Minutes - Audit and Scrutiny Panel of 8 September, and 27 October 2022
North Lanarkshire Council · 1 December 2022
Back to Policy and Strategy Committee — 1 December 2022 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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AUDIT AND SCRUTINY PANEL - 8 SEPTEMBER 2022 1 Motherwell, 8 September 2022 at 2 pm. A Meeting of the AUDIT AND SCRUTINY PANEL PRESENT Councillor Watson, Convener; Councillor Dunbar, Vice-Convener; Councillors Hume, D. Johnston, T. Johnston, Loughran, Robinson and Stevenson. IN ATTENDANCE The Head of Financial Solutions; Head of Business and Digital; Head of Audit and Risk; Finance Manager; Business Strategy Manager; Strategy and Performance Manager; Business Partnership Manager; Principal Auditor and Democratic Services Manager. CHAIR Councillor Watson (Convener) presided. ALSO IN ATTENDANCE G McCreadie and P Murray, Audit Scotland. APOLOGIES Councillors Kelly, Lennon and McNally, Prior to the commencement of business, the Convener read out a statement to the Panel outlining its role and remit and indicating that consideration of matters should take place in a non-political environment. DECLARATIONS OF INTEREST IN TERMS OF THE ETHICAL STANDARDS IN PUBLIC LIFE ETC. (SCOTLAND) ACT 2000 1. There were no declarations of interest. INTERNAL AUDIT ANNUAL REPORT 2021-2022 2. There was submitted a report by the Head of Audit and Risk (1) informing the Panel that the Public Sector Internal Audit Standards and the Council’s Internal Audit Charter require the Head of Audit and Risk to provide the Panel, and the Chief Executive and the Corporate Management Team, with an annual summary of work undertaken by Internal Audit and providing an annual independent opinion on the Council’s Corporate Governance, Risk Management and Internal Control arrangements; (2) explaining that the report fulfilled that requirement by providing an overview of the activities of the Internal Audit Section for the year 2021-2022 and by presenting, attached at Appendix 1 to the report, the Annual Internal Audit Opinion, and (3) stating that the Annual Opinion is unqualified and that the report offers a generally positive view of the Council’s Governance and Internal Control arrangements. The Panel agreed that the 2021-22 Internal Audit Annual Report, and associated annual opinion of the Head of Audit and Risk, be noted.
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AUDIT AND SCRUTINY PANEL - 8 SEPTEMBER 2022 2 ANNUAL GOVERNANCE STATEMENT 2021-22 3. There was submitted a report by the Head of Business and Digital (1) informing the Panel that the Council is required to produce an Annual Governance Statement in line with the Local Authority Accounts (Scotland) Regulations 2014 and that this statement requires to be included within the Council’s annual accounts and is subject to review by the external auditors as part of their year end annual audit report process; (2) attaching, as Appendix 1 to the report, the Annual Governance Statement for the 2021-22 year, which outlines the Council’s Governance arrangements for the previous financial year and demonstrates how the Council complies with the Delivering Good Governance in Local Government Framework (2016), and (3) advising that included in the Annual Governance Statement is the annual internal audit opinion from the Head of Audit and Risk on the Council’s internal control systems which concludes that “reasonable assurance can be placed on the adequacy and effectiveness of the Council’s Framework of Governance, Risk Management and Internal Control for the year ended 31 March 2022”. The Panel agreed:- (1) that the Annual Governance Statement for 2021-22 be noted, and (2) that the inclusion of the Assurance Statement in the Annual Governance Statement for 2021- 22 be confirmed. DRAFT UNAUDITED ANNUAL ACCOUNTS FOR THE YEAR TO 31 MARCH 2022 4. There was submitted a report by the Head of Financial Solutions (1) informing the Panel that the unaudited accounts for the year ended 31 March 2022 had been completed and submitted to Audit Scotland by 30 June 2022 in accordance with the statutory deadline, and (2) attaching, as an Appendix to the report, the unaudited annual accounts for the year to 31 March 2022. The Panel agreed that the contents of the report, and the unaudited annual accounts submitted to External Audit by 30 June 2022, be acknowledged. EXTERNAL AUDIT – ANNUAL PLAN 2021-22 5. There was submitted a report by the Head of Audit and Risk presenting the Annual Plan 2021-22 from the Council’s appointed external auditors, Audit Scotland. Thereon, G McCreadie, Audit Scotland, spoke to the External Audit Annual Plan 2021-22. The Panel agreed that the External Audit Annual Plan 2021-22, and the work proposed in undertaking that audit of the Council, be noted. INTERNAL AUDIT PROGRESS REPORT 6. There was submitted a report by the Head of Audit and Risk (1) providing an overview of Internal Audit activity; (2) reporting the results of Internal Audit outputs finalised since the last update to the Panel in March 2022; (3) highlighting the most significant areas arising from the completed audit work; (4) updating the Panel on other aspects of the work of Internal Audit, and (5) attaching, as an Appendix to the report, a brief summary of the scope and key findings of each substantive planned audit together with a supplementary pack containing copies of those reports.
