model with a particular focus on identification and intervention of children in need of additional and intensive support. This builds on work carried out over the pandemic period to identify vulnerable children and develops it into a cluster based, business as usual model; this work will continue into 2022/23. As part of this, SEEMiS Wellbeing Application has been rolled out to all schools and provides an aligned recording system to schools to assist with planning and intervention for children. To allow assessment of quality of wellbeing supports, a Wellbeing Quality Framework was developed which is currently being considered by partner services as a possible multi-agency quality model. Work has continued to develop the use of Outcome Star, as a related outcome measuring tool. Finance for this development has been agreed and some initial training has been carried out.; this will continue into 2022/23. Through 2021/22 a survey of needs of pupils in schools was carried out using the Strengths and Difficulties Questionnaire. This gave a reassuring picture that most pupils showed difficulty levels that were close to average. It did however also highlight that a small minority of pupils may require additional supports through GIRFEC arrangements. Previously care experienced children and children looked after at home were identified as more likely to have support needs and this will be taken forward through the cluster planning arrangements referred to above. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2021-22 Plan Page 299 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P081 Leadership and operating model Leadership and operating model This programme of work was first approved by committee in September 2019 (following consideration of the Schools and Centres modernisation programme - progress update report), with the focus on a review of how the associated Leadership and Operating Model will underpin the Town and Community Hub delivery programme. The Leadership and Operating Model, implemented through a three phased approach, will enable greater integrated working across services, partners, third sector and wider public sector services and seeks to establish an effective governance structure within each hub that is focused on improving outcomes, and ensuring that services delivered from a hub setting are in line with needs at a local level and reach those who need services most. The three phased approach outlined below, was approved by Policy and Strategy Committee in December 2021, with: • Phase 1 (first 6-months from November 21) to provide shared hub facilities across communities for agile staff in support of our future workplace ambitions. • Phase 2 (in 6 months to 3 years) to extend hub facilities to the wider workforce, partners, third sector, and wider public sector services to enable greater integrated working and reach into our communities. • Phase 3 (in 3 to 10 years) for a fully integrated town and community hub model. Reports on learning from phase 1 and progress against phases 1 / 2 - which are fundamental to ensure a fully integrated community offering while maintaining an effective governance structure - are scheduled to be brought to committee in cycle 4 of 2022/23. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO P039 Scottish Attainment Challenge (SAC) and Pupil Equity Fund (PEF) The SAC and PEF work will continue to have a focus on research and evidence-based practice with a more explicit focus on outcomes. The emerging innovations which have been successful will be shared across the service to ensure that future sustainable systems evolve. Work will continue to ensure that the governance for these programmes, which have differing origins and funding approaches, align and facilitate teacher / head teacher empowerment. Support will also be provided to promote an integrated and inclusive approach so that centres can develop synergies between various funding streams while retaining a focus on supporting vulnerable children and families. The Attainment Challenge programme will continue to further develop the empowering Cluster model in order that collaboration between services can be accelerated and linked to a common purpose of closing the poverty related attainment gap. This work will be based on lessons learned within a local context as well as those emerging nationally, and from within the West Partnership, and will focus on a sustainable future landscape beyond SAC and PEF. Work within North Lanarkshire has accelerated the sharing of successful innovations, capitalised on a redesign of integrated service delivery, and supported a more cohesive and coherent approach across all centres and services to provide a common goal. The SAC Plan for session 2022/23 will build on the workstreams developed as part of a comprehensive consultation exercise implemented in 2021/22 and will take forward key elements of integrated practice and structure through, for instance, the Cluster model, allowing for support around the child to be more focused and comprehensive. In addition, and as part of the refreshed guidance from the Scottish Government, the SAC approach for session 2022/23 will also incorporate a tackling poverty agenda thereby creating further opportunities to develop integrated practice within the council. Work in 2022/23 will also build on the success of the implementation of the innovation and improvement hub, which sits within North Lanarkshire’s learning management system. This will support services to explore emerging thinking and research and make positive practical improvements towards a more connected approach. Reports to committee during 2022/23 will reference progress on both the SAC and PEF and the developing synergies between both. Internal Audit work on SAC and PEF was undertaken in 2020-21. Routine follow-up work will review implementation of agreed actions. Programme of work activity does not currently require or justify further Internal Audit coverage in 2022-23. Aspects relating to performance monitoring will be addressed in part through planned work on wider quality assurance arrangements and on educational attainment. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 300 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P095 Development of Centres of Excellence A key aim of Delivering for Communities is to create a structure that brings together various groups of people with common goals to deliver on the vision in The Plan for North Lanarkshire and The Place The Vision. Within the context of technology and strategy oversight of all nine Community Boards, existing governance groups and Boards will be used to identify a need for Centres of Excellence and/or Communities of Practice to be developed to support the critical capabilities required within the council for it to effectively support Community Boards to deliver on The Plan for North Lanarkshire. As the scale of digital transformation increases, defining and implementing long-term Centres of Excellence which drive innovation and improvement will provide a more consistent experience for local communities. Encouraging members to measure, experiment and push both the organisation and each other forward will be essential to support the Town and Community Hub Model, bringing together shared facilities and resources. For this to be effective four key areas must be addressed over the short to medium-term timeframe: • Senior leadership buy-in and clarity - essential for maintaining the focus on the long-term vision and ensuring this is embedded throughout planning and implementation and all other policy statements agreed by the council - but challenging in terms of developing the relationships and networks required to facilitate the change required (and keeping them going) and building the capacity of the organisation to manage the circle of planning and implementation. • Cross-discipline teams - while respecting the expertise of different disciplines, bringing together multi-discipline teams creates a more efficient and effective support solution in line with Delivering for Communities. • Shared resources - the recent digital workplace transformation affords greater opportunity to work collaboratively utilising Microsoft tools and techniques and ensuring standardisation of approach. • Consistency and governance - building on the strong governance already in place, adaptation of the council’s governance framework will be required to include the parameters within which support is provided across all nine Community Boards. Through the work of the Organisational Design Authority (ODA), several Centres of Excellence will be developed but initially the report to committee in cycle 4 of 2022 will focus attention on Robotic Process Automation (RPA) and Business Change given the requirement to support services to build capacity and capability to deliver council-wide transformation. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 301 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P092 Future workplace model It is expected in 2022-23 that the council will enter a new operating phase, enabled by reductions in COVID-19 restrictions (including social distancing), in a wide range of workplace settings. Assuming these positive changes are sustained, the council will take forward its plans to fully recover its workplace arrangements and more importantly progress these in line with the future workplace ambitions as set out in The Place The Vision. This includes establishing new operating arrangements for a full range of workplace settings such as office buildings, locality offices, frontline service depots, and other community-based workplace facilities which are vital to support the effective delivery of council services. Embedded within the future workplace ambition is a clear desire to enable all staff across the council to work closer to and within their communities, collaborating across services to deliver integrated solutions which better meet the needs of residents. As of January 2022, the council has a total workforce headcount of 15,622 with more than 85% of these staff operating in frontline services across Education and Families, Health and Social Care, and Enterprise and Communities. The previously office-based workforce of 1,677 (which represents just over 10% of the total workforce) have seen the most significant changes to their working practices and environment with the majority having spent a significant proportion of the last 18 months working from home. This group of staff will require the most careful consideration in terms of future workplace arrangements; this includes ensuring that a more flexible and blended approach to office and home working is offered (which 93% have expressed a clear preference for) while maintaining a consistency of approach and ensuring that the remaining office locations are well utilised and remain a vibrant and engaging work location for these staff. The delivery of the future workplace model will proceed in phases and will be focused on delivering a more agile workplace environment that will enable the council to work more efficiently and effectively. The aim is to build a future workplace model which is attractive to future talent and makes North Lanarkshire Council an employer of choice, offering flexibility, but in a vibrant, engaging and collaborative culture which embraces the use of technology to deliver the best quality services for local communities. All of this will be underpinned by strong staff and trade union engagement, alongside appropriate health, safety and workforce policies and guidance that promotes flexible working, health and wellbeing and upholds the council’s duty of care towards all staff, wherever they are working. This programme of work is expected to continue into 2023/24, and in this next phase for 2022/23 the model will be advanced and supported by a range of initiatives and activities. A particular focus will be on ensuring a smooth transition to the new hybrid working arrangements, and a safe and successful return to the workplace as everyone emerges from the most difficult period of the pandemic. These include: • Transitioning all home workers and agile homeworkers to the new hybrid worker model during February, March, and April 2022, including all contract variations and adjustments through the smarter working policy. • Supporting the delivery of the next phase of community hub facilities. • Finalising and implementing the next version of the Hybrid Working Scheme which will remain in place until April 2023, where it will be subject to further review. • Introducing future workplace behaviours to support the development of the desired collaborative and community focused workplace culture and ensure that all staff are clear in terms of what is expected of them in the new workplace environment. • Continuing to develop and evolve the very successful employee engagement and mental health and wellbeing offerings to support employees as they transition back into the workplace. • Placing a stronger emphasis on equality and inclusion in the workplace, to ensure that the future workplace environment is accessible and welcoming to all staff, especially those with protected characteristics who are more disadvantaged. • Ensuring ongoing engagement with managers, staff, and trade unions in the further development of the model, including surveys and focus groups to ensure that the model is evolved in full partnership with staff and other key stakeholders. • Ensuring that there is a strong leadership, and learning and development, offering which supports and underpins the development of the future workplace model and desired culture. Regular update reports will be provided to committee on the progress of the future workplace model and to seek approval for the implementation of all changes to supporting HR and workplace policies and programmes required to ensure its successful delivery in 2022/23. This Programme of Work activity represents a significant change in how significant parts of the Council’s workforce will operate. Internal Audit will assess relevant governance and control aspects to provide assurance on the effective roll-out/ implementation of the future workplace model YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 302 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P034.1 Improving outcomes The requirement to improve attainment is identified as a key national driver to deliver Excellence and Equity in Scottish education. To ensure a continued focus on raising attainment and closing the poverty related attainment gap, senior officers have key strategic remits aligned to aspects of improvement and equity. Quality assurance processes and procedures have been designed to ensure an ambitious, effective, and sustainable model of school improvement that is underpinned by rigorous processes that are systematic, transparent, and understood by all relevant stakeholders. Effective self-evaluation is integral to our approach. Statutory legislation under the Standards in Schools etc. Act 2000 (as amended by the Education (Scotland) Act 2016) requires that an annual report is prepared describing local authority activity to: • Reduce inequalities of educational outcome experienced by pupils because of socioeconomic disadvantage. • Achieve the strategic priorities of the National Improvement Framework (NIF). In line with legislation, the council’s annual standards and quality report aims to evidence the improved outcomes achieved for the people and communities of North Lanarkshire in this respect. This report is also designed to serve three purposes: • To provide all stakeholders and the people of North Lanarkshire with the performance information across the six NIF drivers (performance information, school improvement, assessment of children’s progress, parental engagement, teacher professionalism, and school leadership), and against the council’s improvement priorities to measure how well educational outcomes for young people and their families are improving. • To provide a summary of the outcomes and performance of the Pupil Equity Fund programme at a local authority level, in line with external grant funding. • To provide the information required to contribute to the Scottish Government’s annual report on the six NIF drivers for improvement. The report also includes key aspects of the council’s response to the pandemic to ensure continued support for families and improved outcomes for learners. The Standard and Quality report and Action Plan for session 2021/22 will be presented to committee in cycle 4 of 2022. Feasibility of providing free school uniform to all pupils universally This review will provide information on the financial impact of a free school uniform for all policy considered alongside all other cost benefits. It will consider the workforce capacity to deliver this as well as implications on current systems and processes to administer and manage the provision of a free school uniform to all pupils universally. Importantly the review will seek the views of stakeholders and specifically the views of children and young people and consider the council’s Climate Plan and commitment to net zero by 2030. The conclusion of this review will be presented to committee in cycle 3 of 2022. Elements of this will be addressed through Internal Audit work currently underway examining the Service’s quality assurance arrangements. Programme of work activity does not require or justify separate Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 303 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P035.1 Additional Support Needs (ASN) provision In 2019, a major review of ASN provision in North Lanarkshire was conducted by a Member / Officer working group who were responsible for overseeing this work. The review involved a comprehensive evaluation of policy, practice, and provision in North Lanarkshire Council with regards to meeting the support needs of children and young people and ensuring that all are reaching their full potential. Significant stakeholder engagement was used to gather information to inform discussions and recommendations. The review assessed methods relating to the deployment of resources (including staffing and finance) and considered the suitability and condition of current ASN estates prior to developing a new model of service delivery linked to future community hub developments. 12 recommendations from the review were reported to committee in September 2019, outlining an action plan to improve ASN systems under three headings, improving practice, empowering staff, and managing resources. These recommendations have provided a route map to ensure effective planning, development, and implementation. In May 2020 an update on progress for all twelve recommendations was provided to committee. This update specifically reported on the development of a new learning assistant allocations model, a new pupil support service, and the establishment of integrated cluster wellbeing teams and bases. In October 2020, the Scottish Government outlined national priorities in the Additional Support for Learning: Action Plan. It is important to note that progress made in all 12 recommendations of the council’s 2019 ASN review demonstrate strong alignment to the national actions and goals. In November 2020, committee approved the Reconfiguring Intensive ASN Systems and Services report and through this report approved a proposal to engage in five statutory consultations to create We Aspire College, relocate primary aged pupils from Mavisbank School to the Drumpark / Greenhill campus, and relocate pupils from Clydeview School to the Firpark / Cathedral Primary School campus. A detailed update on progress in relation to each of the 12 recommendations of the ASN review was provided tocommittee in February 2021. This also highlighted the adoption of a formal project management governance structure through the Inclusion Board to lead and monitor the delivery of the overarching ASN strategy. In June 2021, all five statutory consultations were approved by a special Education and Families Committee. Further committee reports in September 2021, gave approval to conduct a statutory consultation on the proposal to relocate Bothwellpark High School, create a P4-P7 Language and Communication Support Centre (LCSC) as part of St Aidan’s Primary School, and develop a 0-5 years- old Family Learning Centre within the Edward Lawson Centre as a second phase of reconfiguring intensive ASN systems and services. In November 2021, a report provided committee with an update on the considerable progress made in implementing the 12 recommendations arising from the ASN review. In February 2022, a report was taken to committee providing an overview on the outcome of the statutory consultation on the relocation of Bothwellpark High School to establish an integrated Zero to 18 Offering for Children with Complex Needs. Significant range of activities being progressed to support the delivery of the Council’s ambitions. Audit work will review progress and provide assurance on the adequacy and effectiveness of relevant project management and governance arrangements. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 304 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P044.1 Keeping the Promise: Care experienced children and young people Keeping the Promise: Care experienced children and young people In February 2020 the Independent Care Review reported its findings in the form of The Promise, which sets out a path for a 10-year programme of transformation in the delivery of care and family support in Scotland and places the voice of children and young people at its heart. This was followed by the Promise Plan 2021-24 - a blueprint for priority actions over the next three years. The council has committed to supporting this programme and to Keeping the Promise. Over the next year it is also anticipated that legislation incorporating the United Nations Convention on the Rights of the Child into Scots Law will be embedded. This is reflected in the new Children’s Services Plan for North Lanarkshire 2021-23 which is shaped around the foundations of the Promise, the updated improvement plan supporting the current Corporate Parenting Strategy 2019-23 and the recruitment of a Promise development team whose lived experience of care is integral to local planning. To support the ambition, a range of work focused on improving outcomes for care experienced children and young people will continue alongside new areas of work. These include: • Continuation of the Close to Home programme designed to improve capacity to support children and young people closer to their communities. • A review of the operating model for local children’s carer services. • Expansion of support to kinship families though the new kinship team. • Continued enhancement of the virtual school model. • Integrated planning around educational and vocational pathways. • Enhancement of health, mental health, and wellbeing supports. • Contextual safeguarding. • A focus on child-centred records and recording. • Work to ensure all children and young people benefit from positive relationships. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 305 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P079 Curricular review This programme of work relates to the ongoing review of the curriculum and has a clear strategic focus on the delivery of a revised curricular model to facilitate a more effective set of pathways for children and young people. This encompasses taking forward the four overarching recommendations from the Organisation for Economic Cooperation and Development (OECD) Implementing Education Policies: Scotland’s Curriculum for Excellence: Into the Future: 2021 report. There is a greater emphasis on re-aligning key elements of Curriculum for Excellence at national and local levels in response to recovery from the pandemic and the transformational change in approaches to digital learning and teaching. The results of an initial review were reported to committee in May 2020 and a further update was reported in November 2021; this described the work being undertaken by schools and establishments and the central team to ensure coherent curriculum planning and delivery arrangements on the implementation of 32 period week and Future Fridays. There was also a report noted and approved by committee in February 2021 which updated on digital learning, the deployment of devices to vulnerable children and young people, and curricular initiatives to support educators and learners during the pandemic. The Digital School continues to develop approaches in three focused areas of infrastructure and accessibility, digital capacity, and learner experience. Throughout 2021, the focus has been to further strengthen and enhance the curriculum offering and cohesiveness through online learning and supporting children, and young people and families through periods of home learning relating to the ongoing pandemic. In 2022 this programme of work will provide updates to committee on the progress of the curriculum review and taking forward the OECD recommendations in relation to learner pathways, digital learning and provision, curricular frameworks, and initial planning for a maximum of 21 hours class contact time for teachers. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO P045.1 Tackling domestic abuse and gender-based violence - support for adults and families The impact and harm caused by domestic abuse continues to present a significant challenge to North Lanarkshire’s communities. Building on the review of services undertaken and in line with the aspirations of Equally Safe, Scotland’s strategy to eradicate violence against women and girls, a comprehensive strategy and plan will be developed through the Violence Against Women Partnership. This will aim to ensure a coherent approach to improvement activity which will include a focus on prevention and early intervention as well as enhancing practice, support, and safeguarding. Specific priorities over 2022 will include: • The extended rollout of the Safe and Together model through a partnership training and development programme. • Continued work to embed UP2U (the Domestic Abuse Intervention model) and the expansion of reach through the non-mandated UP2U Family Intervention programme. • Completion of the role out of MVP (Mentors in Violence Prevention) in secondary schools and development of a primary school programme and linking with the Equally Safe at School programme. • Enhancement of the MARAC (multi-agency risk assessment conferencing) model. • Continuing work to strengthen pathways to support. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 306 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P048.1 Framework for physical activity Active and Creative Communities Strategic Activity Framework During 2020, this programme of work updated the ActiveNL framework within the context of the decision to insource culture and leisure services and the Physical Activity Strategy 2020-30. The ActiveNL Framework seeks to integrate and align partners’ priorities to address a clear mission and suite of key objectives, focused on improving levels of physical activity through active living, sport and recreation, dance, and play. The ambition is to deliver the many benefits of participation for all residents of North Lanarkshire. This will mean increased opportunities for engagement, new approaches, and different ways of delivering services. To draw on the wider service offerings within the council, a strategic delivery plan now needs to be developed. This will aim to deliver support in terms of health and wellbeing, the local economy, education, reducing inequality, and realising innovative future working with communities in line with the national strategy, A Culture Strategy for Scotland. Within the context of the new Active and Creative Communities offering, an action plan will be developed in support of the agreed focus on active living, sport, dance, and play. To meet the World Health Organisation’s physical activity targets and lessen health inequality gaps in North Lanarkshire, the action plan will maximise opportunities offered through enabling participation and promoting a range of social, cultural, and leisure activities. Working with community partners and strengthening existing lists to schools, the action plan will offer a baseline approach for improvement through to 2030. During 2022/23, the programme of work will reflect the position of Active and Creative Communities as an established service in the council. An updated action plan will both reflect those actions which carry over from year one and focus on new activity planned for year two. An increased focus on partnership working internally and with external partners will be a key theme. Active and Creative Communities services continue to be subject to a period of review and change since returning to North Lanarkshire Council. The outcome of the review and further alignment with The Plan for North Lanarkshire will be presented in the summer of 2022. This will reflect the ongoing requirement to balance community need with ensuring sustainable service provision which supports a co-produced approach. A key element in service development is the involvement of more volunteers within services. It is recognised that many services will benefit from this and will develop a comprehensive Volunteer Policy which supports those giving up their time with clear training opportunities and provides a chance to build skills, enhance community connections and, where appropriate, provide pathway into employment. As service changes see a move in operational and structural terms, into Education and Families, activity to enhance the offer to young people will be to the fore, working with colleagues to ensure young people reach their full potential through development of a curriculum which offers a range of opportunities for all interests. Finally, a key aim of the Active and Creative Communities Framework is enhancing and increasing the number of people who are now active or engaged in services. Much has been achieved to date and a comprehensive report on progress will be presented to committee towards the end of 2022. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 307 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P049 Prevention and early intervention North Lanarkshire has a long history of innovative practice which aim to maximise independence and support individuals to remain active members of their community. Approaches prioritise prevention, early intervention, and community capacity building, with a focus on promoting health and wellbeing and addressing inequalities. Core within this is tackling poverty and ensuring all developments aim to reduce inequalities. The impact of the pandemic makes the focus on addressing inequalities and targeting hard to reach populations even more important in seeking to improve health and wellbeing. Further activities being developed under this programme of work include: • Continuing the development of routine enquiry to include a range of health improvement and inequality focused topics (including financial inclusion enquiries) into the formal assessments by all health and social care professional groups. This work strand will be developed in tandem with First Point of Contact. • Continuing the expansion of the content and usage of Making Life Easier, North Lanarkshire’s self-help portal, to enhance access to appropriate information and low-level supports. • Building on the Healthy Schools Framework within North Lanarkshire’s schools. • Developing targeted self-help programmes to enable individuals to proactively manage their own health and the day-to-day practicalities of living with a long-term condition, including being able to identify and act on the signs of exacerbation. New programmes will include the use of technology to enable monitoring of conditions. • Implementation of the Type 2 Diabetes Framework for Lanarkshire. • Further developing Anticipatory Care Plans (ACPs) which allow individuals to make informed choices about how and where they wish to be treated and supported. While the use of ACPs has expanded, further work is required to ensure the process is more integrated in approach and electronically hosted to maximise impact. • Further promoting awareness of Power of Attorney for staff and the public through website North Lanarkshire - My Power of Attorney. • Expanding physical activity programmes to include home support and tie in closely with the reablement and rehabilitative ethos. This has arisen from the pilot in North Lanarkshire for the Care About Physical Activity (CAPA) programme which aims to support older people in care homes to move more often. • Delivering the Tobacco Control Strategy. • Improving uptake of cancer screening programmes. • Implement a range of measures to improve breastfeeding rates, including work to become Scotland’s first Breastfeeding Friendly council. Community solutions Investment in the third sector offers the opportunity to genuinely focus on prevention and early intervention. The Community Solutions Programme, supported by Voluntary Action North Lanarkshire, brings both locality and thematic structure to volunteer, neighbourhood, and community activity. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 308 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P080.1 Keeping the Promise: Support for families Keeping the Promise: Support for families In February 2020 the Independent Care Review reported its findings in the form of The Promise, which sets out a path for a 10-year programme of transformation in the delivery of care and family support in Scotland and places the voice of children and young people at its heart. This was followed by the Promise Plan 2021-24 - a blueprint for priority actions over the next three years. The council has committed to supporting this programme and to Keeping the Promise. Over the next year it is also anticipated that legislation incorporating the United Nations Convention on the Rights of the Child into Scots Law will be embedded. This is reflected in the new Children’s Services Plan for North Lanarkshire 2021-23 which is shaped around the foundations of the Promise, the updated improvement plan supporting the current Corporate Parenting Strategy 2019-23 and the recruitment of a Promise development team whose lived experience of care is integral to local planning. During 2022 work will continue to develop and enhance integrated family support systems in line with the 10 principles for good family support embedded in the Promise and building on the opportunities provided by the empowering Cluster model and the learning from integrated working to support vulnerable children and families during the pandemic. Specifically, work will include: • Partnership with the Promise team nationally on Human and Economic Cost Modelling (HECM) to support capacity for a transformative shift to upstream early support. • Enhancement of Family Group Decision-Making supported by the piloting of individual family budgets. • Further development of community mental health and wellbeing supports for children, young people, and families in line with the new national framework and incorporating learning from pilot activity and family feedback. • A focus on improving access to support, including a review of social work duty systems to ensure better alignment with integrated cluster arrangements and delivery of preventative support. • In conjunction with the ASN programme, a focus of improving wider support and transitions for children with disabilities. • Development of integrated support in early years • Completion of a review of support to children and young people in conflict with the law and continued development of the contextual safeguarding model. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 309 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P005.2 Tackling poverty While trends show strong improvement in several key indicators relating to economic growth, investment, and educational attainment, there are still unacceptably high levels of deprivation and child poverty, and clear areas of inequity and inequality remaining across North Lanarkshire. With a focus on inclusive growth and prosperity for all, The Plan for North Lanarkshire, seeks to ensure that all North Lanarkshire’s people share equally in the improving picture, and there is an element of social inclusion across all towns and communities. The focus on poverty means tackling some of the greatest hardships experienced by people living in North Lanarkshire - such as low pay, expensive fuel, or inadequate support to meet life's challenges. The focus on inequality means action that reduces the gaps between people living in different circumstances - gaps in relation to health and wellbeing, educational achievement, having a decent job that pays a decent wage, transport to get to work, and good quality services and facilities. With employment being one of the key drivers to support individuals and families out of poverty, the Workforce for the Future Strategy 2020-23 (approved in March 2020) has a focus on pathways out of poverty and aims to ensure opportunities for all to access training and increase skills that enable routes to meaningful employment and supports the most vulnerable residents into work. Aligned to the Workforce for the Future Strategy, the North Lanarkshire Youth Guarantee supports the tackling poverty priorities and through work via a local employability partnership, will support a range of additional youth employability activities to support the employment, education or training of young people, particularly because of the impact of the pandemic on the labour market. Towards a Fairer North Lanarkshire, the Tackling Poverty Strategy 2020-23, and supporting action plan comprises several underpinning elements: • Child Poverty Action Report - developed and implemented in line with the Child Poverty (Scotland) Act 2017 which introduced statutory targets to reduce child poverty in Scotland by 2030. • Improving the provision of information and advice to help those most vulnerable combat fuel poverty. • Continuing the roll out of anti-poverty approaches for children, including pedagogical practice, and support programmes to address food poverty. Inclusion pledge Work will be undertaken to develop a North Lanarkshire inclusion pledge / guarantee to bring together key activities such as supported employment, workforce planning, recruitment, procurement, and service delivery and tie these into current duties such as equalities, Fairer Scotland, and child poverty actions. This action will cement the council’s explicit commitment to inclusion across its workforce, its operations and service delivery. Internal Audit work on this issue was undertaken in 2021-22. Routine follow-up work will review implementation of agreed actions. Programme of work activity does not currently require or justify further detailed Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 310 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P050.1 Do the right thing, first time First Point of Contact (FPoC) and home-based assessment A key aim of the health and social care integration legislation is to develop frontline services that are integrated at the point of delivery, simplifying the service landscape and removing the frequent hand-offs and duplication between services. The three-year Strategic Commissioning Plan (SCP) for 2020 to 2023 sets out six key ambitions relevant to all stakeholders and offers clarity of direction at a time of increasing demand through demographic change as well as financial challenge. While engagement and participation in writing the SCP was carried out prior to the pandemic, the ambitions not only remain relevant but become even more important. It has become more prevalent for changes in associated areas of work to be progressed much more quickly or for specific areas of work to undergo further review in light of the experience and impact of the pandemic. FPoC remains a key priority. This aims to ensure that, wherever people contact the system, they receive a consistent and correct response which has a focus on preventative and anticipatory care approaches. At present there are numerous potential entrances to the system - from walk-in at a range of sites to separate service telephone numbers and websites. Collectively health and social care practitioners hold a wide range of information and potential responses but facilitating the correct engagement can prove challenging. The development of FPoC seeks to build a system which empowers people to be as healthy, safe, and independent as possible but ensures that when they need help, treatment or care, they can access the correct supports efficiently and effectively. The project will link with DigitalNL developments and work in relation to General Medical Services. The development of an increasingly effective FPoC includes the need to ensure robust assessment at home. Facilitating discharge from hospital at the earliest opportunity and avoiding unnecessary admissions to hospital is enhanced by focusing assessment at home, in familiar surroundings, involving family more actively. Prioritising mental health Two of the main national strategic developments are around the Primary Care Improvement Plan (tied into the new General Medical Services contract) and the Mental Health and Wellbeing Strategy. Pan-Lanarkshire strategies have been development for both areas, with associated action plans setting out the key deliverables for the next five years. Both programmes of work will continue to create a range of prevention and early interventions, set within a wider multidisciplinary approach. Challenging stigma and ensuring that mental health is given the same priority as physical health are important elements of the Lanarkshire Mental Health and Wellbeing Strategy 2019-24. It is expected that the pandemic and associated restrictions will continue to have a significant impact on mental health, with increased demand for services and supports. Where the impact of mental health has a significant effect on a person’s ability to live independently in their local community, or adversely affects their ability to make decisions in their best interest, work is also being done to respond appropriately to increased demand because of the Mental Health and Adults with Incapacity legislation. The statutory functions of the council include the requirements to ensure the right number and availability of Mental Health Officers (who are qualified social workers with additional qualifications in mental health), recognised currently as being problematic both nationally and locally. The development of Urgent Care pathways will see a change over time in the use of Emergency Departments and changes to both physical and mental health pathways. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 311 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P051 Focus on what matters to people (outcomes) In line with legislation, there is a clear duty on authorities to give people more choice and control over how they achieve agreed outcomes. This includes increased transparency around how much money is available to put individualised support arrangements in place, make services and supports much more specifically designed to meet individual needs, and be able to achieve important outcomes. Self-Directed Support (SDS) aims to improve people's lives by empowering them to be equal partners in the design, delivery, and evaluation of their support. North Lanarkshire has been at the forefront in developing the model, with significant progress having been made for children affected by disability and younger adults. The modernisation of home support services is an important development in ensuring that older adults are more routinely offered choice and control through individual budgets. The success of promoting increased choice and control is dependent upon a wide range of local authority, third, and independent sector providers being available to meet the wide and varied needs of children, adults, and older people. A 10-year framework is in place offering longer term commitment to people in North Lanarkshire. This longer-term framework facilitates a focus on working in partnership with independent sector providers to facilitate choice and control and the flexible and innovative achievement of outcomes remains the focus. Individualised responses which empower people to live in their own homes - with support arrangements built in partnership with family and friends - has been a particular strength throughout the pandemic. Work will continue to ensure underrepresented groups are encouraged to take advantage of the choice and control offered through adopting a self-directed approach. SDS covered by previous audit work. Issues arising will be progressed via routine follow-up work. Programme of work activity does not currently require or justify further Internal Audit coverage in 2022-23. NO P052 Support people to live well connected lives Promoting increased choice and control through the principles of Self-Directed Support (SDS) will continue to be a focus for the Health and Social Care Partnership and social work services. The implementation of the new model of home support has been ongoing over the past few years, creating a greater focus on rehabilitation, recovery and reablement and introducing the option of SDS for older people. In line with the DigitalNL programme, further developments are progressing to maximise the use of electronic scheduling and remote working, which will improve both the quality and efficiency of the service on offer. Findings from the national independent Review of Adult Social Care services and the development of a National Care Service will inform the future direction of local services and models of care. Work with wider partners, in particular Community Solutions (a community led, health and social care investment programme operating across North Lanarkshire focused on building communities where people can have full, independent lives), adds a depth to the local response which recognises the importance of people living well, with friends and relationships and active roles within local communities. The full reporting of the Health and Social Care Partnership to the Integrated Joint Board and Performance, Finance and Audit Committee will identify reports on the detail of the Strategic Commissioning Plan programme of work, which will be relevant to the Adult Health and Social Care Committee. Reports will be remitted as appropriate. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 312 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P054 Technology and sustainable solutions Within the world of health and social care, technology enabled care is an ever-expanding feature of developing models. This has particularly been the case over 2020 and into 2021 with the response to the pandemic relying heavily on the extended use of technology in care and support, as well as for lines of business. In North Lanarkshire, there are many examples of how innovative use of technology has supported individuals to access services and supports, remain in the community, and manage their condition. This experience of technology is now expanded to include Near Me access to assessment and treatments (a video consulting service that enables people to have health and social care appointments from home or wherever is convenient). In conjunction with South Lanarkshire Health and Social Care Partnership, the pan-Lanarkshire Technology Enabled Care group has been awarded funding from the national work stream to support development of a blueprint from which to develop future service provision. In conjunction with housing, a project will be developed to fully embed the wide range of technological supports within a Very Sheltered Housing Complex, with the aim of supporting new models of support and care and evaluating the impact for potential wider roll out. Opportunities will also be maximised around the community alarm service, with a move to digital opening up potential for further innovative practice. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO P082 Work, volunteer, and care Supporting the health and wellbeing of staff, volunteers, and carers is a key ambition within the Strategic Commissioning Plan 2020-23 and is essential to sustaining a whole system approach to improving the health and wellbeing of local communities. The Care Academy plays an important role in developing the future workforce as well as provide encouragement and opportunity to progress for current employees. The Community Solutions strategy, supported by Voluntary Action North Lanarkshire, provides an important vehicle to supporting community response to connecting people. The Carers (Scotland) Act 2016 set out a range of duties on local authorities and health boards to improve the support and recognition of unpaid carers. The Act is designed to support carers’ health and wellbeing within each Health and Social Care Partnership area. The Carers Strategy Implementation Group will continue to monitor the impact of the local responses to act and bring forward regular reports to the Adult Health and Social Care Committee and Integrated Joint Board. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 313 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P088 Digital infrastructure Digital infrastructure aims to both improve connectivity for the council as a corporate entity, but also to leverage that requirement to positively disrupt the marketplace, improving connectivity availability, affordability, and take-up for residents and businesses. Through delivering next generation digital infrastructure, the project aims to stimulate inclusive economic growth and investment in digital skills. By providing the affordable connectivity required to attract new businesses and tackle areas of digital exclusion, digital infrastructure creates an environment that fosters innovation and supports people and businesses to live, learn, work, and operate in smart and digital ways. A communications technology partner will help shape digital connectivity and deliver smart services and intelligent solutions. Driven by the ambition set out in The Plan for North Lanarkshire, fully integrated digital services that are responsive to changing demand and meet residents and service users’ needs will be developed. This programme of work will initially address the underlying infrastructure within the authority, with the first 18 months focused on the installation of fibre connectivity across local towns and villages, connecting council corporate properties to a new and improved corporate network and increasing fibre coverage across the authority. Ultimately this infrastructure will ensure state of the art connectivity in key council buildings and areas, facilitating 5G coverage, providing the foundations on which to transform residential areas into smart towns and connect them to innovative services that help reduce demand and support priorities, and enabling the Internet of Things (IoT) as standard across North Lanarkshire’s homes, streets, communities, and towns. Introduction of a consolidated public WiFi solution is a key aspect of the programme, incorporating transitioning from existing disparate solutions and bringing new areas online (supported accommodation, country parks, etc). Interaction through community groups advertising broadband availability and the structured use of voucher schemes are other aspects that will be used to aid take-up of connectivity offerings. During 2022/23 the following areas will be reported on - corporate transition to new solutions, fibre availability to premises, investment of third- party fibre broadband suppliers, community engagement, and the voucher scheme use. Reporting in 2023/24 will update on the use of public WiFi and the take-up of residential and business broadband via these new suppliers. All IT architecture, solutions, and devices will be prioritised, developed, and managed through the councils Enterprise Architecture Governance Group (EAGG) and Technical Design Authority (TDA). By maintaining strategic oversight, the EAGG will ensure all IT related projects and solutions are fit for purpose, comply with all relevant standards, specifications, and principles, and facilitate a consistent one council approach. Digital NL and associated digital infrastructure arrangements remains a key transformational programme of work and providing assurance on this remains a priority for Internal Audit work in 2022-23 YES P007.1 Annual corporate communications plan A Communications Strategy was approved at committee in June 2019. This sets out how the council will communicate its vision through ongoing brand development within the Live, Learn, Work, Invest, and Visit themes and strategic deployment of campaigns. To support the Communications Strategy a communications plan is updated each year, this describes planned major communications activity under the Live, Learn, Work, Invest, and Visit themes, forward looking over a 12-month period. It also reports on the previous year’s activity in support of all the council’s strategic priorities. The plan is scheduled to be presented to committee in cycle 3 of 2022 and cycle 2 annually thereafter. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 314 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P003.2 Business change and service redesign The DigitalNL transformation programme has a significant impact internally on council staff and externally with service users, the wider public, and local businesses. This involves changes to the way services are delivered, realigning staff roles and responsibilities and building digital knowledge and skills, shifting the way people interact with the council towards accessible online solutions, and enhancing the digital infrastructure across North Lanarkshire. Maintaining this overarching programme of transformation ensures strategic oversight of each individual digital work package. This includes the following: • A programme of service construct sprints to improve productivity and remove inefficiencies and reconfigure processes to better deal with the impact of rising service demand and decreasing resources. • Improvements to self-service opportunities for residents to encourage a culture of self-management and self-support. • Further development and roll out of self-service opportunities to enable staff to be more self-sufficient and better equipped to deliver the needs of the business. • Implementation of further intelligent automation to improve productivity by eliminating data entry errors and decrease completion times in tasks that are high volume, repetitive, and manually intensive. • Oversight of the Systems Integrator (SI) developments in delivering the work packages for mobilisation and planning, digital workplace (Microsoft 365) design and implementation, cloud assessment and migration, and the digital platform foundation. • Management of the benefits realisation approach to define and track the benefits achieved from the various change programmes to ensure these are realised. • Alignment with the development of service specific workforce plans (and. the digital skills and inclusion programme of work within P093) to take account of the affect which the DigitalNL transformation programme will have on the size and shape of the council’s workforce and what it means for existing roles, as well as roles that are likely to be required in future. A refreshed Digital and IT Strategy was developed and approved in February 2022 - this reiterates the vision for a Digital North Lanarkshire with Digital Communities, a Digital Economy, and a Digital Council and aims to strengthen alignment with the council’s long-term vision and Programme of Work items, set the direction for the year ahead, and support the delivery of wholly integrated and connected programmes of work to realise the digital vision. Digital NL (and the associated business change and service redesign processes_ remain a key transformational programme of work and providing assurance on this remains a priority for Internal Audit work in 2022-23 YES Programme of work to support the shared ambition Internal Audit commentary Include in 2021-22 Plan Page 315 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P093 Digital skills and inclusion With the rapid pace of technological change and changes in how people live, learn, work, and do business, building digital skills across young people, residents, and businesses to meet current and future digital skills requirements is critical. The council has an established Digital Skills and Inclusion Group which has co-ordinated a range of activity related to improving digital skills in North Lanarkshire focusing on five inter- linked workstreams: • Digital teaching, learning, curriculum, and pathways • Digital business, intelligence, engagement, and support • Digital council and workforce • Digital communities, employability, and skill development • Digital health and care The work of the Group is aligned to the council’s Digital NL transformation programme, the council’s Digital and IT Strategy, Driving Digital Locally, Digital Infrastructure, Digital School activities, and the Workforce for the Future Strategy. The Group reported activities to committee in May 2021. A survey of local businesses undertaken in 2021 highlighted that 67% of respondents had a current digital skills gaps within their organisation. The survey highlighted the importance of digital skills to businesses and the growth in demand for more advanced digital skills. During 2022/23, the council will deliver a clear, co-ordinated partnership approach to digital skills planning focused on the current and anticipated future demands for digital skills within North Lanarkshire to support economic recovery and growth, to maximise the impact of improvements to the digital infrastructure across North Lanarkshire, and to develop a digital ready workforce through a skills academy approach. As part of this work, a detailed action plan is being developed outlining how the council and its partners will: 1. Build digital skills, innovation, and capability within the North Lanarkshire business community to meet future demand, address short to medium term skills shortages, reduce vacancies, and support economic growth. 2. Build digital skills and capabilities in children and young people and deliver digitally enhanced curriculum and pathways aligned to business and labour market needs and intelligence. 3. Support residents, community groups, and the third sector to improve their digital skills and capabilities and build a digital ready workforce across North Lanarkshire. The detailed action plan and update on work being undertaken to develop digital skills will be reported to committee in cycle 4. Driving Digital Locally The wide-reaching extent of the DigitalNL transformational programme has a significant impact for staff and service users, businesses and people across North Lanarkshire’s communities. In approving the DigitalNL business case, Members acknowledged this would require adoption of a whole place approach, with all future service delivery being designed to reflect the needs and outcomes of communities going forward. Involving stakeholders and staff, providing opportunities for ongoing dialogue, and listening to views and taking feedback on board is essential to ensure service design reflects stakeholder needs, views, and aspirations. As such, a range of communication channels were deployed during 2020/21 to provide the initial messages around this whole place change. As the DigitalNL transformation programme progresses, stakeholder engagement was further developed during 2021/22 through Driving Digital Locally communication and engagement. These arrangements, developed in tandem with Community Boards, are designed to facilitate local people, Elected Members, and communities being at the heart of the council’s operating model. Aligned to the council’s Communications Strategy, this programme of work will ensure the development of a rolling plan of communication and engagement activity so that all stakeholders - staff, Elected Members, trade unions, service users, residents, and businesses are well informed, left in no doubt as to what is happening, and positively welcome the transformation. Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. See proposed work on wider Digital NL programme. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 316 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P086 Equalities Equality outcomes Establishing equalities outcomes is a requirement of the Public Sector Equality Duties with the purpose of advancing the general Equality Duty. These require to be evidence based and refreshed every four years, with progress reported every two years. A refreshed set of equality outcomes, covering the years 2021-25, was approved at committee in June 2021. These nine outcomes were developed through ongoing community engagement and gathering qualitative and quantitative information regarding the disadvantage and inequalities experienced by people with characteristics protected by the Equality Act 2010. A report on progress in the first year is scheduled to be presented to committee in cycle 1 of 2023. Black Lives Matter Working Group and research in terms of the Black, Asian and minority ethnic population As approved at the Council meeting in August 2020, a Member / Officer Working Group was established to look at how “the council and its partners can work to ensure that all residents are able to live their lives free from racism or discrimination of any form”. The work of this group was detailed in an action plan and reported to committee in September 2021. The intention was reported to conclude the Working Group in February 2022, but to continue with an action plan that would align with the council’s equality outcomes and commitments set out in the Race at Work Charter. As such, a Race Equality and Employment action plan has been developed that looks specifically at advancing equality for current and prospective BAME employees. In June 2021, findings from phase 1 of the research to understand the experiences of North Lanarkshire’s Black, Asian and minority ethnic people was reported to committee. Phase 2 of the research will provide a greater focus on specific areas of life. A report with all findings and recommendations will be presented to committee in cycle 3. A key aspect of the Black Lives Matter Working Group was to engage with local people on this agenda to promote understanding of the work of the group and ultimately advance race equality and relations in North Lanarkshire. A community conference is scheduled to take place in late February 2022. All this work will be brought together into a report specifically about the progress the council has made - and will continue to make - to advance race equality in North Lanarkshire. Employer accreditation programmes to advance equality The council currently holds two specific equality focused employer accreditation awards: • Disability Confident Leader - This aims to advance equality of disabled people by meeting the criteria set out within the themes of getting the right people for your business, keeping and developing your people, and showing leadership by actively helping other employers make the journey to becoming Disability Confident. • Equally Safe at Work (ESAW)- The council was awarded the ESAW bronze award in March 2021. Equally safe recognises that violence against women is both a cause and consequence of gender inequality. Therefore addressing gender inequality in the workplace is a fundamental step in preventing violence against women. The council also signed up to the Business in the Community Race at Work Charter in October 2021. The Charter asks signatories to act on seven calls in relation to race equality in the workplace. Reports detailing the progress of these employer accreditation programmes and the Race at Work Charter will be presented to committee as part of the process of becoming a Fair Work employer and organisation. Progress towards becoming a Fair Work employer and organisation Many aspects of Fair Work are being implemented by the council internally and in partnerships in place with external organisations. All equalities initiatives within this programme of work make a significant contribution to the council being recognised as a Fair Work employer. However, other aspects such as a commitment to the Real Living Wage, investment in employee learning and training, and health and wellbeing support are also included within the Fair Work agenda. Also included are how the council influences external organisations through the delivery of services and procurement of goods and services, and discretionary grant support programmes to community groups and businesses. A report on the council’s approach to and status as a Fair Work employer will be presented to committee in cycle 4. We will undertake a general overview of how the Council seeks to ensure compliance with relevant legislative requirements and manages risks associated with this Programme of Work activity. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2021-22 Plan Page 317 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P056.2 Working with communities’ model and supporting governance structure Working with communities is vital to ensuring that North Lanarkshire fulfils its ambition as the place to Live, Learn, Work, Invest, and Visit. Community engagement and empowerment approaches should support those who live locally to contribute to, and benefit from, the ambitious vision for North Lanarkshire. The aim is to achieve an effective model of co-production across all key areas of activity. Approved at committee in 2019, Community Matters - a Framework for Working with Communities, outlines the principles and approaches to working with communities in the development and delivery of The Plan for North Lanarkshire and supporting Programme of Work. Reflecting this, updates have been provided to committee on the implementation plan for engaging communities at a locality level within nine distinct communities. This includes: • Implementation and development of the nine Community Boards to ensure community involvement and governance for local decision making and investment including establishing a Board development programme and introducing the role of Community Champions. • Launch of nine local outcome improvement plans (LOIPs) for each area and development of delivery plans under each priority. • Work with community planning partners to scope out and agree an appropriate local partnership delivery model. • Co-ordination and support for engagement around The Plan for North Lanarkshire relevant to an area or community of interest. • Progress with development of a shared community and voluntary sector support framework and working arrangements. • Establishment of opportunities for local people to influence use of council and, where appropriate, partnership resources through a Participatory Budgeting model. The programme of work for 2022/23 will build on the progress made to date in establishing the Community Boards and the LOIPs. As such, work will focus on: • Reporting progress on the delivery of the LOIPs and maturing of the Community Boards. • Implementation and monitoring of the priorities identified through the nine LOIPs which reflect partnership support and local outcomes and measures of success. • Further embedding a co-ordinated approach to community focused communication and engagement to ensure best use of resource and targeting of key messages and opportunities. • Mainstreaming Participatory Budgeting approaches. • Reviewing and implementing new community and voluntary sector commissioning arrangements. Participatory budgeting Participatory budgeting is a different way to manage public money. Communities decide how part of a public budget will be spent, enabling citizens to work with decision makers on budget decisions about services. It also has the capacity to support active citizenship, helping build stronger communities and communities proactively involved in solving local problems. The profile and spread of participatory budgeting have accelerated in Scotland over the past decade; from little more than a handful of known processes in 2010 to at least 200 processes having taken place by 2018. There has also been increasing legislative and policy support for participatory budgeting. • A revised framework agreement, in May 2021, extended the timeframe to deliver on the 1% commitment to the end of March 2022 in response to delay caused by the pandemic. The council established a short life task and finish group to explore processes and priorities for action and a report was presented to committee in November 2021 providing an update and seeking approval to establish (via the Community Boards) appropriate Participatory Budgeting task / reference groups (or similar) along with governance processes with implementation supported through the Community Board development programme. The priority for 2022/23 will be to develop the role of the locality subgroups as a key mechanism for driving Participatory Budgeting approaches locally. This Programme of work activity has been the subject of previous work on Community Engagement and Participatory Budgeting but remains an important aspect of how the Council aims to deliver its ambitions and ongoing developments means that providing assurance on the adequacy and effectiveness of relevant management arrangements and progress remains a priority for Internal Audit work in 2022-23 and will be included within work on corporate governance and the management of strategic change. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 318 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P084.1 Building capacity and social capital Underpinning work with young people, adult learning, parenting, and family learning is the process of community development. This supports communities of place and identity to use their skills, assets, and strengths to improve their individual and collective outcomes. Working and learning together is vital to sustain community engagement. This approach helps build the skills and capacity of communities to take control of their own assets, build capacity, and develop social capital. Going forward a greater emphasis will be placed on community development approaches across work with young people and community-based adult learning and family learning to achieve greater cohesion and connections across communities in relation to the long-term ambition for North Lanarkshire. Over the past two years there has been an increased focus on working with the most vulnerable in North Lanarkshire’s communities due to the pandemic, with a shift for many aspects of delivery onto online platforms. There is a continued focus on engaging with North Lanarkshire’s residents who reside in areas within the lowest 20% of Scotland’s data zones Young people At a youth summit in November 2021, elected members and young people discussed issues such as health and wellbeing, the environment, places to go and things to do, and employment. It was here that the Board was agreed to be called Future NL. In line with actions set out in The North Lanarkshire Youth Work Delivery and Recovery Plan for 2020-22 and, following approval at committee in August 2021, a new youth participation structure was implemented including the development of improved youth engagements across the council committee structure. The move from six to nine local youth voice groups in line with the Community Board structure, and the development of a new Board aims to enable young people and Elected members to engage with each other and improve youth engagements and youth voice across the structure. Reports to committee through the programme of work for 2022/23 will focus on the new youth participation structure and the development of improved youth engagement across the council committee structure. This will include an update on the training and action plans of the nine local youth voice groups, Members of the Scottish Youth Parliament, youth reference groups, and the development of Future NL. The North Lanarkshire Youth Work Delivery and Recovery Plan for 2020-22 was approved at committee in August 2020. At this time, it was agreed that the plan should be a two-year interim recovery and delivery plan due to the impact of the pandemic on young people. At cycle 4 2022, a full report on the Youth Work Delivery and Recovery Plan 2020-22 will be presented alongside a new North Lanarkshire Youth Work Delivery Plan for 2022-25. This plan will use a community learning and development youth work approach and be co-produced with young people and the North Lanarkshire Youth Work sector. Community based adult learning and family learning • In recent years there has been an increased focus on employability; this has determined the focus on adult learning in further and higher education. A national review of adult learning is underway, and the national Adult Learning Strategy is scheduled for publication in April 2022. • The Youth Guarantee programme has given participants the opportunity to gain experience of all functions of community learning and development, adult learning, family learning, youth work, and community capacity building and qualifications. The review and evaluation of the programme and the ongoing tracking of participants progress will inform the development of a core Young Adult programme. This report is scheduled to be presented to committee in cycle 3 of 2022. Resettlement programmes The Syrian Resettlement team was created in 2015 to deliver on the UK and Scottish Government’s commitment to supporting Syrians fleeing conflict with relocation to North Lanarkshire. The work of the team supports relocations through the United Kingdom Resettlement Scheme (UKRS), including family reunification, Afghan Relocations and Assistance Policy (ARAP), and Afghan Citizens Resettlement Scheme (ACRS) adults and families through the associated refugee and resettlement programmes and co-ordinates social work, housing, English for speakers of other languages (ESOL) and integration services, education and NHS support and provision on arrival. The UK National Transfer Scheme Programme of work activity does not currently require or justify Internal Audit coverage in 2022- 23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 319 of 418
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for Unaccompanied Asylum-Seeking Children (UASC) is also co-ordinated once the initial assessment has been made by social work. To date 44 families have resettled in North Lanarkshire, this equates to a total of 153 people. 20 children have been born to Syrian families since 2015. North Lanarkshire has signed up to support the various new schemes on a case-by-case basis. To date three Afghan families (eight adults and 11 children) have been matched with properties in North Lanarkshire. Community learning and development, English for speakers of other languages (ESOL), and integration • The Adult Learning Delivery Plan has contributed to integration and progression of New Scots and ESOL learners within North Lanarkshire. Several factors have contributed to this success: the welcome from North Lanarkshire’s communities and the voluntary sector, the flexible and helpful approach of all partner agencies and the attitude and dedication of the support drawn from council colleagues and the community learning and development partnership. Community learning and development practice and approach to ESOL and integration has been highlighted locally and nationally through ESOL and integration networks. • In October 2019, a dedicated community learning and development worker (Resettlement) post was established through the Syrian Resettlement programme, to have an overview of support provided to North Lanarkshire’s refugee and migrant communities and to co- ordinate the learning and integration plans. Building on the ethos of inclusion the same approach is taken by the community learning and development team with all refugees and ESOL work being planned, co-ordinated, and delivered together. • ESOL provision and integration support is offered across the six localities and more recently online. Community learning and development and support workers provide ESOL sessions, groups, one-to-one support and doorstep drop-off of resources covering English language, Driving Theory, ESOL support for family learning, ESOL for employment, cooking, health and wellbeing, and participation in events such as International Women’s Day and Family Learning Week. • A report is scheduled to go to committee in cycle 3 of 2022 providing an update on the resettlement programmes and ESOL and integration progress and impact. Adult learning The community learning and development Adult Learning Delivery Plan 2020-22 will be reviewed and evaluated to inform the development of the new plan for 2022-25 to deliver an improved, blended learning approach to the community-based adult learning offer, particularly targeted at adults aged 16-64 with no formal qualifications by addressing barriers of literacy and numeracy, digital literacies and mental health and well-being. The revised plan and adult learning programme will align with the vision and ambitions set out in The Plan for North Lanarkshire, the Digital and IT Strategy, and the national Adult Learning Strategy by building on the success of the Youth Guarantee programme, the role of family learning, facilitating adult learner links to community development and building vibrant communities, increased opportunities for accreditation, adult literacy and numeracy, ESOL, and supporting the integration of New Scots. This report is scheduled to be presented to committee in cycle 4 of 2022. Breastfeeding Friendly North Lanarkshire The council and partners have made a commitment to lead the way in driving change to improve breastfeeding rates by increasing facilities and creating a positive culture around breastfeeding as illustrated by celebrating World Breastfeeding Week in August 2021. A group with representation from the council, NHS Lanarkshire, and the community and voluntary sector has been established and is working with the Scottish Government to establish North Lanarkshire as the first Breastfeeding Friendly Scotland accredited Local Authority. A draft Framework document has been developed and sets out how the local authority will evidence actions that will contribute to change attitudes and create a positive culture around breastfeeding, address concerns and anxieties from breastfeeding families around feeding outside the home, and work toward supporting staff to have effective conversations about breastfeeding. A report is scheduled to be presented to committee in cycle 3 2022 on the progression of the Breastfeeding Framework and achievement of the local authority Breastfeeding Friendly Accreditation award. Family learning A new model of working that supports the most vulnerable children, young people, and families has been introduced which aims to mitigate the disproportionate impact a child’s circumstances has on their chance of success. Parental engagement and the importance of parents and carers being fully engaged in a child’s learning is a key driver to improve outcomes for all children. This includes learning at home and in the community, as well as formal establishments. Page 320 of 418
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Family learning is a powerful method of engagement that can foster positive attitudes to lifelong learning and enable learning opportunities within the family (for the whole family), as well as encouraging and supporting continued learning for both child and the adult. With a focus on children living in poverty and guided by the principles of Getting it Right for Every Child (GIRFEC), the Family Learning Delivery Plan aims to deliver learning opportunities that drive forward improvements in parental engagement, family learning, and learning at home. Also informing the Plan will be emerging evidence on the impact of the pandemic on families living in poverty, which will direct work to support digital inclusion and the health and well-being of families. A report scheduled to be presented to committee in cycle 4 of 2022 will update on the review and evaluation of the community learning and development Family Learning Delivery Plan 2020-22 to inform the development of the new plan for 2022-25. This will have an emphasis on work with vulnerable families and the work undertaken to mitigate against the impact of the pandemic on children and young people and their parents and carers. Community learning and development Community learning and development work aims to empower individuals, groups, and communities. This activity has a strong focus on early intervention, prevention, and tackling inequalities and the programme of work is structured around work with young people, community-based adult learning, parenting and family learning, and community development. Learning opportunities are offered in a variety of ways through group work, informal learning, one to one sessions, and engagement through a broad range of activities. Community learning and development offers a range of universal and targeted work with young people, adults, and communities with an emphasis placed on engagement with people living in the lowest 20% data zones and other vulnerable groups as reflected within the new national self-evaluation framework for community learning and development which was launched in October 2021. A report is scheduled to be presented to committee in cycle 3 of 2022 which will have an emphasis on work with participants in the lowest 20% data zones and the work done to mitigate against the effect of the pandemic on our most vulnerable learners. Implementation of a commissioning approach The implementation of a commissioning approach to investing in the local community and voluntary sector will help to shape and guide relationships and approaches and support the voluntary sector as a delivery partner. In order to effectively deliver place and needs based locality planning and considering the lessons learnt and new ways of working prompted by the pandemic, a partnership group is in place which aims to streamline the way the community and voluntary sector is supported to fully participate in the delivery of local services. A major aspect of this work is how organisations are funded. An investment and renewal working group is in place and working to reduce duplication, increase quality of service, and ensure that the community and voluntary sector are resourced to play a full role in support of the work of the Community Boards and delivery of the local outcome improvement plans (LOIPs). This programme of work includes consideration of procurement processes, the development of robust funding agreements over longer periods, and the drawing together of wider partnership funding in a more consistent way. Implementation of a commissioning approach to investing in the local community and voluntary sector will shape and guide relationships and approaches and support the voluntary sector as a delivery partner. An update report was presented to committee in January 2022, this shifted the approach from one which focusses not on commissioning but on work to scope out a community led approach to funding the community and voluntary that mirrors the approach to participatory budgeting and can be tested using existing resources. This includes progressing a framework that underpins how the sector is supported and resourced, together with work to engage with communities to develop an agreement between the community and voluntary sector (CVS) and public sector agencies based on agreed values and principles. The proposal includes the drafting and adopting of a shared statement for community wealth building to be embedded across a number of key policy and strategy frameworks. Reports throughout 2022/23 will continue to provide updates with progress on these key areas of work and aim to present for consideration a draft proposed approach to remodeling how support resources for the CVS are administered. Page 321 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P002.1 Asset rationalisation and development Property rationalisation The council has been successful in delivering asset managing savings in the excess of £3m through a variety of activities, including property rationalisation, reduction in energy costs, disposals, and demolitions. To deliver on The Plan for North Lanarkshire, rationalise the office estate, and deliver the one shared campus, North Lanarkshire requires a one council and partner approach to the use of assets. This review will continue to radically change how the council uses its office accommodation and wider estate portfolio and reduce the requirement for many existing premises through more flexible, smarter, agile working practices, and improved space utilisation. The impact of the pandemic has led to an opportunity to accelerate the office rationalisation programme and mobilise agile working practices as a pre-cursor to the development and introduction of the community hub model in localities and roll out of DigitalNL. The Corporate Asset Management Plan (CAMP) requires to be re-aligned and investment prioritised in the future to make a sustainable estate, remodel the provision to meet operational needs, and support services being delivered within, and in conjunction with, local communities. Development of the CAMP is scheduled to be reported to committee in cycle 3 of 2022, with an update on the property rationalisation programme and move to one civic base / shared campus scheduled to be reported to committee in cycle 4 of 2022. Co-ordination of environmental assets The consolidation of assets across the council will enable a holistic overview of the management and maintenance of environmental assets (such as trees, open spaces, bridges, lighting columns, and car parks). This will also reduce inter service recharging, rationalise the management focus across the council, improve health and safety and risk management around these assets, and provide a more informed basis for asset management, improvement, and investment, where appropriate. Carried out in conjunction with the DigitalNL programme, the introduction of technology will enhance the levels of management and maintenance of each asset type. This work will link to the development of the programme of work for country parks for the future (P025.1). Progress on the initial pathfinder project considering tree asset management was reported to committee in cycle 1 of 2020, with an update in cycle 4. The results of pilot tree inspection and strategy development was presented to committee in cycle 3 of 2021. Community ownership and management Under the terms of Part 5 of the Community Empowerment (Scotland) Act 2015, community bodies have the right to request that land and buildings belonging to public authorities are transferred to them. Community ownership and management of community facilities will be a key feature of ensuring that local communities are delivery partners in achieving the shared ambition for North Lanarkshire and that approaches to asset rationalisation result in improved outcomes for local people. The council’s Community Asset Transfer policy and decision-making approach was reviewed throughout 2020 with an update approved at committee in November 2020. Committee approved a further report in 2021 which outlined a workstream to focus the council’s work with communities linked to community ownership and management of assets. This proposed: • creation of a charitable leasing policy • a shared assessment / agreement framework to be applied to all requests from communities regarding use, management, maintenance, or ownership of council assets • a plan for engaging communities around asset rationalisation and redesign of services • promotion and awareness raising around ownership opportunities Addressed by recent audit work. Programme of work activity does not require or justify Internal Audit coverage in 2022-23 although we will address this issue as part of work on the implementation of the Council’s future operating model. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 322 of 418
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• a shared understanding across services of opportunities, risks, operational challenges, and scope and parameters relating to community Progress with these key areas of work will form the focus of work for 2022/23. This programme of work reflects but is not limited to, the following strands of work: • The Delivering for Communities report approved in December 2020. • Asset management and rationalisation policy and practice. • Integrated Town and Community Hubs and Town Visions. • Framework for Working with Communities - community capacity building. • Country Parks for the Future, and Active and Creative Communities and the future model for service delivery. Rationalisation and development of fleet and waste assets. The waste and fleet service continue to develop through a process of transformational change. This has seen an integration of the two services under a common management structure and the positioning of the two services within a single depot facility. As detailed in the original programme of work, the intention was to rationalise the entire front-line depot facilities. Over 2020 the first stage of this rationalisation has been completed resulting in the waste service moving from its two primary depot facilities at Souterhouse in Coatbridge and Albert Street in Motherwell and locating the majority of the service within the Bellshill depot. This in turn has allowed the rationalisation of the property assets associated with the environmental assets service and the table below summarises the moves which have already taken place and those that are planned. The original proposal was to centralise the entire waste function at Bellshill, however by providing an operational base for the waste service at Wardpark significant efficiencies in the route planning for the front-line collection routes has been achieved. An element of the waste and fleet service has therefore been moved from Bellshill to Wardpark (six waste collection vehicles and several school minibuses). During 2021, the existing fleet workshop at Bellshill was subject to significant water ingress and in response to this a full structural survey of the roof was commissioned. In summary this concluded that the deterioration of the structure was accelerating to such an extent that the building could not be deemed safe, even in the short-term. Immediate action was taken to move the entire waste and fleet operation based at Bellshill into the former Souterhouse depot. This arrangement will remain in place until such times as a longer-term solution is in place. Arrangements are now being made for the complete demolition and replacement with a more bespoke facility, as the cost of any repairs would outweigh the cost of a rebuild of a more suitable sized and designed facility. It is the intention to complete the procurement process for the new build facility by March 2022, with the actual build completed by end of March 2023. To provide further waste disposal efficiencies for both waste and land management services, plans are now being drafted which will see the creation of a waste transfer station at the Wardpark depot. This will allow waste to be deposited and bulked at this location which will deliver route efficiency and reduced costs for disposal of materials, although delivery of this work will be dependent on appropriate capital funding being available. To protect against the volatile external waste markets, the council has sought to maximise the potential of the former Dalmacoulter landfill site. At present this site is effectively vacant and derelict land. Over the past year the council has been successful in attaining a planning consent to allow the establishment of a materials recovery facility and waste transfer station on this site. The intention is now to undertake an options appraisal exercise to determine whether it would be viable for the council to introduce, build, and manage its own materials recovery facility or whether it would be best to place this asset on the external market to provide an overall capital receipt for the council, but more importantly provide a central waste facility within the heart of North Lanarkshire which will drive competition for waste contracts and should in turn lead to cheaper waste contracts for the council in future years. The council will also move towards the decarbonisation of its entire fleet with a plan now in place to move all light goods vehicles from diesel / petrol by 2027/28. There is also a further commitment to do the same for the heavy goods fleet by 2030/31 to allow technology to advance to a stage which will allow the delivery of efficient and reliable low carbon HGV vehicles. As the council accelerates this move towards a low carbon fleet, this will require significant enhancements to the infrastructure primarily at the Bellshill and Wardpark depots. This includes the installation of additional electricity sub-stations, electric charging points, and potentially hydrogen fuel stations. Page 323 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P011 Revenue Resources Budget Strategy The Revenue Resources Budget Strategy lays out a set of principles and an outline framework to ensure the council has a robust, affordable, and sustainable financial plan that aligns with The Plan for North Lanarkshire and delivers on the shared ambition and Programme of Work. The principles are now well embedded in the council’s approach to financial planning, however, additional challenges arising from the pandemic has made it difficult to fully implement all the principles of the Strategy. Therefore, an update on the implementation of the key principles and further development of the Strategy will be reported to committee in cycle 3. Updates on the progress of implementing previously approved savings will be provided to committee in cycle 3 of 2022 and cycle 1 2023. The annual review of the planning assumptions in the council’s Medium-Term (5 year) Financial Plan (MTFP) will be undertaken. This will allow updated scenarios, relating to the anticipated budget gap from 2023/24 to 2027/28, to be identified and reported to committee in cycle 3. Following the announcement of the Local Government Financial Settlement, budget options will be finalised to allow the Council to update the three-year rolling budget (2023/24 to 2025/26) in February 2023 (cycle 1 2023) to ensure plans for the shared ambition remain affordable and sustainable. One of the key principles of the Revenue Resources Budget Strategy is that future charging models for services provided will be informed by benchmarking and the principles of full cost recovery. Once costs are established on this basis, future increases will be index-linked. Additionally, consideration will be given to appropriate revenue generating opportunities. Therefore the development of a fees and charges policy will help ensure full application of this principle in the financial planning arrangements of the council. Addressed by recent audit work. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO P012 Community Investment Fund (CIF) A critical element of The Plan for North Lanarkshire is the development of a Strategic Capital Investment Plan that supports the shared ambition and Programme of Work. In cycle 1, an update to the council’s current Strategic Capital Investment Programme will be presented to committee highlighting revised investment targets for the remainder of the five-year capital planning period from 2022/23 to 2025/26. This will ensure alignment with programmes of work and The Plan for North Lanarkshire, while ensuring sustainable investment in the council’s existing assets. This update will incorporate all elements of capital investment and available resources, including capital grant, external funding and resources available through the council’s Community Investment Fund. In cycle 4, the annual Community Investment Fund update report will be presented to committee highlighting the ongoing impact of changes to variables (such as housing growth and prudential borrowing factors) which will affect the level of funding available through the Community Investment Fund. This process will inform the annual Strategic Capital Investment Programme budget report which will reflect updated assumptions on capital resources available to the council and will ensure the investment programme is robust, affordable, and sustainable. To ensure robust ongoing monitoring of the delivery of the annual Strategic Capital Investment Programme, regular updates will be brought to committee at each cycle. Capital Strategy The current Capital Strategy runs to financial year 2022/23. Therefore, a full review will be undertaken to ensure the Strategy continues to enable the council to create an asset base that supports the strategic vision of The Plan for North Lanarkshire, which delivers on the shared ambition and the Programme of Work. This update will also give an opportunity to review the key principles and ensure the Capital Strategy reflects all requirements of the new Prudential Code for Local Authorities. The Capital Strategy will continue to set out the long-term context in which capital expenditure and investment decisions are made and ensure there is strategic integration of the revenue resources Medium-Term Financial Plan (MTFP) and the Strategic Capital Investment Programme. The Capital Strategy will also continue to ensure that Elected Members understand how stewardship, value for money, prudence, sustainability, and affordability will be secured, and meet legislative requirements on reporting. In terms of the updated Capital Strategy, a report will be presented to committee in cycle 1 2023. Addressed by recent audit work. Programme of work activity does not require or justify Internal Audit coverage in 2022-23. NO Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 324 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P059 Improve procurement capacity and capability To further develop procurement capacity and capability across the organisation, progress has been made in rolling out a more efficient and effective means of procuring goods, services, and works required by the council. This has been achieved by working with services through the category manager approach and ensuring that procurement methodology and activities become embedded across the council. This is being further supplemented by work segmenting procurement activity across all council services, which will identify procurement activity and resource implications. Further development will involve a review and update of the Procurement Strategy 2020-22, publication of the Annual Procurement report in 2022/23, delivery of the 2021/23 Procurement Improvement Plan, and delivery of the procurement contracting work plan (which includes procurement support for several council programmes of work such as the Enterprise Strategic Vehicle and DigitalNL). This will help secure further improvement in the score achieved by the council at the next external assessment of procurement capability, conducted by Scotland Excel every two years. A review and update of the General Contract Standing Orders will continue to be undertaken, which will address further legislative changes relating to Brexit. Work is also ongoing to determine the ongoing effects of the new trade arrangements with the European Union and COVID- 19 recovery, which are having a considerable effect on supply chains. The subject of previous audit work with reasonable assurance provided on tendering and contract award activities. In 2022-23 we will focus on contract management arrangements across the Council. YES P087.1 Climate change: committing to net zero Climate change is the resulting impact human activity has on this natural system by causing an increase in greenhouse gas emissions. More emissions in the atmosphere results in an imbalance in this fragile system and an increase in temperature throughout the planet. While the impact of climate change may seem to be less severe in North Lanarkshire, an increase in severe weather events has been seen in recent years. These can affect the council through: • Travel disruption • Emergency response situations • Loss of power supply • Landslides • Flooding • Disruption to service delivery The council recognises the need for urgent action and, as such, declared a Climate Emergency in June 2019 advancing the net zero target from 2045 to 2030. Similarly, the council became a signatory of the Edinburgh Biodiversity Declaration in June 2021, recognising the need to protect nature as well as the important role it will play in tackling climate change. The risk of climate change to the local economy is considered significant and therefore as well as being the right thing to do, any deliberate interventions will benefit North Lanarkshire. Actions delivered should consider the impact on the vulnerable such as those likely to become fuel poor and ensure that these households are not negatively impacted on. Post-COP26 (the 26th United Nations Climate Change Conference held in 2021) and the Glasgow Pact, the council (through its Climate Plan ACT2030) will continue to develop its overall climate strategy to encourage internal and external action (mitigation, adaptation, and sustainability) to tackle and prevent further climate change. Reports to committee in 2022 will provide the annual update on the council’s compliance with the public sector climate change duties, the status of the council in achieving net zero by 2030, and a route map detailing the resource requirements to achieve net zero by 2030. Although the subject of previous audit work, the increased expectations placed upon the Council merits further Internal Audit coverage in 2022-23 with a focus on how effectively the Council. Is putting in place realistic and achievable plans and that these are being progressed/monitored. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 325 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P089 Absence management This programme of work continues the council’s focus on absence management following an extensive review and redesign of the approach to managing absence across all services. This work was carried out in partnership with the trade unions and was approved for implementation by the Finance and Resources Committee in March 2021. The implementation of the new Supporting Attendance Policy is now well underway and a positive impact is starting to be evidenced in terms of the levels of absence. To continue this positive trend and ensure any adverse ongoing impacts from the pandemic are also dealt with (including long COVID and impacts on mental health and wellbeing), the focus on absence will continue into 2022. This programme will be supported by a full plan of activities, to ensure a sustained improvement in levels of absence across the council including: • The continued provision of e-learning and masterclasses to ensure that all managers understand the new Supporting Attendance Policy and how to implement it effectively. • Bespoke training will also be supported for certain topic areas, such as dealing with mental health related absence, and these sessions will continue and be developed for the foreseeable future. • Continuation of the monitoring of absence statistics and taking remedial action where necessary and/or deploying resources to tackle problematic absence areas. • Having regular meetings with the trade unions to ensure that any issues that are arising are addressed at the earliest possible point. • Provision of targeted support for managers from the Employee Relations team to ensure that managers are confident in addressing all forms of absence issues. • Review of the Teachers Managing Attendance Policy with a view to standardising policy and processes across all employees where possible. • Continued development and roll out of specific employee supports and other provisions to help prevent mental health related absence and promote health and wellbeing, delivered through Work Well NL and as part of the council’s Healthy Working Lives Gold Standard accreditation and associated ongoing progress. • A full link to the council’s wider Workforce Mental Health and Wellbeing Strategy and the wider Mental Health and Wellbeing Strategy across Lanarkshire being led by NHS Lanarkshire. Given the importance of effectively managing absence, ongoing and regular reports on progress within this programme of work will be taken to committee throughout the year. Internal Audit work on this issue was undertaken in 2021-22. Routine follow-up work will review implementation of agreed actions. Programme of work activity does not currently require or justify further detailed Internal Audit coverage in 2022-23. NO P072.2 Strategic data management and information governance The Data and Information Strategic Roadmap outlines the approach which will drive data management and storage to support strategic, evidence-based decision making, and the vision set out in The Plan for North Lanarkshire. The main aim of the Roadmap is to ensure that one single source of truth for all data is retained within the council thus ensuring that through the Master Data Entities of customer, cases, employees, and place there is an ability to process and use data as information which can support service delivery, cost reduction, and risk management arrangements. A critical tool to enable this approach will be the further development of the Business Intelligence (BI) Hub (phase 3 and beyond) which is being progressed as part of the DigitalNL transformation programme. This new capability within the council will operate hand in hand with service delivery to provide information, intelligence, and insight. The automated platform will integrate with systems to provide a single source of data in line with the one council approach. The use of a range of BI tools will enable the data to be turned into actionable information that will enable the council to detect and drive efficiencies within the current financial and resource constraints, allow areas requiring improvement to be identified, and demonstrate how the council is performing against The Plan for North Lanarkshire. Greater insights will also be gained into how residents, businesses, and partners are engaging with the council, as well as their needs and Internal Audit coverage in 2022- 23 will focus on the management arrangements in place and how management reviews performance/compliance with key aspects. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 326 of 418
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how to meet these. The Data Governance Board has agreed a revised Data Governance Framework based on the Data Custodian Model together with role descriptors and the focus for 2022/23 will be to embed this framework and these roles across the council service areas together with linked data quality processes and tools. Key tasks identified in the Strategic Roadmap will also be progressed which include the further development and delivery of the BI Hub. Committee reports will update on the development and delivery of the Data and Information Management Strategic Roadmap and Data Governance Framework. Separate committee reports will update on the development and delivery of the BI Hub across the council. Corporate data protection arrangements To deliver services effectively the council needs to collect, process, and hold large volumes of information relating to organisations and individuals. Protecting the confidentiality and integrity of personal data is a critical responsibility that is always taken seriously. To continue to ensure compliance in this respect further work will be undertaken to review the corporate data protection arrangements, particularly with regards to processing Subject Access Requests, dealing with data breaches, and completing Data Protection Impact Assessments. An update to committee in cycle 4 will report on the conclusion of this review undertaken to ensure greater assurances can be provided in terms of statutory compliance with data protection legislation and information governance. This will also support the development of the Roadmap in terms of enhancing data governance and processes Page 327 of 418
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Appendix 4 Internal Audit consideration of Programme of Work for inclusion in the 2022-23 Plan (continued) P075.1 Strategic governance, oversight, and accountability Serious Organised Crime and Counter Terrorism arrangements Serious organised crime and the threat of terrorist attacks continue to present significant challenges to the council in it seeking to protect Elected Members, employees, physical assets, public funds, and the information it holds from the risks of infiltration and attack. The council's physical and cyber security must be a priority to ensure that it is not exposed to any incident which gives rise to loss of life or injury, financial loss, or reputational damage. It is accordingly essential that a review of all controls either in place or assessed as being necessary going forward, is carried out. It is anticipated that this programme of work will report to committee in cycle 3 of 2022. Partnerships Arrangements are in place to ensure the council maintains adequate oversight of service delivery and governance while demonstrating where arm’s length external organisations, strategic community planning, and other partnerships are supporting delivery of The Plan for North Lanarkshire. Assurance reports in this respect - which include work through strategic partnerships, as well as the Strategic Leadership Board for the Community Planning Partnership and arrangements for arm’s length external organisations - are provided to committee on a six-monthly basis. Risk management Risk management activities will continue to remain focused on ensuring the council has in place robust and effective arrangements, consistent with current good practice, to identify, assess, and manage risks to the achievement of the council’s objectives, priorities, and planned outcomes. The Corporate Risk Register will also be reviewed and, where appropriate, updated to ensure appropriate alignment with the council’s strategic risks (in line with The Plan for North Lanarkshire and supporting Programme of Work), as well as including relevant cross cutting and other significant operational risks. Work will continue to increase risk maturity across the organisation and to ensure that risk registers identify and assess appropriate risks and that these risks are monitored and managed at the appropriate level in the organisation and within the relevant context. Regular reports on risk management and on the management of key corporate risks will be submitted to the Corporate Management Team and the Audit and Scrutiny Panel. Internal Audit Strategy and Internal Audit Plan Internal Audit delivers an internal audit service, consistent with best professional practice, 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 Section 95 Officer. This involves delivering the Internal Audit Strategy and Internal Audit Plan and supporting the Audit and Scrutiny Panel and senior management in undertaking their respective roles. This is achieved through undertaking work designed to produce a range of independent assurance outputs focused on cyclical coverage of core corporate governance processes, key strategic priorities and programmes of work, corporate risks, and key financial systems. Regular reports on Internal Audit outputs and performance will be submitted to the Corporate Management Team and the Audit and Scrutiny Panel in line with the Internal Audit Charter and approved reporting protocols. The Plan for North Lanarkshire, Programme of Work, and supporting Frameworks Good governance enables the council to effectively pursue its vision within appropriate management controls. It is central to ensuring effective scrutiny and delivery of statutory Best Value obligations. This means ensuring resources are directed in line with agreed policies, priorities, and project management guidelines, and there is sound and inclusive decision making and clear accountability for the use of those resources in achieving improved outcomes for service users and communities. A clear vision is set out through The Plan for North Lanarkshire. The fast moving, unpredictable, and increasingly complex local government environment means the council does not have the luxury of a traditional once and done approach to strategic planning; this needs to continue to evolve in line with local and national circumstances and priorities. As such, the associated Programme of Work and Strategic Policy Framework (reviewed and updated annually) sets the priorities for action each year in order to deliver on Much of this activity will be covered by planned work in 2022-23 on the Council’s corporate governance arrangements. YES Programme of work to support the shared ambition Internal Audit commentary Include in 2022-23 Plan Page 328 of 418
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the shared ambition by translating the long-term vision into day-to-day activities and providing a consistent focus for resources and working practices in the short to medium-term in line with the principles of good governance. Ensuring co-ordinated resourcing and effective governance in an environment subject to sudden and swift changes is critical to underpin and enable delivery of the place based and people centred approaches evolving through the Programme of Work which is now in its fourth iteration. Therefore to ensure the council’s strategic planning framework reflects the increased need for ongoing visibility into all programmes of work and takes cognizance of their interconnections and associated impacts on business processes and infrastructure, the council’s strategic planning framework has been augmented by the Strategic Policy Framework to avoid duplication, but still ensure strategy and policy remain connected to delivery. Moving forward the annual review and refresh of the Strategic Policy Framework and Programme of Work will be undertaken in tandem so that the council’s approach to strategic planning continues to support delivery of the long-term vision set out in The Plan for North Lanarkshire. Setting the annual strategic planning framework includes the latest level 1 Strategic Performance Framework results highlighting the North Lanarkshire context. These measures are designed to provide a high-level impact assessment of the work of the council and partners on North Lanarkshire’s economy, its people, and its communities. The complementary frameworks supporting The Plan for North Lanarkshire and the Programme of Work - the Strategic Governance Framework, Strategic Self-Evaluation Framework, Strategic Performance Framework, and the Programme and Project Management Framework - are designed to enable a regular structured approach to assessing progress, measuring success, and identifying (where necessary) areas requirement improvement. These frameworks are on an annual review and refresh programme to ensure they remain aligned to The Plan for North Lanarkshire and the council’s strategic planning framework (through the Programme of Work and Strategic Policy Framework) in order to effectively support delivery of, and assess progress towards achieving, the shared ambition. 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. 2022 will see development of what is in essence a sixth framework to ensure the council improves compliance with the Accounts Commission’s statutory direction for 2022/23 to 2024/25 in terms of demonstrating achievement in the improvement of outcomes for local people and communities. All frameworks will be reviewed and updated annually; reports to committee in this respect will be specifically in line with corporate governance requirements. An annual composite update will ensure the Audit and Scrutiny Panel receive an up-to-date position at least once a year in line with their strategic oversight and governance role. Page 329 of 418
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Appendix 5: 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 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 330 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref: KA/CMT/Sept22 Date 08/09/22 Risk management update and corporate risk register 2022-23 From Ken Adamson, Head of Audit & Risk E-mail adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary This report provides members with a general update on key risk management developments with a particular focus on the results of the recent annual review of the corporate risk register. The report also contains a proposed timetable for future reporting on key corporate risks to the Panel. The corporate risk register is reviewed annually to ensure completeness and continuing alignment to the council’s strategic objectives, The Plan for North Lanarkshire and the associated Programme of Work. The purpose of this report is to update the Panel on the results of that process and to present the 2022-23 corporate risk register as determined by CMT. To support the review, the risk team prepared a horizon scanning document (Appendix 4) which was used to support consideration of the key strategic and operational risks facing the Council. The risk team also engaged with Services to consider whether any risks within Service-level risk registers merited escalation to the corporate risk register and undertook informal comparisons with other local authorities’ corporate risk registers to inform the process. Members should note that all corporate risks identified and agreed as meriting inclusion in the corporate risk register are subject to regular monitoring and review by relevant senior management and periodic review/consideration of individual risks by both the CMT and the Panel in line with the Council’s Risk Management Strategy and their respective governance roles. Overall, although there are some changes in individual risk scores, the corporate risk register for 2022-23 is substantively unchanged from the previous year. The most significant changes include a widening in scope of the previous ‘Asset Management’ corporate risk to better reflect how this and other key Programmes of Work align and link together in supporting the implementation of the Council’s target operating model and increasing clarity over the potential impacts of the National Care Service proposals following publication of the draft legislation. Other changes are noted in the body of the report. Recommendations The Panel is asked to consider the contents of the report and to: (1) note the agreed corporate risk register for 2022/23 at Appendix 1 which incorporates the range of proposed changes outlined in Section 2 of the report; (2) approve the proposed schedule (at Appendix 3) for reporting on corporate risks to future meetings of the Panel; and (3) note the proposal to carry out a further review of the corporate risk register in late-2022 as described at para 2.28 including the addition of top risks from Service risk registers. AGENDA ITEM 9 Page 331 of 418
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1. Background 1.1 The Council’s Risk Management Strategy requires that the corporate risk register is refreshed 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 service risks within their areas of responsibility. 1.2 In addition to considering the wider environment within which the Council operates, each year the corporate risk register is also reviewed for completeness and relevance to the council’s strategic objectives, and alignment with The Plan for North Lanarkshire and the associated Programme of Work. 1.3 This year’s annual review exercise has recently been undertaken on behalf of CMT. This has involved discussion with members of the RMCWG, as well as directly with Heads of Service, to consider potential issues arising from individual Service risk registers. Informal external benchmarking with corporate risk registers of other councils has also been carried out. Most importantly the review has been informed by, and considered against, The Plan for North Lanarkshire and the revised ‘Programme of Work for 2022/23’ approved by Policy & Strategy Committee in March 2022. 1.4 The environment within which the council operates and provides services continues to be dynamic and the proposed corporate risk register must continually evolve in order to keep pace with and accurately reflect, the ongoing challenges facing the Council. To aid this process, the Corporate Risk Team prepared a ‘horizon scanning’ paper to support CMT’s considerations/discussions on risks associated with the council’s future direction and strategic planning considerations. The paper, attached at Appendix 4, is intended to highlight risks and issues relevant to the environment within which the Council operates. The paper can also be used to generate discussion and inform thinking in relation to the preparation and review of individual Service Risk Registers. It is proposed that such horizon scanning will form a key part of the corporate risk register annual review exercises going forward. 1.5 This report presents the outcome from this year’s corporate risk register review process and allows the Panel to note the corporate risk register for 2022-23 as outlined in the table at Appendix 1. 1.6 Members will note a change of layout of this year’s corporate risk register. The opportunity has been taken to present the register in two sections; the first relating to those corporate risks which are more ‘day to day’ or operational in nature and the second relating to those risks which are more strategic and/or longer-term in nature. Although there is not always a clear distinction between the two, it is hoped that this will assist/inform the review process in future. 2. Report 2.1 The previous corporate risk register approved for 2021-22 contained 25 risks as outlined in the table at Appendix 1. Risks contained within the register have been subject to ongoing monitoring and review throughout the year, with regular risk reporting to CMT and Audit & Scrutiny Panel both on the overall register, and with detail on individual risks being reported by relevant Risk Leads. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Page 332 of 418
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2.2 Currently there are 21 risks classified as ‘live’ with completed risk documentation, and 4 risks classified as ‘draft’ where relevant documentation is currently being finalised. 2.3 The definition of a corporate risk is ‘those risks which can impact the Council in achieving its priorities and stated objectives or are more strategic in nature and require corporate oversight. For example, such risks may have the potential to impact many Services, and/or can impact significantly on the Council in terms of financial costs and reputational damage. The Corporate Risk Register will reflect an amalgamated position of Service-level risks and may also include significant Service-level risks which have been escalated for attention at a strategic level.’ 2.4 A number of methods have been used and information sources reviewed to stimulate a thorough approach to the corporate risk register review process including: • Review of the Programme of Work for 2022-23 considering whether risks in relation to key planned Programme of Work activities are adequately reflected within existing corporate, service and/or project risk registers; • Heads of Service were asked to consider whether any changes to the corporate risk register were deemed necessary arising from the 2022-23 Programme of Work. • Services were asked to highlight any key risks within Service risk registers not already reflected that might merit consideration for inclusion in the corporate risk register going forward; • Informal comparisons/benchmarking was done with other local authorities’ corporate risk registers, to help inform the review process and to identify any relevant issues which may have been overlooked; and • The corporate risk team undertook a ‘horizon scanning’ exercise on behalf of CMT to support its discussions on the council’s future direction and strategic planning considerations. This included examination of a range of external sources including public sector risk partner Zurich Municipal’s white paper ‘Rising to the Challenge’ focussing on the future of the public and voluntary sectors, as well as relevant materials from the National Audit Office, Audit Scotland, Deloitte and HM Treasury. 2.5 The corporate risk register should be reflective of what the Council is seeking to achieve at a strategic level with risks relating to key projects or programmes captured. Our review of the approved Programme of Work for 2022-23 suggests that risks in relation to key planned activities being undertaken are largely already captured either at corporate, service or project level and controls/actions that will help mitigate some of those risks are largely captured, although it was identified that there is scope to better reflect the interdependencies between certain key projects and workstreams and how failure to recognise this could impact the achievement of certain key objectives. 2.6 A ‘sense-check’ or informal benchmark review of other council’s corporate risk registers confirms that the content of the Council’s corporate risk register remains valid and comprehensive, and broadly consistent with other council’s risk registers. 2.7 Changes agreed to the corporate risk register by CMT as a result of the review process are detailed throughout the remainder of this report. Review of the 2021-22 corporate risk register 2.8 Most of the existing risks contained within the 2021-22 corporate risk register remain relevant and are included in the agreed 2022-23 version. Existing risks are subject to regular review by the relevant Risk Lead and associated governance groups. 2.9 Following a recent review, Risk RIS0000019: Information Security & Information Governance has increased in rating from 16-HIGH to 20-HIGH. Whilst good progress continues to be made on the implementation and embedding of controls in relation to this risk, the residual risk likelihood has been raised again to 5 recognising the current increased external threats arising from the current geopolitical situation which Page 333 of 418
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increases the likelihood of a cyber-attack. There is ongoing monitoring of this risk and the relevant controls and actions by the Information Risk & Security Team and the Head of Business & Digital, as the lead for this corporate risk. The ‘Human Resources’ corporate risk has also increased from 12-MEDIUM to 16-HIGH reflective of current labour market challenges in relation to recruitment and retention, particularly of some key professions. 2.10 Following the local government elections in May 2022, it is recognised that the resultant changes in the political landscape and governance arrangements within the council, are likely to have a bearing on a number of existing corporate risks. Management has therefore agreed to review risks RIS0000021: Managing Strategic Change and RIS0000256: Governance, Leadership & Decision Making at an early opportunity to reflect any resulting impacts on the nature and significance of these risks and how these issues are managed. Any other associated impacts on the council’s overall risk profile will also be considered as part of these reviews. As risks with significant potential influence on all areas of council activity and decision making, these have been added at a relatively early stage to the proposed timetable for reviewing/reporting on corporate risks to CMT and the Panel at Appendix 3. Existing risks remaining but with an agreed change of focus/reframing 2.11 As part of our engagement with Heads of Service, the Head of Planning and Regeneration raised Risk RIS0000259: Implementation of ERDP for possible reframing to make the risk and its scope more focused. Recognising the long-tail nature of many of the programme/projects and the range and diverse nature of the activities and PoW items that make up the ERDP, discussions are currently ongoing with relevant senior management to revise the scope of this risk. The intention is to make it more specific and relevant to the shorter-term objectives included within the Programmes of Work, while ensuring it articulates current and anticipated key challenges. 2.12 CMT had previously agreed that the ‘Asset Management’ risk should remain on the corporate risk register, but there has been some challenge in agreeing exactly how this risk should be framed. Recognising the strategic implications of the asset rationalisation programme and its links with other key Programmes of Work, it has now been agreed by CMT that the risk scope is expanded to be described as: “Ensuring resources (workforce, digital and assets) and service delivery are fully aligned to support the successful implementation of the Council’s future operating model”, and risk description reframed as “There is a risk that the council is unable to successfully implement Phase 1 of its Future Operating Model in having a flexible and empowered workforce, delivering efficient collaborative services from an optimised modern asset base”. 2.13 Many different workstreams need to effectively align and dovetail to enable the Council to successfully deliver the vision for the new ways of working and provide a solid foundation for future phases of organisational and transformational change. There are also issues relating to financial resources and progress regarding prioritisation and integration that will also need to be aligned. As a newly framed and important risk, this has been added at a relatively early stage to the proposed timetable for reviewing/reporting on corporate risks to CMT and the Panel at Appendix 3. New risks added to the corporate risk register 2.14 A new risk in relation to the impact of ‘Supply Chain’ disruptions is currently being finalised to reflect the position across the Council of its organisational ability to anticipate and respond to changes and disruption to supply chains, including non- availability/delay of goods and services as well as resulting potential impacts on costs and robustness of contract supplier management processes. Focus is being given to ensure that this aligns with planned actions from a Corporate Procurement perspective in relation to the agreed Procurement Improvement Plan, capturing those actions which will have a positive impact on the council’s resilience in this area and on the management of this risk in terms of contract supplier management. As a new risk, this Page 334 of 418
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has been included at a relatively early stage within the proposed timetable for reporting on corporate risks to CMT and the Panel at Appendix 3. A separate report from management on the impacts of associated inflationary pressures on the Council and how these might be responded to is currently being prepared and is expected to be submitted to elected members in due course. 2.15 The Panel should note that the two new risks that were previously agreed by CMT for inclusion on the corporate register ‘Impact of proposals in respect of the National Care Service’ and ‘Educational attainment gap (including learning loss arising from Covid- 19)’ are still under development. The risk team continues to work with Senior Management to finalise risk documentation and scoring, the results of this will be reported to CMT and the Panel as soon as these are available. The National Care Service proposals are likely to have significant potential impacts on the Council and although there remains considerable uncertainty over some of the details of how the Scottish Government’s policy ambitions will be progressed, a separate report setting out management’s current understanding of the risks and issues for the Council arising from the relevant draft legislation is currently being prepared and is expected to be reported to members in due course. 2.16 In anticipation of the completion of risk documentation and assessment of these new risks, these risks have also been added to the proposed timetable for reporting on corporate risks to CMT and the Panel by Risk Leads at Appendix 3. Risks agreed for escalation and/or de-escalation from Service risk registers Escalation 2.17 CMT has recently agreed that RIS000008: Scottish Child Abuse Inquiry be escalated from the service risk register for inclusion in the corporate risk register to enable formal consideration and oversight of increased activity in this area. This was particularly in relation to current challenges around organisational capacity to respond to an increasing number and complexity of requests for information and associated financial and reputational risks. The Corporate Risk Team will work with relevant management to review and refresh risk assessment documentation, linking with the Corporate Historical Abuse Working Group prior to reporting back to CMT with an updated risk position. As a newly escalated risk, this has also been added to the proposed timetable for reporting on corporate risks to CMT by Risk Leads. De-escalation 2.18 It has been agreed to de-escalate RIS0000461: Administration of Elections to the Chief Executive’ Service risk register for ongoing monitoring at Service level, with the expectation that it can be escalated again for CMT oversight in advance of the next council-wide election event (which is presently scheduled to be the next UK General Election due in 2024). 2.19 It was also agreed to de-escalate RIS00000325: Pandemic Illness: Covid-19 to the Enterprise & Communities Service risk register, for ongoing monitoring as part of the Council’s corporate resilience arrangements, with the expectation that should there be a material change in circumstances and/or public health messaging, the risk may be escalated again to support CMT in decision-making related to any possible future increase in this risk. 2.20 With these changes, it should be noted that the overall net effect is that the agreed risk register has 24 risks, 20 of which are ‘Live’ and fully documented and 4 of which are still being finalised. 2.21 Ongoing monitoring and review of these risks ensures that planned actions to mitigate risks are being progressed, as well as ensuring there is consideration of whether controls are still in place and having the desired effect in managing the risk. Further detail on the management of each risk is available within the accompanying deep dive risk assessment documentation. Page 335 of 418
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Other risk management developments 2.22 The Panel should note that the Corporate Risk Team continues to actively participate in the ongoing review of the corporate project management methodology, with a key focus on ensuring that robust risk management practice is embedded and applied appropriately within the management of projects, and crucially that there are mechanisms for recognising and highlighting risks and issues between projects that are inter-related and/or have interdependencies. 2.23 The Corporate Risk Team also continues to actively support the application of risk management in a number of key corporate projects including most recently the Shared Campus, Asset Rationalisation and Climate Change projects including supporting Project Boards’ consideration of risk. 2.24 The planned review of the existing Corporate Risk Management Strategy will commence shortly and be carried out in accordance with the Strategic Policy Framework Guidance, with reporting back to CMT and Committee for approval scheduled for early-2023. 2.25 Internal Audit recently concluded work on the Council’s risk management arrangements which included a review of both corporate and Services’ arrangements for ensuring that all significant risks are identified, evaluated and controlled, that risk registers have been prepared and are kept up-to-date, and that appropriate arrangements are in place to review/monitor and report on risk. 2.26 The report, details of which can be found as part of the Internal Audit progress report (a separate agenda item at this meeting), categorised the audit as offering ‘reasonable assurance’ meaning that Internal Audit considered that the Council’s risk management arrangements have continued to improve and embed since their last review, that they were generally satisfied that these arrangements are being actively supported and promoted by senior management at both corporate and service level, and that risk management contributes towards the achievement of corporate objectives. 2.27 Internal Audit also reported that they were satisfied that there are adequate procedures in place at both corporate and service levels for identifying and prioritising risks and identifying appropriate action to mitigate/manage those risks. A number of areas for improvement were identified and management has committed to a range of actions to address these. These included that replacement and/or new corporate risks need to be documented and assessed in line with agreed timescales, improvements are required in respect of training on risk and a framework for monitoring compliance with the Risk Management Strategy needs to be developed and implemented to better facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services. Further review of the corporate risk register 2.28 In order to provide further update to CMT and the Panel on completion of ‘draft’ risks and resulting outcome of risk assessments, it is proposed that a further review of the corporate risk register is carried out in December 2022 and reported to CMT and the Panel. It is also proposed at that time to supplement the Corporate/Strategic risk register information for the first time with a summary of key Service risks from service risk registers. Not only will this allow CMT and the Panel to gain a clearer understanding and awareness of key service risks, but it will have the added value of ensuring better alignment between key corporate risks and issues, with the content of individual Service risk registers. Page 336 of 418
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3. Measures of success 3.1 The corporate risk management 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: 2022-23 corporate risk register Appendix 2: Risk scoring matrix and descriptors Appendix 3: Proposed timetable for reporting of corporate risks to CMT and ASP Appendix 4: Current strategic risks and issues facing the Council Ken Adamson Head of Audit and Risk Page 337 of 418
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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 ☒ 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 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 risk management arrangements including the identification, assessment, management and oversight of relevant risks will increase the likelihood of the Council achieving its ambitions and plans by more effectively mitigating potential threats to planned outcomes. It also contributes to effective management of risks relating to all service and operational areas. Page 338 of 418
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Appendix 1: 2022-23 corporate risk register CORPORATE RISKS (Operational) Likelihood Impact Rating Evaluation 1. Information Security and Information Governance 5 4 20 High 2. ICT operational capability 4 4 16 High 3. Public Protection 4 4 16 High 4. Human Resources 3 4 16 High 5. Health and Safety 5 3 15 High 6. Business continuity planning 5 3 15 High 7. Terrorism 3 5 15 High 8. Governance, Leadership and Decision-Making 3 4 12 Medium 9. Procurement risk 3 4 12 Medium 10. Resilience planning 2 5 10 Medium 11. Serious organised crime, fraud and corruption 3 3 9 Medium 12. Supply Chain risk (new) To be confirmed To be confirmed To be confirmed To be confirmed 13. Scottish Child Abuse Inquiry - (escalated) To be confirmed To be confirmed To be confirmed To be confirmed CORPORATE RISKS (Strategic) Likelihood Impact Rating Proximity 14. Tackling Poverty 5 4 20 High 15. Climate Change 4 4 16 High 16. Implementation of Economic Regeneration Development Plan 3 5 15 High 17. Financial Sustainability 3 5 15 High 18. Enterprise Project 3 4 12 Medium 19. Managing strategic change 3 4 12 Medium 20. Digital and IT strategy 3 3 9 Medium 21. Engagement and consultation 3 3 9 Medium 22. Ensuring resources (workforce, digital and assets) and service delivery are fully aligned to support the successful implementation of the Council’s future operating model. (NB. Replaces asset management risk) To be confirmed To be confirmed To be confirmed To be confirmed 23. Impact of National Care Service (NB. Replaces IJB risk) To be confirmed To be confirmed To be confirmed To be confirmed 24. Improving Educational Outcomes To be confirmed To be confirmed To be confirmed To be confirmed RISKS DE-ESCALATED TO SERVICE RISK REGISTER 25. Administration of Elections 3 4 12 Medium 26. Pandemic Illness: Covid-19 3 3 9 Medium Page 339 of 418
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APPENDIX 2: LIKELIHOOD / IMPACT DESCRIPTORS AND RISK MATRIX Likelihood Descriptors: Score Probability of occurrence Description 5 Over 90% Almost certain to occur within 12 months 4 61-90% Likely to occur within 12 months 3 31-60% Possible that it may occur within 12 months 2 11 - 30% Unlikely to occur within 12 months 1 10% or less Rare that it would occur within 12 months Impact Descriptors: Score Description of impact On Service Objectives Financial On people On time to recover On reputation 5 Catastrophic Unable to function, inability to fulfil obligations Severe financial loss (over 25% of budget) Death Serious – in excess of 2 years to recover to pre- event position Highly damaging, severe loss of public confidence 4 Major Significant impact on service objectives Major financial loss (between 10% and 25% of budget) Extensive injury, major permanent harm Major – between 1 and 2 years to recover to pre-event position Major adverse publicity, major loss of confidence 3 Moderate Moderate impact on service objectives Significant financial loss (between 2.5% and 10% of budget) Medical treatment required, semi- permanent harm up to one year Considerable – between 6 months to 1 year to recover to pre- event position Some adverse publicity, legal implications 2 Minor Minor impact on service objectives Moderate financial loss (between 1% and 2.5% of budget) First aid treatment, non- permanent harm up to 1 month Some – 2 to 6 months to recover to pre-event position Short-term public embarrassment and no damage to reputation 1 Insignificant Minimal impact, no service disruption Minimal loss (up to 1% of budget) No obvious harm/injury Minimal – up to 2 months to recover No interest to the media, internal only. Risk Matrix: Likelihood 5 - Almost certain 5 10 15 20 25 4 - Likely 4 8 12 16 20 3 - Possible 3 6 9 12 15 2 - Unlikely 2 4 6 8 10 1 - Rare 1 2 3 4 5 1 - Insignificant 2 - Minor 3 - Moderate 4 - Major 5 - Catastrophic Impact Risk Rating Insignificant 1-3 Low 4-6 Medium 8-12 High 15-25 Page 340 of 418
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Appendix 3: Proposed timetable for reporting on corporate risks to CMT/ASP The future programme post-February 2023 will be considered as part of the proposed review of the corporate risk register scheduled for December 2022. Risk Lead report on CMT A&SP 1. Ensuring resources (workforce, digital and assets) and service delivery are fully aligned to support the successful implementation of the Council’s future target operating model (replaces asset management risk) September 2022 November 2022 2. Supply chain risk October 2022 November 2022 3. Governance, leadership and decision- making November 2022 November 2022 4. Impact of National Care Service proposals December 2022 February 2023 5. Managing strategic change January 2023 February 2023 6. Improving educational outcomes February 2023 February 2023 7. Scottish Child Abuse Inquiry March 2023 May 2023 Page 341 of 418
