Agenda pack
North Lanarkshire Council · 24 November 2022
Back to Audit and Scrutiny Panel — 24 November 2022 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
Our Ref: Your Ref: Contact: Tel: Fax: E-Mail: Date: Lesley Dysart dysartl@northlan.gov.uk 15 Nov 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, 24 November 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, T Fisher; J Hume; D Johnston, T Johnston, H Loughran, F McNally, G Robinson; K Stevenson; R Sullivan, and S Watson. Page 1 of 174
Page 2
Page 2 of 174
Page 3
AGENDA (1) Declarations of Interest in terms of the Ethical Standards in Public Life Etc. (Scotland) Act 2000 SCRUTINY RELATED ITEMS (2) Strategic Frameworks Annual Position Statement (page 5 - 18) Submit report by the Head of Business and Digital setting out the corresponding annual position statement for each Framework for the information of the Panel in line with their remit (copy herewith) (3) Annual Review and Refresh of the Strategic Self-Evaluation Framework (page 19 - 62) Submit report by the Head of Business and Digital (1) updating the Panel on the achievements from the Strategic Self-Evaluation Framework rolling Review Programme for 2021 to 2022, and (2) presenting the refreshed Framework (copy herewith) AUDIT RELATED ITEMS (4) Audit and Risk-Related Items: Action Log (page 63 - 64) Submit report by the Head of Audit and Risk allowing the Panel to track implementation of requests and recommendations made by the Panel in respect of audit and risk-related items in the previous 18 months (copy herewith) (5) Internal Audit Progress Report (page 65 - 122) 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 September 2022 (copy herewith) (6) Internal Audit: Follow-Up of Actions previously agreed by Management in response to Audit Recommendations (page 123 - 140) Submit report by 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) RISK MANAGEMENT RELATED ITEMS (7) Risk Management Update (page 141 - 154) Submit report by the Head of Audit and Risk (1) providing the Panel with a brief update on key risk management developments since the most recent report in September, and (2) highlighting a selection of the more significant issues which are of current focus from a risk perspective (copy herewith) Page 3 of 174
Page 4
2 (8) Corporate Risk Update (a) Governance, Leadership and Decision-Making (page 155 - 164) Submit report by the Head of Audit and Risk providing an overview of the current risk environment together with an overview of existing controls and actions taken to date to mitigate against this risk, as well as further actions planned to continue to manage and update this risk (copy herewith) (b) Supply Chain Risk (page 165 - 174) Submit report by the Head of Audit and Risk providing an overview of the current risk environment and the existing controls and actions taken to date to mitigate against this risk, as well as further actions planned to continue to manage and respond to this risk (copy herewith) Page 4 of 174
Page 5
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref KH/SL Date 24/11/22 Strategic frameworks annual position statement From Katrina Hassell, Head of Business and Digital E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary Members of the Audit and Scrutiny Panel are aware of the inter-related strategic frameworks where the benefits to be gained by avoiding duplication and enhancing alignment across these frameworks are key to assessing the success of The Plan for North Lanarkshire, while ensuring each stage of delivery towards achieving the overall vision is appropriately planned, guided, implemented, and governed. The six frameworks focus on ensuring a corporate one council approach in respect of Policy, Governance, Performance, Self-Evaluation, Project Management, and Demonstrating Improved Outcomes for Communities. To ensure these frameworks remain aligned to The Plan for North Lanarkshire, each is on a programme to undergo a regular review and refresh exercise. Delivering the council’s long-term vision within such a fast moving, unpredictable, challenging, and complex local government environment means the ongoing effectiveness of the Frameworks is therefore vital not only to support delivery of the long-term vision and business as usual activities, but also to ensure this is undertaken within the appropriate governance, performance, and control frameworks. Various reports in respect of these Frameworks have been considered by the Audit and Scrutiny Panel during the last year in line with their responsibility to provide an independent review of the council’s governance, risk management, performance, and control frameworks. This composite report therefore sets out the corresponding annual position statement for each Framework for the information of the Panel in line with their remit. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Acknowledge the annual position statement for each Framework and the next steps to ensure each remains aligned to The Plan for North Lanarkshire, monitors delivery towards achieving the overall vision, and ensures delivery is appropriately planned, guided, implemented, and governed, and (2) Are aware that a corresponding Review Programme supports each Framework which ensures that all relevant matters are kept under review, updated as required, and reported to the relevant committee. AGENDA ITEM 2 Page 5 of 174
Page 6
1. Background 1.1 The Plan for North Lanarkshire is now well established as 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. 1.2 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. 1.3 The strategic frameworks supporting The Plan for North Lanarkshire are equally well established: • Strategic Policy Framework • Strategic Governance Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities 1.4 These inter-related frameworks are key to assessing the success of The Plan for North Lanarkshire and ensuring a corporate one council approach. They are also key to monitoring delivery towards achieving the overall vision and ensuring each stage is appropriately planned, guided, implemented, and governed. 1.5 The ensure these frameworks continue to align to, and support delivery of, The Plan for North Lanarkshire all are on a programme for a regular review and refresh exercise. 1.6 This report follows on from previous annual updates on the Frameworks presented to the Audit and Scrutiny Panel in September 2020 and September 2021. It sets out the current position statement for each Framework to provide a composite update in support of the Audit and Scrutiny Panel’s strategic oversight and governance role. 2. Update 1. Strategic Policy Framework Background 2.1 Initially approved in September 2018, the Strategic Policy Framework aims to ensure that strategies, policies, and plans supporting delivery of The Plan for North Lanarkshire are formulated, developed, implemented, monitored, and reviewed in a consistent and transparent manner across the council. The Framework therefore sets out the high- The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Page 6 of 174
Page 7
level strategies, policies, and plans which are subject to a formal review process to ensure they remain fit for purpose and continue to align to the strategy of the council. 2.2 Since implementation many strategies, policies, and plans have been newly developed, reviewed and updated, approved, and implemented to support achievement of the long- term vision. 2.3 This was acknowledged in the Audit Scotland interim management report in June 2021 which concluded by categorising the related recommendation from the 2019 Best Value Assurance Report (BVAR) as complete given the “robust process in place to ensure policies and strategies are kept up to date and regularly reviewed to ensure they are aligned to The Plan and any laws and regulations”. Current position 2.4 The Strategic Policy Framework has undergone various updates since initially approved, with the most recent position being reported to the Policy and Strategy Committee in March 2022. 2.5 The report in March 2022 followed the annual review process which focussed on: • An update of the Review Programme to ensure all strategies, policies, and plans are kept under review, updated as required, and reported to committee. • Identifying any gaps in terms of strategy or policy development in line with the five priorities set out in The Plan for North Lanarkshire. • A review of the supporting guidance to ensure strategies, policies, and plans are developed in a standardised manner, consistently use a common format, and roles and responsibilities are clear. This included strengthening the guidance to ensure appropriate consultation and engagement with all relevant stakeholders, consideration of the impact of the pandemic and the resultant social and economic effects locally, and enhancing cross service collaboration to avoid strategies or policies pulling in different directions. • The integration of impacts into the guidance for developing strategies, policies, and plans, as appropriate, e.g. similar to the impacts on the committee report template (e.g. carbon, technology/digital, data protection, equalities, etc). • Further development of the hierarchy approach supporting the Strategic Policy Framework in order to provide a clear structure for the development of strategies and policies that differentiates between strategies or polices designed to ensure compliance with laws and regulations, facilitate delivery of The Plan for North Lanarkshire, or standardise internal processes. 2.6 The Strategic Policy Framework review programme has continued throughout 2022 with new (or updated) strategies, policies, and plans approved at committee in respect of the following: • North Lanarkshire Tourism Strategy - February 2022 • North Lanarkshire Social Enterprise Framework - February 2022 • Climate Plan: Action on Climate Together 2030 - February 2022 • Digital and IT Strategy - February 2022 • Corporate Asset Management Plan - September 2022 • Procurement Strategy - September 2022 Next steps 2.7 Developments over the years within both the Strategic Policy Framework and Page 7 of 174
Page 8
Programme of Work meant there had been overlap. This was resolved in the March 2022 report to the Policy and Strategy Committee when the delineation was made and strategies, policies and plans were only included in the Strategic Policy Framework moving forward. 2.8 As such, the Strategic Policy Framework Review Programme is scheduled to undergo an annual review and update process with a view to reporting an updated position to the Policy and Strategy Committee in March 2023. 2. Strategic Governance Framework Background 2.9 The Strategic Governance Framework brings the principles of good governance together with legislative requirements and management processes by which the council is directed and controlled and through which it is accountable to, engages with, and leads the local community. It sets out the council’s local code of governance in line with the national Delivering Good Governance in Local Government: Framework (2016). 2.10 The Strategic Governance Framework recognises the importance of good governance in terms of meeting statutory Best Value obligations and ensuring the council is able to effectively pursue the long-term ambition set out in The Plan for North Lanarkshire, while ensuring this is underpinned with control and the management of risk, and: • Resources are directed in accordance with agreed policies and according to priorities, and in line with corporate Project Management procedures. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in achieving defined outcomes for service users and local communities. 2.11 Initially approved in February 2020, the Strategic Governance Framework went through a substantial review and refresh process in June 2021 which was endorsed by the Corporate Management Team (CMT) and approved by the Audit and Scrutiny Panel in September 2021. 2.12 A subsequent 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. Current position 2.13 The latest update to the Strategic Governance Framework and its accompanying Review Programme was further endorsed by the CMT in June 2022 as the council’s local code of governance which has undergone an annual review and refresh process in order to identify how the effectiveness of the council’s governance arrangements have been monitored and evaluated in the year. The updated Framework was subsequently approved by the Audit and Scrutiny Panel in September 2022. 2.14 Using a RAG status, each of the elements and mechanisms within the Review Programme can be assessed to ensure they remain timely and effective in supporting delivery of The Plan for North Lanarkshire. This process provides a method by which to identify and prioritise items requiring to be reviewed and updated further. Page 8 of 174
Page 9
The latest position as at June 2022 identified no Red elements or mechanisms, three Amber, and the rest were Green. For all three assessed as Amber (i.e. Corporate Anti- Fraud Policy and Response Plan, Code of Conduct for Chief Officers, and the Employee Performance Review and Development (PRD)), there is a commitment by a member of the CMT to ensure an update is undertaken during 2022/23. Next steps 2.15 The natural alignment of the elements and mechanisms in the Strategic Governance Framework means there has been, in some instances, overlap with the governance and strategic oversight and accountability aspects from the Programme of Work for 2022/23. CMT therefore acknowledged (in June 2022) the integration of these items into the one framework moving forward, in line with the outputs from their Strategic Planning session in April 2022. 2.16 Specific items from the Programme of Work from 2022/23 were therefore incorporated into the Strategic Governance Framework Review Programme in June 2022 (i.e. P007.1-Corporate communications plan; P011-Three year revenue budget strategy, P012.1-Community Investment Fund; P059-Procurement capacity and capability, P072.2-Strategic data management and information governance; P075.1-Strategic governance, oversight, and accountability; P086-Equalities, and P087.1-Climate change duty compliance). 2.17 Moving forward, the Strategic Governance Framework and its accompanying Review Programme will remain on a formal annual review process that will take place each year in order to inform production of the council’s Annual Governance Statement. This review will include updating on the reporting arrangements for the former Programme of Work governance items. 3. Strategic Performance Framework Background 2.18 The detailed Strategic Performance Framework, approved in September 2019, sets out the framework for performance measurement at three levels (as per the diagram on the right). This approach aims to collectively provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people and communities of North Lanarkshire. The measures in this Framework allow for day to day activities, and progress towards achieving the long-term vision set out in The Plan for North Lanarkshire, to be regularly monitored, reported, assessed, and scrutinised. 2.19 Ensuring compliance with the requirements of Best Value, good governance, and the Accounts Commission’s Statutory Direction were three aspects which shaped the development of the Strategic Performance Framework. As such, the three levels of indicators within the Framework align to Statutory Performance Indicator 1 in the Direction in respect of “improving local services” (level 3) and “improving local outcomes” (levels 1 and 2)”. The non-negotiable standards supporting the Framework are designed to reflect key requisites of the Direction, such as ensuring performance reporting that is balanced and in context. Current position Page 9 of 174
Page 10
2.20 As recognised in the Annual Governance Statement for 2021/22 (signed off by the CMT in June 2022 and approved by the Audit and Scrutiny Panel in September 2022), the Internal Audit annual audit opinion for 2021/22 recognised 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”. 2.21 Notwithstanding this impact, work has progressed and this is recognised by Audit Scotland in their Annual Audit Report for 2021/22 (due to be presented to the Audit and Scrutiny Panel in November 2022). This reports on the implementation of the BVAR recommendation (i.e. to “implement the recently approved Performance Management Framework and reporting schedule to support the delivery of The Plan for North Lanarkshire and its scrutiny my members”) and concludes that “good progress has been made”. 2.22 Activities undertaken during 2022 in this respect therefore include the following. • An update to the level 1 health check indicators was reported to the Policy and Strategy Committee in March 2022. Collectively these indicators provide the North Lanarkshire context and have an important role to play in terms of informing the council’s strategic planning process and providing a way of assessing progress against the long-term vision. A further six monthly update was produced in August 2022 which is currently being used to inform the further development of the Programme of Work for 2023 onwards. • Local Government Benchmarking Framework (LGBF) reporting to the Audit and Scrutiny Panel was aligned to the five priorities within The Plan for North Lanarkshire. This enabled due consideration of council performance - along with comparable performance results from other councils over a considerable period of time - within the context of the council’s strategic plan. • The council’s website hosts the national online LGBF tool to enable easy access for the public to view the suite of benchmarking measures and compare North Lanarkshire’s results with other local authorities (https://www.northlanarkshire.gov.uk/your- council/performance-of-the-council/comparing-our-performance). The Audit Scotland 2020/21 Annual Audit Report therefore concluded that the BVAR recommendation to ensure that “performance information on the council’s website should be kept up to date to improve accountability to the public” was complete. • A new approach to performance reporting for complaints indicators (in line with the Scottish Public Services Ombudsman (SPSO) Local Authority Complaints Handling Procedure) was built up within the Business Intelligence (BI) Hub in line with the move to the new Dynamics platform for handling complaints. This provides a range of data visuals which enable live complaints performance information to be viewed, segmented, and analysed in order to identify aspects of complaints handling which require further investigation. This supports the move away from performance reporting to actively using performance information to identify areas for improvement. • Strategic Performance Framework pilot reporting was tested during 2021 and 2022 that aimed to reaffirm the related responsibilities of service committee and set out the latest performance results to allow Elected Members to monitor, assess, and scrutinise performance in order to identify areas requiring improvement and inform future decision making. This also aimed to ensure performance reporting remained effective in achieving the best fit between reporting on progress against the council’s long-term vision and delivering on what matters today locally. The pilots reported the latest performance results for the: - Head of Regulatory Services and Waste Solutions to the Environment and Page 10 of 174
Page 11
Transportation Committee in August 2021 and February 2022. - Head of Business and Digital to the Transformation and Digitisation Committee in September 2021 and February 2022. - Head of Financial Solutions to the Finance and Resources Committee in September 2021 and March 2022. - Head of Environmental Assets to the Environment and Transportation Committee in February 2022. 2.23 Following positive feedback from Committees and Heads of Service regarding the pilot, the opportunity was taken (while there was no committee meetings from April to August 2022) to establish the same reporting mechanism for all other Head of Service areas. This has involved establishing a bank of data spreadsheets with all relevant indicators and updated data, updating indicator definitions, and ensuring accuracy checks are in place. 2.24 It should be noted that this has been a substantial piece of work given the size of the council and extent of service provision in operation, the availability of performance information and resources in services to maintain such information while dealing with the pandemic, not to mention that this work was ongoing at the same time as it was being audited by both internal and external auditors, thus impacting on the same resource. This work was also ongoing at a time when work was being carried out simultaneously to set up the Strategic Performance Framework in the Business Intelligence (BI) Hub to improve not only the presentation of performance information in the future, but also the ability to more effectively analyse the information in order to identify areas for improvement. Next steps 2.25 Work to progress the next steps in order to fully re-implement the Strategic Performance Framework in 2022/23 has been ongoing during 2022. Current work therefore includes: • Finalisation of work already underway to complete the Head of Service data spreadsheets and the corresponding Teams landing page for launch with the CMT in November 2022. • These spreadsheets - and the suite of LGBF indicators (which are integrated within the spreadsheets) - will inform a future programme of themed discussions and challenge and scrutiny agenda items for both the CMT and the Audit and Scrutiny Panel. • CMT meetings will also see each Head of Service (a) present service performance highlights in line with risks, and (b) identify the public performance reporting to follow thereafter. • Finalisation of work already underway with Heads of Service to review indicators within the Strategic Performance Framework and identify those that are to remain moving forward. This has included a review and update of the corresponding targets and thresholds for the next three years. • Finalisation of work already underway to update the triennial Strategic Performance Framework document itself to ensure it remains effective in assessing performance and progress in terms of the delivery of The Plan for North Lanarkshire. This will incorporate changes to the levels of performance measures therein following the review. • Finalisation of work already underway to update the Strategic Performance Framework Annual Reporting Schedule which aims to set out arrangements for regular reporting to Service Committees and the Audit and Scrutiny Panel in respect of (a) the Strategic Performance Framework, (b) service specific Page 11 of 174
Page 12
requirements and statutory obligations, and (c) the range of programmes and projects identified through the refreshed Project Management Framework and associated Project Register. • Development of a public performance reporting framework framed within the context of what The Plan for North Lanarkshire aims to achieve and what performance in this respect means locally. 4. Strategic Self-Evaluation Framework Background 2.26 Initially approved in 2018, the Strategic Self-Evaluation Framework asks the questions How well are we doing? How do we know? and How can we do better? to ensure the council has a way of regularly assessing practices, recognising strengths, and identifying areas for improvement. 2.27 This supports the council’s Best Value duty that aims to secure continuous improvement in performance. Being self-aware and undertaking a structured programme of self-evaluation underpins the duty to secure continuous improvement, and good practice suggests local authorities adopt a single strategy for improvement when implementing self-evaluation. 2.28 A single strategy for improvement is in place through the Strategic Self-Evaluation Framework and rolling Review Programme, which was endorsed by the CMT in July 2021 and approved by the Audit and Scrutiny Panel in September 2021. Current position 2.29 A dedicated page on the council’s website provides a central location for reporting on findings and recommendations from all national audits and inspections: (https://www.northlanarkshire.gov.uk/your-council/performance-of-the-council/best-value). 2.30 The accompanying report on the Audit and Scrutiny Panel agenda today (Annual review and refresh of the Strategic Self-Evaluation Framework) updates the Panel on the achievements from the Strategic Self-Evaluation Framework rolling Review Programme for 2021 to 2022 and presents the refreshed Framework. As a mechanism that also helps the council to provide assurances that services provided represent value for money, are efficient and effective, and able to demonstrate Best Value, a corporate approach to Options Appraisal has also been included in the Framework. 2.31 The council’s commitment to self-evaluation and implementing the recommendation from the 2019 Best Value Assurance Report (BVAR) - i.e. improvement plans arising from self-evaluation exercises should include measurable actions and clear deadlines - is recognised by Audit Scotland in their Annual Audit Report for 2021/22 (due to be presented to the Audit and Scrutiny Panel in November 2022). This external assessment concludes that this BVAR recommendation is now considered complete. Next steps 2.32 The accompanying report on the Audit and Scrutiny Panel agenda today sets out the rolling Review Programme for 2022 to 2023 to ensure the council continues to ensure a mechanism is in place to assess the council’s functions and activities and identify areas for improvement within the context of fulfilling the vision set out in The Plan for North Lanarkshire. Page 12 of 174
Page 13
2.33 As the Panel will recall, the council was in year three of the six-year national Best Value Assurance Report (BVAR) review programme which concluded with publication of a positive report for North Lanarkshire in May 2019. A new national approach to auditing Best Value now comes into effect (for 2022/23 onwards) which will not see a repeat of the BVAR process for all councils, rather the focus moves to the integration of auditing Best Value within each individual council’s external auditors Annual Audit Report (AAR) process. 2.34 This means that the council will, in effect, undergo an annual assessment in terms of particular aspects of Best Value. As such, and considering that the North Lanarkshire BVAR is over three years old (and pre-dates the pandemic) it is important to ensure the council continues to be able to demonstrate Best Value and evidence this in practice. It is therefore the intent of the CMT that a self-evaluation will be undertaken that is in essence a Best Value follow up. This is incorporated into the Strategic Self-Evaluation Framework rolling Review Programme for 2022 to 2023 and an update in this respect will be reported to a future meeting of the Audit and Scrutiny Panel. 5. Project Management Framework Background 2.35 The council’s corporate Project Management Model was launched in April 2018 to enable each stage of delivery towards achieving the overall objectives of a project to be planned, guided, and implemented through a systematic and consistent approach. 2.36 The annual position statement reported to the Audit and Scrutiny Panel in September 2021 advised that a review of the Model was underway; this review followed recommendations arising from Internal Audit reports - on the governance of capital projects and managing strategic change - which both reported a reasonable assurance (green-amber) audit opinion, but considered further action was required and/or there was scope for improvement in five specific areas. 2.37 The review and refresh exercise was also considered necessary in light of the changes in the council’s operating environment since the implementation of the Model in 2018. These changes have led to a rapid evolution of programmes and projects across the council, as well as increasing complexities in the delivery of many of these, and a growing need for good governance and good project management to set up and deliver a wider range of projects at pace and scale, and ensure these are well-directed, delivered to time, cost, and quality targets, and provide the expected benefits and improved local outcomes. 2.38 The Review Group set up to review and update the Model benefitted from the expertise of a wide range of officers from across the council with practical on the ground experience of project management in both construction and non-construction projects. 2.39 Following work to collate and analyse the information collected through the review, five themes on areas for improvement consistently emerged, as noted below. 1. Redevelopment of the Framework itself to provide clear step by step guidance for employees on how projects should be planned, managed, and monitored (whether they are experienced or new to the discipline of project management). 2. Identification of mandatory tasks for particular stages in the project life cycle which the Senior Responsible Officer (SRO) and Project Manager must ensure are adhered to. 3. Making it easier for employees to understand their own role and responsibilities if Page 13 of 174
Page 14
they are assigned to a Project Team, as well as the roles and responsibilities of all Team members. 4. An ongoing programme of training, staff learning and development, and awareness raising in line with the refreshed Project Management Framework. 5. Enhanced opportunities for more collaboration, sharing, and learning. Current position 2.40 Following the conclusion of the review, and further work to develop and implement the identified improvement actions, the consultative draft of the refreshed corporate Project Management Framework (2022) was approved by the CMT on 27th September 2022. 2.41 Subsequent engagement has since concluded with the council’s Operational Management Team (OMT) and Organisational Design Authority (ODA) to ensure appropriate feedback from a wider more operationally focussed audience. 2.42 An engagement and communication programme is currently underway across all Services in order to raise awareness of the refreshed Project Management Framework, highlight the key differences and mandatory aspects therein, and ensure appropriate consistency of approach in terms of implementation. More importantly, this also aims to help those affected by the change to transition seamlessly to the refreshed Framework and use it - not as a tick box exercise - but to add value and effective support to the everyday tasks involved in developing, managing, and delivering projects. 2.43 In addition, work is also underway with Heads of Service to establish a Project Register for strategic oversight purposes. When established, this Register will (a) assist with the appropriate implementation of the refreshed Project Management Framework, (b) serve as a mechanism to provide evidence in respect of the council’s governance arrangements, and (c) inform a regular review programme by which projects will be assessed for quality assurance purposes and for appropriate compliance with the refreshed Project Management Framework. Next steps 2.44 It is recognised that the refreshed Project Management Framework contains a significant volume of information that relevant staff will require to become familiar with and apply. As such, the supporting training and learning and development programme was considered important in terms of the rollout and implementation process. A similar rollout to that which occurred in 2018 is therefore being applied, in that training will be ongoing over a period of time to ensure all relevant members of staff, senior management, and Elected Members can be brought up to date. A Frequently Asked Questions (FAQs) document has also been developed to support this rollout. A pilot of the new face to face training approach will be trialled in December 2022, with full roll out across the council (as appropriate) scheduled to begin in January 2023. 2.45 Ongoing support thereafter will be available through a range of online materials, refresher courses, and a Yammer Forum. Through these mechanisms there will also be an opportunity to share lessons learned and provide feedback on the practical application of the refreshed Framework which will inform the ongoing annual lite touch review process to ensure it remains fit for purpose. 2.46 As noted in Appendix B in the Strategic Self-Evaluation Framework rolling Review Programme, a self-evaluation is scheduled to be undertaken in 2023 on the effectiveness of Project Boards / Groups as a follow on from the 2022 refresh to the Page 14 of 174
Page 15
Project Management Framework. 6. Framework for Demonstrating Improved Outcomes for Communities Background 2.47 As the public spending watchdog for local government in Scotland, the Accounts Commission aim to ensure their work (a) helps provide assurance to the public on the performance of each Scottish council and (b) reflects councils’ responsibilities to deliver high quality services to the public. 2.48 These assurances are provided through a range of audit activity that is set out in the Commission’s programme of work; this includes setting a Statutory Direction that directs local authorities on the publication of performance information relating to their activities that allows for comparisons over time and with other local authorities. 2.49 In operation since implementation of the Local Government Act 1992, the Statutory Direction has more recently been reviewed and refreshed every three years. The recent update to the Statutory Direction in November 2021 (covering reporting for the three financial years from 2022/23 to 2024/25) emphasised a focus on providing a descriptive (rather than prescriptive) approach, with specific revisions centred on a number of key areas which included community engagement and empowerment. 2.50 In this respect, the emphasis is on evidencing that the council is carrying out community planning for the “improvement in the achievement of outcomes”. In addition, the Accounts Commission expects councils (in agreeing outcomes with partners and communities) to report on how they have engaged with, responded to and helped to empower their communities, including those who require greater support. Current position 2.51 In line with the re-emphasised focus in the Statutory Direction set out in paragraph 2.50 above, a sixth Framework (Demonstrating Improved Outcomes for Communities) was established to ensure the evidence is in place to formally fulfil this aspect. 2.52 Approved by the North Lanarkshire Partnership Strategic Leadership Board in June 2022, the Framework for Demonstrating Improved Outcomes for Communities sets out the model which the North Lanarkshire Partnership will use to assess progress and performance in terms of delivering upon the priorities and plans and ensuring that partnership activities can demonstrate improved outcomes that make a real difference for local people and local communities. The Framework also includes a number of case studies to highlight just some of the improved outcomes in local communities. Next steps 2.53 The Framework for Demonstrating Improved Outcomes for Communities is on the review programme to undergo a regular review and refresh exercise. 3. Measures of success 3.1 Regular scrutiny to ensure good governance principles are met and enable the council to pursue its ambition effectively, while underpinning this with controls and the management of risk. 3.2 Regular strategic oversight and scrutiny to ensure resources are directed in accordance Page 15 of 174
Page 16
with agreed policy and according to priorities, while ensuring sound decision making and clear accountability for the use of resources in achieving improved outcomes for service users and the local community. 4. Supporting documentation 4.1 None 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? 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 ☐ Page 16 of 174
Page 17
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”. 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? 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 ensure an annual review and refresh programme for the set of inter- connected corporate frameworks ensures the council continues to support the Best Value duty and comply with the principles set out within the Delivering Good Governance in Local Government: Framework (2016). This contributes towards the mitigation of the risks on the Corporate Risk Register for (a) Governance, Leadership, and Decision Making and (b) Managing Strategic Change. Page 17 of 174
Page 18
Page 18 of 174
Page 19
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref KH/SL Date 24/11/22 Annual review and refresh of the Strategic Self-Evaluation Framework From Katrina Hassell, Head of Business and Digital E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary Members of the Audit and Scrutiny Panel will recall that to meet the Best Value duty the council must ensure arrangements are in place to secure continuous improvement in performance for all the functions and activities undertaken to deliver services and improve outcomes. Being self-aware and undertaking a structured programme of self-evaluation underpins the duty to secure continuous improvement, and good practice suggests local authorities adopt a single strategy for improvement when implementing self-evaluation. A single strategy for improvement is in place through the Strategic Self-Evaluation Framework and rolling Review Programme, which was reported to the Audit and Scrutiny Panel in September 2021. This Framework is specifically designed to be strategic but lite touch, and consistent but flexible to ensure that self-evaluation exercises are tailored to the service, function, project, or group being evaluated and designed within the context of that operating environment. The Strategic Self-Evaluation Framework is one of the six inter-related corporate frameworks designed to assess the success of The Plan for North Lanarkshire, while ensuring each stage of delivery towards achieving the overall vision is appropriately planned, guided, implemented, and governed. To ensure these frameworks remain aligned to The Plan for North Lanarkshire, each is on a programme for a regular review and refresh exercise. This report therefore updates the Panel on the achievements from the Strategic Self- Evaluation Framework rolling Review Programme for 2021 to 2022 and presents the refreshed Framework. As a mechanism that also helps the council to provide assurances that services provided represent value for money, are efficient and effective, and able to demonstrate Best Value, a corporate approach to Options Appraisal has also been formalised and included in the Framework attached. The rolling Review Programme for 2022 to 2023 is also set out in the attached to ensure the council continues to ensure a mechanism is in place to assess the council’s functions and activities and identify areas for improvement within the context of fulfilling the vision set out in The Plan for North Lanarkshire. Recommendations AGENDA ITEM 3 Page 19 of 174
Page 20
1. Background 1.1 Being self-aware and undertaking a structured programme of self-evaluation underpins the Best Value duty to secure continuous improvement. As such, self-evaluation continues to be considered by the Accounts Commission as one of the fundamental principles when auditing Best Value in local government. 1.2 The national Best Value guidance, updated in March 2020, includes a requirement for councils to be able to demonstrate that self-evaluation activity is rigorous and transparent. 1.3 The council’s commitment to self-evaluation and implementing the recommendation from the 2019 Best Value Assurance Report (BVAR) - i.e. improvement plans arising from self-evaluation exercises should include measurable actions and clear deadlines - is recognised by Audit Scotland in their Annual Audit Report for 2021/22 (due to be presented to the Audit and Scrutiny Panel in November 2022). This external assessment concludes that this BVAR recommendation is now considered complete. 1.4 The development of the Strategic Self-Evaluation Framework and rolling Review Programme - with the completion of six self-evaluation exercises during 2022 - provided the evidence to bring the aforementioned BVAR recommendation to its conclusion. These six exercises focused on: 1. The corporate project management model to ensure it remains fit for purpose and able to effectively support the wide range of projects essential to deliver on The Plan for North Lanarkshire. 2. The effectiveness of the arrangements for the North Lanarkshire health and social care Integrated Joint Board and identifying how well the Board is meeting its intended outcomes. 3. The council’s compliance with the CIPFA Financial Management (FM) Code. 4. The adequacy and effectiveness of the Corporate Management Team in terms of the revised arrangements and in managing strategic change. 5. The risk management arrangements for the DigitalNL programme and the risks themselves. 6. Whether the arrangements for the Data Governance Board adequately contributed to the achievement of the council’s vision as detailed in the Data and Information Management Strategic Roadmap. 1.5 Members will recall that the Strategic Self-Evaluation Framework is one of six inter- It is recommended that the Audit and Scrutiny Panel: (1) Acknowledge the refreshed Strategic Self-Evaluation Framework and rolling Review Programme and the purpose therein in terms of ensuring that self-evaluation identifies areas for improvement that contribute to achievement of the vision set out in The Plan for North Lanarkshire, (2) Are aware of the challenge and scrutiny role of the Audit and Scrutiny Panel in line with their responsibility to provide an independent review of the council’s governance, risk management, performance, and control frameworks. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements Page 20 of 174
Page 21
related strategic frameworks. The benefits to be gained by avoiding duplication and enhancing alignment across these frameworks are key to assessing the success of The Plan for North Lanarkshire, while ensuring each stage of delivery towards achieving the overall vision is appropriately planned, guided, implemented, and governed. 1.6 The six frameworks focus on ensuring a corporate one council approach in respect of Policy, Governance, Performance, Self-Evaluation, Project Management, and Demonstrating Improved Outcomes for Communities. To ensure these frameworks remain aligned to The Plan for North Lanarkshire, each is on a programme to undergo a regular review and refresh exercise. 1.7 This report therefore presents the Audit and Scrutiny Panel with the refreshed Strategic Self-Evaluation Framework and rolling Review Programme for 2022 to 2023. This aims to ensure the council continues to comply with the requirements of Best Value and Good Governance and, more importantly, ensures a mechanism is in place to assess the council’s functions and activities and identify areas for improvement within the context of fulfilling the vision set out in The Plan for North Lanarkshire. 2. Annual review and refresh of the Strategic Self-Evaluation Framework Framework 2.1 In its simplest form improvement starts with the question How well are we doing? Self-evaluation helps to answer that question and those that flow from it, i.e. • How do we know? - What evidence is there to support the view of how well we are doing? • How can we do better? - What are we going to do now? 2.2 The council’s Strategic Self-Evaluation Framework (included at Appendix 1) ensures a focus on these three questions. In doing so it also incorporates a degree of triangulation by including ways to cross check results from multiple sources. This aims to increase the reliability and validity of the findings, help to gain a wider understanding of complex issues, and ensure more complete results. 2.3 In this respect the incorporation of audit and inspection work - carried out by the various inspection bodies (e.g. the Care Inspectorate, HM Inspectorate of Education, Scottish Housing Regulator, etc), and recommendations arising from the external auditor’s Annual Audit Report (AAR) and Internal Audit programme of audit work - is a key requisite of any self-evaluation exercise the council undertakes. Non-negotiable standards 2.4 In line with the other strategic frameworks, the Strategic Self-Evaluation Framework adopts a set of five non-negotiable standards which are designed to ensure that self- evaluation exercises undertaken in line with the Strategic Self-Evaluation Framework rolling Review Programme are: • Aligned - to The Plan for North Lanarkshire so that improvement actions contribute to the achievement of the council’s long-term vision. • Consistent - so there is a clear understanding of the purpose and benefits of each self-evaluation exercise. • Transparent - ensuring that progress made against the implementation of the improvement actions is widely reported, understood, and acted upon. Page 21 of 174
Page 22
