Minute of Audit and Scrutiny Panel of 24 November 2022
North Lanarkshire Council · 16 March 2023
Back to Policy and Strategy Committee — 16 March 2023 and its agenda
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AUDIT AND SCRUTINY PANEL - 24 NOVEMBER 2022 1 24 November 2022 at 2 pm. A Meeting of the AUDIT AND SCRUTINY PANEL PRESENT Councillor Watson, Convener; Councillor Dunbar, Vice-Convener; Councillors Fisher, Hume, T. Johnston, Loughran, McNally, Robinson and Stevenson. CHAIR Councillor Watson (Convener) presided. IN ATTENDANCE Head of Audit and Risk; Business Strategy Manager; Strategy and Performance Manager; Corporate Risk Manager; Principal Auditor, and Democratic Services Manager. ALSO IN ATTENDANCE P. Murray (Senior Audit Manager), Audit Scotland. APOLOGIES Councillors D. Johnston and Sullivan. DECLARATIONS OF INTEREST IN TERMS OF THE ETHICAL STANDARDS IN PUBLIC LIFE ETC. (SCOTLAND) ACT 2000 1. There were none. STRATEGIC FRAMEWORKS ANNUAL POSITION STATEMENT 2. There was submitted a report by the Head of Business and Digital (1) referring to the inter-related Strategic Frameworks which are key to addressing the success of the Plan for North Lanarkshire, whilst ensuring each stage of delivery towards achieving the overall vision is appropriately planned, guided, implemented and governed; (2) explaining that 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 and, to ensure that each framework remains aligned to the Plan for North Lanarkshire, they are on a programme to undergo a regular review and refresh; (3) reminding the Panel that it has previously considered a number of reports in relation to these frameworks in line with its responsibility to provide an independent review of the Council’s Governance, Risk Management, Performance and Control Frameworks, and (4) setting out the corresponding Annual Position Statement for each framework for the information of the Panel in line with its remit. Decided: (1) that the Annual Position Statement for each framework, and the next steps to ensure each remains aligned to the Plan for North Lanarkshire, monitor delivery towards achieving the overall vision and ensuring delivery is appropriately planned, guided, implemented and governed, be acknowledged, and
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AUDIT AND SCRUTINY PANEL - 24 NOVEMBER 2022 2 (2) that it be noted that a Corresponding Review Programme supports each framework which in turn ensures that all relevant matters are kept under review, updated as required and reported to the relevant Committee. ANNUAL REVIEW AND REFRESH OF THE STRATEGIC SELF -EVALUATION FRAMEWORK 3. There was submitted a report by the Head of Business and Digital (1) recalling that, in order to meet the Best Value Duty, the Council must ensure arrangements are in place to secure continuous improvement in performance for all functions and activities undertaken to deliver services and improved outcomes; (2) explaining that a single strategy for improvement is in place through the Strategic Self-Evaluation Framework and the rolling review programme, which had been reported to the Panel in September 2021, and that this framework is specifically designed to be strategic but light touch and consistent but flexible enough 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; (3) reminding the Panel that the Strategic Self-Evaluation Framework is one of six inter- related corporate frameworks and that, to ensure these frameworks remain aligned to the Plan for North Lanarkshire, each is on a programme for regular review and refresh; (4) providing an update to the Panel from the Strategic Self-Evaluation Framework Rolling Review Programme for 2021 to 2022 and presenting a refreshed framework; (5) advising that, as a mechanism that also helps the Council to provide assurances that the services provided represent value for money and are efficient and effective, and able to demonstrate best value, a corporate approach to options appraisal had also been formalised and was included in the Framework and attached as an Appendix to the report, and (6) setting out, as an Appendix to the report, the Rolling Review Programme for 2022 to 2023. Decided: (1) that 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, be acknowledged, and (2) that the challenge and scrutiny role of the Panel, in line with its responsibility to provide an independent review of the Council’s Governance, Risk Management, Performance and Control Frameworks, be acknowledged. AUDIT AND RISK -RELATED ITEMS: ACTION LOG 4. There was submitted a report by the Head of Audit and Risk enabling the Panel to track implementation of requests and recommendations made by it in respect of Audit and Risk related items in the previous 18 months, with the Action Log, attached as an Appendix to the report, recording those requests and recommendations made by the Panel and detailing when these had been addressed and/or were expected to be addressed. Decided: that the contents of the report be noted. INTERNAL AUDIT PROGRESS REPORT 5. There was submitted a report by the Audit and Risk Manager (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 September 2022; (3) highlighting the most significant issues 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 - 24 NOVEMBER 2022 3 During consideration of the report the Panel requested that further reports be brought back to a future meeting on progress made by management implementing agreed actions in relation to audit recommendations in respect of (1) Debtors and Debt-Management, and (2) Equalities. Decided: (1) that the findings, conclusions and recommendations of completed Internal Audit Reports, together with the associated management responses, be noted; (2) that reports on progress made by management implementing agreed actions in response to audit recommendations on (1) Debtors and Debt-Management, and (2) Equalities be submitted to a future meeting of the Panel; (3) that Internal Audit provide a report to future meetings of the Panel on progress made by management in implementing agreed management actions in relation to all audit recommendations categorised as “high” or “medium”, and (4) that, otherwise, the contents of the report be noted. INTERNAL AUDIT: FOLLOW UP OF ACTIONS PREVIOUSLY AGREED BY MANAGEMENT IN RESPONSE TO AUDIT RECOMMENDATIONS 6. 