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AUDIT AND SCRUTINY PANEL - 8 SEPTEMBER 2022 3 Thereon, K Adamson answered questions from the Panel and provided assurance that information relating to the report on business continuity planning testing by Services would be provided to members of the Panel. The Panel agreed:- (1) that the findings, conclusions and recommendations of completed Internal Audit reports, together with the associated management responses, be noted; (2) that Internal Audit provide a report to future meetings of the Panel on progress made in implementing agreed management actions in relation to all audit recommendations categorised as high or medium, and (3) that, otherwise, the content of the report be noted. INTERNAL AUDIT: FOLLOW-UP OF ACTIONS PREVIOUSLY AGREED BY MANAGEMENT IN RESPONSE TO AUDIT RECOMMENDATIONS 7. There was submitted a report by the Head of Audit and Risk (1) detailing the extent to which management had implemented actions previously committed to in response to recommendations in Internal Audit reports, where those actions were due to be completed by the end of June 2022; (2) advising that Internal Audit had concluded that 10 of the 27 actions agreed in response to relevant Internal Audit recommendations during the period had been completed, 15 were assessed as being partially implemented, and 2 determined as no longer relevant; (3) explaining that 9 of the 14 actions agreed in respect of External Audit outputs had been completed, 1 had been partially implemented, and 4 were no longer relevant, and (4) attaching, as an Appendix to the report, commentary for management and details of proposed management actions and revised target dates for completion of those outstanding audit recommendations where Internal Audit had assessed the residual risk as high or medium. During consideration, the Panel expressed concern that where a target date for an action was listed for the end of the month in which the Panel met, and in the event that the target date was missed, it may be an entire Committee cycle before the Panel was made aware of this situation and requested that members of the Panel be notified between meetings where any actions listed had not been achieved by their target date. The Panel agreed (1) that the contents of the report be noted, and (2) that the recommendations by Internal Audit at Appendix 1 to the report be approved. INTERNAL AUDIT ANNUAL PLAN 2022-23 8. There was submitted a report by the Head of Audit and Risk (1) presenting the proposed Internal Audit Plan 2022-23 to the Panel for its consideration and approval, and (2) setting out the background and context within which the Internal Audit planning process is undertaken, and providing a high level review of how it is proposed Internal Audit resources will be allocated in 2022-23. The Panel agreed:- (1) that the approach adopted to produce the 2022-23 Internal Audit Annual Plan be noted;
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AUDIT AND SCRUTINY PANEL - 8 SEPTEMBER 2022 4 (2) that the detailed list of proposed Internal Audit assignments for the 2022-23 Plan, attached at Appendix 1 to the report, be noted, and (3) that the proposed 2022-23 Internal Audit Annual Plan be approved. RISK MANAGEMENT UPDATE AND CORPORATE RISK REGISTER 2022-23 9. There was submitted a report by the Head of Audit and Risk (1) providing a general update on key risk management developments with particular focus on the results of the recent annual review of the Corporate Risk Register; (2) submitting a proposed timetable for future reporting on key corporate risks to the Panel; (3) reminding the Panel that the Corporate Risk Register is reviewed annually to ensure completeness and continuing alignment to the Council's strategic objectives; (4) noting that all corporate risks identified and agreed as meriting inclusion in the Corporate Risk Register are subject to regular monitoring and review by senior management and periodic review and consideration of individual risks by both the Corporate Management Team and the Panel in line with the Council's Risk Management Strategy and their respective governance roles, and (5) reporting that, although there are some changes in individual risk scores, the Corporate Risk Register for 2022-23 remains substantially unchanged from the previous year. The Panel agreed:- (1) that the agreed Corporate Risk Register for 2022-23, attached at Appendix 1 to the report and incorporating the range of proposed changes outlined in the report, be noted; (2) that the proposed Schedule, attached at Appendix 3 to the report, for reporting on corporate risks to future meetings of the Panel, be approved, and (3) that the proposal to carry out a further review of the Corporate Risk Register in late 2022, as outlined in the report, including the addition of top risks from Service Risk Registers, be noted. STRATEGIC GOVERNANCE FRAMEWORK - ANNUAL REVIEW AND REFRESH 10. There was submitted a report by the Head of Business and Digital (1) reporting that the Delivering Good Governance in Local Government: Framework requires that each year, local authorities test their arrangements against the Good Governance principles set out within it by carrying out a review of existing arrangements, ensuring that their local Code is up to date, and reporting on compliance; (2) advising that, in this respect, the Strategic Governance Framework has been reviewed and updated; (3) presenting the updated Strategic Governance Framework to the Panel for approval in line with its role "to provide independent assurance to the Council and those charged with governance on the adequacy of the Council's Risk Management Framework and internal control environment", and (4) intimating that the annual review process, and refreshed Strategic Governance Framework, are also key pieces of evidence used to inform the development of the Annual Governance Statement for 2021-22. The Panel agreed:- (1) that the annual review which has been undertaken to refresh the Strategic Governance Framework, and ensure each of the elements and mechanisms listed therein are up to date, and on a review programme to be updated at an appropriate interval and reported to the relevant Committee, be acknowledged; (2) that the Panel continues to carry out its role in respect of the Strategic Governance Framework in terms of providing independent assurance to the Council and those charged with
