Agenda Document Pack - Audit and Risk Committee - 07/12/2022
Perth and Kinross Council · 7 December 2022
Back to Audit and Risk Committee — 7 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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Securing the future… • Improving services • Enhancing quality of life • Making the best use of public resources Council Building 2 High Street Perth PH1 5PH 20/06/2024 A hybrid meeting of the Audit and Risk Committee will be held in the Council Chamber on Wednesday, 07 December 2022 at 10:00. If you have any queries please contact Committee Services on (01738) 475000 or email Committee@pkc.gov.uk. THOMAS GLEN Chief Executive Those attending the meeting are requested to ensure that all notifications are silent on their device and other devices are in silent mode. Please note that the meeting will be broadcast online and recorded. The recording will be publicly available on the Council’s website following the meeting. Members: Councillor David Illingworth (Convener) Councillor Andy Chan (Vice-Convener) Councillor Liz Barrett Councillor Ken Harvey Councillor Iain MacPherson Councillor Colin Stewart Councillor Grant Stewart Page 1 of 20
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Audit and Risk Committee Wednesday, 07 December 2022 AGENDA MEMBERS ARE REMINDED OF THEIR OBLIGATION TO DECLARE ANY FINANCIAL OR NON-FINANCIAL INTEREST WHICH THEY MAY HAVE IN ANY ITEM ON THIS AGENDA IN ACCORDANCE WITH THE COUNCILLORS’ CODE OF CONDUCT. 1 WELCOME AND APOLOGIES/SUBSTITUTES 2 DECLARATIONS OF INTEREST 3 MINUTE OF MEETING OF THE AUDIT AND RISK COMMITTEE OF 27 SEPTEMBER 2022 FOR APPROVAL (copy herewith) 5 - 12 4 OUTSTANDING BUSINESS STATEMENT (copy herewith 22/299) 13 - 14 5 INTERNAL AUDIT FOLLOW UP Report by Chief Internal Auditor (copy herewith 22/300) 15 - 16 6 INTERNAL AUDIT UPDATE Report by Chief Internal Auditor (copy herewith 22/301) 17 - 20 Page 3 of 20
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AUDIT AND RISK COMMITTEE Minute of Meeting of the Audit and Risk Committee held hybrid on Tuesday 27 September 2022 at 10.00am. Present: Councillors D Illingworth, L Barrett, A Chan, M Frampton (substituting for Councillor S McCole), K Harvey, N Khogali, I MacPherson, C Stewart and G Stewart. In Attendance: J Clark, D Coyne, S MacKenzie, A O’Brien, S Walker, K Molley, A Brown and M Pasternak; (Corporate and Democratic Services); S Coyle and J McCrone (Communities); and J Cockburn and F MacKay (Education and Children’s Services). Also in Attendance: C Batchelor and M Wilkie (KPMG) Apologies: Councillors B Brawn and S McCole Councillor D Illingworth, Convener, Presiding. 1. WELCOME AND APOLOGIES/SUBSTITUTIONS The Convener welcomed everyone to the meeting and apologies were noted as above. 2. DECLARATIONS OF INTEREST There were no declarations of interest made in terms of the Councillors’ Code of Conduct. 3. MINUTE OF MEETING OF THE AUDIT AND RISK COMMITTEE OF 28 JUNE 2022 FOR APPOVAL The minute of meeting of the Audit and Risk Committee of 28 June 2022 was submitted and approved as a correct record. 4. OUTSTANDING BUSINESS STATEMENT Resolved: The Outstanding Business Statement, be noted. 5. DRAFT AUDITED 2021/22 ANNUAL ACCOUNTS DRAFT ANNUAL AUDIT REPORT TO THE MEMBERS OF PERTH & KINROSS COUNCIL AND THE CONTROLLER OF AUDIT FOR THE YEAR ENDED 31 MARCH 2022 There was submitted a report by Head of Finance (22/237) presenting the Council’s draft Audited Annual Accounts for the financial year 2021/22 in accordance with the Local Authority Accounts (Scotland) Regulations 2014. M Wilkie, KPMG, gave a detailed summary of the report. 3 Page 5 of 20
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In response to a question from Councillor L Barrett regarding preparations around the componentisation of infrastructure assets, S Walker advised that it was a national issue and would continue to be monitored closely. In response to another question from Councillor L Barrett on the unadjusted audit difference of £6.8m in relation to the additional obsolescence of external works, S MacKenzie advised that this would not have an impact on the External Auditor’s opinion of the accounts. He added for this issue to be corrected at a late stage, several other significant changes would need to be made to the Council’s accounts. It was accepted that this matter would appear in the report and would be discussed with auditors to ensure there was a common understanding. In response to a question from Councillor L Barrett regarding the review of all SLA’s between ALEO’s, S MacKenzie advised that work would be progressed and form part of the discussions around the budget at the upcoming meeting of full Council. In response to a question from G Stewart regarding cyber resilience and ensuring processes are robust, J Clark advised that this was part on the annual governance statement which was considered in June 2022. She added that information and security specialists within Legal and Governance Services continue to review the Council’s resilience and information governance arrangements and ensure processes are fit for purpose. In terms of being robust, the Council compares arrangements with other public sector organisations to ensure they are achieving with resources that are permitted. In response to a question from Councillor C Stewart regarding the opinion of the