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Appendix 4 - Current strategic risks and issues facing the Council This note has been prepared by the Corporate Risk Team (in March 2022) to support CMT discussions on the Council’s future direction and strategic planning considerations and represents an informed horizon scanning of the environment within which the Council will operate. It does not highlight all those risks currently on the corporate risk register, particularly those that relate to the management of day-to-day operations of the Council, but rather attempts to highlight where current corporate risks relate to the broad strategic themes highlighted in the document. 1. Constitutional uncertainty Links to existing corporate risks: ‘Managing strategic change’ and ‘Impact of National Care Service’ • Potential for an independence referendum to be held during current parliamentary session. • Following Brexit, it remains unclear how the UK internal market (across England, Scotland, Wales, and Northern Ireland) will operate and how some aspects of the existing devolution structures will operate. • The process of implementing the Scotland Act 2016 remains incomplete (VAT assignment and full adoption of social security powers). The fiscal framework is due for review in 2022. • Uncertainty surrounding the potential impact of all of the above, and proposals relating to National Care Service and the potential impact of moves towards greater national or regional collaboration in Education on the future composition and funding of Scottish local government. 2. Economic challenges Links to existing corporate risks: ‘Implementation of ERDP’ ‘Digital and IT Strategy’ ‘Educational attainment’ and ‘Climate change’ and ‘Tackling Poverty • The pandemic has resulted in an economic downturn. Some sectors of the economy may be permanently affected. The nature and timing of economic recovery remains unclear. Establishing a more digital, more inclusive economy will require time and significant investment in skills. The economy will have to reshape to enable climate change objectives to be met. Economic/inflationary pressures on household incomes may drive greater demand for public services. • Scotland’s fiscal framework means that public sector budgets are now more closely tied to economic performance (and Scotland’s performance relative to the rest of the UK) than at any time since devolution in 1999. • The short and long-term economic effects of exit from the European Union (due to changes in access to markets and migration patterns) remain to be seen. • Uncertainty around short-term impacts of geopolitical situation with Russia and Ukraine and potential longer-term impacts on wider supply chains/increased focus on supply chain resilience with consequential potential impacts on rising costs, availability etc. Page 342 of 418
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Appendix 4 - Current strategic risks and issues facing the Council (continued) 3. Financial sustainability Links to existing corporate risks: ‘Financial sustainability’ • A considerable proportion of the Scottish public sector budget is spent on the NHS and social care. Along with the effects of the pandemic, demographic change and medical advances mean that despite being prioritised in successive Scottish Government budgets (at the expense of local government) the pressure on these budgets is already acute and appears insatiable. Some NHS boards have already seen overspends, despite the NHS budget having grown in real terms. • The public sector already has many long-term financial commitments (pensions, PFI/PPP/NPD payments) that extend decades into the future. This constrains its financial flexibility. • Prior to the pandemic, there were already concerns about the financial sustainability of certain parts of the public sector in their current form including local government and policing. The pandemic has focused the public sector’s attention on short-term priorities. The need and challenges for medium and long-term financial planning to ensure future planned activities are compatible with financial sustainability remains. 4. Addressing inequalities Links to existing corporate risks: ‘Tackling Poverty’, Implementation of ERDP’ and ‘Educational Attainment’ • There is still a significant amount of progress to be made to reduce inequalities. Areas affected include wealth, health and wellbeing and education. These inequalities affect diverse communities and groups (including women and girls, BAME people, older people, disabled people etc.) often in complex and interacting ways. • There are profound geographical inequalities both across Scotland and within individual Council areas. Demographic changes (the aging population and movement of population from some parts of Scotland to others) may alter these patterns. • There is a need to capture users’ perspectives and enable communities to have greater power and influence over what matters to them through increased community engagement and meaningful participation in the planning/design and delivery of public services. 5. Performance and innovation Links to existing corporate risks: ‘‘Governance, leadership and decision-making’ ‘Information security and governance’, ICT operational capability’, ‘Digital and IT strategy’ • Ten years since the Christie report, there is still limited evidence of a significant shift towards preventive spending. • Mounting financial pressures are starting to have an impact on how well some public services are performing. This may affect delivery of the outcomes in the National Performance Framework, such as reducing educational inequalities. The pandemic has exacerbated this, created backlogs and reduced access to some public services and affected systems to monitor performance. • The integration of health and social care remains a work in progress with considerable cultural, organisational, and financial challenges. The proposals surrounding the creation of a National Care Service have the potential to create significant challenges and strategic, financial, and operational risks to the Council’s current operations and ability to deliver against its wider ambitions. • The pandemic has accelerated the shift to greater digital delivery of public services, but true digital transformation remains a significant challenge to deliver and generates risks around capacity, digital exclusion, cybersecurity, and fraud. Page 343 of 418
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Appendix 4 - Current strategic risks and issues facing the Council (continued) 6. Leadership, workforce, and governance Links to existing corporate risks: ‘Governance, leadership and decision-making’, ‘Human Resources’ ‘Managing strategic change’, ‘Engagement and consultation’) • Leadership roles are increasingly difficult to fill in parts of the public sector with increased turnover/vacancies at senior (chief executive, director) levels. • To secure long-term outcomes, collaborative leadership across multiple organisations and sectors is essential. Achieving this remains challenging when existing public sector structures and systems of incentives and accountability remain siloed. • An ageing population, increasing demands for Council services, relatively inflexible remuneration arrangements and a smaller working age population presents real challenges for local authorities to ensure they remain an attractive option for younger workers and can recruit and retain sufficient staff with the right skills and attributes. Also increased focus on ensuring our employees reflect the diversity of our local communities. • The shift to digital technology and the expansion in the use of data and artificial intelligence demands greater attention to digital governance to ensure that ethical, privacy and equalities and human rights perspectives are carefully considered. 7. Other current and potential future corporate risks with strategic considerations • Public Protection: always a high-risk and high-profile issue. Increased risks arising during the pandemic and from the economic challenges facing many families and communities will likely result in continuing pressures. • Enterprise Project: refocused and narrower than originally envisaged but still a significant project which will need to be successfully delivered to underpin key aspects of service delivery and to contribute to the achievement of many of the Council’s wider ambitions. • Place-making: central to the Council’s ambitions and links the Council’s future operating model and associated asset requirements to the wider development and delivery of the Town Centre Visions designed to create vibrant and sustainable towns across North Lanarkshire. • Working/collaborating with partners and other stakeholders – the Council increasingly needs to work in partnership to address the complex challenges facing our towns and communities. This can be challenging and also requires us to rely on the willingness, capacity and ability of third parties to positively engage. • Organisational resilience and agility – while the resilience of the organisation has been well-tested over the last two years, there remains a risk that our longer-term ability to anticipate and respond to external factors is impaired, for example, as a result of further financial and workforce pressures. The maturity and effectiveness of key enablers such as risk management, project management and contract management will directly affect how well we can, identify, anticipate and respond to certain challenges. Page 344 of 418
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Summary assessment of the potential impact and timing of identified strategic risks and whether these are currently increasing, stable or decreasing Risk Timeframe Impacts Risk currently increasing, stable or decreasing? Impacts of constitutional uncertainties (future development of the devolution settlement and potential independence referendum) Ongoing / uncertain Potentially high Increasing – the medium-term political context within which the Council operates continues to be fluid and uncertain. Impacts of Scottish Government policies such as the proposed National Care Service and potential future education reform Short-term 1-3 years Potentially high Increasing – the NCS proposals creates significant operational, financial and strategic risks for the Council and along with the wider direction of travel of other SG policies suggests uncertainty over, and a possible future review of, the current structure and composition of Scottish local government. Economic challenges Immediate High Increasing – the post-Covid economic environment combined with current inflationary/cost of living pressures has and will continue to significantly impact North Lanarkshire and its communities and is likely to make the Council’s aspirations in this area more challenging to achieve. Financial sustainability Immediate and likely to be ongoing High Currently stable but current/future pressures on NHS and impacts on future SG budgets of the use of devolved income tax powers is likely to result in increased pressures on future LG budgets. Also, significant risks arising from current inflationary pressures on Council budgets (and although initially expected to be relatively short- term, these could become more embedded). Inequalities: including wealth, health and wellbeing and education Immediate and ongoing High Increasing – Covid’s impacts have generally worsened pre-existing inequalities across all aspects (wealth, health and well-being and education) making the Council’s aspirations in this area more challenging to achieve. Performance and innovation (including digital transformation) Short-term 1-3 years Medium to High Increasing – financial challenges, changing public expectations and ongoing performance challenges are likely to require difficult decisions re-service delivery models and service redesign, testing the Council’s organisational capacity to deliver. Leadership and workforce Short-term 1-3 years Medium to High Increasing – longer-term demographic pressures have been exacerbated by Brexit and Covid impacts; existing workforce pressures have already increased and the Council faces real challenges to ensure it has the right workforce to deliver against its current and future ambitions. Increased risks arising from staff expectations that future pay awards will keep pace with current inflationary pressures. Place making – range of activities designed to create vibrant and sustainable towns across North Lanarkshire Longer term 3-5 years Medium to High Increasing - The Council’s aim to create vibrant and sustainable towns across North Lanarkshire faces considerable challenges and the economic and wider societal impacts of the pandemic have only increased the pressures on existing town centres. Page 345 of 418
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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 08/09/22 Strategic Governance Framework - annual review and refresh From Katrina Hassell, Head of Business and Digital E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary Good governance enables the council to effectively pursue the ambition set out in The Plan for North Lanarkshire within appropriate controls and the management of risk. It is also central to ensuring effective scrutiny and delivery of statutory Best Value obligations. This means ensuring resources are directed in line with agreed policies, priorities, and project management procedures, and there is sound and inclusive decision making and clear accountability for the use of those resources in achieving improved outcomes for service users and communities. Reflecting the principles in the national Delivering Good Governance in Local Government: Framework, the council’s local code of governance is set out in the Strategic Governance Framework which was initially approved in February 2020 and subsequently refreshed and approved by the Audit and Scrutiny Panel in September 2021. The Delivering Good Governance in Local Government: Framework requires that each year councils test their arrangements against the good governance principles set out therein by carrying out a review of existing arrangements, ensuring their local code is up to date, and reporting on compliance. In this respect the Strategic Governance Framework (and more specifically the list of supporting elements and mechanisms in Appendix B) has been reviewed and updated and is presented herewith for Audit and Scrutiny Panel approval in line with the Panel’s role - as set out in the Scheme of Administration - 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”. The annual review process, and refreshed Strategic Governance Framework, is also a key piece of evidence used to inform the development of the Annual Governance Statement for 2021/22. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Acknowledge the annual review which has been undertaken to refresh the Strategic Governance Framework and ensure each of the elements and mechanisms listed therein (as noted in Appendix B) are up to date, and on a review programme to be updated at an appropriate interval and reported to the relevant committee, (2) Continue to carry out their role in respect of the Strategic Governance Framework in AGENDA ITEM 10 Page 347 of 418
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1. Background 1.1 The council is required to demonstrate its commitment to the good governance principles set out in the national Delivering Good Governance in Local Government: Framework (2016) and accompanying Guidance Notes for Scottish Local Authorities (2016) published by Chartered Institute of Public Finance and Accountancy (CIPFA) in association with Society of Local Authority Chief Executives (SOLACE). 1.2 To ensure compliance with these principles, the council is required to determine its own governance structure (local code) underpinned by the Delivering Good Governance in Local Government: Framework. The council’s local code of governance in this respect is set out in the Strategic Governance Framework in Appendix 1. 1.3 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. 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 programme and 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. 1.4 All councils are required to test their governance arrangements (local code) against the 7 principles, 21 sub principles, and 91 behaviours and actions that demonstrate good governance in practice which are contained within the Delivering Good Governance in Local Government: Framework, by: • Reviewing existing governance arrangements. • Developing and 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. • Reporting publicly on compliance with the local code on an annual basis, including how the governance arrangements have been monitored for effectiveness in the year and identifying planned changes. 1.5 An annual review process is in place to fulfil the requirements set out in paragraph 1.4 above. This is depicted in Figure 2 in the Strategic Governance Framework which is attached as Appendix 1. The accompanying Annual Governance Statement report to the Audit and Scrutiny Panel contributes to fulfilling these requirements in that it reports terms of providing independent assurance to the council and those charged with governance on the adequacy of the council’s risk management framework and internal control environment, and (3) Approve the refreshed Strategic Governance Framework. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Page 348 of 418
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on the annual process to review existing governance arrangements to ensure ongoing effectiveness. 1.6 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. 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. 1.7 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 Framework. It should be noted that the list of elements and mechanisms (in Appendix B) does not introduce new items of governance to the council, rather its purpose is to collate all existing items into the one local code for annual review, assessment, assurance, and reporting purposes. 1.8 An Internal Audit on Corporate Governance in March 2022 cited the assessment process now in place through the Strategic Governance Framework and its accompanying review programme as good practice. It was also cited that there are now “formal and robust arrangements” in place to ensure that such reviews are undertaken on an annual basis. 1.9 Chief Officers and Elected Members are responsible for 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 21st June 2022. 1.10 With the annual review process now concluded for 2021/22, the updated Strategic Governance Framework is now presented to the Audit and Scrutiny Panel for approval in line with the Panel’s role 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. Strategic Governance Framework 2.1 The refreshed Strategic Governance Framework attached at Appendix 1 sets out the council’s commitment 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 This commitment, allied to the principles of good governance set out in the Delivering Good Governance in Local Government: Framework, takes into account the environment within which the council operates and, as such, sets out the council’s local code of governance within the local context and long-term vision of The Plan for North Lanarkshire. 2.3 This commitment also supports the council in meeting its statutory 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 Page 349 of 418
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scrutiny of performance and stewardship of resources. 2.4 The Strategic Governance Framework in Appendix 1 comprises two further appendices: • Appendix A: This lists the 7 principles and 21 sub principles from the national Delivering Good Governance in Local Government: Framework supported by 91 behaviours and actions that demonstrate good governance in practice. • Appendix B: Each of the specific elements and mechanisms which form the council’s local code of governance have been aligned to the 7 principles (and 21 sub principles) within the national Framework. The list of elements and mechanisms set out within Appendix B provide a tangible evidence base which enables the council to demonstrate good governance in practice. 2.5 These elements and mechanisms span the complete range of council activities and include arrangements for corporate governance, risk management, and internal financial controls. Each has been assigned a timeframe to support the review programme and ensure they remain timely and effective in supporting delivery of the Programme of Work and The Plan for North Lanarkshire. 2.6 The information within Appendix B also contains an assessment of each of the elements and mechanisms. Based on this assessment each element and mechanism has been assigned a RAG status. This assessment process was first introduced at the end of 2020/21 as a method by which to identify and prioritise items requiring to be reviewed and updated further. 2.7 Taking into consideration the impact of the coronavirus pandemic, the use of this assessment process (and corresponding RAG status) aims to ensure all elements and mechanisms are as up to date as they require to be. Definitions supporting the RAG status are noted in the table below: Red The element or mechanism was last updated prior to January 2020 and there is an annual requirement to do so or there has been a change in legislation which necessitates a review and update, but no commitment has been identified to ensure this is updated. Amber Although the element or mechanism has been updated, it has not been reviewed or updated within the COVID recovery environment to reflect any changes required in service delivery or to ensure continued compliance with good governance. There is, however, a commitment by a member of the Corporate Management Team to do so during 2022/23. Green The element or mechanism was updated after January 2020, or there is no requirement for a further update at this time, or work to review and refresh this item is already recorded on the Programme of Work for 2022/23, or Corporate Management Team have already identified that the item requires to be reviewed and updated during 2022/23. Next steps 2.8 The Strategic Governance Framework is not a static document, the Strategy and Performance function within Business and Digital will continue to keep the list of elements and mechanisms under review to ensure: (a) Updates are submitted to the Corporate Management Team and relevant Committee (as appropriate) in line with the review programme. (b) Any other policy developments or legislative changes are considered for inclusion Page 350 of 418
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in the council’s local code of governance, as appropriate. 2.9 A checklist for Heads of Service to use when reviewing and updating each of the elements and mechanisms contained within the Strategic Governance Framework review programme was introduced in June 2021. This has been implemented during 2021/22 with no adverse feedback received. As such, all reports to the Corporate Management Team and Committee which provide an update on work to review and refresh an element or mechanism in Appendix B will continue to require to contain the following: • An assessment of the effectiveness of the particular element or mechanism. • A summary outlining the changes / improvements made to the element or mechanism since the last update. • The role of the element or mechanism in supporting the successful delivery of The Plan for North Lanarkshire. 3. Measures of success 3.1 Good governance enables the council to effectively pursue the ambition set out in The Plan for North Lanarkshire within appropriate controls and the management of risk. It is also central to ensuring effective scrutiny and delivery of statutory Best Value obligations. A measure of success will be in ensuring the elements and mechanisms on the review programme remain up to date and are effective in supporting delivery of the Programme of Work and The Plan for North Lanarkshire. 4. Supporting documentation 4.1 Appendix 1 - Strategic Governance Framework • Appendix A: 7 principles, 21 sub principles, and 91 behaviours and actions that demonstrate good governance in practice in line with the national Delivering Good Governance in Local Government: Framework • Appendix B: North Lanarkshire Council local code of governance review programme Katrina Hassell Head of Business and Digital 5. Impacts ( http://connect/report-template-guidance ) 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? Page 351 of 418
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The Delivering Good Governance in Local Government: Framework (2016) positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such this is reflected in the Strategic Governance Framework. 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 have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Development and publication of the Strategic Governance Framework supports the council’s compliance with the CIPFA Statement on the Role of the Chief Financial Officer in Local Government 2016 in terms of financial controls. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? 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 have been discussed and agreed with Legal and Democratic Solutions? 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? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ Page 352 of 418
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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? The Delivering Good Governance in Local Government: Framework (2016) positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such this is reflected in the Strategic Governance Framework. 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? Work to review and refresh the Strategic Governance Framework - and ensure 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) - contributes towards the mitigation of the risk on the Corporate Risk Register for Governance, Leadership, and Decision Making. Page 353 of 418
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Strategic Governance Framework Appendix 1 Page 354 of 418
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2 Document control Title Strategic Governance Framework Owner Katrina Hassell, Head of Business and Digital Contact HassellK@northlan.gov.uk Governance group Audit and Scrutiny Panel Author Susan Lawrie, Strategy and Performance Manager Contact LawrieS@northlan.gov.uk Revision history Number Originator Date review commenced Revision description / record of change 1.0 Linda Johnston, Business Strategy Manager 2020 Original framework created 2.0 Linda Johnston, Business Strategy Manager June 2021 Annual review 3.0 Linda Johnston, Business Strategy Manager June 2022 Annual review Document approvals Number Governance group Date approval granted Date approval to be requested (if document still draft) 1.0 Audit and Scrutiny Panel 2020 2.0 Audit and Scrutiny Panel September 2021 3.0 Audit and Scrutiny Panel September 2022 Consultation record (for most recent update) Status of document consulted upon Strategic Governance Framework Stakeholders consulted / date Corporate Management Team (21/06/22) Strategic alignment Next review date Review date June 2023 The Plan for North Lanarkshire and all 5 priorities and 25 ambition statements therein, the Programme of Work, Strategic Policy Framework, Strategic Performance Framework, Strategic Self-Evaluation Framework, Project Management Framework, and Framework for Demonstrating Improved Outcomes for Communities. Page 355 of 418
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3 Table of contents Page number Introduction ……………………………………………………………………………………….. 4 Good governance in the public sector ………………………………………………………... 5 Good governance in local government ………………………………………………………. 6 Local code of governance ………………………………………………………………………. 7 - 12 - Requirements …………………………………………………………………………………. 7 - Local context ………………………………………………………………………………….. 7 - Local code of governance ………………………………………………...…………………. 7-9 - Annual review and assessment ……………………………………………………………... 10 - Continuous improvement …………………………………………………………………….. 11 - Roles and responsibilities ……………………………………………………………………. 11-12 Appendix A: 7 principles and 21 sub principles from the national Framework …………….. 13 - 17 Appendix B: North Lanarkshire Council local code of governance review programme …... 18 - 38 Page 356 of 418
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4 Introduction 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 and a fairer distribution of wealth across all local communities. As the delivery vehicle for the shared ambition, the Programme of Work - now in its fourth iteration (with plans approved to the end of 2022/23) - enables a recurring and dynamic approach to realising the shared ambition. It enables delivery of the long-term vision to be informed by an annual strategic planning process that is influenced by national policy changes and new developments which impact on the achievement of the vision and which require to be reflected in the development of future strategies, policies, plans, and programmes of work. Key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately planned, guided, implemented, and governed) are six inter-related corporate frameworks: • Strategic Governance Framework • Strategic Policy Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities 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. The council’s Strategic Governance Framework is set out within this document. To comply with good governance principles, the council must ensure 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. Good governance is also central to meeting statutory 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. To ensure its good governance arrangements are sound and the highest standards are met, the council is required to set out its commitment to the national principles of good governance by determining its own governance structure (local code) underpinned by these principles. The council’s local code in this respect is set out on pages 7 to 12. This 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 programme and 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. Chief Officers and Elected Members are responsible for implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. In this respect the council’s annual review process is depicted on page 10 and the review programme is set out in Appendix B (page 18). Page 357 of 418
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5 Good governance in the public sector 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.” 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. Figure 1 illustrates the 7 principles of good governance (A. to G. listed above) and outlines how they relate to each other. Principles A. and B. underpin implementation of principles C. to G. Figure 1 also illustrates that good governance is dynamic and that a public body should be committed to improving governance on a continuing basis through a process of review and evaluation. The aim of the International Framework is to encourage better service delivery and improved accountability by establishing a benchmark for aspects of good governance in the public sector. Figure 1 Page 358 of 418
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6 Good governance in local government 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) published by CIPFA in association with the Society of Local Authority Chief Executives (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. The 7 principles and 21 supporting sub-principles are specified in Appendix A on page 13. 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 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 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. The essence underpinning the Delivering Good Governance in Local Government: Framework is that local government develops and shapes its own approach to governance, taking account of the environment within which it operates. Within this context, it is therefore up to each local authority to: • Set out its commitment to the principles of good governance outlined in the Delivering Good Governance in Local Government: Framework. • Determine its own governance arrangements, or local code, underpinned by these principles. • Ensure that the local code operates effectively in practice. 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 an organisation and its culture and the need for, and value of, good governance must be explicit. Reflecting the principles in the Delivering Good Governance in Local Government: Framework, the local code set out in this Strategic Governance Framework demonstrates North Lanarkshire Council’s commitment to good governance and outlines the arrangements in place in line with the 7 principles and 21 supporting sub principles. Page 359 of 418
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7 Local code of governance Requirements By defining the 7 principles and 21 supporting sub principles, the Delivering Good Governance in Local Government: Framework provides a structure to help the council set out its arrangements in relation to good governance. All councils are required to test their governance arrangements against these principles by: • Reviewing existing governance arrangements. • Developing and 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. • Reporting publicly on compliance with the local code on an annual basis, including how the governance arrangements have been monitored for effectiveness in the year and identifying planned changes. Local context The council has a long-term vision for North Lanarkshire to be the place to live, learn, work, invest, and visit. Set out in The Plan for North Lanarkshire, the vision has been shaped by the area’s demographic, social, and economic profile. While trends show a positive picture in terms of economic growth, inward investment, employment, and educational attainment, there are still unacceptably high levels of deprivation and child poverty and clear areas of inequity and inequality remaining. This means that not all North Lanarkshire’s people share equally in the improving picture, and there is an element of social exclusion across some towns and communities. Aiming to achieve inclusive growth and prosperity for all, The Plan for North Lanarkshire sets out the ambition to deliver sustainable economic growth which leads to inward investment, generates jobs and training opportunities, and enhances transport infrastructure to ensure access to homes, employment, education, and leisure for all. Supported by a world class future proof digital infrastructure, this will enable universal connectivity and an economy that expands opportunities for individuals and businesses and ensures more affordable access for all. As the delivery vehicle for the shared ambition, the Programme of Work - now in its fourth iteration (with plans approved to the end of 2022/23) - enables a recurring and dynamic approach to realising the shared ambition. It enables delivery of the long-term vision to be informed by an annual strategic planning process that is influenced by national policy changes and new developments which impact on the achievement of the vision and which require to be reflected in the development of future strategies, policies, plans, and programmes of work. Essential to building the foundations in order to realise the ambition, The Plan for North Lanarkshire is founded on a place based approach. As such the Programme of Work includes a focus on town centre and community regeneration, the creation of integrated town and community hubs, enhancement of the schools’ new build programme, and development of parks master planning as well as the associated active travel plans. These plans have taken on an even more important meaning and urgency considering the effects of the coronavirus pandemic and the health and economic impacts across local communities. Local code of governance The Programme of Work process (established in 2019) provides a clear roadmap for work across council services and with partners. Directing policies and plans to support delivery of The Plan for North Lanarkshire, the Programme of Work is therefore instrumental in bringing together the elements that support strategic planning, local development, enterprise activities, and community investment in a cohesive manner. Page 360 of 418
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8 The fourth annual iteration of the Programme of Work (for 2022/23) was approved in March 2022. This reflects the changes required to deliver on the long- term ambition and the broad range of innovative and transformative programmes of work and projects required in order to maintain services for residents in local communities which are efficient and effective, while targeting resources towards those individuals in the most vulnerable situations and ensuring value for money. The council’s local code of governance outlines the elements and mechanisms in place to ensure appropriate oversight and governance of the Programme of Work and enable the council to monitor the delivery of its ambitions, while ensuring arrangements for corporate governance, risk management, and internal financial controls are sound. The council’s local code of governance is therefore based on the following: • Identifying and setting out the council’s long-term strategic ambition and priorities in The Plan for North Lanarkshire and ensuring the vision for inclusive growth and prosperity for all is embedded throughout all other policy statements agreed by the council as well as all strategic management, service delivery, and corporate governance approaches. • Establishing the six inter-related corporate frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and the Framework for Demonstrating Improved Outcomes for Communities) and ensuring these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work through a regular review and refresh programme. • Standing Orders that allow the council to delegate decision making to committees, sub-committees, or officers and sets out the rules which 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. • 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 North Lanarkshire Council funds. Compliance with these regulations ensures that public 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 - as the overarching framework that establishes the financial strategies and policies to ensure effective financial governance, planning, and management - also sets out the responsibility for safeguarding public funds within the council and the role of the Section 95 Officer. The strategies and policies covered by the Financial Strategy include the Capital Strategy, Treasury Management Strategy, Revenue Budget Strategy, and the Medium-Term Financial Plan. • A Risk Management Strategy with arrangements that reflect the council’s strategic ambition at a corporate, service, and project level. A key part of the system of internal control, the council’s risk management arrangements are designed to identify, assess, prioritise, and mitigate risks which impact on achievement of the council’s priorities. These arrangements are designed to enable the council to perform well, to manage risk effectively, and to minimise any potential impacts on service delivery and the achievement of planned outcomes. • 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. • An Anti-Fraud Policy and Fraud Response Plan which sets out the council’s expectations (which extends to all individuals and organisations Page 361 of 418
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9 with whom it deals) in terms of acting honestly and with integrity and in safeguarding public resources. • A Whistleblowing Procedure 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 Corporate Management Team with a supporting meetings structure comprising service Senior Management Team meetings, and Operational Management Team meetings to cascade the context, deliverables, and accountabilities and ensure consistency of message in the vision set out in The Plan for North Lanarkshire and the delivery required through the Programme of Work. All Heads of Service are members of the Corporate Management Team; this includes those Heads of Service 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 that aims to enable performance to be measured and assessed at three levels within the council and includes target setting and service and statutory reporting in line with an annual schedule. • 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 by management and Elected Members. • A range of programme Boards and working groups aligned to the delivery of specific Programme of Work items, e.g. Strategic Capital Delivery Group, DigitalNL, Hub Delivery Programme Board, and Data Governance. • An Information Governance Policy Framework, comprising policies in terms of records and information management, data protection, information handling and classification, information risk, and information 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 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 reporting arrangements. • A range of employment and other policies and the associated guidance documents and forms which promote and support ethical behaviour and standards of conduct by employees, along with an employee Performance Review and Development (PRD) process, and access to a range of employee and Elected Members’ training and development programmes and opportunities through LearnNL. • 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 their Annual Audit Report (AAR) process and a range of other external audit and inspection bodies. Specific details on each of the elements and mechanisms in the above list, which forms the council’s local code of governance, are detailed in Appendix B. These span the complete range of council activities and include arrangements for corporate governance, risk management, and internal financial controls. Page 362 of 418
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10 Annual review and assessment The council’s local code of governance requires to be reviewed to ensure it operates effectively in practice and an annual assessment of compliance with the principles requires to be undertaken and reported in public. The annual review process is outlined in Figure 2 below Chief Officers and Elected Members are responsible for implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. Figure 2 Page 363 of 418
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11 Continuous improvement Introduced under the Local Government in Scotland Act 2003, the council has a duty to ensure Best Value. This requires the council to “make arrangements to secure continuous improvement in performance” in the way in which its functions are exercised, having regard to a combination of economy, efficiency, and effectiveness. Good governance is central to meeting statutory 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. Areas requiring improvement are also identified through the work of the Internal Audit function, the external auditors Annual Audit Report (AAR), the various external bodies’ audit and inspection reports, and the council’s Strategic Self-Evaluation Framework and rolling review programme. Outputs from these processes are a key piece of evidence required to inform the development of the Annual Governance Statement. The council’s Strategic Self-Evaluation Framework is aligned to the seven Best Value themes: • Vision and leadership • Governance and accountability • Use of resources • Partnerships and collaborative working • Working with communities • Sustainable development • Fairness and equality These themes are outlined within the national guidance (updated in 2020 and available at: https://www.gov.scot/publications/best-value-revised-statutory- guidance-2020/) which is designed to help local authorities and other public bodies to demonstrate continuous improvement in their performance. Roles and responsibilities Chief Officers and Elected Members are responsible for implementing the council’s governance arrangements and ensuring the Strategic Governance Framework is assessed on an annual basis to ensure ongoing effectiveness and compliance. In identifying how the effectiveness of the council’s governance arrangements have been monitored and evaluated in the year, the Corporate Management Team 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. Improvements to the process to review effectiveness were introduced in 2021 through the establishment of a checklist for Heads of Service to use when reviewing and updating each of the elements and mechanisms on the Strategic Governance Framework review programme. As such, all reports to the Corporate Management Team and/or Committee which provide an update on work to review and refresh an element or mechanism in Appendix B require to contain the following: • An assessment of the effectiveness of the particular element or mechanism. • A summary outlining the changes / improvements made to the element or mechanism since the last update. Page 364 of 418
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12 • The role of the element or mechanism in supporting the successful delivery of The Plan for North Lanarkshire. As set out in the Scheme of Administration (June 2022), the Audit and Scrutiny Panel is a key component of the council’s corporate governance arrangements. The purpose of the Audit and Scrutiny Panel 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. It provides independent review of the council’s governance, risk management, performance and control frameworks and oversees 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 will establish short life task group reviews, as required, to undertake in-depth examination of particular areas of policy and/or service delivery with a view to making recommendations for improvement.” Page 365 of 418
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13 Appendix A: 7 principles and 21 sub principles The 7 principles (A. to G.) within the International Framework: Good Governance in the Public Sector together with the 21 supporting sub-principles set out in the Delivering Good Governance in Local Government: Framework are listed in the table below (pages 13 to 17) along with 91 examples of behaviours and actions that according to CIPFA demonstrate good governance in practice. A. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. B. Ensuring openness and comprehensive stakeholder engagement. 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. e.g. • Principle A = Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. • Sub-principles = A1. BEHAVING WITH INTEGRITY, A2. DEMONSTRATING STRONG COMMITMENT TO ETHICAL VALUES, A3. RESPECTING THE RULE OF LAW. • Listed below that are the behaviours and actions that demonstrate good governance in practice (i.e. 1.1 to 1.4; 2.1 to 2.4; and 3.1 to 3.5). A. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law A1. BEHAVING WITH INTEGRITY A2. DEMONSTRATING STRONG COMMITMENT TO ETHICAL VALUES A3. RESPECTING THE RULE OF LAW 1.1 Ensuring members and officers behave with integrity and lead a culture where acting in the public interest is visibly and consistently demonstrated thereby protecting the reputation of the organisation. 1.2 Ensuring members take the lead in establishing specific standard operating principles or values for the organisation and its staff and that they are communicated and understood. These should build on the seven Principles of Public Life (also known as the Nolan principles), i.e. selflessness, integrity, objectivity, accountability, openness, honesty, and leadership. 1.3 Leading by example and using these standard operating principles or values as a framework for decision making and other actions. 1.4 Demonstrating, communicating, and embedding the standard operating principles or values through appropriate policies and processes which are reviewed on a regular basis to ensure that they are operating effectively. 2.1 Seeking to establish, monitor and maintain the organisation’s ethical standards and performance. 2.2 Underpinning personal behaviour with ethical values and ensuring they permeate all aspects of the organisation’s culture and operation. 2.3 Developing and maintaining robust policies and procedures which place emphasis on agreed ethical values. 2.4 Ensuring that external providers of services on behalf of the organisation are required to act with integrity and in compliance with high ethical standards expected by the organisation. 3.1 Ensuring members and staff demonstrate a strong commitment to the rule of the law as well as adhering to relevant laws and regulations. 3.2 Creating the conditions to ensure that the statutory officers, other key post holders and members are able to fulfil their responsibilities in accordance with legislative and regulatory requirements. 3.3 Striving to optimise the use of the full powers available for the benefit of citizens, communities, and other stakeholders. 3.4 Dealing with breaches of legal and regulatory provisions effectively. 3.5 Ensuring corruption and misuse of power are dealt with effectively. Page 366 of 418