• In context - ensuring that self-evaluation exercises are tailored to that which is being evaluated (whether that is a service, function, project, or group) and designed within the context of that operating environment. • Balanced - to ensure any self-evaluation exercise undertaken is proportionate to the resources expended, outcomes expected, the scale of the service, function, project, or group being evaluated, and the associated risks. Assessment framework 2.5 The assessment criteria within the Strategic Self-Evaluation Framework aligns to the seven Best Value themes (noted below) and the national guidance which was updated in March 2020: 1. Vision and leadership. 2. Governance and accountability. 3. Effective use of resources. 4. Partnerships and collaborative working. 5. Working with communities. 6. Sustainability. 7. Fairness and equality. 2.6 The good practice statements within each of the Best Value themes (shown in Appendix A) form the basis for self-evaluation exercises undertaken across the council in line with the Strategic Self-Evaluation Framework and rolling Review Programme. 2.7 Where national audit and inspection frameworks already exist these inform the assessment framework for the self-evaluation exercise. This avoids duplication and ensures the council’s self-evaluation exercises are focused on gaps and what improvement is needed locally. Similarly where relevant good practice guides and/or checklists already exist (e.g. produced by the Improvement Service or Audit Scotland), these are taken into consideration and used or aligned accordingly. 2.8 Well-established principles from national self-assessment frameworks (such as those for European Foundation for Quality Management (EFQM) and Public Service Improvement Framework (PSIF)), have shaped the councils’ self-evaluation methodology. Key features of this are detailed within Appendix 1. This includes: • The role of a member of the Corporate Management Team as a Champion for each self-evaluation exercise. • The strategic oversight role of the Corporate Management Team. • The challenge and scrutiny role of the Audit and Scrutiny Panel. • Carrying out self-evaluations that include assessing the approach, its deployment, and the assessment and review processes. Rolling Review Programme 2.9 Appendix B outlines the rolling Review Programme of self-evaluation exercises to be undertaken from 2022 to 2023 along with indicative timescales. This programme will be updated as new evaluations are identified. 2.10 As Members will recall, the council was in year three of the five-year national Best Value Assurance Report (BVAR) review programme which concluded with publication of a positive report for North Lanarkshire in May 2019. Due to the impact of the pandemic, this national programme was expanded from five to six years and all 32 councils has now undergone the BVAR review process. Page 22 of 174
Page 23
2.11 A new national approach to auditing Best Value in councils comes into effect as part of the new five-year audit appointment term for the external auditors, i.e. from October 2022. The new approach will not see a repeat of the BVAR process for all 32 councils, rather the focus moves to the integration of auditing Best Value within each individual council’s external auditors Annual Audit Report (AAR) process. 2.12 The specific details around the external auditors annual audit plan have still to be finalised by the incoming Audit Scotland team, however early indications arising from the Accounts Commission’s workplan to 2024 report that: “From 2022/23, Best Value work in councils will be fully integrated with the annual audit and reported in Annual Audit Reports (AARs), including risk-based, follow up, and thematic Best Value work. AARs for each council will be reviewed by the Accounts Commission at least once over the five year appointment to provide the Commission with assurance on Best Value in each individual council. The Commission will use the Annual Assurance and Risks Report (AARR)* to identify thematic work for the coverage by all auditors in the following year’s audit”. [*The Annual Assurance and Risks Report (AARR) is the annual report from the Controller of Audit about the work undertaken by all council’s external auditors over the past year on the Commission's behalf]. 2.13 This means that the council will, in effect, undergo an annual assessment in terms of particular aspects of Best Value. As such, and considering that the North Lanarkshire BVAR is over three years old (and pre-dates the pandemic), it is important to ensure the council continues to be able to demonstrate Best Value and evidence this in practice. It is therefore the intent of the Corporate Management Team that a self- evaluation will be undertaken in 2022/23 that is in essence a Best Value follow up. Options Appraisal 2.14 As the Panel are aware councils must provide assurances that services provided represent value for money, are efficient and effective, and demonstrate Best Value through continuous improvement. Critically assessing current arrangements and considering a range of options when deciding what services to provide, and how to deliver them, helps to ensure that decisions are transparent and based on sound information. An Options Appraisal helps make these decisions and provides assurance that all relevant issues (including quality, cost, and risk) have been considered. 2.15 The use of Options Appraisal is already widespread across the council. However to ensure that the outcome from such an exercise continues to remain consistent with the strategic direction for the council, as set out in The Plan for North Lanarkshire, a corporate approach has been formalised and is included in the refreshed Strategic Self- Evaluation Framework attached. 2.16 It is expected though that the size, nature, and complexity of each individual Options Appraisal exercise will influence the size and scale of the options appraisal process to be used. It is not considered good use of limited resources to spend time and money on options appraisals for decisions which are straightforward and of minimal impact on service provision, or the council’s finances. Decisions in terms of the extent to which the approach set out in Appendices C and D is used (i.e. a basic or enhanced approach) will therefore need to be made in a sensible and proportionate way. Next steps Page 23 of 174
Page 24
2.17 The next steps will involve scoping and preparatory work to develop a more detailed evaluation specification for each of the self-evaluation exercises in Appendix B. 2.18 Championed by identified members of the Corporate Management Team, self- evaluation exercises will continue to be managed by the Strategy and Performance Manager in Business and Digital to ensure the five non-negotiable standards are consistently applied across the rolling Review Programme and improvements support the further delivery of The Plan for North Lanarkshire. Where identified as appropriate for certain self-evaluation exercises, external facilitation will be provided by the Improvement Service to ensure that independency of approach. 3. Measures of success 3.1 The key measure of success will be in securing continuous improvement in performance through self-evaluation that is focussed on what the council ultimately aims to achieve. 4. Supporting documentation 4.1 Appendix 1 - Strategic Self-Evaluation Framework - Appendix A: Assessment criteria and statements - Appendix B: Rolling Review Programme - Appendix C: Options Appraisal process - Appendix D: Options Appraisal templates 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? 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 Page 24 of 174
Page 25
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 statutory duty of Best Value which requires that councils “make arrangements to secure continuous improvement in performance”. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for 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? Implementation of a corporate approach to self-evaluation and options appraisal through the Strategic Self-Evaluation Framework and the rolling Review Programme Page 25 of 174
Page 26
ensures the council fully complies with Best Value and Good Governance requirements. This approach also contributes towards the mitigation of the risks on the Corporate Risk Register for (a) Governance, Leadership, and Decision Making and (b) Managing Strategic Change. Page 26 of 174
Page 27
1 Strategic Self-Evaluation Framework (includes the corporate process for Options Appraisal) Appendix 1 Page 27 of 174
Page 28
2 Document control Title Strategic Self-Evaluation Framework (includes the corporate process for Options Appraisal) 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 Description Original framework created Linda Johnston, Business Strategy Manager 2019 - 1.0 Linda Johnston, Business Strategy Manager June 2021 Annual review 2.0 Linda Johnston, Business Strategy Manager September 2022 Annual review and formal incorporation of a corporate approach to Options Appraisal Document approvals Number Governance group Date approval granted Date approval to be requested (if document still draft) Original document created Policy and Strategy Committee 2019 1.0 Audit and Scrutiny Panel September 2021 2.0 Audit and Scrutiny Panel November 2022 Strategic alignment Next review commencement date Review date September 2023 The Plan for North Lanarkshire (all 5 priorities and 25 ambition statements), Programme of Work, Strategic Policy Framework, Strategic Governance Framework, Strategic Performance Framework, Strategic Self-Evaluation Framework, Project Management Framework, Framework for Demonstrating Improved Outcomes for Communities. Page 28 of 174
Page 29
3 Table of contents Page number Introduction ………………………………………………………………………………………..….. 4 The duty of Best Value …………………….……………………………………………………….... 5 - 6 - Statutory framework …………………………………………………………………………….... 5 - Scope of the national guidance …….……………………………………………………........… 5 - The role of self-evaluation in continuous improvement ……………………….………........... 5-6 Self-Evaluation in North Lanarkshire Council ………………………………………………..….. 7 - 11 - Continuous improvement ……………………………………………………………….………... 7 - Non-negotiable standards …...………………………………………….………………………... 7 - Self-evaluation …………………………………………………………………………………..... 8 - Assessment criteria and statements ……………………………………………………...……. 8 - Assessment process ……………………………………………………………………………... 8-11 Options Appraisal …………………………………………………………………………………...… 12 - 16 - Introduction ……………………..………………………………………………………………….. 12-13 - Potential outcomes from an Options Appraisal ………………………..……………………….. 13 - Options Appraisal process ……………………………………………………………………….. 14 - Potential barriers ……………………………………………………………….…………………. 15 - Options Appraisal and project management …………………………………………………… 15 - Reviewing the approach ………………………………………………………………….……… 16 Appendix A: Assessment criteria and statements …………………………………………………. 17 - 25 Appendix B: Rolling Review Programme ………………………………………………................... 26 Appendix C: Options Appraisal process …………………………………………………….............. 27 - 31 Appendix D: Options Appraisal templates …………………………………………...……………… 32 - 35 Page 29 of 174
Page 30
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 for all 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 are six inter-related corporate frameworks that focus on ensuring a corporate one council approach. They are also key to monitoring delivery towards achieving the overall vision and ensuring each stage is appropriately planned, guided, implemented, and governed. • 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, 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 Self-Evaluation Framework is set out within this document. To meet the Best Value duty the council must ensure arrangements are in place to secure continuous improvement in performance for all the functions and activities undertaken to deliver services and improve outcomes for local communities. Being self-aware and undertaking a structured programme of self-evaluation underpins the duty to secure continuous improvement, and good practice suggests local authorities adopt a single strategy for improvement in this respect. How self-evaluation has been developed in North Lanarkshire Council is set out on pages 7 to 10 of this document. This outlines the assessment framework used by the council, and the standards which are applied to ensure alignment with The Plan for North Lanarkshire. The assessment process on page 11 provides a consistent framework for undertaking self-evaluation exercises that allows for flexibility in adapting the methodology to ensure evaluation takes place within the appropriate context, meet the needs of the operating environment of the service, function, project, or group being evaluated, and achieves the desired outcomes. Key strategic oversight roles are set out on pages 9-10 for the Corporate Management Team, and also for the Audit and Scrutiny Panel in line with their responsibility to provide an independent review of the council's governance, risk management, performance, and control frameworks. A rolling Review Programme of self-evaluation for 2022 and 2023 is set out on page 26 along with indicative timescales. This programme aims to ensure the council continues to comply with the requirements of Best Value and Good Governance and, more importantly, ensures a mechanism is in place to assess the council’s functions and activities and identify areas for improvement within the context of fulfilling the vision set out in The Plan for North Lanarkshire. This Framework formalises a corporate approach to Options Appraisal. An overview is set out on pages 12 to 16 (and detailed in Appendices C and D); this highlights the importance of defining clear objectives and fully informed options, applying a rigorous framework for comparing / assessing / evaluating a range of alternative ways of delivering a service, project, or operational matter against set criteria and objectives, and ensuring a transparent process with a clear evidence trail. Page 30 of 174
Page 31
5 The duty of Best Value Statutory framework The Local Government in Scotland Act 2003 introduced a statutory framework for Best Value within local government in Scotland. This outlined the requirement for local authorities to secure Best Value by making arrangements to secure continuous improvement in performance for all the functions and activities undertaken to deliver services and improve outcomes for local communities. In making arrangements to secure continuous improvement, local authorities are required to ensure an appropriate balance is maintained between quality and cost. In maintaining this balance, local authorities must ensure their functions and activities take into account economy, efficiency, and effectiveness: • Economy - minimising the cost of resources used or required (inputs). • Efficiency - the relationship between the output from services delivered and the resources to produce them. • Effectiveness - the relationship between the intended and actual results of public spending (outcomes). Best Value also requires local authorities to ensure their functions and activities meet the equal opportunities duties and contribute to the achievement of sustainable development. As cross-cutting themes, these are integral to a local authority delivering good outcomes and achieving Best Value. Scope of the national guidance National Best Value guidance has been in place since 2004; this has identified a range of Best Value characteristics which have helped local authorities develop arrangements that demonstrate continuous improvement in performance. The Best Value guidance applies to other bodies as required by Section 106 of the Local Government (Scotland) Act 1973, notably health and social care integration joint boards and other joint committees or boards that are subject to the same statutory Best Value duties as local authorities and, as such, the guidance requires to be interpreted and applied accordingly. Other devolved public bodies, such as the NHS, are not directly covered by the 2003 Act. They are, however, under a similar Best Value duty (which is set out in the Scottish Public Finance Manual) and a statutory duty under the Public Finance and Accountability (Scotland) Act 2000 to use their resources economically, efficiently, and effectively. Since 2003, the enactment of other key legislation has had a significant impact across Scotland, extending the requirements of Best Value beyond local authorities. The Public Bodies (Joint Working) (Scotland) Act 2014 has resulted in the integration of health and social care, while the Community Empowerment (Scotland) Act 2015 has strengthened the statutory base for community planning, and for involving and engaging communities in planning and decision-making about things that matter to them. The national Best Value guidance was therefore updated in 2020 to reflect the significantly changed policy and public service delivery landscape within which local authorities now operate (https://www.gov.scot/publications/best-value-revised-statutory-guidance-2020/documents/). The role of self-evaluation in continuous improvement The Accounts Commission - the public spending watchdog for local government, responsible for holding councils in Scotland to account and helping them to Page 31 of 174
Page 32
6 improve - consider that being self-aware and undertaking a structured programme of self-evaluation underpins the duty to secure continuous improvement. As such, self-evaluation is considered to be one of the fundamental principles when auditing Best Value in local government. By applying rigorous self- evaluation, it is considered that local authorities will be able to use assessments of how well resources have been used, and what performance levels have been achieved, in order to focus on where improvement is most needed to help deliver on priorities and improve outcomes for people in local communities. Page 32 of 174
Page 33
7 Self-Evaluation in North Lanarkshire Council Continuous improvement To comply with the duty of Best Value and make arrangements to secure continuous improvement in performance, good practice suggests councils adopt a single strategy for improvement when implementing a programme of self-evaluation. This will ensure that insights gained from the programme of self-evaluation - into what works, where problems have arisen or unintended consequences have been identified, where there have been unanticipated results, or where there are areas of good practice - can be used to make judgements on the quality, value, and importance of the function or activity being evaluated. This, in turn, provides the evidence that can be fed back into the decision making process in order to facilitate the highest possible level of quality and accountability in service delivery and/or secure the improved approaches and resources required to deliver on local priorities and contribute to the achievement of the council’s long-term vision (while maintaining Best Value in performance). Non-negotiable standards To support the achievement of a single strategy for improvement, a set of five non-negotiable standards are in place. These are designed to facilitate a one council approach and ensure consistency across the inter-related corporate frameworks. These standards also aim ensure to ensure that self-evaluation exercises undertaken in line with the Strategic Self-Evaluation Framework and rolling Review Programme are: • Aligned - to The Plan for North Lanarkshire so that improvement actions contribute to the achievement of the council’s long-term vision. Improvements should also be focused, where appropriate, on enhancing the supporting processes, plans, policies, and strategies designed to deliver the services and improved outcomes that will achieve the long-term vision. • Consistent - so there is a clear understanding of the purpose and benefits of each self-evaluation exercise. Integrating recommendations arising from local and national audit and inspection work into the council’s self-evaluation review programme will ensure as comprehensive a picture as possible is attained to inform the identification of areas for improvement and future decision making. • Transparent - ensuring that progress made against the implementation of the improvement actions is widely reported, understood, and acted upon to support the council’s governance arrangements and help build credibility, reliability, and a common understanding of the benefits of self-evaluation in securing continuous improvement. Self-evaluation needs to be robust enough to provide assurances to a range of internal and external stakeholders. • In context - ensuring that self-evaluation exercises are tailored to the function or activity being evaluated (whether that is a service, function, project, or group) and designed within the context of that operating environment. Identifying the context and any constraints, within which the self-evaluation exercise is to be undertaken, is a key step in the process in order for improvement plans to be able to demonstrate the resultant impact on local people and communities. • Balanced - to ensure any self-evaluation exercise undertaken is proportionate to the resources expended, outcomes expected, the scale of the service, function, project, or group being evaluated, and the associated risks. The outputs must tell a balanced narrative that identifies aspects of good practice as well as areas for improvement. Figure 1. Five non-negotiable standards Page 33 of 174
Page 34
8 Self-evaluation In its simplest form improvement starts with the question How well are we doing? Self-evaluation helps to answer that question and those that flow from it, i.e. • How do we know? (i.e. What evidence is there to support the view of how well we are doing?) • How can we do better? (i.e. What are we going to do now?). The Strategic Self-Evaluation Framework adopted by the council ensures a focus on these three questions. In doing so it also incorporates a degree of triangulation (as depicted in Figure 2.) by including ways to cross check results from multiple sources. This aims to increase the reliability and validity of the findings, help to gain a wider understanding of complex issues, and ensure more complete results. In this respect the incorporation of audit and inspection work - carried out by the various inspection bodies (e.g. the Care Inspectorate, HM Inspectorate of Education, Scottish Housing Regulator, etc), and recommendations arising from the external auditor’s Annual Audit Report (AAR) and Internal Audit programme of audit work - are a key requisite of any self-evaluation exercise the council undertakes. Assessment criteria and statements There are many self-evaluation models (with varying assessment criteria, statements, and evaluation techniques) in operation across the public and private sectors. For council led self-evaluations, local authorities across Scotland have adopted the model (or a local variation of the model(s)) that best fits with their council’s strategic planning approach, operating environment, and governance arrangements. In North Lanarkshire this is the Best Value guidance itself. Updated in 2020, the seven themes that support Best Value in line with the Local Government in Scotland Act 2003 reflect the significantly changed policy and public service delivery landscape within which local authorities now operate. Local authorities are required to demonstrate a focus on continuous improvement in performance around each of these seven themes: 1. Vision and leadership. 2. Governance and accountability. 3. Effective use of resources. 4. Partnerships and collaborative working. 5. Working with communities. 6. Sustainability. 7. Fairness and equality. For each theme, a range of good practice statements outline what constitutes Best Value in local government; these are outlined in Appendix A. Assessment process The council’s Strategic Self-Evaluation Framework is aligned to the seven Best Value themes and supporting good practice statements shown in Appendix A. These statements form the basis for self-evaluation exercises undertaken across the council in line with the Strategic Self-Evaluation Framework and rolling Review Programme. It should be noted however, that no self-evaluation exercise will include all statements; each exercise will comprise a small Figure 2. Self-Evaluation model Page 34 of 174
Page 35
9 subset of statements that best reflects the function or activity being assessed and the context and operating environment of that function or activity, and that are most appropriate to delivering the desired outcomes. Where national frameworks already exist (e.g. the Chartered Institute of Public Finance and Accountancy (CIPFA) Financial Management Code, Education Scotland’s How good is the learning and development in our community, and the Care Inspectorate’s Self-evaluation for improvement), these should inform the selection of assessment statements for the self-evaluation exercise. This will avoid duplication and ensure the council’s resources are focused on gaps and what improvement is needed locally. Similarly where relevant good practice guides and/or checklists already exist (e.g. produced by the Improvement Service or Audit Scotland), these should be taken into consideration and used or aligned accordingly. Where appropriate for certain self-evaluation exercises, external facilitation will be provided by the Improvement Service to ensure that independency of approach. The methodology used to undergo self-evaluation exercises loosely take into account the key elements from the frameworks for European Foundation for Quality Management (EFQM) and Public Service Improvement Framework (PSIF). The key features of this approach include (but are not restricted to): • Implementation of a Champion - to provide leadership, commitment, motivation, and recognition to the introduction and execution of the self- evaluation exercise. To communicate the purpose and the benefits, and to challenge resistance. To ensure resultant improvement actions are valid and used to inform improvements to what the council ultimately aims to achieve. In the council the role of Champion is assumed by a member of the Corporate Management Team. • Management of the process - to ensure there is a Champion and clear ownership of the process and to work with the Champion to optimise the benefits and results. To produce the project plans and develop and facilitate the exercises, secure the resources, arrange appropriate training, and ensure consistency and alignment with the council’s strategy. In the council this role is assumed by the Strategy and Performance Manager with external facilitation provided, where appropriate, by the Improvement Service. • An assessment team - to contribute their time, knowledge, and expertise to the self-evaluation exercise and play an active role in the improvement process. To understand and then communicate to others the purpose and benefits of self-evaluation. • Context mapping - to ensure a clear understanding of the operating environment of the service, function, project, or group being evaluated and ensure clarity in terms of the scope and boundaries of each exercise. • Evidence - to ensure decision making (in terms of areas for improvement) is informed by clear and tangible evidence, which is attained through an initial desktop exercise and/or online survey or discussion session. • A consensus session - to ensure the assessment team have the opportunity to discuss and reach a collective agreement on the evidence presented, the scores achieved through the self-evaluation exercise, and the aspects of good practice and areas for improvement to be reported on. • Planning and prioritisation - to identify areas where improvement should be made and ensure clear priorities for action are established. To ensure improvement plans are developed in line with SMART principles, follow a one council approach, and are aligned to the vision set out in The Plan for North Lanarkshire. This is complemented by two key strategic oversight roles: (1) The strategic oversight role of the Corporate Management Team in line with their remit to consider matters which are corporate or cross-service in nature, to maintain oversight and monitoring of strategic performance across the organisation, and to maintain strategic oversight and direction of the council’s Programme of Work and The Plan for North Lanarkshire. Page 35 of 174
Page 36
10 (2) The challenge and scrutiny role of the Audit and Scrutiny Panel in line with their responsibility to provide an independent review of the council's governance, risk management, performance, and control frameworks. Using these key features, the council’s assessment process comprises 10 steps (as shown in Figure 3. on page 11). While these 10 steps provide a consistent and standardised approach to undertaking self-evaluation in line with the Strategic Self-Evaluation Framework and rolling Review Programme, each step can be customised in order to best meet the needs, operating environment, and desired outcomes of the function or activity being assessed. Depending on what is to be evaluated and what the self-evaluation exercise aims to achieve, it can sometimes be useful to gather some initial feedback to inform the further development of particular steps in a self-evaluation exercise. An initial straw poll to ascertain the extent to which the potential audience agrees or disagrees (i.e. strongly agree, agree, disagree, strongly disagree, don’t know) with the following statements in terms of the approach of a service, function, project, or group as well as its deployment and also the associated assessment and review processes is a quick and easy way to do this: • APPROACH: There is a clear rationale behind the choice of approach, it is underpinned by well-defined and developed processes, it is aligned to the relevant strategy and policies of the council, and it meets stakeholder needs. • DEPLOYMENT: The approach is systematically deployed and implemented in all relevant areas of the council, it is implemented to its full potential, and it is understood and accepted by all stakeholders. • ASSESSMENT AND REVIEW: The approach and its deployment are regularly reviewed to assess for effectiveness, there are processes and measures in place to assess success, and the assessment process is used to identify areas for improvement and opportunities for learning. Appendix B sets out the rolling Review Programme - this outlines the programme of self-evaluation for 2022 to 2023 along with indicative timescales. This programme will be updated as new evaluations are identified and kept on an annual review and refresh programme to ensure the Framework, and supporting assessment process, remain fit for purpose and support achievement of the long-term ambition set out in The Plan for North Lanarkshire. Page 36 of 174
Page 37
11 Figure 3. 10 steps in the assessment process Page 37 of 174
Page 38
12 Options Appraisal Introduction An Options Appraisal is about making informed choices and better decisions and nowhere is this more important than within local government, where the choices made dictate how public funds are spent and impact on how people live their lives. An Options Appraisal therefore helps the council to provide assurances that services provided represent value for money, are efficient and effective, and demonstrate Best Value through continuous improvement. There are many challenges facing local authorities, the most pressing being the need to manage financial pressures and the increasing demands on services. As such, Elected Members and officers need to be open to considering a broad range of options for delivering services and ensuring a rigorous and challenging appraisal of these options. This might involve providing services in a different way, or even not providing some services at all. These are difficult decisions to make as they can significantly affect residents, service users, partner organisations, and council staff. A robust Options Appraisal helps councils to make these important decisions and provides assurance that all the relevant issues (including quality, cost, and risk) have been considered. Critically assessing current arrangements and considering a range of options when deciding what services to provide, and how to deliver them, also helps to ensure that decisions are transparent and based on sound information. An Options Appraisal is all about making well informed decisions. As with any decision making tool, Options Appraisal provides support to the process, it does not provide the answers. The relevant decision makers within the council will still have to make judgements based on the evidence provided and at some point it may be necessary to explain those judgements to others. The value of a decision making tool such as Options Appraisal is that it takes people through the process step by step and assists in making sure that everything relevant is taken into account. A robust decision that has been carefully considered in discussion with others, and has been informed by a robust process, is more likely to be successful. The need to carry out an Options Appraisal may come from a variety of sources. As well as the outcome of a self-evaluation exercise, these triggers could include: • A strategic review of service delivery, for example as part of a council’s transformation programme or improvement plan, or because the external environment and/or a range of related factors have had a significant impact on the ability of the council to continue with the service in its current form. Or there could be a need to provide services in a different way to better meet the needs of residents or service users. • The outcome of an external evaluation exercise or non-compliance with a contract. • Poor service performance or performance that suggests services are not achieving value for money - highlighted, for example, through benchmarking comparisons or by performance indicators that show decreasing efficiency, increasing unit costs, or declining user satisfaction. • Budget imperatives or the need to make savings in one area to redirect resources to other higher priority areas that are more aligned to deliver the council’s vision. • The need for realignment following a new or changed national or local policy direction or decision. An Options Appraisal can be used to help make decisions at a number of different levels, from strategic decisions about services to more specific decisions about projects or operational matters. Councils have choices about the size and scale of the Options Appraisal process they use to ensure that it is proportionate to the significance of the decision to be made. Page 38 of 174
Page 39
13 To be able to demonstrate Best Value and work well, Options Appraisal needs to be managed properly. In this respect it is important that: • Members of the Corporate Management Team - who are responsible for delivering the council’s vision - ensure that Elected Members receive robust, complete, and evidence based information in order to make informed decisions. • Managers - who are responsible for the service change required - are able to manage a robust Options Appraisal process. They also need to ensure appropriate time, money, skills, and experience are devoted to the process to ensure that sound evidence based information is produced. They are also responsible for ensuring that the approach used is proportionate to the significance of the decision to be made. Potential outcomes from an Options Appraisal There are a wide range of potential outcomes from an Options Appraisal; these include those depicted in Figure 4. below. Figure 4. Possible outcomes from an options appraisal derived from Options appraisal: Are you getting it right (Audit Scotland, 2014) Page 39 of 174
Page 40
14 Options Appraisal process To ensure best use of public money, the council needs to ensure that resources are used wisely and sufficient time and money is spent ensuring that a robust Options Appraisal has been undertaken before key decisions are made. However, it would not be a good use of limited resources to spend time and money on options appraisals for decisions which are straightforward and of minimal impact on service provision, or the council’s finances. There is therefore a need to apply the use of Options Appraisal in a sensible and proportionate way. Deciding whether an Options Appraisal is required will therefore involve judgement. It is not possible to be definitive in this document if an Option Appraisal will be required, that is ultimately a decision for the relevant Head of Service, but the following four aspects may be helpful in making that judgement: • Complexity - a formal Options Appraisal is likely to be necessary if the matter to be decided is complex. • Implications on service delivery - if a change to a project or proposal will have a significant impact on public service provision, especially affecting front line service delivery, then an Option Appraisal will usually be necessary. • Financial implications - changes to activities which give rise to additional financial implications for the council, or would mean significant change in existing budget provisions, will usually require an Options Appraisal. • Sensitivity - even small-scale projects or routine activity can, on occasion, be highly sensitive in political or reputational terms. Where this is likely to arise, an Options Appraisal may be necessary to help decide how to proceed. Whether a formal Options Appraisal is necessary (and, if it is, the extent of detail required) should also be informed by an assessment of its complexity and sensitivity and by the extent of service and financial implications involved. Where an Options Appraisal is required, it is expected that all exercises carried out by the council will follow the same broad steps, as outlined in Figure 5. below and Appendix C (unless there are specific industry standards that require an alternative method to be followed or there are tried and tested methods and processes already in place). However please note the following caveat: 1. It is expected though that the size, nature, and complexity of each individual Options Appraisal exercise will influence the size and scale of the Options Appraisal process to be used. 2. It is not considered good use of limited resources to spend time and money on options appraisals for decisions which are straightforward and of minimal impact on service provision, or the council’s finances. 3. Decisions in terms of the extent to which the approach set out in Appendices C and D is used (i.e. a basic or enhanced approach) will therefore need to be made in a sensible and proportionate way. It should be noted though that, while each Options Appraisal will include these steps, in practice it is not exactly a linear process and some of the steps will take place simultaneously. Figure 5. Options Appraisal process Page 40 of 174
Page 41
15 Potential barriers Options Appraisal can be extremely challenging as balancing competing interests and priorities is always difficult and there are a number of things that may get in the way of an effective Options Appraisal. However, the key position of the council is that the duty of Best Value - on making best use of public resources - must always prevail. Potential barriers that the Senior Responsible Officer (SRO) and Project Manager need to be aware of include the following: • Unclear objectives - The council needs to take the time and be clear about the reasons why services are provided in-house. There may be good reasons for this; it may be due to the specialist nature of the service, the vulnerability of the client group, the sensitivity of the information processed, the absence of an alternative provider, or issues of equality and fairness, for example. It needs to be equally clear which services are open to alternative forms of service delivery through a rigorous Options Appraisal. Ensuring clear objectives will ensure the council spends time and public money pursuing the right approach from the outset and does not waste public money by withdrawing late on in a process. • The always been principle - Change is never easy, it can be challenging for officers and Elected Members to radically change the way the council has provided a service often over a lengthy period of time. Some may believe that Options Appraisal would be too difficult and fear that the alternatives seem too radical. Personal and political sympathies and aspirations may also have an impact on the success of the process. • Having a short-term perspective - Focusing too much on the here and now, or on the short-term, can mean that the longer-term benefits are not fully considered. • Not involving the right people - For any Options Appraisal the right people have to be involved, those with the right skills, knowledge, and experience. Everyone involved in an Options Appraisal needs to have clear roles and responsibilities. • Not considering governance - Governance is about how the council ensures that it is doing the right things, in the right way, for the right people, in a timely, inclusive, open, honest, and accountable manner. Ensuring the governance arrangements are clear at the outset of an Options Appraisal will ensure that the decisions on selecting the preferred options are transparent. Any decisions arising from an Options Appraisal must be made within the council’s existing governance arrangements in line with the Scheme of Administration and Scheme of Delegation to Officers. It is good practice to set out a clear reporting framework at the start of an Options Appraisal. Regular reporting on progress should be built into the process, so that the Corporate Management Team and Committees are kept informed in line with their roles and responsibilities. Reports should be prepared in line with the council’s approved report template and guidance [ http://connect/report-template ]. • Decisions being made on incomplete evidence - When considering difficult and potentially controversial options, it is important that the decision- making process is - and is seen to be - robust. The decisions must be open to public scrutiny, although there may be stages in specific options appraisals where some information needs to be managed carefully in order to respect commercial confidentiality. Keeping good quality documentation is vital to demonstrate that decision making is based on sound evidence. Options appraisal and project management Options Appraisal is an important consideration at specific stages in a project life cycle. Guidance on Options Appraisal, and the identification of the preferred option, is contained within the economic case section of the Project Business Case within the council’s Project Management Framework (2022). This requires due consideration of the economic case to identify the proposals that deliver Best Value to the local community, including wider social and environment effects. A prerequisite of the economic case is therefore the demonstration of value for money through a wide range of realistic options being appraised in terms of how well they meet the spending objectives and critical success factors for a project. Page 41 of 174
Page 42
16 Reviewing the approach To ensure the council’s corporate Options Appraisal approach remains fit for purpose in practice, this Framework is on a programme to undergo an annual review and refresh exercise, and any feedback received will therefore be used to inform this process. Therefore after undergoing an Options Appraisal, please e-mail any general feedback (or specific feedback in relation to the following points), to strategyandperformance@northlan.gov.uk • How effective was the Options Appraisal process in delivering the stated objectives? • Was the Options Appraisal process itself delivered on time and on budget? • What lessons have been learned that should inform future Options Appraisal exercises? Page 42 of 174
Page 43
17 Appendix A: Self-Evaluation assessment criteria and statements The seven Best Value themes and supporting good practice evidence statements from the national Best Value: Revised Statutory Guidance document (Scottish Government, 2020) provide the framework that forms the basis for the council’s self-evaluation exercises undertaken in line with the Strategic Self- Evaluation Framework and rolling Review Programme. It should be noted however, that no self-evaluation exercise will include all statements; each exercise will comprise a small subset of statements that best reflects the service, function, project, or group being assessed and their context and operating environment, and that are most appropriate to delivering the desired outcomes. In addition, it may be that national audit and inspection frameworks - or good practice guides and/or checklists - already exist. Where this is the case, and these form an appropriate self-evaluation framework for the service, function, project, or group to be reviewed, then the Best Value statements may not be appropriate to use for certain self-evaluation exercises. Or in these instances, the Best Value statements may only be applicable to use to fill any gaps. BEST VALUE THEME: 1. Vision and leadership Effective political and managerial leadership is central to delivering Best Value, through setting clear priorities and working effectively in partnership to achieve improved outcomes. Leaders should demonstrate behaviours and working relationships that foster a culture of cooperation, and a commitment to continuous improvement and innovation. Evidence statements - in achieving Best Value, a local authority will be able to demonstrate the following: This means that: 1.1 Members and senior managers have a clear vision for their area that is shared with citizens, key partners, and other stakeholders. 1.2 Members set strategic priorities that reflect the needs of communities and individual citizens, and that are aligned with the priorities of partners. 1.3 Effective leadership drives continuous improvement and supports the achievement of strategic objectives. a. The local authority’s vision for its area is developed in partnership with its citizens, employees, key partners and other stakeholders. b. Members set strategic priorities that contribute to achieving the local authority’s vision, reflect the needs of communities and individual citizens, and are aligned with the priorities of partners. They take decisions that contribute to the achievement of those priorities, in particular when allocating resources and in setting and monitoring performance targets. c. The local authority’s vision and strategic priorities are clearly communicated to its citizens, staff and other partners. d. Strategic plans reflect a pace and depth of improvement that will lead to the realisation of the local authority’s priorities and the long-term sustainability of services. e. Service plans are clearly linked to the local authority’s priorities and strategic plans. They reflect the priorities identified through community planning and show how the local authority is working with partners to provide services that meet community needs. f. Priority outcomes are clearly defined, and performance targets are set that drive continuous improvement in achieving those outcomes. g. There are clear and effective mechanisms for scrutinising performance that enable the taking of informed Page 43 of 174
Page 44