Chief Internal Auditor and the different levels of reliance, J Clark advised that there is one level above reasonable which is substantial and there are also several lower levels of reliance. She added that one of the reasons why she wouldn’t be able to give a substantial opinion is due to the level of coverage that can be undertaken across all systems. She added that a risk-based internal audit programme is carried out but the whole organisation is not covered every year. J Clark advised reasonable reliance is what the organisation would aim to achieve as significant more resources would be needed to meet the level of substantial. In response to a question from Councillor C Stewart regarding the project governance arrangements in place for significant capital projects, M Wilkie advised that capital project governance had been analysed for current and previous years and there have been no deficiencies found. However, the risk continues to increase due to fluctuations and costs in the environment which heightens the need for more transparent scrutiny of all capital projects. In response to a question from Councillor D Illingworth, M Wilkie advised that the recommendation highlighted in the audit is not a reflection of Perth and Kinross Council’s performance but is a sector wide issue which would affect the majority of local authorities to an extent. Members congratulated the finance team for preparing the accounts and for their accuracy and attention to detail. Members also thanked KPMG for their years of service to Perth and Kinross Council. Page 6 of 20
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Resolved: (i) The Leader of the Council, the Chief Executive and the Head of Finance be authorised to sign the Audited 2021/22 Annual Accounts and the Head of Finance be authorised to sign the letter of Representation. (ii) The contents of KPMG’s Draft Annual Audit Report to the Members of Perth & Kinross Council and the Controller of Audit for the year ended 31 March 2022, be noted. M WILKIE AND C BATCHELOR (KPMG) LEFT THE MEETING AT THIS POINT. THERE WAS A 10 MINUTE BREAK AND THE MEETING RECONVENED AT 10.40AM. 6. INTERNAL AUDIT FOLLOW UP There was submitted a report by the Chief Internal Auditor (22/242) presenting a summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to August 2022. In response to a question from Councillor C Stewart regarding checks undertaken on the implementation of actions, J Clark advised that where possible checks are undertaken as part of the follow up work or would be rolled forward. She added that the team are not fully resourced to undertake an effectiveness review of all activity. Resolved: The current position in respect of the agreed actions arising from Internal Audit’s work, be noted. 7. INTERNAL AUDIT UPDATE There was submitted a report by the Chief Internal Auditor (22/243) presenting a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2020/21 and 2021/22. In response to a question from Councillor C Stewart regarding staffing resources, J Clark advised that the Senior Internal Auditor post had been vacant for three years with two rounds of recruitment being unsuccessful. However, she advised that the Senior Internal Auditor post had been readvertised and interviews were being held the following week. In response to a comment from Councillor C Stewart regarding the risk of staffing issues, J Clark advised that internal audit work on a risk basked approach to cover the significant risks of the organisation. She added that staffing resources have not been raised as a risk by external auditors due to the management of resources and reliance of assurance from other agencies. Information gathered then feeds into the Internal Audit Plan and Internal Audit Opinion. Members thanked Internal Audit for their work and referred to J Clark for her management of resources and prioritisation. Page 7 of 20
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Resolved: The progress with Internal Audit activity from June 2022, be noted. (i) COMMUNITIES (i)(a) 22-01 LEADER There was submitted a report by Chief Internal Auditor (22/244) on an audit to review regulatory compliance for the LEADER projects. Resolved: The contents of report 22/244, be noted. 9. INTERNAL AUDIT PLAN 2022/23 There was submitted a report by the Chief Internal Auditor (22/245) presenting the strategy for the delivery of Internal Audit and the proposed approach for the direction of planned Internal Audit work for 2022/23. In response to a question from Councillor L Barrett regarding the Mosiac system, J Clark advised that Mosiac is a key system to the organisation which is being developed and implemented to replace the information system SWIFT. In response to a question from Councillor C Stewart regarding the seven internal audits planned in relation to the Strategic Risk Register, J Clark that there are slightly fewer planned than previous years, but the risk areas identified would still be covered. Resolved: The strategy and plan for 2022/23, be approved. 10. NATIONAL FRAUD INITIATIVE OUTCOMES 2020/21 AND PREPARATIONS 2022/23 There was submitted a report by the Chief Internal Auditor (22/246) (1) presenting the reported findings of the 2020/21 National Fraud Initiative (NFI) exercise and (2) outlining the preparations currently underway in respect of the 2022/23 exercise. In response to a question from Councillor C Stewart regarding the Electoral Register and if the edited version is available in Perth and Kinross, J Clark advised that the requirements from NFI are for the full version of the Register to be shared but the organisation are not able to do so. The publicly available Electoral Register is used as part of extended checks that are undertaken along with credit reference agencies. In response to another question from Councillor C Stewart regarding the decision made by other local authorities to share information, J Clark advised that some changes were made to data regulations. Advice had been sought from legal officers in Perth and Kinross and they advised that changes were not sufficient to permit data being shared. Page 8 of 20