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14 B. Ensuring openness and comprehensive stakeholder engagement B1. OPENNESS B2. ENGAGING COMPREHENSIVELY WITH INSTITUTIONAL STAKEHOLDERS B3. ENGAGING STAKEHOLDERS EFFECTIVELY, INCLUDING INDIVIDUAL CITIZENS AND SERVICE USERS 1.1 Ensuring an open culture through demonstrating, documenting, and communicating the organisation’s commitment to openness. 1.2 Making decisions that are open about actions, plans, resource use, forecasts, outputs, and outcomes. The presumption is for openness. If that is not the case, a justification for the reasoning for keeping a decision confidential should be provided. 1.3 Providing clear reasoning and evidence for decisions in both public records and explanations to stakeholders and being explicit about the criteria, rationale and considerations used. In due course, ensuring that the impact and consequences of those decisions are clear. 1.4 Using formal and informal consultation and engagement to determine the most appropriate and effective interventions/ courses of action. 2.1 Effectively engaging with institutional stakeholders to ensure that the purpose, objectives and intended outcomes for each stakeholder relationship are clear so that outcomes are achieved successfully and sustainably. 2.2 Developing formal and informal partnerships to allow for resources to be used more efficiently and outcomes achieved more effectively. 2.3 Ensuring that partnerships are based on - trust, a shared commitment to change, a culture that promotes and accepts challenge among partners - and that the added value of partnership working is explicit. 3.1 Establishing a clear policy on the type of issues that the organisation will meaningfully consult with or involve individual citizens, service users and other stakeholders to ensure that service (or other) provision is contributing towards the achievement of intended outcomes. 3.2 Ensuring that communication methods are effective, and that members and officers are clear about their roles with regard to community engagement. 3.3 Encouraging, collecting, and evaluating the views and experiences of communities, citizens, service users and organisations of different backgrounds including reference to future needs. 3.4 Implementing effective feedback mechanisms in order to demonstrate how their views have been taken into account. 3.5 Balancing feedback from more active stakeholder groups with other stakeholder groups to ensure inclusivity. 3.6 Taking account of the interests of future generations of taxpayers and service users. C. Defining outcomes in terms of sustainable economic, social, and environmental benefits C1. DEFINING OUTCOMES C2. SUSTAINABLE ECONOMIC, SOCIAL, AND ENVIRONMENTAL BENEFITS 1.1 Having a clear vision which is an agreed formal statement of the organisation’s purpose and intended outcomes containing appropriate performance indicators, which provides the basis for the organisation’s overall strategy, planning and other decisions. 1.2 Specifying the intended impact on, or changes for, stakeholders including citizens and service users. It could be immediately or over the course of a year or longer. 1.3 Delivering defined outcomes on a sustainable basis within the resources that will be available. 1.4 Identifying and managing risks to the achievement of outcomes. 1.5 Managing service users’ expectations effectively with regard to determining priorities and making the best use of the resources available. 2.1 Considering and balancing the combined economic, social, and environmental impact of policies, plans and decisions when taking decisions about service provision. 2.2 Taking a longer-term view with regard to decision making, taking account of risk and acting transparently where there are potential conflicts between the organisation’s intended outcomes and short-term factors such as the political cycle or financial constraints. 2.3 Determining the wider public interest associated with balancing conflicting interests between achieving the various economic, social, and environmental benefits, through consultation where possible, in order to ensure appropriate trade-offs. 2.4 Ensuring fair access to services. D. Determining the interventions necessary to optimise the achievement of the intended outcomes Page 367 of 418
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15 D1. DETERMINING INTERVENTIONS D2. PLANNING INTERVENTIONS D3. OPTIMISING ACHIEVEMENT OF INTENDED OUTCOMES 1.1 Ensuring decision makers receive objective and rigorous analysis of a variety of options indicating how intended outcomes would be achieved and including the risks associated with those options. Therefore ensuring best value is achieved however services are provided. 1.2 Considering feedback from citizens and service users when making decisions about service improvements or where services are no longer required in order to prioritise competing demands within limited resource available including people, skills, land, and assets and bearing in mind future impacts. 2.1 Establishing and implementing robust planning and control cycles that cover strategic and operational plans, priorities, and targets. 2.2 Engaging with internal and external stakeholders in determining how services and other courses of action should be planned and delivered. 2.3 Considering and monitoring risks facing each partner when working collaboratively including shared risks. 2.4 Ensuring arrangements are flexible and agile so that the mechanisms for delivering outputs can be adapted to changing circumstances. 2.5 Establishing appropriate key performance indicators (KPIs) as part of the planning process in order to identify how the performance of services and projects is to be measured. 2.6 Ensuring capacity exists to generate the information required to review service quality regularly. 2.7 Preparing budgets in accordance with organisational objectives, strategies, and the medium-term financial plan. 2.8 Informing medium and long-term resource planning by drawing up realistic estimates of revenue and capital expenditure aimed at developing a sustainable funding strategy. 3.1 Ensuring the medium term financial strategy integrates and balances service priorities, affordability, and other resource constraints. 3.2 Ensuring the budgeting process is all-inclusive, taking into account the full cost of operations over the medium and longer term. 3.3 Ensuring the medium-term financial strategy sets the context for ongoing decisions on significant delivery issues or responses to changes in the external environment that may arise during the budgetary period in order for outcomes to be achieved while optimising resource usage. 3.4 Ensuring the achievement of ‘social value’ through service planning and commissioning. E. Developing the entity’s capacity, including the capability of its leadership and the individuals within it E1. DEVELOPING THE ENTITY’S CAPACITY E2. DEVELOPING THE CAPABILITY OF THE ENTITY’S LEADERSHIP AND OTHER INDIVIDUALS 1.1 Reviewing operations, performance and use of assets on a regular basis to ensure their continuing effectiveness. 1.2 Improving resource use through appropriate application of techniques such as benchmarking and other options in order to determine how the authority’s resources are allocated so that outcomes are achieved effectively and efficiently. 1.3 Recognising the benefits of partnerships and collaborative working where added value can be achieved. 1.4 Developing and maintaining an effective workforce plan to enhance the strategic allocation of resources. 2.1 Developing protocols to ensure that elected and appointed leaders negotiate with each other regarding their respective roles early on in the relationship and that a shared understanding of roles and objectives is maintained. 2.2 Publishing a statement that specifies the types of decisions that are delegated and those reserved for the collective decision making of the governing body. 2.3 Ensuring the leader and the chief executive have clearly defined and distinctive leadership roles within a structure, whereby the chief executive leads the authority in implementing strategy and managing the delivery of services and other outputs set by members and each provides a check and a balance for each other’s authority. 2.4 Developing the capabilities of members and senior management to achieve effective shared leadership and to enable the organisation to respond successfully Page 368 of 418
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16 to changing legal and policy demands as well as economic, political, and environmental changes and risks by - ensuring members and staff have access to appropriate induction tailored to their role and that ongoing training and development matching individual and organisational requirements is available and encouraged, ensuring members and officers have the appropriate skills, knowledge, resources, and support to fulfil their roles and responsibilities and ensuring that they are able to update their knowledge on a continuing basis, and ensuring personal, organisational and system-wide development through shared learning, including lessons learnt from both internal and external governance weaknesses. 2.5 Ensuring that there are structures in place to encourage public participation. 2.6 Taking steps to consider the leadership’s own effectiveness and ensuring leaders are open to constructive feedback from peer review and inspections. 2.7 Holding staff to account through regular performance reviews which take account of training or development needs. 2.8 Ensuring arrangements are in place to maintain the health and wellbeing of the workforce and support individuals in maintaining their own physical and mental wellbeing F. Managing risks and performance through robust internal control and strong public financial management F1. MANAGING RISK F2. MANAGING PERFORMANCE F3. ROBUST INTERNAL CONTROL F4. MANAGING DATA F5. STRONG PUBLIC FINANCIAL MANAGEMENT 1.1 Recognising that risk management is an integral part of all activities and must be considered in all aspects of decision making. 1.2 Implementing robust and integrated risk management arrangements and ensuring that they are working effectively. 1.3 Ensuring that responsibilities for managing individual risks are clearly allocated. 2.1 Monitoring service delivery effectively including planning, specification, execution, and independent post- implementation review. 2.2 Making decisions based on relevant, clear objective analysis and advice pointing out the implications and risks inherent in the organisation’s financial, social, and environmental position and outlook. 2.3 Ensuring an effective scrutiny or oversight function is in place which encourages constructive challenge and debate on policies and objectives before, during and after decisions are made thereby enhancing the organisation’s performance 3.1 Aligning the risk management strategy and policies on internal control with achieving objectives. 3.2 Evaluating and monitoring risk management and internal control on a regular basis. 3.3 Ensuring effective counter fraud and anti-corruption arrangements are in place. 3.4 Ensuring additional assurance on the overall adequacy and effectiveness of the framework of governance, risk management, and control is provided by the internal auditor. 3.5 Ensuring an audit committee or equivalent group or function which is independent 4.1 Ensuring effective arrangements are in place for the safe collection, storage, use and sharing of data, including processes to safeguard personal data. 4.2 Ensuring effective arrangements are in place and operating effectively when sharing data with other bodies. 4.3 Reviewing and auditing regularly the quality and accuracy of data used in decision making and performance monitoring. 5.1 Ensuring financial management supports both long-term achievement of outcomes and short-term financial and operational performance. 5.2 Ensuring well-developed financial management is integrated at all levels of planning and control, including management of financial risks and controls. Page 369 of 418
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17 and that of any organisation for which it is responsible. OR (for a committee system) Encouraging effective and constructive challenge and debate on policies and objectives to support balanced and effective decision making. 2.4 Providing members and senior management with regular reports on service delivery plans and on progress towards outcome achievement. 2.5 Ensuring there is consistency between specification stages (such as budgets) and post- implementation reporting (e.g. financial statements). of the executive and accountable to the governing body: provides a further source of effective assurance regarding arrangements for managing risk and maintaining an effective control environment, and that its recommendations are listened to and acted upon. G. Implementing good practices in transparency, reporting, and audit to deliver effective accountability G1. IMPLEMENTING GOOD PRACTICE IN TRANSPARENCY G2. IMPLEMENTING GOOD PRACTICE IN REPORTING G3. ASSURANCE AND EFFECTIVE ACCOUNTABILITY 1.1 Writing and communicating reports for the public and other stakeholders in an understandable style appropriate to the intended audience and ensuring that they are easy to access and interrogate. 1.2 Striking a balance between providing the right amount of information to satisfy transparency demands and enhance public scrutiny while not being too onerous to provide and for users to understand. 2.1 Reporting at least annually on performance, value for money, and the stewardship of its resources. 2.2 Ensuring members and senior management own the results. 2.3 Ensuring robust arrangements for assessing the extent to which the principles contained in the Framework have been applied and publishing the results on this assessment including an action plan for improvement and evidence to demonstrate good governance (annual governance statement). 2.4 Ensuring that the Framework is applied to jointly managed or shared service organisations as appropriate. 2.5 Ensuring the performance information that accompanies the financial statements is prepared on a consistent and timely basis and the statements allow for comparison with other similar organisations. 3.1 Ensuring that recommendations for corrective action made by external audit are acted upon. 3.2 Ensuring an effective internal audit service with direct access to members is in place which provides assurance with regard to governance arrangements and recommendations are acted upon. 3.3 Welcoming peer challenge, reviews and inspections from regulatory bodies and implementing recommendations. 3.4 Gaining assurance on risks associated with delivering services through third parties and that this is evidenced in the annual governance statement. 3.5 Ensuring that when working in partnership, arrangements for accountability are clear and that the need for wider public accountability has been recognised and met. Page 370 of 418
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18 Appendix B: North Lanarkshire Council local code of governance review programme Each of the specific elements and mechanisms which form the council’s local code of governance (as outlined on pages 7 to 12) have been aligned to the 7 principles (and 21 sub principles) within the international and local government Frameworks. These are detailed below along with hyperlinks to the relevant documentation, an update on the review timeframe and date of next update (where appropriate), and an assessment of the current position. Based on this assessment each element and mechanism has been assigned a RAG status. Taking into consideration the impact of the coronavirus (COVID-19) pandemic, this aims to ensure all elements and mechanisms are as up to date as they require to be while providing a method by which to identify and prioritise items requiring to be reviewed and updated further. Definitions supporting the RAG status are noted in the table below: Red The element or mechanism was last updated prior to January 2020 and there is an annual requirement to do so or there has been a change in legislation which necessitates a review and update, but no commitment has been identified to ensure this is updated. Amber Although the element or mechanism has been updated, it has not been reviewed or updated within the COVID-19 recovery environment to reflect any changes required in service delivery or to ensure continued compliance with good governance. There is, however, a commitment by a member of the Corporate Management Team to do so during 2022/23. Green The element or mechanism was updated after January 2020, or there is no requirement for a further update at this time, or work to review and refresh this item is already recorded on the Programme of Work for 2022/23, or Corporate Management Team have already identified that the item requires to be reviewed and updated during 2022/23. Elements and mechanisms in the North Lanarkshire Council local code of governance Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Standing Orders Local authorities are corporate bodies created by statute and must make corporate decisions. Legislation allows local authorities to delegate most decision making to committees, sub-committees, or officers. This means that committees only operate within the remits given to them by their council. The council has delegated certain matters to committees, sub-committees and officers, and the Standing Orders set out the rules which apply to the running and operation of council and its committee meetings. October 2018: https://mars.northlanarkshire.gov.uk/egenda/images/att88879.pdf A review of the Standing Orders was carried out in October 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att92238.pdf. This was followed in August 2020 by an amendment approved to the Standing Orders to permit the council and its committees to meet by remote access. At this time the Standing Orders were changed and an annex was incorporated: https://mars.northlanarkshire.gov.uk/egenda/images/att94286.pdf. Standing Orders are published on the council’s website: https://www.northlanarkshire.gov.uk/your-council/how-the-council-works/standing- orders-and-scheme-of-administration Latest version: August 2020 Review timeframe: Changes to Standing Orders are led by Elected Members who can propose amendments as they wish; these require approval at a meeting of the Council prior to adoption. Assessment: Standing Orders are subject to regular review to determine if they remain fit for purpose and to identify any revisions required to further improve the efficient operation of the council’s decision making process. Following the local government elections in May 2022 and the new governance arrangements approved for the council on 9th June 2022, a cross- party review of Standing Orders will be undertaken during 2022. Standing Orders may be subject to further change following the conclusion of the review. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Financial Regulations and Scheme of Financial Delegation Financial Regulations are an integral part of the council’s framework of internal financial controls; these are designed to ensure the effective stewardship of North Lanarkshire Council funds. Compliance with these regulations will ensure that public money is safeguarded and properly accounted for, and all council 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. November 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97301.pdf Latest version: November 2021 Review timeframe: An annual review process is in place to ensure that both the Financial Regulations and Scheme of Financial Delegation remain appropriate for the effective stewardship of the council’s financial resources. Assessment: Financial regulations are subject to regular review. Key changes made to the Financial Regulations following the most recent review in November 2021, and the rationale for each change, are listed in the accompanying committee report. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Scheme of Administration The Scheme of Administration provides the details and different functions of committees and other groups of each council and the delegation of authority to carry out the functions of the council. It sets out the terms of reference for committees, sub- committees, and panels of the council. At its meeting on 9th June 2022, the Council approved new governance arrangements and the Scheme of Administration: https://mars.northlanarkshire.gov.uk/egenda/public/kab190.pl?meet=226&cmte=COU The Scheme of Administration is published on the council’s website: https://www.northlanarkshire.gov.uk/your-council/how-the-council-works/standing- orders-and-scheme-of-administration Latest version: June 2022 Review timeframe: The Scheme of Administration is reviewed following every local government election. Officers and Elected Members can propose amendments as they wish throughout each term; these require approval at a meeting of the Council prior to adoption. Assessment: Following the local government elections in May 2022, an updated Scheme of Administration was approved in June 2022. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Committee arrangements Latest version: June 2022 Head of Legal and ✓ ✓ ✓ ✓ ✓ Page 371 of 418
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19 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Committee arrangements support the implementation of the Scheme of Administration, for example through a timetable of meetings. At its meeting on 9th June 2022, the Council approved new governance arrangements - including the timetable of meetings to end of 2022/23: https://mars.northlanarkshire.gov.uk/egenda/public/kab190.pl?meet=226&cmte=COU Review timeframe: The Scheme of Administration is reviewed following every local government election. Officers and Elected Members can propose amendments as they wish throughout each term; these require approval at a meeting of the Council prior to adoption. Assessment: Following the local government elections in May 2022, an updated Scheme of Administration was approved in June 2022. This included a timetable of meetings to the end of 2022/23. RAG: Democratic Solutions Scheme of Delegation to Officers The Scheme of Delegation sets out the powers delegated by the Council to officers, pursuant to the Local Government (Scotland) Act 1973. The Scheme is intended to facilitate the efficient conduct of council business by clearly setting out the nature and extent of the powers delegated to officers by the Council. In exercising any delegated function, the nominated officer will take account of any appropriate council practice or procedure, any managerial instruction given, and any other similar consideration. The Scheme of Delegation to Officers is subject to: 1. The policies adopted by the council. 2. Appropriate provision for financial outlays having been made in the estimates for the current year. 3. The right of an officer to consult with the Chief Executive on any matter or to refer any matter to the appropriate committee or sub-committee of the council. 4. The obligation on the Chief Executive and on each Chief Officer to arrange consultations with individual local Members on matters which affect their areas in all cases in which the council practice or procedures so require. 5. The requirement that the Chief Executive and all Chief Officers observe the principles of corporate management. 6. Statutory authority granted only to certain officers. April 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90599.pdf The Scheme of Delegation to Officers is published on Connect: http://connect/index.aspx?articleid=9566 Latest version: April 2019 Review timeframe: As a matter of practice, the Scheme of Delegations to Officers is reviewed following any organisational change or restructure. Assessment: The latest changes, approved in April 2019, reflect changes to the organisational structure implemented in September 2018. As the council’s Monitoring Officer, the Head of Legal and Democratic Solutions, has delegated authority to update the Scheme of Delegation to Officers as necessary in line with statutory changes and organisational requirements. A further review and refresh of the Scheme of Delegation to Officers will be undertaken during 2022 following the restructure changes approved through the Delivering for Communities report in December 2020. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ ✓ Code of Conduct for Chief Officers This 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. November 2017: https://mars.northlanarkshire.gov.uk/egenda/images/att87046.pdf Latest version: November 2017 Review timeframe: As required based on organisational changes and to reflect updates in respect of legislation, best practice, and government guidance. Assessment: Specific amendments made in 2017 provided greater detail relating to the role and responsibilities of all Chief Officers in relation to the media and provided clarity in relation to specific areas of work undertaken by Chief Officers which match the operating procedures in place. Review and update scheduled to be undertaken during 2022/23. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ Chief Officers Register of Interests A process to register the interests of Chief Officers was implemented in November 2017: https://mars.northlanarkshire.gov.uk/egenda/images/att87047.pdf To comply with this, Chief Officers are required to detail any other renumeration they receive, property they may own, memberships of clubs and associations or any other financial interests (for example directorships or shareholdings), they may have. Registers are published on the council’s website: https://www.northlanarkshire.gov.uk/your-council/how-council-works/chief-officers- register-interests Latest version: Registers and council website last updated in May 2022. Review timeframe: Annual. Assessment: Annual process in place which is co- ordinated by the Depute Monitoring Officer in Legal and Democratic Solutions (as that postholder does not require to register their interests within the Chief Officers Register of Interests). RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ Statutory officer posts • The post of head of paid service (the chief executive) was established under the Local Government and Housing Act 1989 and is responsible to councillors for the staffing of the council and ensuring the work in different departments is co- ordinated. • The monitoring officer was established under the Local Government and Housing Act 1989 and is responsible for ensuring that the council observes its governance arrangements and operates legally. This includes reporting on the legality of Latest version: Ongoing statutory obligation Review timeframe: N/A Assessment: All statutory posts are currently filled. RAG: Chief Executive / Head of Legal and Democratic Solutions / Head of Financial Solutions / / Head of Children, Families, and Justice ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 372 of 418
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20 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 matters, mal-administration, and the conduct of councillors and officers. • The chief financial officer (section 95 officer or the senior financial officer) was established under the Local Government (Scotland) Act 1973 and is responsible for the financial affairs of the council. • The chief social work officer was established under the Social Work (Scotland Act) 1968. Councils are required to appoint a professionally qualified chief social work officer to provide members and senior officers with effective, professional advice about the delivery of social work services. There are also a number of other statutory posts across services in line with legislation. Employee Code of Conduct The Code of Conduct is the standard which is applicable to all employees. While Chief Officers have additional responsibilities, and many other professions within the council work to dedicated professional standards (e.g. teaching or social care), the Employee Code of Conduct should be considered as the foundation of the high standards applicable to all. An introduction and commitment from the Chief Executive reinforces this view. • March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95750.pdf • Available to employees on MyNL: https://mynl.co.uk/wpfd_file/employee-code-of- conduct/ Latest version: March 2021 Review timeframe: Annual Assessment: The latest version of the Employee Code of Conduct was approved in March 2021. This followed changes to the Homeworking Scheme (Interim), introduced in September 2020 in direct response to the pandemic, and reflected the associated changes proposed to the Employee Code of Conduct and Acceptable use of ICT policies. RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ ✓ Conflicts of Interest Register When an employee identifies a potential conflict of interest, they must complete the relevant form after discussion with their line manager. Employees must then submit the form to their Head of Service. This must be done as soon as possible and within one month of the conflict or potential conflict of interest. A new section in this respect was introduced to the Employee Code of conduct in May 2018: https://mars.northlanarkshire.gov.uk/egenda/images/att87964.pdf Links were also inserted to the relevant register on Connect: http://connect/index.aspx?articleid=20697 Latest version: February 2022 Review timeframe: Bi-annual Assessment: In May 2018, the conflicts of interest procedures was updated in the Employee Code of Conduct. A process is in place whereby Heads of Service are required to submit their up to date registers twice a year for all their staff for independent review and reporting to the CMT. A report is submitted to CMT annually to provide an update in this respect - the latest report was submitted in February 2022. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ Gifts and Hospitality Register Employees are required to advise their line manager of any gifts or hospitality received by them, or offered to them, in the course of their employment with the council. After discussing any gifts or hospitality received (or offered) with their line manager, employees must complete and submit the relevant form to their Head of Service. This must be done as soon as possible and within one month of being offered the gift or hospitality. Further details on what should be recorded were included in the updated version of the Employee Code of Conduct in May 2018: https://mars.northlanarkshire.gov.uk/egenda/images/att87964.pdf Links were also inserted to the relevant register on Connect: http://connect/index.aspx?articleid=20697 Latest version: February 2022 Review timeframe: Bi-annual Assessment: In May 2018, procedures for gifts and hospitality were updated in the Employee Code of Conduct. A process is in place whereby Heads of Service are required to submit their up to date registers twice a year for all their staff for independent review and reporting to the CMT. A report is submitted to CMT annually to provide an update in this respect - the latest report was submitted in February 2022. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ Councillors Code of Conduct The Ethical Standards in Public Life etc. (Scotland) Act 2000 introduced a new ethical framework for public life in Scotland. The Code of Conduct for Councillors came into effect in May 2003. All Councillors elected to local authorities in Scotland must follow this statutory code of conduct when carrying out their public duties. This code is published on the council’s website: https://www.northlanarkshire.gov.uk/your-council/councillors-and- committees/your-councillor/councillors-code-conduct The Code of Conduct for Councillors 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 was published in December 2021: https://www.standardscommissionscotland.org.uk/codes-of-conduct/councillors-code- of-conduct Latest version: December 2021 Review timeframe: Review timeframes are set by the Scottish Government as they are responsible for setting the Councillors Code of Conduct. Assessment: In 2020, the Scottish Government held a consultation on a review of the Councillors' Code of Conduct to seek views from relevant stakeholders and members of the public. The council and the Standards Commission for Scotland provided feedback as part of this exercise. Following this exercise, a new code was published on 7th December 2021. The new code and relevant guidance was shared with new and returning Elected Members in May 2022, with training provided on the content. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ Councillors registered interests Under The Ethical Standards in Public Life etc (Scotland) Act 2000 (Register of Interests) Regulations 2003, Councillors and other committee members are required to give notice of any registrable interests. The list of registrable interests for each Elected Member is updated on the Councillor’s Information System and published on the council’s website: Latest version: Ongoing statutory obligation set out in the Councillor’s Code of Conduct Review timeframe: Any changes to the process will be advised nationally in line with the guidance issued by the Standards Commission. Assessment: Upon taking up their position as an Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ Page 373 of 418
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21 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 https://www.northlanarkshire.gov.uk/your-council/councillors-and-committees/your- councillor/councillors-registered-interests Elected Member, Councillors are required to give notice to the Monitoring Officer of any registrable interests at that point and for the previous 12 months. Thereafter Elected Members are legally required to inform the council’s Monitoring Officer of any changes to their registrable interests within four weeks of the change taking place. Following the local government elections in May 2022 there was an obligation on every Elected Member to complete and sign their register within 4 weeks of being elected. RAG: Declarations of interest Standing agenda item number 1 on all agendas for Council and Committee meetings is Declarations of Interest in terms of the Ethical Standards in Public Life Etc. (Scotland) Act 2000. Any declarations made are recorded in the minutes. Latest version: Ongoing statutory obligation set out in the Councillor’s Code of Conduct Review timeframe: Any changes to the process will be advised nationally in line with the guidance issued by the Standards Commission. Assessment: Agenda / minutes of all committee meetings show declarations of interest are sought, and appropriate declarations are made and recorded. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Open and transparent decision making Dedicated section on the council’s website provides the public with information on each of the local Elected Members, the official council roles, minutes / agendas / reports on MARS from committee meetings, standing orders and scheme of administration, and a link to webcasts of committee meetings on You Tube. March 2022: https://www.northlanarkshire.gov.uk/your-council/councillors-and- committees Latest version: Live pages Review timeframe: Ongoing Assessment: Web pages continually updated as and when new information becomes available. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Corporate Anti-Fraud Policy and Response Plan An Anti-Fraud Policy and Fraud Response Plan is in place which sets out the council’s expectations (which extend to all individuals and organisations with whom it deals) in terms of acting honestly and with integrity and in safeguarding public resources. June 2017: https://mars.northlanarkshire.gov.uk/egenda/images/att86106.pdf Latest version: June 2017 Review timeframe: A periodic review was undertaken of the Corporate Anti-Fraud Policy and Fraud Response Plan in June 2017. The review was undertaken to ensure that the document remains consistent with good practice and continues to properly reflect how the council responds to fraud following staffing and organisational changes since the policy was last reviewed. The revised document reflects changes to specific posts, organisational structures, and revised management arrangements for certain types of fraud. Assessment: An Internal Audit review in May 2020 (https://mars.northlanarkshire.gov.uk/egenda/image s/att94222.pdf) recommended that current corporate anti-fraud policies and arrangements should be reviewed and any identified actions necessary should be implemented to ensure the council’s arrangements are more fully consistent with recognised good practice. A review is scheduled to be undertaken during 2022/23 in this respect. RAG: Head of Audit and Risk ✓ ✓ ✓ ✓ Whistleblowing Procedure (Public Interests Disclosure) The council’s Whistleblowing Procedure 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. • Procedure - March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97980.pdf • Available for employees to access on Connect: http://connect/index.aspx?articleid=3937 Latest version: March 2022 Review timeframe: Annual Assessment: Latest review in March 2022 was undertaken on the use of the Whistleblowing Procedure and to identify any amendments required to the Procedure. The updated Procedure was approved at Committee in March 2022. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ The Plan for North Lanarkshire • February 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90076.pdf • Published on the website: https://www.northlanarkshire.gov.uk/your-council/council- strategies-and-plans/council-strategies/plan-north-lanarkshire • Place based regeneration investment programme of work - March 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att93588.pdf • Update on level 1 health check indicators and progress against Programme of Work, March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95824.pdf • Place based regeneration investment programme of work - The Place The Vision, Latest version: Long-term vision approved in February 2019. Review timeframe: Annual Assessment: Annual Programme of Work in place as the delivery mechanism. Latest council wide updates in terms of delivery and progress were reported through The Place The Vision report in September 2021 and within the Programme of Work report for 2022/23 in March 2022. Chief Executive ✓ ✓ ✓ ✓ ✓ ✓ Page 374 of 418
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22 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96933.pdf • Update on level 1 health check indicators and progress against Programme of Work, March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97996.pdf RAG: Programme of Work • Inaugural Programme of Work approved in March 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90396.pdf • Programme of Work for 2020 and beyond approved in March 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att93774.pdf • Programme of Work for 2021/22 approved in March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95824.pdf • Programme of Work for 2022/23 approved in March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97996.pdf Latest version: Programme of Work for 2022/23 approved in March 2022. Review timeframe: Annual update in cycle 1 each year. Assessment: Programme of Work comprises an annual review and assessment process which concludes with a report to committee in cycle 1 each year. CMT strategic planning session in April 2022 further reviewed the Programme of Work arrangements and contents and identified future developments required therein. The next annual update is scheduled to be reported to committee in cycle 1 of 2023. RAG: Chief Executive ✓ ✓ ✓ ✓ ✓ ✓ ✓ Strategic Policy Framework • Inaugural Strategic Policy Framework approved in September 2018: https://mars.northlanarkshire.gov.uk/egenda/images/att88711.pdf • Update provided to the Audit and Scrutiny Panel in September 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94661.pdf • Update provided to the Audit and Scrutiny Panel in September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96915.pdf • Refreshed Strategic Policy Framework approved in March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97995.pdf Latest version: Most recent update following annual review and refresh process was approved at committee in March 2022. Review timeframe: Annual. Assessment: The Strategic Policy Framework is key in supporting the council’s Programme of Work and, as such, is subject to an annual review and refresh process to ensure the council’s strategies, policies, and plans are kept up to date, aligned to The Plan for North Lanarkshire, and reflect policy and legislation changes, as appropriate. The next annual update of the Strategic Policy Framework is scheduled to be reported to committee in cycle 1 of 2023. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Strategic Performance Framework • Approved in February 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90076.pdf • Detail reported in September 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att92050.pdf Pilot reports to service committees August/September 2021: • Regulatory Services and Waste Solutions - https://mars.northlanarkshire.gov.uk/egenda/images/att96782.pdf • Financial Solutions - https://mars.northlanarkshire.gov.uk/egenda/images/att96958.pdf • Business Solutions - https://mars.northlanarkshire.gov.uk/egenda/images/att96716.pdf Follow up six monthly reports to service committees February/March 2022: • Regulatory Services and Waste Solutions - https://mars.northlanarkshire.gov.uk/egenda/images/att97662.pdf • Financial Solutions - https://mars.northlanarkshire.gov.uk/egenda/images/att97666.pdf • Business Solutions - https://mars.northlanarkshire.gov.uk/egenda/images/att97665.pdf • Environmental Assets - https://mars.northlanarkshire.gov.uk/egenda/images/att97663.pdf Latest version: March 2022 Review timeframe: Six monthly reporting for service committees. Assessment: Positive feedback received from pilot reporting to service committees so this is being rolled out for all heads of service’s responsibilities within the Strategic Performance Framework. The Strategic Performance Framework is key in supporting the council’s Programme of Work and, as such, is subject to a regular review and refresh process to ensure it remains aligned to The Plan for North Lanarkshire. The next update of the Strategic Performance Framework is scheduled to be reported to committee in cycle 4 of 2022. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ Strategic Performance Framework reporting schedule • Update on level 1 health check indicators and progress against Programme of Work, March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95824.pdf • Reporting Schedule - March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95860.pdf • Update on level 1 health check indicators and progress against Programme of Work, March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97996.pdf Latest version: March 2022. Review timeframe: Annual Assessment: Annual performance reporting schedule includes a list of service/statutory and Strategic Performance Framework reporting for 2021/22. This includes six monthly ALEO performance reports submitted by Heads of Service from the relevant client service. An update on the Strategic Performance Framework reporting schedule is underway to be reported to committee in cycle 4 of 2022/23. RAG: Head of Business and Digital / all Heads of Service ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Strategic Governance Framework • Initial Strategic Governance Framework approved in February 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att92927.pdf Latest version: Most recent update following annual review and refresh process was approved at committee in September 2021. Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 375 of 418
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23 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 • Update provided to the Audit and Scrutiny Panel in September 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94661.pdf • Update provided to the Audit and Scrutiny Panel in September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96915.pdf • Refreshed Strategic Governance Framework approved in September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96686.pdf Review timeframe: Review and update undertaken annually in order to inform the production of the Annual Governance Statement Assessment: The Strategic Governance Framework is key in supporting the council’s Programme of Work and, as such, is subject to an annual review and refresh process to ensure ongoing alignment to The Plan for North Lanarkshire, and to inform the production of the Annual Governance Statement. The next annual update of the Strategic Governance Framework is scheduled to be reported to committee in cycle 3 of 2022. RAG: Annual Governance Statement Annual Governance Statement reported in June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96418.pdf Latest version: Annual Governance Statement for 2020/21 reported to the Audit and Scrutiny Panel in June 2021 Review timeframe: Annual Assessment: Annual Governance Statement requires to be produced each year in line with the Delivering Good Governance in Local Government: Framework and included in the annual accounts each year in line with The Local Authority Accounts (Scotland) Regulations 2014. Statement for 2021/22 was presented to CMT in June 2022 to allow for inclusion in unaudited Annual Accounts for 2021/22 and submission to external auditors by end June 2022. RAG: Chief Executive / Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Project Management Model Launched in April 2018, the council’s Project Management Model aims to ensure a systematic approach across the organisation by providing a corporate framework and guidance that enables each stage of delivery towards achieving the overall objectives of a project to be planned, guided, implemented, and governed. • Guidance and templates on Connect: http://connect/index.aspx?articleid=20087 • Update provided to the Audit and Scrutiny Panel in November 2019 in terms of governance arrangements for the project management model: https://mars.northlanarkshire.gov.uk/egenda/images/att92361.pdf • Updated provided to the Audit and Scrutiny Panel in September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96915.pdf Latest version: Update provided to the Audit and Scrutiny Panel in September 2021. Review timeframe: Annual Assessment: The Project Management Model is key in supporting the council’s Programme of Work and, as such, is subject to an annual review and refresh process to ensure ongoing alignment to The Plan for North Lanarkshire. An annual review is currently underway and nearing completion; this is expected to conclude with a report to CMT in September 2022. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Strategic Self-Evaluation Framework • Approved in February 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90076.pdf • Update provided to the Audit and Scrutiny Panel in September 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94661.pdf • Refreshed Strategic Self-Evaluation Framework was presented to the Audit and Scrutiny Panel in September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96743.pdf Latest version: Refreshed Strategic Self-Evaluation Framework and rolling review programme presented to the Audit and Scrutiny Panel in September 2021. Review timeframe: Annual Assessment: The Strategic Self-Evaluation Framework is key in supporting the council’s Programme of Work and, as such, is subject to an annual review and refresh process to ensure improvement actions remain aligned to The Plan for North Lanarkshire. The annual update of the Strategic Self-Evaluation Framework is scheduled to be reported to committee in cycle 4 of 2022. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Financial Strategy As the overarching framework that establishes the financial strategies and policies which ensure effective financial governance, planning, and management, this sets out the responsibility for safeguarding public funds within North Lanarkshire Council and the role of the Section 95 Officer. The strategies and policies covered by the Financial Strategy are the Capital Strategy, Treasury Management Strategy, Revenue Budget Strategy, Medium-Term Financial Plan, and the Financial Regulations and Scheme of Financial Delegation. June 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90922.pdf (updated hyperlink to reflect the August 2022 review process to be added when available) Latest version: August 2022 Review timeframe: The strategies and policies covered by the Financial Strategy are set out therein along with timescales for further review. All have an annual review frequency. Assessment: All strategies and policies covered by the Financial Strategy are shown separately in this table. The Financial Strategy itself was reviewed in August 2022 and, as reported to the Corporate Management Team, it was concluded that the Strategy remains relevant in its current form and therefore no further update requires to be reported to committee at this time. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 376 of 418