18 decisions and the measuring of impacts and service outcomes. h. There is a corporate approach to continuous improvement, with regular updating and monitoring of improvement plans. i. The local authority and its partners agree on how the key elements of Best Value will contribute to achieving the commonly agreed local priorities and outcomes. These key elements include the need to: • secure continuous improvement, in particular for those services aligned to the local authority’s priorities • provide customer- and citizen-focused public services, which meet the needs of diverse communities • achieve the best balance of cost and quality in delivering services (having regard to economy, efficiency, effectiveness, and equalities) • contribute to sustainable development • encourage and support innovation and creativity j. Members and senior managers communicate the approach to Best Value methodically throughout the local authority in terms that are relevant to its staff and set out clear expectations of them. The local authority has a positive culture in which its people understand its vision and objectives and how their efforts contribute to their achievement, and they are engaged with and committed to improvement. k. Members and senior managers are self-aware. They commit to training and personal development to update and enhance their knowledge, skills, capacity, and capabilities to deliver Best Value and perform their leadership roles, and they receive sufficient support to do so. l. Leadership is effective and there is good collaborative working. Members and senior managers have a culture of cooperation and working constructively in partnership, informed by a clear understanding of their respective roles and responsibilities and characterised by mutual respect, trust, honesty and openness and by appropriate behaviours. BEST VALUE THEME: 2. Governance and accountability 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, effective scrutiny of performance and stewardship of resources. Evidence statements - in achieving Best Value, a local authority will be able to demonstrate the following: This means that: 2.1 A clear understanding and the application of the principles of good governance and transparency of decision-making at strategic, partnership and operational levels. 2.2 The existence of robust arrangements for scrutiny and performance reporting. a. Members and senior managers ensure accountability and transparency through effective internal and external performance reporting, using robust data to demonstrate continuous improvement in the local authority’s priority outcome measures. b. Management information and indicators that allow performance to be assessed are widely and consistently used by the local authority. Senior management regularly receives information that is used to inform members about performance. c. Performance is reported to the public, to ensure that citizens are well informed about the quality of services Page 44 of 174
Page 45
19 2.3 The existence of strategic service delivery and financial plans that align the allocation of resources with desired outcomes for the short, medium, and long terms. being delivered and what they can expect in future. d. Learning from previous performance, and from the performance of other local authorities, informs the review and development of strategies and plans to address areas of underperformance. e. Key organisational processes are linked to, or integrated with, the planning cycle; these include strategic analyses, stakeholder consultations, fundamental reviews, performance management, staff appraisal and development schemes, and public performance reporting. f. The local authority has a responsible attitude to managing risk, and business continuity plans (including civil contingencies and emergency plans) are in place to allow an effective and appropriate response to planned and unplanned events and circumstances. g. Key discussions and decision-making take place in public meetings, and reasonable measures are taken to make meeting agendas, reports and minutes accessible to the public, except when there are clear reasons why this would be inappropriate. h. The local authority’s political structures support members in making informed decisions. i. The scrutiny structures in the local authority support members in reviewing and challenging its performance. j. Members and senior managers promote the highest standards of integrity and responsibility, establishing shared values, mutual trust and sound ethics across all activities. Effective procedures are in place to ensure that members and staff comply with relevant codes of conduct and policies. This includes ensuring that appropriate policies on fraud prevention, investigation and whistleblowing are established and implemented. k. Members and senior managers understand and effectively communicate their respective and collective roles and responsibilities to members and staff. They understand that effective delegation enables and supports the local authority’s ability to achieve Best Value. l. An information governance framework is in place that ensures proper recording of information, appropriate access to that information including by the public, and legislative compliance. m. Technological innovation and digital transformation are promoted and used to ensure accessibility of performance information and public accountability. n. Members and employees across the local authority understand and implement their responsibilities in relation to its Standing Orders and Financial Regulations. o. There are clear governance and lines of accountability when delivering services via a third party, and there is evidence of the application of the principles within the Following the Public Pound guidance (https://www.audit-scotland.gov.uk/uploads/docs/um/pg_code_guidance.pdf) when funding is provided to external bodies. BEST VALUE THEME: 3. Effective use of resources Making the best use of public resources is at the heart of delivering Best Value. With clear plans and strategies in place, and with sound governance and strong leadership, a local authority will be well placed to ensure that all of its resources are deployed to achieve its strategic priorities, meet the needs of its communities, and deliver continuous improvement. Evidence statements - in achieving Best Value, a local authority will be able to This means that: Page 45 of 174
Page 46
20 demonstrate the following: 3.1 It makes best use of its financial and other resources in all of its activities. 3.2 Decisions on allocating resources are based on an integrated and strategic approach, are risk-aware and evidence- based, and contribute to the achievement of its strategic priorities. 3.3 It has robust procedures and controls in place to ensure that resources are used appropriately and effectively and are not misused. 3.4 It works with its partners to maximise the use of their respective resources to achieve shared priorities and outcomes. Staff a. A workforce strategy is in place that sets out expectations on how the local authority’s staff will deliver its vision, priorities and values. b. 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. c. All employees are managed effectively and efficiently and know what is expected of them. Employee performance is regularly assessed through performance appraisal, with individuals and teams being supported to improve, where appropriate. d. Members and senior managers understand and demonstrate that effective delegation is an important contribution to the local authority’s ability to achieve Best Value. e. The contribution of staff to ensuring continuous improvement is supported, managed, reviewed and acknowledged. f. The local authority demonstrates a commitment to fairness, equity and safety in the workplace; it adopts relevant statutory guidance through progressive workplace policies and a commitment to best practice in workplace relationships. g. Leaders ensure that there is the organisational capacity to deliver services through effective use of all employees and other resources. They communicate well with all staff and stakeholders and ensure that the organisation promotes a citizen- and improvement-focused culture that delivers meaningful actions and outcomes. Asset management a. There is a corporate approach to asset management that is reflected in asset management strategies and plans, which are subject to regular review. b. There is a systematic and evidence-based approach to identifying and managing risks in relation to land, buildings, plant, equipment, vehicles, materials and digital infrastructure. c. The local authority actively manages its asset base to contribute to its objectives and priorities. d. Fixed assets are managed efficiently and effectively, taking account of availability, accessibility, safety, utilisation, cost, condition and depreciation. Information a. Information is regarded as a strategic resource and is managed accordingly. b. There is a clear digital strategy in place, which includes resilience plans for information systems. c. Information is shared appropriately, and the local authority seeks to develop data compatibility with its partners. Financial management and planning a. There is clear alignment between the local authority’s budgets and its strategic priorities. b. Regular monitoring and reporting of financial outturns compared with budgets is carried out, and corrective action taken where necessary to ensure the alignment of budgets and outturns. c. Financial plans show how the local authority will fund its services in the future. Long-term financial plans Page 46 of 174
Page 47
21 that include scenario planning for a range of funding levels are prepared and linked to strategic priorities. d. An appropriate range of options is considered when taking decisions, and robust processes of option appraisal and self-assessment are applied. e. The local authority has clear plans for how it will change services and realise efficiencies to close future budget gaps. f. Members and senior managers have a clear understanding of likely future pressures on services and of how investment in preventative approaches can help alleviate those pressures, and they use that understanding to inform decisions. g. Financial performance is systematically measured across all areas of activity, and regularly scrutinised by managers and members. h. There is a robust system of financial controls in place that provides clear accountability, stakeholder assurance, and compliance with statutory requirements and recognised accounting standards. i. The local authority complies with legal and best practice requirements in the procurement and strategic commissioning of goods, services and works, including the Scottish Model of Procurement (https://www.gov.scot/policies/public-sector-procurement/). There is clear accountability within procurement and commissioning arrangements. j. There are clear and effective governance and accountability arrangements in place covering partnerships between the local authority and its arm’s-length external organisations (ALEOs), including for performance monitoring and the early identification of any significant financial and service risks; there is evidence of the application of the principles of ‘Following the Public Pound.’ k. The local authority has a reserves policy that supports its future financial sustainability, and its reserves are held in accordance with that policy. Performance management a. Effective performance management arrangements are in place to promote the effective use of the local authority’s resources. Performance is systematically measured across all areas of activity, and performance reports are regularly scrutinised by managers and elected members. The performance management system is effective in addressing areas of underperformance, identifying the scope for improvement and agreeing remedial action. b. There is a corporate approach to identifying, monitoring and reporting on improvement actions that will lead to continuous improvement in priority areas. Improvement actions are clearly articulated and include identifying responsible officers and target timelines. c. The local authority uses self-evaluation to identify areas for improvement. This includes the use of comparative analyses to benchmark, monitor and improve performance. d. The local authority takes an innovative approach when considering how services will be delivered in the future. It looks at the activities of other organisations, beyond its area, to consider new ways of doing things. A full range of options is considered, and self-assessment activity and options appraisal can be demonstrated to be rigorous and transparent. e. Evaluation tools are in place to link inputs, activities and outputs to the outcomes that they are designed to achieve. There is evidence to demonstrate that improvement actions lead to continuous improvement and better outcomes in priority service areas. f. The local authority seeks and takes account of feedback from citizens and service users on performance Page 47 of 174
Page 48
22 when developing improvement plans. g. Improvement plans reflect a pace and depth of improvement that will lead to the realisation of the local authority’s priorities and the long-term sustainability of services. h. Performance information reporting to stakeholders is regular and gives a balanced view of the local authority’s performance, linked to its priority service areas. The information provided is relevant to its audience, and clearly demonstrates whether or not strategic and operational objectives and targets are being met. i. The local authority demonstrates a trend of improvement over time in delivering its strategic priorities. BEST VALUE THEME: 4. Partnerships and collaborative working The public service landscape in Scotland requires local authorities to work in partnership with a wide range of national, regional and local agencies and interests across the public, third and private sectors. A local authority should be able to demonstrate how it, in partnership with all relevant stakeholders, provides effective leadership to meet local needs and deliver desired outcomes. It should demonstrate commitment to and understanding of the benefits gained by effective collaborative working and how this facilitates the achievement of strategic objectives. Within joint working arrangements, Best Value cannot be measured solely on the performance of a single organisation in isolation from its partners. A local authority will be able to demonstrate how its partnership arrangements lead to the achievement of Best Value. Evidence statements - in achieving Best Value, a local authority will be able to demonstrate the following: This means that: 4.1 Members and senior managers have established and developed a culture that encourages collaborative working and service provision that will contribute to better and customer-focused outcomes. 4.2 Effective governance arrangements for Community Planning Partnerships and other partnerships and collaborative arrangements are in place, including structures with clear lines of responsibility and accountability, clear roles and responsibilities, and agreement around targets and milestones. a. Members and senior managers actively encourage opportunities for formal and informal joint/integrated working, joint use of resources and joint funding arrangements, where these will offer scope for service improvement and better outcomes. b. The local authority is committed to working with partner organisations to ensure a coordinated approach to meeting the needs of its stakeholders and communities. This includes: • scenario planning with partners to identify opportunities to achieve Best Value • collaborative leadership to identify Best Value partnership solutions to achieve better outcomes for local people • proactively identifying opportunities to invest in and commit to shared services • integrated management of resources where appropriate • effective monitoring of collective performance, including self-assessment and reviews of the partnership strategy, to ensure the achievement of objectives • developing a joint understanding of all place-based capital and revenue expenditure c. Members and senior managers identify and address any impediments that inhibit collaborative working. The local authority and its partners develop a shared approach to evaluating the effectiveness of collaborative and integrated working. d. In undertaking its community planning duties the local authority works constructively with partners to agree a joint vision for the Community Planning Partnership and integrates shared priorities and objectives into its Page 48 of 174
Page 49
23 planning, performance management and public reporting mechanisms. Service plans clearly reflect the priorities identified through community planning and show how the local authority is working with partners to provide services that meet stakeholder and community needs. BEST VALUE THEME: 5. Working with communities Local authorities, both individually and with their community planning partners, have a responsibility to ensure that people and communities are able to be fully involved in the decisions that affect their everyday lives. Community bodies - as defined in the Community Empowerment Act 2015 (section 4(9)) - must be at the heart of decision- making processes that agree strategic priorities and direction. Evidence statements - in achieving Best Value, a local authority will be able to demonstrate the following: This means that: 5.1 Early and meaningful engagement and effective collaboration with communities to identify and understand local needs, and in decisions that affect the planning and delivery of services. 5.2 A commitment to reducing inequalities and empowering communities to effect change and deliver better local outcomes. 5.3 That engagement with communities has influenced strategic planning processes, the setting of priorities and the development of locality plans. a. Members and senior managers ensure that meaningful consultation and engagement in relation to strategic planning take place at an early stage and that the process of consultation and engagement is open, fair, and inclusive. b. Members and senior managers are proactive in identifying the needs of communities, citizens, customers, staff, and other stakeholders; plans, priorities and actions are demonstrably informed by an understanding of those needs. c. Communities are involved in making decisions about local services and are empowered to identify and help deliver the services that they need. Suitable techniques are in place to gather the views of citizens, and to assess and measure change in communities as a result of service interventions. d. Active steps are taken to encourage the participation of hard-to-reach communities. e. The local authority and its Community Planning Partnership work effectively with communities to improve outcomes and address inequalities. f. A locality-based approach to community planning has a positive impact on service delivery within communities and demonstrates the capacity for change and for reducing inequality in local communities by focusing on early intervention and prevention. g. Members and senior managers work effectively with partners and stakeholders to identify a clear set of priorities that respond to the needs of communities in both the short and the longer term. The local authority and its partners are organised to deliver on those priorities, and clearly demonstrate that their approach ensures that the needs of their communities are being met. h. The local authority engages effectively with customers and communities by offering a range of communication channels, including innovative digital solutions and social media. i. The local authority plays an active role in civic life and supports community leadership. BEST VALUE THEME: 6. Sustainability Sustainable development is one of the two cross-cutting themes that a Best Value local authority should fully embrace across all of its activities. Sustainable development is commonly defined as securing a balance of social, economic, and environmental wellbeing in the impact of activities and Page 49 of 174
Page 50
24 decisions and seeking to meet the needs of the present without compromising the ability of future generations to meet their own needs. The United Nations Sustainable Development Goals (https://www.un.org/sustainabledevelopment/sustainable-development-goals/) provide a fuller definition and set out an internationally agreed performance framework for their achievement. Sustainable development is a fundamental part of Best Value. It should be reflected in a local authority’s vision and strategic priorities, highlighted in all plans at corporate and service level, and a guiding principle for all of its activities. Every aspect of activity in a local authority, from planning to delivery and review, should contribute to achieving sustainable development. Evidence statements - in achieving Best Value, a local authority will be able to demonstrate the following: This means that: 6.1 Sustainable development is reflected in its vision and strategic priorities. 6.2 Sustainable development considerations are embedded in its governance arrangements. 6.3 Resources are planned and used in a way that contributes to sustainable development. 6.4 Sustainable development is effectively promoted through partnership working. a. Leaders create a culture throughout the local authority that focuses on sustainable development, with clear accountability for its delivery across the leadership and management team. b. There is a clear framework in place that facilitates the integration of sustainable development into all of the local authority’s policies, financial plans, decision- making, services and activities through strategic-, corporate- and service-level action. In doing so, the local authority will be able to demonstrate that it is making a strategic and operational contribution to sustainable development. c. The local authority has set out clear guiding principles that demonstrate its, and its partners’, commitment to sustainable development. d. There is a broad range of qualitative and quantitative measures and indicators in place to demonstrate the impact of sustainable development in relation to key economic, social, and environmental issues. e. Performance in relation to sustainable development is evaluated, publicly reported and scrutinised. BEST VALUE THEME: 7. Fairness and equality Fairness and equality is one of the two cross-cutting themes that a Best Value local authority should fully embrace across all of its activities. Tackling poverty, reducing inequality, and promoting fairness, respect and dignity for all citizens should be key priorities for local authorities and all of their partners, including local communities. Evidence statements - in achieving Best Value, a local authority will be able to demonstrate the following: This means that: 7.1 That equality and equity considerations lie at the heart of strategic planning and service delivery. 7.2 A commitment to tackling discrimination, advancing equality of opportunity, and promoting good relations both within its own organisation and the wider community. a. The local authority demonstrates compliance with all statutory duties in relation to equalities and human rights. b. The local authority is taking active steps to tackle inequalities and promote fairness across the organisation and its wider partnerships, including work and living conditions, education, and community participation. c. The local authority and its partners have an agreed action plan aimed at tackling inequality, poverty and addressing fairness issues identified in local communities. d. The local authority engages in open, fair, and inclusive dialogue to ensure that information on services and performance is accessible to all, and that every effort has been made to reach hard-to-reach groups and Page 50 of 174
Page 51
25 7.3 That equality, diversity and human rights are embedded in its vision and strategic direction and throughout all of its work, including its collaborative and integrated community planning and other partnership arrangements. 7.4 A culture that encourages equal opportunities and is working towards the elimination of discrimination. individuals. e. The local authority ensures that all employees are engaged in its commitment to equality and fairness outcomes, and that its contribution to the achievement of equality outcomes is reflected throughout its corporate processes. f. The local authority engages with and involves equality groups to improve and inform the development of relevant policies and practices and takes account of socio-economic disadvantage when making strategic decisions. g. The equality impact of policies and practices delivered through partnerships is always considered. Equality impact information and data is analysed when planning the delivery of services and measuring performance. h. The local authority’s approach to securing continuous improvement in delivering on fairness and equality priorities and actions is regularly scrutinised and well evidenced. Page 51 of 174
Page 52
26 Appendix B: Self-Evaluation rolling Review Programme The following table sets out the Review Programme of self-evaluation exercises to be undertaken from 2022 to 2023 along with indicative timescales. It should be noted that the Strategic Self-Evaluation Framework is designed to be strategic but lite touch, and consistent but flexible enough to ensure that self-evaluation exercises are specifically tailored to the service, function, project, or group being evaluated and designed within the context of that operating environment. For this reason a more detailed evaluation specification will be developed for each exercise following the scoping and preparation work undertaken by the Corporate Management Team Champion and Lead Facilitator(s). Function or activity being evaluated Focus of the assessment Champion Cycle 4 2022 Cycle 1 2023 Cycle 2 2023 Cycle 3 2023 Cycle 4 2023 Service arrangements Risk management arrangements for all aspects of digital and technology Head of Business and Digital ✓ Corporate cross council arrangements Best value follow up Head of People and Organisational Development ✓ Strategic / Partnership / community groups Community Boards / Strategic Leadership Board Head of Audit and Risk ✓ Corporate cross council arrangements Project Boards (follow on from the 2022 refresh of the Project Management Framework) Head of Planning and Regeneration ✓ Page 52 of 174
Page 53
27 Appendix C: Options Appraisal process It is expected that Options Appraisal exercises carried out by the council follow the same broad steps, as outlined in Figure 5. on page 14 (unless there are specific industry standards that require an alternative method to be followed or there are tried and tested methods and processes already in place). However please note the following caveat: 1. It is expected that the size, nature, and complexity of each individual Options Appraisal exercise will influence the size and scale of the Options Appraisal process to be used. 2. It is not considered good use of limited resources to spend time and money on options appraisals for decisions which are straightforward and of minimal impact on service provision, or the council’s finances. 3. Decisions in terms of the extent to which the approach set out in Appendices C and D is used (i.e. a basic or enhanced approach) will therefore need to be made in a sensible and proportionate way. The broad steps outlined in Figure 5. on page 14 are set out in more detail in the following pages (28 to 35). These pages set out the enhanced approach, so don’t forget to take into consideration the above caveat and ensure any Options Appraisal that needs to be carried out is progressed in a sensible and proportionate way. Page 53 of 174
Page 54
28 Page 54 of 174
Page 55
29 Page 55 of 174
Page 56
30 Page 56 of 174
Page 57
31 Page 57 of 174
Page 58
32 Appendix D: Options Appraisal templates Template for the contextual information brief Page 58 of 174
Page 59
33 Template for the SWOT analysis Page 59 of 174
Page 60
34 Template for scoring the options Page 60 of 174
Page 61
35 Template for the assessment of risks Please note that the approach in place across the council to assessing risk in the Corporate Risk Register, Service Risk Registers, and Project Risk Registers (in line with the Risk Management Strategy) uses scores of 1 = low risk, and 5 = high risk. For the purposes of Options Appraisal these scores / ratings are reversed (i.e. 1 = high risk and 5 = low risk); this is required in order to align the risks scores / ratings accordingly to the scores applied in the other appraisal criteria (i.e. where a higher overall score represents the preferred option). A template is available to carry out the final analysis which brings together all the scores and weightings. This will show the option with the highest score which represents the strongest fit with the appraisal criteria. Page 61 of 174
Page 62
Page 62 of 174
Page 63
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref KA/ASP/Nov22 Date 24/11/22 Audit and risk-related items: Action log 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 allow elected members to track implementation of requests and recommendations made by the Panel in respect of audit and risk-related items in the previous 18 months. The attached log (at Appendix 1) records those audit and risk-related requests and recommendations made by the Panel and when these were addressed and/or are expected to be addressed. Recommendations The Panel is invited to note the report. The Plan for North Lanarkshire: Priority: All priorities Ambition statement All ambition statements Ken Adamson, Head of Audit and Risk AGENDA ITEM 4 Page 63 of 174
Page 64
Appendix 1 Audit and risk related items: Action log Meeting Requests or agreed action Status September 2022 Internal Audit to provide specific assurance that management actions proposed in response to Business Continuity Planning are progressed in line with agreed timescales. Outstanding - timescales for agreed actions are not yet due and will be reported on, as they fall due, in line with Internal Audit’s arrangements for reporting on follow-up. September 2022 Updates on the management of key corporate risks to be provided to the Panel in accordance with agreed timetable included at Appendix 3 of Risk Management update report. Partially complete – two of the three planned reports (Supply chain and Governance, leadership and decision-making) are included in the papers for the November meeting. Work on the third planned report (Resources aligned with future target operating model) is underway but not yet complete and will be reported at a later date. June 2022 Internal Audit to provide an update on whether management actions proposed in response to Internal Audit investigation into overtime issues within Waste and Fleet have been implemented and adequately addressed the weaknesses/identified areas for improvement. Outstanding – necessary work is currently being scoped/planned and will be reported on as soon as possible after completion. June 2022 Internal Audit follow-up reports to seek to provide greater clarity on extent of progress on actions where due timescales are around date of report preparation and/or around or immediately prior to Panel meetings Complete - the approach to preparing and finalising relevant reports has been amended to ensure that appropriate current information is available and presented to the Panel wherever possible. Standing item Implementation by management of actions agreed in response to External Audit's recommendations (Annual Report) be monitored through reports from Internal Audit. Complete – This is addressed through the Follow-up of Internal and External Audit recommendations report included as a separate agenda item for this meeting. Internal Audit provide a report to future meetings of the Panel on progress made in implementing agreed management actions in relation to all Internal Audit recommendations categorised as “red” or “amber”. Complete – This is addressed through the Follow-up of Internal and External Audit recommendations report included as a separate agenda item for this meeting. Page 64 of 174
Page 65
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No ☐approval ☒noting Ref KA/ASP/Nov22 Date 24/11/22 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 September 2022. A number of Internal Audit reports completed in the period provided only limited assurance and this report highlights these reports and the most significant issues arising from other 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 5 Page 65 of 174
Page 66
1. Background 1.1 The 2022-23 Annual Plan was approved by the Audit and Scrutiny Panel in September 2022. 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 September. 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. Housing Benefit and Council Tax Reduction Substantial assurance (Green) 2. Performance management Limited assurance (Amber-Red) 3. Income and cash collection: Cash offices Substantial assurance (Green) 4. Sundry debtors/Debt management Limited assurance (Amber-Red) 5. Equalities Reasonable assurance (Green-Amber) 2.2 In addition to the above reports, work is currently underway on a range of topics including Cyber-security, Supply Teachers, Contract management arrangements, Education quality assurance, Creditors and Housing allocations. Once finalised, these 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. 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. Commentary on completed planned ‘core’ Internal Audit work 2.6 The nature of Internal Audit exercises means that most audit reviews invariably find some scope for improvement, usually in the form of controls which are weak or only partially effective and, therefore, contain recommendations. Page 66 of 174
Page 67
2.7 Two of the five reports finalised in the period were assessed as providing only limited assurance, while three of the reports finalised in this period provided more positive levels of assurance. All five reports contain a range of improvement actions and made a series of recommendations. 2.8 Our work on Housing Benefit and Council Tax Reduction focused on the adequacy and effectiveness of the Council’s controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. 2.9 Based on results of our work, we have categorised this audit as providing ‘substantial assurance’. We are satisfied that the governance, risk management and controls in place are adequate and appear robust, with the Council’s arrangements for processing claims substantively complying with DWP requirements, being supported by adequate and appropriate documentation and being correctly assessed and calculated. We were also pleased to note that management checks are being undertaken regularly to provide assurance on the quality and compliance of decision making and that regular reconciliations between the housing benefit system and financial ledger are being undertaken. Management has responded positively to the recommendations contained within the report. 2.10 Our work on Performance management was designed to provide assurance on the adequacy and effectiveness of the Council’s approach to performance management, with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. 2.11 Our review of the SPF has led us to conclude that the framework substantially complies with recognised good practice and when fully implemented, would facilitate effective oversight, monitoring and review of performance. We are generally satisfied that the SPF comprises a range of relevant performance indicators which are aligned with the Council’s priorities, ambition statements and programme of work items and should enable an assessment of the quality, efficiency and effectiveness of the Council’s day-to-day operations. 2.12 The report also notes, however, that that although progress has been made in all aspects of the SPF, many remain a work in progress having been significantly impacted over the last two years due to the need for Services to respond to, and re-prioritise resources, as a result of the Covid-19 pandemic. This includes full implementation of the expected corporate arrangements for monitoring and recording key strategic and operational performance measures by Services, the effective, timely and regular reporting of performance to the Corporate Management Team and Service Committees and the integration of the framework into the Council’s wider governance arrangements. 2.13 We have therefore categorised this audit as offering ‘Limited Assurance’. We consider that there is considerable scope for improvement in the Council’s performance management arrangements and we have raised several recommendations for management consideration. These include the need to fully implement and integrate the SPF into the Council’s wider governance arrangements to provide more effective oversight of performance and the need to better align indicators contained within the SPF to the Council’s ambitions. We have also commented on the need for Services to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making. Management has responded positively to the recommendations contained within the report. Page 67 of 174
Page 68
2.14 Our report on Income and cash collection: Cash offices is the first of two reports focused on the adequacy and effectiveness of the Council’s management arrangements and key controls in relation to income and cash collection activities. The review focused on First Stop Shops/cash offices and examined whether all cash/income received by the Council is properly recorded in the Council’s financial systems and is regularly reconciled to amounts recorded within the cash receipting system. We also assessed whether all cash/income is held securely and banked timeously and whether there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. A further report in respect of similar controls at leisure sites will be issued at a later date. 2.15 Based on the results of our work, we have categorised this audit as offering ‘substantial assurance’ meaning we consider that the control environment is adequate and has operated substantially as intended, with any control issues or weaknesses identified presenting only a low risk to the control environment. We were pleased to note that all cash/income received by the Council is being properly recorded in the Council’s financial systems and is being regularly reconciled to amounts recorded within the cash receipting system. We also noted that all cash/income is held securely and banked timeously and there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. There were only a small number of areas identified where scope for further improvement exists and management has responded positively to the recommendations contained within the report. 2.16 The purpose of our work on Sundry Debt/Debt management was to provide independent assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. In particular, we considered whether adequate written policies and associated guidance covering income/debt recovery/collection and write-off procedures exist; whether debt management arrangements are operating effectively in line with relevant written policies and guidance and appear efficient and cost-effective; whether all credit notes and debt write-offs are appropriately authorised; and whether adequate and timely management information is generated in respect of debt and debt recovery to provide a sound basis for the monitoring of performance and associated decision making. 2.17 Members should note that the audit did not consider and/or review the arrangements in respect of debtors/debts associated with Housing Rents, Council Tax or Non-Domestic Rates as these are subject to separate and specific arrangements and are routinely covered by separate audit assignments. 2.18 Based on the results of our work during this review, we are satisfied that Services are generally proactive in seeking to minimise debts wherever possible by requiring payment for goods and services in advance and that generally, effective controls exist in relation to raising invoices and the debt write-off process. However, we have categorised this audit as offering ‘limited assurance’ as we consider that although some aspects of the control environment are adequate and operating effectively, there are significant deficiencies in a number of areas. 2.19 Areas of weakness include inadequate procedures/guidance notes, credit notes lacking sufficient detail as to why they are required and limited performance information and performance monitoring. In addition, there has been little action taken to address many of the recommendations previously raised by Internal Audit. Indeed, in some areas, (such as those relating to the passing of outstanding debts for legal action) controls have deteriorated further since we last reviewed this area. Page 68 of 174
Page 69
2.20 Overall, we consider there is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework and consequently, we have recommended that management formally review all aspects of the Council’s debt management framework, including relevant policy, procedures and detailed operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. Management has responded positively to the recommendations contained within the report, although they consider the ‘limited assurance’ opinion as unwarranted given performance in this area. 2.21 Our work on Equalities was designed to provide assurance on the adequacy and effectiveness of the key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016. 2.22 The Council has a statutory duty under the Act and Public Sector Equality Duty (PSED) to mainstream its equalities activities into its day-to-day functions (its ‘general equality duty’). In accordance with this duty, the Council has developed an Equality Strategy 2019-2024, which clearly sets out its commitment to mainstreaming equality and human rights through five working objectives for success, together with identified actions. 2.23 The strategy was approved by Policy & Strategy Committee in September 2019 and is closely aligned with the Plan for North Lanarkshire, the associated Programme of Work and various key corporate strategies. In addition, the Council has committed to build equalities into its key decision-making processes, where appropriate, through its expectations that decisions are informed by the use of Equality Impact Assessments (EQIAs), the results of which require to be included in all committee reports and published on the Council’s website. 2.24 Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’ as we consider that the Council generally has appropriate arrangements in place to demonstrate consideration of the PSED in mainstreaming equalities into its day- to-day functions, that there are robust processes in place for ensuring that the equalities outcomes have been set and monitored in accordance with expected timescales and that key equalities reports have been published in accordance with the Council’s specific equality duties. 2.25 However we did identify a number of issues where we consider that there is a need to significantly improve current arrangements. These included that current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose. We also concluded that significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs) and that improvements are needed to the equalities performance monitoring framework, including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. Management has responded positively to the recommendations contained within the report. 2.26 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’. 2.27 There are no completed fraud/irregularity investigations or 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. Page 69 of 174
Page 70
Other Matters – Internal Audit Performance 2.28 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. 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. 63% of agreed actions have been implemented by the agreed implementation date in the period July to September 2022. Progress in implementing agreed actions is monitored and reported separately to the Panel each cycle. 2.29 The second performance indicator is about client satisfaction and reflects the results of four key questions we ask audit clients at the conclusion of each audit assignment. Results presented to the September meeting of the Panel showed generally positive feedback on the work of Internal Audit with most 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. As only a small number of responses have been received in this period, no information is included in this report and this data will be carried forward and reported in more detail in the next update. 2.30 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 Internal Audit assignments completed in the period Appendix 2 Audit gradings Appendix 3 Internal Audit performance framework Ken Adamson, Head of Audit and Risk Page 70 of 174
Page 71
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 improving control frameworks and more effectively mitigating potential threats to planned outcomes. Page 71 of 174
Page 72
Appendix 1 Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 1. Housing Benefit and Council Tax Reduction Internal Audit Opinion: Substantial assurance (Green) Audit recommendations: High 0 Medium 0 Low 3 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. Universal Credit (which is administered by the Department of Work and Pensions (DWP)) continues to replace Housing Benefit with many claimants now in receipt of the former which has resulted in a gradual decline in caseload of the latter. However, the Council is still responsible for administering Housing Benefit and Council Tax Reduction claims for eligible claimants. Based on results of our work, we have categorised this audit as providing ‘substantial assurance’. We are satisfied that the governance, risk management and controls in place are adequate and appear robust, with the Council’s arrangements for processing claims substantively complying with DWP requirements, being supported by adequate and appropriate documentation and being correctly assessed and calculated. We were also pleased to note that management checks are being undertaken regularly to provide assurance on the quality and compliance of decision making and that regular reconciliations between the housing benefit system and financial ledger are being undertaken. We have identified a small number of areas where we consider that there is scope for improvement, and these are detailed in Section 3 of the report. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 72 of 174