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Resolved: (i) The outcomes as reported within the National Audit Scotland report of the National Fraud Initiative 2020/21, be noted. (ii) The work undertaken in preparation for the 2022/23 exercise, be noted. (iii) The section of Audit Scotland’s self-appraisal checklist relating to those charged with governance at Appendix A of report 22/246, be approved. IT WAS AGREED THAT THE PUBLIC AND PRESS SHOULD BE EXCLUDED DURING CONSIDERATION OF THE FOLLOWING ITEMS IN ORDER TO AVOID THE DISCLOSURE OF INFORMATION WHICH IS EXEMPT IN TERMS OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973. P1. EDUCATION AND CHILDREN’S SERVICES (a) VIOLENCE AND AGRESSION There was submitted a report by Chief Internal Auditor (22/247) presenting an audit in response to a grievance by letter, from a member of staff to a school Headteacher relating to an incidence of violence and aggression by a pupil. Resolved: The contents of report 22/247, be noted. Page 9 of 20
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EXEMPT Appendix 1 EXEMPT NOT FOR PUBLICATION BY VIRTUE OF PARA 15 OF PART 1 OF SCHEDULE 7A OF THE 1973 ACT. P1. EDUCATION AND CHILDREN’S SERVICES (a) Violence and Aggression There was submitted a report by Chief Internal Auditor (22/247) presenting an audit in response to a grievance by letter, from a member of staff to a school Headteacher relating to an incidence of violence and aggression by a pupil. In response to a question from Councillor C Stewart regarding the whistle- blower and if they had been contacted regarding the audit, J Clark advised that the whistle-blower had been involved in the internal audit findings of the report and the HR process. The whistle-blower then received the draft and final reports of the audit. In response to a question from Councillor C Stewart regarding a pattern in challenging behaviour, J Clark advised that from Internal audit’s review, there were several challenging behaviours found over a period. She added that it was a very complex case and Education, and Children’s Services were involved in supporting the young person. In response to a question from Councillor C Stewart regarding the process of reporting incidents and if a change would be required, F Mackay advised that the incident took place prior to the use of the DASH reporting system being fully embedded. It is now fully embedded. She added that the system allows incidents to be monitored, reported and resolved more efficiently, creating greater security. Once an incident of distressed behaviour has been reported by a member of staff, the system automatically notifies a member of Senior Management who would then decide on the necessary action. In response to a question from Councillor N Khogali regarding the focus on reporting incidents and if it leads to fewer incidents, F MacKay advised that it does enabled a focus on prevention in relation to the children and staff involved and supports an awareness in schools of challenging behaviour which is also very important in reducing incidents. In response to another question from Councillor N Khogali regarding the effectiveness of the whistle-blower system, J Clark advised that issues reported had been addressed by changing processes and staff are reporting incidents effectively. F MacKay added that the Violence and Aggression Working Group focuses on improvement and has representation from schools, health and safety and Unions and Professional Bodies to reduce the number of challenging behavioural incidents recorded. In response to a question from Councillor I MacPherson regarding staff undertaking CALM training, F MacKay advised that through CALM, staff are trained to use de-escalation approaches such as distraction methods to help reduce the number of challenging behaviour incidents. Staff should only use CALM measures if they are fully trained. Ongoing support and refresher training are also provided. In response to a question from Councillor C Stewart regarding headteachers and if they are required to inform teachers to report behavioural incidents through the DASH reporting system, F MacKay advised that regular reminders are sent to schools. 3 Page 11 of 20
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EXEMPT In response to a question from Councillor C Stewart regarding information collated, F MacKay advised that regular reports are brought to the Joint Negotiating Committee for Teaching Staff and the Joint Consultative Committee highlighting incidents of challenging behaviour throughout schools on a term basis. F MacKay advised that data collated showed around 300 incidents in schools in Perth and Kinross in term 4. Councillor C Stewart asked for information to be circulated to members on the number of challenging behaviour incidents that had been repeated in term 4. Resolved: The contents of report 22/47, be noted. Page 12 of 20