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24 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Treasury Management Strategy Each year, in line with the CIPFA Code of Practice on Treasury Management, the council produces a Treasury Management Strategy. The Treasury Strategy Statement sets out the policies, practices, and activities undertaken by the council in compliance with the Code. It covers the council’s debt and investment projections, expected movement in interest rates, council borrowing and investment strategies, policy on repayment of loans funds advances, and treasury management and prudential indicators. March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95752.pdf Treasury Management monitoring reports are submitted to committee quarterly. This fulfils the requirements in accordance with the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities. It informs on Treasury Management activity for the latest quarter and compliance with the mandatory treasury and prudential indicators. November 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97306.pdf The Treasury Management Annual Activity report also fulfils the key requirements 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 the latest financial year and the resulting impact on the council’s borrowing and investment strategy. It also reports on the council’s performance in complying with the mandatory prudential indicators, and provides a detailed summary of performance, making reference to those targets and prudential indicators set at the start of the year within the approved strategy. September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96857.pdf Latest version: March 2021 Review timeframe: Annual Assessment: The latest version of the Treasury Management Strategy approved in March 2021 covers the period from 2021 to 2022. This report fulfils the key requirements of the Local Government Act 2003 in that it outlines the Treasury Management Strategy for 2021/22 in accordance with the CIPFA Code of Practice on Treasury Management, and reports on the treasury and prudential indicators as required by the above code and the CIPFA Prudential Code for Capital Finance in Local Authorities. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Reserves Policy To support the commitments made by both the Financial Strategy and Revenue Resources Budget Strategy, a Reserves Policy was approved in January 2020. The policy is subject to annual review to ensure available balances are managed and utilised in accordance with effective governance principles and continue to support financial plans which are affordable and sustainable. Any significant amendments to the policy are reported to committee. January 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att92779.pdf Latest version: January 2020 Review timeframe: Annual Assessment: The Reserves Policy was approved in January 2020. The annual review process in January 2021 and January 2022 identified no further changes and concluded that the original Reserves Policy remained valid and therefore no further update was required at the time. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Revenue Resources Budget Strategy To facilitate a more strategic approach to establishing budgets and associated savings options, a Revenue Resources Budget Strategy was approved in June 2019. This set out the rationale for the development of a revised approach to budgeting and the identification of future savings. It sets out guiding principles and an outline framework to develop the Strategy to ensure alignment with The Plan for North Lanarkshire. • June 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90956.pdf The Revenue Resources Budget Strategy has been reviewed and updated annually since. • June 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94063.pdf • June 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att96162.pdf Latest version: June 2021 Review timeframe: Annual Assessment: The Revenue Resources Budget Strategy was approved in June 2019. An update was provided in June 2020 and June 2021 given the significantly increased financial risks the council faces in both responding to and recovering from the pandemic. The latest update report also set out some of the high level challenges faced by the council and how these will need to be addressed in line with the Revenue Resources Budget Strategy. The Revenue Resources Budget Strategy is key in supporting the council’s Programme of Work and, as such, an annual update on the ongoing development and implementation of the Revenue Resources Budget Strategy is scheduled to be undertaken and reported to committee in cycle 3 of 2022. Update reports will also be provided to committee in cycle 3 of 2022 and cycle 1 of 2023 on the implementation of savings. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 4-weekly revenue monitoring reports The council’s Revenue budget is subject to close monitoring throughout the financial year, with service’s reporting their own position to their relevant Service Committees and Management Teams. A council Summary report is prepared on a 4-weekly basis and consolidates the budget monitoring position of all General Fund Services, along with the Housing Revenue Account, and Adult Health and Social Care. This report highlights and explains major variances as per the council’s approved Financial Regulations and is reported to both the CMT and committee. Revenue monitoring reports are standing items on the CMT agenda. Revenue Monitoring Report Council Summary 1 April 2021 to 7 January 2022 (Period 10), March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97879.pdf A consolidated council annual Provisional Outturn Revenue monitoring report is provided to CMT each year. This updates CMT on the overall position for the General Latest version: Period end report in March 2022 and annual report for 2020/21 in September 2021 Review timeframe: As at each period end and as at the year end. Assessment: Revenue budget monitoring reports are submitted to committees each cycle throughout the year and at the year end. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 377 of 418
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25 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Fund Account, Housing Revenue Account, and Adult Health and Social Care for the financial year just ended. This is supported by individual service reports which are reported to Service Committees / Service Management Teams. These reports include analysis of significant budget variations, impact of COVID, budget savings, and earmarked reserves. An Annual Accounts final outturn is reported to committee each year after the completion of the draft accounts. September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96862.pdf Annual Revenue Budget and Council Tax The statutory requirements in relation to budget setting are contained within Section 93 of the Local Government Finance Act 1992. An annual report provides financial information to enable the council to set its Revenue Budget and Council Tax for the year. February 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97910.pdf Latest version: February 2022 Review timeframe: Annual Assessment: Report approved in February 2022 set the Revenue Budget for 2022/23 to 2024/25 and the Council Tax for 2022/23. Setting an updated three year (rolling) budget is key in supporting the council’s Programme of Work and, as such, is scheduled for a report to committee in cycle 1 in each year. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Medium-Term Financial Plan Longer term planning is integral to the council’s Financial Strategy and the council’s strategic approach to budgeting. Effective decision making relies on strong financial planning and the Medium-Term Financial Plan assists in ensuring resources are aligned to the key priorities outlined in The Plan for North Lanarkshire and ensures the Programme of Work is robust, affordable, and sustainable. The Medium-Term Financial Plan reflects the risks which may impact on the council’s ability to continue to provide high quality services focussing on the strategic priorities. The Medium-Term Financial Plan was approved at Committee in September 2019, this is a 5 year rolling plan: https://mars.northlanarkshire.gov.uk/egenda/images/att92055.pdf The plan has subsequently been reviewed and updated annually: October 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94530.pdf September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96882.pdf Taking the previously reported position as the new baseline, the latest plan updates financial planning assumptions in relation to future revenue grant and other funding sources, along with increased cost pressures arising from employee costs, inflation, and policy decisions. A range of risk-based scenarios have been considered, resulting in envisaged, pessimistic and optimistic positions. Latest version: September 2021 Review timeframe: Annual Assessment: The Medium-Term Financial Plan approved in September 2021 covers the period 2022/23 to 2026/27. This provides an update on the five year financial forecast and outlines the challenges facing the council in maintaining medium-term financial stability, while achieving the strategic priorities of the council and reflecting the impact of the pandemic. The Medium-Term Financial Plan is key in supporting the council’s Programme of Work and, as such, an annual review of the planning assumptions in the council’s Medium-Term (five- year) Financial Plan and update of the scenarios relating to the anticipated budget gap from 2023/24 to 2027/28 is scheduled to be undertaken and reported to committee in cycle 3 of 2022. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Capital Strategy Following the publication of the revised Prudential Code for Capital Finance in Local Authorities 2017, there is a requirement for councils to produce a Capital Strategy. The Capital Strategy to 2022/23 was approved in March 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90194.pdf An update in March 2020 reported on the annual review of the strategy: https://mars.northlanarkshire.gov.uk/egenda/images/att93556.pdf which requires to be undertaken in accordance with the Prudential Code requirements. Latest version: March 2020 Review timeframe: Annual Assessment: The annual review of the Capital Strategy approved in March 2020 covers the period to 2022/23. The Capital Strategy is key in supporting the council’s Programme of Work and creating an asset base that supports delivery of The Plan for North Lanarkshire and which delivers on the shared ambitions and the Programme of Work, as such, a review and update of the Capital Strategy is scheduled to be undertaken and reported to committee in cycle 1 of 2023. This update will include a review of the key principles and reflect the requirements of the new Prudential Code for Local Authorities. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Strategic Capital Investment Programme The principles of the council’s strategic capital investment programme are underpinned by the Capital Strategy. Following the review of the Capital Strategy in March 2020, the main principles outlined and adopted within the Strategy remained unchanged apart from minor updates - the Strategic Capital Delivery Group (SCDG) terms of reference were updated to incorporate all capital investment programmes. The principles of the Capital Strategy are adopted in preparing the revised annual Strategic Capital Investment Programme. An update to the Strategic Capital Investment Programme for 2022/23 to 2025/26 was approved at Committee in March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97974.pdf Latest version: March 2022 Review timeframe: Annual Assessment: Strategic Capital Investment Programme approved in March 2022 covers the period from 2022/23 to 2025/26. The Strategic Capital Investment Programme is key in supporting the council’s Programme of Work and, as such, update reports are scheduled to be provided to committee each cycle of 2022/23; this includes elements funded by the Community Investment Fund managed by the Strategic Capital Delivery Group. In addition, an annual Community Investment Fund progress report is scheduled to be reported to committee in cycle 4 of 2022. This will outline updated financial projections linked to emerging Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 378 of 418
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26 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 economic trends. RAG: Strategic Capital Delivery Group (SCDG) terms of reference and governance framework The SCDG is an officer working group convened of senior officers with responsibility for the development and delivery of the council’s long-term capital programme. The Terms of Reference and Governance Framework allow the SCDG to make amendments to the approved capital programme subject to limits, adjustments to the programme to reflect future capital grant allocations, the approval of virement of resources, and additional projects plus the process for reporting decisions and recommendations to committee. September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96942.pdf Latest version: September 2021 Review timeframe: Terms of Reference reviewed in line with the requirements of the Strategic Capital Investment Programme. Assessment: Virement and reprofiling limits were updated and approved at Committee in September 2021 to reflect the increased scale of overall capital investment. The objectives of the Group were updated to reflect the council’s responsibilities within the Community Empowerment (Scotland) Act 2012 and to ensure the Terms of Reference reflected the increased role of project boards in managing and monitoring capital programme activity in accordance with the council’s Project Management Model. The terms and reference and governance framework will be further updated during 2022 to reflect the council’s current management structure. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Strategic Capital Delivery Group (SCDG) Meetings are held each quarter as a minimum. Minutes and meeting papers available. Latest version: Recurring group. Review timeframe: Strategic Capital Delivery Group in operation; chaired by Depute Chief Executive. Assessment: Effectiveness of the group reviewed in line with the council’s Strategic Capital Investment Programme. RAG: Depute Chief Executive / Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Capital monitoring The capital programme is monitored and managed by the council’s Strategic Capital Delivery Group. Consolidated council monitoring reports are prepared regularly and provide an update on the resources and expenditure for the council’s Capital Programmes. The close monitoring facilitates the group’s proper management of the council’s ambitious capital programme, including the realignment of resources to ensure its effective delivery and ensuring resources are directed to where they are most required and informs updates to elected members through committee where appropriate. Capital programme monitoring reports are standing items on the CMT agenda every 4 weeks. These reports include projected outturns, budget variations, savings, earmarked reserves, and commitments. Reports are also submitted to committee each cycle. These provide an update on the latest year’s resources and expenditure for the council's Strategic Capital Investment Programme. The report also shows the latest financial year’s provisional outturn position and the resultant variances as at the period end. Capital Programme 2021/22 Monitoring Report 1 April to 7 January 2022 (Period 10), March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97881.pdf An annual Provisional Outturn Capital Monitoring report is provided to the Strategic Capital Delivery Group (SCDG) each year (latest on 20/05/21). This provides an update on the latest financial year’s resources and expenditure for the council's capital programmes. The report also shows the year end provisional outturn position and the resultant variances. Capital Programme 2020/21 Monitoring Report, May 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96144.pdf Latest version: Period end report in March 2022 and annual report for 2020/21 in May 2021 Review timeframe: As at each period end and as at the year end. Assessment: Capital monitoring reports are submitted to committee each cycle throughout the year and at the year end. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Annual accounts The preparation of the Accounts is a key statutory responsibility for Financial Solutions and the council. The Local Authority Accounts (Scotland) Regulations 2014 require the council to prepare Annual Accounts, section 12 of the Local Government in Scotland Act 2003 requires these to be prepared in accordance with proper accounting practices, primarily the Code of Practice on Local Authority Accounting in the United Kingdom, supported by International Financial Reporting Standards (IFRS), and statutory guidance issued. In the midst of the ongoing pandemic, Local Government Finance Circular 10/2020 was issued, providing flexibility within the Regulations in line with The Coronavirus (Scotland) Act 2020, this included flexibility in the timescales for publication of the Unaudited Accounts and the subsequent approval of the Audited Accounts for 2019/20. The Local Authority (Capital Finance and Accounting) (Scotland) (Coronavirus) Amendment Regulations 2021 subsequently extended this for the Latest version: December 2021 Review timeframe: Annual Assessment: The preparation of the Annual Accounts is a key statutory responsibility for the council. The audited annual Accounts for 2020/21 were approved by the Audit and Scrutiny Panel in December 2021 for signing. The unaudited Annual Accounts for 2021/22 were presented to the external auditors by end June 2022, in line with statutory requirements. RAG: Head of Financial Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 379 of 418
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27 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 publication of the 2020/21 Audited Accounts to 15 November 2021. • Annual Accounts (audited) - December 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att97493.pdf • Annual Accounts are published on the council’s website: https://www.northlanarkshire.gov.uk/your-council/facts-and-figures/annual-accounts Risk Management Strategy The Risk Management Strategy outlines that effective risk management arrangements form an important element of good corporate governance and are designed to ensure that the council operates systematic and logical processes for managing business risks within a comprehensive framework, ensuring that identified risks are managed consistently, effectively, efficiently and coherently across the organisation. March 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att93523.pdf Latest version: March 2020 Review timeframe: 3 year strategy Assessment: Risk Management Strategy approved in March 2020 covers the period 2019/20 to 2021/22. An item within the Strategic Policy Framework, the Risk Management Strategy is scheduled to be updated and reported to committee in cycle 4 of 2022. In addition, reports are scheduled to be submitted to the Audit and Scrutiny Panel each cycle to develop and regularly assess the effectiveness of the risk management arrangements which the council has in place to assist the identification and management of risks, strengthen organisational resilience, improve governance and stakeholder confidence and trust, and increase the likelihood of the council achieving its planned outcomes, priorities, and ambitions and report the results of that assessment to key stakeholders. RAG: Head of Audit and Risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Workforce for the Future Strategy Workforce for the Future Strategy approved in March 2020 covers the period 2020-23. • March 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att92786.pdf This Strategy was subsequently refreshed in June 2021 and realigned in light of the pandemic, which continues to have a major impact on levels of employment and the needs of employers across North Lanarkshire. It also addresses the issue that the pandemic is expected to have adversely affected the wider employment, training, and progression prospects of young people and other residents who have recently been made redundant or may be at risk when the furlough scheme comes to an end. • June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96241.pdf A further update was submitted to committee in March 2022 to reflect the work over the last 8 months and ensure work continues to identify and directly address critical labour market and employment challenges and opportunities across North Lanarkshire. This report saw approval granted for: • Further progression of an NL Employer Charter Scheme, to fully engage businesses in North Lanarkshire as key partners in the labour market recovery. • Further work to deliver accelerated service improvements in processes for tracking young people post-school and engaging more systematically with business on capturing their workforce needs to ensure a fully end to end service delivery capability is in place. • A test of change proposal to engage directly with a new business investing in North Lanarkshire, in an innovative partnership approach which ensures the council plays a key role in supporting that business to build a workforce for the future. March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97969.pdf Latest version: March 2022 Review timeframe: Annual Assessment: The Programme of Work for 2022/23 (P077.1) outlines scheduled updates in respect of the Workforce for the Future Strategy, for a further report to committee in cycle 1 of 2023. RAG: Head of People and Organisational Development ✓ ✓ ✓ Workforce plans Best Value guidance requires that councils demonstrate effective use of resources. In terms of staff this means: • A workforce strategy is in place that sets out expectations on how the local authority’s staff will deliver its vision, priorities, and values. • The strategy is translated into workforce plans, covering employee numbers, skills, knowledge, competencies, and organisational structures that demonstrate how staff will be deployed to deliver the services planned for the future. • Plans are regularly reviewed at appropriate intervals according to a clear review cycle. Latest version: April 2022 Review timeframe: Annual Assessment: Head of Service workforce plans considered at CMT in April 2022. Refinement of plans to be undertaken and council wide summary scheduled to be presented to committee in cycle 3 of 2022. RAG: Head of People and Organisational Development ✓ General Contract Standing Orders (GCSO) GCSO are a legal requirement and provide the powers to control and regulate procurement throughout the council. The GCSO also place requirements on service areas to effectively plan and manage the resulting contracts. • June 2018: https://mars.northlanarkshire.gov.uk/egenda/images/att88119.pdf • The GSCO have subsequently been updated and version 16 - effective from 1 June 2022 - is available on Connect: http://connect/CHttpHandler.ashx?id=48055&p=0 Latest version: The current General Contract Standing Orders (GCSO) were approved at the former Policy and Resources Committee in June 2018. These have subsequently been updated and version 16 - effective from 1 June 2022 - is now available. Review timeframe: The GCSO require to be kept under regular review to ensure they work effectively Head of Asset and Procurement Solutions ✓ ✓ ✓ Page 380 of 418
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28 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 and secure continuous improvement and Best Value. Assessment: Full review to be undertaken during 2022/23 once clarity on legislative changes as a result of Brexit received and UK and Scottish Government guidance is issued. RAG: Procurement Strategy In order to demonstrate Best Value, local authorities are required to comply with legal and best practice requirements in the procurement and strategic commissioning of goods, services, and works, including the Scottish Model of Procurement and ensure there is clear accountability within procurement and commissioning arrangements. The Procurement Reform (Scotland) Act 2014 requires Scottish public bodies with annual procurement spend greater than £5 million (which includes the council) to develop and publish an organisational procurement strategy and keep the strategy under regular review; the council is also required to publish and prepare an annual report. • Strategy - November 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97297.pdf • Annual report - September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96865.pdf Latest version: November 2021 Review timeframe: Annual Assessment: Introduced in August 2017 and updated annually thereafter, the Procurement Strategy approved in November 2021 covers the period from 2022 to 2023. The latest annual report for 2020/21 was published in September 2021. An item within the Strategic Policy Framework, the Procurement Strategy is due to be updated and reported to committee in cycle 4 of 2022. Reports submitted to committee each cycle update on procurement activity in terms of contracts awarded below committee approval threshold and contracts with variations. RAG: Head of Asset and Procurement Solutions ✓ ✓ ✓ Climate change - committing to net zero The council recognises the need for urgent action and, as such, declared a Climate Emergency in June 2019 advancing the net zero target from 2045 to 2030. Similarly the council became a signatory of the Edinburgh Biodiversity Declaration in June 2021, recognising the need to protect nature as well as the important role it will play in tackling climate change. The risk of climate change to the local economy is considered significant and therefore as well as being the right thing to do, any deliberate interventions will benefit North Lanarkshire. Actions delivered should consider the impact on the vulnerable such as those likely to become fuel poor and ensure that these households are not negatively impacted on. Post-COP26 (the 26th United Nations Climate Change Conference held in 2021) and the Glasgow Pact, the council (through its Climate Plan ACT2030) will continue to develop its overall climate strategy to encourage internal and external action (mitigation, adaptation, and sustainability) to tackle and prevent further climate change. Medium and long-term aims are as set out in the Climate Plan ACT2030 (approved in February 2022) - this encompasses the council’s own climate emergency declaration and its subsequent target of net-zero emissions by 2030. The climate plan therein provides targets from 2021/22 to 2025/26 with a commitment to continually review and set targets beyond this to 2030. • February 2022: Climate Plan: Action on Climate Together 2030 https://mars.northlanarkshire.gov.uk/egenda/images/att97673.pdf Latest version: February 2022 Review timeframe: Annual Assessment: The councils Climate Plan is a key aspect of the Programme of Work and, as such, update reports are scheduled to be provided to committee: • In cycle 4 of 2022 for the route map to 2030 detailing the resource requirements to achieve net zero by 2030. • In cycle 1 of 2023 for the annual report on the council’s compliance with the public sector climate change duties and the status of the council in terms of achieving net zero by 2030. RAG: Head of Asset and Procurement Solutions ✓ Asset management Updates on the asset rationalisation and development programme of work - which includes reviewing the use of assets on a regular basis to ensure their ongoing effectiveness - were provided in: • March 2020: https://mars.northlanarkshire.gov.uk/egenda/public/kab190.pl?cmte=PSC&meet=7, • October 2020: https://mars.northlanarkshire.gov.uk/egenda/public/kab190.pl?cmte=PSC&meet=11 Latest version: October 2020 Review timeframe: Annual Assessment: The Programme of Work for 2022/23 (P002.1) outlines scheduled updates in respect of asset rationalisation and development. This includes reports on the development of a Corporate Asset Management Plan and an update on the property rationalisation programme to committee in cycles 3 and 4 of 2022. RAG: Head of Asset and Procurement Solutions ✓ Communications Strategy The council’s overarching Communications Strategy covers the whole organisation and aims to ensure that communication activity closely aligns with the delivery of The Plan for North Lanarkshire. All major activity must support an ambition statement and also align with the core narrative which supports the Live, Learn, Work, Invest, and Visit brand strategy. • June 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90957.pdf The council has approved The Plan for North Lanarkshire and The Place, The Vision and these are the council’s priorities and therefore the focus for communications activity. As such, the Annual Communications Plan details communications activities for each year. • June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96259.pdf New platform developed for the council’s website went live in November 2020: Latest version: June 2021 Review timeframe: Process in place to update the communications plan annually. Assessment: The council’s Communications Strategy was approved in June 2019. As part of that strategy, an annual communications plan was to be published looking back at the previous year’s major communications activity and setting out the major activity for the next 12 months. No plan was published for 2020/21 due to the pandemic. The plan for 2021/22 was approved in June 2021. Key to supporting the Programme of Work, the update to the annual communications plan is scheduled to be reported to committee in cycle 3 of 2022. Head of Strategic Communication ✓ ✓ ✓ ✓ ✓ ✓ Page 381 of 418
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29 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 https://www.northlanarkshire.gov.uk/ RAG: Digital and IT Strategy The Digital and IT Strategy is central to delivery of the council’s transformational / service redesign programme as well as enabling many of the elements within the council’s Programme of Work. This details the programmes, projects, and policies that will enable the council to recover, renew, and transform services by exploiting emerging technology to the benefit of employees, service delivery, and ultimately the people and communities of North Lanarkshire. It guides services to transition from the current traditional IT estate to a new and agile digital service delivery. • June 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att90858.pdf • September 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94512.pdf The annual review in 2021/22 focussed on: • Reiterating the overarching digital vision for a Digital North Lanarkshire (DigitalNL) with Digital Communities, a Digital Economy, and a Digital Council. • Further strengthening the digital alignment with the council’s long-term vision as set out in The Plan for North Lanarkshire, and the place-based investment programme articulated through The Place The Vision, to reflect the scale and complexities of the DigitalNL programme and the range of interdependencies across many Programme of Work elements. February 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97664.pdf Latest version: February 2022 Review timeframe: Annual Assessment: The Strategy was introduced in June 2019 and refreshed in September 2020 to reflect the fast changing environment in which the council operates, not least the implications and unexpected opportunities arising from the coronavirus pandemic. A further review and significant refresh was undertaken and approved at committee in February 2022. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Enterprise Architecture Governance Group (EAGG) The EAGG ensures: • Organisation wide governance for all digital solutions and services. • That a cohesive, integrated, and data driven approach to enterprise wide architecture is undertaken. • A holistic full lifecycle view of solutions is considered. • The council’s enterprise architecture principles are considered and addressed for new proposals. • The council’s enterprise architecture principle remain relevant. The EAGG aims to ensure a consistent, coherent, and complete council-wide (enterprise) perspective to design to enable business operations to be transformed and the associated benefits to be secured in a co-ordinated manner across the organisation. The EAGG has the ability and responsibility to challenge operational business cases, ensuring a holistic organisation wide approach to design is maintained and best value is achieved. Meetings are held approximately every six weeks. Minutes and meeting papers available. Latest version: Recurring group. Review timeframe: The group was formed in November 2019 to provide strategic governance and oversight for all digital and IT related projects, services, solutions, and operations within the council to ensure such are fit for purpose and comply with all relevant standards, specifications, and principles. Assessment: The EAGG reports to the DigitalNL Delivery Board which holds meetings every second month. The intentions set out in the Digital and IT Strategy are underpinned by the work of the EAGG. The Digital and IT Strategy (refreshed in February 2022) reflects the governance role of the EAGG. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ Data Governance Board The corporate Data Governance Board is responsible for developing good practice and awareness raising to ensure that the council complies with its Data Protection obligations. It is also responsible for developing the council’s overall maturity in how it collects, analyses, and manages data and business intelligence to reduce the volume and complexity of current reporting and achieve the shift to future state forecasting with policies and service developments informed by data intelligence. The Data and Information Management Strategic Roadmap provides the framework and development of the Business Intelligence Hub aims to deliver streamlined data outputs. Meetings are held approximately every 8 weeks. Minutes and meeting papers available. Latest version: Recurring group. Review timeframe: Group reconfigured, transitioning from a service perspective to a functional perspective, at its meeting in December 2020. Assessment: Review of Board and terms of reference for Data Governance Board and Data Management Team was undertaken during 2021/22. This incorporated a self-assessment exercise where the areas for improvement were reported to the Data Governance Board in November 2021. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ Strategic data management and information governance • Data and information management strategic roadmap - February 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95605.pdf • BI Hub update - February 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97777.pdf Latest version: Live programme of work Review timeframe: Next report due cycle 3 of 2022 Assessment: Update on the implementation of the Data and Information Management Roadmap through the themes of vision, organisation and governance, culture and skills, technology and architecture, and process to advance the council’s data maturity score is scheduled to be reported in cycle 3 of 2022 and cycle 1 of 2023. Update on the implementation of Phase 3 of the BI Hub development to deliver on the core and service hub requirements and support the advancement of the council’s data maturity score is scheduled to be reported in cycle 4 of 2022. RAG: Head of Business and Digital ✓ Page 382 of 418
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30 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Information Governance Framework An Information Governance Policy Framework is in place, comprising policies in terms of records and information management, data protection, information handling and classification, information risk, and information security to ensure proper recording of information, appropriate access to that information including by the public, and compliance with legislation. • June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96160.pdf Latest version: June 2021 Review timeframe: Next review due March 2023 Assessment: Latest version of the Information Governance Framework was approved at Policy and Strategy Committee in June 2021. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Information Security Policy An Information Security Policy is in place; this 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. June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96160.pdf Latest version: June 2021 Review timeframe: Next review due March 2023 Assessment: Latest version of the Information Security Policy was approved at Policy and Strategy Committee in June 2021. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Senior Information Risk Owner (SIRO) The SIRO role is fulfilled by a member of the Corporate Management Team. The SIRO has ownership of the council’s information risk policy, and acts at the strategic level as the advocate of information assurance and risk. Good practice in information governance requires an annual information governance and performance overview report to be presented to senior management and Elected Members outlining the council’s information governance arrangements, performance, and compliance against key expectations and requirements. SIRO Information Governance Assurance and Performance Report 20192/20 and 2021/22, December 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97501.pdf Latest version: December 2021 Review timeframe: Annual Assessment: Following various council restructures, SIRO responsibilities now rest with the Head of Business and Digital. Report was produced by the council’s SIRO and presented to the CMT and Audit and Scrutiny Panel in December 2021; this covered the years 2019/20 and 2020/21. Reporting will revert to the recommended annual report from financial year 2021/22 onwards. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Data protection The Head of Legal and Democratic Solutions is the council’s Data Protection Officer (DPO) and the Head of Business and Digital is the council’s Senior Information Risk Owner (SIRO). • Data Protection Policy was updated in line with the Information Governance Policy Framework in June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96160.pdf • Data protection information published on Connect: http://connect/index.aspx?articleid=3955 includes Data Protection Impact Assessment (DPIA) guidance and template, General Data Protection Regulation (GDPR) guidelines, data protection breach and incident management protocol, privacy notice template, and data sharing agreements register. Latest version: June 2021 Review timeframe: Next review due March 2023 Assessment: Policies and procedures in place and communicated via Connect. Latest version of the Data Protection Policy approved at committee in June 2021. RAG: Head of Legal and Democratic Solutions / Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Data protection annual report The General Data Protection Regulation (GDPR) and the Data Protection Act 2018 (DPA) came into force in May 2018. An annual report updates on compliance with the regulations. November 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97307.pdf Latest version: November 2021 Review timeframe: Annual Assessment: The annual data protection report forms part of the Strategic Performance Framework reporting schedule. The latest report in November 2021 (by the council’s DPO) provided an update in relation to data sharing, breaches, complaints, and training. A report on the conclusion of a review of corporate Data Protection arrangements undertaken to ensure greater assurances can be provided in terms of statutory compliance with data protection legislation and information governance is scheduled to be submitted to committee in cycle 4 of 2022. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ ✓ ✓ Freedom of Information The Freedom of Information (Scotland) Act 2002 and the Environmental Information (Scotland) Regulations 2004, both of which came into force in January 2005, provide rights to the public to ask for and be provided recorded information held by public authorities. • The council process is outlined on the website: https://www.northlanarkshire.gov.uk/your-council/managing-information/freedom- information • A guide to information available through the model publication scheme is also available on the council’s website - November 2021: https://www.northlanarkshire.gov.uk/your-council/managing-information/freedom- information Latest version: November 2021 Review timeframe: Annual Assessment: Policies and procedures in place and communicated via Connect. RAG: Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Freedom of Information annual report November 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97268.pdf Latest version: November 2021 Review timeframe: Annual Head of Legal and Democratic ✓ ✓ ✓ ✓ ✓ Page 383 of 418
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31 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Assessment: The annual freedom of information report forms part of the Strategic Performance Framework reporting schedule. The latest report in November 2021 (by the Head of Legal and Democratic Solutions) provided an update on the number of Freedom of Information and Environmental Information requests as well as the number of internal reviews and appeals to the Scottish Information Commissioner processed. RAG: Solutions Employment policies and associated guidance The MyNL Policies A to Z site lists all of North Lanarkshire Council’s employment policies and the associated guidance documents and forms. https://mynl.co.uk/a-to-z/ Contracts of employment and job descriptions are in place for all posts to give employees a clear sense of purpose and direction. A recruitment process is in place which is applied consistently to ensure transparency and fairness. In line with the Scheme of Administration, an Appointments Sub-Committee is in place to deal with the recruitment and appointment of Chief and Depute Chief Officers with full delegated powers to consider and agree the job outline, employee specification, advertising proposals and interviewing procedures, agree the short list of candidates to be interviewed, interview the shortlisted candidates, and make the appointment. Latest version: Policies are all individually dated Review timeframe: Each policy is reviewed and updated as required in line with organisational and/or legislative changes. Assessment: MyNL contains an A-Z list of all of the council’s employment policies and the associated guidance documents and forms. These documents are available to download. A version control process is in place to identify the date of the last review and refresh for each document. RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ ✓ Local Government Benchmarking Framework (LGBF) • National web portal available on the council’s website: https://www.northlanarkshire.gov.uk/your-council/performance-of-the- council/comparing-our-performance • Improvement Service LGBF presentation of the latest results to the Audit and Scrutiny Panel: - March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95913.pdf - September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96914.pdf https://mars.northlanarkshire.gov.uk/egenda/images/att96951.pdf - March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att98107.pdf Latest version: National web portal last updated in May 2022 Review timeframe: Annual publication of data by the Improvement Service Assessment: The national web portal is available from the council’s website; this provides access to all the benchmarking indicators within the LGBF and allows for comparisons with other local authorities, family group averages, and national averages. The Audit and Scrutiny Panel received a presentation from the Improvement Service in March 2021, September 2021, and March 2022, providing a high level overview of the latest results within the North Lanarkshire context. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ Professional / specialised input to policy development and decision making Business partners in People and Organisational Development and Financial Solutions are aligned to specific services in order to provided dedicated professional support. Solutions Relationship Managers in Business and Digital are aligned to services to facilitate a smooth transition to integrated technology and digital solutions and increase understanding of available solutions and levels of consumption. Specialised input is also incorporated into the council’s committee report process which requires sections completed on the following impacts: • Public sector equality duty / Fairer Scotland duty • Financial • HR policy • Legal • Data protection • Technology / digital • Environmental / carbon - change in February 2022 reflects the agreement at the Council meeting in June 2021, that the environmental impact was to be changed to environmental / carbon impact • Communications • Risk An e-learning module Writing Effective Committee Reports has been developed on LearnNL. The aim of this course is to establish a one-way approach to writing committee reports within the council. The e-earning module can be accessed through the following link: https://learnnl.learningpool.com/course/view.php?id=547 A One Way of Reporting booklet has been developed by Corporate Communications - this style guide provides guidance for those who have to put something in writing on behalf of the council. This can be anything from a letter, leaflet, strategy document, or news release to a committee report. This is available on Connect: http://connect/onewayofreporting Latest version: Ongoing resource Review timeframe: N/A Assessment: Structures and processes are in place that provide services with access to officers for professional / specialised input to policy development and decision making and for report writing purposes. The committee report template guidance was updated in March 2021 and again in February 2022 to further improve the contents of these sections in committee reports and provide authors with subject matter experts contact details for the relevant sections for further information and guidance. The updated template and guidance is published on Connect http://connect/index.aspx?articleid=21181 and was issued to all employees via a NLC Announcement e-mail following each annual update. RAG: All Heads of Service ✓ ✓ ✓ ✓ ✓ ✓ ✓ Page 384 of 418