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AUDIT AND SCRUTINY PANEL - 8 SEPTEMBER 2022 5 governance on the adequacy of the Council's Risk Management Framework and internal control environment, and (3) that the refreshed Strategic Governance Framework be approved. SCRUTINY WORK PROGRAMME 11. There was submitted a report by the Head of Business and Digital (1) providing an update to the assessment and prioritisation process previously approved in 2018 to establish a work programme for the scrutiny function of the Panel, and (2) explaining that this process has been updated to ensure that scrutiny activity is framed within the context of The Plan for North Lanarkshire. The Panel agreed:- (1) that the updated process, as set out in the report and in Appendix 1 to the report, in order to assess and prioritise future items requiring scrutiny, with a work programme for the scrutiny function of the Panel to be established, be approved, and (2) that the role of Panel members in identifying, assessing and prioritising items for inclusion in the Scrutiny Work Programme in line with the updated process be endorsed. ARM'S LENGTH EXTERNAL ORGANISATIONS: GOVERNANCE AND RISK MANAGEMENT: OVERSIGHT AND ASSURANCE REPORT 2022-23 (PROGRAMME OF WORKS 75.1 – PART 2) 12. There was submitted a report by the Head of Business and Digital (1) reminding the Panel that the Council delivers a number of frontline and business-focussed services through Arm's Length External Organisations (ALEOs) which have been developed over the past 20 years to provide services in new ways that are innovative, responsive or more commercially driven; (2) explaining that the Council must have confidence in the quality of service delivery and obtain assurances, through robust monitoring, scrutiny and oversight, that the public purse continues to secure best value and that the externalised delivery arrangements are not exposing the Council to potential operational, financial or reputational risks; (3) providing an overview of the ALEO landscape and the performance and financial monitoring safeguards that are in place to provide such assurance; (4) confirming that ALEO Boards and Management Committees continue to demonstrate effective stewardship with financial governance and risk management arrangements in place, and (5) providing an update on the status of current dissolution activity and providing assurance to Members that Council decisions are being effectively and timeously implemented. The Panel agreed:- (1) that the nature and range of services provided by ALEOs and the governance and stewardship arrangements in place to ensure effective, efficient and responsive service delivery be noted; (2) that the performance monitoring and oversight arrangements in place, and that these are suitably robust and provide appropriate opportunity for the Council to obtain the necessary assurances that service delivery reflects best value, be noted, and (3) that the current activity to wind-up the business and affairs of a small number of existing ALEOs, where the Council has previously agreed to in-source or cease service delivery, be endorsed.
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AUDIT AND SCRUTINY PANEL - 27 OCTOBER 2022 1 27 October 2022 at 2 pm. A Special Meeting of the AUDIT AND SCRUTINY PANEL PRESENT Councillor Watson, Convener; Councillor Dunbar, Vice-Convener; Councillors Fisher, Hume, D. Johnston, McNally, Robinson, Stevenson and Sullivan. CHAIR Councillor Watson (Convener) presided. ALSO PRESENT In accordance with Standing Order 64(A) Councillor Hughes substituted for Councillor T. Johnston. IN ATTENDANCE The Head of Financial Solutions; Head of Business and Digital; Head of Audit and Risk; Business Strategy Manager; Strategy and Performance Manager; Finance Manager, and Democratic Services Manager. ALSO IN ATTENDANCE B. Howarth and P. Murray, Audit Scotland. APOLOGIES Councillor T. Johnston. DECLARATIONS OF INTEREST IN TERMS OF THE ETHICAL STANDARDS IN PUBLIC LIFE ETC. (SCOTLAND) ACT 2000 1. There were no declarations of interest. ANNUAL ACCOUNTS 2021/22 LETTERS OF REPRESENTATION 2. There was submitted a report by the Head of Financial Solutions providing the Panel with information on the Letters of Representation required to be submitted to Audit Scotland in respect of the Council’s Annual Accounts and the Council’s Charitable Trust Accounts for 2021/22 (1) indicating that the Letters of Representation had been signed by the Head of Financial Solutions in her capacity as the Council’s Section 95 Officer and Trustee for the Charitable Trust and Educational Trust; (2) attaching, as an Appendix to the report, a copy of both Letters of Representation; (3) explaining that, as in previous years, the letters set out the Representations of Management and confirmed that the accounts were free from material mis-statement; (4) reporting that during the course of the audit, the External Auditors had highlighted a number of mis-statements within the Council’s Financial Statements which had been adjusted for the audited accounts where these were material, and (5) advising that a list of items that had arisen relating to the Council’s Accounts and the Charitable Trust and Education Trust Accounts were contained within the external Audit Annual Report. The Panel agreed that the Letters of Representation, provided to Audit Scotland, be noted.