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AUDIT AND RISKCOMMITTEE OUTSTANDING BUSINESS STATEMENT (OBS) (Report No 22/299) Please note that this statement sets out outstanding decisions of this committee along with an update and estimated completion date. Actions which are overdue are shaded for ease of reference. Where an update reflects that an action is complete then the Committee’s agreement will be sought to its removal from the OBS. No Minute Reference Subject Title Outstanding Action Update Lead Officer /Service Action due Action Expected 2. 27 September 2022. Item P1. ECS – Violence and Aggression Provide information on the number of challenging behaviour repeated incidents throughout schools in Perth and Kinross in Term 4. Email response was circulated to members. COMPLETED Fiona MacKay 7 December 2022 7 December 2022 4 Page 13 of 20
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PERTH AND KINROSS COUNCIL AUDIT & RISK COMMITTEE 7 DECEMBER 2022 INTERNAL AUDIT FOLLOW UP Report by Chief Internal Auditor (Report No. 22/300) 1. PURPOSE 1.1 This report presents a current summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to November 2022. 2. RECOMMENDATION 2.1 It is recommended that the Committee notes the current position in respect of the agreed actions arising from Internal Audit’s work. 3. STRUCTURE OF REPORT 3.1 This report is structured over the following sections: • Section 4: Background • Section 5: Follow Up Outcomes 4. BACKGROUND 4.1 The Public Sector Internal Audit Standards (PSIAS) require the Chief Internal Auditor to establish a follow-up process to monitor and ensure that management actions have been effectively implemented. 4.2 Internal Audit request evidence from Services which confirms that actions have been implemented and, therefore, controls have been improved. 5. FOLLOW UP OUTCOMES 5.1 There were 27 actions arising from Internal Audit reports. Of these, 4 had a completion date of September 2022. Evidence has been provided that all 4 actions have been completed. There were no actions with a completion date in October or November 2022. Author Name Designation Contact Details Jackie Clark Chief Internal Auditor InternalAudit@pkc.gov.uk 5 Page 15 of 20
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PERTH AND KINROSS COUNCIL AUDIT & RISK COMMITTEE 7 DECEMBER 2022 INTERNAL AUDIT UPDATE Report by Chief Internal Auditor (Report No. 22/301) 1. PURPOSE 1.1 This report presents a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2021/22 and 2022/23. 2. RECOMMENDATION 2.1 It is recommended that the Committee notes progress with Internal Audit activity. 3. STRUCTURE OF REPORT 3.1 This report is structured over the following sections: • Section 4: Background • Section 5: Progress Update • Appendix 4. BACKGROUND 4.1 The Public Sector Internal Audit Standards (PSIAS) require that the Chief Internal Auditor reports periodically to the Audit Committee on internal audit activity and on performance relative to the approved plan. 4.2 Work has continued on assignments from Perth & Kinross Council’s Internal Audit Plans. In addition, work has continued to be undertaken in connection with the Internal Audit provision for the Integration Joint Board. 4.3 Work has commenced to support the forthcoming National Fraud Initiative exercise, with all relevant datasets having been uploaded in preparation for the release of data matches for investigating to commence in January 2023. 4.4 The team are also involved with a whistleblowing disclosure. If there are any control issues highlighted as a result of this investigation, these will be considered for reporting to a future meeting of the Audit & Risk Committee. 6 Page 17 of 20
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5. PROGRESS UPDATE 5.1 The Service has been successful in recruiting to the Senior Auditor post and the scheduling of assignments from the Internal Audit Plan is being reviewed accordingly. 5.2 Appendix 1 shows the status of audits arising from the Internal Audit Plans, together with those assignments which will continue into 2022/23. Authors Name Designation Contact Details Jackie Clark Chief Internal Auditor InternalAudit@pkc.gov.uk APPENDICES • Appendix 1 Internal Audit Activity Page 18 of 20
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Appendix 1 INTERNAL AUDIT UPDATE Internal Audit Activity Audit No. Title Lead Service(s) Status as at November 2022 Audit Committee 2021/22 A21-05 Tay Cities Deal Communities Draft report issued March 2023 A21-07 Agency Workers Communities Draft report issued March 2023 2022/23 A22-01 LEADER Communities Completed September 2022 A22-02 Climate Change Communities Ongoing A22-03 Partnership Working All Ongoing C22-04 Mosaic Corporate A22-05 Community Engagement Communities A22-06 IT Assets Corporate & Democratic Services C22-07 Transformation Reviews Corporate Ongoing A22-08 Payroll Corporate & Democratic Services G22-09 Bus Service Operators Grant Communities 6 Page 19 of 20
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