Page 73
Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 2. Performance management Internal Audit Opinion: Limited assurance (Amber-Red) Audit recommendations: High 1 Medium 3 Low 1 The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s approach to performance management, with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. In September 2019, the Council approved a SPF which set out a framework for performance measurement at three levels. The SPF was designed to provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people of North Lanarkshire and to allow day-to-day activities and long-term progress against the long-term vision set out in The Plan for North Lanarkshire (The Plan) to be regularly monitored, reported, assessed and scrutinised. Subsequent reports have been presented to the Panel detailing performance reporting arrangements and schedules and further planned work to assess the effectiveness of the SPF. Business and Digital are responsible for the development, review and oversight of the framework, with Services responsible for the implementation and delivery of the framework through the measurement, monitoring and reporting of the level 2 and 3 performance indicators contained in the SPF. Our review of the SPF has led us to conclude that the framework, developed by Business and Digital, substantially complies with recognised good practice and when fully implemented, would facilitate effective oversight, monitoring and review of performance. We are generally satisfied that the SPF comprises a range of relevant performance indicators which are aligned with the Council’s priorities, ambition statements and programme of work (PoW) items and should enable an assessment of the quality, efficiency and effectiveness of the Council’s day- to-day operations. Although progress has been made in all aspects of the SPF, many remain work in progress as full implementation of the expected corporate arrangements for monitoring and recording key strategic and operational performance measures by Services; the effective, timely and regular reporting of performance to the Corporate Management Team and Service Committees; and the integration of the framework into the Council’s governance arrangements, has been significantly impacted over the last two years due to the need for Services to respond to, and re-prioritise resources, as a result of the Covid-19 pandemic. Consequently, there is also little evidence of effective scrutiny of performance information and/or it being used to guide decision making. We have therefore categorised this audit as offering ‘Limited Assurance’. We consider that there is considerable scope for improvement in the Council’s performance management arrangements and we have raised several recommendations for management consideration. These are detailed in section 3 of the audit report and include: • The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide more effective oversight of performance; • Indicators contained within the SPF need to be better aligned to the Council’s ambitions and PoW; • Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making; and • Improvements are needed to the quality of performance indicator data. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 73 of 174
Page 74
Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 3. Income and cash collection – cash offices Internal Audit Opinion: Substantial assurance (Green) Audit recommendations: High 0 Medium 1 Low 3 The purpose of the audit was to provide independent assurance on the adequacy and effectiveness of the Council’s management arrangements and key controls in relation to income and cash collection activities. The review focused on whether all cash/income received by the Council is properly recorded in the Council’s financial systems and is regularly reconciled to amounts recorded within the cash receipting system. We also assessed whether all cash/income is held securely and banked timeously and whether there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. The review comprises two separate exercises – one focused on cash offices and another on leisure sites. The report relates to the review undertaken in respect of cash offices. A further separate report in respect of leisure sites will be issued at a later date. Based on the results of our work, we have categorised this audit as offering ‘substantial assurance’ meaning we consider that the control environment is adequate and has operated substantially as intended, with any control issues or weaknesses identified presenting only a low risk to the control environment. We were pleased to note that all cash/income received by the Council is being properly recorded in the Council’s financial systems and is being regularly reconciled to amounts recorded within the cash receipting system. We also noted that all cash/income is held securely and banked timeously and there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. We have identified a small number of areas where scope for further improvement exists and made a number of recommendations for management attention. Management has responded positively to the recommendations contained within the report. Page 74 of 174
Page 75
Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 4. Sundry debtors/Debt management Internal Audit Opinion: Limited assurance (Amber-Red) Audit recommendations: High 1 Medium 0 Low 0 The purpose of this audit was to provide assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. The effective management and collection of debts is an essential contributor to the Council’s financial resources and helps maximise income available to fund essential services. To achieve this, the Council aims to issue invoices, where appropriate, and collect all debt owing to it promptly, effectively and efficiently whilst ensuring fair and equitable treatment to debtors in line with approved policies. During financial year 2021-22, 115,844 invoices totalling £114,361,939 were raised. Although collection rates are generally very high (the debt collection rate for the last four years is 97%), as at 30 September 2022, 33,504 invoices totalling £13 million (raised in any financial year) were outstanding, with £5 million of these outstanding in excess of 12 months. This area was last reviewed in 2019 when it received a limited assurance audit opinion. Based on the results of our work during this review, we are satisfied that Services are generally proactive in seeking to minimise debts wherever possible by requiring payment in advance and that generally, effective controls exist in relation to raising invoices and the debt write-off process. However, we have categorised this audit as offering ‘limited assurance’ as we consider that although some aspects of the control environment are adequate and operating effectively, there are significant deficiencies in a number of areas. Areas of weakness include inadequate or out-of-date procedures/guidance notes, credit notes lacking sufficient detail as to why they are required and limited performance information and performance monitoring. In addition, there has been little action taken to address many of the recommendations previously raised by Internal Audit. Indeed, in some areas, (such as those relating to the passing of outstanding debts for legal action) controls have deteriorated further. Overall, we consider there is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework and consequently, we have recommended that management formally review all aspects of the Council’s debt management framework, including relevant policy, procedures and detailed operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. Management has responded positively to the recommendations contained within the report; although they consider the ‘limited assurance’ opinion as unwarranted given performance in this area. Page 75 of 174
Page 76
Appendix 1 (continued) Summary of Internal Audit assignments completed in the period Internal Audit outputs: Audit opinion and commentary 5. Equalities Internal Audit Opinion: Reasonable assurance (Green-Amber) Audit recommendations: High 2 Medium 1 Low 0 The purpose of this audit was to provide assurance on the adequacy and effectiveness of the key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016 (as detailed in Appendix 2 of the report). The Council has a statutory duty under the Act and Public Sector Equality Duty (PSED) to mainstream its equalities activities into its day-to-day functions (its ‘general equality duty’). In accordance with this duty, the Council has developed an Equality Strategy 2019-2024, which clearly sets out its commitment to mainstreaming equality and human rights through five working objectives for success, together with identified actions. The strategy was approved by Policy & Strategy Committee in September 2019 and is closely aligned with the Plan for North Lanarkshire, its subsequent Programme of Work and various key corporate strategies. In addition, the Council has committed to build equalities into its key decision-making processes, where appropriate, through its expectations that decisions are informed by the use of Equality Impact Assessments (EQIAs), the results of which require to be included in all committee reports and published on the Council’s website. Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’ as we consider that the Council generally has appropriate arrangements in place to demonstrate consideration of the PSED in mainstreaming equalities into its day-to-day functions, that there are robust processes in place for ensuring that the equalities outcomes have been set and monitored in accordance with expected timescales and that key equalities reports have been published in accordance with the Council’s specific equality duties. Responsibility for Equalities transferred to People and Organisational Development in April 2022, since when, a desktop review of the existing equalities strategy and legacy programme of work has been undertaken. The initial findings from this review were presented to CMT in October 2022 and highlighted a requirement for the Council to better articulate the focus of the equalities programme of activities and more clearly link it to the objectives and outcomes within the Equality Strategy. A need to be clearer about the approaches and processes through which progress will be delivered was also identified. The findings of our audit work endorse this assessment and we have identified a number of areas where we consider that there is a need to significantly improve current arrangements. Recommendations for management consideration/action are detailed at Section 3 of the report and include: • current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose; • significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs); and • improvements are needed to the equalities performance monitoring framework including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. Satisfactory management responses have been received in response to the recommendations contained within the report. Page 76 of 174
Page 77
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 77 of 174
Page 78
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 78 of 174
Page 79
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT HOUSING BENEFITS AND COUNCIL TAX REDUCTION SCHEME: NEW AND AMENDED CLAIMS Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of Financial Solutions, Business Finance Manager (Resource Solutions) and Business Finance Manager (Strategy & Business Development) Copied to: Chief Executive and Deputy Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. Universal Credit (which is administered by the Department of Work and Pensions (DWP)) continues to replace Housing Benefit, with many more claimants now in receipt of the former, which has resulted in a gradual decline in caseload of the latter. However, the Council is still responsible for administering Housing Benefit and Council Tax Reduction claims for eligible claimants. Based on results of our work, we have categorised this audit as providing ‘substantial assurance’. We are satisfied that the governance, risk management and controls in place are adequate and appear robust, with the Council’s arrangements for processing claims substantively complying with DWP requirements, being supported by adequate and appropriate documentation and being correctly assessed and calculated. We were also pleased to note that management checks are being undertaken regularly to provide assurance on the quality and compliance of decision making and that regular reconciliations between the housing benefit system and financial ledger are being undertaken. We have identified a small number of areas where we consider that there is scope for improvement, and these are detailed in Section 3 of this report. Internal Audit Opinion (see definition at Appendix 1) Substantial assurance (Green) Organisational impact (see definition at Appendix 1) Minor Report status FINAL Audit ref 0200/2023/001 Date issued 28/09/22 Audit Team Lesley Armstrong, Paula Hendry and Hugh Shevlin Page 79 of 174
Page 80
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 2 1. Executive Summary Objectives This audit exercise was designed to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that it continues to comply with relevant legislation and DWP requirements in respect of the processing and administration of Housing Benefit and Council Tax Reduction applications/claims and notification of changes in circumstances. The work was designed to offer an audit opinion on the following: • Is the Council complying with key DWP requirements when assessing claims, including obtaining appropriate supporting documentation? • Are claims being correctly assessed/determined, including calculations, start and end dates and backdating of claims? • Are appropriate and expected management checks in place to provide assurance on quality/compliance and are any issues arising from such checks appropriately actioned/addressed? • Are relevant financial records accurate and up-to-date? Work undertaken included substantive testing and re-calculation of 24 new claims and 20 amended (changes of circumstances) claims selected at random for the period January to March 2022. We also reviewed documentation in relation to management checks and reconciliations between the Open Revenues system and the housing management system (HSMS)/financial ledger (efinancials). 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 3 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: • Relevant legislation and DWP guidelines are embedded within the Service’s operating procedures and written guidance and these were generally being complied with; • Awards, start dates, effective dates of change and end dates, where relevant, were generally found to be properly calculated in line with current Housing Benefit/Council Tax Reduction rules; and • The outcome of management checks are monitored by Benefit Managers and Team Leaders and appropriate action is taken to notify staff of any issues arising. Other areas for improvement (Medium) No other areas for improvement were identified. Page 80 of 174
Page 81
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 3 3. Action Plan Housing Benefits and Council Tax Reduction – New and Amended Claims 0200/2023/001 Ref Finding 1 Management should consider reviewing some aspects of the current arrangements for management checks. To ensure that new claims and changes in circumstances for Housing Benefit and Council Tax Reduction are properly processed in line with expectations, the Quality Improvement Team is responsible for reviewing a sample of cases across all areas of benefit processing and providing feedback to the decision maker when any errors are identified to prevent re-occurrence of such errors. The outcome of these reviews, known as benefit management checks, are recorded on a Benefit Management Checks spreadsheet. There is no written documentation which states the number of expected checks to be undertaken, however, we understand that historically this has been set at a minimum of 150 checks per month. Our review of the Benefit Management Checks spreadsheet for 2022-23 confirmed that the target 150 checks is not currently being met mainly due to staff shortages, however, we noted that the number of monthly checks has increased over recent months and the Team are on track to achieve the set target during September 2022. We understand that there has been no review of the level of management checks required for some time. Although we understand that the level of claims for council tax reduction has remained constant, the ongoing move of benefits claimants to Universal Credit has resulted in a reduction in the number of Housing Benefit claims being received and processed by the Council. As such we consider it timely that management formally review the current level of new claims and changes of circumstances processed to determine whether the minimum of 150 checks per month remains appropriate. Depending on the direction of movement of the claims processed by the Service, it is recognised that the outcome of this review may result in an increase or decrease in the target set. We reviewed the Benefit Management Checks spreadsheet for 2022-23 (to mid-September) and noted that of the 540 claims which were subject to a management check, 14% contained a financial error. Discussions with Service management indicate that this level is within a reasonable tolerance, however we were informed that management have not established a formal acceptable tolerance level for errors identified during management checks. Whilst we are satisfied that the outcomes of these errors are discussed with relevant staff to prevent the same error occurring again, we consider that tolerance levels for errors should be determined and monitored with the outcome reported to management on a regular basis. Implication Recommendation Priority Management response Implementation Month/Year Management may be undertaking too many checks resulting in a poor use of resources. Management may be unable to compare and/or report ‘performance’ arising from management checks against previously agreed targets/expectations. Management should consider reviewing the current arrangements for management checks including: (1) determining whether, given the reduction in housing benefits caseloads, the level of management checks currently undertaken, remains appropriate; and (2) establishing an acceptable tolerance level for errors (financial and non-financial) identified during management check and thereafter regularly reporting the outcome of management checks against these tolerance levels. Low Agree Elaine Cornes (Benefit Manager) (1) Current level of management checks has been re-considered by the Team and it has been determined that the current level is appropriate, however the position will be kept under review. (2) An acceptable tolerance level will be introduced. October 2022 Page 81 of 174
Page 82
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 4 3. Action Plan (continued) Housing Benefits and Council Tax Reduction – New and Amended Claims 0200/2023/001 Ref Finding 2 A small number of claims selected for testing contained calculation errors and/or had insufficient evidence to support the claim. Our testing involved a review of a random sample of 44 new and amended claims. Whilst we were generally satisfied that there was appropriate documentation to support the benefit awarded and that housing benefit/council tax reduction had been correctly calculated, we identified a small number of instances where the appropriate checks had not been undertaken by Benefit staff, where documentation was not available to fully support the claim and/or calculation errors occurred. In particular, we noted the following: • for three claims (178321, 178321 and 297973), there was insufficient documentation on file to support elements of the claimant’s income (Disability Living Allowance (DLA), Personal Independence Payment (PIP), Employment and Support Allowance (ESA) and earnings) – the documentation for some of these claims has now been added to Workflow360 (document management system); • the bank statements provided for two claims (180550 and 209041) did not contain the balance column, therefore the balance on the account could not be confirmed; • we were unable to determine how the documentation (birth certificate, DWP and private pension letters) was received for one claim (298073). It would appear that the documents were received via the post, however, only the birth certificate and one letter was stamped was date stamped and none of the documentation was stamped as original seen or signed/dated by the officers; • the application form for one claim (286005) appears to have been completed manually by the claimant (i.e. handwritten), however, the document held on Workflow360 has not been stamped with the date of receipt; • one claim (178321) where the rates used for DLA did not match the standard DWP rates (note: there was no effect on the benefit awarded as DLA payments are disregarded); • for one claim (209041), child benefit was not included in the income calculation (note: there was no effect on the benefit awarded as child benefit payments are disregarded) and the student loan and child tax credits were disregarded in error (note: these have now been corrected but there is no effect on the benefit awarded); and • one claim (297818) where we considered that the capital figure used in the calculation of benefit had been recorded incorrectly. The capital varied throughout the period of claim and this has now been reassessed and recorded more accurately. All calculation errors have been notified to the benefits team and have now been corrected. Implication Recommendation Priority Management response Implementation Month/Year Housing Benefit/Council Tax Reduction may not be correctly calculated in line with legislation and DWP rules. Management should remind all staff processing claims of the need to ensure that all data is accurately input into Civica and that appropriate and sufficient documentary evidence to support all claims is received and retained. Low Agree Elaine Cornes (Benefit Manager) Staff will be reminded in writing of the need for accuracy. October 2022 Page 82 of 174
Page 83
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina report v1.0 as issued.docx 5 3. Action Plan (continued) Housing Benefits and Council Tax Reduction – New and Amended Claims 0200/2023/001 Ref Finding 3 Reconciliations are not always completed on a timely basis and details of who undertook reconciliations and when are not always recorded. Reconciliations between Civica (for rent rebates and rent allowances) and efinancials are undertaken by the Support Team within Financial Solutions. At the time of testing (June 2022), these reconciliations were not up to date (last reconciliation was for period 13 in 2021-22), however, we have since been informed that the outstanding reconciliations have now been completed. We understand that the reconciliations are now documented and stored electronically and that reports are no longer printed, signed and dated, however, we consider that, for each reconciliation, a record of the officers who prepared and subsequently checked/authorised it and when, should be retained. Implication Recommendation Priority Management response Implementation Month/Year If reconciliations are not up to date and are not undertaken regularly, any errors or discrepancies in the records held on the two systems may not be identified and correctly promptly. If details of who undertook processes and checks are not recorded, it may be difficult to establish whether and/or by whom and when these processes and checks have been undertaken and errors may not be identified in a timely manner. Management should ensure that: (1) going forward, reconciliations are completed on a timeous basis; and (2) regardless of whether reconciliations are held electronically or in a printed format, an appropriate record confirming the officers who prepared and subsequently checked/authorised each reconciliation and when is retained. Low Agree Jamie McKenna, Revenue and Benefits Manager (Business Development and Performance) A reconciliation timetable will be implemented to ensure reconciliations for each financial period are completed in a timeous manner. The schedule will include both a ‘prepared by’ and ‘authorised by’ column which will be signed by the officer who completed the relevant task. The schedule will be stored electronically and be made available for audit review. October 2022 Page 83 of 174
Page 84
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.001 - Housing Benefits/A - FINDINGS AND REPORT/A06a 20220928 HB Fina 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 84 of 174
Page 85
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 1 INTERNAL AUDIT REPORT PERFORMANCE MANAGEMENT Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Performance indicators reviewed Appendix 3: National Audit Office – Good practice criteria for performance measurement Issued to: Head of Business and Digital, Business Strategy Manager and Strategy and Performance Manager Copied to: Chief Executive, Deputy Chief Executive and all Heads of Service Headlines The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s approach to performance management with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. In September 2019, the Council approved a SPF which set out a framework for performance measurement at three levels. The SPF was designed to provide an overview of performance to help understand the impact of council activities on improving services and outcomes for the people of North Lanarkshire and to allow day-to- day activities and long-term progress against the long-term vision set out in The Plan for North Lanarkshire (The Plan) to be regularly monitored, reported, assessed and scrutinised. Subsequent reports have been presented to the Audit and Scrutiny Panel (ASP) detailing performance reporting arrangements and schedules and further planned work to assess the effectiveness of the SPF. Business and Digital are responsible for the development, review and oversight of the framework, with Services responsible for the implementation and delivery of the framework through the measurement, monitoring and reporting of the level 2 and 3 performance indicators contained in the SPF. Our review of the SPF has led us to conclude that the framework, developed by Business and Digital, substantially complies with recognised good practice and when fully implemented, would facilitate effective oversight, monitoring and review of performance. We are generally satisfied that the SPF comprises a range of relevant performance indicators which are aligned with the Council’s priorities, ambition statements and programme of work (PoW) items and should enable an assessment of the quality, efficiency and effectiveness of the Council’s day-to-day operations. Although progress has been made in all aspects of the SPF, many remain work in progress as full implementation of the expected corporate arrangements for monitoring and recording key strategic and operational performance measures by Services; the effective, timely and regular reporting of performance to the Corporate Management Team and Service Committees; and the integration of the framework into the Council’s governance arrangements, has been significantly impacted over the last two years due to the need for Services to respond to, and re-prioritise resources, as a result of the Covid-19 pandemic. Consequently, there is also little evidence of effective scrutiny of performance information and/or it being used to guide decision making. We have therefore categorised this audit as offering ‘Limited Assurance’. We consider that there is considerable scope for improvement in the Council’s performance management arrangements and we have raised several recommendations for management consideration. These are detailed in section 3 of the audit report and include: • The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide more effective oversight of performance; • Indicators contained within the SPF need to be better aligned to the Council’s ambitions and PoW; • Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making; and • Improvements are needed to the quality of performance indicator data. Internal Audit Opinion (see definition at Appendix 1) Limited assurance (Amber-Red) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0900/2022/009 Date issued 13/10/22 Audit Team Lesley Armstrong, Paula Hendry, Elizabeth Sweeney and Hugh Shevlin Page 85 of 174
Page 86
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 2 1. Executive Summary Objectives This audit exercise was designed to provide independent assurance on the adequacy and effectiveness of the Council’s approach to performance management with a focus on the adequacy, robustness and effectiveness of the Council’s Strategic Performance Framework (SPF) and its implementation. These arrangements were assessed against the National Audit Office’s ‘Performance measurement: Good practice criteria and maturity model’. The work was designed to offer an audit opinion on the following: • How well does the Council’s SPF reflect recognised good practice? Does it have clear links to the aims of the organisation? Is it integrated with relevant business planning, budgetary and operational processes? And does it incorporate relevant and good quality performance indicators? • Are there effective arrangements for reporting on performance? Have these been implemented? Do arrangements incorporate data quality checks, contextual reporting and presentation with relevant analysis and insight? • How well does the Council use performance information? Is relevant information used to assess performance and guide future decision-making? Work undertaken involved discussions with the Strategy and Performance Manager, a detailed review of documentation to evidence the key processes and procedures operating in 2021-22 and substantive testing across Services on a sample of 12 performance indicators from the SPF (six from Services involved in the pilot exercise and six from Services not involved in the pilot exercise) to assess the accuracy of reporting performance data and, where appropriate, compliance with statutory obligations. It is anticipated that future audits on performance will focus on the arrangements in place within individual Services to implement the SPF. 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 3 1 Key areas requiring management action (High) The following key area requiring urgent management action has been identified: • The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide effective oversight of performance. Good practice identified We noted the following areas of good practice during the audit: • The SPF is one of five frameworks which support the Council’s strategic plan, ‘The Plan for North Lanarkshire’ (The Plan) and associated Programme of Work. The SPF comprises a number of performance indicators, which are aligned with the Council’s priorities, ambition statements and programme of work items, and enable an assessment of the quality, efficiency and effectiveness of the Council’s day-to-day operations. • The SPF contains a reporting schedule detailing which indicators will be reported to which stakeholders and when/how often. This schedule was updated for 2021-22 and is in the process of being updated for 2022- 23 and is expected to be submitted to CMT for approval in November. • Performance indicators have been allocated baselines and targets to enable managers to effectively monitor performance and easily identify any dips or increases in performance at an early stage. • The Council participates in the Local Government Benchmarking Framework (LGBF) co-ordinated by the Improvement Service which is designed to enable comparison of performance with other councils and to encourages councils to examine why variations in costs and performance occur between similar councils. Page 86 of 174
Page 87
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 3 Other areas for improvement (Medium) Other areas for improvement were also identified: • Indicators contained within the SPF need to be better aligned to the Council’s ambitions and Programme of Work; • Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making; and • Improvements are needed to the quality of performance indicator data. Page 87 of 174
Page 88
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 4 3. Action Plan Performance Management 0900/2022/009 Ref Finding 1 The SPF needs to be fully implemented and integrated into the Council’s wider governance arrangements to provide more effective oversight of performance. The Council’s strategic plan (The Plan) was approved at the Policy and Strategy Committee in February 2019. It is a high-level strategy which aims to communicate the Council’s five priorities and provide a focus for activities and resources to ensure that employees and stakeholders work towards a shared ambition. The Plan is supported by 25 high level ambition statements which are further supported by a Programme of Work, which is reviewed annually. The Plan and associated Programme of Work are supported by five frameworks and are designed to enable a structured approach to assessing progress, measuring success and identifying areas for improvement. One of these frameworks is the SPF which was approved at the Policy and Strategy Committee in September 2019 and aims to enable the Council to monitor delivery of the supporting Programme of Work and associated activities. The SPF comprises a number of performance indicators at three levels which collectively provides an overview of performance to help understand the impact of council activities on improving the services and outcomes for people and communities in North Lanarkshire. Its aim is to produce evidence that allows the activities of the Council and progress towards achieving the ambitions in the Plan for North Lanarkshire to be regularly monitored, reported, assessed, and scrutinised. Our assessment of the SPF is that the framework developed by Business and Digital substantially complies with recognised good practice and, when fully implemented by Services, would provide for more effective oversight, monitoring, review and reporting of performance. The requirement to stand down a range of activities across all Services due to the need to re-prioritise resources in responding to the public health emergency, including much of the work associated with the implementation of the SPF, has, however, significantly impacted on the operation of the Council’s performance management arrangements over the last two years. In particular, we noted that: • the reporting schedule contained within the SPF generally expects performance to be reported to the Policy and Strategy Committee, Audit and Scrutiny Panel (ASP), Service Committees, CMT and SMT twice a year, however, our review confirmed that this did not occur in 2021-22 and is not currently happening; • reports in relation to all three levels of performance indicators per this schedule are expected to be submitted to CMT in cycle 2 (April-June) and cycle 4 (October - December) each year; however, there has, to date, been very limited reporting to CMT. We noted that a performance review update by each Head of Service was presented to CMT in April/May 2021 and whilst Heads of Service provided an update on work being undertaken by their Services, it did not provide comprehensive information on performance and progress toward achieving related ambition statements and/or programme of work items. Business and Digital management commented that this approach was stood down after Heads of Service failed to comply with the clear guidance given to present a balanced picture of Service performance results to CMT. Following this, the Chief Executive requested a new approach be developed which led to the pilot exercise using spreadsheets for each Head of Service (see next bullet); • performance reports for each Head of Service were expected to be submitted to the relevant Service Committee during cycle 3 (August to September) of 2021 and cycle 1 (January to March) of 2022 however, this did not happen. Instead, Business and Digital undertook a pilot with three Heads of Service for recording performance on performance spreadsheets and reporting to the relevant Committee, with reports being presented to Committee for these cycles. This has now been completed for a fourth Service and we understand that preparations are underway for the process to be rolled out to all Services by June 2022. Given the rate of progress to date, we consider this timescale to be extremely ambitious; • in late 2021, CMT undertook a self-evaluation of its new arrangements that had been introduced in April 2021 and a report the outcome of this self-evaluation was presented to CMT in February 2022. This report recognised that there is a need to enhance the scrutiny role of CMT and the use of performance information in strategic decision making and continuous improvement, and an action to address this was identified for implementation by the Head of Business and Digital by August 2022. We understand that this date has been revised and is now expected to be complete by November 2022; • there has been limited reporting in relation to performance and performance indicators to the Policy and Strategy Committee in the last few years with the last report providing the latest level 1 indicator figures in March 2022; • similarly, there has been limited reporting of performance to the Audit and Scrutiny Panel (ASP) with the focus being largely restricted to presenting the Local Government Benchmarking Framework indicators and the position of North Lanarkshire Council in relation to other Councils; and • there is no clear statement which sets out how and when performance will be reported to the general public and there is currently limited performance information available in any format (paper, online, etc) for the public. Although we recognise the pandemic has majorly impacted on Services’ ability to engage in implementation of the SPF, all of the above, has significantly impacted on the level of reporting to, and scrutiny, analysis and interpretation of performance data by, elected Members and senior management. Effective scrutiny of performance by elected Members forms an important part of the Council’s governance arrangements and this has, effectively, been absent for much of the last two years. (Continued over page) Page 88 of 174
Page 89
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 5 3. Action Plan Performance Management 0900/2022/009 Implication Recommendation Priority Management response Implementation Month/Year It may be difficult to clearly demonstrate progress, improvement or achievement of the Council’s ambition statements and programme of work items, which could result in the Council failing to meet its obligations in relation to best value, good governance and public performance reporting. Inadequate and/or irregular performance reporting impacts on the ability of key stakeholders (corporate management and elected members) to review performance and identify where issues are arising and/or action may be needed. The Head of Business and Digital, in conjunction with Services, should ensure that, as a matter of priority, the SPF is fully integrated into the Council’s wider governance arrangements with effective, timely and regular reporting on key strategic and operational performance measures to all key stakeholders (CMT, relevant Service Committees, Audit and Scrutiny Panel and the general public). High Agree Katrina Hassell, Head of Business and Digital The Service is committed to implementing the SPF in full in line with the audit recommendations. This work is underway in a number of phases due to conclude at the end of this financial year. A key dependency is the planned revision to the Programme of Work. The updated SPF will be presented to the CMT in December 2022 with reporting implemented by the end of the financial year. March 2023 Page 89 of 174
Page 90
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 6 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 2 Indicators contained within the SPF need to be better aligned to the Council’s ambitions and Programme of Work. The SPF comprises a group of performance indicators at three levels – (1) NL context, (2) improving outcomes and (3) day-to-day operations with each indicator designed to be aligned with the Council’s priorities and ambition statements and thereby providing a clear link to The Plan. We consider, however, that the SPF contains an excessive number of level 2 and 3 indicators, many of which, whilst relevant to the Council’s activities/day-to-day operations and Services may be interested in measuring and monitoring for operational purposes, do not always have a clear direct link to The Plan and the ambition statements or Programme of Work items to which they are aligned. Our review also identified that there is no documentation which clearly indicates which Head of Service is responsible for each of the current level 2 and 3 indicators to ensure that clear responsibility for all indicators included in the SPF have been allocated to a Head of Service including responsibility for how these are calculated. Our testing of a small sample of 12 indicators identified one indicator which was not being measured by the Service despite being included in the SPF, as relevant staff were unaware of its existence. We understand that the SPF is currently being refreshed, with all Heads of Service reviewing and reconsidering their performance indicators and making additions/deletions/amendments to better reflect their activities. We consider that this review should include consideration of each existing indicator to determine whether they will have a direct impact on achieving the shared ambition and identification of new indicators which will better measure the impact of actions on outcomes. The refreshed SPF is expected to be presented to Committee in cycle 4 of 2022 (October - December). In addition, best practice (see Appendix 3) states that in developing a performance framework the activity measured should be “capable of being influenced by actions which can be attributed to the organisation” and that the “influence on outcomes that the organisation exerts are separated from the other influences on those outcomes”. Level 1 indicators do not meet this expectation. They provide context to North Lanarkshire overall and whilst it is useful data to monitor and report, it does not provide a direct measure of the Council’s performance. We therefore consider, in line with good practice, that senior management (CMT) and Elected Members would benefit more from receiving performance reports containing a smaller number of ‘primary’ or leading’ indicators (a range of indicators which would be of most significance/interest to senior management to enable monitoring of the progress of ambition statements and the Programme of Work) or forecasts of performance (to reflect how changes in activities or processes may affect performance), enabling them to undertake more meaningful and focused performance monitoring and scrutiny. Implication Recommendation Priority Management response Implementation Month/Year It may be difficult to clearly demonstrate progress, improvement or achievement of the Council’s ambition statements and programme of work items, which could result in the Council failing to meet its obligations in relation to best value, good governance and public performance reporting. The Head of Business and Digital, in conjunction with all Services, should: (1) as part of the refresh of the SPF, ensure that consideration is given to all level 2 and 3 indicators to determine whether improvements in these performance indicators provide meaningful information in respect of progressing/achieving the ambition statements and programme of work items that they are linked to. This review should include the removal of any indicators which are not directly linked to planned outcomes and the identification of new indicators to assist with the monitoring of progress of ambition statements and key programme of work items; (2) consider preparing a document (or adding to existing documentation such as the SPF) which clearly indicates the Head of Service responsible for each performance indicator; and (3) identify a suite of key performance indicators/reporting mechanism(s) that would facilitate effective scrutiny and challenge by CMT and elected members. Medium Agree Katrina Hassell, Head of Business and Digital (1) As part of the refresh of the SPF, consideration is being given to determining the improvements required in terms of the suite of performance indicators. The updated SPF will be presented to the CMT in December 2022. (2) The new approach comprises a spreadsheet for each Head of Service that clearly indicates their responsibilities for each performance indicator within the SPF. (3) The launch of the new approach to CMT in December 2022 will provide more detail in this respect. December 2022 Page 90 of 174
Page 91