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 contained in Internal Audit reports, where those actions were due to be completed by the end of September 2022; (2) advising that Internal Audit had concluded that 19 of the 24 actions agreed in response to relevant Internal Audit recommendations during the period had been fully completed and 5 had been assessed as partially implemented; (3) reporting 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 considered relevant, and (4) attaching, as an Appendix to the report, commentary from management together with 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 of the report, the Panel requested that further update reports be provided by management on a number of matters highlighted by Internal Audit in Appendix 1 of the report namely, (1) Digital NL (quantifying and reporting on non-financial benefits); (2) Managing Strategic Change (reporting on key projects), and (3) Governance of Capital Projects (assessing compliance with the project management framework). The Panel also requested that, where such reports were submitted to meetings of the Panel, an appropriate Senior Officer be in attendance. Decided: (1) that the contents of the report be noted; (2) that the recommendations made by Internal Audit in Appendix 1 to the report be noted, and (3) that reports be submitted to a future meeting of the Panel in respect of progress on (a) Digital NL (quantifying and reporting on non-financial benefits; (b) Managing Strategic Change (reporting on key projects), and (c) Governance of Capital Projects (assessing compliance with the project management framework, and that each report be accompanied by the appropriate Senior Officer in attendance at that meeting.
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AUDIT AND SCRUTINY PANEL - 24 NOVEMBER 2022 4 RISK MANAGEMENT UPDATE 7. There was submitted a report by the Head of Audit and Risk (1) providing an update to the Panel on key risk management developments since the most recent report in September 2022; (2) highlighting a selection of the more significant issues which are of current focus from a risk perspective, and (3) providing a narrative on the justification for additional risks to be added to the Corporate Risk Register. Decided: (1) that the current residual scores for those risks previously agreed for inclusion in the Corporate Risk Register for 2022-23, as indicated in Appendix 1 to the report, be noted; (2) that the addition to the Corporate Risk Register of new risks relating to data migration and school transport, as detailed in the report, be noted; (3) that the references to other topical risk issues, as highlighted in the report, be noted, and (4) that the work ongoing to include key service risks, and an overview of how these risks are being managed, as part of future reporting to the Corporate Management Team and the Panel, be noted. CORPORATE RISK UPDATE – GOVERNANCE, LEADERSHIP AND DECISION MAKING 8. There was submitted a report by the Head of Audit and Risk (1) reminding the Panel that, 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; (2) highlighting that 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 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; (3) advising that, in line with the previously approved timetable for reporting on corporate risks, this report focused on the deep dive of the ”Governance, Leadership and Decision-Making” corporate 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, and (4) informing the Panel that, following the most recent review of this risk, the residual risk score had increased from 12 to 16 largely attributable to the Elections in May 2022 and subsequent political events which are assessed as having increased uncertainty in a number of areas. Decided: (1) that it be noted that the updated deep dive, attached as Appendix 1 to the report, highlights that the residual risk score in relation to the “Governance, Leadership and Decision-Making” corporate risk had increased; (2) that the current and planned controls and actions relating to this corporate risk be noted, and (3) that the important role that Elected Members and Chief Officers have in relation to the ongoing management and mitigation of this risk be recognised. CORPORATE RISK UPDATES – SUPPLY CHAIN 9. There was submitted a report by the Head of Audit and Risk (1) reminding the Panel that, 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; (2) advising that, in line
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AUDIT AND SCRUTINY PANEL - 24 NOVEMBER 2022 5 with the previously approved timetable for reporting on corporate risks, this report focused on the deep dive of the ”Supply Chain” corporate 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; (3) indicating that the increased costs associated with the Supply Chain risk will largely have to be managed within existing budgets which are not expected to increase in line with inflationary pressures and the Council can increasingly expect to see impacts on service provision, projects, Programme of Work items and challenges in delivering the Capital Programme as previously planned, and (4) concluding that there will require to be decisions made to review and update previously approved plans and projects, assessing what will progress and what may need to be delayed or ceased. Decided: (1) that it be noted that the updated deep dive, attached as Appendix 1 to the report, highlights that the residual risk score in relation to the “supply chain and associated inflationary pressures” corporate risk is unchanged and remains high; (2) that the current and planned controls and management actions relating to this corporate risk be noted, and (3) that the important role that short and medium-term financial planning has in allowing the Council to respond to pressures arising from this risk, and a need to ensure that future plans and ambitions are realistic and aligned with available resources, be recognised.