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32 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Fairer Scotland Duty The Fairer Scotland Duty (FSD) came into effect in April 2018. The Duty places a legal responsibility on particular public bodies in Scotland to actively consider how they can reduce inequalities of outcome caused by socio-economic disadvantage when making strategic decisions or at the policy development stage. August 2018: https://mars.northlanarkshire.gov.uk/egenda/images/att88434.pdf Interim guidance was published nationally at this time. While awaiting further guidance from the Scottish Government, the council was required to take steps to ensure that the duty is taken forward through combining the needs of the FSD into the equality impact assessment process, as recommended in the FSD interim guidance. In preparation for the new guidance being published, the council considered how its own approach had delivered on the duty to reduce socio-economic disadvantage. The findings from this review were presented to committee in September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96878.pdf Updated guidance was published by the Scottish Governance in October 2021. The guidance hasn’t changed substantially from what was published in 2018, as the duty hasn’t changed, but it has been updated, enhanced, and informed by the experience of delivering the duty over the last three years. The pandemic and its impacts are reflected in the guidance, highlighting how important consideration of socio-economic disadvantage is in decision making in order to tackle the unequal impact on those on low incomes, with low wealth, in material deprivation or living in deprived areas. Information in terms of the updated guidance was reported to committee in January 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97618.pdf Latest version: October 2021 Review timeframe: As this is nationally produced guidance, the Scottish Government undertook a consultation in May 2021 with a view to revising and finalising the interim guidance. Updated guidance was subsequently published in October 2021. Assessment: The guidance adopted by the council, incorporates the equality impact assessment process and templates into the committee report writing processes. This guidance is on Connect: http://connect/index.aspx?articleid=21181. Following publication of the updated national guidance, a report was submitted to committee in January 2022 highlighting the changes from the previous guidance. RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ Equality Strategy The council’s Equality Strategy sets out a clear commitment to deliver equality for communities, service users, and employees through outcomes specifically developed to support the council’s vision to make equality an embedded element of not only mainstream service delivery but also the operation of the council. The Equality Strategy therefore underscores the council’s commitment to equality and human rights and sets out an approach that ensures that equality is embedded within everyday business through five key underpinning objectives for success. September 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att91529.pdf Latest version: August 2019 Review timeframe: Strategy approved in August 2019 covers the period from 2019 to 2024. Assessment: The Equality Strategy is on the Strategy Policy Framework review programme to report on an update in 2024/25. RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ Equality Impact Assessments (EqIA) The council ensures that equality impact assessments (EqIA) are undertaken to ensure fairness and openness in the decisions taken. This ensures a process is in place to examine the council’s main functions and policies to see whether they have the potential to affect people differently. Carrying out an EqIA on council policies, practices, decisions (including financial decisions), functions and strategies helps to identify any negative impact on particular groups of people and therefore allow for action to be taken to remove it or lessen its negative effects. EqIAs also include assessments under the Fairer Scotland Duty. Equality Impact Assessments are published by each service on the council’s website: https://www.northlanarkshire.gov.uk/your-community/equalities/equality-impact- assessments-eqias Latest version: Ongoing Review timeframe: Registers are reviewed at varying times within each service. Assessment: EqIAs also include assessments under the Fairer Scotland Duty - see information above in terms of the Fairer Scotland Duty review. RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ Public Sector Equality Duties Every four years public bodies covered by the Public Sector Equality Duties (PSED) are required to publish a number of reports and information to evidence how they are meeting the needs of people whose characteristics are protected by the Equality Act 2010 - the PSED (General Duty). June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96170.pdf Latest version: June 2021 Review timeframe: Every four years Assessment: The Public Sector Equality Duty combined report in June 2021 covers a number of different requirements including - the Mainstreaming Equality report 2021, progress in achieving the council’s equality outcomes 2017-21, NLC Equality Outcomes 2021-25, employment Information, and the Equal Pay Policy Statement. A key aspect of the Programme of Work, update reports are scheduled to be provided to committee: • In cycle 3 of 2022 and cycle 1 of 2023 to report on progress of the nine equality outcomes set for the years 2021-25. • In cycle 3 of 2022 to report the findings following several areas of work in relation to advancing race equality in the organisation. • In cycle 4 to report on progress towards becoming a Fair Work employer and organisation including progress in relation to Disability Confident Leader, Equally Safe at Work, and Race at Work Charter. RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ Page 385 of 418
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33 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Corporate Risk Register • Corporate risk register for 2021/22 - June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96445.pdf Latest version: June 2021 Review timeframe: Annual. Assessment: Most recent version of the Corporate Risk Register was considered by the Audit and Scrutiny Panel in June 2021. The Corporate Risk Register is key in supporting the council’s Programme of Work and, as such, is subject to an annual review and update process. Risks within the Corporate Risk Register are on a regular programme of review. Update reports are scheduled to be presented to the Audit and Scrutiny Panel each cycle of 2022/23. RAG: Head of Audit and Risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Service risk registers Risk Champions and Facilitators are identified for each service. These are noted on Connect: http://connect/index.aspx?articleid=20382 Latest version: Ongoing Review timeframe: Registers are reviewed at varying times within each service. Assessment: Service risk registers are required to be a standing item on all service management team meetings. RAG: Head of Audit and Risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Project risk registers As part of the corporate Project Management Model (2018), all projects, regardless of value, are required to complete a Preliminary Risk Assessment (PRA). This is to estimate the level of risk within a project, both at an initial stage and at any other time during the life cycle of the project. All projects with a value of £500,000 or greater, are required to follow the full project management process. The PRA and project risk management process are embedded in this. Details are on Connect: http://connect/index.aspx?articleid=20090 Latest version: April 2018 Review timeframe: As required Assessment: A review and refresh of the current Project Management Model is currently underway and expected to conclude with a report to CMT in August 2022. RAG: Head of Audit and Risk / Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Complaints Handling Procedure • Procedure and online portal available publicly on the council’s website: https://www.northlanarkshire.gov.uk/your-council/complaints-and-feedback • Online portal for making complaints is also accessible from the website: https://www.northlanarkshire.gov.uk/nlc-forms/complaint • March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95705.pdf • Complaints performance on the council’s website: https://www.northlanarkshire.gov.uk/your-council/complaints-and- feedback/complaints-performance Latest version: November 2021 Review timeframe: Annual Assessment: Information on the local authority complaints handling procedure is published on the council’s website; this also contains links to the online portal to allow for complaints to be made. The website also contains information on advocacy services for those that need help to make a complaint. Complaint’s handling is currently a work package within the DigitalNL transformation programme, an update in this respect was provided to the Policy and Strategy Committee in March 2021. This transformation work includes development of the new Dynamics system and integration with the BI Hub which aims to enhance access to information for managing complaints and reporting performance and strengthen arrangements for learning from complaints and implementing service improvements. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ Audit and Scrutiny Panel The purpose of the Audit and Scrutiny Panel 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. It provides independent review of the council's governance, risk management, performance, and control frameworks and oversees the financial reporting and annual governance processes. Meetings are held every cycle. Minutes and meeting papers are available in Mars. https://mars.northlanarkshire.gov.uk/egenda/public/kab71.pl?cmte=AUS Latest version: Recurring Panel meetings Review timeframe: Review arrangements for the Audit and Scrutiny Panel take place in line with the Scheme of Administration. Assessment: Scheme of Administration was updated in June 2022: https://mars.northlanarkshire.gov.uk/egenda/public/k ab190.pl?meet=226&cmte=COU RAG: Head of Business and Digital / Head of Audit and Risk ✓ ✓ ✓ ✓ Audit and inspection reports The council is subject to ongoing inspection work undertaken by a range of scrutiny bodies. This includes the work the council carries out in partnership with other public bodies. This inspection work provides an independent assessment of North Lanarkshire's performance. The latest inspection reports are available from the council’s website: https://www.northlanarkshire.gov.uk/your-council/performance-of-the-council/best- value/independent-assessments Latest version: Various Review timeframe: These are set by the respective external audit or inspection body. Assessment: Audit and inspection reports are reported to the relevant committee when received by the council and uploaded to the website when they are made publicly available by the relevant body. RAG: All Heads of Service ✓ ✓ ✓ ✓ Page 386 of 418
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34 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 • Scottish Housing Regulator 2020/21 annual assurance statement - September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96709.pdf • Scottish Housing Regulator 2020/21 landlord report - November 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att97234.pdf Best Value Assurance Report (BVAR) • Website - May 2019: https://www.northlanarkshire.gov.uk/your-council/performance- of-the-council/best-value/national-audit-results • Council meeting to formally present the BVAR findings - June 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att91268.pdf • Update on recommendations - September 2019 https://mars.northlanarkshire.gov.uk/egenda/images/att91818.pdf • Update on recommendations - March 2020 https://mars.northlanarkshire.gov.uk/egenda/images/att93589.pdf • Update on recommendations, Audit Scotland interim Management Report - June 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att96423.pdf • Update on recommendations, Audit Scotland Annual Audit Report (AAR) - December 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97492.pdf Latest version: December 2021 Review timeframe: Annual Assessment: Published in May 2019, the BVAR comprised eight recommendations for action by the council. An update was provided to the CMT and Policy and Strategy Committee in September 2019 and March 2020. The report in March 2020 consolidated the eight improvement actions within the Programme of Work to strengthen a corporate and integrated approach to improvement that supports delivery of The Plan for North Lanarkshire. Any future updates in this respect are covered by the External Auditors Annual Audit Report (AAR) - the interim 2020/21 report was submitted to the Audit and Scrutiny Panel in June 2021 and the final 2020/21 AAR in December 2021 - both provided an update in terms of the eight BVAR recommendations (four of which are now confirmed ay Audit Scotland as complete, and good or reasonable progress was noted as being made regarding the remaining four). RAG: Chief Executive / Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Internal Audit • Internal audit charter - September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96738.pdf • Standing item on the agenda for the Audit and Scrutiny Panel https://mars.northlanarkshire.gov.uk/egenda/public/kab71.pl?cmte=AUS • Internal Audit annual plan - June 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att96320.pdf • Internal Audit annual report (and annual opinion) - June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96327.pdf Latest version: Recurring function Review timeframe: Annual Assessment: Annual report provides an update on compliance with audit requirements. Various audit outputs are a standing item on the agenda for the Audit and Scrutiny Panel throughout the year. Reports are scheduled to be submitted to the Audit and Scrutiny Panel each cycle to provide a range of independent assurance outputs, in line with the approved Internal Audit Strategy and Annual Plan, focused on cyclical coverage of core corporate governance processes, key strategic priorities and programmes of work, key corporate risks, and key financial systems. An item within the Strategic Policy Framework, the Internal Audit Strategy is scheduled to be updated and reported to committee in cycle 3 of 2022. RAG: Head of Audit and Risk ✓ ✓ ✓ Corporate governance audits • Audit on corporate governance, principles A and B - March 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att89965.pdf • Audit on corporate governance principles C and D - September 2020 https://mars.northlanarkshire.gov.uk/egenda/images/att94112.pdf • Audit on corporate governance principles E, F, and G - March 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att95449.pdf • Audit on corporate governance principles A and B - March 2022 https://mars.northlanarkshire.gov.uk/egenda/images/att96559.pdf • Internal Audit annual report 2019/20 - September 2020 https://mars.northlanarkshire.gov.uk/egenda/images/att94146.pdf • Internal Audit annual report 2020/21 - June 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att96327.pdf Latest version: March 2022 Review timeframe: Annual Assessment: The Head of Audit and Risk’s Internal Audit annual reports for 2019/20, 2020/21, and 2021/22 states that the results from the detailed internal audit work examining the council’s corporate governance arrangements suggest that compliance with the requirements of the corporate governance framework adopted by the council continues to be positive with no significant weaknesses or areas of concern highlighted. RAG: Head of Audit and Risk ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ External auditor’s annual audit report (AAR) • Draft at Audit and Scrutiny Panel - December 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97492.pdf • Final published by Audit Scotland February 2022; links to the council and IJB AAR are on the council’s website: https://www.northlanarkshire.gov.uk/your- council/performance-of-the-council/best-value/independent-audits Latest version: February 2022 Review timeframe: Annual Assessment: Draft Annual Audit Report (AAR) for the council was considered by the Audit and Scrutiny Panel in December 2021 with the final version being published on the Audit Scotland website in February 2022. RAG: Head of Business and Digital / Head of Financial Solutions / Head of Audit and Risk ✓ ✓ ✓ ✓ ALEOs’ governance and risk management oversight and assurance The council’s seven arm’s length external organisations (ALEOs) complete an annual Latest version: March 2022 Review timeframe: Six monthly. Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ Page 387 of 418
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35 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 Certificate of Assurance and update the accompanying checklist to support the preparation of the council’s statements on corporate governance and internal financial control. A regular reporting process is in place to provide the Audit and Scrutiny Panel with oversight and assurance of governance, financial governance, and risk management arrangements within the council’s Arm’s Length External Organisations (ALEOs). March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97829.pdf Assessment: Regular reports are submitted to the Audit and Scrutiny Panel on arrangements to ensure the council maintains adequate oversight of service delivery and governance while demonstrating where arm’s length external organisations (ALEOs) are supporting delivery of The Plan for North Lanarkshire. Latest oversight and assurance report submitted to the Audit and Scrutiny Panel in March 2022. Six monthly reports are scheduled to be submitted in cycle 3 of 2022 and cycle 1 of 2023. RAG: Insourcing the delivery of culture, sport, and leisure services • December 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att95067.pdf • March 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95927.pdf • June 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96222.pdf Latest version: June 2021 Review timeframe: The insourcing of culture, sport and leisure services was effective from 1 April 2021. Assessment: Following the decision taken by the Policy and Strategy Committee at its meeting in January 2020 the insourcing of culture, sport and leisure services was effective from 1 April 2021, under the new, focussed and integrated Active and Creative Communities (ACC) team. RAG: Head of Education ✓ ✓ Community Planning Partnership - Strategic Leadership Board Information on the council’s website: https://www.northlanarkshire.gov.uk/your- community/working-communities/your-area/community-planning Meetings are held approximately every 10-12 weeks. Minutes and meeting papers available. Annual report, September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96876.pdf Latest version: Recurring group Review timeframe: As required Assessment: Annual report approved at committee in September 2021 provides an update on activity to strengthen governance arrangements within the North Lanarkshire Community Planning Partnership Board and introduced an annual review report to committee to demonstrate where partnership working is making a significant contribution to improving local outcomes and ensuring compliance with statutory requirements. New corporate framework - Framework for Demonstrating Improved Outcomes for Communities - was formally approved by the Strategic Leadership Board in June 2022. This sets out the performance arrangements in line with the partnership’s programme of work, strategies, policies, and plans, and strategic and local delivery requirements and includes a reporting timetable. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ ✓ ✓ ✓ Community Boards • Community Matters - a framework for working with communities - August 2019: https://mars.northlanarkshire.gov.uk/egenda/images/att91527.pdf • Establishment of Community Boards - March 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att93588.pdf • Community Boards - progress update - August 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96642.pdf Community Board information and dates of meetings on the council’s website - last updated June 2022: https://www.northlanarkshire.gov.uk/your-community/working- communities/your-area/community-boards Local Outcome Improvement Plans: https://www.northlanarkshire.gov.uk/your- community/working-communities/your-area/local-outcome-improvement-plans-loips Latest version: June 2022 Review timeframe: Meetings are ongoing. Assessment: Boards are now established and a schedule of meetings is in place. Local Outcome Improvement Plans are in place for each of the 9 Community Board areas. RAG: Head of Communities ✓ ✓ ✓ ✓ ✓ ✓ Boards and working groups A range of programme / project Boards and working groups, aligned to the delivery of specific Programme of Work items, are in operation, e.g. Strategic Capital Delivery Group, DigitalNL, Hub Delivery Programme Board, and Data Governance. Meetings frequency differs for each Board, but generally meetings are held every 6-8 weeks. Minutes and meeting papers available Latest version: Recurring groups. Review timeframe: Annual Assessment: Membership and terms of reference reviewed and updated as required. RAG: Various Heads of Service ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Serious Organised Crime / Counter Terrorism (SOC / CT) working group Serious organised crime and the threat of terrorist attacks continue to present significant challenges to the council in it seeking to protect Elected Members, employees, physical assets, public funds, and the information it holds from the risks of infiltration and attack. Latest version: Recurring group. Review timeframe: The Head of Legal and Democratic Solutions is the Single Point of Contact (SPOC) for the council’s working group as well as the Lanarkshire multi-agency group. Assessment: An ongoing review of all controls either in place or assessed as being necessary, is in Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Page 388 of 418
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36 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 The council's physical and cyber security is a priority so as to ensure that it is not exposed to any incident which gives rise to loss of life or injury, financial loss, or reputational damage. Meetings are held quarterly. Minutes and meeting papers available. place. This is particularly important given the ever changing and developing environment in which these risks operate. Following the review, an update is scheduled to be reported to committee in cycle 3 of 2022. RAG: Corporate Resilience Plan Dedicated section on Connect for business continuity and disaster recovery: http://connect/index.aspx?articleid=20534 • Corporate Resilience Plan - October 2021: http://connect/CHttpHandler.ashx?id=47988&p=0 • Committee update - November 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97157.pdf Latest version: October 2021 Review timeframe: As required Assessment: The Corporate Resilience Plan was updated in October 2021 and this update was reported to committee in November 2021. RAG: Head of Regulatory Services and Waste Solutions ✓ ✓ ✓ ✓ Corporate Resilience Group Meetings are held approximately every 8 weeks. Minutes and meeting papers available. Latest version: Recurring group Review timeframe: Corporate Resilience Group in operation; chaired by Head of Regulatory Services and Waste Solutions Assessment: Effectiveness of the group is reviewed in line with the council’s Corporate Resilience Plan. RAG: Head of Regulatory Services and Waste Solutions ✓ ✓ ✓ ✓ Corporate Business Continuity Plan / service Business Continuity Plans In line with legislation, businesses are required to have continuity planning measures in place in order to survive and continue to thrive whilst working towards keeping the incident as minimal as possible. In accordance with the Act, the council has a duty to make relevant provisions and this forms an important part of the council’s resilience development functions. • Corporate Business Continuity Plan on Connect - October 2021: http://connect/CHttpHandler.ashx?id=44828&p=0 • Annual assurance return / business continuity guidance notes http://connect/index.aspx?articleid=20534 Latest version: October 2021 Review timeframe: Annual Assessment: It is the responsibility of each service within the council to detail their specific business continuity arrangements which would be enacted, as appropriate, to mitigate the impact of an emergency. Heads of Service are required to review and update their Business Continuity Plans annually. Heads of Service are also required to complete a business continuity annual assurance return. RAG: Head of Regulatory Services and Waste Solutions ✓ ✓ ✓ ✓ Council’s response to COVID • Self-evaluation exercise - October 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94694.pdf • Internal audit - February 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att95449.pdf Latest version: October 2020 Review timeframe: N/A Assessment: A desktop review of the council’s response to the COVID-19 pandemic was undertaken in September 2020. This review was structured around a set of criteria developed independently by the Improvement Service; it comprised 20 assessment statements across four sections - the council’s response to COVID19, governance of the council during COVID-19, support for staff during COVID-19, and new ways of working. This exercise also captured lessons learned from the pandemic to support the council through the recovery and renewal planning processes, and to move to a platform of stability from which available resources were able to be redirected to fulfil the ambition set out in The Plan for North Lanarkshire. An Internal Audit was subsequently carried out in order to provide independent assurance of the adequacy and effectiveness of the council’s resilience arrangements and its response to the pandemic. Based on the results of the work, this audit was categorised as offering substantial assurance. RAG: Chief Executive ✓ ✓ ✓ ✓ ✓ COVID-19 Operating model In line with the guidance set out by the Scottish Government, a COVID Operating Model was approved at the Council meeting in March 2022. This provides a template as to how the council will operate over the next six months in a manner which recognises the ongoing risks associated with the pandemic, sets out the routine protection measures to be adopted across all council facilities, and allows for delivery of all council services in a manner more reflective to what existed pre-pandemic. March 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att98054.pdf Latest version: March 2022 Review timeframe: Six monthly Assessment: In line with the commitment to review the new hybrid working model (approved at committee in December 2021), there will also be a review of the COVID-19 Operating Model within a similar timeline. The purpose of this will be to reflect on any issues arising through its implementation and to have regard to any change in national policy which is likely to be kept under review over the Head of Regulatory Services and Waste Solutions ✓ ✓ ✓ ✓ ✓ Page 389 of 418
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37 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 same time period. RAG: North Lanarkshire’s Economic Recovery Plan This plan recognised that the pandemic has had a profound impact not just on the nation’s health and wellbeing, but also on global, national, and local economies. It is likely that the economic effects of the pandemic will be felt for many years to come. While NLC is unable to directly influence some of the macro-economic factors that impact on the local economy, the council and partners can still play an important role in supporting local economic recovery. February 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att95704.pdf Update, February 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97633.pdf Latest version: February 2021 Review timeframe: This plan covers the period from 2020 to 2023. Assessment: The Delivering Good Governance in Local Government: Framework positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such, the Economic Recovery Plan seeks to secure sustainable improvements in terms of economic outcomes and opportunities for all by helping to mitigate some of the economic impact of the pandemic. An update on progress was reported to committee in February 2022. RAG: Head of Planning and Regeneration ✓ ✓ ✓ ✓ ✓ NL Connect NL Connect is an opportunity for residents to share their views, help inform council priorities, and shape the future of North Lanarkshire. https://www.northlanarkshire.gov.uk/your-community/working-communities/nl-connect Latest version: Live process Review timeframe: As required Assessment: Ongoing mechanism for local engagement. RAG: Head of Business and Digital ✓ ✓ ✓ ✓ Tenant engagement and participation The Housing (Scotland) Act 2001 introduced the first legal framework for tenant participation in Scotland. Section 53 (1) of the 2001 Act sets out the statutory requirement for social landlords to develop and publish a Tenant Participation Strategy in consultation with tenants. The Housing (Scotland) Act 2010 places additional duties on social landlords to involve both tenants and other customers in housing and related services with the introduction of the Scottish Social Housing Charter (SSHC). The council’s Tenant Participation Strategy is a five year strategy and is the main source of information with regard to tenant participation for tenants and customers and outlines the opportunities to participate in the monitoring and development of the housing service. February 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att93095.pdf September 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96710.pdf Latest version: Strategy for 2020-25 approved in February 2020. Review timeframe: Reviewed quarterly via the Tenant Participation Steering Group with representatives from the North Lanarkshire Federation of Tenants and Residents (NLF). Assessment: The report to committee in February 2020 saw the approval of the new 5 year strategy (2020-25) and the corresponding action plan. Report in September 2021 provided an update in terms of the delivery of the action plan. RAG: Head of Housing Solutions ✓ ✓ ✓ Members induction A range of materials are available through various platforms. Report to committee in March 2022 updated on the work undertaken to develop appropriate arrangements for the induction and training of Elected Members following the May 2022 local government elections. This also outlined the induction programme for May and June 2022: https://mars.northlanarkshire.gov.uk/egenda/images/att97964.pdf Latest version: Full induction programme in place for new and returning Elected Members following the local government elections in May 2022. Review timeframe: Induction programme is reviewed as a matter of course in line with the local government elections timetable. New Members, following by-elections, also take part in the induction process. Assessment: Report to committee in March 2022 concluded on the review of the governance and induction and training arrangements. RAG: Head of People and Organisational Development / Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Elected Members training and development LearnNL https://learnnl.learningpool.com/login/index.php Latest version: Learning site for Elected Members went live on LearnNL in June 2021. Review timeframe: Programme on LearnNL is reviewed for effectiveness on an ongoing basis. Assessment: The LearnNL site comprises an Elected Members development programme and provides access to a range of information, materials, e-learning, and sessions on live topics as well as the offer of 1:1s with the Training and Development team. RAG: Head of People and Organisational Development / Head of Legal and Democratic Solutions ✓ ✓ ✓ ✓ ✓ Employee Performance Review and Development (PRD) Revised scheme introduced in 2017 following consultation with employees and trade unions and completion of a successful pilot scheme. https://mars.northlanarkshire.gov.uk/egenda/images/att85835.pdf The documentation is available to download from Connect: http://connect/index.aspx?articleid=4088 Latest version: March 2017 Review timeframe: As required. Assessment: Plans are in place to review the PRD forms and process during 2022/23 to reflect the move to the hybrid working model for a greater number of employees, as well as technological advances and the move to a digital workforce and need for digital skills as part of the DigitalNL Head of People and Organisational Development ✓ ✓ ✓ ✓ Page 390 of 418
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38 Name of element or mechanism with a brief description and links to relevant documentation Current position including review timeframe and date of next update (where appropriate), with assessment and RAG status Chief Officer responsible 7 principles and 21 sub principles A B C D E F G A1 A2 A3 B1 B2 B3 C1 C2 D1 D2 D3 E1 E2 F1 F2 F3 F4 F5 G1 G2 G3 transformation programme. It is intended that the PRD will move to the learn NL platform. This will support ready access to PRDs so they can be a live document that seamlessly links to learning opportunities. RAG: Employee training and development LearnNL provides an online portal for all employee training and development needs. A calendar of activity in LearnNL supports a range of employee learning and development opportunities and a blended approach. https://learnnl.learningpool.com/login/index.php Latest version: LearnNL went live in June 2020 Review timeframe: Ongoing Assessment: Review of learning assets and digital learning infrastructure completed and LearnNL went live in June 2020. This digital learning platform aims to improve the ability to reach and provide enhanced learning provision to all employees. Leadership and management development provision was revitalised through the LearnNL Leadership Academy which provides bespoke development programmes for managers to gain specific development for future leadership roles. The e-learning offer was refreshed in line with individual and organisational needs and updated mandatory e-learning modules were introduced (for data protection essentials, information security awareness, records and information management, introduction to risk management, conflicts of interest, prevent, introduction to first aid, and fire safety). RAG: Head of People and Organisational Development ✓ ✓ ✓ ✓ NL Life Available to all employees, NL Life provides benefits and discounts, health and well- being support, and learning and development opportunities. http://connect/index.aspx?articleid=20279 Workforce mental health and wellbeing strategy - May 2021 https://mars.northlanarkshire.gov.uk/egenda/images/att96130.pdf Latest version: Ongoing resource for employees Review timeframe: As required Assessment: Workforce mental health and wellbeing strategy approved in May 2021 covers the period from 2021 to 2022. Refresh of the strategy scheduled for 2022 will be aligned with the development of the future workplace model within the Programme of Work. RAG: Head of People and organisational Development ✓ ✓ ✓ ✓ Employee engagement and wellbeing and Investors in People Investors in people is the internationally recognised industry standard for people management that sets out and measures the extent to which organisations are able to drive high levels of performance and employee engagement. The council’s employee engagement plan is fully aligned to the Investors in People framework. The framework is also used to benchmark council practices against those of other leading organisations. • September 2020: https://mars.northlanarkshire.gov.uk/egenda/images/att94474.pdf • May 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att96130.pdf • December 2021: https://mars.northlanarkshire.gov.uk/egenda/images/att97423.pdf Latest version: December 2021 Review timeframe: As per Investors in People accreditation timetable Assessment: Reports to committee in September 2020 and May 2021 provided an update in terms of employee engagement and wellbeing, and Investors in People accreditation. Report to committee in December 2021 confirmed that the council had met the requirements of the Investors in People Standard with accreditation awarded at silver level. RAG: Head of People and organisational Development ✓ ✓ ✓ ✓ Page 391 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref LJ/SL Date 08/09/22 Scrutiny work programme From Katrina Hassell, Head of Business and Digital E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 1. Background 1.1 Members are aware that the Audit and Scrutiny Panel has two distinct functions - (1) audit and (2) scrutiny. These functions support the Panel in fulfilling its role as a “key component of the council’s corporate governance arrangements” and its purpose (as set out in the Scheme of Administration) to provide “independent assurance to the Executive Summary This report provides an update to the assessment and prioritisation process previously approved in 2018 to establish a work programme for the scrutiny function of the Audit and Scrutiny Panel. This process has been updated to ensure scrutiny activity is framed within the context of The Plan for North Lanarkshire. The process aims to assess the relative merits of the specific area of activity or issue being brought forward while ensuring items requiring scrutiny are prioritised using a standardised set of criteria, and there is ongoing objectivity and transparency. This process also ensures that the contents of the work programme are aligned with the long-term vision set out in The Plan for North Lanarkshire, as well as strategic management, service delivery, and corporate governance approaches across the council. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Approve the updated process, set out in this report and Appendix 1, in order to assess and prioritise future items requiring scrutiny and establish a work programme for the scrutiny function of the Audit and Scrutiny Panel, and (2) Continue to endorse the role of Panel members in identifying, assessing, and prioritising items for inclusion in the scrutiny work programme in line with the updated process. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 11 Page 393 of 418
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council and those charged with governance on the adequacy of the council’s risk management framework and internal control environment”. 1.2 More specifically, the Scheme of Administration outlines that the Audit and Scrutiny Panel is responsible for providing “independent review of the council's governance, risk management, performance, and control frameworks, and overseeing the financial reporting and annual governance processes.” 1.3 In relation to the scrutiny function, the Panel’s remit includes a requirement to: • Review and monitor the performance of the council in delivering upon its priorities, outcomes, programme of work, and targets in the council plan, and specifically performance in improving local public services and local outcomes and demonstrating Best Value. • Review performance to assess whether intended policy outcomes have been achieved. • Consider the council's performance and improvement arrangements to ensure that approaches continue to facilitate effective and efficient delivery of planned services and outcomes. 1.4 To support the scrutiny function of the Panel, Members approved a report in August 2018 which established an assessment and prioritisation process for the Audit and Scrutiny Panel to use to develop its scrutiny work programme. This approach was further supported by the Panel in November 2019 when the in-depth Elected Member review process was established. This process enabled in-depth reviews to be undertaken on specific areas of activity or issues that were identified by Panel members. 1.5 With The Plan for North Lanarkshire (approved in 2019) and now well embedded as the approved strategic direction not just for the council and partners, but for North Lanarkshire as a place, this provides a clear long-term vision, focus, and compelling narrative in terms of what the council is working towards and therefore a clear basis for scrutiny activity. 1.6 An updated position statement on each of the Strategic Frameworks which are key to supporting The Plan for North Lanarkshire and monitoring delivery of the Programme of Work - while ensuring each stage of delivery towards achieving the long-term vision is appropriately planned, guided, implemented, and governed - was provided to the Panel in September 2021. This also outlined the Panel’s strategic oversight and governance role therein. 1.7 Following the update to the Scheme of Administration and composition of council committees in June 2022 - which resulted in changes to the membership of the Audit and Scrutiny Panel - the assessment and prioritisation process for the Audit and Scrutiny Panel to use to develop its work programme for scrutiny has been reviewed and updated. This update aims to ensure scrutiny activity is framed within the context of The Plan for North Lanarkshire and is focused on improving local public services and improving local outcomes. 1.8 This report therefore sets out the updated assessment and prioritisation process for the Audit and Scrutiny Panel to use to determine its work programme for scrutiny. This standardisation will help to assess the relative merits of the specific areas of activity or issues being brought forward by Panel members, and make prioritising and choosing between possibly competing items requiring scrutiny easier, while ensuring ongoing objectivity and transparency and ongoing alignment with the long-term vision set out in Page 394 of 418
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The Plan for North Lanarkshire. 2. Scrutiny work programme Assessment and prioritisation process 2.1 The development of a work programme for the scrutiny function of the Audit and Scrutiny Panel is founded on items submitted for consideration being evidence based. This is essential in order to ensure a fully informed assessment and prioritisation process. 2.2 As such, a set of principles were agreed in 2018 which were to be used to assess and prioritise items to be included in the scrutiny work programme. To ensure scrutiny continues to support delivery of the priorities and programme of work in The Plan for North Lanarkshire, and focuses on improving local public services and local outcomes, these have been reviewed and the updated set of principles is listed below: 1. Is the issue an area of concern for a wide range of service users, communities, or stakeholders that has been identified by numerous sources and is supported by a substantial bank of evidence? 2. Is the issue strategically significant, i.e. would improvement in this area have a positive impact on the delivery of one or more of the five priorities in The Plan for North Lanarkshire. The five priorities aim to: • Improve economic opportunities and outcomes. • Support all children and young people to realise their full potential. • Improve the health and wellbeing of communities. • Enhance participation, capacity, and empowerment across communities • Improve North Lanarkshire’s resource base. 3. Can scrutiny add value? Is performance, service delivery, or quality likely to improve as a result of scrutiny? 4. Will scrutiny of the issue support improved delivery of the Programme of Work or improved delivery of any of the supporting strategies, policies, or plans in the Strategic Policy Framework? 5. Does the issue pose a risk to the council? 6. Has the issue already undergone scrutiny, or review activity, within a recent timeframe? 7. Will scrutiny be duplicating other review work already underway, or planned, across the council? If so, does the scrutiny process align to the scope of the other review work and will it be able to support the identification of mutually beneficial recommendations for improvements? 8. Is the proposed scrutiny activity timely and can the scrutiny activity be completed within a reasonable timeframe? 2.3 The assessment and prioritisation process - informed by the principles set out in paragraph 2.2 above - is set out in Appendix 1. This process should be applied by the Audit and Scrutiny Panel when assessing and prioritising each proposed area of activity or issue put forward for scrutiny from Panel Members. By following the simple process map Members will be able to identify whether each item put forward for scrutiny is a high, medium, or low priority and merits inclusion in the scrutiny work programme. Type of scrutiny review 2.4 To ensure the most effective approach to scrutiny, reviews could take one of three formats: Page 395 of 418
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• An in-depth review - which can be undertaken by all Panel Members or, if required, a smaller subgroup. This would require a clear scope to be developed along with a timetable for the work to be undertaken. The work of any subgroup would require a report, with recommendations, to be submitted back to the full Audit and Scrutiny Panel for consideration and approval. • A spotlight on - short, sharp focused scrutiny activity, which could form one agenda item for a Panel meeting. • A focus on - presentations to Panel Members to share information and raise awareness or increase knowledge of a particularly complex area of activity or issue. Evidence for scrutiny reviews 2.5 A wide range of information exists to complement the scrutiny process; this includes: • Performance indicators from the Strategic Performance Framework. • Information on the volume, nature, and outcome of complaints. • Benchmarking results and comparisons with other councils, where available and aligned to themes linked to the five priorities in The Plan for North Lanarkshire (as per the approach established by the Panel in September 2021). • Demographics and future projections, e.g. for population or households. • Policies in place, or under development in line with the Strategic Policy Framework review programme. • Improvements already identified and implemented arising from the Strategic Self- Evaluation Framework review programme. • Elements or mechanisms from the Strategic Governance Framework review programme. Next steps 2.6 Following approval of the updated process (set out in this report and Appendix 1) to identify, assess, and prioritise future items requiring scrutiny, a work programme will be established for the Audit and Scrutiny Panel. This will be submitted for Member’s consideration at the next Panel meeting and updated as the year progresses. 3. Measures of success 3.1 The use of the scrutiny function of the Audit and Scrutiny Panel to identify specific areas of activity requiring improvement, that are aligned to The Plan for North Lanarkshire, will have a positive impact on the council’s ability to deliver the long-term vision. 4. Supporting documentation 4.1 Appendix 1 - Scrutiny work programme - assessment and prioritisation process Katrina Hassell Head of Business and Digital Page 396 of 418
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5. Impacts ( http://connect/report-template-guidance ) 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 have been discussed and agreed with Financial Solutions? 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 have been discussed and agreed with People and Organisational Development? 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 have been discussed and agreed with Legal and Democratic Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? 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". Councils are also required to ensure appropriate performance and governance arrangements are in place which meet the CIPFA Delivering Good Governance in Local Government: Framework (2016). The Accounts' Commission Statutory Direction requires that all councils report information which sets out performance in improving public services and improving local outcomes. 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 Page 397 of 418
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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 technology, has an assessment been carried out (or scheduled) 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? Scrutiny of the council's governance and performance contributes towards the mitigation of the risk on the Corporate Risk Register for Governance, Leadership, and Decision Making. Page 398 of 418
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Appendix 1 Scrutiny work programme Assessment and prioritisation process Page 399 of 418