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 7 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 3 Services need to make better use of performance information to ensure relevant and timely reporting to their senior management teams and associated Committees to allow for appropriate scrutiny and challenge and to inform decision making. During the audit, for the sample of performance indicators (see Appendix 2) selected, we reviewed and assessed how Services are discharging their responsibilities for performance reporting. Various approaches are taken to service level performance reporting including reporting to Committee/Boards (NLC, Health and Social Care), discussions at management meetings (without Head of Service presence), ad hoc discussions with the Head of Service and discussion with key contractors about their performance. From our review of a sample of 11 performance indicators, we consider that the arrangements in place for reporting to Service management for six of the indicators was insufficient as the evidence provided did not confirm that performance is routinely reviewed and discussed with the Head of Service. As noted at point 1 above, Service Committees have not been presented with performance reports as per the expected reporting schedule but rather a pilot with three Heads of Service for recording performance on performance spreadsheets and reporting to Committee has been undertaken. We undertook a review of the committee reports presented for the pilot by Services to relevant Committees and whilst we were pleased to note that they follow a consistent structure, we identified a number of issues with the content of the reports: • The main body of the report is about two and a half pages long, however, the narrative does not contain much summary information on performance – instead it largely details which ambition statements the Head of Service is responsible for, explains the information contained in the appendix and refers to the performance spreadsheet; • Services do not provide an analysis of performance indicators in the main body of the report to highlight areas of good or poor performance, the reasons for the performance level or, where performance is poor, the actions that will be taken to improve it; • There is no distinguishment in the report to indicate whether individual performance indicators are level 2 or 3; and • The comments contained in the appendix do not always provide clear explanations for changes in trends, not meeting targets or the factors influencing performance. Implication Recommendation Priority Management response Implementation Month/Year Performance information may not be used effectively by senior management or elected members to evaluate the effectiveness of activities and/or inform decisions and/or drive continuous improvement. It will be difficult for stakeholders to understand whether/how well the organisation is progressing towards achieving strategic objectives. The Head of Business and Digital should: (1) Establish, and thereafter communicate to Services, a set of minimum standards for performance reporting within Services, including the requirement to report and discuss performance with the Head of Service, identify areas where performance exceeds/is below target or substantially differs from previous periods to understand/explain the reasons and, where appropriate, identify actions to improve performance and monitor the implementation of these actions; and (2) review and amend as appropriate, the committee template and/or guidance for performance reporting to include summary narrative highlighting areas of good or poor performance, the reasons for performance levels and any actions being taken to address or improve poor performance. Medium Agree Katrina Hassell, Head of Business and Digital and all Heads of Service (1) A set of standards for performance reporting is already contained within the SPF. These will be further reviewed and updated as appropriate in the finalisation of the revised SPF as detailed above. (2) The pilot performance reports to committee have a column for narrative to highlight areas of good and poor performance. This is further substantiated by the use of a RAG status. In the pilots, the narrative column provided information in terms of work being done to address or improve poor performance; this approach will continue and will be reiterated within the refreshed SPF and new approach presented to CMT in November. The use of the narrative column received positive feedback from Heads of Service and Elected Members. November 2022 Page 91 of 174
Page 92
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 8 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 4 Improvements are needed to the quality of performance indicator data. As part of the Council’s corporate performance arrangements, there is a requirement for Services to nominate a Calculating Officer and Verification Officer for each performance indicator. These roles have been in place for a number of years and two documents detailing the roles and responsibilities of each officer were prepared. These documents are available on Connect, however, they are currently in the process of being refreshed for inclusion in a new ‘How To’ guide which is currently being prepared for staff involved in the calculation and verification of performance information. Given the removal of PerformNL, the standing down of performance reporting during 2020/21 due to Covid, the reconsideration of Committee performance reporting and the number of officers in these roles who have left the Council’s employment, many of the officers undertaking these roles have recently changed, resulting in many new officers who appeared unaware of their roles and responsibilities. This is supported through substantive testing on a sample of six performance indicators (which were subject to the pilot exercise for reporting) where discussions with the nominated Calculating and Verification Officers generally confirmed that they had not been formally made aware of their responsibilities and the corporate expectations and requirements for measuring, calculating, monitoring and reporting performance information. Business and Digital’s Workplan for the SPF includes an action to hold engagement/drop-in sessions with Calculating and Verification Officers on the new SPF arrangements, roles and responsibilities, reporting timescales, etc in October/November once the SPF reporting arrangements have been fully implemented. All performance indicators are required to have a performance information definition sheet, prepared by the relevant Service, 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. Our review of a sample of 11 performance indicators confirmed that a definition sheet had been prepared for each indicator, however, we identified a number of issues including the definition sheets were not always fully completed; the titles of the indicator did not always clearly state what it was measuring; the detailed description for some indicators was vague and did not always clearly describe what was being measured and how; the worked example was not always correctly calculated and/or the data source for some indicators was either unclear or did not match the information provided during our review. We were informed that, as the new performance spreadsheet and committee reporting process is being rolled out, the definition sheets are being reviewed and vetted by Business and Digital, although we noted that some of the issues identified above related to indicators for Services which had already been subject to this process. We also 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, data sources, etc. There was also previously an annual data quality process in place for performance indicators to ensure that indicators were correctly calculated in line with the definition sheet and accurately reported. This process involved the Calculating and Verification Officers completing ‘forms A and B’ once the year-end performance indicator results had been calculated and contained a series of questions requiring ‘sign-off’ by each officer as confirmation of they had undertaken the appropriate checks, recorded the results and provided explanations for variances, as appropriate. We understand that this process has been adapted and will be included as part of the ‘How To’ guide. This process has not yet been implemented, however, Business and Digital management confirmed that completed ‘forms A and B’ have been requested from the four Services who have reported to Committee as part of the corporate process. As this is an annual year-end process, it will not be fully implemented until the 2022/23 year-end. The lack of knowledge by the Calculating and Verification Officers within Services of their roles and responsibilities and the data quality process is substantiated through our detailed review of a sample of 11 performance indicators where we identified issues with the calculations for five of the indicators, including the reported figures not reconciling with the supporting documentation for three indicators; the Service identifying an error in the calculation prior to providing the supporting documentation for two indicators; an error in the calculation of the denominator and omission of some data as the records had not been fully updated for one indicator. This resulted in some of the performance spreadsheets not being updated correctly by Services. We also noted that the definition for two indicators was not consistent with what was actually being measured and that Services did not have any separate procedures/ guidelines explaining how the indicator was to be calculated for 10 indicators. (continued over page) Page 92 of 174
Page 93
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 9 3. Action Plan (continued) Performance Management 0900/2022/009 Implication Recommendation Priority Management response Implementation Month/Year If officers involved in the calculation and verification process are not fully aware of their responsibilities, performance information may be of poor quality and/or not prepared on a timely basis. The Head of Business and Digital should ensure that: (1) the guidance in relation to Calculating Officer and Verification Officer responsibilities is completed and issued, and that appropriate engagement is undertaken with all relevant staff in Services to raise awareness of their responsibilities in relation to performance information, including the requirement to ensure the accuracy of calculation of performance indicators; (2) Services are reminded of the need to prepare performance information definition sheets for all indicators (including LGBF indicators), including that these must be fully completed, contain accurate information and be subject to review on a regular basis to ensure they remain up-to-date; and (3) the planned annual data quality process is fully implemented. Medium Agree Katrina Hassell, Head of Business and Digital and all Heads of Service (1) The guidance for Calculation and Verifications Officers roles and responsibilities is now complete. Since the audit, user acceptance testing has taken place with several CO/VOs for ease of use, understanding and implementation. Stakeholder feedback has informed the final version of the guidance. (2) The need to have (and ensure an annual update to) indicator definitions was reiterated to Services when standing back up the data collection process. A set of indicator definitions already exists nationally (developed by the Improvement Service) for the suite of LGBF indicators, and it is not the intention to duplicate this work. Where it is appropriate to do so (the Council is the data owner, and where the data collection process is not part of another already established national process), Services will be asked to produce relevant indicator definitions. (3) Re-establishing the data quality process is in line with timescales agreed with the Chief Executive. Reporting will be re-established to Service committees in cycle 1 of 2023. The process for 2021/22 will be concluded in time for cycle 1 reporting to committee. The 2022/23 process will revert back to having a scheduled set of deadlines. January 2023 Page 93 of 174
Page 94
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 10 3. Action Plan (continued) Performance Management 0900/2022/009 Ref Finding 5 The use of the Business Intelligence Hub (BI Hub) for interpreting and understanding performance information needs to be fully implemented. The Business and Digital team have developed performance spreadsheets and a corporate template for reporting performance information to Committee and this has been introduced on a pilot basis for four Heads of Service and Business and Digital are currently in the process of rolling this new process out to all other Heads of Service. We understand that this is expected to be completed by June 2022. Business and Digital advised that further improvements are being made to the presentation of performance information for various audiences as part of the development of the Business Intelligence Hub (BI Hub). We were informed that arrangements were well underway for mapping the performance information for one service to the BI Hub, and that once this had been implemented, it would be replicated for all Heads of Service. We were provided with a timeline which states that this exercise is expected to be completed by July 2022. Implication Recommendation Priority Management response Implementation Month/Year Digital solutions to improve the preparation and interrogation of performance data may not be utilised to ensure the efficient and effective use of resources. Business and Digital should review planned progress of the implementation of performance information for all Heads of Service into the BI Hub and ensure a realistic timescale is set for completion of this exercise. Low Partially Agree Katrina Hassell, Head of Business and Digital The development of the SPF sits within a wider project plan for the BI Hub and, as a result, has a number of dependencies. The audit finding presented above only provides part of the picture regarding the integration of the SPF into the wider BI Hub project. The audit recommendation is not presented within the full context of the BI Hub development. Since the audit, phase 1 of the process in terms of data mapping has now been completed and the system integrator is currently undertaking work to further develop these. Internal Audit Comment: we recognise that the BI Hub is a corporate wide project, and the SPF is only a small part of that. For the purpose of this audit review, we only concentrated on the progress of implementation for performance being recorded in the BI Hub. The full extent of the BI Hub project was outwith the scope of this exercise. March 2023 Page 94 of 174
Page 95
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 11 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 95 of 174
Page 96
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 12 Appendix 2 – Performance Indicators Reviewed Sample Service Level Indicator Performance indicators selected from Services involved in the pilot exercise 1 Business and Digital 3 Service desk - % of tickets logged through the self-help portal 2 Environmental Assets 2 Volunteering - cash equivalent of number of hours delivered 3 Environmental Assets 3 Cost of street cleaning per 1,000 population 4 Financial Solutions 2 % of income due from NDR that was received by the end of the year 5 Regulatory and Waste 3 Refuse collection complaints, all categories - number of complaints per 1,000 household visits 6 Regulatory and Waste 3 Trading standards, consumer complaints - % dealt with within 14 days of receipt Performance indicators selected from SPF for Services not involved in the pilot exercise 7 Enterprise and Growth (Planning and Regeneration) 2 Town centre vacancy rates - % of vacant commercial units as a % of total units for the local authority town centre 8 Education and Families (Asset and Procurement Solutions) 2 School meal uptake - % uptake over all programmes 9 Adult Health and Social Care 2 Care home placements, age 65+, at end of quarter – placements per 1,000 population 10 Education and Families (Education) 2 Community learning and development programmes - % of adult learners enrolled from the 20% most deprived areas 11 Enterprise and Growth (Planning and Regeneration) 3 Commercial planning applications – cost per application 12 Adult Health and Social Care 3 Home care – cost per hour for people over aged 65 or over Page 96 of 174
Page 97
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 13 Appendix 3 – National Audit Office Good Practice Criteria for Performance Measurement Activity Good Practice Criteria Developing a performance measurement framework Aims of the organisation and aims for the framework Statutory and other high-level objectives are translated into more specific and measurable lower-level objectives. There should be a clear line-of-sight from high to low levels. The purpose and building blocks of the framework, and what it does/does not cover, should be clear and well understood. The performance measurement framework focuses on strategic and other main objectives. There should be arrangements with other organisations, where objectives are shared or common. Linking the framework and the business The performance measurement system is well integrated with business planning, budgetary and operational processes The roles and responsibilities of the board and others within the organisation for performance measurement should be clear. There should be clear and open communication channels between different parts of the performance measurement framework. The links between inputs, outputs and outcomes are well understood (through for example logic or causal models). Delivery maps are developed to show how required actions will be delivered. The resourcing needs, including information and information technology requirements, are well understood and considered in decisions about the framework. The costs of the performance measurement framework, including information collection, should be proportionate to the benefits that it provides. Performance indicators It is clear (including externally) what performance indicators are being used. There are stated rationales and clear processes for selecting performance indicators. Performance indicators are prioritised if necessary. Performance indicators are relevant to the outcomes the organisation seeks to achieve. The performance measures give a balanced overall picture of what the organisation is doing, covering all significant areas of work. Performance indicators link overall business performance to the performance of individual business units, teams and activities. The framework incorporates leading indicators or forecasts of performance, where this might be appropriate. The activity measured is capable of being influenced by actions which can be attributed to the organisation. The influence on outcomes that the organisation exerts are separated from other influences on those outcomes. The framework monitors the success of significant change within the business. Feedback and learning The performance measurement framework is tested when first implemented, and where subsequent changes are made to it. There should be processes for managing change to the performance measurement system. Sufficient time should be allowed for the framework to 'bed in' before changes are made. The framework should be robust to withstand organisational changes or personnel leaving. There are mechanisms for learning about performance measurement within and from outside the organisation. Managers and staff at various levels should be involved in planning, implementing and challenging the system. The framework is informed by feedback from external stakeholders. Page 97 of 174
Page 98
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2021-22/0900.2022.009 Performance Management/A - FINDINGS AND REPORT/A10a 20221013 Performance Management Final report.docx 14 Appendix 3 (continued) – National Audit Office Good Practice Criteria for Performance Measurement Activity Good Practice Criteria Reporting Performance Information Data quality The measure has a clear, unambiguous definition so that data will be collected consistently, and is easy to understand and use. The performance indicators and supporting information are well documented, to allow for validation. There are systems of control to check that data is accurate, reliable and robust Baselines are set for measuring performance against indicators. Measures are capable of comparison with either past periods or similar programmes elsewhere. Data is produced frequently enough to track progress and quickly enough for the data to still be useful. Management decides on the appropriate balance between timely and accurate data, where these may conflict. The performance measurement framework draws appropriately on different data sources, including external sources where cost-effective. Performance information collected is relevant and proportionate to the purposes of the framework. Reporting in context The organisation articulates success criteria for performance measures, with a stated rationale and clear process for selecting those criteria. Performance against indicators should be benchmarked against, for example, similar organisations or functions. Presenting with analysis and insight The organisation makes sufficient allowance (time and resources) for analysing and interpreting data. The information being collected (and presented) should be appropriate to, and useful for, (each of) the stakeholders who are likely to use it. The organisation has clear and structured rationale and processes for deciding what information to report internally, and what to report publicly. Performance information is presented in a way that is accessible and draws attention to the most important issues. Presentation includes structured analysis of performance information and includes insights into the factors influencing performance, and what the organisation is able to influence. Using Performance Information Linking performance and financial information The performance measurement framework links performance and financial information (for example through Activity-Based Costing). Management uses linkages between performance and financial information to assess value for money. Guiding decision- making The board is committed to performance measurement and has a clear approach to use of the performance measurement framework. The board reviews the performance measurement system periodically to satisfy itself that the board's needs are met and that its benefits exceed the costs. Performance measurement framework outputs feed into objectives and business planning. The framework helps to promote good governance and scrutiny of performance by non-executives and others. There should be processes to check for unintended outcomes (for example matters falling outside of established indicators). Creating a performance measurement culture The organisation should promote and maintain a culture of performance measurement within the organisation Page 98 of 174
Page 99
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT INCOME AND CASH COLLECTION – CASH OFFICES Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Issued to: Head of Housing Solutions (points 1 and 2) and Head of Financial Solutions (points 3 and 4) Copied to: Business Finance Manager, Customer Service Manager, Chief Executive and Deputy Chief Executive Headlines The purpose of this audit was to provide independent assurance on the adequacy and effectiveness of the Council’s management arrangement and key controls in relation to income and cash collection activities. The review focused on whether all cash/income received by the Council is properly recorded in the Council’s financial systems and is regularly reconciled to amounts recorded within the cash receipting system. We also assessed whether all cash/income is held securely and banked timeously and whether there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. The review comprises two separate exercises – one focused on cash offices and another on leisure sites. This report relates to the review undertaken in respect of cash offices. A further separate report in respect of leisure sites will be issued at a later date. Management responsibility for the staffing and operation of cash offices/First Stop Shops lies with Housing Solutions, with the responsibility for banking reconciliations and administration of the cash receipting system lying with Financial Solutions. Our work involved visiting three separate cash offices where we undertook a range of checks on different aspects of cash collection activity with the aim of providing assurance to management on compliance with expected controls and procedures. Testing was also undertaken to assess the adequacy of controls exercised by the Controls and Reconciliations Team who are responsible for reviewing/ monitoring cash collection activity and the reconciliation of monies collected/banked. Based on the results of our work, we have categorised this audit as offering ‘substantial assurance’ meaning we consider that the control environment is adequate and has operated substantially as intended with any control issues or weaknesses identified presenting only a low risk to the control environment. We were pleased to note that all cash/income received by the Council is being properly recorded in the Council’s financial systems and is being regularly reconciled to amounts recorded within the cash receipting system. We also noted that all cash/income is held securely and banked timeously and there are appropriate security arrangements in place within the cash offices to prevent/discourage thefts and to address the safety and security of staff. We have however identified a small number of areas where scope for further improvement exists and accordingly, we have made a number of recommendations for management attention. This includes that management should ensure that monthly discrepancy and reversal reports are produced and reviewed in a timely manner. Internal Audit Opinion (see definition at Appendix 1) Substantial assurance (Green) Organisational impact (see definition at Appendix 1) Minor Report status FINAL Audit ref 0900/2023/007 Date issued 25/10/22 Audit Team Lynn McCrum, Paula Hendry, Hugh Shevlin and Elizabeth Sweeney Page 99 of 174
Page 100
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s management arrangement and key controls for income and cash collection activities. The key control objectives reviewed and tested during the audit considered whether: • all cash/income received by the Council is properly recorded in the Council’s financial systems and regularly reconciled to amounts recorded within the cash receipting system and other accounting systems as required by relevant Service guidance; • all cash/income is held securely and banked timeously; and • appropriate security arrangements are in place within the cash collection facilities to prevent/discourage thefts and to address the safety and security of staff. Substantive testing was carried out at three cash offices (Bellshill, Motherwell and Kilsyth) using a standard audit programme based on the current cash collection operating practices. We also reviewed the adequacy of the management/monitoring of cash collection activity undertaken by Cash Office management, including management checks on key records, reversals and discrepancies and security related issues. In addition, we assessed the adequacy of the additional monitoring of reversals and reconciliation of income collected undertaken by the Controls and Reconciliations team. In addition to this exercise being carried out for cash offices, testing was also carried out at two leisure sites and a separate report will be issued in due course to relevant Service management for consideration. 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 3 Key areas requiring management action (High) There have been no key areas requiring urgent management action identified. Good practice identified We noted the following areas of good practice during the audit: • Cash receipting and security procedures have been circulated to all cash office staff and training provided on a regular basis to ensure all staff are aware of their responsibilities and expected controls. • Regular management checks on the completion of key documentation are undertaken by the Team Leaders at each cash office and by cash office management on a rolling basis throughout the year. • All income received is reconciled to transactions processed through the cash receipting system. • Reconciliations between the financial ledger and bank statements, which are appropriately documented and balanced, are carried out promptly after the end of each financial period by staff independent of the cash collection process and reviewed by a senior member of staff. Other areas for improvement (Medium) One area for improvement was identified as follows: • Management should ensure that monthly discrepancy and reversal reports are produced and reviewed in a timely manner. Page 100 of 174
Page 101
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 3 3. Action Plan Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 1 Management should ensure that monthly discrepancy and reversal reports are produced and reviewed in a timely manner. We reviewed the processes in place for reviewing and checking the monthly discrepancies and reversals reports and noted that at the time of the audit (September 2022) the last reports to be produced and reviewed were for March 2022. We understand that there have been issues with regards to the move to Microsoft Office 365/SharePoint and incompatibility with the existing database which has resulted in the monthly discrepancies and reversals reports being unable to be run. Management have advised that there have been ongoing discussions with Business and Digital to try to resolve the issues and in the interim that work is underway by the Revenue and Benefits Manager (Business Development and Performance) to identify a ‘work-around’ to enable the reports to be run and thereafter reviewed. The reports referenced above enable management to analyse and track reversals and discrepancies by cashier and identify any trends and/or training issues. Although this analysis is not currently being undertaken, the Operations Manager advised that the expected process for recording and reviewing individual discrepancies is still operating with completed forms being forwarded to the Operations Manager. In lieu of this report, a manual review is being undertaken by the Operations Manager to identify any issues or trends and action taken as appropriate. Reversals are actioned as they occur at the cash office and as well as the review of the above-mentioned report, a ‘reversals (wide history) report’ is reviewed by the Controls and Reconciliations team to ensure reversals are appropriately dealt with thereby providing a compensatory control in the interim. Implication Recommendation Priority Management response Implementation Month/Year If reports are not run on a regular basis, discrepancies and reversals may not be identified and the basis and/or underlying explanations for the discrepancies and/or reversals may not be properly investigated and appropriate action taken. The Head of Housing Solutions should ensure that the discrepancies and reversals reports are produced and thereafter reviewed on a monthly basis. This should include the retrospective review of all entries since April 2022 that have not yet been subject to formal review. Medium Agree Lynda Donnelly, Customer Services Manager Due to issues migrating the discrepancy database to Microsoft Teams, the usual automated reports cannot be uploaded, however during this time all discrepancies and reversals have been reviewed manually by Team Leaders and the Operations Manager. Due to the small number of discrepancies, it is feasible to continue with manual reviews. These will now be recorded in an Excel spreadsheet, giving the Team Leaders and Operations Manager an overview of each individual member of staffs performance. The Excel spreadsheet will be set up in early November and will include all discrepancies and reversals from April 2022. November 2022 Page 101 of 174
Page 102
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 4 3. Action Plan (continued) Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 2 We identified a small number of areas of non-compliance with expected security procedures and/or issues regarding the security arrangements within cash offices. We reviewed the security arrangements in place within the selected cash offices and are satisfied that the procedures are adequate and are generally being complied with. We did, however, note a small number of areas of non-compliance with some aspects of the expected security procedures and/or areas for improvement in the current security arrangements. The most significant of these include: • five occasions where there was no record of the Controls and Reconciliations section having been notified by the cash office that the scheduled uplift of monies to be banked did not take place or the explanation as to why this was the case; • one office (Bellshill) where the door to the secured area housing the safe was open during working hours with the exception of lunchtime when it was closed and locked. • one office (Bellshill) where a mobile phone was observed in the cash office area and not stored in the locked drawer; • one office (Motherwell) where the form used to log the Keypad Battery checks did not include space for a signature when checked; and • two offices (Motherwell and Kilsyth) where the form used to log the Panic Alarm Maintenance checks was not fully completed as the outcome of the checks was not always documented. We also noted one office (Kilsyth) where, due to the location of the CCTV Hard Drive, checks are carried out by Housing staff rather than cash office staff and the cash office do not receive confirmation that the checks have taken place. However, we have been advised that going forward the Team Leader plans on carrying out periodic checks on this and has also requested that Housing staff sign the CCTV check sheet to confirm that the checks have been carried out. Implication Recommendation Priority Management response Implementation Month/Year If security arrangements are not properly adhered to, there is an increased risk of theft and/or misappropriation of monies and/or risks to the safety and security of staff. Where uplifts do not take place as scheduled, insurance limits on the cash office’s safe may be breached. The Head of Housing Solutions should ensure that: (1) staff are reminded of the importance of ensuring that, where an uplift does not take place as scheduled, the Controls and Reconciliations section are promptly notified by e-mail of this including the reason(s) why; (2) staff are reminded of the procedures in place with regards to security access for areas containing the safe and for storing mobile phones outwith the cash office area; (3) the correct forms are being used in all cash offices to log Key Battery checks and Panic Alarm Maintenance checks and remind staff of the importance of ensuring that these forms are fully completed and signed in respect of each check undertaken; and (4) the proposed periodic checks on CCTV Hard Drive at Kilsyth Cash Office are carried out by the Team Leader and CCTV check sheet signed by Housing staff where they carry out CCTV checks. Low Agree Lynda Donnelly, Customer Services Manager (1) Staff will be reminded of the importance to e-mail Controls and Reconciliations section when cash collections do not take place. (2) Staff will be reminded to ensure safe doors must always be secure and mobile phones should not be stored within the cash office. (3) Staff will also be reminded to fully complete the key battery and panic alarm check forms. (4) Staff at Kilsyth Cash Office will be reminded to ensure the periodic checks on CCTV hard drive are carried out by the Team Leader and CCTV check sheet signed by Housing staff where they carry out the CCTV checks. November 2022 Page 102 of 174
Page 103
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 5 3. Action Plan (continued) Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 3 Reconciliations are not always being undertaken on a timely basis. We reviewed the arrangements in place within the cash offices and Controls and Reconciliations section with regards to cash collection and are satisfied that the procedures in place are generally being complied with. We did, however, note that whilst Cashbook Receipt Journal reconciliations are undertaken for each working day, these are not being undertaken timeously (expected to be completed within a week) and tend to be 2-3 weeks after the date cash was collected. In addition, we identified two cases where the daily ‘End of Day Credit and Debit Card Reconciliation’ was completed but the date of completion was not recorded. Implication Recommendation Priority Management response Implementation Month/Year There is an increased risk that any issues, errors or discrepancies arising would not be identified and corrected in a timely manner. The Head of Financial Solutions should remind Controls and Reconciliations staff that the daily reconciliations should be undertaken timeously and thereafter dated. Low Agree Bernie Rowan, Control & Reconciliations Supervisor At the time of the audit there were a number of vacancies and staff seconded to other finance sections, which meant cashbooks were not being processed as timeously as normal. However, with staffing resources back to normal levels, as well as managing operational requirements, processing of cashbooks is back in line with expectations. The position in respect of timeliness of cashbook reconciliations is kept under continuous review. Staff have been reminded of the requirement to ensure that reconciliations are completed and dated accordingly. October 2022 Page 103 of 174
Page 104
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 6 3. Action Plan (continued) Income and Cash Collection (Cash Offices) 0900/2023/007 Ref Finding 4 The password parameters for the cash receipting system are not in line with best practice. Best practice states that the minimum recommended length of a password should be at least eight characters and should use a mix of numbers, letters, upper- and lower-case characters. We noted that while the parameters for the password complexity for the cash receipting system generally comply with best practice, it only requires that the password be a minimum length of seven characters. Implication Recommendation Priority Management response Implementation Month/Year If the password parameters are not in line with best practice, there is an increased risk that the password could be compromised. The Head of Financial Solutions should review the password parameters of the cash receipting system to ascertain whether the minimum required length can be increased to reflect best practice and update accordingly. Low Agree Bernie Rowan, Control & Reconciliations Supervisor Service will review the password parameters of the cash receipting system and will update to increase the minimum length of passwords to eight characters to reflect best practice. December 2022 Page 104 of 174
Page 105
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0900.2023.007 - Income and Cash Collection/A - FINDINGS AND REPORT/A06 20221025 Cash Collection Final report v1.0 as issued.docx 7 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green - Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber - Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 105 of 174
Page 106
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 1 INTERNAL AUDIT REPORT SUNDRY DEBTORS/ DEBT MANAGEMENT Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Examples of inefficient/ineffective debt management Issued to: Head of Financial Solutions, Business Finance Manager (Resources and Payments) and Debt Recovery Manager Copied to: Chief Executive, Deputy Chief Executive and all Heads of Service Headlines The purpose of this audit was to provide assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. The effective management and collection of debts is an essential contributor to the Council’s financial resources and helps maximise income available to fund essential services. To achieve this, the Council aims to issue invoices, where appropriate, and collect all debt owing to it promptly, effectively and efficiently whilst ensuring fair and equitable treatment to debtors in line with approved policies. During financial year 2021-22, 115,844 invoices totalling £114,361,939 were raised. Although collection rates are generally very high (the debt collection rate for the last four years is 97%), as at 30 September 2022, 33,504 invoices totalling £13 million (raised in any financial year) were outstanding, with £5 million of these outstanding in excess of 12 months. Based on the results of our work during this review, we are satisfied that Services are generally proactive in seeking to minimise debts wherever possible by requiring payment in advance, and that generally effective controls exist in relation to raising invoices and the debt write-off process. This indicates that some aspects of the control environment are adequate and operating effectively, and when coupled with the high collection rate noted above, would tend towards us concluding that a ‘reasonable assurance’ audit opinion might be appropriate. However, this review has also identified significant deficiencies in several aspects of the control environment under review. Areas of weakness include inadequate or out-of-date procedures/guidance notes, credit notes lacking sufficient detail as to why they are required, and limited performance information and performance monitoring. In addition, there has been little action taken to address the recommendations raised in the previous audit report issued in 2019 which received a limited assurance audit opinion. Indeed, in some areas, (such as those relating to the passing of outstanding debts for legal action) the control environment has deteriorated further. As a result, we have again categorised this audit as offering ‘limited assurance’. Overall, we consider there is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework and consequently we have recommended that management formally review all aspects of the Council’s debt management framework, including relevant policy, procedures and detailed operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. This recommendation is detailed in section 3 of the audit report. Internal Audit Opinion (see definition at Appendix 1) Limited assurance (Amber-Red) Organisational impact (see definition at Appendix 1) Moderate Report status FINAL Audit ref 0200/2023/002 Date issued 31/10/22 Audit Team Lesley Armstrong, Paula Hendry, Jackie Struthers and Hugh Shevlin Page 106 of 174
Page 107
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance that the Council has adequate, robust and effective management arrangements in place for ensuring that the management of debtors is appropriately and effectively controlled. In particular, we considered the following: • Adequate written policies and associated guidance covering income/debt recovery/collection and write-off procedures exist; • Debt management arrangements are operating effectively in line with relevant written policies and guidance and appear efficient and cost-effective; • All credit notes and debt write-offs are appropriately authorised; and • Adequate and timely management information is generated in respect of debt and debt recovery to provide a sound basis for the monitoring of performance and associated decision making. Substantive testing was undertaken on the Council’s debt management arrangements across all Services and included assessing whether the Council is proactive in seeking to minimise debts wherever possible. The audit did not consider and/or review the arrangements in respect of debtors/debts associated with Housing Rents, Council Tax or Non-Domestic Rates as these are subject to separate and specific arrangements and are routinely covered by individual audit assignments. 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 0 0 Key areas requiring management action (High) One key area requiring urgent management action have been identified: • There is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework. Good practice identified We noted the following areas of good practice during the audit: • The Council uses the ASH debtors system to retain information in relation to debtors’ invoices raised and record debt recovery action taken. • ASH automatically issues an initial reminder at a pre-set timescale where invoices remain unpaid after the payment due date; • All credit notes entered into ASH must be authorised by a second user prior to being applied to the invoice; and • As part of the annual write-off process, Services are required to submit to the Business, Development and Performance Team a Write-Off Mandate signed by the Head of Service or other relevant manager, indicating the number and value of invoices authorised for write-off. The Business, Development and Performance Team reconcile the totals on the mandate to those marked for write-off in ASH prior to processing the write-off. Other areas for improvement (Medium) No other areas for improvement were identified. Page 107 of 174
Page 108