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AUDIT AND SCRUTINY PANEL - 27 OCTOBER 2022 2 ANNUAL ACCOUNTS 2021/22 – EXTERNAL AUDITOR’S REPORT TO THOSE CHARGED WITH GOVERNANCE ON THE 2021/22 AUDIT 3. There was submitted a report by the Head of Financial Solutions permitting the Panel to consider the External Auditors comments on specific matters arising from its audit of the Financial Statements for both the Council and the Charitable Trust in Education Endowments administered by the Council (1) providing background to the appointment of External Auditors to the Council and their role and remit; (2) explaining that, following completion of the audit, Audit Scotland had produced reports to those charged with governance on the 2021/22 audit for both the Council, and the Council’s Charitable Trust in Education Endowments, and (3) attaching, as Appendices to the report, reports from Audit Scotland in relation to the Council and the Council’s Charitable Trust in Education Endowments. B. Howarth spoke to the report by the External Auditor, following which the Panel agreed to note the report. EXTERNAL AUDIT – ANNUAL AUDIT REPORT 2021/22 4. There was submitted a report by the Audit and Risk Manager presenting to the Panel the Annual Audit Report produced by the Council’s appointed External Auditors, Audit Scotland in respect of the audit for the Council for the year ending 31 March 2022 (1) explaining that the Accounts Commission had appointed Audit Scotland as the Council’s appointed External Auditor and that Audit Scotland is required to annually prepare a report for Elected Members and the Controller of Audit, summarising the audit work and presenting the main findings arising from the audit; (2) informing the Panel that the External Auditor’s report presents key matters arising from each of the main areas of work undertaken by the External Auditor including the audit of financial statements and issues relating to the Council’s Financial Management, Financial Sustainability, Governance and Value for Money arrangements; (3) highlighting that, as outlined in the report by the External Auditor, they were able to place an unqualified audit opinion on the 2021/22 Financial Statements and that, although a small number of issues were highlighted by the External Auditor where scope for further improvement exists, overall, the report is considered by management to be positive with no significant weaknesses identified, and (4) attaching, as an Appendix to the report, the Audit Scotland Annual Audit Report 2021/22. B. Howarth spoke to the report by the External Auditor and answered questions from the Panel. The Panel agreed:- (1) that the External Auditor’s Annual Audit Report be noted, and (2) that implementation by management of actions agreed in response to External Audits recommendation be monitored through reports from Internal Audit. ANNUAL ACCOUNTS 2021/22 (AUDITED) 5. There was submitted a report by the Head of Financial Solutions presenting the Council’s final 2021/22 Annual Accounts, and providing Elected Members with a background on the need to consider matters raised by Audit Scotland in respect of examination of the accounts (1) reminding the Panel that the Local Authority Accounts (Scotland) Regulations 2014 require the Council to prepare an Annual Statement of Accounts in accordance with proper accounting practices and that the Accounts Commission appoints External Auditors to local authorities in order to carry out the audit of Financial Statements in accordance with International Standards; (2) informing the Panel that the review of the 2021/22 accounts by Audit Scotland was now complete and that the final version of the accounts was attached to the report as an Appendix, and (3) indicating that, following consideration of the accounts, a copy of the financial accounts signed by Council Officers and the Audit Director would be submitted to Audit Scotland and that a full Annual Report had been prepared by Audit Scotland and considered elsewhere in the meeting.
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AUDIT AND SCRUTINY PANEL - 27 OCTOBER 2022 3 B. Howarth spoke to the report by Audit Scotland and wished to place on record the thanks of Audit Scotland for the co-operation of the Council Officers involved. The Panel agreed:- (1) that the contents of the report be noted; (2) that the final accounts, attached to the report as an Appendix, be approved for signing, and (3) that the relevant matters raised by the External Auditor at the meeting be noted.