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref KH/JL Date 08/09/22 Arm’s Length External Organisations: Governance and Risk Management: Oversight and Assurance Report 2022/23 (Programme of Work 75.1 – part 2) From Katrina Hassell, Head of Business and Digital E-mail hassellK@northlan.gov.uk Telephone 07903 096121 Executive Summary The council delivers a number of frontline and business-focused services through arm’s length external organisations (ALEOs) which have been developed over the past 20 years to provide services in new ways that are innovative, responsive or more commercially driven. The council must have confidence in the quality of service delivery and obtain assurances, through robust monitoring, scrutiny and oversight, that the public purse continues to secure best value and the externalised delivery arrangements are not exposing the council to potential operational, financial or reputational risks. This report provides an overview of the ALEO landscape and the performance and financial monitoring safeguards that are in place to provide such assurance. The report confirms that ALEO Boards and Management Committees continue to demonstrate effective stewardship with robust governance, financial governance and risk management arrangements in place. In recent years the number of council owned ALEOs has reduced following service review activity, or external factors, which highlighted that service provision via the externalised delivery vehicles no longer represented best value for the council. As such, the council has taken separate decisions to either in-source service delivery or cease provision, with the assets and responsibilities of the individual companies transferred accordingly and the companies formally wound-up and struck-off with all due diligence considerations adhered to. This report provides an update on the status of current dissolution activity providing an assurance to members that council decisions are being effectively and timeously implemented. Recommendations The Audit and Scrutiny Panel is requested to: 1) Note the nature and range of services provided by arm’s length bodies and the governance and stewardship arrangements in place to ensure effective, efficient and responsive service delivery; 2) Scrutinise the performance monitoring and oversight arrangements in place and confirm that these are suitably robust and provide appropriate opportunity for the council to obtain the necessary assurances that service delivery reflects Best Value; and 3) Endorse current activity to wind-up the business and affairs of a small number of existing ALEOs where the council has previously agreed to in-source or cease service delivery. AGENDA ITEM 12 Page 401 of 418
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1. Background 1.1. North Lanarkshire Council delivers a number of its customer-facing services via Arm’s Length External Organisations (ALEOs) and strategic partnerships. These outsourced arrangements have been established over previous years to provide an alternative, and in many cases more innovative method of service provision, or to ensure a commercially driven focus in delivery of the council’s business functions. 1.2. The ALEOs are separate legal entities in their own right, with their own governance and financial management obligations, however, the council remains accountable for service delivery, whether performed in-house or through alternate, arm’s length arrangements. As such it is imperative that the council regularly reviews and scrutinises the individual ALEOs’ operational and financial performance to ensure robust stewardship and quality of service delivery, whilst also minimising financial, service delivery and reputational risks to the council. 1.3. This report provides members with an overview of the council’s ALEO landscape and the reporting arrangements in place, along with assurance in relation to governance and risk management arrangements in the individual companies. As previously requested by members of the Audit and Scrutiny Panel in March 2022, the report also includes an update on progress in the dissolution and striking-off of those companies where the council has previously taken the decision to insource or cease service delivery. 2. Report 2.1. Although the council has reduced the number of ALEOs in recent years, the authority continues to have significant interest in a number of separate companies and statutory bodies and must therefore ensure that services are being delivered as per the council’s expectations, to a high standard and in line with the contractual arrangements and The Plan for North Lanarkshire. Table 2.1 below summarises service delivery by ALEOs, or through the joint venture partnership agreements in place with Amey and Mears. ALEOs – where the company(ies) are wholly owned by the council through 100% shareholding • Employability services including training, and support for people who are furthest from the labour market Routes to Work Limited (Ltd) • Commercial property letting • General lease advice to the council including management of the retained commercial properties North Lanarkshire Properties LLP and North Lanarkshire Property (Investments) Ltd • Economic regeneration and infrastructure investment Fusion Assets Ltd The Plan for North Lanarkshire 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 402 of 418
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ALEOs – where the company(ies) are wholly owned by the council through 100% shareholding • Deposit banking savings facility (to 30 September 2022) North Lanarkshire Municipal Bank Ltd Joint Venture Companies – formal partnership arrangements where the council has 33% shareholding and the parent company holds the remaining 66% • Housing repairs • Corporate properties’ repairs and maintenance Mears Scotland Limited Liability Partnership (LLP) • Roads and streetlighting repairs • Winter maintenance Amey Public Services LLP Table 2.1 2.2. Appendix 1 provides further information on each of the above including: • A summary of each company’s objectives and incorporation status; • Board or Management Committee composition; and, • The service committee responsible for monitoring and scrutiny. Council Scrutiny and Performance Reporting 2.3. The council has robust performance monitoring and management arrangements in place which have been developed and strengthened in recent years through a range of measures including the ALEO Review Programme, to ensure that the council’s externalised service delivery arrangements continued to demonstrate Best Value; and, the Strategic Performance Monitoring Framework which sees individual ALEOs’ operational and financial performance reported to the relevant service committee every six months. In addition, Audit and Scrutiny Panel members consider this composite assurance and oversight report every six months, providing members with the opportunity to review ALEO governance, financial governance, risk management or any other matters where there may be the potential for operational, financial or reputational risks to the council. 2.4. Further liaison and monitoring arrangements are described at Appendix 2. This ongoing dialogue between and the council and the ALEOs, further enhanced through the appointment of elected members and senior officers to serve as Directors on the individual Boards or Management Committees, creates the platform for collaborative working opportunities and ensures that the ALEOs’ business objectives are aligned to support delivery of The Plan for North Lanarkshire. Regular engagement also provides early indication of any potential service delivery constraints and provides an opportunity to highlight successes or service innovation, and promote collaborative working, Statutory Bodies 2.5. The statutory bodies, Strathclyde Partnership for Transport (including the Strathclyde Concessionary Travel Scheme) Lanarkshire Valuation Joint Board and the Health and Social Care Partnership all receive revenue funding from the council to provide services in North Lanarkshire and the council must assure itself that these are being delivered to a high standard and support our strategic direction. The level of performance monitoring and oversight, however, must take cognisance of wider scrutiny that is already in place through legislation and public accountability, and also the likely level of potential risk to the council. To this end, Strathclyde Partnership for Transport (including Concessionary Travel) and Lanarkshire Valuation Joint Board Page 403 of 418
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are both subject to annual reporting to the Environment and Place and Policy and Strategy Committees respectively. 2.6. The Health and Social Care Partnership is governed through the Integration Joint Board as per the Public Bodies (Joint Working)(Scotland) Act 2014, and a separate Performance, Finance and Audit Committee provides oversight of operational and financial performance including risk management. Governance Oversight and Assurance Update 2.7. The individual ALEOs and Strategic Partnerships have predominantly returned to business as usual with hybrid working arrangements in place. The companies are organising induction training, and site or office visits as appropriate, for the new members appointed to Board and Management Committees. Appendix 3 provides updates for each of the ALEOs confirming that Boards and Management Committees are meeting regularly; summarising the impact and recovery from Covid-19; and, identifying the top five risks for each entity. Audit and Scrutiny Panel members can take assurance that effective governance arrangements and robust financial stewardship are in place within each company. Financial Governance 2.8. The council has a duty under its “Following the Public Pound” obligations to ensure that the ALEOs are financially sound. The Council’s Section 95 Officer is responsible for maintaining appropriate and proportionate processes and procedures for scrutinising ALEOs’ financial performance. The individual contractual arrangements, between the council and each company specify the financial information which each ALEO must submit to the council and this enables Financial Solutions to assess and report on any potential financial risk likely to arise as a result of the council using the ALEO to deliver services. Paragraphs 2.9 and 2.10 describe, by exception, financial matters that require close monitoring by the individual ALEOs’ Board of Directors or Management Committees, along with robust, separate oversight by Financial Solutions. North Lanarkshire Properties LLP (NLP) 2.9. North Lanarkshire Properties (NLP), although still continuing to experience a reduction in rental income as a result of the pandemic, has not experienced any additional adverse impact on collections due to the outbreak of the Omicron variant, the ending of the furlough scheme or withdrawal of other business support. The company is proactive in its approach and continues to assess the forecast impact on rent collection levels and long-term debt recovery. The council has provided NLP with a letter of comfort to support NLP’s financial sustainability, however NLP will utilise accumulated reserves to sustain financial operations whilst continuing to progress their recovery plan and investment strategy towards longer term financial security. Routes to Work Ltd 2.10. The Board of Directors considered an update on the charity’s Risk Register at the meeting held on 23 June 2022 and identified four new or heightened risks which will require ongoing monitoring by Board members and Financial Solutions. The risks are linked to: • uncertainty of future funding commitments beyond 31 March 2023 to enable the charity to continue to operate at its current scale and capacity levels; • Sustaining reserves at the levels previously approved by the Board; Page 404 of 418
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• Failure to secure a significant portion of funding from the UK Shared Prosperity Fund; and, • Unsuccessful transition to new organisational management and delivery structure from 1st October 2022. The charity has identified control measures for each of these and they will be monitored by the Governance Sub Group and Board of Directors. In-sourcing Update 2.11. At the Audit and Scrutiny Panel meeting in March this year, members noted a series of separate decisions taken by the council in recent years to insource, or cease delivery, of a number of functions that had previously been provided through the arm’s length bodies summarised below. Services /Functions ALEO / Delivery Vehicle Status Cultural, leisure and related services. Culture and Leisure North Lanarkshire Limited. Services insourced and delivered via Active and Creative Communities from 1 April 2021. Functions inherited from the former Cumbernauld Development Corporation in 1996 to redevelop Cumbernauld town centre through support for business and enterprise growth and promotion. Campsies Centre (Cumbernauld) Ltd Company formally dissolved and struck-off from 21 June 2022. Deposit banking savings facility. North Lanarkshire Municipal Bank Ltd Work underway to close the Bank from 30 September 2022 and thereafter wind-up and dissolve the company as per the council decision on 27 October 2021. 2.12. Members requested that an update on the status of each dissolution programme should be provided at this meeting and the following additional information may be helpful. Culture and Leisure North Lanarkshire Ltd 2.12.1. Following service insourcing from 1 April 2021, the focus of activity shifted to concentrate on winding-up the business and affairs of the predecessor providers Culture and Leisure North Lanarkshire (CLNL) Ltd and North Lanarkshire Leisure (NLL) Ltd1. CLNL Ltd and NLL Ltd’s statutory accounts for 2021/22 have been prepared and an independent examination, reflecting the significantly reduced number of transactions 1 Following the earlier decision by the council in September 2018 to integrate sports, leisure, recreational activities and facilities within a single entity, with CultureNL Ltd retained as the single provider, and subsequently renamed Culture and Leisure North Lanarkshire Limited to reflect responsibility for the wider provision of services, the council as sole shareholder of North Lanarkshire Leisure Limited is also required to wind-up the company and apply for dissolution and strike-off via Companies House. Page 405 of 418
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within each company, is due to take place in the late summer. CLNL Ltd is waiting on confirmation of the de-registration of VAT and once this is confirmed, and the due diligence work relating to the insurance claims (referenced below) is completed, the striking -off process can begin. Further legal due diligence work required to be undertaken in respect of a small number of insurance claims that remained outstanding. Dialogue with the legal representatives acting on behalf of CLNL and NLL Ltd’s insurers is now at an advanced stage and it is anticipated that the matter will be resolved in early course. In the meantime, the council has taken steps to assist in making the dissolution and striking-off more straightforward and expedite the processes as timeously as possible by passing and filing special resolutions to reduce and limit the directorships on each company to a smaller number of representatives. Campsies Centre (Cumbernauld) Limited 2.12.2. The transfer of net assets, liabilities and undertaking transferred to the council from Campsies Centre (Cumbernauld) Ltd on 30 June 2021 and formal dissolution and striking-off from the Register of Companies was confirmed by letter from Companies House with effect from 21 June 2022 as noted above. North Lanarkshire Municipal Bank (NLMB) Limited 2.12.3. Following the decision by NLMB’s Board of Directors, and subsequent ratification by the Policy and Strategy Committee on 27 October 2021, to cease provision of a municipal banking facility due to the substantial levels of investment that would be required to ensure full compliance with significantly heightened anti-money laundering and anti-financial crime safeguards introduced in recent years, work to close the Bank with effect from 30 September 2022 is well underway. A Project Working Group comprising representatives from Legal and Democratic Solutions, Financial Solutions and Corporate Communications is in place to manage the closure and external specialist advice is being provided by a legal firm with previous experience in advising another local authority on closing its municipal bank. Correspondence has been issued to all active account holders, where contact details are available, advising them on the process to close their accounts and highlighting the availability of alternative banking services in the local areas. Frequently Asked Questions and regular updates are posted on the council’s website as part of a wider Communications Plan which includes; follow-up letters to customers who have yet to close their accounts; posters displayed in local offices, social media messaging; and news releases published via national and local media outlets. Key risks and challenges, including making contact with as many customers as possible; data protection safeguards; and ensuring that robust asset transfer arrangements are in place to adequately safeguard any monies to be held in trust for customers where it has not been possible to close their accounts by the 30 September 2022, have been identified. These are managed through the Project Working Group with reporting via the Corporate Management Team. Page 406 of 418
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3. Measures of success 3.1. The following measures of success are summarised for Panel members’ consideration: 3.1.1. Arm’s length service delivery providers continue to deliver high quality public services that achieve Best Value for the council. 3.1.2. Effective and timely monitoring and reporting to relevant Service Committees and this Panel provide assurance to the council that adequate governance, financial and risk management procedures are operating effectively in each of the ALEOs. 3.1.3. Panel members have adequate assurance that the council is fulfilling its ‘Following the Public Pound’ obligations and the externalised service delivery mechanisms are delivering services as per the council’s requirements and expectations with minimal risk to the council, or effectively managing risks where such are unavoidable. 3.1.4. Appropriate, timely and robust project management arrangements are in place to support the winding-up and subsequent dissolution of those ALEOs and outside bodies where the council has taken the decision to in-source or cease service delivery. 4. Supporting documentation 4.1. Appendix 1 - Summary of in-scope ALEOs and Joint Venture Partnerships 4.2. Appendix 2 - Approved ALEO Liaison and Monitoring Arrangements 4.3. Appendix 3 - ALEOs’ Governance, Risk Management and Business Continuity Summaries Katrina Hassell Head of Business and Digital Page 407 of 418
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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 have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Financial governance matters within individual ALEOs which require close monitoring by the respective Boards or Management Committees, along with further monitoring and oversight by Financial Solutions are highlighted, by exception, at paragraphs 2.8 to 2.10. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? 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 have been discussed and agreed with Legal and Democratic Solutions? 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 408 of 418
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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 technology, has an assessment been carried out (or scheduled) 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? Individual ALEOs are responsible for maintaining their own risk management and business continuity arrangements and ensuring these are regularly monitored with effective controls and actions in place, plus mitigations to reduce the likelihood or impact if a risk materialises. The information provided at Appendix 3 identifies the top risks for each company and confirms that risk management and reporting arrangements are in place. Separately, the council’s Business and Digital division has identified within its Service Risk Register the potential for service delivery, financial, operational and performance risks, or reputational damage to the council, if an externalised delivery vehicle fails to provide services and operate to the standards expected and required by the council. Controls and actions designed to minimise the potential risks associated with service delivery via an arm’s length body are in place and include the monitoring and oversight arrangements described in Appendix 2. Page 409 of 418
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Appendix 1 Summary of in-scope ALEOs and Strategic Partnerships WHOLLY OWNED ALEOs OBJECTIVES / SERVICES DELIVERED STATUS BOARD OF DIRECTORS COMPOSITION SERVICE COMMITTEE Routes to Work (RtW) Ltd Relief of poverty through supporting individuals to secure and sustain employment Advance education and training, particularly where this will lead to paid employment. Incorporated as a limited company with charitable status. Council is sole shareholder (100%). Maximum of up to 10 directors of whom: • Up to 2 are Category A Directors (1 elected member & 1 chief officer) appointed by NLC; • Up to 8 are Category B Directors representative of local community or possessing key skills/experience Enterprise, Growth and Fair Work Committee Fusion Assets Ltd Physical regeneration and infrastructure projects, focusing in remediation of vacant & derelict land where there is little speculative development by the private sector and/or market failure. Incorporated as a limited company. Council is sole shareholder (100%). Maximum of up to 8 directors of whom: • Up to 5 are Partner Directors (3 elected members & 2 chief officers) appointed by NLC; • Up to 3 are Co-opted Directors possessing key skills/experience Enterprise, Growth and Fair Work Committee North Lanarkshire Properties LLP Management, marketing and leasing of commercial property portfolio that transferred from NLC in 2013. Provision of general lease advice to NLC and management of NLC’s retained commercial properties (Legacy Estate). Incorporated as a limited liability partnership with 2 members: NLC owns a 99.999% shareholding and NL Property Investments Ltd holds a 0.001% shareholding. Maximum of 6 Management Committee members: • 5 representatives are appointed by NLC (4 elected members and 1 chief officer); • 1 representative is appointed by NL Property Investments Ltd Finance and Resources Committee NL Property Investments Ltd To facilitate and support North Lanarkshire Properties LLP Incorporated as a limited company. Council is sole shareholder (100%). Maximum of 6 directors appointed by NLC (5 elected members & 1 chief officer being the same individuals as those referenced above) Finance and Resources Committee (Limited separate reporting requirement since business is transacted through the LLP above.) North Lanarkshire Municipal Bank Limited Provision of deposit savings account facility for individuals and organisations Incorporated as a limited company and defined as a “municipal bank” under Section 103 of the Banking Act 1987. All serving elected members of NLC are shareholders, with an individual share of £0.05. Maximum of 7 directors (all elected members) appointed by NLC Policy and Strategy Committee approved Bank’s closure and dissolution of the company on 27 October 2021. Page 410 of 418
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STRATEGIC PARTNERSHIP VEHICLES OBJECTIVES / SERVICES DELIVERED STATUS MANAGEMENT COMMITTEE COMPOSITION SERVICE COMMITTEE Amey Public Services LLP Provision of roads, street lighting and winter services contract Incorporated as a limited liability partnership with Amey LG Ltd holding a 67% shareholding and NLC holding a 33% shareholding • 5 representatives with 3 appointed by Amey LG Ltd and 2 appointed by NLC (1 elected member and 1 chief officer) Environment and Place Committee MEARS Scotland LLP Provision of housing and corporate property repairs Incorporated as a limited liability partnership with MEARS plc holding a 67% shareholding and NLC holding a 33% shareholding • 5 representatives with 3 appointed by MEARS plc and 2 appointed by NLC (1 elected member and 1 chief officer) Housing Committee Page 411 of 418
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Appendix 2 NORTH LANARKSHIRE COUNCIL: APPROVED ALEO LIAISON AND MONITORING ARRANGEMENTS Although the ALEOs are separate bodies in their own right, responsible for service delivery and governance, the council remains publicly accountable and has a duty to ensure that these organisations are providing high quality, value for money services that meet service users and customers’ requirements and achieve best value for the council. The council fulfils its monitoring and assurance obligations through a series of contractual, governance and public reporting mechanisms as described. 1. Formal Service Level Agreements (SLAs) or Partnership Agreements between the council and the individual company. These contractual agreements set out the services to be provided, performance standards, monitoring obligations and the levels of funding, management fees or rates where these are provided by the council. 2. A nominated Client Officer is identified by the relevant service to ensure that service delivery adheres to the contractual conditions referenced above, meets the council’s requirements and expectations, and aligns with our strategic direction and The Plan for North Lanarkshire. 3. As per the council’s Strategic Performance Framework, Heads of Service within the relevant client service, submit a six-monthly performance report to the respective service committee. These reports also provide information from the Head of Financial Solutions on the company’s compliance with financial monitoring arrangements and financial performance including: • income and expenditure and comparison with budgeted forecast; • balance sheet at reporting period end; and, • projected cash flow - providing an assurance that the company can meet its liabilities and trading commitments. 4. The council appoints elected members and/or senior officers to serve on the relevant Boards of Directors or Management Committees providing a further opportunity for oversight and strategic alignment and ensuring that the council’s interests are reflected in company objectives and business planning. 5. Nominated Link Officers and Accountants from Business and Digital Solutions and Financial Solutions respectively attend Board and Management Committee meetings and ensure that governance, financial governance, risk management and business continuity arrangements are in place and that the company is complying with its monitoring obligations. 6. All ALEOs complete the annual Assurance Certificate and Checklist, with the findings incorporated in the council’s annual governance statement published in the annual accounts. 7. The council is also required by the Code of Practice on Local Authority Accounting to disclose its interest in companies where it has a controlling influence or has the potential to exert ‘control or influence’ through levels of funding or representation on the Board, when preparing its annual statutory accounts. 8. The Audit and Scrutiny Panel considers a six-monthly governance and assurance report from the Head of Business and Digital. This composite report provides information submitted by each ALEO on governance arrangements; significant developments; risk management (including identification of the top five risks within the company) and assurances in relation to business continuity. The report also includes information from the Head of Financial Solutions highlighting any financial risks within an individual ALEO that have been identified by Financial Solutions through their financial monitoring. This information describes any potential impact or risks to the council including the potential impact on service delivery and/or trading operations. Page 412 of 418
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Appendix 3 ALEOS’ GOVERNANCE, RISK MANAGEMENT AND BUSINESS CONTINUITY SUMMARIES Fusion Assets Ltd Governance - Board of Directors meeting scheduled for 16 May 2022 was rescheduled pending appointment of council representatives and was subsequently held on 8 August 2022 with the AGM scheduled for 7 November 2022. Summary of Impact of Covid-19 on Business and Recovery To Date – Fusion Assets continues to operate in a “business as usual” manner from its new office in the Muirfield Centre, Cumbernauld, on the basis of a hybrid working arrangement with staff spending on average three days a week in the office. Overall, the industrial market continues to show high levels of demand, both from inward investors and local companies, with very limited stock of buildings available. Following the expected completion and sale in November 2022 of Plot A2 at Newhouse where a new facility is being built for Co-op, Fusion Assets intend to start construction of its next development project on the adjacent plot of land. Proposals are also being taken forward to establish a joint venture company at Eurocentral and secure development finance for a 42,000 sqft multi-let industrial scheme. Elsewhere the company continues to look to identify development opportunities and market sectors that will contribute to the delivery of the Council’s Economic Recovery Plan. Risk Management – Fusion Assets operates the Figtree Risk Management system that has been adopted by the council with risks reviewed and updated on a regular basis. An additional staff resource means that Fusion Assets is less vulnerable to the loss of key personnel, although the company remains very small in terms of personnel and headcount. Overall programme delivery associated with annual funding awards remains a key risk area due to a number of external factors including negotiations on site acquisitions with third parties, works contract delays associated with obtaining statutory consents and co-ordination with utility companies. Top 5 Risks Programme delivery Contracts and procurement risks Property acquisition Accessing adequate financial resources Grant availability Business Continuity – There have been no business continuity issues over the last six months with no illnesses or long-term absenteeism. With the recruitment of a Development Manager, the company now has an additional senior staff resource to deputise for the Managing Director when required. The company has successfully migrated its filing system over to Teams in line with the council’s new corporate arrangements for data management, although there remain some slight issues with formatting and Business and Digital Solutions are providing assistance. Service Developments / Highlights – • Director Induction Packs have been prepared which include copies of the current Business Plan and Corporate Governance Manual. Site visits will be organised in due course. • Planned updating of Fusion’s Company Business Plan for 2022- 2024 will follow on from consideration of a new Environmental, Social and Governance (ESG) Policy and Action Plan at the August Board meeting. A new scheme of delegation is also scheduled to be considered by the Board at the August meeting. Page 413 of 418
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North Lanarkshire Properties (NLP) LLP and North Lanarkshire Property (Investments) Ltd Governance - Following the scheduled Management Committee and Board meetings in February this year, and a special meeting in April to consider a specific property matter where a timeous decision was required, NLP’s next meeting will be on 1 September 2022 with indicative dates in place for the remainder of this year and next year. Summary of Impact of Covid-19 on Business and Recovery To Date – Hybrid working was introduced in April 2022 and NLP employees are office based for a minimum of two days each week. The hybrid model works well for NLP as there is a natural requirement for a combination of office and on site delivery associated with the majority of the roles. Continuity of service was able to be maintained throughout Covid as a consequence of the business’s ability to deal with transactions digitally and adopt new processes to complete contractual requirements where necessary. NLP continues to align with the overall North Lanarkshire Council business model. Future investment is being considered in the forthcoming year for the outsourcing of the Uniform database maintenance to the software designer IDOX which will alleviate the need for downtime and business critical bottlenecks that can be associated with fault rectification. This will support the finance team and technical team in maintaining continuity in support of the rent roll, new lease transactions and terminations and allay associated reputational damage associated with system downtime. Risk Management – NLP Management Committee considers an update report on the company’s Risk Register at each meeting providing members with the opportunity to review where the proximity or potential impact of any previously identified risks has heightened or been further mitigated in any way and to consider emerging new risks. Individual risks are organised under five strategic risk categories noted below. Top 5 Risks IT Systems and Software: Failure of main reporting and management systems resulting in failure to collect rental income Business continuity management: Staff resource capacity and loss of staff Planning and Resources (Financial): Reduction in income due to pandemic and/or cost of living crisis Planning and Resources (Strategic Change): Failure to align new strategies to change in market conditions Planning and Resources (Financial): Inability to service facility agreement Business Continuity – NLP’s operations have been robust throughout the pandemic and post pandemic period and business aligns well with the hybrid working regime put in place. Some challenges have been experienced where the company is reliant on external partner organisations who provide repairs services and monitoring and testing functions across the property portfolio. Issues are communicated via internal and external working groups and managed accordingly where service is disrupted. NLP continue to support and manage the asset management function for NLC and NHS Lanarkshire via the service level agreement vehicle. Most issues are resolved via one on one meetings or enquiries that are allocated across the Estates Team. Regular meetings are held between NLP, NHS and the company’s appointed facilities management partner where issues are addressed as part of 360° action and feedback. Utility suppliers have caused some delay in project completion and re-letting of a small number of properties where NLP is not in control of timescale for new supplies and metering installations. This is not something that can be controlled, however NLC Energy Assets are engaging on NLP’s behalf as and when required to help resolve issues. Service Developments / Highlights – • NLP’s existing Five Year Business Plan is under review and update with draft proposal being prepared for 2023. • Recruitment underway for two additional surveyors to backfill vacant posts. Page 414 of 418
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Routes to Work (RtW) Ltd Governance - Board meetings took place on 15 March and 23 June 2022 as scheduled with further quarterly meetings scheduled for the remainder of this year including the Annual General Meeting on 22 September 2022. The Finance Sub Group meets monthly and the separate Governance and HR Sub-Groups continue to meet quarterly with special meetings convened as required. (For example two special meetings of the HR Sub Group were held over the summer to consider and subsequently recommend that fixed-term contracts of employment for staff due to leave RtW on 30 June this year should be extended to 30 September 2022 to support the wider management and staffing review/restructure exercise. A small number of points of detail arising from this review were also the subject of separate consideration and finalisation by the HR Sub Group at a further special meeting in advance of engagement and dialogue via the Employee Forum and a full staff briefing event held on 19th July 2022. Summary of Impact of Covid-19 on Business and Recovery To Date – RtW staff returned to hybrid working (2 days in the office / 3 days at home for FTEs and pro rata for part time staff) from Monday 7th February 2022, following a short period of full homeworking due to the Omicron variant and pressure on NHS Services. This was reviewed at the end of February and from 21st March 2022, RtW increased the days in the office to a 3:2 ratio (3 days in the office and 2 days at home). This was reviewed again in April and restrictions were further relaxed enabling RtW to return to client facing activity. From 19 April 2022, client appointments in the offices were reintroduced and RtW made preparations to resume community based appointments with clients. This planned return to ‘business as usual’ was successful and at the beginning of June RtW moved to a 4:1 office / home working pattern (for FTEs and pro rata for part time staff). RtW have recently reviewed the impact of these hybrid working arrangements and the potential to implement a more permanent hybrid working model, consulting widely with staff, clients and partners. The findings were discussed by the Board with the outcome of the service delivery model review and a blended model of delivery, along with some specific recommendations for particular service user cohorts, being identified as the most preferred model. The recommended actions arising from this exercise will be carried out from October 2022 onwards. Risk Management – The Risk Register is reviewed quarterly by Senior Management Team and discussed at the Governance Sub Group quarterly meeting. A Risk Management update report is submitted at each Board meeting. This identifies any new risks and outlines where the impact of a potential risk is considered to have heightened in terms of severity or proximity. The Risk Management report also confirms where the impact of a potential risk is considered to have become less of a threat, including the point at which the risk is deemed to be sufficiently manageable or insignificant and may be removed from the Risk Register. Risks are assessed using a Red, Amber and Green (RAG) methodology. The Risk Register had a full review in April 2022 in line with the new operational year, the top 5 risks were identified as the following: Top 5 Risks Under- performance on key contracts Failure to secure funding via UK Shared Prosperity Fund Failure to deliver on new Community Regeneration Fund Project Unsuccessful transition to new delivery model Breach of information security Business Continuity - • Business Continuity Policy and a Business Continuity Plan in place. • Interim Working from Home Policy introduced in 2021 is due to be replaced with Hybrid Working Policy as described above. Page 415 of 418
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• Staff shortages, as a result of staff leaving RtW due to the prevalence of short term, temporary contracts linked to funding commitments and an inability to backfill, due to the current labour market and the short contract length, continue to present the greatest business continuity challenges. • A recent rise in sickness levels, potentially as a result of increased numbers in offices and general closer mixing of people both at work and in leisure, is being closely monitored. While figures remain generally within the target overall 97% attendance rate, the trajectory is worsening and RtW will conduct a deep dive if this continues to identify any additional measures required beyond the charity’s usual absence management processes. Service Developments / Highlights – • Business Plan annual review completed in March this year to identify objectives for inclusion in the 2022/23 annual operational plan. The Operational Plan, as approved by the Board in June this year consists of 8 Action Areas with 49 Tasks and Activities supported and demonstrated through 145 progress indicators. The Plan will be reviewed quarterly through the Governance Sub-Group with update reports provided at each Board meeting. • In line with RtW’s Strategic Business Plan objectives, a revised core management and staffing structure was approved by the Board at its meeting in June. The revised structure reflects current operational commitments; increasing corporate governance commitments and obligations; growth and development ambitions; Knowledge Transfer Partnership (KTP) workplans; and considers current and future management and leadership capacity and work distribution issues to ensure, as far as possible, that RtW is future-proofed for the remaining period of the business plan. The structure anticipates that revenues will continue to remain at recently increased levels, significantly reducing the necessity to employ staff on fixed-term contracts through the creation of 15.1 Full Time Equivalent new permanent posts, taking the permanent headcount to 71.3 FTEs. An external and internal recruitment campaign will commence in early August with the aim of having staff in place by 30 September to coincide with the revised end date of the majority of fixed term contracts currently in place. • RtW has recently secured a place on the Scotland Excel Framework for delivery of commissioned services under the No One Left Behind umbrella across Scotland. The framework covers all 32 local authority areas and provides a directory of approved providers which individual Local Authorities can choose to call-off service provision from using a mini- competition process. RtW has been successful in gaining a place on the 12 Glasgow City Region authorities’ frameworks, plus other geographically linked authorities and anticipates taking this forward as part of the charity’s growth and development ambitions. • 20,000 service user celebration event held on 17 June 2022 and attended by elected members, partners, service users, employer, colleges and training providers. Amey Public Services (APS) LLP Governance - Management Committee met on 24 June 2022 with further quarterly meetings scheduled for the 9 September and 9 December 2022. APS Senior Management Team meets with senior managers from Environmental Assets on a monthly basis at the Roads, Street Lighting and Winter Service Client Liaison meetings. The standing agenda includes: Contract Performance Management (including review of Performance Indicators); Financial Management; Health and Safety; Operational Service Delivery; Winter Services; and any issues escalated from other sector meetings between the council and APS. APS continues to work closely with the council at all levels to maintain consistency of service delivery and flag / discuss / resolve issues at the most appropriate level. Any matters which are not resolved are escalated to management as appropriate. Summary of Impact of Covid-19 on Business and Recovery To Date – APS continues to deliver services on a ‘business as usual’ basis and in line with Scottish Government and Amey’s own Covid work restrictions and safeguards. The company has recently removed some restrictions and is moving towards to a “Living with Covid strategy”, however, Amey remains Page 416 of 418
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vigilant to the impact that Covid could have on working practices and operational delivery and good practices remain in place. Hybrid working is available for office-based staff as appropriate, and the council liaison meetings referenced above continue to be undertaken via TEAMS. APS continues to monitor Covid sickness absences, and these have been relatively small in number with little to no impact on service delivery. This is due to the positive behaviours of employees both in the work and non-work environment and continual monitoring of individuals’ wellbeing. Risk Management – Although the APS Contract has not been impacted by any significant issues to date, the conflict in Ukraine, hyperinflation and the lag from exiting Covid is monitored constantly to keep all parties aware at an early stage of any impacts which could affect the contract stability. There have been no changes to existing risks on the APS Contract since the previous report and risk management is discussed at appropriate forums with the council and at Management Committee meetings. Top 4 Risks Insufficient revenue and capital budgets from the council to maintain APS resource levels, productivity and utilisation Continued pressures from labour market (e.g. house builders, competitors) attracting operational staff away from APS with higher wages Need for increased levels of third-party work to offset any NLC budget constraints Hyperinflation and changes in law have seen a wholesale increase on material costs. These increases have not been fully covered off by the contract indexation Business Continuity - There have not been any impacts on service delivery or business continuity over the last six months from Covid. APS continues to keep its Business Continuity Plan and other risk assessments under review on an ongoing basis to reflect current guidance both from Scottish Government and Amey Group and HSEQ team. Service Developments / Highlights – • APS and the council are working in partnership to submit a tender for the Department for Transport and ADEPT Live Labs2 initiative which aims to support the creation / maintenance of Net Zero highways and local roads. The programme targets innovation in working towards carbon Net Zero and improving environmental impacts. A series of joint “Net Carbon Zero” workshops have been held to present and identify the key issues in zero carbon that should be addressed through the bid along with a process to enable identification of solutions. Mears (Scotland) LLP Governance - Mears Management Committee meeting scheduled for 31 May 2022 was postponed pending the appointment of council representatives. The operational and financial performance for Quarterly Monitoring Periods 1 and 2 (1 January to 30 June) were subsequently considered at the meeting on 23 August 2023. Mears engages with the Client Monitoring Officer from Housing Property and Projects through the quarterly governance meetings along with wider engagement and collaborative working through: • 4 Weekly Liaison Meetings with the council’s Repairs and Maintenance Manager; • SIP (Service Improvement Groups); • Finance Liaison Meetings (Monthly); and, • Customer Success Improvement Group. Page 417 of 418
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Summary of Impact of Covid-19 on Business and Recovery To Date – Mears’s operating model has returned to ‘business as usual’ and the company continues to work in partnership with the council to deliver all services within the Contract. All staff have now returned to the office on a full-time basis. All digital infrastructure and technology remains in place however, to ensure that in the event of an emergency, all staff have the correct kit and security protocols to allow a swift and seamless transition to home working. Health and Safety remains centric to Mears’s operating model and as such, the decision was taken to continue to work to the approved Covid risk assessments and procedures to ensure a safe working environment for our staff and to protect the wellbeing of tenants and residents in the local communities. Risk Management – Risks are monitored with controls in place to reduce the likelihood of occurrence and mitigate the potential impact. Top 5 Risks Potential Health and Safety breaches through failing to adhere to additional Covid practices Resource Supply (Attracting and retaining qualified employees); Supply and pricing of materials; and sub-contractors. Partnership finance following cessation of the defined service agreement and impacted by: Continued Covid safety operating; change in sales mix from higher margin larger capital works to lower margin repeat work; and supply and pricing of materials. GDPR- Failure to comply with Data Protection requirements in line with regulations updated in May 2018. Requirement to ensure that Mears’s T&Cs and pay rates remain competitive /comparable to the labour market. Business Continuity – Business Community Plan updated in March 2022 to reflect Mears’s newly implemented structure, and key personnel to engage with depending on nature of the event or incident. Mears are able to respond quickly to any incident which limits access to office space as demonstrated by adapting to home working during the pandemic. All systems are accessible remotely and data protected through our remote desktop Virtual Private Networks. Service Developments / Highlights – • Mears has been selected as the delivery partner on behalf of North Lanarkshire Council to refurbish tower blocks that had been earmarked for demolition, to provide homes for Ukrainian refugees. Mears are now on site to refurbish 200 homes within Birkshaw and High Coats Towers. • Mears are working alongside the council’s Business and Digital division on the development and implementation of the new job scheduling and planning tool, Microsoft Field Services, which is due to be rolled out in August 2022. Page 418 of 418