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 3 3. Action Plan Sundry Debtors/Debt Management 0200/2023/002 Ref Finding 1 There is an urgent need to strengthen the robustness and effectiveness of many aspects of the debt recovery control framework. Internal Audit last reported on our review of the Council’s debt management arrangements in December 2019, where we identified the need for management to review and significantly improve the debt management framework in place. At that time, a commitment was made by management to lead a full review of the Council’s debt management framework by June 2020, however, such a review has not yet been undertaken, partially due to Covid, the retirement of the previous manager/changes in staffing structures and competing priorities. As debt management was included in this year’s audit plan, we agreed with the Service that any review by them would be best put on hold until this audit work was concluded. The Council has a Corporate Debt Policy (which had not been formally updated since 2013) and Debt Recovery Procedure manual which contain a range of information/guidance in relation to policy, procedures and responsibilities for debtor invoices and debt recovery. Financial Solutions management stated that the debt management framework was reviewed and discussed at a Debt Liaison meeting, involving Service representatives, however, this had very little effect on the debt management process and resulted in only minor amendments being made to the Debt Recovery Procedure manual. As a result, this audit identified very similar findings to the previous audit with no significant improvement in the debt management process. Despite there being a 97% debt collection rate on invoices raised during the last four years, the level of total outstanding debt (for all years) as at 30 September 2022 was £13 million. From our review of debt management activity, we consider that the debt collected is largely due to debtors being willing to make payments upon request and not necessarily due to efficient and effective debt recovery activity. We, therefore, consider that the debt management processes require to be reviewed, with full consideration of the objectives, working arrangements, staffing requirements and responsibilities for raising, controlling and recovering outstanding debt, both corporately and within Services, to ensure a more efficient, timely, effective and equitable system of debt management and consequential maximisation of income. Our review of a sample debt management activity identified a number of issues, as follows: • There is generally a lack of evidence of appropriate, effective and timely follow-up/recovery action taken by Services and the Debt Recovery Team (DRT) and many invoices sit for long periods of time without any recovery action being taken; • The event log is not always appropriately and adequately updated to fully reflect/document the recovery action taken by Services and/or DRT; • Instances where there appears to be inequitable treatment of debtors. Where a policy decision has been made to charge for services, the Council welcomes payment from those that pay promptly, but fails to adequately attempt recovery from those that choose for whatever reason not to and often continue to provide services to these debtors; • Outstanding debt is not promptly passed to Legal and Democratic Solutions for legal action when all other attempts to recover the debt have been exhausted. When debt is identified for passing for legal action, it is clearly marked with a ‘legal flag’ and is shaded green on ASH to enable the DRT to undertake the appropriate checks and obtain, from the Service, the documentation required by Legal to pursue the debt. We noted that, for the majority of invoices which had been marked with a legal flag (some of which were marked a number of years ago), the event log did not record whether any further action had been taken. As a result, many of the invoices had not formally been transferred to the Legal module on ASH and therefore, no legal action had been taken; • Our review of performance reporting and monitoring concluded that, although a suite of reports providing performance information in relation to debt management are issued to the Business Finance Manager (who has responsibility for the corporate DRT) and Service representatives on a quarterly basis, there is insufficient reporting and monitoring of performance for debt recovery by management and officers. The reports prepared are high level reports with no detailed content and our work identified that they are generally not utilised by Services with inconsistencies in the generation, review and monitoring of performance information. We also noted that these reports have been in place for a number of years and no review has been undertaken to confirm their continued relevance/utility and identify the most appropriate reports to enable Services to monitor and manage their debt more effectively; • We consider that some of the instalment plans reviewed had excessive repayment terms, and the rationale for determining the level of payment and length of instalment plans was not always clearly documented in the event log on ASH. Additionally, where the debtor defaulted on the payment arrangements, prompt follow-up action was not always taken; • Staff are not always proactive in monitoring dispute codes and trying to resolve them. Whilst there are often valid reasons for some dispute codes being in place for long periods of time (e.g. write-offs, charging orders), we noted a small number of dispute codes which were continuously re-applied over lengthy periods without resolution and/or evidence of proactive monitoring; (Continued over page) Page 108 of 174
Page 109
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 4 3. Action Plan (cont) Sundry Debtors/Debt Management 0200/2023/002 Ref Finding 1 (Continued from previous page) • Credit notes and/or the event log on ASH do not generally record the reason for the credit being raised, with credit notes usually restating the details recorded on the original invoice. Additionally, whilst credit notes require to be created and authorised by two different users, there is no management review/oversight of the credit notes raised to ensure that they are valid and appropriate; and • A number of Write-off Mandates were not physically signed and, where they were returned by email, the email did not always indicate authorisation of the mandate. We also noted that the mandate and/or supporting email was not always signed/provided by the Head of Service or other appropriately authorised manager. During the course of our work, we identified a number of examples of inefficient and ineffective debt management and some of these are detailed at appendix 2. We noted that there has been a degree of staff turnover within the DRT within the last few years, with staff seconded to other areas during Covid, and generally when staff leave, the debtors’ accounts/invoices contained in their recovery/legal diaries were not always transferred to other staff and were therefore, not being routinely monitored. Additionally, we understand that the DRT are often in effect ‘fire-fighting’ as their recovery diaries are so full that a number of outstanding debts never get reviewed, resulting in insufficient time for staff to review the debts contained in the legal diaries to ensure that the appropriate documentation has been received from Services to enable the debt to be passed for legal action. Implication Recommendation Priority Management response Implementation Month/Year Policies and procedures may be inadequate, resulting in processes which do not effectively contribute toward maximising income. Debt management arrangements may not be operating efficiently and effectively and may not be applied consistently across the Council, resulting in delays receiving payments, loss of income or inequitable treatment of debtors. Head of Financial Solutions should ensure that a formal review of the debt management framework is undertaken to revisit and refresh all aspects, including policy, procedures and operational arrangements with a view to improving the efficiency, timeliness, effectiveness and equity of the Council’s current approach to debt management. This review should include consideration of the purpose and objectives of debt management activity and cover areas such as: • Establishing which activities are best done at a corporate-level and within Services; • Ensuring between corporate and Service roles and responsibilities are clear and documented; • Examining whether Services are minimising the need for raising invoices by ensuring wherever possible that payment for good and services is obtained in advance of service provision; • Producing clear guidance detailing key requirements for all aspects of the debt management process (e.g. holding appropriate documentation to support debts raised and expectations for monitoring outstanding debt and recording debt recovery action taken); and • Identification of the most effective methods for monitoring compliance and performance of debt management activities. High Agree Nicola Lynch, Business Finance Manager Although Financial Solutions agree with the overall recommendation that a review of the debt management framework is required, we consider that a ‘limited assurance’ audit opinion is unwarranted, as with a 97% collection rate it is unreasonable to suggest that very little of this is as a result of pro-active work being undertaken by the debt recovery team. However, in response to the recommendation made, a review will be undertaken which will focus on the duties which are currently being undertaken within the Corporate Debt Team, how this can link better with the roles of the Service Leads and whether Legal Services should have a more pro-active role in debt recovery. The Debt Recovery guidance will be updated as appropriate following the outcome of this review. April 2023 Page 109 of 174
Page 110
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors 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 110 of 174
Page 111
https://nlcgov.sharepoint.com/sites/AUR-INTERNALAUDITFILES/Shared Documents/Planned Work/2022-23/0200.2023.002 - Debtors - Debt Management/A - FINDINGS AND REPORT/A07a 20221031Debtors Final report v1.0 as issued.docx 6 Appendix 2 – Examples of inefficient and ineffective debt management from sample of cases reviewed by Internal Audit Debtor Number Comments 169126 Invoice for care home fees and current outstanding balance at 29/08/22 was £28,963.65. Account was put in dispute on 09/03/21 as family were pursuing guardianship, however, there is no evidence on ASH of this being followed up. We contacted the Service to confirm whether the progress of the guardianship was being monitored and were informed that the solicitor had requested a Mental Health Officer report in March 2021, which was delayed and was not completed before the debtor passed away on 04/05/22. We were advised that the estate has not yet been settled but the Service is in ongoing discussion with the family. Updates on this are not being recorded on the ASH system. 75490 Invoices to NHS and current outstanding balance at 11/10/22 was £621,382 (38 invoices) with 5 invoices totalling £262,414 outstanding since 2019. DRT regularly send a list of all outstanding invoices to this debtor and when they make payment, they select which invoices are to be paid. There is no evidence of specific follow-up action for long outstanding invoices (since 2019). 169034 Invoice for recharge of void repairs totalling £1,905.42 raised 08/04/21. Debtor moved out of council house and provided a c/o address. As no actual address, unable to pursue debt and invoice put into dispute immediately after it was raised. There is no record of any attempt to establish the current address (i.e. checking our internal systems (Open Revenues, HSMS etc.). As a result of our enquiries during this audit, the dispute code has now been removed and recovery action has now commenced. 88192 Invoice to SGN for emergency works - £11,728.27. Phone call received from owner of property invoice was addressed to advising that invoice has been sent to the incorrect address. Invoice was put into dispute using the GA (gone away) code instead of the DH1 (department hold) code. Although Service is working with SGN to resolve payment (SGN’s system keeps rejecting the invoice as not a valid address for the business), the Event Log has not been updated on ASH to reflect this and no-one noticed that the address was incorrectly recorded (75 Burnbank Street, instead of 76). 70532 Invoices for Homecare raised monthly since April 2019 and current outstanding balance at 27/09/22 was £7,050.13. Legal Services were asked to look at possibility of court action, however the Service was unable to provide the required documentation to proceed with legal action therefore Legal Services advised to write the invoices off. 178518, 176283 and 196771 Invoices for overpayment of wages for three different former employees of £3120.63, £1,446.82 and £5,011.53 respectively. Legal flags set 14/05/19, 29/10/18 and 20/03/19 respectively but not formally transferred to Legal Services and therefore no legal action taken. 193186 Invoice for overpayment of former Councillor salary - £4,231.89. Councillor resigned his position but continued to be paid for 4 months resulting in the above overpayment. Legal flag set as passed to Legal Services by Service as solicitor involved. Legal requested further information from Service but Service did not respond and Legal did not pursue. No further recovery action taken by either the Service or Legal. 111574 Invoice for care home fees totalling £3,356.79 raised in 2010. Service contacted Legal Services to advise on legal action as decision made regarding deprivation of capital. Various correspondence between Service and Legal asking for and providing updates. In 2018, Legal confirmed that they do not have a file, the house was no longer in the name of the debtor and the litigation file was closed years ago. Debt marked for write off in February 2022. 184762 Invoice for overpayment of wages for former term-time employee - £750.67. Former employee disputed overpayment. Initially disputed as DH1 on 19/02/21 and as removed after 3 months, continually applied by Service as dispute not resolved. Service contacted Legal Services for advice and whether able to pursue and were informed need evidence of notification to term-time employees of potential overpayment when employment ceases. Service confirmed that this account had fallen off their radar and due to the lapse in time they are likely to recommend it is written off. Page 111 of 174
Page 112
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 1 INTERNAL AUDIT REPORT EQUALITIES Contents 1. Executive Summary 2. Findings and Recommendations 3. Action Plan Appendix 1: Audit grading Appendix 2: Equalities - statutory responsibilities and duties Issued to: Head of People and Organisational Development and Equalities Manager Copied to: Chief Executive and Deputy Chief Executive Headlines The purpose of this audit was to provide assurance on the adequacy and effectiveness of the key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016 (as detailed in Appendix 2 of this report). The Council has a statutory duty under the Act and Public Sector Equality Duty (PSED) to mainstream its equalities activities into its day-to-day functions (its ‘general equality duty’). In accordance with this duty, the Council has developed an Equality Strategy 2019-2024, which clearly sets out its commitment to mainstreaming equality and human rights through five working objectives for success, together with identified actions. The strategy was approved by Policy & Strategy Committee in September 2019 and is closely aligned with the Plan for North Lanarkshire (TPFNL), its subsequent Programme of Work and various key corporate strategies. In addition, the Council has committed to build equalities into its key decision-making processes, where appropriate, through its expectations that decisions are informed by the use of Equality Impact Assessments (EQIAs), the results of which require to be included in all committee reports and published on the Council’s website. Based on the results of our work, we have assessed the audit as providing ‘reasonable assurance’ as we consider that the Council generally has appropriate arrangements in place to demonstrate consideration of the PSED in mainstreaming equalities into its day-to-day functions, that there are processes in place for ensuring that the equalities outcomes have been set and reviewed in accordance with expected timescales and that key equalities reports have been published in accordance with the Council’s specific equality duties. Responsibility for Equalities transferred to People and Organisational Development in April 2022, since when, a desktop review of the existing equalities strategy and legacy programme of work has been undertaken. The initial findings from this review were presented to the Corporate Management Team (CMT) in October 2022 and highlighted a requirement for the Council to better articulate the focus of the equalities programme of activities and more clearly link it to the objectives and outcomes within the Equality Strategy. A need to be clearer about the approaches and processes through which progress will be delivered was also identified. The findings of our audit work endorse this assessment and we have identified a number of areas where we consider that there is a need to significantly improve current arrangements. Recommendations for management consideration/action are detailed at Section 3 of the report and include: • current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose; • significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs); and • improvements are needed to the equalities performance monitoring framework including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. 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 0900/2023/005 Date issued 3/11/2022 Audit Team Jacquie Howden and Paula Hendry Page 112 of 174
Page 113
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 2 1. Executive Summary Objectives The purpose of this audit was to provide assurance on the adequacy and effectiveness of the Council’s key controls and management arrangements associated with ensuring that the Council complies with its statutory general and specific equalities responsibilities as laid down in the Equalities Act 2010 (‘the Act’) and Equality Act 2010 (Specific Duties) (Scotland) Amendment Regulations 2016. In particular, the audit sought to consider whether the Council has: • taken reasonable steps to embed the Public Sector Equalities Duty (PSED) (‘the general equalities duty’) within its governance arrangements and the planning and delivery of its services; and • addressed, or has clear plans to address in line with relevant deadlines, the key specific duties under the Act. Section 149 of the Equalities Act 2010 sets out the three needs of the Public Sector Equality Duty (PSED) in mainstreaming its equalities activities in the day-to-day functions of the Council. The associated Regulations also impose specific duties on the Council to comply with its general equality duty. These are covered in Appendix 2 of this report. Equalities is currently being progressed through the programme of Work P086 – ‘Equalities’ as well as through a number of other related POW and activities undertaken by the Council. This includes being incorporated into key decision-making processes through expectations that, where appropriate, decisions are informed using Equality Impact Assessments (EQIAs). Work undertaken during the audit included a review of the governance arrangement for equalities, together with consideration of the processes for ensuring that the Council can demonstrate that is has had ‘due regard’ to the needs of the PSED in mainstreaming equalities and for ensuring that the key equalities reports (as detailed in the specific equalities duties) are published in accordance with the statutory timescales. We also considered the adequacy of the process for setting, monitoring and reviewing the equality outcomes. Some limited substantive testing was also undertaken on a sample of corporate policies and strategies to assess the extent to which EQIAs are being completed in accordance with corporate expectations. As part of this work, we have not sought to specifically assess the adequacy or effectiveness of the Council’s identified objectives for success or its equality outcomes in mainstreaming its equalities activities. 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 2 1 0 Key areas requiring management action (High) The following key areas requiring urgent management action have been identified: • Current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose; and • Significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs). Good practice identified We noted the following areas of good practice during the audit: • The Council’s equality agenda is being progressed through a number of Programmes of Work, including P086 – Equalities, with regular reports due to be presented to Committee in accordance with the agreed committee cycles; • The Council’s Equality Strategy 2019-2024 is closely aligned with the Plan for North Lanarkshire (TPFNL), its subsequent Programme of Work and various key corporate strategies. The strategy was approved by Policy & Strategy Committee in September 2019 and clearly sets out the Council’s commitment to mainstream equality and human rights into its day-to-day business, through five working objectives for success and associated actions; Page 113 of 174
Page 114
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 3 Good practice identified (continued) We noted the following areas of good practice during the audit: • The Council’s Equalities Strategy contains clearly defined roles and responsibilities for key actors in the Equalities agenda. The arrangements include an Equalities Champion, responsible for providing leadership and scrutiny and driving change in the equalities arrangements; working groups with specific responsibilities for leading on the Equally Safe at Work and Disability Confident leader workstreams. The Council also has a small Equalities team which is responsible for ensuring that the Council is complying with its general and specific duties under the Equalities Act 2010; • In accordance with the PSED, the Council has set its evidence-based Equality Outcomes for the four-year period 2021-2025, which are aligned to Council’s business priorities (as set in TPFNL) and the three needs of the general equality duty. The outcomes were approved at CMT and then by Committee in June 2021. The Council’s Equality Outcomes are evidence based and are set every four years, with progress being reported every two years; • The Council has committed to undertaking Equality Impact Assessments (EQIAs) for all proposed, new or revised policies and practices, where appropriate, in accordance with its specific statutory duty and to publish the results of the assessment on its website. The Council’s approach to undertaking EQIAs also incorporates the Fairer Scotland Duty, which requires the Council to consider how it can reduce and tackle socio-economic disadvantages experienced by people when making strategic decisions; • In addition, EQIAs have been formally built into the Council’s committee reporting formats and consideration of the completion of the EQIAs require to be included in all committee reports. Guidance on how to complete an EQIA, together with proforma EQIA templates, are published on Connect and have been notified to Services; • In accordance with the Council’s specific duties, the council has published a Mainstreaming Equalities report, which sets out the Council’s approach to mainstreaming equalities into its day-today business; an Equality Outcomes progress report (2017-2021), an Equality Outcomes report (2021-2025), an Employment Gathering Information report and an Equal Pay statement. Reports require to be published every two years, with the next reports due to be published by 30 April 2023; and • The council has made its equality reports accessible to the public in accordance with the specific duty in the PSED, with information available on Connect, MARS and the Council’s website. Other areas for improvement (Medium) One other area for improvement was also identified: • Improvements are needed to the equalities performance monitoring framework, including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. Page 114 of 174
Page 115
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 4 3. Action Plan Equalities 0900/2023/005 Ref Finding 1 Current governance arrangements for equalities need reviewed and improved to ensure that they remain fit for purpose. The Equality Strategy 2019-2024 sets out the Council’s formal governance hierarchy for equalities, together with clearly defined roles and responsibilities for each group from Committee through elected members and the Corporate Management Team (CMT) to working groups, employees and Trade Unions. We were pleased to note that there is a designated Equalities Champion whose responsibilities include providing leadership and scrutiny, driving change in equalities activities and for providing representation at a political level on regional and national forums where equality matters are concerned. In addition, there is a dedicated Equalities Team, which has been tasked with ensuring that the Council is complying with its general duty under the Equalities Act 2010 and for ensuring that appropriate arrangements are in place around the specific equalities duties to allow the Council to mainstream equalities in its day-to-day operations. From our work, we were satisfied that the team is at the core of advancing all the Council’s equalities activities including collating and reporting key equalities information; liaising with Services; involvement in the working groups tasked with taking forward elements of the equalities work; developing/reviewing the Equality Strategy, objectives for success and the equalities outcomes; and preparing guidance for staff on the completion of EQIAs. Our audit testing, however, also highlighted a number of areas where we consider that there is significant scope for improvement in the current governance arrangements as follows: • The Equality Networking Group is responsible for ensuring all equality matters are advanced and fit for purpose. However, our audit testing highlighted that the group has not met since 2020 (when the Covid pandemic hit) and has since been stood down. We understand that initial discussions have been held with the Head of People and Organisational Development (POD) to replace this group with an Equality Board, but that this has not been formally taken forward to date; • There are currently two live working groups (Equally Safe at Work and Disability Confident Leader), both of which are chaired by the Head of POD and both of which are tasked with taking forward specific elements of the equalities agenda. In addition, a short-life member/officer working group (Black Lives Matter) (BLM) was stood down in February 2022. We understand, however, that the legacy actions identified for the BLM working group are currently being taken forward by the Equalities Manager and Head of POD and will be included in the advancing race equalities plan; • None of the working groups had clearly defined terms of reference and there was scope for the action plans used for each group to define the current and planned actions more clearly, the expected outcomes from each action, the performance measures to be considered in each case, the name of the officer responsible for taking any action and the timescales for taking this action. We also noted that there is no overarching comprehensive action plan encompassing all aspects of the equalities agenda; • The Equality Strategy does not currently set out the Equalities Team’s roles and responsibilities; and • Despite the role of the Equalities Team to ensure that the Council is complying with its general and specific duties under the Equalities Act 2010 to mainstream equalities in its day-to-day operations, there is currently no over-arching monitoring/compliance role being undertaken by the team in respect of the Council’s equalities activities. The Equalities Team transferred to People and Organisational Development in April 2022. Since the transfer, a desktop review of the existing equalities strategy and legacy programme of work has been undertaken with the aim of assessing the current level of progress and identifying any gaps in provision and approach. Initial findings from this review were presented to the Corporate Management Team (CMT) in October 2022 and highlighted a requirement for the Council to better articulate the focus of its equalities activities and more clearly link this to the objectives and outcomes within the Equality Strategy. Whilst it is evident that there is much activity underway by the Equalities Team and the CMT report highlights a number of current and potential future work streams, we consider that with the recent transfer of responsibility, it would be appropriate and timely for there to be full consideration and prioritisation of actions considered necessary to advance work in the equalities area. The CMT report recognises that equality cannot be solely delivered by the Equalities Team and that it is the responsibility of all. As part of this audit, we considered the extent to which Services could demonstrate that they were considering the Council’s five equality objectives for success in their service planning and delivery arrangements. We received responses from only five of the 10 Heads of Service selected. Whilst the responses received generally indicated that equalities and human rights were considered in the relevant Service’s planning/delivery processes, in the absence of any formal monitoring of compliance with key aspects of the Equalities strategy and associated procedures, we were unable to determine whether/the extent to which this is replicated across the Council. We consider that the absence of any formal monitoring process in place at a corporate level to ensure that Services are adequately addressing the Council’s equalities duties, whilst not necessarily indicating that the Council is failing to discharge its equalities duties, does mean the Council may not always be able to adequately demonstrate this. (continued over page) Page 115 of 174
Page 116
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 5 3. Action Plan (continued) Equalities 0900/2023/005 Implication Recommendation Priority Management response Implementation Month/Year Without appropriate scrutiny/challenge or monitoring processes, the Council’s equalities arrangements may not be fit for purpose. Without clearly defined terms of reference, members of the relevant groups and other key stakeholders may not be fully aware relevant roles and responsibilities in respect of the equalities agenda and/or be taking appropriate actions in respect of these roles and responsibilities. There would be no effective process in place for ensuring that actions taken to address issues are being properly managed on a timely basis and/or monitored for impact. Management may not be aware of the extent of compliance with expected processes and actions. The Head of People and Organisational Development should ensure that: (1) the current governance arrangements for equalities are reviewed and updated (having due regard to the issues raised above) to ensure that the Council can better demonstrate compliance with its general and specific duties for equalities under the PSED. As a minimum, consideration should be given to establishing an Equalities Board (or equivalent) to ensure that equalities activities are being progressed and regularly reviewed/monitored at both corporate and service level; (2) an action/workplan capturing all required work around equalities, including responsible officers and timescales, is prepared and suitable monitoring arrangements are put in place to ensure any actions are appropriately progressed in line with expected timescales; and (3) a framework is developed to appropriately monitor compliance with key aspects of the Equality strategy and associated procedures. High Agree Audrey Cameron, Equalities Manager (1) It is the intention of the service to establish a new vehicle to ensure better overarching governance and a focus on the delivery of our Equalities Strategy. This is likely to be in the form of an Equalities Delivery Board with a focus on the Equalities Delivery Framework, engagement across services, and supporting our annual plan of activities in this area. We envisage that the board would meet quarterly with onward progress reporting to CMT and Committee twice yearly. This board will also be our primary vehicle for an ongoing improvement in the effectiveness of our EQIA processes and compliance. (2) The corporate action plan currently being delivered by the Equalities team is due to be presented to Committee in February 2023 (cycle 1). The action plan will be updated to also include individual service actions and will include named responsible officers identified to take appropriate actions at service and corporate level together with the relevant timescales for taking that action. The Action Plan will be monitored through the Delivery Board. (3) As per (1) above, the Delivery Board will be responsible for monitoring the progress on the Equalities Delivery Framework on a quarterly basis. Terms of reference including membership of the board to be drafted and agreed by end February 2023. First Board meeting to be arranged by the end of March 2023. March 2023 and ongoing First Board meeting to be arranged by the end of March 2023. Page 116 of 174
Page 117
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 6 3.Action Plan (continued) Equalities 0900/2023/005 Ref Finding 2 Significant improvements are needed to ensure consistent and appropriate use is made of Equality Impact Assessments (EQIAs) We were pleased to note that the Council has committed to undertake EQIAs for all proposed, new or revised policies and practices and to publish the results of these assessments on its website in accordance with its specific equality duties. We were also pleased to note that EQIAs have been formally built into the Council’s committee reporting formats and consideration of the completion of the EQIAs require to be included in all committee reports. Guidance on the completion of EQIAs has been developed, together with proforma assessment templates, in accordance with the Equality and Human Rights Commission (EHRC) guidance document – ‘Assessing impact and the PSED’, which incorporate both the general equality duty and the Fairer Scotland Duty. A presentation was provided to the extended Corporate Management Team in June 2019 setting out the Equality Strategy and the need to complete EQIAs. We reviewed the Council’s guidance in this area and were generally satisfied that it reflected the good practice contained in the EHRC guidance above. We did identify a small number of areas where we considered that there was scope to improve the guidance, and these have been notified separately to the Equalities Manager for further consideration. As of June 2022, there were only 16 assessments published on the Council’s website, which is lower than we would have expected give the number of council policies and procedures in place and key decisions made. In particular, we were surprised to note that none of the published EQIAs related to Adult Health and Social Care activities. From discussions with the Equalities Manager, we noted that there is currently no formal scrutiny process in place to ensure that EQIAs are being completed in accordance with corporate procedures, to check the accuracy/completeness of any such assessments and/or to ensure that appropriate documentation is being retained by service to support these assessments. In addition, there is also no formal requirement for Services to notify the Equalities Team of any EQIAs undertaken to ensure that these are published on the website in accordance with the corporate expectations. We reviewed a sample of five corporate strategies reviewed as part of the latest SPF review and noted that EQIAs had only been completed in three cases, only two of which were then subsequently published on the Council’s website. We also selected a sample of five recently reviewed policies from MARS and noted that only one had a completed EQIA, which had not been published on the website. Reasons provided by Services for non-completion/publication of the EQIAs indicated a lack of understanding of the need to complete an assessment for all such policy and strategy reviews. A recent desktop review of this area by the Equalities Team also identified a lack of consistency in the application of EQIAs with many completed after decisions have been made, if at all, and that many of those undertaken do not adequately explore potential equality impacts. The Team has intimated an intention to develop a range of training opportunities for equalities covering both staff and Elected Members including a mandatory module for all staff who may be required to consider and/or complete an EQIA. This concurs with our findings above, and we consider that raising awareness and ensure all relevant staff undertake appropriate training in relevant aspects of equalities should be a priority. Implication Recommendation Priority Management response Implementation Month/Year EQIAs may not be completed in accordance with corporate expectations and/or the Council’s equality duty. EQIAs may not be fully and/or accurately completed leading to decisions being made without potential equalities impacts being considered. Without appropriate or sufficient evidence that the Council is complying with its legal responsibilities, it risks legal challenges and/or reputational damage. The Head of People and Organisational Development should: (1) review, and refresh as necessary, the arrangements for EQIAs including ensuring that relevant corporate guidance and supporting documentation is up-to-date and fit for purpose; (2) thereafter, seek to raise awareness/understanding of corporate expectations. This should include reviewing current equalities training, including formalising what training, if any, requires to be made mandatory and ensure that arrangements are put in place to monitor uptake of these courses by relevant staff as appropriate; and (3) periodically review compliance with corporate expectations regarding the completion of EQIAs. High Agree Audrey Cameron, Equalities Manager (1) An immediate review of current EQIA arrangements will be undertaken by the Equalities Manager. All user communications will be issued based on the CMT recommendation for all staff undertaking EQIA’s to undertake a mandatory e-learning module. (2) A wider review of EQIA arrangements will be undertaken to agree a revised and improved approach. This will be finalised in conjunction with the Equalities Delivery Board and rolled out into services thereafter. It is also the service’s intention to appoint Equalities leads within each service who will take responsibility for ensuring the effectiveness of EQIA use within their service. A revised programme of EQIA training will be developed to support the roll out of the new process. (3) The Equalities Manager will develop a process for the periodical review of compliance within services, working in conjunction with each service equalities leads. November 2022 June 2023 August 2023 August 2023 Page 117 of 174
Page 118
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 7 3.Action Plan (continued) Equalities 0900/2023/005 Ref Finding 3 Improvements are needed to the equalities performance monitoring framework, including ensuring that comprehensive and robust information is regularly and timeously reported to key stakeholders. In accordance with the requirements of the PSED the Council is required to report progress on its Equality Outcomes every two years (next due April 2023). We reviewed the arrangements for setting/prioritising, monitoring and measuring progress on the equality outcomes. We did not, for the purposes of this audit, specifically assess the adequacy or effectiveness of the Council’s identified equality outcomes in mainstreaming its equalities activities. We noted that, whilst various sources of qualitative and quantitative information are collated, the process for setting/prioritising the final Equality Outcomes is not fully documented. In addition, we noted that there is currently no robust process in place for measuring and monitoring performance in respect of progressing the outcomes and for determining whether the actions taken by the Service/Council are appropriate and having the expected impact (either for the Council’s role under the PSED or in respect of the council’s role for Education and Licencing). A Performance Management Framework (PMF) has been developed to facilitate the tracking and measurement of impact and progress for each outcome. The PMF, however, currently only records the expected impact of the outcome, actions identified to progress the outcome and some generic performance measures for each year e.g. ‘people at risk of homelessness are provided support’ or ‘number of women/men/children re-housed’. There are no specific targets set for performance each year and no timescales have been set for achieving these targets (other than by year end). We understand that the Equalities team is currently in the process of reviewing the PMF to ensure that the Council can better monitor progress against each of the outcomes. However, we understand that there is currently no definitive date set for its completion/update. We reviewed the reports presented to committee via the programme of work for equalities (P086) and were satisfied that the reports for 2021/2022 were all presented to the relevant committees in accordance with the agreed timescales. We understand, however, that, due to the revised Committee structure following the Council elections in May 2022, changes to the reporting timescales for the 2022/2023 have been made, with the Equalities Outcome Progress report now due to be presented to the new Wellbeing and Tackling Poverty Committee as part of the 2023 Mainstreaming report (possibly in cycle 2), which may be after the 30 April statutory reporting timescales. In addition, we noted that the reports required by the specific equalities duties of the PSED were presented to Policy & Strategy Committee in a composite report dated June 2021, again after the 30 April statutory reporting timescale. We understand that the individual reports were published on the Council’s website in draft by the statutory deadline, with committee approval sought retrospectively, due primarily to the information not being available in time for the March 2021 committee cycle. Services are responsible for ensuring that accurate and up-to date-information is provided to the Equalities Manager to ensure that the statutory reporting timescales are met. However, we understand that information provided by Services is not always robust and/or provided on a timely basis. In addition, we understand that there currently no further checks on the accuracy/completeness of the information provided to the Equalities team prior to the reports being presented to committee/published on the Council’s website. Implication Recommendation Priority Without an effective performance management framework, management would not be able to measure whether the Equality Outcomes and the actions taken to address these were having the expected impact. and/or may not be able to take appropriate action to address areas of ‘under- performance’. Without formal processes, reports may not be published in accordance with the agreed committee and/or statutory timescales. The Head of People and Organisational Development should ensure that: (1) a robust performance monitoring framework is developed that will allow management to measure performance and impacts more effectively and accurately against the equality outcomes and allow for periodic assessments to be undertaken. This should include identifying clear and realistic targets for each outcome and consideration of current and future planned actions which are designed to contribute to the achievement of these outcomes; (2) ensure that robust arrangements are in place to enable accurate and up to date information to be collated and reported to key stakeholders in accordance with the committee and statutory timescales; and (3) seek to ensure greater transparency underpins the process for identifying/setting/prioritising Equalities outcomes/targets and associated activities and actions. Medium Page 118 of 174
Page 119
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 8 3. Action Plan (continued) Equalities 0900/2023/005 Management response Implementation Month/Year Agree Audrey Cameron - Equalities Manager (1) The review and updating of the current performance framework and reporting arrangements will be prioritised as a key work area for the Equalities Delivery Board. The Council’s Mainstreaming report, including progress on the equalities outcomes, is due to be published in April 2023 and this will inform the future work of the Board. (2) It is envisaged that improved arrangements and a revised framework will be devised in conjunction with Business Solutions and members of the board during 2023, linking to a wider review of the Strategic Performance Framework to ensure that the two are fully linked. This might involve the introduction of an annual reporting cycle to ensure that the performance data on outcomes is gathered on a more regular basis. This would ensure that we are able to meet the statutory reporting timelines for future years. (3) As part of the above arrangements, the process for setting/prioritising the Council’s equality outcomes and targets will be fully documented. Re (1) and (2) Mainstreaming report – April 2023. New approach to be agreed by the board by September 2023 for reporting in December 2023 and annually thereafter. (3) Equalities outcomes are not due to be amended until 2025 and the review process will be discussed with the Equalities Board during 2023 and 2024. Page 119 of 174
Page 120
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 9 Appendix 1 - Audit Grading Audit reports are graded with an overall assurance opinion, and any issues and associated recommendations are classified individually to denote their relative importance, in accordance with the definitions in the tables below. Definition of audit assurance and recommendation categories Assurance Confidence based on sufficient evidence that internal controls are in place, operating effectively and objectives are being achieved. Assurance opinion Green Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Green-Amber Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Amber-Red Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. Red No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. Organisational impact Major The weaknesses identified during the review have left the Council open to significant risk. If the risk materialises it would have a major impact upon the organisation as a whole. Moderate The weaknesses identified during the review have left the Council open to medium risk. If the risk materialises it would have a moderate impact upon the organisation as a whole. Minor The weaknesses identified during the review have left the Council open to low risk. If the risk materialises it would have a minor impact upon the organisation as a whole. Recommendation priority High Significant control failure or weakness that, if not addressed, may lead to a major financial, operational or reputational risk to the organisation and/or significantly impact the successful delivery and achievement of the objectives of the area under review. Urgent/Immediate action is required. Medium Control failure or weakness that, if not addressed, may lead to a moderate financial, operational or reputational risk to the organisation. Weakness may be individually significant but is unlikely to affect the successful delivery and achievement of the overall objectives of the area under review. The risk of error would, however, be significantly reduced if corrective action was taken. Prompt action is required. Low Control failure or weakness that may lead to a minor financial, operational or reputational risk to the organisation. Weakness does not appear to significantly affect the ability to meet objectives. Minor issue raised to improve the efficiency and effectiveness of controls. Page 120 of 174
Page 121
https://nlcgov.sharepoint.com/sites/aur-internalauditfiles/shared documents/planned work/2022-23/0900.2023.005 - equalities/a - findings & report/a05a. 20221103 equalities - final report as issued.docx 10 Appendix 2 – Equalities - statutory responsibilities and duties The Council has a range of general and specific responsibilities and duties with regard to Equalities placed upon it by legislation. The purpose of the key public sector equality duty is to ensure that public authorities and those carrying out a public function consider how they can positively contribute to a more equal society through advancing equality and good relations in their day-to-day business, to: • take effective action on equality; • make the right decisions, first time around; • develop better policies and practices, based on evidence; and • be more transparent, accessible and accountable; • deliver improved outcomes for all. The general equality duty requires public authorities, in the exercise of their functions, to have due regard to the need to: • eliminate unlawful discrimination, harassment and victimisation and other prohibited conduct; • advance equality of opportunity between people who share a relevant protected characteristic and those who do not; and • foster good relations between people who share a protected characteristic and those who do not. In terms of specific duties, each listed authority is required to: • report on mainstreaming the equality duty; • publish equality outcomes and report progress; • assess and review policies and practices; • gather and use employee information; • use information on members or board members gathered by the Scottish Ministers; • publish gender pay gap information (where they have at least 20 employees); • publish statements on equal pay (where they have at least 20 employees; • consider award criteria and conditions in relation to public procurement; and • publish in a manner that is accessible. The Equalities and Human Rights Commission has published a range of guidance for public bodies in relation to equalities duties at Public sector equality duty in Scotland | Equality and Human Rights Commission (equalityhumanrights.com). Page 121 of 174
Page 122
Page 122 of 174
Page 123
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref KA/LM/ASP/Nov 2022 Date 24/11/22 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 September 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 be noted that, as reported to the 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 but not yet complete 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. 19 of the 24 actions agreed in response to relevant Internal Audit recommendations due in the period have been fully completed and five have been assessed as partially implemented. Recommendations The Panel is invited to: (a) note the contents of this report; (b) note the recommendations made by Internal Audit at Appendix 1; and (c) 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 6 Page 123 of 174
Page 124
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 September 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 have 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 originally agreed date. This avoids repeatedly reporting and focusing on actions which are ‘late’ where there are sound reasons for non- implementation by the originally agreed date. 1.4 This report presents the assessment of the potential risks arising from those planned actions agreed in response to Internal Audit recommendations due in the period (July to September 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 below shows whether management have implemented those actions previously agreed to in response to ‘High’ and ‘Medium’ Internal Audit recommendations which were due to be completed by the end of September 2022. Overall, 19 of the agreed actions have been completed and five have been assessed as partially implemented. Table 1 Head of Service Area Complete Partially implemented No longer relevant Total Asset and Procurement 3 1 0 4 Audit and Risk 0 1 0 1 Business and Digital 4 3 0 7 Education (North/South) 2 0 0 2 Education and Families 3 0 0 3 Financial Solutions 3 0 0 3 People & Organisational Development 2 0 0 2 Performance, Planning and Quality Assurance 1 0 0 1 Planning and Regeneration 1 0 0 1 TOTAL 19 5 0 24 Page 124 of 174
Page 125
2.2 Internal Audit has reviewed the management updates and agreed revised implementation dates for all five 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 which we have also made suggestions as to how the Panel may wish to consider these issues. Definitions of the residual risk ratings are provided at Appendix 3. 2.4 In response to queries raised at the last meeting of the Panel in September 2022, we have provided detail in respect of each of the recommendations which were reported at that meeting as ‘not yet complete’ and with a September 2022 revised date. This is as detailed in Appendix 2. 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 Internal Audit recommendations – Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Appendix 3 Residual risk rating definition Ken Adamson, Head of Audit and Risk Page 125 of 174
Page 126
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 126 of 174
Page 127
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 Enterprise Project (May 2022) Risk: 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. Recommendation: 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. Category: Medium The risk of a lack of market appetite for the procurement opportunities remains key within the Enterprise Project with the Project Board receiving updates on this and other risks at each meeting. This risk, along with a high-level contingency plan, has also been discussed separately with the SRO, Project Sponsor and Chief Executive. The Project Lead has taken advice from the project’s legal advisers and is developing contingency plans and timescales. The outcome of the SPD evaluation will help inform the Council’s decision to proceed with the procurement and/or appraise alternate delivery options (‘Plan B’). This decision will in turn help inform the detailed development of the ‘Plan B’ and if required, allow the ‘Plan B’ to be enacted after appropriate engagement with the CMT and Elected Members. Original timescale: July 2022 Revised timescale: December 2022 We acknowledge that work in this area to develop the ‘Plan B’ has been ongoing and that the delay in implementing this is largely due to ensuring the timely launch of the Phase 1 procurement. Given that further action is required to fully develop the contingency plan/’Plan B’, we assess the residual risk as ‘Medium’ and consider it important that the agreed extension date of December 2022 is achieved. We note that an update on the status and future development of the Enterprise Project is due to be presented to the Policy and Strategy Committee in December 2022. 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 Audit and Risk Risk Management (July 2022) Risk: 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. Recommendation: The Head of Audit and Risk should ensure that the replacement and/or new corporate risks detailed in the finding are documented, assessed and moved to ‘live’ status with a reasonable timescale. Category: Medium The corporate risks on Supply Chain and the Scottish Child Abuse Inquiry have been developed, agreed and are now ‘live’. The corporate risk in relation to the National Care Service proposals has been documented as much as can be based on current information available. This will continue to be developed as the national policy direction progresses and the current level of uncertainty reduces. The two remaining corporate risks (Educational Outcomes and Target Operating Model) are both in draft format and require further discussion and development with the relevant Risk Leads before being agreed and finalised. Original timescale: September 2022 Revised timescale: December 2022 Whilst we acknowledge that there has been significant action taken to address the recommendations made, it is important the two remaining risks are finalised and moved to ‘live’ status at an early opportunity. 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. Page 127 of 174
Page 128
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: 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 updated Benefits Management approach has been revised, updated and circulated to all relevant parties. The non-financial benefits tracker templates for each of the sprints (both completed and those in progress) have been created but have not yet been populated with the expected non-financial benefits and how these will be measured and quantified. The focus to date has been on the financial benefits. 1:1 meetings require to be held with the Business Change Analysts to determine what, if any, non-financial benefits are/were expected and how these will thereafter be measured. The non-financial benefits tracker templates will thereafter be populated with this information. For those sprints which have already been completed, the templates will be updated retrospectively. Going forward, the expectation is that the templates will be updated in line with progression of the sprint. Original timescale: April 2022 Revised timescale: September 2022 Further revised timescale: March 2023 Whilst we acknowledge that the updated Benefits Management Approach would enable both financial and non-financial benefits to be identified, monitored and tracked, it is important that the non-financial benefits are identified, measured and quantified retrospectively for completed sprints and going forward identified and captured in a timely and consistent manner for those sprints not yet underway/at an early stage. Given the limited progress of identifying and quantifying non-financial benefits to date we have assessed the residual risk as ‘High’ and consider it important that the revised timescale is adhered to and would suggest that the Panel may wish to consider requesting an update on this issue from relevant senior management at the next meeting of the Panel. Page 128 of 174
Page 129
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 Managing Strategic Change (June 2021) Risk: 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 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 Following review and refresh of the project management framework, the updated framework includes a section on reporting to the programme/project boards on the progress of specific programmes and projects. This references that good practice recommends that these reports assign a RAG status based on assessment criteria for three of the key dimensions within which the project requires to be delivered (i.e. cost, time and quality). Original timescale: September 2021 Revised timescale: September 2022 Further revised timescale: Still to be determined by management The Service consider this action to be complete as the updated project management framework includes detail around reporting to project/programme boards. However, we note that this does not reference the arrangements in place for reporting to key stakeholders (for example: CMT and/or Committee) to facilitate regular and ongoing oversight of identified key projects across the Council. We have assessed the residual risk as ‘High’ as the recommendation has not yet been fully addressed by management who have provided no clear indication as to how or when oversight of progress of key projects across the Council 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 will be reported to key stakeholders. We consider it important in allowing effective oversight and scrutiny that management identify and commit to a clear timescale for implementing this recommendation and would suggest that the Panel may wish to consider requesting an update on this issue from relevant senior management at the next meeting of the Panel. Page 129 of 174
Page 130
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) Risk: If Services are aware of the projects which will be reviewed, they are more likely to follow the guidance for those projects and the results of any such reviews may not provide a true representation of the extent of compliance with expected arrangements, including use of the relevant guidance and control template documents. Recommendation: Management should 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; and • reviewing and updating the checklist to include consideration of the adequacy and effectiveness of the completed control document templates, determination of whether established processes have been documented and confirmation that key stakeholders have been adequately updated on the progress of the project, in line with the suggested improvements at Appendix 3. Category: Medium A review programme cannot be established until the Project Registers have been received from Heads of Service. This review programme will cover both capital and non-capital projects. An e-mail was sent to all Heads of Service on 11th October 2022 asking that they submit their Project Registers by the 1st November 2022. Project Register maintenance and monitoring will be revisited in line with the future development and implementation of a centralised project management IT system. As reported to CMT on 27/09/22, the review and refresh of the project management framework identified the need for a more consistent approach across the Council with regards to the extent and effectiveness of the programme and project board. It is considered that this approach will also support further improvements in the development of the project management framework review programme and ensure that it provides a meaningful accurate and representative assessment of the extent of compliance with the fundamentals and mandatory tasks within the framework. Original timescale: June 2020 Revised timescale: September 2022 Further revised timescale: Still to be determined by management Although the Service have provided some detail around the planned approach and review programme for the project management framework which will assess compliance with this, they have provided limited detail to confirm how and when this will be implemented. Given that further action is required to progress arrangements for monitoring compliance with the refreshed project management framework, we have assessed the residual risk as ‘Medium’ and consider it appropriate that more detailed plans and timescales are identified by management at an early stage. We would suggest that the Panel may wish to consider agreeing to note the progress made and request that management provide an update including revised implementation dates at the next meeting of the Panel. Page 130 of 174
Page 131
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 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. 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. The actions in respect of the review and update of the project management model and the project management documentation have now been fully implemented. The refreshed project management model was presented to CMT, OMT and ODA in September/October 2022. An update in terms of the next steps is documented in the Strategic Frameworks Annual Position Statement which is included the pack for this meeting of the Panel. The actions in respect of amendments to the ‘project management model review programme’ and establishing a reporting mechanism which better facilitates regular and ongoing oversight by key stakeholders of the progress of key projects against the plan are partially implemented. See Appendix 1 for further detail on the current position. Page 131 of 174
Page 132
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 Head of Business and Digital Digital NL (November 2021) 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. Revised timescale: September 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. This action thus remains partially implemented. See Appendix 1 for further detail on current position. Page 132 of 174
Page 133
Appendix 2 Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 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. 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. This action has now been fully implemented. The Annual Procurement Report 2021-22 has been finalised and was presented to the Finance and Resources Committee in September 2022. 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. 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. This action has now been fully implemented. A report was presented to the Policy and Strategy Committee in September 2022 outlining the progress to date and the Roadmap for Year 4 and beyond. Page 133 of 174
Page 134
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 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. 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. This action has now been fully implemented. A report was presented to the Delivery Board at the end of August referencing proposed changes to the Programme Highlight Report which will further enhance the reporting process. A revised report incorporating these changes was presented to the Board on 27 October 2022. Page 134 of 174
Page 135
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 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. 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. This action has now been fully implemented. A review of the documentation provided demonstrated that the Head Teachers are now identifying, planning and setting out outcomes for their SAC and PEF programmes. There are two bi-annual reporting ‘checkpoints’ as part of the annual improvement cycle for all establishments. Schools/establishments are now using a variety of data when setting targets and both the reports to Committee and individual schools’ School Improvement Plans now include detail on performance measures and progress being made. An update on progress of SAC and PEF was presented to CMT in October 2022 and will be presented to the November meeting of the Education, Children and Families Committee. Page 135 of 174
Page 136
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 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. 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. This action has now been fully implemented. A review of Framework and non- framework expenditure has been reported to both the Programme Board and the Senior Leadership Team. This was presented to the Senior Leadership Team at the end of August 2022 and thereafter shared with the Programme Board at the October meeting. Page 136 of 174
Page 137
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update Position as at October 2022 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. 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. This action has now been fully implemented. The Local Child Poverty Action Report was prepared and submitted to the Policy and Strategy Committee in September 2022. Page 137 of 174
Page 138
Appendix 2 (continued) Internal Audit recommendations - Management actions with revised timescale of September 2022 per ASP meeting on 8/9/22 Head of Service Report Details Details from original recommendation Position per previous management update Internal Audit comment per previous update 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. 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. This recommendation has been fully implemented. The review has now been completed and the Policy reviewed and re- issued to the relevant managers along with detailed instruction on the responsibility of card holders. A briefing note providing details of the Financial Solutions review and resultant recommendations and was issued to the Head of Financial Solutions in September 2022. Steps have been taken to implement the recommendations made in this briefing note. Page 138 of 174
Page 139
Appendix 3 Residual Risk Rating definition Internal Audit Assessment of Residual Risk from non-implementation High Non-implementation of actions has the potential to significantly undermine the relevant control environment. Medium Non-implementation of actions has the potential to impact upon the achievement of the control environment. Low Other issues which require management attention but which pose less significant or less immediate impacts to the control environment. Page 139 of 174
Page 140
Page 140 of 174
Page 141
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref: KA/ASP/Nov22 Date 24/11/22 Risk management update From Ken Adamson, Head of Audit & Risk E-mail adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary This report provides the Panel with a brief update on key risk management developments since the most recent report in September and highlights a selection of the more significant issues which are of current focus from a risk perspective. The Council continues to operate within a complex and challenging environment which should be reflected in corporate and service risks registers. CMT have been reminded that all risks should continue to be reviewed in line with the approved Risk Management Strategy. Strategically significant risks of particular current focus include responding to the ongoing challenges presented by current inflationary pressures and increased uncertainty over future levels of funding for local government in light of wider developments in UK and Scottish public sector finances. The Council is also fully engaged with ongoing attempts to assess and respond effectively to the likely significant impacts of the National Care Service draft legislation and associated guidance on service users, staff and the Council more generally. Responding to the outcomes arising from the current consultation by the Scottish Government on the future of education in Scotland is also likely to be of increasing focus. Significant operational risks of particular current focus currently include work underway to ensure the resilience of the Council’s home care service in light of ongoing pressures and in advance of expectations of increased challenges over the winter period and ongoing work around responding in both the short and longer-term to current and future challenges around the provision of school transport. Staffing issues, including potential industrial action and responding to recruitment and retention challenges, have also featured prominently in recent months. Finally, risk issues continue to be addressed in relation to a number of significant projects and programmes of work. Recommendations The Panel is asked to consider the contents of the report and to: (1) note the current residual scores for those risks previously agreed for inclusion in the corporate risk register for 2022-23 at Appendix 1; (2) note the addition to the corporate risk register of new risks relating to Data Migration and School Transport as detailed at paras 2.8 to 2.13 (3) note the references to other topical risk issues highlighted in Section 2; and (4) note the work ongoing to include key service risks (and an overview of how these risks are being managed) as part of future reporting to CMT and the Panel. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 7 Page 141 of 174
Page 142
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. CMT previously approved the 2022-23 corporate risk register as outlined in the table at Appendix 1. 1.2 It is widely recognised that the environment within which the Council operates and provides services continues to be dynamic, and corporate and service risk registers must continually evolve in order to keep pace with and accurately reflect, the ongoing challenges facing the Council. 1.3 To aid this process, earlier in 2022 the Corporate Risk Team prepared a ‘horizon scanning’ paper to support considerations/discussions on risks associated with the council’s future direction and strategic planning considerations. The paper, attached at Appendix 3, 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. 2. Report 2.1 The corporate risk register (at Appendix 1) approved for 2022-23 originally contained 24 risks. Risks contained within the register have been subject to ongoing monitoring and review throughout the year, with regular risk reporting to CMT and the Panel both on the overall register, and with detail on individual risks being reported by relevant Risk Leads. 2.2 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.’ 2.3 Currently there are 23 risks classified as ‘live’ with completed risk documentation, and 2 risks classified as ‘draft’ where relevant documentation is currently being finalised. Those risks still currently being drafted are ‘Target Operating Model’ and ‘Improving Educational Outcomes’. Both of these risks are due to be finalised and reported as live before the end of the year. The remaining risk, ‘Impact of National Care Service proposals’ is documented but remains unscored and actively under review in light of ongoing uncertainty and developments as the legislative processes proceeds. Update on the 2022-23 corporate risk register 2.4 Since the last update to the Panel, risk RIS0000256 Governance, Leadership and Decision Making has been reviewed to consider impacts arising from the changing political landscape and governance arrangements within the council. This review resulted in an increase in residual risk rating from 12 (MEDIUM) to 16 (HIGH) recognising that there are a number of factors now present which create an increased potential for issues to occur arising from this risk. These include the presence of a significant number of new elected members following the Council elections in May 2022 and recent changes in the structure of the senior management team. Page 142 of 174
Page 143
2.5 The finely balanced political composition of the Council and recent changes in the political leadership of the Council when combined with the challenging environment facing the Council (and the need to make contentious and/or difficult decisions) are considered to increase the risk of inconsistency and/or uncertainty around decision- making and increased challenges in ensuring that future decisions and associated resources reflect agreed corporate priorities and ambitions. More detail on this risk review together with the current risk assessment itself are contained within a separate report to the Panel. 2.6 Risk RIS0000020 Digital & IT Strategy risk has also changed in scoring as a result of its most recent review. The residual risk rating has increased from 9 (Medium) to 12 (Medium). Whilst staying in the same overall banding, the score has changed as a result of an increase in the likelihood assessment from 3 ‘Possible’ to 4 ‘Likely’. This reflects the combination of a range of factors including the volume and rate of change in technology and how the Service may need to respond to current and likely future Council budget saving requirements where some of the technology changes required may be substantial and impactful. 2.7 One further risk as increased in residual risk rating as a result of its most recent review, that being RIS0000003: Human Resources. The residual risk rating has increased from 12 (Medium) to 16 (High) which is reflective of the current challenges in relation to recruitment and retention in some key service areas and in certain professional disciplines. 2.8 In the period since the annual Corporate Risk Register review was completed, two additional two risks have been added for inclusion on the corporate risk register. These are ‘Home to School Transport (Mainstream temporary contracts due for renewal 14 October 2022); and 'Information Governance – Data Migration’. 2.9 Members will be aware of the school transport issues arising at the start of the 2022/23 school session when Strathclyde Partnership for Transport (SPT) contacted North Lanarkshire Council to advise that they had failed to successfully arrange transport for over 1600 children and young people due to attend school the next day. This was, they reported, due to systemic failure in the market for school transport contractors who were scheduled to provide these services. The scale of failure and the short-notice provided by SPT was such that normal contingency arrangements were understandably rendered totally inadequate. 2.10 Under the Council’s corporate resilience framework, an Emergency Planning Group (School Transport) was established to manage the Council’s response and a range of actions were taken to address the issue. This group was also required to consider whether additional contingency arrangements should be progressed and/or readied in light of an additional 80 temporary contracts which were due to renew at the October break. And while additional contingency capacity was identified, to date significantly fewer issues have arisen following the award of these contracts. 2.11 General risks around the provision and affordability of school transport arising from current market conditions has undoubtedly increased and this will form part of a wider strategic review currently underway of how the Council best addresses its obligations in this area going forward. 2.12 Data Migration was a new risk that was created to assist the Council’s understanding of the risks associated with migrating business data to O365 within short timescales prior to network servers reaching their end of life and/or being decommissioned. This reflected that there was a risk that council data currently held within network drives would not be migrated to SharePoint/Microsoft Teams within required timescales; that the information which is migrated might include significant volumes of redundant, obsolete and/or trivial information and that data migration may be rushed and poorly managed with potential impacts that important data was not secure, lost in the transition and/or data moved into storage areas that were not designed for it and/or that the incorrect retention periods will be applied. Page 143 of 174
Page 144
2.13 The risk was initially assessed as having a high residual risk rating of 25 with additional mitigating actions approved by the Data Governance Board to reduce this risk. Services were also asked to reflect this risk within their individual service risk registers to better understand where the potential ‘hot spots’ or key impacts might arise. There has been much recent activity in this area which continues to be closely monitored by the Data Governance Board. 2.14 Strategically significant risks of particular current focus include responding to the ongoing challenges presented by current inflationary pressures and increased uncertainty over future levels of funding for local government in light of wider developments in UK and Scottish public sector finances. This issue has been the subject of recent reports to the Policy and Strategy Committee. 2.15 The Council is also fully engaged with wider policy developments which have the potential to impact significantly on the Council and its corporate ambitions. This includes ongoing attempts to understand, assess and respond effectively to the likely significant impacts on service users, staff and the Council more generally of the National Care Service draft legislation and associated guidance. Responding to the outcomes arising from the current consultation by the Scottish Government on the future of education in Scotland is also likely to be of increasing focus. National developments in both areas will continue to be kept under review and actioned as required, with updates provided to relevant Committees at key development points. 2.16 The National Care Service (Scotland) Bill proposals allows Scottish Ministers to transfer social care responsibility from local authorities to a new national service. This could include adult and children’s services, as well as areas such as justice social work - but this has still to be determined. Scottish Ministers will also be able to transfer healthcare functions from the NHS to the National Care Service. Policy and Strategy Committee were provided with a report in September 2022 which provided an update on the position of the Bill at its current Stage 1 position. 2.17 In view of the significant and wide-ranging impact which the NCS proposals will have on the Council and the future delivery of support to individuals and families, the Policy and Strategy Committee (in September 2022) approved the establishment of a Member Officer Group to guide the council’s future engagement with the Bill process, support planning and management of the potential impacts for the council, and ensure the delivery of public services remain steadfast during what is expected to be a significant period of change. 2.18 The Bill also has significant implications for the council in terms of the proposed transfer on existing functions and staffing, the wider impact on service delivery and delivery of The Plan for North Lanarkshire, and on the future functions of the council. An initial calculation suggests that up to 27% of the council’s workforce / resource base could be in scope to transfer to the NCS. As such, an Officer Working Group is in place to ensure the ongoing identification and effective management of associated risks and provide oversight in relation to the operational impact on future council functions. 2.19 Operationally, the Council continues to manage a wide range of risks associated with day-to-day service delivery and progressing projects and programmes of work. Significant operational risks of particular current focus currently include work underway to ensure the resilience of the Council’s home care service in light of ongoing pressures and in advance of expectations of increased challenges over the winter period and ongoing work around responding in both the short and longer-term to current and future challenges around the provision of school transport. Staffing issues, including potential industrial action and responding to recruitment and retention challenges, have also featured prominently in recent months. Finally, risk issues continue to be addressed in relation to a number of significant projects and programmes of work. Page 144 of 174
Page 145
2.20 Members will note at Appendix 1, that the overall corporate risk profile has changed with a notable increase in the number of risks which now sit within the ‘High’ category for residual risk rating. This is to be expected as a result of the complex and challenging environment in which the Council is operating, and the changing risk profile itself should be a key consideration in the planning and decision-making activities of the Council. To support this, it is proposed that as part of the planned Risk Management Strategy review for 2022-23, there will be some focus on ‘fine-tuning' the risk scoring approach to ensure this provides greater differentiation in ratings (and rationale for those ratings), that will enable CMT and elected members to better distinguish areas that require more focus particularly within the ‘High’ residual risk category. The Corporate Risk Team proposes to provide CMT with some analysis and recommendations on a revised approach to risk scoring for consideration and agreement in order to achieve this as a key development of the planned review of the Risk Management Strategy, the results of which will be reported to Policy and Strategy Committee for approval early in 2023. 2.21 Generally corporate risks are being reviewed within reasonable timescales however there can be occasions where they fall overdue and Risk Leads have been reminded of the need to contact the Corporate Risk Team promptly when e-mail reminders are received to advise that a risk is due its review. The Corporate Risk team will assist in the facilitation and co-ordination of those reviews, and timely consideration will allow risk review frequencies to be maintained aligned to risk rating, and avoid risks becoming out of date, ensuring risks are current and reflective of the most current position. 2.22 Regular consideration by senior management of Service risks and Service risk registers is expected, but how such consideration is undertaken is not prescribed as it is considered appropriate to ensure that how risks are considered is aligned to and integrated within each Service areas own distinct management arrangements. All Services have been encouraged however to regularly review risk registers for completeness and to ensure that Service risks are reported regularly to Service management teams. The corporate risk team will be developing formal measures to review and report on compliance in this aspect of the Council’s risk arrangements during 2022-23. The Corporate Risk team will continue to work with Corporate Risk Leads and Service Risk Champions to ensure that risks registers continue to capture and reflect the current key challenges facing the organisation. Other risk management developments 2.23 The Risk Management Corporate Working Group is currently exploring with Service Risk Champions how best to identify significant Service risks which will be reported to both CMT and the Panel in future risk management update reports. 2.24 The Corporate Risk Team also continues to actively support the application of risk management practice and Project Boards’ consideration of risk in a number of key corporate projects including most recently the Shared Campus, Asset Rationalisation and Climate Change projects. 2.25 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 the Policy and Strategy Committee for approval scheduled for early-2023. 2.26 The Corporate Risk team are also actively progressing all actions agreed in response to the recent Internal Audit review. A number of areas for improvement were identified and management committed to a range of actions to address these. These included that replacement and/or new corporate risks needed to be documented and assessed in line with agreed timescales, improvements were required in respect of the monitoring of training on risk and a framework for monitoring compliance with the Risk Management Strategy needed to be developed and implemented to better facilitate assessment and overview of the adequacy and effectiveness of risk management arrangements within Services. All key actions are captured and being progressed by Page 145 of 174
Page 146
the Corporate Risk Team working either with individual risk leads or with Service Risk Champions via the Risk Management Corporate Working Group. Further review of the corporate risk register 2.27 In order to provide further update to CMT and the Panel on completion of ‘draft’ risks and resulting outcome of risk assessments, a further formal review of the corporate risk register will be carried out in December 2022 and reported to CMT and the Panel. It was also proposed 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. 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: Horizon scanning: Current strategic risks and issues facing the Council Ken Adamson Head of Audit and Risk Page 146 of 174
Page 147
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 147 of 174
Page 148
Appendix 1: 2022-23 corporate risk register CORPORATE RISKS (Operational) Likelihood Impact Rating Evaluation 1. Information Governance – Data Migration 5 5 25 High 2. Information Governance & Information Security 5 4 20 High 3. ICT operational capability 4 4 16 High 4. Public Protection 4 4 16 High 5. Human Resources 4 4 16 High 6. Governance Leadership & Decision Making 4 4 16 High 7. Supply Chain Risk 4 4 16 High 8. Scottish Child Abuse Inquiry 4 4 16 High 9. Health and Safety 5 3 15 High 10. Business continuity planning 5 3 15 High 11. Terrorism 3 5 15 High 12. School Transport (Mainstream -temp contracts Oct) 4 3 12 Medium 13. Procurement risk 3 4 12 Medium 14. Resilience planning 2 5 10 Medium 15. Serious organised crime, fraud and corruption 3 3 9 Medium CORPORATE RISKS (Strategic) Likelihood Impact Rating Proximity 16. Tackling Poverty 5 4 20 High 17. Climate Change 4 4 16 High 18. Implementation of Economic Regeneration Development Plan 3 5 15 High 19. Financial Sustainability 3 5 15 High 20. Enterprise Project 3 4 12 Medium 21. Managing strategic change 3 4 12 Medium 22. Digital and IT strategy 4 3 12 Medium 23. Engagement and consultation 3 3 9 Medium 24. Target Operating Model – (Ensuring resources (workforce, digital and assets) and service delivery are fully aligned to support the successful implementation of the Council’s future operating model. To be confirmed To be confirmed To be confirmed To be confirmed 25. Impact of National Care Service To be confirmed To be confirmed To be confirmed To be confirmed 26. Improving Educational Outcomes To be confirmed To be confirmed To be confirmed To be confirmed Page 148 of 174
Page 149
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 149 of 174
Page 150
Appendix 3 – Horizon Scanning - current strategic risks and issues facing the Council (originally prepared March 2022; updated in October 2022) This note has been prepared by the Corporate Risk Team (in March 2022 and updated in October 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’ ‘Supply chain’ 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 longer-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 150 of 174
Page 151
Appendix 3 - Horizon Scanning - 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 151 of 174
Page 152
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 challenge. Page 152 of 174
Page 153
Page 153 of 174
Page 154
Page 154 of 174
Page 155
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref: KA/ASP/Nov22 Date 24/11/22 Corporate risk update – Governance, leadership and decision- making From Ken Adamson, Head of Audit & Risk E-mail adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary To support the Council in mitigating risks and uncertainty, the Council operates risk management arrangements which identify, evaluate, manage, and control a range of key corporate risks. All 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 Audit and Scrutiny Panel (ASP) in line with the Council’s Risk Management Strategy and their respective governance roles. In line with the previously approved timetable for reporting on corporate risks, this report focuses on the deep dive of the ‘Governance, leadership and decision-making’ corporate risk. The report provides an overview of the current risk environment together with an overview of existing controls and actions taken to date to mitigate against this risk, as well as further actions planned to continue to manage and update this risk. Members should note that following the most recent review of this risk, the residual risk score has increased from 12 to 16 largely attributable to the elections in May 2022 and subsequent political events which is assessed as having increased uncertainty in a number of areas. Recommendations The Panel is asked to consider the contents of the report and to: (1) note the updated deep-dive (at Appendix 1) which highlights that the residual risk score in relation to the ‘Governance, leadership and decision-making’ corporate risk has increased; (2) note the current and planned controls and actions relating to this corporate risk; (3) recognise the important role that Elected Members and Chief Officers have in relation to the ongoing management and mitigation of this risk. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 8A Page 155 of 174
Page 156
1. Background 1.1 CMT has previously approved the corporate risk register for 2022-23. 1.2 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.’ 1.3 Risks contained within the register are 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. 2. Report 2.1 The previous corporate risk register approved for 2022-23 contained 24 risks. Immediately following the local government elections in May 2022, it was recognised, that the resultant changes in the political landscape and governance arrangements within the council, were likely to have a bearing on a number of existing corporate risks. 2.2 It was agreed, therefore, that management review risk RIS0000256: Governance, Leadership & Decision Making at an early opportunity to reflect any resulting impacts on the nature and significance of this risk and how these issues are managed. 2.3 There have, of course, been a number of significant political developments since that earlier decision and these have now been reflected in the current risk assessment which is attached at Appendix 1. 2.4 The Deep Dive reflects upon the importance of sound and robust governance, leadership and effective decision-making to the ability of the Council to deliver against its ambitions. In particular, the document notes that operating within the context of a minority administration (irrespective of its political composition) presents significant additional risks and challenges to the good governance, leadership and decision- making of the Council. 2.5 Should relationships between officers and elected members, or within and/or between the political groups, break down then decision-making within the organisation may become increasingly difficult, inconsistent, impaired or even cease altogether. It is important therefore that officers maintain good working relationships with all political groups and that, where possible, consensus is sought about shared goals, ambitions and planned outcomes. 2.6 Should officers and the various political groups fail to work effectively together then it would become more difficult to achieve a cohesive policy framework or to achieve clear and consistent decision-making which ultimately could mean that the strategic direction of the Council may become less clear and/or service delivery could be confused and/or fragmented with potentially detrimental impacts on service users and local communities. Sound financial planning could also be detrimentally impacted in such circumstances. 2.7 Ensuring effective working relationships between the Chief Executive and Corporate Management Team and the political leadership of the administration (including the Council Leader and individual Conveners) and the leadership of the various political groups will be important in ensuring that the risk and challenges surrounding this corporate risk are effectively managed. Page 156 of 174
Page 157
2.8 It is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making. This has been confirmed by management’s own self-assessment, independent reviews by Internal Audit and generally positive comments from external agencies such as Audit Scotland. These arrangements are generally expected to significantly reduce but not eliminate the likelihood of the risk occurring. 2.9 However, it is recognised that there are a number of factors which are now present which create an increased potential for issues to occur arising from this risk. These include the presence of a significant number of new elected members following the Council elections in May 2022 and recent changes in the senior management team structure. The finely-balanced political composition of the Council and the associated recent changes in the political leadership of the Council when combined with the challenging environment (and the need to make contentious and/or difficult decisions) facing the Council are considered to increase the risk of inconsistency and/or uncertainty around decision-making and increased challenges in ensuring that future decisions and associated resources reflect agreed corporate priorities and ambitions. 2.10 Whilst current controls and planned actions seek to minimise the impact of these factors on the likelihood of issues arising, it is recognised that the political dimension within which part of the risk sits is not one that can or should be readily ‘controlled’ in a formal sense. The impact, if any, of recent political changes and changes to the composition and structure of the Corporate Management Team has also yet to be fully established. 2.11 While it is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making, these arrangements are not considered to significantly reduce the nature and scale of impacts if the risk materialises and it is considered that the potential remains for any such impacts to be significant. Consequently, overall, these issues have led to management increasing the residual risk score for this issue from 12 to 16. 3. Measures of success 3.1 CMT and ASP are content with, and have an appropriate understanding of, the key risks facing the Council and how these are being managed 3.2 The corporate risk management team will continue to report quarterly to CMT and the ASP 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. 3.3 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 ASP. 3.4 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: Deep dive (October 2022) – Corporate Risk: Governance, leadership and decision-making Ken Adamson Head of Audit and Risk Page 157 of 174
Page 158
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? Included in the corporate risk register. 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 158 of 174
Page 159
Appendix 1 Deep dive (October 2022) – Corporate Risk: Governance, leadership and decision-making Deep Dive Report RIS0000256 Risk Title Governance Leadership and Decision Making Owner Des Murray Risk Context To comply with CIPFA good governance principles for local government, the Council is required to 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. A range of structures, processes, and codes must be in place that define roles and responsibilities and accountabilities and establish mechanisms to enable the council to pursue its vision effectively and ensure that the vision is underpinned with effective control and management of risk. The overall aim is to ensure: • There is sound, consistent, coherent and inclusive decision making; - Resources are aligned with agreed corporate policies and reflect agreed corporate priorities, ambitions and planned activities including approved programme of work workstreams. • The operation of the Council's governance arrangements respects the distinct roles and responsibilities of senior officers and elected members (including the roles of Council Leader and individual Conveners) • There is sound financial planning and clear accountability for the use of resources in achieving defined outcomes for service users and local communities. Good governance is also central to the Council 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. Effective governance and leadership are therefore key to setting the councils strategic direction, ensuring clarity in terms of roles and responsibilities, ensuring sound decision making in terms of the allocation of resources, and facilitating delivery of the shared ambition for North Lanarkshire. Clarity about governance arrangements, roles and responsibilities and good working relationships are central to the success of any organisation. And the Accounts Commission, amongst others, has repeatedly expressed the view that getting governance, leadership and decision-making right in councils has a significant bearing on how well they perform in achieving their objectives, delivering vital services for local people and communities and ensuring value for money. Trust, confidence and good conduct between elected members and senior officers are recognised as essential for building and maintaining good relationships, and supporting good leadership, management and performance. (Audit Scotland: How councils work: Roles and Working Relationships: are you getting it right, 2010). Elected Members have complex and demanding roles, representing constituents, providing direction, and scrutinising service performance. Council Officers give professional advice and are responsible for operational leadership and management of the organisation. In theory these roles and responsibilities are clear and distinct, but often they can become blurred and there are many complexities in the current local government environment which impact on this in practice and which need to be carefully managed. Working together effectively whilst respecting each other's distinct roles, Members and Officers should collectively lead and manage the Council to provide services that improve the lives of local people. It is important that elected members take cognisance of relevant local and national policies as well as relevant statutory considerations during decision making to ensure the robustness and sustainability of the Council's direction of travel, while officers should be aware of, and consider, the political environment in which the Council and elected members operate and which will rightly impact on decision making. The Council has agreed and laid out a clear long-term vision for North Lanarkshire in The Plan for North Lanarkshire and the associated annual Programmes of Work. This, together with the key risks facing the Council as outlined in the corporate risk register, highlights the significant and challenging agenda that the Council faces reinforcing the need for clarity in roles and responsibilities and effective working relationships between Last assessment undertaken 4 October 2022 Page 159 of 174
Page 160
elected members and officers in order to deliver on the Council's challenging ambitions. The Chief Executive, acting as Head of Paid Service, and the Corporate Management Team are responsible for maintaining strategic oversight and direction of the council's Programme of Work and The Plan for North Lanarkshire as well as developing, monitoring and providing oversight of the activities and policies of the council. The effectiveness of the leadership role undertaken by the Council's senior management is vital if the Council is to deliver against its key objectives and corporate ambitions. The Council elections in May 2022 resulted in the Council initially having a new minority SNP administration. This altered in August when political leadership of the Council changed and reverted back to the position immediately prior to the elections in May with a minority Labour administration in place. The current finely-balanced political composition of the Council could mean that the Council may find it more difficult to make decisions and/or to deliver consistent decision-making. This may particularly affect challenging or contentious decisions relating to structures, policies and/or those impacting future service delivery, many more of which are likely to be required as a result of the significant financial challenges facing the Council. Responding consistently to the inevitable tensions that often arise between short-term issues and the Council's longer-term ambitions is also likely to become more difficult and/or more unpredictable. Operating within the context of a minority administration (irrespective of its political composition) also presents significant additional risks and challenges to the good governance, leadership and decision-making of the Council. Should relationships between officers and elected members, or within and/or between the political groups, break down then decision-making within the organisation may become increasingly difficult, inconsistent, impaired or even cease altogether. It is important therefore that officers maintain a good working relationship with all political groups and that, where possible, consensus is sought about shared goals, ambitions and planned outcomes. Should officers and the various political groups fail to work effectively together then it would become more difficult to achieve a cohesive policy framework or to achieve clear and consistent decision-making which ultimately could mean that the strategic direction of the Council may become less clear and/or service delivery could be confused and/or fragmented with potentially detrimental impacts on service users and local communities. Sound financial planning could also be detrimentally impacted in such circumstances. Ensuring effective working relationships between the Chief Executive and Corporate Management Team and the political leadership of the administration (including the Council Leader and individual Conveners) and the leadership of the various political groups will be important in ensuring that the risk and challenges surrounding this corporate risk are effectively managed. Risk Description There is a risk that the council's governance arrangements will be impaired and/or unable to deliver on the shared ambition set out in The Plan for North Lanarkshire and associated Programme of Work and/or deliver best value services and/or financial sustainability while effectively fulfilling its governance and public accountability duties. Due To • Failure to establish sound governance arrangements and/or to monitor and periodically review their effectiveness; • Failure to provide adequate organisational leadership and strategic direction and/or effective communication and understanding of the same; • Lack of openness and transparency in decision-making / inadequate and/or failure to comply with Scheme of Delegation • Lack of clarity over the respective roles and responsibilities of elected members and officers and/or failure to comply with the Chief Officers Code of Conduct and/or the Code of Conduct for Elected Members; • Lack of trust and/or confidence leading to poor working relationships between elected members, officers and key partners; • Potential for increased uncertainty and/or consistency in decision-making particularly around difficult and/or contentious decisions as a result of the political balance of the Council which has resulted in a minority administration; Organisation Structure North Lanarkshire Corporate Page 160 of 174
Page 161
• Inadequate focus on strategic plans and ambitions as a result of a disproportionate focus on/consideration of decisions with short term impacts; • Poor quality of committee reports with no or inadequate information/evidence to support and inform effective decision-making processes; • Insufficient or inconsistent levels of understanding around the role of elected members re- governance, challenge and scrutiny roles; • Failure of the Chief Executive and the Corporate Management Team to effectively discharge their roles re-providing strategic leadership and oversight of performance; • Inadequate senior officer engagement with the administration in early stages of key proposals; • Inadequate cross party working where appropriate and/or desirable; Impact • Inability to progress key strategic priorities and ambitions; • Council being unable to effect the changes needed to meet current and future challenges; • Inability of senior management and elected members to agree on strategic direction and detailed requirements/decisions necessary to deliver The Plan; • Time lost in re-planning and re-submission of amended plans and obtaining buy-in; • Time of elected members and senior management diverted to resolving more minor issues rather than focus on meeting the needs of the community; - Decision making processes are ineffective and/or could grind to a halt and/or be impeded; • Impacts on service delivery and/or poor responsiveness to the needs of our communities; • Significant reputational impact; • Senior officer resource diverted to resolving minor issues raised by elected members; • Inability to effectively achieve and demonstrate best value; • Decisions taken without appropriate levels of understanding/authority/budget/legality; • Fraud/misappropriation of assets; • Failure to manage conflicts of interest; • Poor morale; • Poor mobilisation of resources to effect change; • Inefficiency, duplication of effort; • External intervention/criticism and associated reputational damage. Corporate Priorities • Improve economic opportunities and outcomes • Support all children and young people to realise their full potential • Improve North Lanarkshire’s resource base • Enhance participation, capacity, and empowerment across our communities • • Improve the health and wellbeing of our communities Inherent Assessment ASM0003112 Likelihood - 5 Impact - 5 High - 25 Page 161 of 174
Page 162
Controls and Actions Owner Status Due Date CON0000737 - Development and approval of The Plan for North Lanarkshire Des Murray Implemented CON0000738 - At its meeting on 9 June 2022, the Council approved a new Scheme of Administration (Committee structure) which reflected the newly created organisational structure. Archie Aitken Implemented CON0000739 - Five complementary frameworks in place to support The Plan for North Lanarkshire and Programme of Work: - Strategic Policy Framework - Strategic Performance framework including Public performance reporting - Strategic Self-evaluation framework - Strategic Governance framework - Project Management Model Katrina Hassell Enhancing ACT0000716 - CON0000739 - Update on the review and refresh of each of the supporting frameworks (policy, performance, governance, self-evaluation) is part of the Programme of Work for 2022/23 This aims to ensure each element in each framework is up to date, on a timetable for review at an appropriate interval, and reported to the relevant committee. Susan Lawrie Raised 31 March 2023 ACT0000738 - CON0000739 - Update on the review and refresh for each of the supporting frameworks (as part of the Programme of Work for 2021/22) includes use of the corporate project management model to ensure a consistent, corporate approach to managing projects and programmes of work. Susan Lawrie Raised 28 October 2022 CON0000743 - Code of Conduct for Elected Members. Archie Aitken Implemented ACT0000717 - CON0000743 - Review of Governance & Induction processes. This will encompass all internal governance arrangements and associated risks, statutory requirements, training needs (including lessons learned based on engagement with current Elected Members), and ICT requirements so that an appropriate framework is in place for the new Council. Archie Aitken Complete CON0000744 - Code of Conduct for Chief Officers Des Murray Implemented CON0000745 - Code of Conduct for Employees supported by appropriate training programmes (highlighted in letter of employment, induction and disseminated via Intranet.) Fiona Whittaker Implemented CON0000746 - Schemes of Delegation and Administration Andrew Rose Implemented CON0000747 - Financial Regulations and financial procedures Elaine Kemp Implemented CON0000748 - Standing Orders amendments now means that Members have earlier sight of key committee reports ensuring longer oversight. Archie Aitken Implemented CON0000749 - Regular engagement between the Chief Executive and Members/political groups. Register maintained of Members requests for Officer attendance at political group meetings. Des Murray Enhancing ACT0000489 - CON0000749 - Engagement with Political Group Business Managers 1/4ly to encourage discussions around training and engagement to be included on business meeting agendas. Pauline McCafferty Underway 28 October 2022 CON0000750 - Monitoring Officer Role provides oversight of conduct and enables management intervention when required. Archie Aitken Implemented Page 162 of 174
Page 163
CON0000751 - Whistleblowing Policy Archie Aitken Implemented CON0000752 - Corporate Risk Management arrangements Ken Adamson Implemented CON0000754 - Reporting - Officers skilled in producing a consistent quality level of reporting. Reporting template and guidance updated and implemented. Susan Lawrie Implemented ACT0000490 - CON0000754 - Review of committee report template and associated guidance, adherence and quality of reporting will drive improvements in decision making process. Susan Lawrie Complete ACT0000491 - CON0000754 - Skills development for officers in writing reports to improve quality, consistency and clarity of information being put in front of members, on which they are required to make decisions. E-learning module developed and now on LearnNL Pauline McCafferty Complete CON0000756 - Council staff resources, skills and numbers, aligned with the Plan Fiona Whittaker Implemented ACT0000492 - CON0000756 - Full delivery of the commitments set out in the Workforce for the Future paper Fiona Whittaker Complete CON0001042 - Elected Member training programme via LearnNL (Elected Members Toolkit) Fiona Whittaker Implemented ACT0000487 - CON0001042 - Development of Elected Member training programme via LearnNL (Elected Members Toolkit) and linked to the Improvement Service - approval being sought at Council on 19th December with a launch thereafter. Pilots will involve Elected Members. Fiona Whittaker Complete ACT0000488 - CON0001042 - Consider what core Good Governance training for Members looks like, that should be included within the training programme, and seek Audit & Scrutiny Panel endorsement/championing of the same as a means of continuous improvement in governance and decision making across the organisation. ASP have endorsed. Content will require to be considered. Action owner changed. Archie Aitken Complete CON0001456 - Annual review and update of the Programme of Work is undertaken to provide Members with a composite overview of progress to date, along with the future roadmap to ensure strategy remains connected to delivery and the Programme of Work enables the ongoing delivery of projects, activities, and services in support of The Plan for North Lanarkshire. Des Murray Implemented CON0001459 - Strategy & Performance Manager post oversees the four supporting frameworks and project management model into one strategic support for business strategy and governance. Regular reporting on the supporting frameworks to elected members. Katrina Hassell Implemented CON0001460 - Restructured Corporate Management Team to create a single integrated corporate forum including all Heads of Service, with revised Terms of Reference including strategic oversight of the Programme of Work and Delivering for Communities, and clear linkages to cascade and communicate with Service's Senior Management Teams and wider Operational Management Team (OMT) on a formal and regular basis. Key relevant areas of activity are: To develop, monitor and provide oversight of the activities and policies of the council. To maintain strategic oversight and direction of the council's Programme of work and The Plan for North Lanarkshire. To maintain strategic oversight of corporate governance arrangements. Des Murray Implemented Page 163 of 174
Page 164
CON0001512 - Annual Governance Statement produced each year, this is informed by (a) assurances provided by all Heads of Service to the Chief Executive that they have considered the corporate governance arrangements and the standard of internal financial controls in their area of responsibility and to the best of their knowledge, corporate governance arrangements and financial controls in their service have been, and are, working well and there are, in their opinion, no significant matters arising which would require to be raised specifically, and (b) an annual review for ensuring ongoing effectiveness of the council's governance arrangements. The Annual Governance Statement is signed off by the Chief Executive and the Leader. It is also included in the annual accounts in line with the Local Authority Accounting (Scotland) Regulations. Des Murray Implemented Residual Assessment ASM0003112 Likelihood - 4 Impact - 4 High - 16 Likelihood Reason It is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making. This has been confirmed by management's own self-assessment, independent reviews by Internal Audit and generally positive comments from external agencies such as Audit Scotland. These arrangements are generally expected to significantly reduce but not eliminate the likelihood of the risk occurring. However, it is recognised that there are a number of factors which are now present which create an increased potential for issues to occur arising from this risk. These include the presence of a significant number of new elected members following the Council elections in May 2022 and recent changes in the senior management team structure. The finely-balanced political composition of the Council and the associated recent changes in the political leadership of the Council when combined with the challenging environment (and the need to make contentious and/or difficult decisions) facing the Council are considered to increase the risk of inconsistency and/or uncertainty around decision-making and increased challenges in ensuring that future decisions and associated resources reflect agreed corporate priorities and ambitions. Whilst current controls and planned actions seek to minimise the impact of these factors on the likelihood of issues arising, it is recognised that the political dimension within which part of the risk sits is not one that can or should be readily 'controlled' in a formal sense. The impact, if any, of recent political changes and changes to the composition and structure of the Corporate Management Team has yet to be fully established. Impact Reason While it is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making, these arrangements are not considered to significantly reduce the nature and scale of impacts if the risk materialises and it is considered that the potential remains for any such impacts to be significant. Page 164 of 174
Page 165
North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref: KA/ASP/November22 Date 24/11/22 Corporate risk update – Supply Chain From: Ken Adamson, Head of Audit and Risk E-mail: adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary To support the Council in mitigating risks and uncertainty, the Council operates risk management arrangements which identify, evaluate, manage, and control a range of key corporate risks. All 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 Audit and Scrutiny Panel (‘the Panel’) in line with the Council’s Risk Management Strategy and their respective governance roles. In line with the previously approved timetable for reporting on corporate risks, this report focuses on the deep dive of the ‘Supply chain’ corporate risk. The report provides an overview of the current risk environment and the existing controls and actions taken to date to mitigate against this risk, as well as further actions planned to continue to manage and respond to this risk. The increased costs associated with this supply chain risk will largely have to be managed within existing budgets which are not expected to increase in line with inflationary pressures and we can increasingly expect to see impacts on service provision, projects, programme of work items and challenges in delivering the capital programme as previously planned. This will require decisions to review and update previously approved plans and projects, assessing what will progress and what may need to be delayed/ceased. Ensuring we have ambitions which continue to be aligned with and underpinned by robust and realistic updated financial plans will be important in managing this risk. Recommendations The Panel is asked to consider the contents of the report and to: (a) note the updated deep-dive (at Appendix 1) which highlights that the residual risk score in relation to the ‘Supply chain’ (and associated inflationary pressures) corporate risk is unchanged and remains high; (b) note the current and planned controls and management actions relating to this corporate risk; (c) recognise the important role that short and medium-term financial planning has in allowing the Council to respond to pressures arising from this risk and the need to ensure that future plans and ambitions are realistic and aligned with available resources. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements AGENDA ITEM 8B Page 165 of 174
Page 166
1. Background 1.1 CMT has previously approved the corporate risk register for 2022-23. 1.2 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. 1.3 Risks contained within the register are subject to ongoing monitoring and review throughout the year, with regular risk reporting to CMT and the Panel both on the overall register, and with detail on individual risks being reported by relevant Risk Leads. 2. Key issues arising 2.1 The environment in which the council operates has seen significant challenges over recent years. The COVID-19 pandemic had a huge impact on supply chains and the council's procurement activity. When combined with increased trade barriers arising from the UK's exit from the European Union, and impacts arising from the Russia/Ukraine conflict (including significant increases in the price of oil, gas and many other natural resources), this has only served to exacerbate the position, with challenges to supply chains (availability and costs) now expected to be present for many years to come. Pricing pressures are now being experienced across the entire range of goods and services with inflation currently at a 40-year high. Economic forecasters generally do not expect inflation to return to lower levels in the near future. Current pressures are resulting in increasing prices, delays and/or non-availability of certain items and there is no indication that these pressures will disappear in the short-term. We are also seeing increased volatility in the willingness to tender and in the reliability and financial sustainability of those from whom we procure goods and services. 2.2 Whilst Services are generally responding to current circumstances in line with expectations and to the best of their abilities, it is recognised that the Council has limited ability to directly control or mitigate the wider inflationary pressures associated with this risk or increase the level of resources available to respond to the pressures arising. The nature of some of the key drivers of this risk has significantly limited our ability to anticipate and react in advance or to respond to current market volatilities. 2.3 Increased costs will largely have to be managed within existing budgets which are not expected to increase in line with inflationary pressures and we can increasingly expect to see impacts on service provision, projects and programme of works and challenges in delivering the capital programmes as planned. This will require decisions to review and update previously approved plans and projects, assessing what will progress and what may need to be delayed/ceased and is likely to lead to associated negative impact on reputation from failure to deliver what was previously committed to. 2.4 As with likelihood above, the impacts will vary across the Council but the identified risks have the potential, if not mitigated, to impact significantly across a wide range of Council Services and to impact on the Council’s financial sustainability and the ability of the Council to deliver against key projects and corporate ambitions as laid out in the Plan for North Lanarkshire and the associated Programme of Work. 2.5 A key element of the Council’s response must be to ensure that corporate ambitions and associated financial plans are realistic and reflective of this new environment and recent reports to Policy and Strategy Committee have outlined to members how this process will be progressed. Attention is also being given to improving resilience planning, strategic and tactical procurement decision-making and further strengthening existing contract supplier management arrangements. Page 166 of 174
Page 167
3. Measures of success 3.1 CMT and the Panel are content with, and have an appropriate understanding of, the key risks facing the Council and how these are being managed. 3.2 The corporate risk management team will continue to report quarterly to CMT and the 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. 3.3 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 Panel. 3.4 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: Deep dive (October 2022) – Supply Chain Ken Adamson, Head of Audit and Risk Page 167 of 174
Page 168
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 ☐ Included in the corporate risk register. Service specific risks should be included in relevant Service or project risk registers2. 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 168 of 174
Page 169
Deep Dive Report RIS0000460 Risk Title Supply Chain Owner Ken Adamson (co-ordinator) Risk Context North Lanarkshire council is a unitary authority, the fourth largest in Scotland, and is responsible for the delivery of a wide and diverse range of statutory and discretionary public services. We deliver our services through a mixed economy acting as both a provider, through direct provision of services using our own workforce and assets, and an enabler with services delivered through private providers, the third sector and supported businesses. We spend around £450 million externally each year, across both revenue and capital investment projects. The Council procures a wide and diverse range of supplies, works and services using a variety of contracts, ranging from simple single purchase orders to long-term complex partnership agreements. Some contracts are with a single provider, others are frameworks with multiple providers, all seeking to maximise outcomes and best value from the supplies, works and services that it buys. The environment in which the council operates has seen significant challenge over recent years. The COVID-19 pandemic had a huge impact on the council's procurement activity presenting a number of new and unexpected supply chain challenges. This when combined with the UK's exit from the European Union, and impacts arising from the Russia/Ukraine conflict have only served to exacerbate the position, with challenges to supply chains (availability and costs) expected to be present for many years to come. Generally, inflation is currently at a 40-year high and economic forecasters generally do not expect inflation to return to lower levels in the near future. In terms of the council's experience, current pressures are resulting in increasing prices, delays and/or non-availability of certain items and there is no indication that these pressures will disappear in the short-term. Corporately this risk has the potential to create significant additional financial pressures, to potentially limit what the Council can achieve within available budgets and impact on the Council's ability to deliver key services and progress planned projects (including a number Programme of Work items). A key challenge for Services, however, is the uncertainty around where and when any such supply chain issues may arise, and this is becoming more widespread. CMT continues to have oversight of the developing picture across services, with each service required to assess its current position and associated mitigating actions. The Head of Financial Solutions is also setting out how inflationary pressures will be managed within the Council's short- and medium-term financial management and planning arrangements. This document represents a high-level assessment of the council's position together with key hotspots arising within services. Assessment Due 31 July 2022 Last Assessment Undertaken 20 January 2022 Page 169 of 174
Page 170
Risk Description There is a risk that the council is unable to anticipate and/or respond appropriately to disruption and/or volatility in the supply/availability/cost of a range of goods, services and materials needed to deliver services and progress its wider strategic ambitions. Due To Increased challenges associated with ensuring the availability, reliability and affordability/pricing of the supply of goods and services. The increased likelihood of this risk arising has largely been attributed to: - • The effects of the pandemic, Brexit and other geo-political factors on local and global supply chains; • Tighter labour markets and pressures on associated production and distribution arrangements; • Lack of mature contract supplier management (CSM) arrangements; • Inability to fully understand critical supply issues at each stage in the chain; • Lack of fully mature and embedded project management arrangements; • Lack of fully mature and embedded risk management arrangements, both of which would allow early identification, consideration and escalation of the risks and issues arising and their impact together with appropriate prioritisation of any relevant actions. Impact • Preventing and/or delaying the Council in delivering expected services (or impacting on the ability to deliver expected quality) and in progressing its wider ambitions; • Increased costs which will largely have to be managed within existing budgets which are not expected to increase in line with inflationary pressures; • Delays on projects and programme of works and challenges in delivering the DigitalNL and capital programmes as planned; • Requirement to change previously approved plans and projects, assessing what will progress and what may need to be ceased and associated negative impact on reputation from failure to deliver what was previously committed to. • Main service impacts are currently being experienced on the corporate and housing capital programmes and in Adult Health & Social Care and Children, Families & Justice, Assets & Procurement, Housing Property & Projects and Business Solutions. These could result in significant increases in costs associated with capital projects and delays in delivering equipment and adaptations to adults, young people and children with disabilities; impacts on the supply by external providers in AH&SC, CF&J; difficulties in certain contracted services being provided to NLC. Organisation Structure North Lanarkshire Corporate Corporate Priorities • Improve economic opportunities and outcomes • Improve North Lanarkshire’s resource base Page 170 of 174
Page 171
Inherent Assessment ASM0002408 Likelihood - 5 Impact - 5 High - 25 Likelihood Reason Whilst the likelihood of the risk crystallising varies significantly across the Council depending on the nature of the Services delivered and the extent to which we rely on externally procured goods and services to sustain service delivery, overall the risk is assessed as ‘High’ as most Services rely on the adequate and affordable supply of externally procured goods and services. Impact Reason As with likelihood above, the impacts will vary across the Council but the identified risks have the potential to impact significantly across a wide range of Council Services and to impact on the Council’s financial sustainability and the ability of the Council to deliver against key projects and corporate ambitions as laid out in the Plan for North Lanarkshire and the associated Programme of Work. Controls and Actions Owner Status Target/Due Date CON0001879 - Regular Service Impact Assessments for each area including actions taken and/or planned with periodic reviews. Ken Adamson (co- ordinator) In Progress Ongoing CON0001880 - Regular monitoring and reporting of position to CMT. Ken Adamson In Progress Ongoing ACT0001004 - CON0001880 - Service specific review and analysis to be incorporated into all CSM processes, in order to identify any significant changes in the supply chain. Chris Gannon Raised 30 September 2022 CON0001881 - Approval process for revised rates/contract variations that arise outwith expected annual contract price reviews - CMT has already approved arrangements to allow the Council to consider and approve revised rates where cost pressures arising from the pandemic/Brexit have the potential to impact on the commercial viability of existing contractual arrangements. To date, only a relatively small number of such cases have been authorised. Owners are jointly James McKinstry and Archie Aitken. James McKinstry Complete Complete ACT0000918 - CON0001881 - Services to be reminded of process involved where approval needs to be sought for increasing contractually agreed rates. Communicate the approvals process via Procurement network and CPWG. Chris Gannon Raised 20 December 2022 CON0001882 - Procurement guidance requires Services to ensure supplier quality and conduct procurement due diligence. Chris Gannon In Progress Ongoing Page 171 of 174
Page 172
ACT0000840 - CON0001882 - Services to actively consider changing product requirements, where appropriate, to replace or reduce the need for ‘at risk' goods or materials. Chris Gannon Raised Complete ACT0000841 - CON0001882 - Where appropriate, practical and cost effective, services are to consider identifying, purchasing and increasing stocks of 'at risk' or potentially 'at risk' materials. Ken Adamson Raised Complete CON0001883 - Services are encouraged to consider diversifying suppliers to minimise risk and increase current and future options (included within Contract Strategy section 5 Procurement/Contract Options Appraisal). Chris Gannon In Progress Ongoing ACT0000839 - CON0001883 - Services are encouraged to consider seeking alternative sources of relevant goods or services deemed 'at risk'. Drafting note to be inserted into Contract Strategy to serve this purpose and prompt author to consider alternatives. Chris Gannon Underway 31 March 2022 CON0001884 - Including partners in risk planning and bringing them closer to NLC operations; Ken Adamson Implemented CON0001885 - Taking appropriate mitigating actions and contingency planning where residual risk exposure remains high. Ken Adamson In Progress ACT0000842 - CON0001885 - Across relevant services develop and implement a process as part of planning and work scheduling that reprioritises, switches or delays work to reduce demand for 'at risk' goods or materials until such time as they are more widely available. Ken Adamson Raised 31 March 2022 ACT0000917 - CON0001885 - Services to review contingency plans to ensure appropriate response and capture additional actions necessary to respond to insufficient supply of keys goods or services. Lauren Anthony Raised 8 April 2022 CON0001887 - Where necessary and practical, services to consider amending work schedules and plans where associated material shortages exist or are anticipated. Ken Adamson In Progress CON0002064 - Services manage financial implications through financial monitoring & budgeting processes. Financial Solutions Implemented CON0002065 - Council's Contract Supplier Management (CSM) arrangements are in place (until March 2023) however not as mature as we would like and link to development actions within the Procurement Improvement Plan (CPIP). Chris Gannon In Progress Page 172 of 174
Page 173
ACT0000916 - CON0002065 - Services enter dialogue with relevant key contractors/suppliers to ascertain current and potential threats/risks and to understand what contractors/suppliers are doing to mitigate these. This is incorporated within the Contract Strategy section 3 (Research & Development. - review the content of the Contract Strategy with the group?) Chris Gannon Raised Complete ACT0000920 - CON0002065 - CSM needs to be part of contracts, setting out exactly what meetings should contain from 1st April. (Procurement improvement plan). This is already incorporated into the CSM guidelines - see the performance review meeting/agenda/minutes/action template, that is currently online. For discussion. Chris Gannon Raised 8 April 2022 ACT0000921 - CON0002065 - Review how services resource CSM and ensure skills/training are fit for purpose. - Training matrix is underway Chris Gannon Raised 8 April 2022 CON0002066 - Corporate Risk Management arrangements when used properly should enable Services to identify and evaluate key supply chain risks, and these could be used to establish the overall council position and key hotspots. Ken Adamson Implemented ACT0000915 - CON0002066 - Essential that services use risk registers to identify and monitor key risks such as this and enable them to call out highest areas of risk and allow for escalation as appropriate to CMT. This would allow an emerging picture to be created. Discussions held through RMCWG. Lauren Anthony Complete CON0002067 - Corporate Project Management arrangements allow for identification of risks within projects and setting of acceptable parameters of cost deviation enabling escalation of key problem areas. Lauren Anthony In Progress ACT0001005 - CON0002067 - Review of Corporate Project Management Methodology and associated training is underway - ensure Supply chain risks are highlighted and brought into the process. Susan Lawrie Underway 30 September 2022 CON0002068 - Service self evaluation/assurance statements Ken Adamson In Progress ACT0000919 - CON0002068 - Consider how services evaluate their CSM arrangements and how they satisfy themselves this area is working - if they do. Chris Gannon Raised 8 April 2022 CON0002329 - Regular Market Intelligence reports purchased by Corporate Procurement (IBIS world). Chris Gannon In Progress ACT0000922 - CON0002329 - Corporate Procurement to share market intelligence reports via CPWG and Procurement network to increase service awareness of market changes to help inform services. Chris Gannon Raised 30 September 2022 Page 173 of 174
Page 174
CON0002374 - Financial Solutions to set out how associated inflationary pressures will be managed both in relation to existing financial budgets and medium-term financial plans as part of the Council’s financial management arrangements. Elaine Kemp In Progress Ongoing ACT0001036 - CON0002374 - At the time of setting the 2022/23 budget the impact of inflation pressures on council contracts and costs was yet unknown however an estimated provision was set aside to recognise increased costs would be likely. Budget Setting for 2022/23 provides additional resource to recognise likely cost pressures associated with inflation. Elaine Kemp Complete Ongoing ACT0001037 - CON0002374 - The closure of the 2021/22 accounts saw additional monies set aside within Earmarked Reserves to assist in managing the impact of inflation pressures on a one-off basis until the impact could be fully understood. One off resources to be set aside from council reserves to assist with the in-year impact of inflationary pressures on council contracts and costs. Elaine Kemp Complete Ongoing ACT0001038 - CON0002374 - The MTFP for 2023/24 now incorporates a recurring cost pressure to recognise the most up to date forecasts for RPI and CPI. Council’s Medium Term Financial Plan provides for anticipated recurring inflationary costs on council contracts and costs. Elaine Kemp Underway 31 October 2022 ACT0001039 - CON0002374 - Regular Financial Outlook papers provide updates on the anticipated impact from anticipated inflationary pressures on council contracts and costs. Elaine Kemp Underway 28 February 2023 Residual Assessment ASM0002408 Likelihood - 4 Impact - 4 High - 16 Likelihood Reason Whilst Services are responding to current circumstances in line with expectations and to the best of their abilities, it is recognised that the Council has limited ability to control or mitigate the wider inflationary pressures associated with this risk or increase the level of resources available to respond to pressures arising. This when combined with the relative lack of maturity of some of our contract/supplier management processes, risk and project management arrangements and the nature of some of the key drivers of this risk has significantly limited our ability to anticipate and react in advance of current market volatilities. Impact Reason While the Council has been able to mitigate some of the expected impacts, the supply chain risk and associated inflationary pressures has, and will continue to impact on the Council’s finances and on the ability of the Council to deliver the range and quality of services and/or to progress many planned projects and ambitions in line with previous expectations. Page 174 of 174